Water - Delivery Assurance Group (DAG) report: quarter 3 - 2022 to 2023

2. Overview

Year 2 Tier 2 Investment to the end of Q3 2022/23 was £511m made up of planned repair and refurbishment (£316m), enhancement (including flooding) (£134m) and growth (£60m). It includes £45m invested on the delivery of projects that were planned to be completed in the previous period.

Tier 2 investment was £24m above the central forecast (£487m) and we are forecasting that we should be at the top end of our Delivery plan range of £620m to £690m at year end. Investment in responsive repair and refurbishment of assets and RCC (Tier 1a) for Q3 2022/23 was £162m. This level of investment represents an increase of circa 21% on the average investment achieved in SR15 when compared on a like for like basis at 2017/18 price base.

Our key performance indicator (IPOD) was established as a measure of forecasting accuracy for key milestones added to the Committed list with the intention of gaining and implementing learning, and monitoring delivery. The indicator is outside the range at Q3 primarily due to the 'acceptance' milestone for a number of projects needing to be re-forecast due to slippage , the impact of adverse weather in December and outstanding commercial settlements with one of our Alliance partners. We expect IPOD to be within the range -2 months to –3 months at year end.

Projects which were committed in the early stages of the SR21 period may have suffered from optimism bias where we endeavoured to establish challenging targets for our delivery teams without fully understanding some of the issues that would occur.. It is important that when committing to the delivery of a project we balance the likelihood of delay due to risks against setting an over cautious target with the potential to lose focus on the need to drive delivery. Lessons learned on how we assess schedule risk together with additional governance checks on committed dates (especially Gate 100 Acceptance) have been included on more recent projects commitments. This should mitigate the risk of that the actual delivery on projects varies significantly from our commitment forecast.

23 of the 51 projects which have been reforecast and now substantially complete with acceptance forecast in Q4 this year. Although substantially complete these projects have encountered issues during their latter phase which has delayed acceptance. A further 10 are forecasting acceptance in Q1 2023/24. An example would be Glenlatterach WTW Manganese Removal, where the primary scope is the refurbishment of the rapid gravity filters. This work is now complete, but the project has been delayed in the performance test phase due to software issues. It has been further delayed as a result of the inclement weather during December which caused an increased H&S risk to personnel and delayed work on site. Performance testing has now re-started, and the project is forecast to achieve acceptance in Q4 this year.

An example of a project where significant construction activity is still ongoing, but it has been delayed due to the realisation of construction or third-party risk would be Main Street Newtonmore. This project comprises the construction and upsizing of new and existing sewers with associated manholes to address flooding in the area. Construction on the project has been significantly delayed as utility diversions need to be undertaken to create a clear zone for the proposed infrastructure installation. Although site investigation was undertaken prior to start on site the requirement to relocate services was not identified at the time the project was committed. The project is currently forecasting Acceptance in Q3 2023/24, however the programme will be reviewed once the diversion work is completed.

Outputs

Following on from the previous DAG, where we outlined the work being carried out to capture and validate outputs, there has been an initial meeting with WICS to review the output information held and agree how it should be presented. Unfortunately, due to time pressures, we have not been able to complete these discussions and Section 7 of the report contains a first draft of output information for discussion at the Working Group. This captures the outputs associated with named project on the committed list but excludes SR15 Completion projects as these are reported separately as "number of projects achieving Gate 100 Acceptance. The information and format remain draft and will be finalised after review. Completion of this work will enable us to provide initial output reports for all of our live investment on the Committed list to the next DAG meeting in June 2023.

Delivery risks

We continue to monitor the 3 broad categories of risks that may impact our forecasts.

• Third Party Risk - Potential delays due to third-party issues
• Construction Risk - Unforeseen delays from allowable events or poor performance on site
• Construction Market Conditions

The key risk continues to be Construction Market Conditions as noted below.

Construction market conditions - Cost pressures and availability of materials, labour, and commodities are challenging. The key areas of note are:

• Price and availability of materials and commodities - our procurement teams monitor all frameworks
• Planning - our delivery teams continue to resequence project design, planning and procurement following the extension of lead times for some projects.
• Resourcing and Skills - our partners are experiencing higher than normal staff turnover levels and shortages.

Capturing learning to improve performance

To achieve our desired outcome of efficient and effective investment delivery it is important that we understand both what went well and what did not go so well in the delivery of capital projects. This requires the learning from both live and completed projects to be made available to the planning and delivery teams in a consistent and easily consumed format. To allow us to better capture knowledge and learnings, we have been working to develop a new Lessons Learnt portal. This online 'app' enables anyone involved in the delivery of a project to record learnings which are then accessible for others to see and implement where appropriate. Common themes and key learnings are validated, collated and best practice shared in the form of improvements to our Risk/Design libraries and targeted toolbox talks. Learnings currently span multiple directorates with improvements being applied to projects at all stages of the Plan / Prepare / Deliver project lifecycle.

An example of where cross function innovation and win-win was realised was at Glenfarg WTW. Within the existing works the current pH correction equipment utilises lime as the primary mechanism of control. The solution promoted at G50 was to renew and refurbish existing equipment on-site within the current area of the building. However, due to the main project driver to increase resilience of supply by provision of increased volume of storage this would mean dosing lines of over 200m being required to service the new position of the additional storage. This would result in increased risk of blockages within dosing lines and increase future maintenance costs and risk service of supply. Collaborative effort resulted in an alternate solution using caustic. The costing models and designs have been logged as standardised solutions and cost reference models to be utilised in future projects across the portfolio of programmes.