Irish Water - Commission for Regulation of Utilities · Figure 1: Target Operating Model Proposal. 6 | Irish Water CER TOM Submission The TOM is based on a High Performance Utility

Irish Water

Target Operating Model

Interim Price Control Submission 2014-2016 Document No: IW-IPC-007

2 | Irish Water CER TOM Submission

Contents

1 Irish Water Organisation Structure 5

1.1 Executive Summary 5

1.2 Objectives of the TOM 6

2 Functional Definition 7

2.1 Introduction 7

2.2 Leadership Structure 7

2.3 Employee Headcount for 2014-2016 9

2.4 Evolving Needs of IW 9

3 Work & Asset Management 13

3.1 Introduction 13

3.2 Asset Management (Payroll Functions) 14

3.2.1 Asset Strategy & Sustainability 15

3.2.2 Asset Investments 15

3.2.3 Asset Programmes 16

3.2.4 Business Solution Delivery 17

3.3 Asset Management (Non-Payroll Activities) 18

3.4 Capital Delivery (Payroll Activities) 20

3.5 Capital Delivery (Non-Payroll Activities) 21

3.6 Operations & Maintenance (Payroll Activities) 21

3.6.1 Water & Waste Water Regional Operations 21

3.6.2 Operations Support Services 22

3.6.3 Operational Planning and Control Centre Management 23

3.6.4 Workflow Management 24

3.7 Operations & Maintenance (Non-Payroll Activities) 25

3.8 Technical Advisory Service (Payroll Activities) 27

3.9 Technical Advisory Service (Non-Payroll Activities) 28

3.10 WAM (Payroll and Non Payroll Costs) 28

4 Customer Operations 30

4.1 Introduction 30

4.2 Customer Experience and Strategy (Payroll Activities) 31

4.3 Customer Service (Payroll Activities) 31

4.4 Billing and Payments (Payroll Activities) 32


4.5 Customer Operations Support (Payroll Activities) 33

4.6 Customer Operations (Non-Payroll Activities) 34

4.7 Customer Operations (Payroll and Non Payroll Costs) 35

5 Support Services 36

5.1 Introduction 36

5.2 Finance (Payroll Activities) 37

5.2.1 Accounting & Reporting 37

5.2.2 Project Finance 39

5.2.3 Financial Planning 40

5.3 Commercial & Procurement (Payroll Activities) 41

5.4 Regulation (Payroll Activities) 42

5.5 Information Technology (Payroll Activities) 43

5.6 Human Resources (Payroll Activities) 45

5.6.1 Employee Relations 45

5.6.2 Learning and Development 46

5.6.3 HR Operations 46

5.6.4 Business Change 47

5.7 Corporate Services 48

5.7.1 HSQE 48

5.7.2 Legal 50

5.7.3 Communications 51

5.7.4 Administration 53

5.8 Support Services (Non-Payroll Activities) 54

5.9 Support Services Uncontrollable Costs 60

5.9.1 Insurance 61

5.9.2 CER Levy 62

5.9.3 EPA Licence fees 62

5.9.4 Commercial Rates 62

5.9.5 Irrecoverable VAT 62

5.10 Support Services (Payroll and Non-Payroll Costs) 63

6 Market Based Reward Model 66

6.1 The move to a Market Based Pay Agreement 66

6.2 Performance Management 67

6.3 Governance 67

7 Summary 69


Appendix A 72


1 Irish Water Organisation Structure

1.1 Executive Summary

The Irish Water (IW) Target Operating Model (TOM) describes the business

capabilities and processes within Irish Water (IW). It is made up of a number

of key elements that define the functions, structures and processes that IW

will need to effectively carry out its business activities. The IW TOM has

been designed to operate a full suite of business capabilities and efficiently

integrate IW practices within Bord Gáis Éireann (BGÉ).

The TOM has been designed to leverage the best of, and add value to, the

existing water services sector in Ireland and to drive benefits for IW’s

customers. The organisation’s structure has been designed to accommodate

the partnership between IW and the 34 Local Authorities (LAs) to deliver

water services on the ground. This structure will enable local, regional and

national operations to be a carried out in an efficient manner. It also

recognises and addresses administrative and geographic realities of the

water sector and its dispersed nature. The TOM Proposal is outlined in

Figure 1 below.

Figure 1: Target Operating Model Proposal.


The TOM is based on a High Performance Utility Model (HPUM). This is a

best practice utility model encompassing organisational structure, associated

business processes and enabling systems. At the core of the model for IW is

the Asset Management and Customer Operations function, which drive all

other activities within the business.

The implementation of the HPUM in IW will ensure that the organisation is

managed to best-in-class utility structures and standards as a vertically

integrated operation. The TOM design was completed over an 8 week period

from December 2012 to February 2013. Planning involved the expertise of

business stakeholders from across the Irish Water Programme (IWP),

nominated representatives from the Department of Environment, Community

and Local Government (DECLG) and the LAs to ensure broad consultation

during the design process.

1.2 Objectives of the TOM

The key objectives of the TOM are to define how people, technology,

processes and governance interact together to deliver a fit for purpose utility

that will provide safe, clean and affordable water services to IW customers.

The TOM will allow IW to:

(a) Plan and invest wisely in improved national water infrastructure to meet

present and future needs of customers;

(b) Implement systems and processes that best manage the national water

services infrastructure; and

(c) Reduce costs by improving operational performance to the best

standards of other water service utilities, under similar timelines. IW

anticipates that full implementation of the TOM will be complete by the end

of 2016.


2 Functional Definition

2.1 Introduction

The functional structure is a core component of the IW TOM. It outlines how

IW capabilities will be organised into functions and the activities that each

function will be accountable for. The key functions, and their respective sub-

teams, within the IW TOM are:

Work & Asset Management

o Asset Management

o Capital Delivery

o Operations and Maintenance

o Technical Advisory Service

Customer Operations

o Customer Experience and Strategy

o Customer Service

o Billing and Payments

o Customer Operations Support

Support Services

o Finance

o Commercial & Procurement

o Human Resources

o Business Change

o Regulation

o HSQE

o Legal

o Corporate Services

o IT

2.2 Leadership Structure

Figure 2 is a graphical illustration of the leadership structure within IW.


Figure 2: Leadership functions within IW.


2.3 Employee Headcount for 2014-2016

The Water Services Act 2013 (No. 2.) transferred the responsibility for the

delivery of water and waste water services to IW. As noted above the TOM

was developed between late 2012 and early 2013, prior to the Water

Services Act and was based on a number of assumptions regarding the

initial staffing of IW, outlined below.

Asset Ownership

The approach to the transfer of asset ownership would see all water

services assets transferred to IW by January 2014. Assets did not

transfer to IW on January 1st, 2014, however IW expect that asset

transfer will take place at intervals during the Interim Price Control

period.

Customer Billing

In October 2014 IW would become responsible for the billing of

approx. 1.8m public water service users across the country.

Service Level Agreements

Service Level Agreements (SLAs) would be put in place between IW

and the 34 LAs to operate and maintain the IW assets, by utilising the

skills and capabilities existing within the LAs.

2.4 Evolving Needs of IW

The projected headcount for IW for the Interim Price Control period (October

1st 2014 to December 31st 2016) (the ‘Period’) has been designed to align

with the major milestones of the organisation. The two notable milestones for

this period are the billing of domestic customers in October 2014 and the

roll-out of IT systems across the water services network in 2015 and 2016.

The headcount for IW at the start of 2014 was 167 Full Time Equivalents

(FTEs); the headcount is expected to rise to 747 FTEs by the end of 2016. It

is evident from the projected headcount in Figure 3 below that significant

increases in FTEs reflect the two major milestones outlined above.


The first increase will be in Customer Operations FTEs to meet the

requirements for domestic customer billing, including a customer validation

programme, customer analytics, marketing, and customer service. FTEs in

Support Services will also increase during this time. Support functions, such

as Finance, IT, HSQE and HR will require increases in headcount to allow

the organisation to ‘stand-up’ in an efficient manner and meet statutory and

regulatory requirements.

Figure 3: IW Projected Headcount 2013–2016.

The second stage covers the Work & Asset Management (WAM) functions in

IW. An increase in FTEs during the Period will be on a phased basis to

accommodate the roll out of various WAM IT systems to the LAs and the

network, including GIS, Maximo, telemetry alarms and SCADA, systems.

As IT systems are deployed, the WAM Team will need to grow to

accommodate the collection and analysis of the returning data. IW did not

consider it appropriate to hire the required levels of FTEs to support WAM

during the initial start up period of the company, without the required IT

50 79 89 89

70

362 459 460

47

184

198 198

0

100

200

300

400

500

600

700

800

End of 2013 End of 2014 End of 2015 End of 2016

MD &SS

WAM

Cust.Ops


systems being first in place. Therefore recruitment will be carried out in

phases to mirror the deployment of these essential IT systems and the

collection of data.

Phased recruitment will provide IW with the opportunity to ensure that new

hires fit effectively into the TOM structure and meet the developing needs of

the business. This is an efficient approach to properly ‘standing up’ the IW

TOM. The planned teams, and the respective projected headcounts across,

are outlined in more detail in subsequent sections. Figures 4 and 5 outline

the projected IW headcount for 2013-2016, by geographical area and

function.

Table 4: IW Headcount by Geographical Area 2013-2016.

141

426

482 483

8

69 88 88

7

60 87 87

11

70 89 89

0

100

200

300

400

500

600

700


Dublin HQ

North &West

East &Midlands

South

167

746 747

625


Projected headcount by Function

End 2013 End 2014 End 2015 End 2016

Asset Management, Capital Delivery & Technical Advisory

35 155 231 232

Operations & Maintenance

35 207 228 228

MD &Support Services 47 184 198 198

Customer Operations 50 79 89 89

Total 167 625 746 747

Figure 5: IW Projected headcount by Functional Area 2013-2016.


3 Work & Asset Management

3.1 Introduction

The Work and Asset Management (WAM) function within IW is responsible

for the delivery of safe, responsive, reliable and sustainable water and waste

water services. This will be done through effective management and

development of the water and waste water assets. The capability is divided

into four main functional areas: Asset Management, Capital Delivery,

Operations & Maintenance and the Technical Advisory Service. The

projected headcount for WAM across the Period is outlined in Figure 6

below, while a functional breakdown is outlined in Figure 7.

Figure 6: WAM Capability Headcount 2013-2016.

70

362

459 460

0

100

200

300

400

500


WAM


Headcount by Function End 2013 End 2014 End 2015 End 2016

WAM

Asset Management 33 135 210 210

Capital Delivery 0 14 15 16

Operations & Maintenance 35 207 228 228

Technical Advisory Services 2 6 6 6

Total Headcount 70 362 459 460

Figure 7: WAM Capability projected headcount by Function 2013- 2016.

3.2 Asset Management (Payroll Functions) The Asset Management function will bring a new focus to managing the

asset base of the water and wastewater system in Ireland. Driving efficiency

and increasing the performance capacity of the system will also be a key

focus of the function in the coming years. Integrated asset management

based decision-making will represent a radical change from the previous

provision of water services in Ireland. Previous to the establishment of IW

investment decisions were fragmented across the 34 LAs; the level of asset

data was limited and asset maintenance tended to be reactive, rather than

planned.

The introduction of best practice asset management during the Interim Price

Control period will result in major benefits, including reduced risk from the

existing and new asset bases. As noted above, it will also allow for more

focused and better targeted investment that will provide better value to IW

customers. At a general level the TOM structure will facilitate coherent data

analysis and better decision-making that can be shared across the IW

organisation.


The Asset Management function is made up of the following sub groups:

Asset Strategy and Sustainability, Asset Investments, Asset Programmes

and Business Solutions Delivery.

3.2.1 Asset Strategy & Sustainability

The Asset Strategy and Sustainability Team is responsible for the definition

and continuous development of asset policies and investment strategies to

guide the investment plans of IW. In addition, the team will be responsible

for the development and maintenance of asset standards and an asset risk

management framework. The team will also provide reporting services on

behalf of the Asset Management function, Operations and Maintenance, and

other IW teams.

Key accountabilities for the team during the Interim Price Control period

include:

Managing asset information, including the development and

management of the IW information strategy, ensuring appropriate

data governance and managing data provision, ensuring compatibility

with data modelling and the analytical needs of the business;

Defining and implementing policy standards agreed with key

stakeholders, ensuring all other asset policies and standards are

compliant with IW requirements;

Developing and maintaining the asset standards and asset risk

management framework; and

Managing asset information relating to regional data transfer and

supporting regional based asset strategy and information capabilities.

3.2.2 Asset Investments

The Asset Investments Team is responsible for governing the investment

portfolio of IW, taking over the current Water Services Investment

Programme (WSIP) from the DECLG and integrating the revised programme


details agreed with the two Regulators (CER and EPA) for the Interim Price

Control Period.

Key accountabilities for the Team during the Interim Price Control period

include:

• Managing the investment approval process via the Water Investment

Approval Committee (WIAC);

• Ensuring that all future investment stakeholders are informed and

engaged as part of the WIAC;

• Developing and applying prioritisation rules relative to business

objectives;

• Understanding and assessing the cost/benefit case of investment

options for medium and long term IW investment plans;

• Confirming budgets; ensuring that they align to functional and

regulatory requirements;

• Establishing the business criteria and reviewing business case

submissions for individual projects; and

• Conducting post-investment review to enable refinement of the

planning process.

3.2.3 Asset Programmes

The Asset Programmes Team is responsible for managing capital

programmes and projects through numerous stages from concept to

delivery. In addition, the Asset Programmes Team is responsible for the

management of new connections to the public water services network. The

Team’s responsibilities also include converting investment plans into

programme deliverables that meet IW’s strategic objectives. The Asset

Programmes Team will have both a central and regional presence.


include:


• Overseeing the management of project planning, design, estimation

including all relevant statutory processes, procurement management

and maintenance forecasting. This will involve working closely with

the IW Capital Delivery Team and the Operations & Maintenance

(O&M) Team;

• Converting investment plans into programmes that are capable of

effective delivery through planning, design and construction stages;

and

• Managing connections and developer services across the public

water services network, including overall responsibility for planned

development needs agreed with the Assets Strategy Team.

3.2.4 Business Solution Delivery

The Business Solution Delivery Team will work as a key point of contact

between the IWP and IW to oversee the effective design and delivery of the

WAM system and processes to meet the requirements and expectations of

the IW business. The Team will be responsible for supporting and advising

Asset Management, Capital Delivery and Operations & Maintenance with

regards to the adoption and implementation of new processes and system

optimisation.


include:

• Managing and overseeing the effective design and delivery of the

WAM system and processes to meet the requirements of the

business;

• Managing the business stakeholders and ensuring they are informed

on the status, issues and decisions impacting on their business area

and drive consensus and resolution of issues;


• Guiding and supporting the IW Senior Management Team through all

phases of programme delivery to ensure that they are well positioned

to take over responsibility from the IWP at an agreed point in time;

• Ensuring the IWP provides all necessary support to the Asset

Management, Capital Delivery and Operations & Maintenance Teams

to facilitate the effective establishment of related functions;

• Overseeing the implementation, adoption and optimisation of the new

systems across the teams;

• Managing business issues and queries relating to Asset

Management, Capital Delivery and O&M and driving solutions through

to resolution;

• Monitoring performance and ensuring infrastructure and architecture

meets IW business requirements; and

• Ensuring that processes are continuously reviewed, optimised and

effectively implemented across the teams.

3.3 Asset Management (Non-Payroll Activities)

As noted above Asset Management is made up of the following functions,

Asset Strategy and Sustainability, Asset Investments, Asset Programmes

and Business Solutions Delivery. It is proposed that the key accountables

within each of these areas will be delivered through the work of the team

members, in combination with the provision of professional services. These

services make up the entire projected Asset Management non-payroll cost

for the Interim Price Control period.

Under the Water Services Act 2013 (No. 2), IW is tasked with producing a

forward-looking 25 year Water Services Strategic Plan (WSSP). The plan

must contain a number of defined sections, including how IW intends to

address deficiencies in areas such as drinking water quality standards and

projected demand for water services over the 25 year forecast period. The

long-term nature and wide ranging scope of the WSSP in combination with

the fact that this is the first time such a plan has been developed for water


services across Ireland, means that IW will require some level of

professional support in the drafting and finalisation of the plan.

The Asset Management Team also intends to undertake a ‘Critical Assets

and Asset Data Aggregation’ study during the Period. One of the significant

challenges that IW faces is a lack of detailed information on critical asset

condition and performance of water services. Data capture for the critical

assets of the waste water collection network will be particularly challenging,

as this will require physical surveying for asset location, type and size and

CCTV survey for asset condition. Professional services will be needed to

help IW carry out this study that will provide information on critical assets,

which will in turn aid the completion of future submissions to the CER.

As detailed in the Capital Investment Plan, Ireland is facing European Court

of Justice (ECJ) proceedings in relation to current EU Directives, such as the

Urban Waste Water Treatment Directive (UWWTD). A high-level workplan

has been prepared by IW to provide a basis for discussions with the EU

authorities and the Environmental Protection Agency (EPA). A key output of

this plan will be a medium to long-term roadmap to address Ireland’s urban

wastewater treatment non-compliance, at the least cost implications for the

water services customer. The workplan will require a number of different

workstreams supported by the provision of professional services, e.g. the

development of IW’s catchment analytical and modelling capabilities for the

licensing of treatment plants.

Considering the structure of water services provision in Ireland before the

establishment of IW, harmonisation of areas such as asset standards and

policies will be key to driving savings in water services provision. The

harmonisation of such standards, with the help of professional services, will

allow IW to deliver benefits to the customer through improved service quality

and efficiency of service delivery.


3.4 Capital Delivery (Payroll Activities)

The Capital Delivery function is responsible for the overall management and

construction delivery of both the IW water and waste water capital

programmes. This includes monitoring progress against plans, risk

mitigation, programme change control, supply chain management,

coordination with service providers, health and safety compliance, liaising

with customers impacted by the delivery of services and ensuring adequate

data capture and documentation.

The Capital Delivery team will work closely with the Asset Management

Team to test the feasibility of investment options, and the O&M team to

ensure successful transition to business as usual and the commissioning of

assets. Capital Delivery is made up of three main functions: Water Capital

Delivery, Waste Water Capital Delivery and Capital Delivery Specific

Projects.


include:

• Responsibility for the delivery of identified water and wastewater

capital programmes, with a focus on the construction delivery, budget,

schedule and output to meet agreed specification;

• Ensuring effective project close-out activities, including

commissioning and handover to the O&M Team for operation;

• Refining work packages and allocate to contractors in line with plan

and survey assessments;

• Providing regular and detailed status updates on programmes

delivery to IW management, including progress, risk, risk mitigation,

earned value etc.;

• Ensuring quality assurance of work undertaken/delivered, e.g.

challenge and approving vendor design and estimates, ensuring


technical compliance with standards and procedures, and health and

safety audits; and

• Ensuring technical assurance for the delivery of water and waste

water capital programmes.

3.5 Capital Delivery (Non-Payroll Activities)

There are no projected non-payroll Opex activities for the Interim Price

Control period. As the Capital Delivery Team is responsible for the overall

management and construction delivery of both the IW water and waste water

capital programmes, all non-payroll activities will be capitalised. These

capitalised costs are included in the IW CIP for 2014-2016.

3.6 Operations & Maintenance (Payroll Activities)

The Operations and Maintenance function is responsible for a number of key

tasks within IW including the definition of O&M planning and standard

operating procedures, monitoring and mitigation of operational risk, planning,

liaising with the EPA, supply chain optimisation and the coordination of

major events. O&M is made up of the following functions: Water and Waste

Water Regional Operations, Operations Support Services, Operational

Planning and Control Centre Management and Workflow Management.

3.6.1 Water & Waste Water Regional Operations

The Water and Waste water Regional Operational Team is responsible for

executing and maintaining treatment, network and plant operations for both

water and waste water at a regional level. The Team is also responsible for

managing the overall provision of services via the SLAs with the LAs, Design

Build Operate (DBO) contracts or other 3rd party service providers. The

Team includes water and waste water engineering inspectors to ensure

quality service is undertaken on the network.



include:

• Managing and governing the provision of water and wastewater

services within the specified regions via the SLAs or 3rd party service

agreements;

• Providing operational input into the regional plans developed by Asset

Management;

• Managing the water conservation, mains rehabilitation programme,

and connections to water networks across the regions;

• Planning and overseeing Waste Water Network Operations, including

oversight of exfiltration, infiltration and repair programmes;

• Overseeing and monitoring Water and Waste Water Treatment

Operations in the regions, including DBO contracts;

• Overseeing SCADA alarm responses, ensuring responses are

effective where SCADA is in place and operational;

• Developing high level plans for a Water and Wastewater Plant and

Network maintenance; and

• Overseeing policy implementation and best practice standards.

3.6.2 Operations Support Services

The Operations Support Services Team is responsible for overseeing and

managing water and waste water process analysis and optimisation. The

team is also responsible for the provision of independent quality sampling

services for water and waste water to ensure compliance with agreed

standards.


include:

• Managing process optimisation for treatment, network and plant

operations and maintenance for water and waste water;


• Managing sampling and analysis for water and waste water, workflow

management, operational planning and control, and contract

management for the O&M Team;

• Monitoring the provision of analytical data and reporting to meet

regulatory monitoring requirements for drinking water and waste

water;

• Overseeing the preparation and implementation of Water Safety

Plans for the Water Supply Zones (WSZs) across the country; and

• Overseeing and managing the provision of quality sampling and

collection for water and waste water across all regions and co-

ordinating testing with laboratory service providers.

3.6.3 Operational Planning and Control Centre Management

The Operational Planning and Control Centre Team review and maintain

contingency plans and coordination across LAs. The team will optimise

production into supply, based upon demand forecasting. The team will also

manage contract delivery and vendor performance across operational

contracts and alarm / event management, including 24/7 control of the IW

asset base.


include:

• Reviewing and maintaining contingency plans for IW operations, co-

ordinating plans across LAs, ensuring adherence to IW Health and

Safety procedures for incident response plans;

• Managing the short-term water production requirements for IW;

• Responsibility for ensuring that drinking water is produced to a high

quality and quantity that meets demand over a specified number of

years;


• Managing contract delivery and vendor performance across

operational contracts, and O&M contractors in the post construction

phase; and

• Managing incoming alarms on IW’s plant and network, and managing

the appropriate response to address alarms.

3.6.4 Workflow Management

The Workflow Management Team oversees the work initiation of service

requests on IW assets and the identification of bundling opportunities. It also

identifies work pre-requisites and creation of work orders to be progressed to

LAs, services providers or IW’s own Scheduling & Dispatch Team to service

IW assets. The team will manage the creation and maintenance of work-

related record data into key IW systems, including GIS and Maximo.


include:

• Managing the work initiation identification of service requests from

multiple sources to triage work requests, identifying bundling

opportunities and enable pre-requisites to create work orders;

• Overseeing the progression of work orders into a “ready to close”

state efficiently;

• Ensuring that service requests generated for IW field staff is

effectively passed to the Scheduling & Dispatch Team;

• Managing and attaching pre-requisites to work orders as required;

and

• Ensuring that work information is inputted into appropriate systems in

conjunction with the Asset Information Team.


3.7 Operations & Maintenance (Non-Payroll Activities)

As detailed above, the O&M Team is made up of the following functions,

Water and Wastewater Regional Operations, Operations Support Services,

Operational Planning and Control Centre Management and Workflow

Management. It is anticipated that the key accountables within each of these

areas will be delivered through the work of the team members, in

combination with the provision of professional services. These services

make up the entire projected O&M non-payroll cost for the Interim Price

Control period.

In the Drinking Water Quality Report for 2010, the EPA placed priority on the

adoption of a Water Safety Plan (WSP) approach by Water Services

Authorities (WSAs) in the management of drinking water supplies. These

plans provide for a risk-based management approach to the provision of a

safe and secure drinking water supply from source to tap. The task of

developing and implementing these plans now falls to IW.

The preparation of WSPs is a mandatory requirement for all Water Supply

Schemes (WSSs), of which there are in excess of 1,000 across the country.

The data collected by the IWP indicates that 3 WSPs have been completed

by the LAs, 13 have commenced and the remainder are yet to start. There is

a significant amount of work required to complete a WSP, which will require

the support of professional services. It is important that this programme of

work is co-ordinated by IW, is carried out in a standardised manner and that

there is guidance and support available for the LAs from IW in order to

accelerate the rate of completion of the outstanding WSPs. It is envisaged

that this work would be co-ordinated on a regional basis.

Water conservation will be a key focus for IW for the Period and beyond. IW

believes conservation can be improved across the country through initiatives

like the domestic Metering Programme, effective pressure management,

active leak detection and repair, focused mains rehabilitation etc. However,


as noted in the CIP, levels of progress in improving water conservation

infrastructure and implementing conservation practices vary across the LAs.

It is necessary to determine the extent of these works in each LA, especially

with regard to the amount of dedicated resources in place in the LA, the level

of leak detection and the timeframe for the subsequent repairs. Oversight

will be required at a regional level to plan, ensure a standardised approach

and to review the productivity on an on-going basis. Leak repairs are a

critical KPI for IW and require dedicated resources from IW in order to

ensure that sustained progress is achieved. Professional support will be

required to assist with the development and implementation of a programme

of works across all LAs focused on water conservation improvement.

IW needs to prepare a business case for the provision and planning of

Laboratory Services requirements for IW, utilising existing LA and third party

laboratories and to set out the roadmap for the future. The capacity and

capability of the laboratories will be assessed as part of the business case

and will require professional support.

Furthermore, IW is required to provide Wastewater Incident Response Plans

(WINREP) for each agglomeration. These documents are currently in draft

format and will be completed in conjunction with the IW Contingency

Planning Specialists and LAs. The purpose of the professional services

support is to provide programme management for the roll-out, training and

embedding of the plans across all LAs.

O&M also require a survey to be carried out on each of the borehole sites

that deliver water for consumption. This will be needed in order to ascertain

the source protection measures, the condition of the borehole and

associated equipment that is required to ensure a safe supply of drinking

water for public health. It is expected that professional support will be

required to assist with the analysis of survey results.


Finally, the utilisation of SCADA and telemetry, along with properly sited

alarms on water and waste water treatment plants and network

infrastructure, will provide IW with the facility to have a national view of all its

assets. These enabling technologies will assist IW to gain efficiencies in the

use of the assets, getting early notification of emerging problems and taking

early intervention where operating issues arise.

The condition of the existing alarms is unknown. An early survey will require

external support to allow the benefits of SCADA and telemetry to be

leveraged at an early stage. In addition to the alarms, there is the potential to

look at energy use across the water network plants in the short term and

identify areas where savings can be achieved.

3.8 Technical Advisory Service (Payroll Activities)

The Technical Advisory Service (TAS) will support the IW Managing Director

and the IW Management Team to deliver its regulatory obligations to the

EPA within a developed Sustainability Framework. This framework will seek

to balance the environmental obligations of IW with its social and economic

objectives and its long term energy and carbon targets.

The TAS will be the primary relationship management function with the EPA

and the DECLG with the DECLG and EPA on environmental policy and

compliance. It is also expected to maintain a strategic technical oversight of

a range of functions across the IW business and advise on technical and

business risks.


include:

Developing policies and environmental strategies within the Asset

Strategy Function, in particular representing IW in the


interdepartmental oversight of the Water Framework Directive (WFD)

and other high level cross-sector policy areas;

Licensing liaison and business relationship management by Assets

Strategy Environmental and Sustainability Support Teams, both

centrally and regionally, impacting the strategic planning of works in

water and waste water and in maintaining close oversight of the WFD

cycle reviews; and

Operating regional EPA Liaison Officers in day-to-day relationship

management, dealing with regular reporting, audit of plants, incidents

and issues management, licensing of trade discharges and liaising

with EPA on IPPC licenses discharging to sewers.

3.9 Technical Advisory Service (Non-Payroll Activities)

There are no explicit non-payroll activities expected for this Period in TAS.

Any requirements for external professional support will be subsumed into the

Asset Management Team.

3.10 WAM (Payroll and Non Payroll Costs)

The tables below detail the projected costs for the WAM Team for this

period. Total WAM costs are €118.16m which is made up €95.16m in Payroll

costs and €23m in Non-Payroll costs. Non-Payroll costs are made up entirely

are projected requirements for Professional Services. The increase in

projected WAM costs reflects the projected increase in headcount across the

team, from 70 FTEs at the start of 2014 to 460 FTEs by the end of 2016.

The projected increase in headcount is required the meet the evolving needs

of the business in WAM, as a result of phased roll-out of various WAM IT

systems to the LA offices and the national water services network. As

systems are deployed across the country, the WAM Team will grow to

accommodate the collection and analysis of the returning data in order to

facilitate focused investment, efficient maintenance activities and to meet

regulatory requirements.


The projected rise in costs across the Period also reflects the expected

increased requirements for professional services (estimated €4.15m in 2014

and €10.99m in 2015), due to vital projects such as the detailed assessment

of critical water services sites, harmonisation of asset standards & policies

and the development of WSPs.

Table 8: Detailed Projected Costs for WAM Teams 2014-2016.


4 Customer Operations

4.1 Introduction The Customer Operations Team in IW will be accountable for developing,

delivering and supporting the desired customer experience and service to

the approx. 1.8m IW customers (domestic and non-domestic). This capability

is organised into four main areas; Customer Experience and Strategy,

Billings and Payments, Customer Service and Customer Operations

Support. The Customer Operations Team structure is outlined in Figure 9

and the projected Team headcount for the Period is outlined in Figure 10.

Billing Services Manager

Head of Customer Operations

Customer Service Manager

Customer Operations Support Manager

Customer Experience & Strategy Manager

Figure 9: Customer Operations Team structure.

Figure 10: Projected Team headcount for the period 2013-2016.

50

79 89 89

0

100


Customer

Ops


Headcount by Function

End 2013 End 2014 End 2015 End 2016



Figure 11: Customer Operations projected headcount for the period 2013-

2016.

4.2 Customer Experience and Strategy (Payroll Activities) The Customer Experience and Strategy Team in Customer Operations has

three main areas of responsibility; Marketing, Customer Strategy and

Customer Regulation & Compliance.


include:

• Developing and managing the brand and visual identity for IW;

• All marketing activities for IW including advertising campaigns,

customer communications, product development, market research

and all online activities, including website and social media;

• Developing customer strategy, including customer journey mapping,

segmentation, customer life cycle and customer platform strategy;

• Developing customer related regulatory policy and management of

customer related regulatory compliance reporting; and

• Developing and implementing unregulated customer products and

contributing to regulated tariff design.

4.3 Customer Service (Payroll Activities)

The Customer Service Team is responsible for all customer contact

operations and administration. This includes customer contact management,


customer complaints management, key account management, channel

management and analysis. The Customer Service team will be primarily

accountable for running an effective customer contact centre and ensuring

customer service is delivered over this Period to the highest possible

standard.


include:

• Ownership of processes for customer contact, channel management

and customer complaints;

• Responsibility for all direct inbound and outbound customer contact

for domestic and non-domestic customers;

• Key Account Management for large industrial and commercial

customers;

• Responsibility for tracking performance levels regarding all inbound

contact types, including operational issues, registration, billing,

connections and complaints; and

• Responsibility for scoping, developing and taking ownership of

customer channels/platforms for customer contact to support all

customer contacts.

4.4 Billing and Payments (Payroll Activities)

The Billing and Payments Team in Customer Operations will be responsible

for the end to end meter-to-cash process, including Meter Data

Management, Bill Production, Revenue Assurance, Payment and any

required Credit and Collections. The team will develop policies, business

rules and practices for these functions.


include:


• Responsibility for the development and implementation of the Billing

Services Strategies, with support from the Head of Customer

Operations;

• Revenue Assurance, developing and maintaining an end-to-end view

of all customer related revenue processes across IW;

• Responsibility for the management of the overarching Meter Data

Management, Billing, Credit, Collection and Payments policies and

standards; and

• Developing and implementing the Meter Data Management Strategy,

Billing Strategy, Credit Risk Strategy, Collections Strategy and

Payments Strategy.

4.5 Customer Operations Support (Payroll Activities) The Customer Operations Support Team is responsible for managing

predictive and descriptive analytics for all customer-related data. It will also

be responsible for supporting quality and change management initiatives,

and managing customer-related vendors.

Key accountabilities for the team for the Interim Price Control period include:

• Managing descriptive and predictive analytics and management of

revenue analytics to minimise risk to the IW business;

• Working with Procurement Shared Services to manage a consistent

framework for vendor management across IW;

• Owning and managing use, manipulation and reporting of all

customer-related data both inside and outside the Customer Care &

Billing platform;


• Defining and managing internal quality management policies and

processes and ensuring continual alignment against customer

strategies and KPIs;

• Supporting and driving sustainability of all Change and Learning and

Development initiatives impacting the Customer Operations function;

and

• Supporting the performance management of vendors, e.g. Meter Data

Management System provider, outsourced contact centre, through to

the provision of analytical insights.

4.6 Customer Operations (Non-Payroll Activities)

As detailed above, the Customer Operations Team is made up of the

following functions, Customer Experience and Strategy, Customer Service,

Billings and Payments and Customer Operations Support. It is proposed that

the key accountables within each of these areas will be delivered through

the work of the team members, in combination with the provision of

professional services. Other activities will also require support from non-

payroll costs, including advertising and marketing and the outsourced

customer contact centre.

These non-payroll activities are outlined in further detail in the separate

Customer Operations submission paper (IW-IPC-006). However, the main

detail includes professional expertise to assist in areas such as the

Customer Validation Programme and legal advice in the customer billing and

debt management processes.

Another non-payroll activity will include marketing development. IW will need

to engage with customers and other stakeholders to raise awareness of its

existence, role and services via a range of communications channels such

as TV and social media. In addition, all engagement with customers directly

involves significant stationary costs due to the scale involved.


Non-payroll activities also include tasks related to the billing cycles of both

domestic and non-domestic customers, such as meter reading, billing and

collection. The contact centre operated by Abtran is another non-payroll

activity. Abtran will handle all customer call, correspondence and e-mail

traffic on behalf of IW.

4.7 Customer Operations (Payroll and Non Payroll Costs)

Table 12 below details the projected costs for the Customer Operations

Team for the Interim Price Control period. Total Customer Operations costs

are estimated at €119.91m, which is made up €16.29m in Payroll costs and

€103.63m in Non-Payroll costs. The increase in projected Customer

Operations costs from 2014 to 2015 reflects the projected increase in

headcount across the team, from 50 FTEs at the start of 2014 to 89 FTEs by

the end of 2015. Projected FTEs remain at 89 by the end of 2016.

The projected increase in headcount is required the meet the evolving needs

of the Customer Operations Team as a result of domestic customer billing on

October 1st, 2014. The estimated rise in costs from 2014 to 2015 and into

2016 also reflects increased work requirements around the customer call

centre and customer contact activities, primarily due to the roll-out of

domestic water charges.

Table 12: Projected Costs for Customer Operations Team.


5 Support Services

5.1 Introduction The Support Services capability for IW is responsible for supporting the

WAM and Customer Operation activities of the business. The team is made

up of the following functions; Finance, Commercial and Procurement,

Regulation, IT, Legal, Human Resources, Business Change, HSQE and

Corporate Services. The projected Support Services headcount for the

period 2013- 2016 is outlined in Figure 13 below.

Figure 13: Support Services projected headcount for the period 2013-2016.

47

184 198 198

0

100

200


SupportServices &MD



MD 1 1 1 1

Finance

Finance Team 11 36 38 38

Commercial & Procurement

3 26 26 26

Regulation 3 12 12 12

IT 4 22 22 22

HR HR Team 12 17 17 17

Business Change 1 21 21 21

Corporate Affairs

HSQE 7 27 29 29

Legal 0 7 17 17

Communications 3 8 8 8

Administration 2 7 7 7


Table 14: Support Services projected headcount by functional area

for the period 2013- 2016.

5.2 Finance (Payroll Activities)

The Finance function in IW is made up of a number of areas; Accounting &

Reporting, Project Finance, Financial Planning & Reporting, Commercial &

Procurement, Regulation and IT.

5.2.1 Accounting & Reporting

The Accounting & Reporting Team will manage the general ledger and

journal posting on behalf of IW. Furthermore, the team is responsible for

assessing the regulatory reporting requirements from a finance perspective,

supporting the submissions to the CER as part of the revenue control

process, monitoring performance against the revenue control plan and

ensuring compliance with finance and accountancy related regulations.



include:

• Developing the vision and strategy for the Accounting & Reporting

function;

• Defining and implementing the IW tax planning strategy, in

conjunction with BGÉ;

• Managing all reporting activities within IW including financial,

statutory, regulatory, management and performance;

• Ensuring all processes and procedures are compliant with relevant

finance and accounting policies;

• Managing the general ledger as required, including assurances of

correct postings of general ledger transactions;

• Participating in the forecasting, budgeting and monthly / quarterly /

yearly accounts close;

• Processing journals and produce reports to fulfil statutory and

regulatory requirements;

• Reconciling balance sheet accounts and ensuring accounting

accuracy;

• Preparing monthly management accounts and commentaries in

preparation of monthly reporting packs;

• Assessing regulatory reporting requirements, preparing submissions

as part of the revenue control process and monitoring performance;

• Ensuring all regulatory finance policies, standards and procedures are

developed in line with the CER’s requirements and are adopted and

implemented by the business;


• Managing tax audits and ensuring tax compliance; liaising with

external and internal auditors, tax advisors and Revenue authorities

as required;

• Acting as an effective business partner on all tax related queries;

• Ensuring best practice is adopted for Accounting, Regulatory and Tax

functions; focusing on continuous improvement around financial

processing cycles; and

• Escalating financial risks and safeguarding the assets of the IW

business.

5.2.2 Project Finance

The Project Finance Team will be responsible for driving and embedding

project finance rigour and best practice across all capital and operational

projects undertaken by IW. Furthermore the team will support the Head of

Finance in IW by developing and executing an effective finance strategy to

support the IW business strategy.


include:

• Supporting the Head of Finance in developing and executing an

effective Finance Strategy which supports the IW Business Strategy;

• Defining how Project Finance will engage and interact with the

Accounting and Reporting function, the Financial Planning function

and the business, including Asset Management, Operations and

Maintenance and Capital Delivery;

• Providing project finance support and management to new projects as

and when required;


• Ensuring compliance with and adhering to Project Accounting Policies

and practices;

• Developing and adhering to all necessary financial controls, ensuring

the production of accurate project accounting financial records and

information;

• Assessing Project Finance reporting requirements and generating

Project Finance management reports as required; and

• Delivering insights and recommendations on how to improve the

Project Finance activities of IW.

5.2.3 Financial Planning

The Financial Planning Team will be responsible for managing all financial

planning activities within the IW organisation including strategy development,

corporate planning, performance management, treasury support and finance

business partnering.


include:

• Developing and reviewing the IW business strategy with the IW

Senior Management Team;

• Preparing the IW corporate plan and annual financial plan to support

the business strategy;

• Developing and reviewing the IW balanced scorecard to support the

business performance management process;

• Identifying initiatives and opportunities, in conjunction with the

business units, to improve business performance;

• Supporting BGÉ Group Finance in relation to treasury information and

reporting requirements for IW;


• Ensuring compliance with relevant treasury policies and guidelines;

• Forecasting cash balances and internal funding requirements for IW,

providing funding and financial analysis reports to the IW

management team;

• Implementing and developing the Finance Business Partner model for

IW; and

• Providing commercial and financial advice, evaluating projects and

proposals to support effective decision making.

5.3 Commercial & Procurement (Payroll Activities)

This team is responsible for all commercial and procurement activities

across IW. It will manage the IW procurement process in conjunction with IW

business functions, including BGÉ Shared Services. Commercial &

Procurement will also manage development, implementation and monitoring

of SLAs with the LAs, commercially manage non-standard contracts, and

support developer services in managing connections agreements. The team

will continually implement best practice processes to ensure that IW

manages risk, whilst meeting its commercial objectives.


include:

• Developing and implementing the overall commercial and

procurement strategy, governance framework and associated policies

for IW;

• Establishing processes for managing commercial and procurement

activity for IW, taking into account scaling of the organisation and its

changing requirements from 2013 onwards;

• Managing the commercial elements of the SLAs between IW and the

LAs, ensuring SLA management teams are equipped to effectively


liaise with LAs and monitor regional performance and commercial

obligations;

• Planning and managing delivery of buying services to be sourced

from Shared Services;

• Developing, implementing, reporting on and managing the execution

of the procurement governance framework and processes to ensure

adherence to all European and National Public Procurement

regulations;

• Ensuring alignment and a single view of external expenditure across

all spend categories, including DBOs and SLAs;

• Defining IW’s category management and supplier relationship

management strategy in line with the overall BGÉ approach;

• Developing and managing relationships between Commercial &

Procurement and other IW functions; and

• Ensuring that optimal commercial outcomes are derived for the

business through the Commercial & Procurement process.

5.4 Regulation (Payroll Activities)

The Regulation function is responsible for setting and managing regulation

governance and policy. The team is also responsible for interacting with key

stakeholders, such as the CER and DECLG, to influence regulation and

legislation that covers Irish water services. The team will work closely with

the IW Management team and the Bord Gáis Group Strategy & Regulation

function, to develop and support the embedding of regulatory decisions and

practices within IW.


include:


• Accountability for compliance monitoring on economic regulation and

water services related legislation;

• Reporting on performance, revenue and cost in conjunction with the

business and Finance as directed by the CER and EPA;

• Co-ordinating development of customer charters, codes of practice,

connections policies and regulatory codes for IW;

• Stakeholder management of the CER and EPA with regards to

national regulatory policy, legislation and standards;

• Responding to consultation papers issued by the CER and EPA on

behalf of IW;

• Developing and managing domestic and non-domestic tariffs;

• Developing regulatory submissions for the revenue control process;

and

• Facilitating interactions between CER and IW functions during

revenue control process.

5.5 Information Technology (Payroll Activities)

The Information Technology (IT) Team will be responsible for the

establishment and development of IT capabilities and systems across IW to

provide operational, strategic and customer–focused services. These

services include business/IT strategy and architecture alignment, project

management, solution delivery, service management and information and

operations management.

IT is comprised of three main functional areas: Strategy, Architecture &

Planning, CC&B Service Delivery and Application Delivery & Support.

Key accountabilities for the IT team during the Interim Price Control period

include:


• Developing and articulating the strategy for IW’s IT and systems

landscape in alignment with the overall corporate landscape;

• Providing a framework to align operational IT activity to the wider

business objectives and developing IT capabilities to meet these

needs;

• Capturing the short, medium and long-term IT needs of the

organisation;

• Providing a high-level roadmap for the organisation’s IT needs,

including investment plans and programmes of work;

• Defining the IW IT strategy and prioritising IT investment decisions

accordingly;

• Implementing and ensuring adherence to IT related policy and

procedures;

• Overseeing and assuring the IT services being provided to IW,

including infrastructure;

• Overseeing changes and enhancements to IT infrastructure,

hardware and software within IW;

• Ensuring delivery of existing and newly implemented applications and

ensuring appropriate support is in place; and

• Aligning strategy and activities of IT with the organisation through

KPIs, the Balanced Scorecard indicators and IT benchmarking.


5.6 Human Resources (Payroll Activities)

The Human Resources (HR) function includes three core HR support

functions: Employee Relations, Learning and Development and HR

Operations and Business Change.

HR will work to develop and implement an effective strategy, by working

closely with senior management and line managers to drive engagement

with the strategy and associated policies; drive organisation change and

design; resource the organisation through workforce planning; provide

support for employee and industrial relations; support learning and

development and work collaboratively with approximately 4,300 employees

across the IW organisation and 34 LAs.

5.6.1 Employee Relations

Key accountabilities for the Employee Relations team include:

• Providing HR support for employee relations, discipline and

grievance, mobility support, leave and absence management;

• Developing, implementing and maintaining all HR policies and

standards throughout IW;

• Managing and facilitating all industrial relations issues and providing

support in the implementation of the SLA where required;

• Designing and implementing compensation and benefits strategy and

designing benefit programs by role in line with BGÉ Group,

benchmarking and best practice; and

• Conducting job evaluations and managing the occupational health

administration.


5.6.2 Learning and Development

Key accountabilities for the L&D Team during the Interim Price Control

period include:

• Developing and managing the Learning and Development and

Knowledge Management strategies for IW;

• Supporting the development of the talent architecture in the

organisation and contributing to the development and design of the

succession planning model; and

• Managing the job based curriculum for all roles across the

organisation.

5.6.3 HR Operations

Key accountabilities for the HR Operations team during the Interim Price

Control period include:

• Resourcing the organisation through workforce planning;

• Managing the organisational headcount through organisation design;

• Budget management for the HR function;

• Identifying, reporting and implementing mitigating measures required

to ensure key performance indicators for HR are met;

• Supporting line managers and the Employee Relations Manager in

the resolution of issues;

• Ensuring effective management and support of the performance

management process, working closely with line managers to support

implementation and application across teams;


• Supporting the business in practical application of HR policies and

procedures; and

• Ensuring transactional support from Shared Services is fit for purpose

for IW and communicate additional requirements, where appropriate.

5.6.4 Business Change

The IW Business Change Team’s primary role is to support the IW business

in delivering the identified change initiatives and change work packages. It

will take responsibility for delivering the remaining IW Establishment

Programme deliverables from April 2014. The remaining programme budget

will transfer to Business Change to deliver the outstanding establishment

scope of work, primarily in the areas of WAM and Customer Operations,

before the end of 2014.

Business Change will also provide project management and change

management services to IW and the LAs to deliver on the many initiatives

outlined in the IW business case and SLA Annual Service Plans (ASPs).

Building an effective collaborative relationship and change network with the

LAs will be fundamental to the success of all initiatives.


include:

• Planning, project managing and delivering responsibility for all change

programmes, including resource management, impacts on IW and

associated partners including LAs, suppliers etc.;

• Assessing, managing and governing of end-to-end business

processes and process improvement across IW and the 34 LAs;

• Owning, analysing and managing programme portfolios to effectively

scope, prioritise, plan and deliver changes into IW and the LAs

aligned to business objectives and regulatory requirements.


5.7 Corporate Services (Payroll Activities)

Corporate Services are made up of HSQE, Legal, Communications,

Administration, Freedom of Information (FOI) and Corporate Affairs Teams.

5.7.1 HSQE

The Health, Safety, Quality and Environment (HSQE) Team within IW will be

responsible for ensuring and supporting compliance with company, national

and European level health, safety, quality, environmental and energy

standards for IW. The team will provide governance and specialist advice

across the business’ regions in these areas, and manage the maintenance

and assurance of the Integrated Management Systems (IMS) to ensure

appropriate HSQE compliance with regulatory requirements.

The Team will help IW implement, at central and regional level, all HSQE

policy and procedures, incorporating legislative requirements, industry best

practice and other requirements related to the IW IMS. The team will look to

embed the HSQE culture, both internally in IW and externally in the LAs.

The HSQE function’s major subdivisions and activities include:

Integrated Management Systems (IMS)

The IMS team will be responsible for developing and managing the system

as a single process to ensure all areas of HSQE are integrated and work in a

seamless manner. They will be responsible for driving an integrated common

approach to HSQE systems including; planning and following policy,

procedures, processes and methodology, as well as training and operational

control.


Environment, Health and Safety (EHS)

The EHS team will assist the HSQE Manager in ensuring compliance and

beyond by developing and implementing the EHS elements of the IW IMS.

Based both centrally and with regional IW resources, the team will act as a

central point for day-to-day EHS issues and handle/escalate issues when

necessary. As per the requirements of the 2005 Safety Health and Welfare

at Work Act they will assist the business in ensuring compliance of IW, the

LAs and anyone working on its behalf. The EHS Team is also responsible

for the on-going development, review and testing of the IW Incident

Management Procedures.

Enterprise Risk Management (ERM)

The ERM Team will manage and drive the overall risk management agenda.

The team will plan, design and implement an overall risk management

process for IW based on the frameworks set out by Bord Gáis Group. The

team will manage and report on all aspects and types of risk, and ensure

safe and efficient continuity of all business systems through performing

business continuity and disaster recovery planning.

Key accountabilities for the HSQE teams during the Interim Price Control

period include:

• Defining the HSQE strategy, policies and standards for IW;

• Facilitating and managing the enterprise risk management process for

the IW organisation, management of all aspects of risk, including

operational, IT and safety etc.;

• Nurturing and developing a behavioural HSQE culture within the

company, through effective leadership and practical auditing

arrangements aligned to a behavioural focus on health & safety,

environmental and quality issues; and


• Managing the IW HSQE IMS and ensuring its effectiveness and

compliance to all Health, Safety, Quality, Environment and Energy

aspects.

5.7.2 Legal

The Legal function within IW will ensure the organisation has the required

legal expertise and support required by the business to meet its day-to-day

legal needs. This includes litigation, reviewing and providing input to legal

documentation such as policies and contracts, and advising on regulatory

matters.

In addition, IW falls under the provisions of the current Freedom of

Information (FOI) Act. This legislation applies retrospectively to the

establishment of IW as a company from July 2013. The FOI Act provides

members of the public with the right to obtain access to information in the

possession of IW. During the Interim Price Control period IW expects to

receive FOI requests covering areas like the IW structure and organisation;

its functions, powers and duties; its internal rules and procedures used in

making decisions affecting the public; staff members responsible for carrying

out these arrangements etc. IW will require staff to facilitate the expected

FOI requests over the Period.

Key accountabilities for the Legal Team during the Interim Price Control

period include:

• Enabling the business to meet it’s day-to-day legal needs including;

reviewing and developing legal documentation, litigation and advice

on regulatory matters;

• Manage the budget for the function, ensuring expenditure on external

legal advisors is closely monitored;

• Providing legal opinion across all areas of the business as required;


• Managing litigation and dispute resolution, review and draft contracts,

agreements and internal policies;

• Continuously monitoring compliance with legal obligations and

advising management accordingly;

• Communicating any legal implications that need to be brought to the

executive management’s attention; and

• Liaising with relevant IW functions and teams to ensure that where

legal risks have been identified, appropriate courses of action are

taken.

In respect of FOI:

• Acknowledging and recording the receipt of all FOI requests made to

IW;

• Establishing and maintaining a database record for all FOI requests

received by IW;

• General FOI document management; creating files and storing

documentation accurately and clearly;

• Interacting with any 3rd parties affected by FOI requests;

• FOI decision-makers within the team will interact with relevant IW staff

to ensure proper provision of information;

• Interacting with FOI requesters to facilitate provision of information in

a timely manner, as per the guidelines of the FOI Act;

• Providing decisions and relevant information to FOI requests; and

• Interacting with the offices of the Information Commissioner and Data

Protection Commissioner on all matters related to FOI requests.

5.7.3 Communications The Communications function within IW will be established in to support the

development and delivery of the business objectives of IW including,

supporting the development of strategic plans and delivery of key capital

projects and the public consultations around those. The team will also be


responsible for supporting the development and delivery of excellent

customer service; managing the engagement between IW and a wide range

of key stakeholder organisations and interest groups; and partnerships with

key organisations in delivering water-based programmes.

Fundamental to the success of IW’s business objectives is engagement with

all water service customers, representative bodies and interest groups.

Success is also dependant on ensuring that this engagement is conducted in

a consistent, professional and transparent manner. As a support function to

all areas of the IW business, the Communications function is an integral

element of supporting the operational units in achieving their objectives, and

is working in tandem with the Customer Operations function to ensure the

general public is informed and engaged around the key issues.

Key accountabilities for the Communucations during the Interim Price

Control period include:

• Supporting the overall achievement of the business objectives of IW

through co-ordination of public consultations on key strategic and

capital planning initiatives;

• Managing all engagement with IW’s external stakeholders, ensuring

an open and constant dialogue, whether collectively or individually,

and ensuring a suitable structure is developed for their input to the

development of key strategies and plans;

• Supporting the positioning of IW as an expert for the Water Industry,

allowing IW to take the lead on informing the debate on the water

industry changes;

• Building, managing and positioning the IW brand by;

• controlling the consistency of messaging across all

communication channels;


• engaging with communities and individuals on water

conservation and environment related initiatives through

suitable partnerships and programmes;

• managing the public consultations that will be required around

key developments during the Interim Price Control period; and

• managing and informing the public debate on water industry

changes through conferences and organised events.

• Supporting the operational activities of the organisation through

providing a regional communications presence that:

• engage with local media on regional issues;

• provide communications support to the Regional Operations

Managers on any service issues; and

• acts as a contact point for LAs and local elected

representatives on water-related communications;

• Supporting the planning of capital projects through the stakeholder

engagement activities and providing communications support to

individual projects over the life of the project; and

• Responsibility for the strategic co-ordination of all water capital project

communications across IW and BGÉ.

5.7.4 Administration

The Administration Team will support all administrative activities for IW,

including; the maintenance of the Company Minutes, the scheduling,

preparation and distribution of materials for all Board and Executive

meetings and more general document management. The team will also

provide PA services to a number of “Heads of Functions” across IW.


include:


Ensuring a consistent approach is taken across all administrative

activities;

• Providing high quality transactional and administrative assistance to

the IW Senior Management and their teams to ensure business

satisfaction with services and support provided by the function;

• Maintaining company minutes, scheduling, preparation and

distribution of materials before all Board and Executive meetings;

• Managing Time and Attendance teams and budget balancing for the

departments;

• General document management; creating files and storing

documentation accurately and clearly;

• Supporting respective teams in logistics management and in the

coordination of regular events and initiatives;

• Completing requisitioning activities as required; and

• Composing and distributing routine written correspondence from

“Heads Of Functions”.

5.8 Support Services (Non-Payroll Activities)

As detailed above, the Support Services team is made up of a number of

functions; Finance, Commercial, Procurement, Regulation, IT, Human

Resources, Business Change, Legal, HSQE and Corporate Services. This is

a diverse set of functions and the teams themselves will require an extensive

set of non-payroll activities for the Interim Price Control period. Similar to

WAM and Customer Operations, it is proposed that the key accountables

within each of these areas will be delivered through the work of the team

members, in combination with the provision of professional services. The

non-payroll costs for each team in Support Services are outlined below.


The Finance Team will incur non-payroll costs in the form of auditing. IW’s

current auditors are Deloitte; however there will be a tender issued for IW’s

2014 audit services in April 2014. Once procured IW’s auditors will also

provide a tax compliance services to ensure that IW meets all of its

corporate tax obligations. The auditors will also provide general advice on

tax compliance when required. Banking fees is another non-payroll cost for

Finance.

Commercial & Procurement will require professional support to help devise

a strategy to identify procurement savings in the water services sector and

the procurement activities of the 34 LAs.

The Regulation Team will also require non-payroll activities during this

Period. One activity will be professional support to the team in drafting and

sense-checking various submission documents for the CER. This will be

required for both the Interim Revenue Control and the first full Revenue

Control. It is also expected that the team will require professional support in

the development, sense-checking and assessment of various domestic, non-

domestic tariff and glidepath options.

The Business Change team will also be undertaking non-payroll activities in

the Period. One of the key change programmes identified for this Period is

collaboration with the 34 LAs to develop a shared HPUM. This will allow for a

single co-ordinated set of business processes across the water sector in IW

and the LAs to drive and enable the efficiencies outlined in the original

business case. It is expected that professional support will be required to

complete due diligence in the LAs, to identify duplication and sub-optimal

processes with respect to water services and agree and roll-out the revised

processes, approach and new ways of working.

The team will also look to develop business capability/systems to support

the reduction of energy costs across water treatment and services, establish


inventory management in line with the HPUM approach to reduce costs

category management and develop standard outage management system

and processes. It is further expected that professional support will be

required in all of these areas to design, develop and deliver plans for these

programmes, project manage, quality assure and deliver business readiness

activities such as communications, training and post “go live” support.

More specifically the key areas of focus for 2014 that require the input of

professional services include: (a) closing out the IW Establishment

Programme deliverables, (b) developing the Change Network in the LAs to

deliver on the commitments made in the SLAs and ASPs and (c)

commencing the work required to align the IW process model with the LAs

and realising the benefits arising from the standardisation of processes and

activities.

The Change Programme for 2015 and 2016 will focus on completing the roll-

out of field technology to the LAs and a number of specific business

initiatives with strong water service customer benefits.

HSQE within Corporate Services will incur professional services costs in a

range of areas to support the carrying out of its main functions over the

Interim Price Control period. This is particularly important given the expected

lean headcount and the fact that the business is in start-up/ramp-up mode

during this Period. The team will be dealing with legacy HSQE issues, while

looking to establish IW as a business entity with appropriate HSQE

standards.

Professional expertise will be procured to assist in a number of areas,

including the carrying out of baseline audits and gap analyses of LA and

contractors systems for HSQE issues. In addition, the team will require

professional support to aid in the carrying out of:


• Energy reviews in the establishment of the Energy Management

System element of the IMS;

• External reviews and accreditation of the IMS to the relevant

standards; and

• Business Continuity assessments across the business, putting in

place business continuity plans and the testing of plans.

It is further expected that professional support will be needed to set up

critical HSQE tools, such as HAZCON, Safe Systems of Work,

environmental planning toolkits, etc., to develop the Enterprise Risk

Management structures and systems and to develop IW’s safety behavioural

framework. Finally, additional professional expertise will be required to

support IW to ensure that there is HSQE compliance (legal requirements) at

all stages of IW’s procurement process.

The Communications team within Corporate Services will have a number of

non-payroll activities over this Period including corporate communications

with stakeholders and associated activities (e.g. printing/reporting) with

various stakeholder engagement forums. In addition, the Communications

team will require legal and professional services for the purpose of

supporting the production of long-term strategic plans for water services and

the development and delivery of key capital projects. This includes running

public consultations and stakeholder engagement activities on key capital

projects or IW headline projects responding to any subsequent challenges.

Given the media profile of IW to-date, the organisation also anticipates the

need to avail of advertising to support Crisis Management and stakeholder

engagement. Developing IW’s media image and public perception will

require activity in the area of Corporate Social Responsibility..


The Legal team within Corporate Services anticipates legal challenge with

the commencement of domestic water charges on October 1st, 2014. The

implementation of various customer codes of practice and T&Cs for new

customer connections is expected to attract further legal challenge at some

point during this period. External support will be needed by IW to address

these challenges and ensure that the business can continue to carry out its

activities effectively and free from legal challenge. It should also be noted

that this cost contains a provision for Board fees and further admin costs

associated with the Secretariat.

The IT team will incur non-payroll costs due to the required annual renewal

of Support and Maintenance for IW’s IT systems – in particular, licence

renewals for the software used by IW staff. There are also expected to be

requirements around IT Third Party Support arrangements - outsourced

activities to support commodity IW IT services, such as software

development. Furthermore, there will be data centre & communications

costs, such as data line rental, cloud computing, fixed lines and fax,

telemetry and machine to machine communications. Finally, professional

services will be required to develop and support the implementation of the

IW IT Disaster Recovery and Business Continuity Planning initiatives.

IW will also incur Facilities operational costs. Facilities Opex has been

determined using a variety of assumptions and methods, using historical and

known data from Bord Gáis Networks actual annual expenditure, and other

relevant facilities benchmarking data. The Opex budget items that support

the IW business function include; rent, building operations, energy

management, security systems, archiving, fleet and rates.

The Opex budget assumes an average rental rate per m2 and this has then

been applied to the assumed floor area per building. The key costs drivers of

the rental allowance include space requirements, regional variations in rental


values and inherited assets/leases. IW buildings are detailed in Table 15

below.

Building No. of buildings Headcount Capacity Floor Area (m2)

HQ Dublin (Colvill House)

1 450 5,100

Foley Street, Dublin1 1 320 2,950

Harbourmaster 5, Dublin2

1 137 1,100

Large Regional Offices

- Mallow - Castlebar - Dublin

3 60 (per office)

700 to 800 (per office)

Satellite Regional Offices

- Limerick - Kilkenny - Donegal - Cavan - Mullingar

5 30 (per office)

250 to 450 (per office)

Operations Command / SCADA Control Centre

1 20 1,000

Table 15: IW Office Space Requirements.

Building operations are also included in the Opex allowance and broadly

cover items such as, building and equipment maintenance, cleaning,

catering, reception etc. Another item non-payroll activity is Security Services

which incorporates access control, including equipment and consumables

associated with control of access to buildings, car parks and sites and a

master key system.

Fleet management is also included in facilities costs. The IW fleet is used to

enable the company to service, maintain and respond to emergencies in a

1 This building will transfer from the Irish Water Programme (IWP) to Irish Water (Dublin Regional Office) in 2014

as the IWP progresses to completion.

2 Harbourmaster will continue to be utilised until space becomes available in other IW office locations, it is currently

planned to release this building at a lease break point and to carry out a schedule of dilapidations.


timely and safe manner. Archiving covers items such as retention and

storage of data, on and off-boarding of data and secure destruction of data

and full audit trail maintenance. Rates are based upon the rental value of a

property, otherwise known as the net annual value.

5.9 Support Services Uncontrollable Costs There are additional uncontrollable operational costs applicable to Irish

Water for the Period. These costs are essentially pass-through for the IW

business. They include insurance, the CER Levy, EPA Licence Fees,

Commercial Rates and Irrecoverable VAT. The breakdown of costs is

detailed in Table 16 below.

Table 16: IW Uncontrollable Costs Projection


5.9.1 Insurance

IW is required by law to have in place certain classes of insurance. Other

classes of insurance are purchased to mitigate the level of financial risk the

company may be exposed to. Insurance is classed as an uncontrollable

cost, as premiums will be dictated by market rates available. BGÉ/IW

undertook a full EU tender and interested parties were invited to tender for

the insurance process. It should be noted that the budget for Insurance does

not include any exposure for IW insurance excesses.

The total cost associated with IW insurance for 2014-206 is €6.9m for each

year, bringing the total for the period to €20.7m.

Some of the main categories of insurance that IW has in place for the Period

are outlined below:

• Employers Liability - Death & Bodily injury to IW employees;

• Public & Products Liability - Third Party Bodily Injury/Property

Damage caused by IW negligence;

• Environmental Impairment Liability - Environmental Damage, clean-

up costs caused by gradual pollution;

• Property Damage/Business Interruption/Terrorism - Material

Damage "All Risks” cover on Assets;

• Terrorism PD/BI - Damage to IW Property as a result of Terrorism;

• Statutory Inspection - Statutory inspection of plant items as required

by law and facilitated by Insurers/Brokers;

• Willis Fee – Insurance broker and risk services; and

• Engineering - Sudden & unforeseen damage to plant and equipment

that is not covered by property damage insurance


5.9.2 CER Levy

The Water Services Act 2013 (No. 2) amended the Electricity Regulation Act

1999 to allow the CER, as regulator for the water services sector, to impose

a levy on IW. This levy allows the CER to fund its work as the economic

regulator of the water services sector and is an uncontrollable cost for IW.

5.9.3 EPA Licence fees

Under the Water Services Act 2013 (No. 2) the costs associated with

administering licences charged by the EPA to the LAs, in relation to water

and waste water services, passed to IW. This cost item is considered to be

uncontrollable, considering the licence fees are set by the EPA.

5.9.4 Commercial Rates

Commercial rates are an annual charge on non-domestic property and

provide a significant element of funding for the 34 LAs to carry out their

activities. The rates are payable on commercial, industrial and some other

non-domestic properties, including factories, offices, land and buildings. The

LAs charge commercial rates on the basis of the valuations provided to them

by the Valuation Office. Therefore, they are considered an uncontrollable

Opex cost for IW.

The total IW cost associated with Commercial Rates for 2014 is

approximately €52.3m. Estimates for 2015 and 2016 are both €59m, giving a

total for of €170.3m across 2014-2016.

5.9.5 Irrecoverable VAT

Value Added Tax (VAT) is collected by VAT-registered traders on their

supplies of goods and services to their customers. Generally traders in the

chain of supply, from manufacturer through to retailer, charge VAT on their


sales and are entitled to deduct from this amount the VAT paid on their

purchases. The VAT legislation was amended in the most recent Finance

Act such that the supply of water by IW is exempt from VAT. This will mean

that IW is not required to operate VAT on revenue derived from the supply of

water.

In respect of operational costs associated with the supply of water, IW will

have to pay VAT on most of its purchases. Given IW‘s VAT exempt status in

respect of the supply of water, IW cannot recover this VAT from Revenue.

The VAT on operational costs is a permanent cost incurred by the company

that needs to be recovered as a separate cost item over this period. The

total cost associated with Irrecoverable VAT for 2014 is €59m. Estimates for

2015 and 2016 are €65.1m and €65.3m respectively, bringing the combined

total to €189.4m across 2014-2016.

5.10 Support Services (Payroll and Non-Payroll Costs)

Table 17 below details the projected costs for the Support Services for this

Period. Total Support Services costs are €118.05m, which is made up of

€56.86m in Payroll costs and €61.19m in Non-Payroll costs. The increase in

projected Support Services costs are due to a number of reasons, including

a projected increase in headcount numbers. Areas such as Finance, IT,

HSQE, HR all require increases in headcount to allow the organisation to

stand-up in an efficient manner and meet statutory and regulatory

requirements. It should be further noted that the payroll category of Support

Services include the payroll costs associated with the Executive Team of IW.

The non-payroll costs stay relatively flat over 2015 and 2016. Facilities costs

make-up over half of that annual cost, while IT costs, which includes items

such as licence renewal, contribute approximately €15.4m over the Period.

IW will also incur audit fees and costs incurred in the provision of a tax

compliance service; hence the non-payroll costs in Finance of approx. €4.5m

over the Period.



Table 17: Projected Costs for Support Services 2014-2016.


6 Market Based Reward Model

6.1 The move to a Market Based Pay Agreement

In February 2013, BGÉ agreed a new deal on pay and performance with the

Group of Unions and staff known as “Performance and Competitiveness

Review” (PCR). This agreement will underpin the financial health and

sustainability of the business both in the short and long term. The new pay

model applies across BGÉ, to all of BGÉ’s subsidiaries, including IW. The

deal includes the following provisions:

• Pay Freeze until 2016;

• Introduction of a new pay model, which is linked to both performance

and the market – for employees on the new model this means a

move away from incremental based pay towards a system based on

performance and market-based salary ranges;

• No automatic pay progression or salary increments;

• Career and pay progression based on performance;

• All new employees will go on to the new pay model;

• The introduction of a new pay range which is market based (using

general market surveys); and

• Reform of allowances.

In essence this has meant the reform of base pay ranges, to ensure they are

in line with the external market and also the removal of increments. The

purpose of the new architecture is to put more pay at risk rather than the

historic more fixed pay structures of higher base pay levels and “entitlement

pay” through increments. The new agreement also removes “time served” or

“automatic’ promotion. Career progression in BGÉ is achieved against a

backdrop of consistent delivery of high performance and continuous


professional development. This new system removes the “legacy” pay

systems from BGÉ that are not consistent with a modern utility and energy

company. The motivation of increased performance through employee

incentivisation is central to BGÉ’s strategy for year-on-year performance

improvement. The concept of non-consolidated payments, or pay at risk, is a

key element of this strategy.

6.2 Performance Management Performance management in BGÉ is rooted in the Corporate Plan, which

sets out the key goals and the strategies to be executed by the company

over the plans period. The Corporate Plan is then translated down through

the organization into each major division, each main business area and

ultimately to each employee.

Every individual in BGÉ has their own work plan, agreed with their line

manger, which sets clear objectives for the year and a set of metrics against

which performance is measured. Their plan is based on their functional area

but also reflects the divisional and overall company objectives. The goal is to

ensure each individual understands what is expected of them and how their

delivery fits into achieving the overall goals and objectives of the company.

The company uses the Balanced Scorecard (BSC) methodology to achieve

this. The BSC is internationally recognized as the hallmark system to

implement performance management. At the beginning of each year each a

manager meets with his/her direct reports and agrees their goals for the

upcoming year. There is a mid-year review and at the end of the year there

is a detailed review for each individual to assess performance against the

plan.

6.3 Governance

The allocation of performance ratings across the company is overseen by

BGÉ Group HR, who ensure a consistent approach and the application of


the performance review. The company also applies a “forced rating”

discipline to ensure there is not an over preponderance of individuals with

“high” performance ratings in any team, business area or function. In line

with best practice, the Performance Related Award formula is the output of

“Overall Company Performance x Divisional Performance x Individual

performance”, with one third allocated to each category respectively in each

individual’s performance plan.

The Board Remuneration Committee also provides objective governance by;

• Assessing the performance of the CEO and providing an overall

performance rating;

• Reviewing the performance rating for the Executive management

Team; and

• Reviewing at an overall level, the performance allocations across the

company.


7 Summary

IW is in the process of building a fit for purpose utility that will provide safe,

clean and affordable water and waste water services to its customers. Even

though the challenges are great, IW believes that the proposed TOM will

allow the company (a) to plan and invest wisely in improved national water

infrastructure to meet present and future needs of their customers, (b)

implement systems and processes that best manage this national water

services infrastructure; and (c) reduce costs by improving operational

performance to the best levels of other water service utilities, in similar

timelines.

The TOM was defined in 2012 to allow IW to develop so that it could meet its

expected business activities, within the areas of WAM, Customer Operations

and Support Services, efficiently and effectively. The key principle used in

the design of the TOM was to leverage the best of, and add value to, the

existing water services sector to drive benefits for the customer.

This means working in partnership with the 34 LAs across the country to

deliver water services to the customer. IW believes that the TOM will allow

local, regional and national operations to be carried out in a progressively

efficient manner over the Interim Price Control period. This will ultimately

benefit the customer through improved water services, i.e. fewer drinking

water restrictions, better water pressure, reduced unplanned interruptions,

and better customer service.

This paper detailed the projected headcount for the IW organisation and this

profile of projected headcount has been designed to (a) fit the TOM structure

accordingly and (b) align to the two major milestones of the IW organisation

during this Period.


With the passing of the Water Services Act 2013 (No 2.), IW became

responsible for the delivery of water services to public water service users. It

also became responsible for the billing of domestic customers for the

provision of such water services - the first major milestone of the

organisation.

It is suggested that increasing FTE numbers in Customer Operations is

required for the effective roll-out of nationwide domestic customer billing.

The IW organisation will need to advance the Customer Validation

Programme, undertake marketing activities engage in customer analytics,

customer contact over bills, providing water services information, etc. To

match the increased organisational requirements coming from domestic

customer billing and water services legislation, it is suggested that FTE

numbers in Support Services will also need to increase in this first stage.

The second milestone is the phased roll-out of various WAM IT systems to

LA offices and the national water services network, such as GIS, SCADA,

etc. This will require an increase in WAM headcount numbers, on a matched

phased basis, so as to accommodate the collection and analysis of data sent

back from these systems. The phased recruitment of WAM staff to mirror the

phased deployment of these essential IT systems is considered by IW to be

the most efficient approach to recruitment in this second stage.

It is acknowledged the general cost trend is for budget increases across the

three main functions of Work & Asset Management, Customer Operations

and Support Services by the end of 2016. However the primary reason for

this is the increased statutory requirements for IW as Ireland’s single water

utility and the need for an increased headcount to match and facilitate these

requirements. Inadequate funding will restrict the implementation of the TOM

structure, which in turn will severely constrain the level to which services can

be improved, economic growth can be catered for and environmental

compliance achieved.


With respect to costs it is also worth noting that the Uncontrollable Costs,

such as those associated with LA Commercial Rates and Irrecoverable VAT,

make-up a significant element of IW’s Opex costs. IW will attempt to manage

these costs as best as possible, in the interests of the water services

customer and the financeability of the company. However it is important to

note that IW has little control over this element of its costs.

IW believe that the TOM allows for the company, working in partnership with

LAs, contractors and service providers to begin delivering more safe,

efficient and environmentally compliant water services to its customers, a

service that is both affordable and meets their expectations. IW expects that

by the end of the Interim Price Control period, IW will be fully “stood-up”, as

per the model outline, to progressively meet these needs of the customer.


Appendix A

This Appendix lists the tables of projected headcount and costs across the

IW organisation and its functional areas - Work & Asset Management,

Customer Operations and Support Services.

Projected Headcount:

IW Projected Headcount 2013 – 2016

50 79 89 89

70

362 459 460

47

184

198 198

0

100

200

300

400

500

600

700

800


MD &SS

WAM

Cust.Ops


IW Headcount by Geographical Area over 2013-2016

Projected headcount by Function

End 2013 End 2014 End 2015 End 2016

Asset Management, Capital Delivery & Technical Advisory

35 155 231 232

Operations & Maintenance

35 207 228 228

MD &Support Services

47 184 198 198


Total 167 625 746 747

IW Projected headcount by Functional Area 2013 - 2016

141

426

482 483

8

69 88 88

7

60 87 87

11

70 89 89

0

100

200

300

400

500

600

700


Dublin HQ

North &West

East &Midlands

South

167

746 747

625


Work & Asset Management Capability Headcount 2013 – 2016


WAM

Asset Management 33 135 210 210

Capital Delivery 0 14 15 16

Operations & Maintenance 35 207 228 228

Technical Advisory Services 2 6 6 6


Work & Asset Management Capability projected headcount by Function 2013 – 2016

70

362

459 460

0

100

200

300

400

500


WAM


Headcount by Function

End 2013 End 2014 End 2015 End 2016



Customer Operations projected headcount for the period 2013 – 2016

50

79 89 89

0

100


Customer

Ops


Support Services projected Headcount for the period 2013 – 2016

47

184 198 198

0

100

200


SupportServices &MD



MD 1 1 1 1

Finance

Finance Team 11 36 38 38

Commercial & Procurement

3 26 26 26

Regulation 3 12 12 12

IT 4 22 22 22

HR HR Team 12 17 17 17

Business Change 1 21 21 21

Corporate Affairs

HSQE 7 27 29 29

Legal 0 7 17 17

Communications 3 8 8 8

Administration 2 7 7 7


Support Services Projected Headcount by functional area for the period 2013 – 2016


Payroll and Non-Payroll Costs:




Documents

Irish Water - Commission for Regulation of Utilities · Figure 1: Target Operating Model Proposal. 6 | Irish Water CER TOM Submission The TOM is based on a High Performance Utility