Modernising Scotland’s Water Industry
Scottish Water recognised the need for a radical and innovative approach when it faced the challenge of delivering its Q&S II Capital Investment Programme from 2002 to 2006.
The water industry in Scotland has suffered from decades of under funding and neglect. Following the amalgamation of the three previous water authorities, Scottish Water inherited a large number of ageing assets, many originally built in the 19th century but were expected to serve the demands of 21st century living. Some were derelict; others were beyond economic or practical repair.
In 2002, 78 waste water treatment works failed compliance and 40% were deemed unfit for their purpose.
The infrastructure network of water mains and sewers was particularly bad with 60% of it being judged in poor or very poor condition. In 2001/02, decayed pipes led to 9,600 bursts.
In addition, given the scale of the construction programme, a more radical approach than had been seen before was required for managing health and safety. The construction industry in Scotland has one of the worst safety records in the UK. This factor alone had delayed delivery of projects in the past and involved costly claims.
Following a consultation exercise in 2001 by the Scottish Executive on Q&S II, it was established that £2.3 billion of investment in water quality and wastewater treatment was required in Scotland by 2006 to meet European Union regulatory standards. The Water Industry Commissioner for Scotland (WIC) advised that, by achieving economies of scale from a merged Scottish Water (achieved April 2002) and pursuing asset delivery as efficiently as elsewhere in the UK, the programme could be delivered for £1.8 billion. This would deliver a saving of £500 million for the customers of Scottish Water.
There were over 2,300 projects in the Q&S II Programme, all to be delivered in just over two-an-a-half years, a challenge some privatised English Water companies had taken ten years to achieve.
Scottish Water’s response was to set up Scottish Water Solutions – a new kind of capital investment delivery model.
