Published 22/03/2024
Wellington Water Response to Contract Optimisation Review Conducted by FieldForce4
In May 2023, Wellington City Council (WCC) decided to invest an additional $2.3m into fixing more leaks in the WCC drinking water network. This additional funding came with the condition to undertake a review of Wellington Water Limited’s frontline operations.
Wellington Water has been provided with both a final version of an Executive Summary and a redacted final version, but not the full document, of the detailed Contract Optimisation Review (the “report”) conducted by reviewer FieldForce4 at the request of WCC.
Wellington Water does not accept the report and is unable to approve or sign off on the report’s recommendations.
This webpage sets out Wellington Water’s summarised response to the review. You can read the full response here.
Background
Wellington Water’s CE agreed with WCC to undertake this review as a condition of receiving the addition investment from WCC, “noting we look forward to getting underway with an initiative that benefits both of our organisations.”
Wellington Water and WCC agreed a Terms of Reference for the review which included a scope. However, the scope provided by WCC to FieldForce4 in the Statement of Work (SOW) was not the Terms of Reference agreed to by WCC and Wellington Water. Wellington Water provided feedback to WCC that the scope of the SOW was too wide-ranging and strayed into organisational structure and contract specifications. Despite this feedback, the SOW was not updated to incorporate this feedback nor to align with the scope of the review as agreed by WCC and WWL in the Terms of Reference.
Concerns with the report
Wellington Water provided extensive feedback to reviewers on the draft report throughout the review process. The final report did not address the concerns set out in the feedback.
The attached document lists Wellington Water’s concerns with the report. Examples include:
- The report suggests major organisation change (such as moving the customer first point of contact from WCC to WWL) as well as additional reviews of other parts of Wellington Water.
In 2020, the WCC Mayoral Taskforce on the Three Waters was established to investigate the condition, funding and management of the network, and to develop recommendations for its future. The Taskforce Report concluded that “tinkering is not going to cut it. Transformational reform is required.”
It is already recognised in the region that this change will need to come through water reform and a potential new regional CCO model under development.
2. One of the key reasons for keeping the Terms of Reference tight was to minimise the impact on our staff who were already stretched, focused on significant priorities such as helping the region to manage a potential water shortage, and dealing with the uncertainty of the reform process.
3. The report does not acknowledge the role of the Wellington Water shareholders or the governance role of the Wellington Water Committee. The changes proposed impact all shareholders who are, like Wellington City, also customers of Wellington Water. The other councils were not included or consulted in the process.
4. There are some overstatements and recommendations that are not backed by evidence. For instance, the report gives an assessment of the capital delivery programme, yet neither the GM responsible for capital delivery nor any of her staff were interviewed or consulted in the review process.
5. The report does not provide options or analysis. It proposes a new way of operating without assessing the potential costs and productivity impact. The Alliance was procured in a competitive procurement process and Wellington Water believes the Alliance is fit for purpose for the highly complex, high risk work we do. Now that a move to a new water reform entity is uncertain, Wellington Water will review the Alliance (among its other key contracting arrangements) to ensure it remains fit for purpose and provides value for money.
6. The report states that the Management Service Agreement between Wellington Water and WCC lacks performance measures. However, Wellington Water sets performance measures each year through its Statement of Intent, in response to the Letter of Expectations from its shareholders. The current Statement of Intent contains 16 measures.
It is also required to meet 25 mandatory performance measures set by the Department of Internal Affairs, 5 additional Long-Term Plan measures set by WCC, and must also comply with and report against 250 Drinking Water Quality Assurance Rules set by Taumata Arowai.
7. The report contained no practical recommendations for new operational efficiencies. Some system improvements were suggested, but these are things that Wellington Water shared with the reviewers and are either underway or are planned but not currently funded by the shareholders to implement.
Conclusion
As an organisation Wellington Water is always looking for improvements to the way it runs its operations in order to be efficient and achieve the best outcomes for its shareholders and the residents of the region. Wellington Water had welcomed the review but unfortunately the report missed the opportunity to focus on operational improvements.
We are not averse to adding performance measures provided that:
- The measures are agreed to by all our shareholding council customers,
- They drive the right behaviour (for example balance customer experience with keeping costs down), and
- Targets are set at a level the shareholding councils can afford.
In the meantime, WWL remains focused on its priorities:
- Supporting our people through water reform,
- Providing the region with sufficient safe drinking water,
- Improving the performance of our Wastewater Treatment Plants, and
- Delivering the capital programme.
This is on top of our urgent and short-term goals of responding to a potential water shortage this summer, finding and fixing as many leaks as possible, and providing councils with long-term planning advice.