Irish Water’s 5 Year Investment Look Ahead - Delivering on Policy Priorities

10 October 2019

Finbarr BurnsAsset Delivery

Clayton Silver Springs Hotel, Cork

Look Back before Look Ahead

Highlights from IRC1 and IRC2

Removal of long term Boil Water Notices (BWN) -75,939 people 155 water

supplies removed from EPA’s remedial action list (RAL)

Replaced a total of 5,620 backyard and

21,838 public side lead services through the Lead Mitigation Plan

Removed 104 Upgraded a

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Key Deliverables

Removed 104 wastewater

agglomerations identified by

EPA for improvement

Upgraded a total of 228

sites through the

Disinfection Programme

Removed 14 wastewater

agglomerations previously discharging untreated wastewater

Delivered a gross leakage savings of

264.9Ml/day through public side leak repairs and customer repairs

Delivered 189km of new/rehabilitated

sewer network and 1,702km of

new/rehabilitated watermains

Policy & Plan

Policy Approach to Investment

Water Services

Policy Statement Water

Services Strategic

Plan Strategic Funding

Plan

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Plan

Water Charges

Plan

CRU Allowed Revenue

Non-domestic

and excessive use paid through tariffs

Normal domestic

usage paid through

Government subvention

Safe drinking water is essential to the day-to-day activities of households, communities, social services and the economy.

Meeting the Policy Objectives

Quality

Irish Water’s Capital Investment Plan is structured around the three key themes of the Water Services Policy Statement.

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Conservation

Future Proofing

Responsible environmental, social and economic policy means that conservation must be firmly embedded at the heart of water services policy.

Ireland’s future economic and social progress is critically dependent on upscaling our capacity to deliver reliable, high quality water and wastewater services.

Strategic Funding Plan

Quality - €3.0bn17% Water 32% Wastewater- Complete risk assessments - UWWTD Compliance- Remove plants from EPA’s RAL - Protect high status waters- Implement lead strategy - Deliver RBMP improvements

Conservation - €0.7bnCapex 2019-2024 €6.1bn

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Conservation - €0.7bn9% Reduce Leakage 2% Protect the Environment- Increase awareness of need to - Sludge management

conserve - Energy Efficiency- Meet leakage targets- Complete the Water Resource

Plan

Future Proofing - €2.4bn21% Capacity & Resilience 19% Support Economic Growth- Improve resilience in areas most - Support National Planning framework

vulnerable to a shortfall in water and Regional and Spatial Economicsupply and wastewater services Strategies

Capex 2019-2024 €6.1bn

Delivery Challenges

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Investment Plan Challenges

Safety

Delivery PartnersDelivery Partners

Economy

Project Challenges

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Investment Plan Challenges

Safety

Delivery PartnersDelivery Partners

Economy

Project Challenges

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Listening to our Delivery Partners

“coverage is not available on the insurance market ”“Price Indices do not adequately reflect the changes in costs”

“Using Milestones causes severe project cash-flow issues”

“onerous tendering cost ”

“NEC encourages collaborative approach , with responsibility for risks sitting where they

are most easily controlled”

“Brexit unknowns”

“Fitness for Purpose and Unlimited Liability ”

“takes all risk away from the Employer , even though they are the owner of the assets and know the risks better than any of the tendering parties”

“The Employer is paying a substantial premium to have this”

reflect the changes in costs”

“procurement model does not provide opportunities for value engineering or for

collaborative development of the best project solution”

“Irish Water and their agents are not being fair in the administration of contracts”

“Strict performance guarantees, despite employer design”

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Investment Plan Challenges

Safety

Delivery PartnersDelivery Partners

Economy

Project Challenges

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Risk Allocation

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SCSI Construction Tender Price Index July 2019

Investment Plan Challenges

Safety

Delivery PartnersDelivery Partners

Economy

Project Challenges

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Investing in Quality

Quality

Water & Wastewater Quality

Quality - €3.0bn17% Water 32% Wastewater- Complete risk assessments - UWWTD Compliance- Remove plants from EPA’s RAL - Protect high status waters- Implement lead strategy - Deliver RBMP improvements

• Risk of under delivery was identified if multiple projects across water and wastewater were progressed in traditional manner.

• Site surveys, ground investigation, design, planning, land & wayleaves and tender process all to be completed prior to construction contract award would end up in significant back ended delivery of outcomes and outputs.

• Early Contractor Involvement identified as opportunity to best involve supply chain in ensuring delivery of plan.

ECI Approach and Benefits to IW & Supply Chain

Committed Volumes enable better resourcing, economies of scale and reduced tendering.

Improved programme

Target cost model with open book actual costs reimbursed. Incentivised model used to further drive value and efficiencies.

Collaborative model utilising Improved programme management, reporting and integration of delivery teams.

Enable innovation across the supply chain and efficiencies at an early stage.

Collaborative model utilising resources in the right way to focus on improved ways of delivering outcomes and outputs.

Better manage risks across the contract to provide more certainty of delivery with greater transparency on costs.

Selecting the right PartnersWater Regions Wastewater Regions

6510%

100%

50%

1510%

100%

50%

2010%

100%

50%

Technical / Capability Commercial Behavioural Assessment

Tender Evaluation Approach

Investing in Conservation

Energy Efficiency

Quality - €3.0bn17% Water 32% Wastewater- Complete risk assessments - UWWTD Compliance- Remove plants from EPA’s RAL - Protect high status waters- Implement lead strategy - Deliver RBMP improvements

Conservation

Conservation - €0.7bn9% Reduce Leakage 2% Protect the Environment- Increase awareness of need to - Sludge management

conserve - Energy Efficiency- Meet leakage targets- Complete the Water Resource

Plan

• Irish Water is committed to an increase in its energy efficiency to 33% by 2021.

• Since the Energy Efficiency Capital Programme was established, more than 150 energy audits and 118 projects will have been carried out on our largest energy using sites by the end of 2019.

• Efficiency upgrades targeted at sites with approx. 5 year payback period as well as renewable energy programmes to offset energy usage.

Pilot Photovoltaic Energy Generation Sites:

• Two pilot projects carried out in June 2019

• Nenagh and Newcastle West Wastewater Treatment Plants

• 240 solar panels (400 square metres)

PV Solar Pilot Projects

• 240 solar panels (400 square metres) installed, generating 58,500 kWh (kilowatt hours) electricity per year

• €86k capital cost with approx. €8,300 saving per year (10.4 year payback)

• Equivalent to a reduction of 26.5 tonnes in carbon emissions each year

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541

1081

2027

3244

3919

4325

3919

3244

2433

1216

811

270

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

pt

Oct

No

v

De

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Est. Generation Nenagh WWTP (kWh)

Energy Efficiency Projects

Heating & Lighting• Lighting Pilot Completed Leixlip WTP – 450

Flourescent lights with LEDs.• Energy reduction – 360,400 kWhr per annum

(approx. €54,060).

Aeration Systems

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Aeration Systems• Purcellsinch WWTP Upgrade - replaced

existing mechanical aeration system withFine Bubble Diffused Aeration coupled tovariable speed air blowers with accurateOxygen Input Control.

• 48% Energy reduction - 965,000 kWhr perAnnum (approx. €144,750).

• Plant also brought into compliance andoperational savings of >€50,000 annually.

• Additional headroom gained for future growth.

Investing in Future Proofing

Providing for Growth

Future Proofing

Future Proofing - €2.4bn21% Capacity & Resilience 19% Support Economic Growth- Improve resilience in areas most - Support National Planning framework

vulnerable to a shortfall in water and Regional and Spatial Economicsupply and wastewater services Strategies

• Growth & Development Programme established in response to growth demands nationally. Aim is to deliver key network extensions and upgrades to facilitate commercial, residential and industrial developments in towns and cities across Ireland.

• Certainty of delivery timelines are critical to removing bottlenecks across our network and enabling new developments.

Growth & Development Programme

| Infrastructure Growth & Development Programme25

Shanganagh, Dublin

Killumney, Cork

G&D Programme Contract

• 5 year regional programme contract• Single contractor per region• 3 stage Design Build contract bringing in

earlier stages of process• Concept Design• Detailed Design & Planning• Construction

• Bespoke Programme Contract with Irish

26 | Infrastructure Growth & Development Programme

• Bespoke Programme Contract with Irish Water Major Works Civil Engineering Contract as basis of works & services agreement

• Schedule of rates and priced standalone works and services

• Cross regional mini-competitions where required

• Contract KPIs key to performance monitoring

SustainableDeliveryApproach

Delivering on Policy Priorities

Strategic Funding Plan objectives defined with Irish Water progressing projects and programmes to deliver identified outcomes and outputs by 2024

Clear Objectives

Annual budgetary profile defined. Need to balance portfolio of work within parameters to deliver optimal matrix of projects meeting mandatory requirements, reducing risk, providing for growth, etc.

Portfolio Balancing

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reducing risk, providing for growth, etc.

Differing delivery approaches are key to ensuring delivery within the regulatory allowance and timeframe, considering challenges ahead and efficiencies required.

Effective Approaches

Cross industry approach essential with Irish Water committed to building a sustainable approach to building and upgrading our asset base.Collaboration

Thank you

fburns@water.ie