Risk analysis for outsourcing water supply maintenance services

 

The need to renovate ageing water mains and sewer networks will increase dramatically in the near future. Water utilities will need to consider new operating models for network maintenance and for mitigating the growth in renovation debt. The SerVesi project developed risk analysis with regard to outsourcing.

VTT, together with Tampere University of Technology and the University of Tampere, has studied the outsourcing of maintenance services for water supply networks under the SerVesi project. VTT Expert Services Ltd have evaluated the market volume for maintenance services in Finland at approximately EUR 250 million per annum. The market for network renovation and rebuilding is clearly more coherent than that for maintenance, with annual volume in excess of EUR 400 million.

Water utilities are facing increasing productivity pressures, while ever greater expertise in network maintenance is needed to support technological development. Collaboration is taking place with the private sector and with other water utilities in the search for new operating practices.

A survey under the SerVesi project established the extent to which water supply network maintenance has been outsourced and how future maintenance might be organised. The survey reveals that water utilities have procured services for practically all maintenance operations.

Most orders from service providers concern renovation of water mains and sewers with methods that require no excavation, TV inspection of sewers, and water meter repair. These are either outsourced completely or performed in close and continuing cooperation between water utility and service provider.

There is no desire, however, to outsource all maintenance tasks to a private contractor, or to another water utility. The response was least enthusiastic for outsourcing operations connected with drinking water supply, fault correction and customer services.

The partners in the SerVesi project developed methods for identifying the risks related to outsourcing. The principle of the risk analysis is to describe the service as completely as possible, split it up into sections, and identify the potential risks for different parts of the service from both supplier and customer perspective. Once the risks have been identified, the parties will be able to negotiate a method of risk management that is satisfactory to both. This enables transparency of operations and engenders reliable and open partnership.

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