Over £150 billion of capital has been invested in assets since the privatisation of the water and sewerage industry in England and Wales in the 1980s.
The industry is expanding by building high profile new assets, Water UK’s Briefing Note 3 (December 2018) points out that the water industry spends 42% of its turnover on capital and this is very large compared to other industries.
The less glamorous activity of replacing worn-out old assets is sometimes neglected. With many physical assets, for example dams or pipe infrastructure, it is notoriously difficult to find the right balance between major spending on replacement or rehabilitation and the rising risk of not doing so.
When the replacement time arrives, it is an opportunity to rethink says Stantec’s Principal Consultant Alec Erskine. Alec believes that this is the time for innovation by thinking flexibly and imaginatively about whether there are alternatives to a simple like-for like replacements.
Only by understanding the condition of our assets and therefore how likely they are to fail can we make tactical judgements about what we need to replace now, and the difficult strategic judgements about what we need to budget for the future.