Scottish Water is a public corporation owned by the Scottish government, responsible for the provision of water and sewage services in Scotland. Regulated by the Water Industry Commission for Scotland, it operates as a monopoly and is accountable to the Scottish government through a Cabinet Secretary. Scottish Water’s services are funded through a combination of customer revenues, reinvested surplus, and loans from the Scottish government.
Scottish Water serves some 2.6m households and 150,000 businesses with a daily volume of 1.52bn litres of clean drinking water, removing and treating some 1.1bn litres of wastewater. In 2021/22, the organisation’s regulated revenues and expenditures were £1.52bn. Of that amount, £621m was allocated to capital investment, and £152m to capital maintenance.
What struck VISION about Scottish Water was the sheer number of passionate and committed people working for the organisation. The deep care for service delivery manifests in a consistent prioritisation of water quality, health and safety. Their customers recognize and appreciate this.
In this context, the organization continues to be challenged – as are many water utilities in the UK – with the fact that it must accelerate the modernisation of infrastructure that often dates back to the Victorian era. For the period 2021-2027, the mandate is to invest £4.6bn in capital projects. This means that annual capital investment needs to ramp up from roughly £600m in 2020 to over £1bn by 2024/2025. Doubling staff was not an option. At the same time, recognizing that its costs were on average higher than that of its industry peers, the organisation set a goal to reduce non-direct construction costs from £0.78 per £1 construction to £0.65 per £1 direct construction costs. All of this must occur in a highly uncertain world, buffeted by the rapid onset of a rising number of extreme weather events, inflation, supply chain challenges, population changes, and net-zero and other environmental mandates. The pressure to do more with less is ever-present. Scottish Water saw a need to transform the way it delivered capital programs, because only with significant time- and cost-savings could it achieve what it has been asked to do.
VISION first introduced Scottish Water’s Mark Dickson, Director of Capital Investment at Scottish Water to one of the world’s largest semiconductor companies, to show how they had previously delivered a transformation at a manufacturing site in Ireland and to demonstrate the magnitude of improvement possible within Scottish Water.
Before VISION began working with this high-tech client, the spiralling cost of semiconductor fabrication factories threatened to price them out of the market. Budgets were in disarray,
talented staff were leaving, and there was a growing culture of mistrust and hostility around the construction of the site. The work that VISION delivered resulted in an overall reduction in construction costs of 30%. The client also reported an increase in value-added work productivity from 17% to 57%. These were the order of magnitude impacts required to transform Scottish Water’s capital investment operations, and to enable its people to rise to what needs to be done.
To bolster the Project 13 -like use of a single shared risk and reward contract for suppliers, VISION and Scottish Water agreed to improve the time – cost aspects of capital project operations, while maintaining a tight focus on quality, customer care, and environmental commitments.
It might seem like an odd place to start in the hard-nosed business of construction and infrastructure, but VISION brings a particular way of assessing operational efficiency, grounded in the insights of modern philosophy and cognitive psychology. Where others apply a recipe-book approach of process rationalisation and change, VISION identifies and tackles collaboration waste – what the Lean tradition calls “Unused Talent” – to drive out other wastes, and implements teaching/coaching/mentoring practices that improve the effectiveness of conversations for action. This sounds simple in principle but is not easy to implement, however it delivers big results.
Known for their Commitment-based Management™ programme, VISION amplifies and intensifies the power of lean construction principles to transform leadership, governance and cultural behaviour. They firmly believe that, in most organisations, more than 50% of the opportunity to improve productivity lies not in process and tools but in behavioural change.
By implementing a combination of Commitment-based Management™ and lean construction principles to transform leadership and collaboration practices in a series of early demonstration projects, VISION and Scottish Water produced project time savings of up to 72%, and cost savings of up to 66%. Across the demonstration project programme of work, cost savings averaged 36%.
The critical benefit and possibility? Reducing the amount of time and money on projects frees up those people and budget to take on new work, meaning that ultimately, customers of Scottish Water get new and better infrastructure faster, and greater value out of capital investment.
In most organisations, more than 50% of the opportunity to improve productivity lies not in process and tools but in behavioural change