Ofwat has told water companies to work together to improve areas of common need in terms of their asset management capabilities, as well as to work on individual needs. the steer comes as the headline recommendation in its new Asset Management Maturity Assessment (AMMA) report. The report is a collaborative piece of work between the regulator and companies on the sector’s asset management capabilities and areas for improvement.
This headline recommendation was supported by six additional suggestions. Ofwat said companies should:
• ensure boards have clear oversight and understanding of current and future asset health risks and of plans to mitigate these;
• improve their approaches to long-term planning, ensuring alignment between short, medium and long-term objectives in their strategies and plans;
• systematically identify and consider uncertainty in all areas of asset management, from strategic asset planning to data quality management;
• develop a strategic approach to data and information management that takes into account the ability to share data;
• make sure that employee competencies and skills are appropriately considered to plan and manage their assets efficiently now and in the future; and
• systematically consider wider aspects of social and environmental value in decision-making and monitor whether delivered interventions provide the benefits expected in their planning.
The research found companies demonstrated more mature capability in “more heavily prescribed areas, influenced by regulation and compliance”. These included: improving asset management capability; contingency planning and emergency response; established strategic planning frameworks; audit, compliance and need for continuous improvement; and reporting of performance commitments and outcome delivery incentives.
In addition, Ofwat indicated in the report that it was considering how its regulatory regime should change in light of the findings. Specifically, it said it would:
• consider how to reinforce the expectation that company boards should reflect on asset health and resilience.
• consider whether to do more to monitor companies' asset health and operational resilience and, as part of this, require reporting and publication of information – this could include information on asset management maturity; and
• consider how companies should evidence their approaches to long-term asset planning as part of wider work, including through the next price review, to support and incentivise long-term planning and delivery.
The report was based on self-assessment from 16 companies (Bristol chose not to respond) in response to questions and scoring criteria put forward in the AMMA.
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