Business Case Analysis for Water Utilities to Strategize & Achieve Grid Modernization

Business Case Analysis for Water Utilities to Strategize & Achieve Grid Modernization

State of the water industry
Water utilities are struggling to meet the demands of outdated infrastructure, changing workforce makeup, and the overall need to address inefficiencies in sourcing water. On the macro-level, population migration in suburbs and cities, reliability of water resources, rising customer expectations for real-time information, and increasing interest in water conservation plans are pressuring water utilities to target investments that drive operational and customer service improvements. As mentioned in “Will Donald Trump’s Infrastructure Plan Throw a Life-Ring to Water Utilities?,” the “America First Infrastructure Plan” aims to encourage new infrastructure investment, and specifically calls out the need to improve water infrastructure. What is the first step water utilities can take to improving their infrastructure?

Utility Modernization as a solution
Given the current state of the water industry, utility modernization is a strategy water utilities can use to target investments that will address a variety of industry challenges, including customer engagement, advanced metering infrastructure, data analytics, workforce, and distribution upgrades. The premise is to elevate performance through people, process, and technology enhancements that allow for resources to be allocated to higher value output.  To accomplish modernization, water utilities should evaluate the costs and benefits of initiatives then prioritize based on value and impact. During our latest webinar of the series, participating water utilities were able to gain insights on methods to identify, prioritize, and determine best value initiatives that drive modernization by beginning with a business case analysis.`

Business Case Analysis
As mentioned in our webinar, West Monroe Partners (WMP) helps utilities analyze and articulate a modernization strategy by beginning with Business Case Analysis (BCA) to establish feasibility, sensitivity, and value for identified initiatives. WMP’s modular and expansive tool can help utilities take a comprehensive approach that considers assumptions developed across more than 30 clients. Assumptions include a utility’s telecom, security, customer service, and meter data management systems vetted through experience and industry best practices. The vetting of assumptions allows the water utility to quickly model costs and benefits of numerous modernization scenarios.
At its core, the BCA tool quantifies both direct and indirect benefits that may be achieved through implementation of utility modernization initiatives. Direct benefits include operational efficiencies, reduced bad debt, deferred capital for maintenance, enhanced revenue from accurate metering, and reduced GHG from reduced truck rolls. Indirect benefits achieved through utility modernization include:
  • Improved customer service and internal processes improvement
  • Fewer billing disputes as customers gain access to data
  • Reduced shortage risks as conservation programs become more informed
  • Societal benefits of decreasing overall water wasted in the process
As a first step in a modernization strategy, the BCA provides a quantitative methodology to leverage for decision making.  When going through a comprehensive people, process, and technology transformation such as modernization, it is crucial to ensure your investments are targeted to the highest value initiatives.  The output of the BCA gives s a clear understanding of where the best cost – benefit value lies.  This understanding, layered with evaluation of impact to the utility, forms a basis for the modernization strategy roadmap. The roadmap then becomes that path a water utility will follow to ensure desired operational and customer service improvements are realized.
Have you taken the first step to assess your strategy for utility modernization?

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