1. New Decade - New Challenges Annual Conference September 2010 Water Services Training Group 14 th Annual Conference New Decade – New Challenges 9 th September 2010

2. New Decade - New Challenges Annual Conference September 2010 WSIP 2010-2012 Implementation Maria Graham Principal Officer Water Services Investment Section, DoEHLG

3. Key features of WSIP 2010-2012 Scale of Programme €1 billion underway €1.8 billion contracts to commence (340 contracts) 190 schemes in planning Presented in River Basin District format Focus on contracts in medium term Integration of water conservation - €321m contracts to commence Annual Review

4. Framing the priorities for 2010-2012 Setting programme priorities Water conservation Environmental objectives ECJ judgments Environmental & public health compliance Economic objectives – works to support sustainable development of hubs and gateways & strategically located areas & employment creation in line with Smart Economy report Assessment process Assessment by Water Services Authorities of projects not substantially advanced in 2007-2009 period against these priorities. Subsequent evaluation by Department.

5. Key inputs… WSIP 2010- 2012 Assessment of Need EPA – Drinking water, Urban Waste Water Reports Work on RAL and waste water priorities NSS/ Developing areas Shellfish Pollution Reduction Plans Freshwater Pearl Mussels Plans Forfas Reports – Enterprise needs of Gateways and Hubs River Basin Management Plans: priorities for first cycle

6. Schemes/contracts excluded Did not rate sufficiently highly as contract/scheme … Did not feature highly on public health/ environmental grounds Involved plans for water supply capacity increases not justified by immediate economic need or progress on water conservation; Involved plans for increased waste water treatment capacity not reflected in waste water treatment priorities in first cycle of river basin management plans or other environmental priorities; Scope of proposal impacting on affordability;

7. WSIP 2010-2012 €1.8 billion of contracts to commence Waste Water Infrastructure - €1 billion Water Supply Infrastructure - €800m

8. Infrastructure Investment priorities 2010-2016  Published by Dept of Finance in July 2010  Water Services - Almost €3.5 billion in Exchequer resources over the period 2010-2016  Report acknowledges progress made – but focuses on future issues –  satisfying demand in critical centres for industrial & commercial development to aid recovery;  tackling high levels of unaccounted for water and  achieving full compliance with directives. New Decade - New Challenges Annual Conference September 2010

9. Infrastructure Investment priorities 2010-2016 New Decade - New Challenges Annual Conference September 2010 “ The new funding level will amount to a very substantial sum in real terms, given reduced tender prices..” Infrastructure Investment Priorities 2010-2016 (D/Finance- July 2010)

10. Infrastructure Investment priorities– Anticipated outcomes by 2016  Make “major in-roads” in addressing deficiencies in water infrastructure particularly in hubs & gateways;  100% compliance with Urban Waste Water Directive – (from 2009 base of 92%);  100% compliance with drinking water standards;  Average level of unaccounted for water to be reduced from 43% to 33% New Decade - New Challenges Annual Conference September 2010

11. Local authority financing (1)  Measures to address changed financial climate  Alignment of WSIP 2010-2012 with available resources  EPA Remedial Action List (RAL) – water pricing deferred to later contracts to facilitate early delivery  Mechanism for dealing with sunk costs on discontinued schemes (Circular L4/10)  Additional resources being devoted to final accounts in 2010  Borrowing  Approved allocations of €144m in 2010  Allocations sufficient to cover demands for completed works & works in progress New Decade - New Challenges Annual Conference September 2010

12. Local authority financing (2) Achieving a sustainable funding mix  RAL – generally 100% funding  Water conservation – generally 90% funding  Other contracts/schemes – need to ensure appropriate project scope and avail of beneficial market conditions  Continue to work with CCMA on issues arising. New Decade - New Challenges Annual Conference September 2010

13. Implications of move to contracts focus Contract = substantial advance, treatment plant Civil, Treatment plant M&E, Treatment Plant DBO, Network Civil, Network M&E, Pumping contracts (Circular L6/09 para. 6) Approved Budgets Application of Water Pricing Planning of Projects Programme/Project Management Annual Review

14. Approved Budgets  Planning stage:– budget covers cost to approval of PR and share of water pricing to be recouped from subsequent contracts;  Construction/Procurement:- budget details at two levels  Scheme ( or phase of scheme) level  Contract level reflecting both relevant contract & non- contract costs - water pricing will apply at this level (on bottom line basis)  WebPCS being adjusted to allow for these changes New Decade - New Challenges Annual Conference September 2010

15. Project financing – water pricing application to contracts New Decade - New Challenges Annual Conference September 2010 Scheme StageApproved Cost Water pricing WSA share (20%)Approved Grant Cumulative share of costs borne by Dept at end of each stage. Planning stage€2m €2m (with €0.4m to be recouped over the procurement/ construction phase) 100% Procurement/ Construction stage (€18m) Apportionment of planning costs across contracts (pro-rata share) Application of 20% to contract cost & pro-rata share of planning costs Contract 1 (including non- contract costs) €2m€0.222m€0.444m€1.556m 89% Contract 2 (including non- contract costs) €7m€.0.778m€1.556m€5.444m 82% Contract 3* (including non-contract costs) €4m€0.444m€0.889m€3.111m 81% Contract 4* (including non-contract costs) €3m€0.333m€0.667m€2.333m 80% Contract 5* (including non-contract costs) €2m€0.222m€0.444m€1.556m 80% Total€20m€16m (80%) * Construction post 2012 – illustrative example from Circular L4/10

16. Planning  Preliminary report  Critical appraisal tool – determining scale, scope and phasing of project;  Need broad vision to guide the incremental approach  Set in River Basin Management Plan context – need to look at opportunities for cross boundary synergies/economies of scale,  Reduce the need for “design reviews”  Aim - to have appropriate contracts ready to go for next investment cycle. New Decade - New Challenges Annual Conference September 2010

17. Programme/project management  Driving the programme  Need to use the “project steering group” meetings as “programme steering groups” to drive local programmes;  Determine key milestones at project level and monitor any slippage and address;  Be guided in implementation by WSIP priorities – quality, compliance and economic recovery;  Project management staff New Decade - New Challenges Annual Conference September 2010

18. Annual Review Review progress at end of each year of operation to allow for re-prioritisation; Review in line with programme priorities but will take account of new issues emerging – Remedial Action List (RAL), licensing/ certification etc RAL – call for proposals in Summer 2010 for small scheme funding.

19. Implementation - Future Trends  VFM study  Review of WSIP 2007-2009 with outcome to inform implementation of WSIP 2010-2012;  Due to be finalised in Autumn;  Steering group involving D/Finance and CCMA;  Terms of Reference to look at efficiency and effectiveness of overall investment & project delivery; New Decade - New Challenges Annual Conference September 2010

20. Implementation - Future Trends  Project scale -  Use of small schemes funding to complement overall priorities  Bundling and DBO :  “continued use of DBO” – Local Government Efficiency Review Group recommendation;  Consideration of bundling projects based on common compliance considerations as well as geographical proximity.  Clarity on overall strategy and contribution of individual contracts to delivering on outcomes New Decade - New Challenges Annual Conference September 2010

21. Economies of scale – waste water DBOs New Decade - New Challenges Annual Conference September 2010

22. Economies of scale –water DBOs New Decade - New Challenges Annual Conference September 2010

23. Implementation - Future Trends  Performance measurement  Greater definition of outcomes expected rather than output only - eg number of schemes/contracts completed  Shared services  Potential being considered in VFM study drawing from existing examples;  Governance issues being considered in context of implementation of River Basin Management Plans  Local Government Efficiency Review Group recommended – “enhanced regional office approach should be developed at river basin level for: - infrastructure delivery and implementation of river basin management plans…..” New Decade - New Challenges Annual Conference September 2010

24. Conclusion  Substantial Exchequer resources available over the coming years;  Opportunity to make major impact on water services infrastructure;  Priorities have been set;  Need to demonstrate success in terms of improved compliance, water conservation and security of supply if projected funding level is to be maintained. New Decade - New Challenges Annual Conference September 2010