Trends and Issues from Qwater14 http://wp.me/p2g64Q-43
Qwater14 has come and gone with some great discussions, presentations and networking. Many of the issues raised during the conference are trends that are relevant to the industry as a whole. My view of these trends and issues include the following.
- Collaborations need to be led by industry and not be a political directive
- Innovation is about cultural change and not a system or new product
- Utilities will have an increased level of investment from the private sector
- Regulatory harmonisation will lead to improved industry productivity
- Being Asia’s food bowl will drive private investment in new Australian dams
- AWA needs to develop a new industry based leadership model for the water industry
- The water industry needs to have a low carbon future
- Operational benchmarking is allowing identification of high and poor performers
- The community does not understand the value or cost of water
- Water management needs a broad toolbox
Collaboration – Our industry is collaborating at an increasing rate. We need to determine what we are good at and what areas we should join with others. There is an increase in the use of supplier panels and partnerships with research and academia. The industry needs to lead these arrangements to ensure that the benefit are realised, risks managed and utilities are not forced into “arranged marriages”.
Innovation – Innovation is about cultural change and not a system or new product. Innovation is currently a buzz word, but just to have forums, workshops, committees or suggestions boxes will not result in the ongoing change we desire. It is just not a step change or continuous improvement. It is about giving permission to staff to challenge and change the way we do things. The change needs to happen from the bottom and be supported by the top.
Utility ownership – Capital recycling opportunities and pressures on balance sheets will see a significant change in the ownership model of the water industry in Australia. It is unlikely that any of our utilities will be privatised but other investment models will see the release of large funds from these utilities. Leases, long term operating contracts and the increase in private investment in new projects will increase and become the norm over the next few years.
Regulatory reform – The need for regulatory reform has been recognised in all jurisdictions with significant achievements having been made in red and green tape initiatives. The next significant improvement needs to be through the harmonisation of regulation across jurisdictions. Economic, health and environmental regulation needs to be harmonised across all states to act as a catalyst for improved industry productivity.
New infrastructure – Currently some 27 dams are proposed to expand agricultural regions in the north of the country. These are not associated with flood or drought mitigation. This will be the only significant infrastructure spend in the foreseeable future. The financing of these will be provided by the private sector, likely in association with Australia’s desire to be the food bowl for Asia.
Leadership of the industry – The demise of the National Water Commission needs to be used as the stepping stone to a new industry leadership model. It is our chance to develop a National Water Strategy, reduce the number of players in the industry and present a united face to the government, business community and our communities. This will increase our ability to sell our industry both locally and overseas.
Low carbon industry – Climate variability and electricity prices have had serious effect on how we operate our industry. Energy recovery on all assets, alternative energy and benchmarking tools are now standard tools across the industry.
Efficiency of operations –The water industry has not been good at demonstrating our level of performance. Recently several benchmarking tools and surveys have been developed including those for sewerage treatment plants, sewerage pumping stations, electrical and mechanical services. The increased use of these operational level benchmarking will improve the performance and efficiency of our operations. Increased benchmarking will help identify and focus on the industry poor performers.
Customer expectation – We need to close the gap between the expertise of water industry and communities knowledge of our capability. Water is off the public agenda after the awareness developed during the drought. The industry needs to continue to converse with the community as to the value of water to them and the overall economy eg – for $2 a day we walk 50 miles and carry water to your family, for $3 a day we take away your families waste and bury it away from our communities.
Integrated water management – The importance of having many options for the supply of water and disposal of effluent is as essential as ever. The nomination of contingency sources of water is increasing with desalination and recycling important components for management of risk during times of scarcity. Costs need to include all externalities including things such as system insurance and protection of catchments.
These are my views of the conference and may not reflect the views of AWA or my employer MidCoast Water.
QLD 30 year Water Strategy Presentation
Hon Mark McArdle the Qld Minister for Energy and Water Supply presented to an AWA Breakfast on 19 Feb 2014. http://wp.me/p2g64Q-2x The following is my understanding and commentary.
Strategy – The 30 yr Water Strategy is aimed at providing a blueprint with a clear vision for the Water Industry moving forward. It is intended that it will be renewed every five years and all identified actions will be reported to the public on a six month basis. It is currently being aligned with the draft State Plan and is expected to be released shortly with a consultation period, before coming into effect in July this year.
Growth – The QLD State plan calls for an increase in population of 3M people over the next 30 years. That plan looks to have 50% of that increase outside of South East Queensland. That will not be sustainable for the water sector. The growth rates can be achieved, but the majority of the growth will need to occur in the current SE, where the water infrastructure has been developed and substantial capacity exists. To provide for this level of growth outside the existing SE would required substantial investment by the regional Water Service Providers which would not be economically sustainable without government support.
Regional Water Development – Currently 2/3 of the State of QLD is under drought conditions. The federal government has expressed interest that the north of Australia becoming the food bowl of ASIA. This is not viable without a large degree of water resources infrastructure development in the north of QLD. Planning still needs to be undertaken but it is expected that any future large spending in the water sector in QLD will be federal money in these regional areas.
SEQ Water Development – Seqwater has commenced a two year planning strategy for the 30 year water needs for South East Queensland. Whilst the current SE water grid provides good security of supply, several components arose from poor planning practises during the Millennium Drought, resulting in higher than optimal costs. The planning during that period is currently the focus of a parliamentary enquiry due over the next couple of months.
Water Customers – The development of flexible communication style (think mobiles) charging plans is desirable for the water sector. Different user groups may need different quality & quantity of water, for different uses, at different rates. Examples may include high use gardening or agricultural users. The strategy will provide for hardship, set customer service standards and provide for the extension of the Water & Energy Ombudsman across the state.
Efficient Water Usage – The state plan calls for the doubling of farm output by 2040. This will require improvements to the water usages within the rural areas. There will be an expansion of “fit for purpose” water, including the reduction of the current “red tape” on recycled water schemes.
Responsible Water Management – Eight irrigation schemes are currently being returned to local control, with the expectation that they will have an improved management, at a lower cost. With the reduction of the “red tape” and the introduction of outcome based KPI’s for water service providers, concerns may arise as to appropriate measurement of “responsible water management”
Skills for the future – Appears to promote general management skills into the water sector. Skills such as Information & data management, economics and business management were mentioned. An expansion of the current Q-Wrap program, with the view to improve and share top management in regional areas was announced.
SMART Regulation & Private Sector Involvement – The continuation of catchment based approaches, the release of the current water services legislation and alterations to the recycled water regulations were mentioned as SMART regulations. Partnerships between government, water service providers and the private sector will be encouraged by the government, whilst recognising that they do not have jurisdiction across many of these relationships.
Innovative Technologies – Several technology based innovations were mentioned including smart meters. The formation of a Industry Lead Innovation Panel was announced.
Whilst no new unexpected issues were announced by the Minister, the 30 yr Water Strategy now appears to be aligned with the state plan and reported through six monthly action plans. Much of the plan will be rural and regional area based with less impact on the urban water sector. The success or failure of the plan will be determine by the implementation plan and the allocation of responsibility across government, water service providers and the industry as a whole. We wait with anticipation the release of the strategy.
This review was prepared by David Nixon of Better Managed, Management Consultants to the Water Industry and chair of AWA’s QLD policy and strategy committee. They are David’s views only which he would be happy to discuss. Davidn@bettermanaged.com.au
So what happened at #Qwater13?
Here is a summary of the information and trends I gained from #Qwater13. http://wp.me/p2g64Q-2t They are my interpretations and not necessarily those of the speakers. Happy to discuss them with anyone interested.
Managing the water cycle
- No new water sources are required in QLD til 2032. We currently have twice the supply as required demand.
- Water quality issues due to the 2011/13 floods remain of concern. The floods mobilised significant sediment in the Brisbane River, which is being transferred into Morton Bay.
- The floods led to aquifer recharge, which has led to an increase in TDS and hardness in the middle Brisbane river which is expected to continue for the next two years.
- With industry restructures, new governments and failures of previous models we are still faced with lack of leadership and accountability across the water cycle. River & catchment health, nutrients offsets and holistic investments strategies are all issues that could be improved with a new leadership approach.
- The CRC for water sensitivity cities is up and running and has the potential to shape our cities of the future. They are challenged with the lack of take up of many previous initiatives including IWCM.
Need for industry leadership
- Many of the COAG reforms over the past 20 years have not led to improvements in the urban water industry. A new model of responsibility between the Federal & State Governments, utilities and providers needs to be established to drive future efficiency improvements.
- We need long term planning, well outside the current political cycles. Droughts & floods will return and we need to be well prepared for all outcomes. We have historically had poor delivery & approval of planning in water infrastructure. (Hopefully the 30 year plan will address this)
- Water is a key enabler of the economy, but has never had community acceptance as a key industry.
- Water Innovation & R&D needs ongoing funding and growth driven by both the public & private sectors. This is currently poorly coordinated across different sectors and industry groups.
Achieving contestability & private sector involvement
- Contestability is about continuing to demonstrate that we are delivering our services in an efficient & effective manner.
- Substantial private sector involvement currently exists in the water sector, with some 50% of major supplies provided by the private sector. QLD has less take up of private involvement than other states.
- We need to determine how the private sector involvement can assist in areas that have traditionally had little attraction. This needs to include regional areas and utilities with high investment needs, conflicting with poor ability to fund.
- Private sector can bring new approaches, culture change, new technologies; improved asset management, international knowledge, investment and better managed the risk.
Asset Management & Efficiency
- Most organisations have a poor level of knowledge of their assets. After 20 years of asset management few standards in approach exist across the water sector.
- The driver for lower cost of service will continue to put pressure on organisations to get more from their current assets. The lack of availability of asset knowledge and skills restricts our improvement.
- Future asset issues will be around asset optimisation, adaptation, mitigation, resilience, big data management, systems approach & anticipatory governance
- Current benchmarking is poor and hence it is hard to compare organisations. We need the ability to compare at whole of organisation, business unit and function levels.
Customers
- Since the end of the droughts, customers have downgraded the importance of water and no longer recognise its value. This is associated with the industries out of sight out of mind approach.
- Water has been caught up in general price rises and customers are demanding the lowering of the cost of service, without any real understanding of what they are paying for.
- We need to restate our value proposition to our communities and have good feedback mechanisms to customers so they can modify behaviour.
- There is an increase in the monitoring of customers comments on social media and a decline in asking them what they think. We need to convert customers from users to advocates.
Regulation
- Most current economic regulation is about controlling political pressures. Economic regulations are often at odds with community regulation eg. Environmental and health regulation drives higher cost solutions.
- We need an economic framework, which addresses regulatory certainty, the whole of sector, the whole of government, customer engagement expectations, with proper establishment timeframes. It needs to cover issues of capital models, clarity on dividends & asset standards.
- It needs to be a flexible framework, set a med term price path, with low burden of compliance and to provide certainty to future investment in the industry.
Better Managed
Provides management consultancy service to water utilities and infrastructure providers including;
- Strategic Planning & Trend Analysis
- Strategic Outsourcing & Procurement Reviews
- Asset Management, Efficiency and Optimisation reviews & strategy
- Business frameworks, systems, policies, processes and procedures
Contact
David Nixon
Mobile: +61 4 1915 6986
davidn@bettermanaged.com.au
Only two weeks till #QWater13 Queensland
Only two weeks till #QWater13 Queenslands biggest Water Conference, great program, great networking! @AustralianWater http://ow.ly/q2YwW
RT @qldparllibrary: New Weekly Economic
RT @qldparllibrary: New Weekly Economic Indicators – Analysis of economic data on a National & Qld state level (12/08/2013) http://t.co/sSrvdBLhNU
At Brisbane airport heading to Darwin fo
At Brisbane airport heading to Darwin for #IPWEA13. Got some great trends affecting public works engineering for Tuesday @11am #100trends
Presenting at #IPWEA2013 next week. Offe
Presenting at #IPWEA2013 next week. Offering 50% specials on Strategic Trends & Planning Workshops #100trends @IPWEA http://ow.ly/nLXqO
How can Queensland’s LNP get the state finances under control & keep popularity?
How can Queensland’s LNP get the state finances under control & keep popularity? http://wp.me/p2g64Q-2e
I am sure there are several people in the LNP worried if they have taken the right track, getting the public sector finances under control and keeping the their popularity high.
They are on the right track, but once the downsizing is finished the job to make a more productive public service and do it in a popular way will have only just commenced. Getting productivity and support in the public service and keeping the voters on side can coexist.
Currently the approach is though downsizing the operations and management component and cutting services or programs. This approach only addresses a small component of the potential productivity savings and doesn’t go down well with the electorate. It is though important
Productivity gains can be made through improving the delivery of capital & operational expenditures both in the procurement and operational areas. To ensure the right services are being delivered we need to get the strategy and culture right.
The electorate will support the government when it can demonstrate that downsizing was only one component of the productivity drive, that the government is more effective and the government is delivering on its promised objectives.
These were;
- Grow a Four Pillar Economy based on Tourism, Agriculture, Resources and Construction
- Lower the Cost of Living for Families by Cutting Waste
- Deliver Better Infrastructure and Better Planning
- Revitalise Front Line Services
- Restore accountability in government
So what does the Government need to do next?
Finalise the downsizing
Change needs to occur quickly, with a purpose and be well managed. To date the changes have occurred quickly (for government) and the purpose is well understood. The Government needs to stick to its timetable and have all downsizing in place by the upcoming budget. The downsizing has rocked the culture of the public services and strategies need to be put in place to rebuild this.
Get the Strategy Right
This government has done what few others have. They came to power with a 100-day action plan, which was completed and have since published a 6-month action plan, which they intend to continually measure themselves on 6 monthly.
This next 6-month action plan needs to be cascaded through the departments to the staff. Each department needs to quickly develop their own strategic plan, taking in consideration the government objectives, the 6-month action plan and the purpose of the department.
This doesn’t need to be complicated and could be expressed as a vision / strategy poster. Then the most important part of achieving the strategy needs to occur. The actions of the strategy needs to be cascade as KPI’s to the DG, Executive and through to all staff members.
It is important that all members of the departments understand how they fit into the strategy. This cascading can have a few effects. You will find staffs that don’t appear to have a purpose in delivering the departmental strategy. This can be due to their roles being redundant or the strategy needing adjustment.
This can be done with minimal effort and over a couple of weeks and will have an extreme effect on the performance of the organisation.
Improvement the Management & Operations
When we look at improving performance we need to think about Edwards Demming, the father of quality. His quotes include “We should work on our process, not the outcome of our processes.” “The prevailing style of management must undergo transformation. A system can not understand itself. The transformation requires a view from outside.”
It will be important to undertake a systemic review of what we do, the inputs & outputs and challenge and review every component. Productivity is gained by changing the system, not working harder on it. This can be a quick and easy task, but can be rarely undertaken by those who have ownership of the tasks.
To admit that you can improve a process you are responsible for is to admit you have previously failed. These reviews need to address issues like;
- The mapping of key processes for delivery of services
- The delegations, approval and governance arrangements of projects and operations
- The services we provide and channels we provide them through
- How technology is affecting our services. Eg use of social media and ceasing use of faxes
It is well-documented that spending 10 percent of your time improving the systems you work on, provides immediate benefit to an organisation. If you use a consultant for this, pay them on a shared risk model. Ie no fee unless savings are realized!
Improve the Procurement
Procurement isn’t only on big capital projects. The government procures consistently and is regularly criticized for its procurement decisions. The actual and perception of its procurement can be improved substantially.
Every department should publish immediately following the release of the state budget a draft procurement strategy. This should be followed by industry consultation on the strategy including accepting alternative delivery methods prior to the details of the procurement being fixed. A monthly report should be issued by each department stating the current status and method of all procurement actions.
The procurement strategy needs to include an in-depth understanding of the potential providers and the intended risk profile of the procurement. Providers charge to accept risk, risks that are undefined or allocated to a party that cannot control then results in increased cost for nil benefit.
Government employees need ongoing training in procurement and how to ensure maximum benefit is gained from the market.
Build a QLD Government Culture
The culture of any organisation changes with a new CEO or management team. The change of government, substantial change in policy direction, replacement of many key officers and current downsizing has resulted in the biggest cultural change in years.
It is important that the new culture is defined and bedded down as soon as possible. Key actions that need to be undertaken include;
- Defining the strategy and cascading it through the organisation as discussed above
- Promotion of new values and focus
- Establish regular transparent communication throughout each department ie newsletters, briefings and one on one communication
- Three monthly review of KPI’s with all staff
- Promote internal good news, success and develop corporate stories
- Ensure recognition programs are in place
The adopting of these key issues will both see the success in improving the productivity of the public service and the recognition from the public that the current downsizing is good governance.
David Nixon is the Managing Director of Better Managed Pty Ltd that provides services in key person support, turnaround, corporate reviews, strategic planning, innovation & change management, both across businesses and within their projects.
David can be contacted on davidn@bettermanaged.com.au, via www.bettermanaged.com.au or add him on linkedin or Twitter on #bettermanaged
My thoughts #AICD – Fast, frictionless and disruptive; Hypereconomics and Australian business with Mark #Pesce #FutureSt & Bruce #Linn
My thoughts #AICD – Fast, frictionless and disruptive with Mark #Pesce #FutureSt & Bruce #Linn http://wp.me/p2g64Q-2a
• 4.5 Iphones sold per second
• A wave of business interruption occurring
• The change is irreversible but we don’t know what the full change is
• This means we can shape the change
• We all have multiple connected devices, but business hasn’t changed their business to cater for this
• We are connected to 5B people but we don’t have anything to say
• Need to pay notice of the signals coming out to the market, so we need to listen
• Smart phones are the fastest selling device in history
An Indian fisherman Story
• Indian Coast, many ports, many fisherman picked a port to sell fish at
• Some ports got too many fish and other not enough and hence high and low prices
• Mobile connection occurred and a fisherman went to the port that had less fish and hence got better price
• Months later the whole industry had connection and the port all served, maximising income to all.
• Phone paid back by all in months
An US Limo Company – Uber
• Need a booking for a limo as opposed to a taxi
• An app was developed for limos and customers
• Now has disrupted the taxi market across many cities
• Limo drivers doubled their income and up to 90% utilisation
• The capital cost a was minimal, no asset outlay, utilised an under utilised market, the limos
• Created a cheap business model with a great return
• Could work with logistics eg backloading
Kenyans – Kazi 560
• Poor African Country
• Can’t afford to be part of the job market
• But have access to the mobile phones
• Kazi 560 is an app to links job seekers with employers
• Low marketing costs, low search costs
• Becomes a connected market
Airtasker Australia
• Browse available work
• Connect labour and labour seekers via app
• Post work wanted, people respond and work awarded
• Could be used to get a lift from an airport when no taxis available, much the way it works in Russia, where every car is a taxi
Kick Starter
• Crowd Funding eg Kick Starter get capital when idea is launched and not when it hits markets
• Will change the approach of an IPO
SONY
• Currently suffering big time
• They lost touch
MICROSOFT
• Will they exist in the future
• If Windows 8 doesn’t work they will be irrelevant
• Area decade behind others
Vodaphone
• Skunworks
• Take a few people to innovate and huge company
• Mobile payment system in Kenya
• Mpesa a payment system was the result
• Money paid to shop, transferred via msm and recovered at another store
• 65% of country has an account
• The countries bank are suffering
• Created a financial system to the worlds poorest
Canada Mint
• MintChip
• Chip that holds funds and can transfer cash, but is not connected to banks
• Have invited developer to use the Mintchip
• Might challenge paypal and others
• Worth watch to see if it gets traction
•
The cornerstones of business (New Entry Forces)
• Time – In time and when committed, no late delivery
• Territory – Communication is no global, available everyway, but location services can only be sold locally
• Talent – Can teach most people anything, need talented people in companies, companies being brought for their people
• Trust – Only do contracts with those we can see and trust. If you are trusted people will work with you.
• Tongue – English is world language, but Mandarin and Arabic are billions. We need to be able to translate to work locally
• Tension – Some people don’t get along, need to understand and deal with this
What’s it all mean?
• No staffing, compliance and regulatory issues in online environment
• Low capital requirements
• If you don’t keep an eye on the movement you will lose
• Innovation coming out of the developing world
• India and Africa will out innovate the rest the world
• Banking is necessary but banks are not, lot of small organisations providing the services of banks
• Pull them together and have a virtual bank
• Traditionally we smother innovations as they are against the norm
• Innovations and productivity gain needs protection to get ahead
• Book “the Lean Startup” is a worthwhile read
• Organisations need to create many “spunkworks” projects
• Innovation without disruption does not work
• Businesses need to change today, Boom or Bust
Questions
• Directors need to have a pulse and understand what might hurt and what might be an opportunity in the future
• Biggest changes in Medical is coming out of India, they are building the things the US used to build
• Nano technology will not have a good effect for 10-15 years
• Will be able to 3D print tissues
• The effect of Crowdsourcing on professional services? Works well on advisory site. Room for people in an Consulting Bases??
• Need papers on how the connected world affects our organisations.
• Invest in Angel Investment
• Taxes / Customs / Approvals – A connected world will change how we do and control trade
BetterManaged 