Water Industry - Scottish Government Investment Group - Development List performance progress report: quarter one 2023-2024

4. Progress of the development of interventions with Level 1 and 2 appraisals

The purpose of this section is to provide:

• An overview of the progress of interventions in Q1 that are subject to Level 1 and 2 appraisals^[1]
• Highlights from significant Level 1 or 2 project investment appraisals completed in the last quarter
• A review of lessons learnt from the delivery of PIA forecast in the last quarter and a look ahead to the next quarter.
• The full list of interventions with Level 1 and 2 appraisals, with an indication of the anticipated timing, is shown in Appendix C, which is an additional document to this paper.

Quarterly review of progress of appraisals

Good progress has been made in project level decision making within Q1:

• 8 Project Investment Appraisal stages were completed within the quarter. This includes the addition to the forecast (1 or 5% of the initial demand).
• 7 of 8 projects progressed through first time at Investment Group or through offline approval. These projects had a value of c.£113m.
• 3 Project Investment Appraisal documents were shared with all sector stakeholders in July.

Highlights from project investment appraisals completed within the quarter are included in Table 1.

Table 1: Project Investment Appraisal Highlights

Bertha Park Growth - Stage 4, May 2023

Perth and Kinross Council have identified Perth as a centre for major housing and business growth. This development is already well underway to the west and north of Perth as a series of identified development packages. Existing housing developments have already resulted in Perth WWTW being loaded at 74,000PE, in excess of its 70,000PE design capacity. This growth will continue at an approximately linear rate through to 2045, at which time the Population Equivalent will be 108,500. Such significant expansion of Perth has required a holistic strategy to be developed so that water supply, wastewater collection, wastewater treatment and bio-resource treatment, are all capable of meeting the growth demand. The Stage 2 appraisal considered 4 options to address a number of needs for the Perth Area and formed the basis of an overall strategy to treat wastewater for the expanding city, and to ensure Perth WwTW could still operate as a sludge treatment hub for Perth and surrounding area. Two options were taken forward to Stage 3a and 3b appraisals:

• Option 2: provision of a new WwTW at North Muirton
• Option 4: upgrading Perth WwTW and reinforcing the network in Perth City Centre upstream of South Inch CSO

The recommended option was to upgrade Perth City WwTW (Option 4). Only minor changes to the scope occurred between Stage 3b and Stage 4, and Option 4 continues to be the basis of the recommendation to proceed.

RCI Newfield Pump Station to Broadmuir Trunk Main - Stage 4, June 2023

The existing 12” PVC Trunk Main from Peterhead (Newfield PS) to Ellon has been causing numerous high profile recurring interruptions to supply. Due to the reputational impact associated with these frequent pipe failures an operational plan is in place to effect repairs to this 25km long rural pipeline. In the region of 700 domestic customers are affected along with almost 50 non-domestic customers (including the key customer Brewdog). This is mitigated through partial short-term rezoning with all customers normally being back in water within a 4-to-6-hour period. In addition to the requirement to replace the water main to avoid on-going interruptions to supply, there is significant planned growth within the Ellon Corridor, including the supply of the Brewdog Brewery in Ellon. Our Strategic Plan sets out the objective to transform the interconnectivity of our major water supply systems to increase their resilience. Where there is an opportunity to size replacement transfer mains such as this, sizing should match available surplus raw water capacity, in this case 15Ml/d available at Forehill WTW which could be used to support the Invercannie / Mannofield system in the future. Therefore, this main has been sized to allow this future resilience flow, which can provide protection for up to 65,000 properties.

A review of lessons learnt from the delivery of PIA forecast in the last quarter.

An overview of the appraisals at Stage 2/3a/3b/4 that were forecast to be delivered during Q1 2023/24 and the appraisals delivered is shown in Table 3, Appendix A.

The purpose of Table 2 is to provide internal visibility to enable forward planning for Level 1 and 2 needs and to ensure enough work is being appraised to support the investment programme. It is not intended to be a fixed set of dates and the dates presented are the earliest that those will be achieved.

A target of c.50% of milestones to be achieved is set due to the dynamic nature of the programme. Although 8 PIAs were presented in line with the forecast, only 7 PIA stages were achieved as more work was requested for Turriff WTW. This is 33% of the initial forecast which is down from 49% in the previous quarter. There are two main themes driving the missed forecasts:

• Repriorisation due to workload. This affected 29% (6) of the forecast projects which had forecasts adjusted to the following quarters in line with the dynamic programme. As an example, Blairlinnans and Milngavie Resilience was adjusted as the team were diverted to focus on managing the recent drought conditions across Scotland.
• Scope and costing. This affected 19% (4) of the initial projects. This has been driven by awaiting Net Present Cost and Carbon (NPCC) assurance in some cases and at Torwood WwTW a review of an option due to a cost increase within the project.

Work to minimise the time associated with these activities in the last quarter is ongoing. However, the water teams are currently operating with fewer resources as a result of recent leavers and long-term absences. Recruitment to fill vacancies has proved challenging due to the limited number of suitable candidates and our framework consultancies also have limited resources available for secondment to support the optioneering activities in the short to medium term.

Benefits of improved project level decision making

Benefits of improved project level decision making are being tracked by the SIDM Programme as part of the Transformation metrics, assessing Tier 1 and 2 cost avoidance, NPCC and carbon.

Projects reforecast by 12 months

In line with the dynamic programme a small number of projects have been reforecast by >12 months since the baseline forecast in April 2022. These are listed in Table 3 with the known consequences explained.

Forecast for 23/24

The forecast for 23/24 is shown below (Table 4).