Quantification of Serviceability
ISBN: 1 84057 137 3
The water industry is concerned that Ofwat?s 'serviceability' approach to setting price levels at the 1999 Periodic Review will result in capital maintenance funding being linked to inappropriate serviceability measures and will perpetuate historic expenditure levels which do not reflect future needs. This report therefore aims to clarify the meaning of 'serviceability' and considers whether it is feasible to optimise it. It considers both the regulation of serviceability and methods of analysis that can be used by water companies to improve it. Criteria for evaluating possible serviceability measures are developed and applied. This leads to the conclusion that the main disadvantages with Ofwat's current measures are that they are backward looking, so do not serve as leading indicators, and they do not necessarily reflect customer requirements. The current measures thus have shortcomings both as a means of regulation and as a management tool. Possible new measures are considered
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