The UK Government (DSIT) has published an evaluation report into the c.£6.2 million “Fibre in Water” trial (Project TAWCO), which tested the deployment of fibre optic (FTTP) cables through a live water mains (used for drinking water) but, as we previously reported (here), ended up being stalled due to several issues.
Just to recap. The FiW project consisted of three phases (phase two was the physical build and phase three would have been live operation), with phase one – supported by a consortium led by Yorkshire Water – being broadly focused on researching the legal and safety aspects of the plan, as well as some survey work.
Phase One developed a potentially workable commercial model between the two industries, which sought to deploy a direct route using 8km of Fibre in Water and predicted that around 7,000 rural premises could benefit. But this was less than the original proposal (17km and 8,500 premises) because survey work revealed that a high number of private landowners along the route needed to be negotiated with and compensated for access.
However, the previous report noted that the decision to stop the trial before Phase 2 (build) mainly centred around three key issues – uncertainty around the best commercial model to adopt, the financial risk that only one small start-up has the capability of installing the cables and the somewhat crucial lack of Reg 31 (regulatory) approval from the Drinking Water Inspectorate (DWI). Some conflicts with the Project Gigabit contract for South Yorkshire also impacted their plan.
The final gov evaluation report, which was published on Friday, isn’t as detailed as the project’s own report from earlier in the year. But it does note that testing, done as part of the regulatory approval process, identified that the chosen installation method can “disturb the water flow, unsettling sediment at the base of the water mains causing it to be introduced into the drinking water supply … This could create significant risks to water quality.”
The report also notes that there existed a sole provider of the key technology needed to complete the project. For fairness of competition, the technology provider was excluded from consortia at the bid stage. However, the report notes that its government sponsors could have considered a greater emphasis on the risks, and associated mitigations, that a monopoly provider introduces to the technical feasibility of the project delivery. The delivery timeline was also viewed as being too ambitious and likely to have discouraged some bidders.
Summary of Lessons Learnt
Business case supporting Phase 1
For innovative projects that are considered to have a high risk of delivery, we recommend structuring the business case to identify the value for money of the independent phases of the project. If the project does not pass the gateway review at the end of Phase 1, then the realised benefits still return value for money to the funder. In part due to the uniqueness of FiW, there is no ready example of this approach successfully being implemented in a similarly complex project.
Understanding the requirements and barriers of building a competitive consortium
FiW received two applications, one of which did not meet the bid requirements by not including a water company within the consortium. The successful consortium required changes at the project start that included replacing key members of the consortium. Providing enough time and market engagement can aid applicants to build a competitive consortium and compile a winning bid. However, a greater consideration of the potential barriers to building a competitive consortium could offer more effective support to applicants and ultimately enhance the number of quality bids received.
Inclusion of a sole technology provider, if such a monopoly exists
For future projects that have a sole technology provider, allowing their inclusion within the project consortium post competition, could mitigate potential communication issues between the project team and the technology provider. This could also aid the alignment of incentives with the project outcomes.
More adaptive project structure
A majority of the project consortium noted that they would have liked a more adaptive project structure, to allow for adjustments to be made more efficiently during delivery. This reflects the innovative nature of the project, where flexibility was important in order to allocate resources to meet the desired outcomes. As partners learned more about the environment the project was operating within, particularly with respect to understanding the regulatory landscape, being able to reallocate resources more effectively may have helped overcome some of the challenges the consortium faced.
Early and clear communication during project inception with all key government departments
The project could have benefited from stronger communication links between departments in the early stages of the project to provide clear indication of responsibilities and level of involvement of project members. A clear delegation of responsibilities can be identified and agreed using a Ways of Working document.
Trial the technical solution in a closed system
Introduce a pilot of the solution that is not within the live drinking water mains but in a closed water system. Using the Innovation Fund, Ofwat have constructed the National Leakage and Test Research Centre, which is a 5km closed water system. This process could have gathered data on water leakage detection, cost of installation, and the durability of the technology without requiring immediate access to drinking water mains.
Separation of technical and commercial feasibility studies
Phase 1 of FiW included a feasibility study which covered technical and commercial concerns. We recommend structuring the project to require first a technical assessment followed by a gateway decision which, if passed, leads to a commercial feasibility study. This should allow for more focus and resources to be directed towards each element in turn and allow more accountability within the project delivery team, across both the consortium and government sponsors.
Include regulatory expertise in the consortium or commissioning team:
The consortium had a vested interest in understanding the details of Regulation 31 and the requirements for approval. Including regulatory expertise within the consortium, for projects involving regulation of drinking water infrastructure, would help navigate the regulatory landscape and mitigate some of the risks surrounding technical feasibility.
At the end of the day this was an interesting project, albeit one that doesn’t seem as if it will be going any further and, even if it did, then a solution would likely end up arriving too late to have much of a positive impact upon the government’s gigabit broadband targets.