Targeted Review of Asset Health and Resilience in the Water Industry

Objectives

The targeted review will:

• Provide a comprehensive assessment of asset health reporting which will include the identification of outliers.

• Enable Ofwat to assess whether companies are taking full ownership of, and responsibility for, asset health.

• Evaluate the relative balance of performance and condition monitoring/assessment within the context of new technology.

• Evaluate the assurance which companies receive for new assets.

Scope

The scope of this work includes assessing company's evaluation, management and interventions with regards asset health. Any recommendations for alternative approaches for PR19 should be within the context of the overall framework of a total expenditure approach to cost assessment and the outcomes framework. Recommendations should aim to enhance customer legitimacy, enable cost effective/timely investment and provide assurance for resilience.

Key Tasks

In order to meet the business objectives, the project will involve the Contractor performing the following tasks:

• Attending and leading meetings with all water companies (WASC's/WOC's) at their premises, however we would consider conducting some of the meetings via teleconference. A member of the Ofwat team will aim to support at these meetings.

• Discussions and short debrief with the Ofwat team following each company meeting.

• Input into pre-meeting briefing/information pack for companies as necessary. This may include collecting information from companies before the meeting, too.

• Regular weekly discussions with the Ofwat team regarding the project, next steps and highlighting any areas of concern.

• A weekly email to the project manager concerning budget spent, remaining and forecast expenditure for the remainder of the contract.

• Review of available technology and approaches for performance and condition monitoring.

Key Deliverables

The Contractor will be required to produce the following deliverables:

A draft and final report; detailing the approach and findings of the targeted review. This should be focused on addressing the questions highlighted in this ToR and include findings from discussions with companies and methods of addressing any concerns regarding robustness and consistency of asset health methodology and investment planning. The draft report should be produced no later than 15 March 2017. Earlier versions can be shared and discussed prior to this. We may request that the draft report be presented to a group of Ofwat colleagues.

The final report (a full and a redacted version if required), suitable for publication, should be produced no later than 31 March 2017. Ofwat may wish to disclose the final report separately or as part of a publication. The final report should include recommendations for next steps, particularly on increasing transparency and consistency of standards across the sector.