Water Meters

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I had an op-ed in the IT last Thursday. Discussion is not great on their site. Here’s my edit.

The government aims to create a national water utility to install water meters and charge for water use. The general thrust is commendable, but it may become an expensive failure.

Taxes will need to go up and public spending down to close the government deficit. This will hurt the economy. However, consumption taxes do less damage to growth than income taxes. The government is right to introduce water charges.

A flat water charge would be unfair. Exemptions for those unable to pay are crude and expensive to administer. A flat water charge would not induce water conservation. We produce about 450 liters of drinking water per person per day (l/p/d). The average person probably uses some 150 l/p/d. It is not fully known what happens to the remaining 300 l/p/d. Part is lost through leaky mains, part is used illicitly, and part is lost through leaks in the house or garden. Experience in other countries, and in the group water schemes in Ireland, shows that water charges would substantially reduce household water use. People would also press the water providers to reduce wastage in the distribution network. As the number of meters increases, it will be easier to locate leaks and illicit use. The government is right, too, to introduce water meters.

The government wants to install water meters in 2012 and 2013. That is ambitious: 1.4 million meters in two years, 2800 meters per day. There is also a plan to replace all household electricity meters with so-called smart meters. This has been carefully planned and trialed over the last three years. The smart meter roll-out will be done by well-established companies. In contrast, the installation of water meters is to be led by Irish Water, a company that does not yet exist. I would be surprised if there will be a water meter in every home in Ireland by Christmas 2013. Flat charges may be with us for a long time.

In fact, there is a possibility that water meters will follow the path of voting machines, as learning from past mistakes is not the strongest point of the Irish government.

Water meters will be unpopular, as they remind people of water charges. Installers would need permission to put water meters in the home. Some homeowners will withhold such permission. The idea is therefore to install water meters just outside the property boundary. This is easier but much more expensive. 1.4 million connections will need to found, and 1.4 million holes dug. The water meters would be far from the smart electricity meters and therefore need a separate communications network. This may cost up to 800 per meter (€1.1 billion in total) according to one estimate.

There is a simpler and cheaper option that has worked well in other countries. Households can install water meters themselves, or ask their plumber to. Households with a meter would pay whatever water they use. Households without a meter would pay a flat charge. If the flat charge goes up over time, more and more households will install a meter. If the costs of water meters are a concern – a good plumber could install a certified meter for less than 200 – then Irish Water could give a voucher for 200 worth of free water upon registering the water meter.

The government has repeatedly promised that there would be free water allowances. Only excessive water use would be paid for. This is nonsense. It does not promote water conservation, and it is bad social policy. Like water, food is essential, but the government does not hand out sacks of potatoes. Instead, there are benefits for those without income and tax credits for those with. Benefits in cash are better than benefits in kind, because the household can choose what potatoes to buy, or pasta. Similarly, water should be charged from the first liter onwards. The revenue from the first 100 l/p/d or so should be used to increase benefits and tax credits.

The government may also seek to transfer the responsibility for drinking and sewage water from the county councils to a new, semi-state utility called Irish Water. There is merit in this too. Water treatment plants are largely build, designed and operated by private companies, but guidance and supervision by the county councils has not always been up to scratch. A new national water company would professionalize water management. If assets would be transferred from the counties, Irish Water should be able to borrow money at a lower rate than the government.

There are dangers too. In the past, semi-state monopolies have served their employees and their political masters well – but customers and owners got a raw deal. The government should create a Commission of Water Regulation at the same time as it creates Irish Water.

Or maybe sooner. The prospect of digging 1.4 million holes in the ground is great news for the construction industry – and a number of companies are actively trying to convince the government that this is the only option. It is not. It would be better if all options would be considered, and the best one selected after an open debate.

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88 Responses to “Water Meters”

  1. Philip II Says:

    Oh come now, evidence based policy making? No, better to have random pressure group flailing about

  2. EWI Says:

    I’ll assume here for one moment that the above RTol piece isn’t entirely a conclusion in search of arguments, and take it on face value.

    So, we have a touching faith in is evidence for the abilities of both your average consumer and your average utilities company to implement the desired government policy outcomes magically (and efficiently) through the intervention of the Free Market fairy.

    I wonder how it might turn out.

  3. Al Says:

    Good article.

    Would it be possible to have a water meter that is future proofed in these and other senses:

    1 Having a sim card to send in readings, and or keep real time/location knowledge of water usage. Possibly seperate from the financial side of it to allay fears, etc.

    2 Tailor the above that it also fits into a potential system that measures multiple domestic, comercial and industrial inputs/outputs: water into sewer systems, electrical usage, Solar HW input, Solar PV yield to national grid etc.

  4. Brian Woods Snr Says:

    @RT:

    Water treatment plants are largely build, designed and operated by private companies, (for obscene profit) but (lack of) guidance and supervision by the county councils has not always been up to scratch. A new national water company would professionalize water management (and scam the customers). If (taxpayers) assets would be transferred from the counties, Irish Water should be able to borrow money at a lower rate than the government ( and further indebt the taxpayer).

    Sorry Richard, but one set of asset looters in Armani suits and Ferragamo ties (instead of hoddies) is enough. Note that the Hoodies are being rounded up and jailed quick-time, but those who looted our savings, pensions and incomes… …?

    “whose got that box of watches, then”

    Brian Snr.

  5. Richard Tol Says:

    @Al
    Water meters by leading companies are indeed read automatically, as a mesh (meters talking to meters), via the mobile phone network, or through the smart electricity and gas meters that will soon be installed. (Electricity meters may also communicate through the power wires.) Multi-utility management is then a matter of software rather than hardware.

  6. VincentH Says:

    Quite honestly I’ve never heard such convoluted rubbish in my entire life. Just why on earth we don’t offer a grant to install a water collection tank for roof run off. With a submersible pump to drive the water into the existing attic tank. Where the hell do they think they are living. We’ve rain most days and filling a tank the size of a heating oil tank from the average roof could be achieved in a day and a simple switch would keep it filled.

  7. Robert Browne Says:

    I see the various semi states, quano’s and opportunist energy providers of every hue and colour are tripping over themselves to be put in charge of `Irelands eighty inches of rain water. They know there is vast largess to be made.

  8. The Dork of Cork Says:

    Monetarist nonsense – unlike oil water is not a scarce resource in Ireland.

    The capital investments are however lacking in a world that makes basic life support dangerously efficient so that consumption can continue unmolested from the now stretched physical world.
    If the Victorians could somehow build middle earth like water capital investments we can also – they had access to much lower power densities & more primative technology and yet had the will & motivation to build rather then engage in a pointless rentier strategy.
    http://www.youtube.com/watch?v=wUqFddQN3Xc
    en.wikipedia.org/wiki/Milngavie_water_treatment_works

    BBC made a fantastic Scottish landscapes series recently but unfortunately it appears behind a national Internet wall.

    http://www.bbc.co.uk/scotland/landscapes/loch_katrine/

  9. PRGuy Says:

    It would be better if all options would be considered, and the best one selected after an open debate.””

    The reality is that whichever vested interest gets their lobbying act together the best – and employs PR guys to help win the debate – will provide the ‘solution.’ There are potentially large sums of money to be made out of this and the vultures are circling.

  10. Al Says:

    @ RT

    The measuring of the data should be a state run affair for long term management of resources?

  11. Tony Owens Says:

    Good article Richard and your point about the needless admin built into the free water allowance proposal is well made. The non-compulsory and price differential-led migration approach you described worked well in the SE UK in the late 90′s and early noughties.
    Networked meters for power and water are a commodity and nothing needs to be developed. There are several competent suppliers capable of delivering and managing the requirements of our small island. Integration of other information such as solar thermal power harvested etc is technically possible but likely to appear as a separate control network for those (e.g. people with disability and those in social housing) for whom there is a reasonable case to be made for the state having access to such information
    Many people in detached dwellings can harvest their own non-potable water at low cost and no doubt more will investigate doing so in the coming years. But potable water is a valuable resource and at times is scarce given our network infrastructure and the distributed pattern of Irish housing. If the network is to be maintained and extended as the population climbs it needs to be paid for – there are no free lunches. Recharging use to its users in proportion to their use of it does not seem unreasonable.
    Incidentally Victorian investments in water and transport infrastructure were private investments and in many cases (not all) generated handsome profits for the shareholders of the companies which built them.

  12. Jagdip Singh Says:

    @Richard, why do you allude to 1.4m homes when the recent preliminary census results indicated we have just over 2m dwellings. Are you suggesting holiday homes, 33,000 vacant homes in ghost estates, another 200,000 vacant homes should not have water meters?

    From recollection the recent preliminary census also indicated there were 1.7m households.

  13. Richard Tol Says:

    @Jagdip
    1.4 mln is the number of households that were on public water supply in 2006. That is a conservative estimate, but high enough to illustrate the scale of the problem.

  14. Kevin Murray Says:

    Richard

    Fascinating article. Much said in few words. There are one or two things I would argue; such as the importance of placing the meter at the boundary (very important) and whether or not it is really feasible to let people install their own meters. The supplier has to control and validate the measurement.

    However, I think that the fundamental point here is that the extent and timeframe for meter installation should be based on a robust business case and the final decision should be made by an independent Regulator. The Regulator, not government, should determine how much metering is required to give value to the consumers without unreasonable cost.

    Regarding the numbers, I agree that there are about 1.4m domestic consumers on the public water supply (excluding those on private wells, group schemes, and those already covered by non-domestic metering). However, that is likely to translate into 1.2m unique connections (when you allow for multi-occupancy dwellings with shared services). Of those, the last 15% (approx) will prove nigh on impossible to meter at a reasonable cost. Therefore, I guess that the national metering program will cover less than 1m water meters.

    Therefore, there will always have to be a combination of metered charges (for those that can be metered easily) and fixed/assessed charges for those that can’t be metered at a reasonable cost; remembering that it is the consumer who has to pay for the cost of the meters eventually.

    I absolutely agree that the idea of a free allowance is not sustainable. It is as much a conservation measure as happy hour is a temperance measure.

  15. Richard Tol Says:

    @Kevin
    There are arguments pro and con meters at the boundary. Pro: detection of and responsibility for leaks in the garden. Con: extra cost of separate communications network.

    I’d get a professional plumber and make sure she install a certified meter.

  16. Kevin Murray Says:

    Richard

    I suspect that the responsibility for leaks in the garden will be the greater cost concern. I would also be mindful that smart metering may not happen for a few years yet; and when it does the technology is likely to have moved on a few steps and the separate network may not arise.

    If I was the water utility company I would see plenty of problems with the customer installing the meter. You will not be able to control the quality of workmanship. There will be too many opportunities to bypass the meter. You will have the costs of inspection. Who will be responsible if the meter is innacurate? It is like asking Tesco if you can bring your own scales and cash register to their shop.

  17. Richard Tol Says:

    @Kevin
    As Water Ireland builds up a database, pattern detection software will easily spot suspect behaviour. Household should be fined; plumber should lose license.

  18. MarcusOC Says:

    @ Kevin

    Re workmanship – just insist that only qualified plumbers may install meters if they are to be recognised. Then keep a list of approved meters from which the customer may choose. Simples

  19. Michael Hennigan - Finfacts Says:

    @ The Dork of Cork

    Water is free — if you live in a cave.

  20. Al Says:

    @ RT

    Plumbers do not require a license to work in this country.
    However, gas work requires an authorised and specially trained person.

  21. Richard Tol Says:

    @Al
    Plumbing qualifications are regulated by Solas. Plumbing companies are regulated by the CRO.

  22. Al Says:

    Not quite.

    A Plumbing craftsperson is one who has sucessfully completed an apprenticeship and has earned a FETAC level 6 cert: Advanced Craft Certificate, National Craft Certificate, older craftspeople possibly have a City and Guilds qualification.

    AFAIK, there is no regulation beyond the apprenticeship and qualification. Nor is there a facility for ‘decrafting’ incompetent or negligent craftworkers.
    Further, Plumbers may or may not trade as a company. the majority trade as sole trader or subcontractors.

  23. Kevin Murray Says:

    @RT Surely we are not relying on the CRO to ensure meters are correctly installed?

    I know many excellent plumbers; but I have also seen the results of those that have cut corners. The sector is not well regulated.

    Pattern detection software is a clever solution to a problem that could be avoided. Plumbers have no license to lose. Fining householders is another headache we can do without; especially if they claim they didn’t realise the work was not up to spec.

    Simple answer is for the meter installation to be undertaken by the water utility on the property boundary.

  24. Brian Woods Snr Says:

    Please face up to reality on this one – (not DoC, VH and RB). Humans have an absolute need for potable water. Hence it is of such strategic importance it should have both constitutional and criminal law protection from corporate parasites wishing to turn a profit on a commodity that each of us HAS to have.

    Forget about this metering, installation codswallop, please concentate on conserving and protecting the resource. Yes, we may indeed need some metering (they were recently installed on my avenue – on the pretext of ‘fixing’ the pedestrian pathways), but there are other alternatives.

    I have installed a submersible pump in my well (its been there since 1792) and I have access to almost 3000 l. There are rain-water collectors which have filters attached and the water is potable. I shall install at least one of these next year.

    AMH-ff: Actually Michael, rainwater is ‘free’; place bucket on ground and wait! If you are careful it is safe to consume – sans boiling!

    The biggest threat to our fresh water is contemporary farming – and coming to a townland near you – Fracking!

    Brian Snr.

  25. DbDh Says:

    As someone who has supervised the installation of water meters on numerous rural group water schemes, I can safely say that the only location that will satisfy the supplier, the householder and the installer is outside the boundary of the property. There is little point in installing a water meter, that measures the amount of water being used by a property for the purposes of determining the level of charges to be paid, anywhere other than as close to the point as possible where the responsibility for the water supply changes from that of the supplier (the Local Authority) to the consumer – there are too many issues regarding access to read/verify meters, the likelihood of consumer bypassing the meters, and the difficulty in locating leaks on the system that could occur on private property but before the meterbox.
    On the otherhand – I sincerely hope that those championing this scheme are not underestimating the time/effort/manpower required for the installation of these meters – it is a timeconsuming and labour intensive work especially considering the low level of preliminary information that currrently exists regarding the location/number of consumer connections off the public water mains supply.
    High quality water meters are expensive – even without the additional telemetry technology required for drive-by meter reading – and there needs to be consideration given to the requirement for maintaining/replacing water meters that get blocked, cracked, stop working etc.
    All discussions like these – especially when taken principly for economic rather than environmental reasons – need to consider at every level – how workable the options are at ground level.

  26. Sporthog Says:

    @ Richard Tol,

    Are there plans for a seperate waste water charge?

    The household pays per litre for nice clean drinkable potable water via a meter.

    Will there be a corresponding charge for waste water returned from the household to the sewage / drainage system? i.e. the household pays twice the meter reading?

    After all, what goes in must come out, right?

  27. Georg Baumann Says:

    Brian Woods Snr Says:
    Actually Michael, rainwater is ‘free’; place bucket on ground and wait! If you are careful it is safe to consume – sans boiling!

    Greetings,

    well, do you ever hear about taxing Rainwater that comes down on your property? No?

    I am somewhat confident RT did, without going into the somewhat tricky details, this is not a joke I am telling here, it is reality, in Germany…. Go figure!

    The way that the profiteering corporate scumbags connected to politicians are doing it is simple. YOU are contributing a burden with the rainwater that you induce. The water filter systems that we as a profiteering company have to maintain are cleaning YOUR water.

    Small airplanes are hovering the skies above southern Germany, busy to take photographs of properties, to calculate the individual tax that will be applied to property owners. Make no mistake, i am not talking exclusively about owners of a lot of land, a single townhouse is equally on the list, hey, it has a roof, right?

    We do live in interesting times. The Muasher doctrine applies, as long as people are indifferent at large, resign to consumerism and political ignorance, those in power can do as they like.

    Even taxing you WATER!

    Best
    Georg

  28. Barry Says:

    Nice ideas, totally inpractical.

    Yes, intergrated services and metering is a reality, but only in well organised and capitalised entities. Yes, a proper system of support for rainwater collection and use is a good idea, again, in well organised and.. Yes, such facilities could and should be part of a public capital programme, in well organised…..

    Now, apply any of them to our country in it’s present economic and adminsitrative state.

    Dream on, the troika want easy to collect taxes to be available to repy the loans. That is the only reality, hence flate rate no billing/collection system proposals.

  29. MarcusOC Says:

    @ Sporthog
    I think it’s reasonable to forgo the waste water charge – it would only be relevant if people were trying to engage in arbitrage (importing/exporting water from their house), which would be too weird. Aside from anything else, I’d rather not create an incentive for people to impose a remarkably unpleasant externality on their neighbourhood!

  30. Áine Uí Ghiollagáin Says:

    “The government has repeatedly promised that there would be free water allowances. Only excessive water use would be paid for. This is nonsense. It does not promote water conservation, and it is bad social policy. Like water, food is essential, but the government does not hand out sacks of potatoes. Instead, there are benefits for those without income and tax credits for those with. Benefits in cash are better than benefits in kind, because the household can choose what potatoes to buy, or pasta. Similarly, water should be charged from the first liter onwards. The revenue from the first 100 l/p/d or so should be used to increase benefits and tax credits.”

    That may be true for adults with no dependents in need of care. Currently, however, net income does not take into account the number of persons dependent on that income in the household. There is a certain minimum level of water required per person for consumption and basic hygiene, so there will have to be a method of rebalancing net income or people will find it even more difficult to afford to begin families or look after elderly or disabled family members in need of care.

  31. Richard Tol Says:

    @Aine
    There are only so many words in an op-ed. Benefits includes child benefits, which should go up to.

  32. Edward Says:

    “If the costs of water meters are a concern – a good plumber could install a certified meter for less than €200 – then Irish Water could give a voucher for €200 worth of free water upon registering the water meter.”

    As an economist with (I presume) more knowledge of the elasticities involved than mine, what is that €200 voucher going to do to the price that a plumber charges for installing a water meter?

  33. William Phelan Says:

    “The revenue from the first 100 l/p/d or so should be used to increase benefits and tax credits.”

    Of course, in the current environment, there is no room for “increasing” benefits or tax credits. Maybe you mean, the coming cuts to benefits or tax credits could be reduced to some small degree to take the new water charges into account? And once it is stated in those terms, you can see why the benefits-and-credits approach does not offer much “political cover” for the introduction of water charges. That may be why the govt is tempted by the “free” water allowance.

  34. Antoin O Lachtnain Says:

    There are a few assumptions here that need to be considered carefully.

    First, there is no ‘plan’ to roll out smart meters for electricity in Ireland. There has been in-principle agreement at national and EU level that there is likely to be a benefit from smart metering, and some trials and cost benefit analysis has been done.

    Second, you are assuming that there is a cost benefit to putting in an electronic meter with radio transmission of some sort for water. As far as I can see there isn’t. There is no peak/off-peak issue in relation to water. There is also the obvious problem of getting power to the meter. You will end up having to change batteries on the meter, and even with batteries, you will not get a continuous ‘feed’ of information from the meter. (However, I can see that there might be some benefit in having a pulse socket on the meter, so that it can be wired back to the smart meter or other device. But this will be a convenience feature rather than something which will really do much to lower costs over the long term).

    All that said, I am a meter ‘fan’ and a lot of what you say makes good sense.

  35. Ossian Smyth Says:

    This article is a model of clarity. I have to disagree with one aspect.

    Providing a ‘free water’ allowance makes taxing water politically feasible. As private companies must gauge the political feasibility of even their internal projects, a democracy must do so all the more.

    In similar vein, Richard previously argued against the Irish carbon tax on the basis that it wasn’t high enough and had exceptions such as peat, yet these suboptimalities were necessary to gain public assent. And taxes may be adjusted in future years to answer these shortcomings.

    Arguing against improvement to a system on the basis that it does not achieve perfection is perverse if the result is to retain a broken status quo.

  36. Sporthog Says:

    @ MarcusOC,

    I was just raising a question in general. Recently I was talking to a person who lives in Perth W.Australia. He informed me that a household pays two charges, one for clean water supplied and the second charge for waste water from the house to the sewage drainage system.

    Recently in Ireland all the talk, commentary in the media / blogs has been about charges for supplying water to the household. I have not seen any mention of the possibility of waste water charges. After all sewage treatment plants cost money to run / maintain etc.

    Generally if a household uses 300lt of water / day between cooking, washing clothes, personal hygene, watering the garden etc it has also produced 300lt of waste water (general round about figures).

    Fitting a meter to the waste water outlet pipe (sewage pipe) would not be practical (possibility of blockages etc), however by metering the supply, a estimation of waste water produced from the household is possible.

    So I was just wondering, when water supply charges are introduced, will a waste water charge also be implemented?

    Or will the two charges be rolled into one charge?

    The cynic in me believes that in the future Irish households will pay two charges, for the water that is supplied to the house, and the waste water which is supplied from the house to the sewage treatment plant.

    I suspect most people have realised this fact yet.

  37. The Dork of Cork Says:

    There is a lack of capital investment in the water sphere , not a lack of water.
    Its as if oil rained on this country and we were told to conserve oil as it is necessary to invest capital which could be used elsewhere – complete bonkers.
    Look around you…………………www.youtube.com/watch?v=s4vwh4-K_ZQ

    But seriously – I would recommend people read Pompeii by Robert Harris – it really conveys the intense effort these societies put into providing the most basic of resources.
    Ireland however has put all of its eggs into building one off trophy houses – leaving very little for basic life support.
    Again to repeat oil is a scarce resourse that needs to be taxed more heavily , water is not a scarce resourse in Ireland – its just needs basic investment , and if that means that living 10 miles from the nearest shop can no longer be subsidised then so be it.

  38. Richard Tol Says:

    @SportHog / MarcusOC
    The volume of water coming into the house is roughly the same as the volume flowing out, so there should be one charge covering both.

  39. Richard Tol Says:

    @Edward
    This would be lump-sum transfer to households. Should not affect behaviour.

  40. Richard Tol Says:

    @Antoin
    There’s no need to collect high-frequency data on water use for most people. It is a useful monitoring tool for some chronic diseases (incl. old age).

    The main advantage of automatic reading is cost. Communication technology is cheap. Labour is expensive.

  41. Richard Tol Says:

    @William, Ossian
    Point taken. Can’t do this without political leadership.

  42. Sporthog Says:

    @ Richard Tol,

    Agreed, either two charges or one combined charge.

    But it is very important that the public understand what they are paying for, otherwise there is the possibility of being charged twice.

    It should be clearly expained to the public that water charges are charges for both water supplied to and waste water taken from the household.

    Water charges should not be marketed as a charge for water supplied, because this allows the councils to then introduce a second charge for waste water at a later date.

    What I fear is sneaky underhand corrupt councils ripping the householder off twice. Charging the householder a supply charge (which already has the waste water charge rolled into it) and then sneakily imposing a seperate waste water charge at a later time.

  43. Antoin O Lachtnain Says:

    Communications technology is not that cheap if you are only making occasional meter readings. If your meter is read once every two years (which is the minimum requirement in the UK), then there will only be ten or fifteen readings over the life of the meter. The comms costs will be at least 5 euros per year. You can easily read a meter for 10 euros, the comms cost over 2 years. There are also issues with communications spectrum licensing (There are no radio licenses longer than to 2028, for instance, which isn’t a long time away when you are in the water infrastructure business).

  44. Áine Uí Ghiollagáin Says:

    @Richard,
    Child Benefit rates, like the rest of the social welfare budget, are not on an upward trajectory.

  45. salmac Says:

    As water and wastewater engineer the industry quoted additional cost of supply to the consumer by a centralized for profit water company as existant in the UK has been 15% over supply by the local authority.
    Having dealt with both Uk and irish water authorities the Irish ones have been the most cost efficient and ready to adopt new technologies and methodolgies.
    In the Irish model we have at the moment running system a combination of private companies and local authorities operating the infrastructure.The most complex operations are normally in hands of a very small no of specialized companies with a deep technical resource on very specific and at time penal contracts with measurable deliverables. The older more lucrative type contract is now becoming a thing of the past rapidly.
    I have worked on numerous water metering schemes and there role out is quit easy with modern GPS schemce and the densities of installations.
    The best model would be the drive by as visual inspections cost approx €10 a visit at moment
    As for the right of access the local authority has a leeway on your pipe to your home , this leeway made lead piping in drinking water an issue in galway even though the local authority had replaced all lead piping in mains years previously .
    The charge for water at the moment is normally divided into a potable and a wastewater charge so if you have onsite treatment you get a reduced charge.
    The best option in my opinion would be a local autherity based metering option with a regional autherity for tying in networks across adminstrational districts. Bill collection and issuance could be by an post or any other agency for all the additional complexity once a meter reading is available With the revenues ring fenced for water and waterwaste and some catchment area protection a dividend can be the paid back to the local people as in SA if revenues are favourable.
    Network losses are inevitable and in some cases its cheaper to accept them then to fix them .The water conservation schemes are almost roled out nationwide and we now have for the first time a live picture of where all the water is going including network losses.
    A set fee should form part of the bill as 60-70% of the cost of the system is the actual infrastructure with out a drop of water moving this can mean the first 200l is free within the set fee or whatever but will also encourage conservation. local are based charging will also mean that cork is not subsiding kerry or vice versa. in the republic the cost per 1000l varies between ´€1.50 to €4. a liter at moment
    For an equitable but inefficient model have a look at welsh water.
    @dork
    Those living 10 miles from the shop are not supplied water by the local authority normally but by group scheme or private well.
    If on a group scheme the household get a grant of 190/year to assist in providing there own supply to the group scheme if on a well nothing.
    if on a group scheme it normally costs 1500-3000 to get connection covering the infrastructural cost.

  46. The Dork of Cork Says:

    @Salmac
    I appreciate your point regarding water provision but I guess I was talking about the wider real cost of utilities to rural areas – such thing as electricity connection , post etc.
    We have the most dysfunctional settlement pattern imaginable – with huge input costs and therefore we need very large incomes to maintain this lifestyle.
    I get the feeling this strange tax policey will further subsidise rural dwelling at the expense of more efficient urban living which typically need once off big capital projects that on a per ca pita basis need much less inputs when operational.
    My once compact lilliputian city is becoming a hollow shell as road based commuting directs energy outward in some strange orbital loop pattern.
    Its instructive to fly via Google earth on the old west cork line – old railway villages such as Crossbarry / and closer Waterfall are exhibiting a deep habitation dysfunction as they service linear homesteads many miles apart.
    Unless we deal with this very deep structual design problem Ireland’s problems will magnify to the point of impossibility.
    Rural consumption subsidies must stop – we can’t afford it – directing more cost burdens to more efficient urban dwellers is a sociological / class meme rather then real economic pragmatism.

  47. Mr. Cranky Says:

    “Like water, food is essential, but the government does not hand out sacks of potatoes.”
    Unlike water, potatoes do not fall from the sky.

  48. Mark Dowling Says:

    I live in a city which has had meters for donkeys years (water and sewer is a combined charge but the volume is decided by the inflow amount) and yet my mother in law has successfully avoided having one installed which means she can water her garden and adjacent footpath/road to her heart’s content in the height of the summer – it will take time to roll this out and the politicians will not have the stones to push this out aggressively because the papers and RTE News will be filled with tales of 80 years olds crying “I’ll have no water for the tea!” and so on.

    I’m on board with Irish Water – as a semi-state. If we can have an electricity semi-state and a gas one I don’t see why water can’t be either. IW should have a minimal staff with planning, design and billing in house but all design and construction outsourced, with IW given authority to decide whether tenders should be local, regional or national in nature. Local tenders would allow smaller companies to participate without being simply subs but national tenders would be those where economies of scale would demand an EU wide tender to interest large suppliers in participating.

    Public ownership is not a guarantee of low rates or prudent behaviour – in Toronto water charges have been rising at 9% p.a. because previous (public) administrations had frozen rates while making no provision for 60/70/80 year old mains.

  49. The Dork of Cork Says:

    The Irish middleclass are simply too melodramatic for their own good , they simply do not have enough class to pull off their I vont to be alone dreams.
    http://www.youtube.com/watch?v=tojjWQvlPN8

    Shifting more stealth costs to the urban poor who live frugally for the most part is simply beyond the pale or is it inside it ?

  50. Edward Says:

    “@Edward
    This would be lump-sum transfer to households. Should not affect behaviour.”

    Richard, I believe this is incorrect. The transfer is not lump-sum in a strict sense. It is conditional upon having the meter installed. First, it will encourage more consumers to install water meters instead of paying the flat fee (this is a good thing, given that metering is better than flat fee). Second, consumers who take action to have the meter installed will pay a higher price due to the higher demand for meters. I still believe that some of the incidence of this subsidy will fall on the plumbers, but I don’t know the elasticities. It is possible that the increase in demand will be very small, and that this will merely be an ineffective subsidy, more like an income redistribution tool. In the medium term, perhaps we will have more plumbers.

  51. Peter Says:

    It’s nice to see national environmental issues thoroughly debated and we are privaliged to have somebody like Richard Tol impart his insights and moderate the discussion, but the approach taken by Phil Hogan (from the start) has made it blatently obvious that revenue creation is at the heart of this, so these discussions have little impact. Richard must be well aware that he comes from a more advanced country – nonetheless, a country we should have aspired to long before now.

    Is water a scarce or exclusive good in this country…like a nurtured potato? I’ve yet to see a potato fall freely from the sky. This line of thinking is consistent with taxing a man for breaking wind (mind you, that might constitute an externality…so it would make greater economic sense to apply some disincentive). Surely there is a middle ground, where people are educated on water usage and excessive use is charged for. But charging for “excessive” use won’t pay for the water meters, so more people need to be brought into the net to cover the meter installation costs, giving “excessive” another meaning.

    The government could be more concerned about creating initiatives to improve the quality of drinking water – and nowhere have I heard the idea of using funds raised to invest in better water treatment infrastructure. I had an idea a few years ago; a forward thinking local council would create a bottling company, selling water at 50c (one third of the cost of leading “brands”) and use the revenue to upgrade local water treatment plant. This fosters community spirit, gives everybody access to cheaper/cleaner water and eradicates the “food miles” associated with Volvic and the like – it is also a subtle way to remind people that water costs something (mind you this could work the other way in a place like Ireland).

  52. Brian Woods Snr Says:

    @RT:

    I took a walk up and down my avenue – DLRCC area – (270 single residences, several commercials, two pubs, three schools and four multi-dwelling developments). A road construction gang has been ‘fixing’ both the paths and road (third new surface in seven years!) and installing w/m in some locations – but not in all – ?

    The meters are direct replacements for the original Uisce stopcocks – with a neat little odometer-style meter which whizzes around. Foreman in charge of the road gang said the meters had to be read by opening lid and reading visually!

    @Peter: Very nifty idea to bottle local water. Too simple! Has to be complex. Dragon’s would rubbish it :-)

    Brian Snr.

  53. Yields or Bust Says:

    @RichardT

    What’s the current situation about homeowners having to upgrade supposedly Non EU compliant septic tanks under the Nitrates Directive (I think).

    I’ve spoke to few householders in relation to this matter and it seems at the moment an upgraded ‘system’ would cost c€6,000 Euro to install for the average household.

    In the current environment how realistic is this given that these houses would all at one stage have had to get planning permission which would have included septic tank design and positioning as far as I’m led to believe

  54. Sarah Carey Says:

    Richard will be debating this issue next Tuesday 23rd with Minister Hogan when I do my fill-in week for VB on tv3.

    Should be good!

    (shameless promo endeth)

  55. TRP Says:

    We have been paying metered water/sewerage rates for our business for the last 3 years. At the start the water charges were very high compared to the previous fixed charges. We found out what was using water on the premises and have now brought down our water usage but also our charges significantly because guess why ? The system here assumes the volume of water in is the same as the volume of water out but the Irish Local Authorities charge double the price for “estimated” water out. THe cost savings in our case is around 70%.

    So I agree totally with Richard to get metering in as soon as possible and we will reduce water usage. We can deal then with the outdated transmission system with savings from the wasted treated water. The one Caveat I have is that we do not use a Quango which are totalling self serving i.e. Eirgrid, ESB, Bord Gais etc etc

  56. desmond brennan Says:

    As RT points out, the design of thids involves a lot of ‘make work’. Requiring the water authority to administer ‘free water allowances’ will mean it will take on an administrative overhead similar to the Revenue/Social Welfare. That is foolish duplication.

    The €800 meters are insane, ESB meters are on premises. In either case the government will have to pay the plumbers, and can control them.

    It is disturbing that our public servants have no ability to produce efficient policy.

  57. The Dork of Cork Says:

    Once we all accept tax does not raise any revenue now we can move on logically in this discussion.
    The function of tax must be to increase efficiency but this tax will not – its merely another subsidy for sub-rural dysfunctionality.
    Unlike back in William Jennings Bryans time – the countryside does not subsidise the city , the city has bypassed its local hinterland and plugged itself directly into foregin oilfields , the “countryside” is now just a more dysfunctional suburban tumour on the conurbations central mass.

    http://www.youtube.com/watch?v=HeTkT5-w5RA

  58. Ronan Keane Says:

    “We produce about 450 liters of drinking water per person per day (l/p/d). The average person probably uses some 150 l/p/d. It is not fully known what happens to the remaining 300 l/p/d.”

    Do we just leave it at that? Try to get a handle on the 1/3 of the problem that we know about, put the other 2/3 in the drawer labelled ‘mysterious problems’ and just move on?

    A 10% reduction in one is worth the same as a 20% reduction in the other.

  59. Ordinary man Says:

    ‘We produce about 450 liters of drinking water per person per day (l/p/d). The average person probably uses some 150 l/p/d. It is not fully known what happens to the remaining 300 l/p/d.’

    Are we not going after the wrong target i.e households.

    (Not that I am against it in principle per se.)

    From the above we are 2/3 over capacity in production for demand. Reducing per person demand by 50% will only take aggregate demand down 16.5%.

    Would it not be better to incentivise the decommissioning of the 2/3 excess capacity by finding the 300 missing litres per person per day?

  60. Ordinary man Says:

    My apologies for the simplicity of the above but hopefully someone can put some costings to it.

    Specifically does anyone have a cost per litre for water in Ireland?

    How much are the Government looking to raise by installing water meters?

  61. Ordinary man Says:

    @ Salmac

    My apologies I have just seen your figures.

    Anyone have operational running costs for the water treatment works?

  62. Brian O'Dwyer Says:

    Richard,
    in the UK most homes pay based on the value of the home.
    Only homes built post 1989 must have a meter installed in UK.
    http://www.ft.com/intl/cms/s/2/f4d8ce0e-9bf5-11e0-bef9-00144feabdc0.html#axzz1V7zuX1AL
    I agree that putting in 1.4m meters is nuts.
    Common sense seems to be absent.

  63. Robert Browne Says:

    The same people that were looting the system and signing off on the building of hundreds of thousands of inappropriate building projects (all of which require water) failed to invest in water supply and distribution. They incinerated the wealth of hundreds of thousands of people while conveniently ignoring, to this very day, that if the Vartry tunnell collapsed in the morning 30% of Dublins water supply would go with it. I once asked where was the water going to come from to flush toilets on a building applications for an apartment block that was was higher than Liberty Hall and that was in 2008. These questions have to be accompanied by a fee of 220 Euro’s non returnable even when the applicant is unsuccessful. I was told it would be coming from the Shannon! Build them high, stack them high, send them to NAMA, sell them cheap with negative equity guarantees funded by the Irish tax payer, then knock them down in 20 to 30 years because they were crap and no management company in their right mind will take responsibility for them. The people that built them are more than likely bankrupt or in any event had no responsibility for them two seconds after they were flogged! That is business Irish style and good luck with the negative equity loans and flushing those toilets.

    Three individuals were allowed to speculate on property to the tune of 2 billion Euro each while the vital distribution system for water was allowed to leak like a sieve. Anyone going to be held to account?

    I am suspicious about the governments new found interest in all matters environmental especially water. Water meters are not about conservation they are plain and simply a means to screw money from every debt serf in this country, same as tolls except much better because you can decide not to use the roads but water now we all must drink, wash and shave. The national acreage of forestry did not increase by one single acre during the time the so called “Greens” were in power arguing about the “new smart economy” that is how hollow and vacuous these modern day environmental Dick Turpins were.

    This is the story so far and as I write this it is lashing rain, nobody gave a damn about water. Taxes paid were more than adequate to upgrade the water distribution network and safeguard our groundwater from contamination by local authorities, farmers, industrialists but not in that order, which has happened. Instead, the money was diverted to benchmarking to vanity projects and quango’s all 1003 of them according to Dr. Niamh Hardiman, while the government ignored the regulation of banking. Pop went the bubble and hey presto, the government and opposition who studiously ignored water were suddenly eager to sign off on the MOU surrender deal under which they “agreed” to set up a “water company” that will sell water to the Irish public. In due course and of course, this water company will be sold off to the highest bidder as will the forests. Those running the forests decided what was the point in developing and planting more trees when they had to do was sit on their hands, get paid the same money and look forward to the annual salary increases and wait just wait for it to be be sold off. Presumably the bonuses will be great when this happens . The whole thing stinks. There will be all out war over water. Half the country will be given waivers It will be the point where people say enough is enough but then again it is hard to overestimate the slavish compliance of Irish tax payers.

  64. fergaloh Says:

    Another can that has been kicked down the road.

    If only the govt had had the initiative to tackle this issue in their first 100 days. At least then they could have blamed it all on Gormley.

  65. Ossian Smyth Says:

    @Robert Browne

    The national acreage of forestry did not increase by one single acre during the time the so called “Greens” were in power

    National acreage of forestry increased by 69,000 or 3.9% during 2007-2010.

    Afforestation statistics are measured by DAFF:
    http://www.agriculture.gov.ie/forestservice/forestservicegeneralinformation/foreststatisticsandmapping/afforestationstatistics/

    Capital investment in water services in Ireland has been over 400m/annum during 2000-2010. (see DoE)

  66. Peter Says:

    @ Brian Snr.

    Taking a good idea to the Dragons is never a good idea ;o)
    They do say a good idea is worth $10. The near impossible execution is where value lies.

    It would be nice if we had a little more transparency around the quality of the water we consume in this country. If councils had treatment plants bottle and sell their water to local retailers, you might eventually see competition at inter-county level, leaving it very obvious as to which water treatment plants need government subsidies for upgrade etc.

  67. Robert Browne Says:

    @ Ossian Smyth

    Did not increase by one “additiona”l acre I should have been concise, during the Greens stint in office. When you cut down trees you must replace them and you must replace, more than you cut down, in order to increase the acreage under management. I recall this from an Irish Times editorial earlier in the year will find the link and post it.

  68. James Burke Says:

    Greetings,

    A interesting article from Prof. Tol – it, and the following comments, shows the difficulties in addressing these issues of efficient resource supply/usage.

    One of which is the perception that, even if households attempted to reduce their use of energy and water to be “green”, providers will see their profits go down and think, “What will we do? – *snap fingers* – I know! We’ll charge them more!”

    In keeping with this perception, Bord Gáis have announced that they’ll be increasing prices by 20% this winter due to high(er) costs of buying natural resources from international markets.

    With water providers, the shoe’s on the other foot – during (near-)drought conditions, they’d prefer customers would conserve water by not hosing their lawns to keep them green.

    Here’s an idea that may be of interest.

    In South Carolina, a “visionary” bill (S1096) was introduced, passed and duly signed into law on 31 March 2010 by the then Governor Mark Sanford. [1]

    It allows electricity and natural gas providers to fund efficiency improvements in homes, where such loans are then repaid over time – with a nominal added rate of interest – through cost-savings to the utilities.

    For example, someone has an old fridge and wishes to replace it with a energy-efficient one – they borrow the money from their electricity provider to buy the new fridge (the loan could also include the cost of recycling/disposing of the old fridge), repaying it over time through their reduced use of electricity.

    However, this scheme could be adapted to include all energy and water providers. It could also be extended to include businesses who wish to become more energy (and water) efficient, reducing their “carbon footprint” – through upgrading their computer systems or even their boilers/heating and lighting systems. (I’ve also seen a comment elsewhere that, urinals installed before 1992 in the US used up to 5 times more water than modern ones.)

    Water utilities could similarly fund water-saving WCs/WHBs and shower units, thus helping to save water and – through this scheme – cut their costs of providing it, rather than simply charge more for its use.

    Since the energy (or water) utility provides less of their resource, they save money in doing so.

    Using this scheme, if Bord Gáis could help their customers reduce their usage by 16-17%, they wouldn’t need to raise their prices at all this winter. Or, perhaps, ever.

    Other advantages of this scheme include encouraging innovation in technology and industry to research/develop more efficient ways to provide/use these resources.

    And – most importantly – provide jobs in innovation, research, development, sales and installation of such technology as well as environmental recycling/disposal of older technology.

    I trust that Professor Tol might look into this and bring it to Minister Hogan’s attention.

    (I had been seriously considering emailing it to Ministers Bruton (Jobs, Enterprise and Innovation) and Rabbitte (Communication,Energy and Natural Resources), but perhaps either Professor Tol and/or Minister Hogan could pass it on…!?)

    [1] https://docs.google.com/viewer?url=http://ssl.csg.org/dockets/2012cycle/32Abills/0332a04scmetercharge.pdf&embedded=true&chrome=true

    Kindest regards,

    James

  69. Ossian Smyth Says:

    Ireland’s area under forest increased by 69,000 additional acres net of depletion through felling and fires. More than a third of this increase was broadleaf rather than conifer.

    Year: Area under forest in acres
    2006 1,772,484
    2007 1,789,651
    2008 1,805,090
    2009 1,821,518
    2010 1,842,062

    source: Dept of Ag./EPA

    New forest has come from the private sector rather than Coillte which has maintained constant acreage for the past decade. Perhaps this is the figure you heard?

    I’m not sure of the relevance of afforestation rates to water metering!

  70. Dom K. Says:

    I can speak with authority about automated meter reading having been involved in several international projects.

    Meters capable of being interrogated remotely are marginally more expensive than ordinary meters. Bulk of the additional cost is in the infrastructure required to communicate with meters and process the meter reading data. It is utterly senseless that households may end up with three meters and not having the common interrogation / processing infrastructure. Water, gas and electricity meter should be placed on a local bus and read through the same communications / processing infrastructure thus making manual reading redundant. This would lead to significant cost reduction compared to having separate remote meter reading systems such as the one ESB is currently piloting.

    There is no reason why this shouldn’t be set up as a service separate from utility providers and sold as a service to the utility providers. This would be best catered for by competing companies with licenses awarded after tendering and on regional basis.

  71. Dom K. Says:

    @ Brian Woods Snr

    Sir, to eat food is you human right to the same extent as having potable water in the house. Based on your logic, food provision should be also taken out of the remit of corporate sharks and placed in the benevolent hands of the state. I look forward to you enjoying Hereford beef steak with truffles sauce and a fine bottle of Beaujolais supplied by your Food Services Executive.

    Regards

  72. Richard Tol Says:

    @Dom K (1)
    Thanks. That is exactly my point. N meters, 1 communication network. In this case, smart electricity meters will be rolled out first and need more sophisticated communication anyway (higher frequency, two-way signals). Water meters should piggy-back on that.

  73. Dom K. Says:

    Richard,

    I would not bank on ESB nationwide rollout being a sure thing. Initial cost estimates put this at a ball park of E2b. ESB depends on wholesale funding and have recently obtained its own credit rating (which unfortunately mirrors that of the state). As a consequence the rating agencies will more closely scrutinize the accounts and savings will have to materialize in ESB to improve financial performance. I would say that bread-and-butter investments in networks will have priority over nice-to-have items like smart metering.

    Most feasibility studies I have seen identified the low voltage electricity network (a technology called Distribution Line Carrier) as the preferable means to communicate with domestic meters. This technology requires no frequency licensing or pay-per-volume tariffs like those of GPRS/3G. The initial investment is in DLC modem at the meter end and concentrator in substations. The bandwidth offered is not great but the requirements for domestic meters are not great either. Water and gas meters can easily piggy back on such a system but this has to be designed into the system as not all electricity meters are capable of receiving pulse-inputs, previously correctly identified by another poster as the preferable means of collecting input from water meters. The only issue being that a cable would have to be laid from the water meter to the electricity meter and this may be an problem if the water meter is at the boundary.

    The trouble is that ESB competes with other gas and electricity suppliers and I honestly doubt competition would be inclined to use the service of ESB as this would give ESB access to consumption data of their customers which s used for billing but also for market research. This is sensitive commercial information. There are also legal implications as it has emerged that consumer load profiles may be subject to legislation dealing with protection of privacy.

    Smart legislation is required to deal with the subject and the system should be structured in such a way that all market participants have access. This is why I feel this should be handled separately from the utility providers.

  74. Dom K. Says:

    I strongly agree that this should not be delivered by the same people who could not manage PPARS and e-voting machines. Public sector has prove to be rather inapt for managing large-scale IT projects. This goes far beyond the trivial issue of certifying meter installers. Implementing and managing applications behind data collection and validation are much more complex than that.

  75. MarcusOC Says:

    @ Dom K
    The problems you suggest are addressed to some degree in the UK. Meters owned by (almost always) non-utilities and there’s a (planned) central head end service to handle comms and data for all suppliers. I realise you’re likely aware of this; any reason why it couldn’t work in Ireland?
    If ESB are to lead a roll-out, I don’t see why they can’t operate the head end behind a chinese wall or even just outsource it.

  76. Dom K. Says:

    @MarcusOC

    But the UK system is still in conception stage. They are currently defining standards and the system has yet to start operation.

    Whether this could work in Ireland is a matter of opinion. Anything can be made to work if done properly. In my opinion the Irish public sector has a dismal record with projects of similar complexity. Someone else may have a different opinion.

    As far as ESB is concerned I do not doubt their technical competence or honesty. In fact I hold them in high regard. If the arrangement is structured properly surely they could manage the system. It would be rather like telecoms unbundling and Eircom operating ‘the last mile’ for other providers. Of course it can be done but I doubt the optimum solution involves common infrastructure operated by one of the market participants.

  77. hoganmahew Says:

    So smart water meters are a cinch as long as there are smart ESB meters with an already existing network? And these will cost 2bn?

    Hmmm. Perhaps it would be handier to set up a meter reading company that read all meters at once. Maybe as a branch of An Post… (seeing as Bord Bainne is defunct).

  78. EWI Says:

    @ Dom K. (of one-time “Freedom Institute”?)

    I strongly agree that this should not be delivered by the same people who could not manage PPARS and e-voting machines. Public sector has prove to be rather inapt for managing large-scale IT projects.

    Perhaps you can direct me to the public sector factory which created the e-voting machines, or the public-sector software house which created PPARS.

    The PD/FF cult of “outsourcing” is what has hollowed out the past proven ability of the public sphere to deliver.

  79. Sarah Carey Says:

    @EWI

    The key word there is “managing” not “creating”.

    I don’t expect the public sector to create specialised software or hardware. We do hope they can commission and manage such projects without getting ripped off in the process.

    (to be fair, the e-voting was entirely a political whim but PPARS was a management disaster.)
    Over on the waste collection post, I asked why can private companies make money out of rubbish collection while councils have been forced to abandon it? I’m no fan of the PD’s but outsourcing is usually done where there is
    1. a lack of expertise
    2. inability to deliver a service due to higher costs and restrictive work practices
    3. management failure (which is occasionally so acute they can’t even outsource properly, ref the PPARS)

    On water meters I’m not so sure it has to be so smart. We text in our electricity meter readings so we get charged the minimum amount and don’t get stung with estimates. Make it up to the consumers – read the meters twice a year and in between they should read their own. If not they are charged an estimate.

    Otherwise the electricity meter readers could do both on the one trip.

  80. MarcusOC Says:

    @ Sarah C
    It wouldn’t make sense at the margin to have a small army of readers if every household will have a metering comms hub anyway. Better to connect to the elec meter and add minimal extra cost.

    @ Dom K
    I understand your point, but I don’t think there needs to be much management by public sector. I’m no expert, but I gather that there are at least two companies offering services that basically cover comms hub all the way to SAP integration. In a decent tendering process, I’m sure they’d demonstrate how keen they are to prove themselves for other roll-outs.
    Do you know if Irish meters will need in-home-displays? If so it will be interesting to see how they set up in apartment buildings.

  81. EWI Says:

    @ Sarah Carey

    The key word there is “managing” not “creating”.

    I don’t expect the public sector to create specialised software or hardware. We do hope they can commission and manage such projects without getting ripped off in the process.

    I happen to be close to the coal-face on this one. The continued deliberate run-down of the ability of the public sector to do this work itself (both with the outsourcing con and the encroaching victories of the clerical side over technicals and professionals like myself) carries the can here for creating the situation where this occurs.

    Giving examples in this jurisdiction is hazadous to your career prospects, so I’ll instead point to the complete and utter subversion of the public sector by the large contractors in the UK (as ably catalogued by Private Eye).

    If and when the tasks are done in-house (with properly-qualified staff actually responsible for the work), the normal incentives that you would expect apply, and it is universally of a very high standard which meets or exceeds best practice. We are, after all, *professionals*.

  82. Sarah Carey Says:

    @Marcus

    That is the best solution alright, i’m just wondering if the cost and lead time to implement it makes the project viable? I’ve worked on projects before where the best most fabulous solution costs a fortune and take ages to produce. A second best solution would’ve done the job just fine and not broken everyone hearts and bank balance.

    @EWI

    I’ve heard nightmare stories of clerical vs technical (which again points to a management issue – not a production issue if you get me -and given that the benchmarking winners were the managers who still can’t be fired if they make terrible decisions is an outrage…). But is it practical to have specialised software programmers on permanent staff? Maybe it is – but i’d have thought on a project by project basis there are companies who can deliver good products on time. (e.g. payroll stuff should be straightforward, SAP etc..)

    (And eh, companies who’ll rip you off for crap software at any given opportunity and therefore expert project management is a key skill….)

    So yes, contractors can become monsters- I’ve seen it happen too. But it seems to me this consistently boils down to poor management….nothing will change until you have accountability. Whoever ran the PPARS fiasco should have been fired. That is the sort of reform I would dearly love to see come out of Croke Park. Will it?

  83. Dom K. Says:

    @MarcusOC

    To implement this complex project one would have to start with a decent feasibility study to determine the budget and conceptual designs. This has been very badly handled in large projects like LUAS and PPARS. In case of LUAS the initial budget was for some 300m for three connected lines and we ended up with 1000m costs and two disconnected lines. The feasibility study should predict the budget to within 20% accuracy. If one has incoming tenders at three times the budget it’s back to the drawing board time to assess whether the investment is feasible. And yet one of our former Transport Ministers defended the LUAS fiasco by claiming that the project was on the ‘tender budget’. This is utter nonsense as one should have a fair idea how much the project will cost before tenders go out.

    Feasibility study is followed by identification of suppliers and preparation of tender packages. In this case it is likely that there would be a number of tender packages likely split in regional lots. Good knowledge of technologies involved, proper scoping and definition of contractual interfaces is the key. Any gaps and the contractors will skin your back for extras you missed in the contract. This is because they cut margins to win the job and compensate on variations, in particularly those which they know you can’t do without.

    After that everything is down to the control and this does not apply solely on contractors but also of your own stakeholders. Contractors are not the only villains. Let the end users run amok with additional requirements and you will end up with lots of extras which inevitably feed into time and cost overruns. Delay on one of the contracts in the package will have a knock on effect on other contracts and this will result in claims feeding into further cost overruns. What seems like a simple change request if not properly assessed can result in major cost implications. This is how complex projects get shafted and all evidence suggests this is exactly what happened to PPARS. Competence of contractors is irrelevant if contract is not properly managed because the contractor depends on client as much as he depends on its own resources. And even if a client ends up with an incompetent contractor, it is still client’s fault.

    This is a very short brief and behind the steps outlined above are months and months of hard work to keep the contractors on track. It is not a simple matter of selecting the best bidder and paying invoices. Client has as much responsibility for project delivery as the contractors.

  84. Dom K. Says:

    To come back to EWI’s point about the public sector being starved of resources by outsourcing – this boils down to cost of keeping resources on the payroll. Most organizations run projects infrequently to justify keeping highly-skilled PMs on the payroll. Good project director will not work for less than E120k a year. Most organizations I have worked on in my days as consultant have had staff who have participated in rather few large projects in their career. They do not have the skills and the routine required. External consultants have much more up-to-date skills and also, which is very important, are able to give impartial assessment of end user requirements in pre and post award stages. I have seen consultants making dogs dinner out of projects but that too is a fault of the client. If a client can’t manage 2m worth of contract for a consultant employed to manage 500m worth of contracts, it is certain that such client would make a much bigger mess if they were to attempt to manage the same 500m worth of contract themselves.

    I am a fan of using specialists when one needs them and let them go when one does not need them. This is not an ideology but pure practical matter. Some people seem to prefer that the public service employs internal resources for everything regardless of the cost just to show that they are as good as the private companies. They tend to react at E1000 / day with outrage but they seem not to care that the same person employed in the public sector would cost an arm and a leg on the long run sitting idle when no projects are available for them to manage (and bear in mind elephant projects are quite rare and one cannot put any bog standard PM on large contracts) and benefiting from generous pensions etc.

    To answer the query on in-house displays on ESB project – these are a part of the drive to influence the consumer behavior advocated by the previous Green Party energy minister. These are not necessary as the ‘bog standard’ smart meter is capable of remote interrogation, time-of-use tariffs, load profile recording and even remote connection / disconnection.

    Hoganmahew, I haven’t seen the detail of the E2b budget. Back of the envelope figure suggests E500-600m should cover 1.5m or so connections. ENEL of Italy have pulled it off for E80 per meter including central infrastructure but they had a scale to make meters designed to their spec and have delivered limited functionality with lots of trouble in the process. Go heavy with the spec and you end up with E500-600 per meter. Hardly justifiable when your annual revenue is E800 per customer like it is the case in Ireland.

  85. EWI Says:

    @ Sarah Carey

    I’ve heard nightmare stories of clerical vs technical (which again points to a management issue – not a production issue if you get me -and given that the benchmarking winners were the managers who still can’t be fired if they make terrible decisions is an outrage…).

    The management grades are now either all administrative or moving that way. Any comparison of the relative pay of technical and professional pay will show that a huge disparity exists (the colleges and HSE are only the most publicised). The lack of consequences for failure seems to be a universal mark of any large organisation or bureaucracy, not particularly public ones.

    But is it practical to have specialised software programmers on permanent staff? Maybe it is – but i’d have thought on a project by project basis there are companies who can deliver good products on time. (e.g. payroll stuff should be straightforward, SAP etc..)

    This is rather getting into the weeds (I have both engineering and CompSci qualifications, which I’m guessing you don’t). But I’ll simplify by saying that even where exceptionally specialised projects need to be contracted out, a minimum professionalism in the field is necessary in the staff who need to engage with and manage the project… otherwise, PPARS and other shoddy work. If you want to dip a tow into this, look up “Systems Analysis”

    And most of what’s ‘good’ in contractor’s work will turn out to be what they’ve gotten off your own internal professional staff, who will already have a firm grasp on what needs to be done and how. I’ve had my own work handed verbatim back to me in glossy documents (without attribution!) in the past on several occasions.

    So yes, contractors can become monsters- I’ve seen it happen too. But it seems to me this consistently boils down to poor management….nothing will change until you have accountability. Whoever ran the PPARS fiasco should have been fired. That is the sort of reform I would dearly love to see come out of Croke Park. Will it?

    Who, exactly, is responsible for PPARS failing? The immediate project manager, their boss, the boss’s boss? CAn you see the problem here in attributing blame to an individual? As I say above, this just doesn’t happen in any large bureaucracy, whether private public or other. It takes massive personal indiscretion (And then only sometimes) for a member of the “executive” class to get fired in our modern society, which is a problem.

    The fallacy here about Croke Park is that what it’s about is “reform”. It isn’t – it’s all about cutbacks. As an example, the Defence Forces more than a decade ago engaged in a process arising out of a PwC report which has left them an unrecognisable lean, mean fighting machine on employment terms that would make our Galtian overlords in IBEC weep with happiness – and they’ve been savagely cut, just like everyone else.

  86. Sarah Carey Says:

    @EWI

    I recognise much of what you describe. ( I believe there are highly paid consultants running around AIB at the moment rebranding existing work) (btw, I have worked in software companies; been on project management teams for big technical projects and attended board meetings where executives are excoriated for going over budget and not delivering – so I’ve seen all sides of this. In fact, some of my best friends are computer scientists ;-) Your point about scale reducing accountabiity is fair – there are more places to hide in a large organisation – but ultimately people do get fired or “managed out”. – I’ve seen it; contractors are easily let go and VPs have job descriptions and performance reviews. It’s *all* about accountability and PPARS showed there was none.

    I’m not surprised Croke Park is not about reform. No pay cuts for reforms was the supposed deal. If there are no reforms, then shouldn’t there be pay cuts? Doubt the implementation body will be admitting that…

    Anyway, we are desperately off-topic – apologies to everyone else. But I guess how we got onto this is
    - is the state capable- either directly through the public sector or through outsourcing capable of rolling out national domestic water metering in a couple of years at an economic cost?

    The evidence to date is mixed. We got motorways but at a huge cost/risk to the state/taxpayer . We didn’t get PPARs. Are there other precedents we could rely on?

  87. Dom K. Says:

    EWI

    “Who, exactly, is responsible for PPARS failing? The immediate project manager, their boss, the boss’s boss? CAn you see the problem here in attributing blame to an individual? As I say above, this just doesn’t happen in any large bureaucracy, whether private public or other. It takes massive personal indiscretion (And then only sometimes) for a member of the “executive” class to get fired in our modern society, which is a problem.”

    Let us not confuse responsibility with consequences. The absence of latter does not resolve of the former. When a project fails the responsibility is with the PM. If projects consistently fail, this it is an organizational issue and the responsibility moves up the food chain.

    Incidentally, I work with a large private company which does not shy away from staff replacements when something is an issue. In fact, I am the PM number 3 on this gig so it is not entirely true that large companies do not fire or replace staff. But I do agree that failures are not adequately ‘rewarded’.

    You are not, however, going to like what I am about to say. The liberals have fought for decades for ‘job security’ and this is what you have, EWI, in public sector today. Therefore, there is an air of hypocrisy around complaints that ‘executives’ and company are not getting fired more often. The liberal judges returning failures to work, the liberal and restrictive HR legislation have effectively made it cheaper for companies to retain failures than to fire them.

  88. carmel Says:

    have just seen that they have installed a water meter outside my house, i live in the country, surely i should have been asked first, i am disgusted. Have they a right to do this????

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