By Devesh Sharma
The economic impact of water risk has been generally seen by industry through the lens of short-term costs associated with water treatment operations. This long-held but rather flawed perspective has been based on the fear of spending too much money. The problem is, however, that this cost focus is always on up-front, one-time, capital costs. Long-term operating costs, although recognized as important, are often left out of the process or not correctly evaluated.
The cost of operations will dwarf the initial capital cost over the lifecycle of a water plant. When evaluating operational costs, it’s important to account for the hidden costs.
The Hidden Costs of Water Operations
It is critical to take a holistic view of operational water costs and risks. This list is broken down into two distinct themes: conventional, and profound and intangible. The former addresses the questions that need to be asked around what we consider normal operating costs but don’t necessarily drill down enough, and the latter moves beyond simple cost issues to those risks that have a profound and often intangible impact on operations — and are often underestimated and overlooked.
An accountability-managed approach will provide the assurance and insurance of experience and expertise, which will alleviate risk. Photo courtesy of Aquatech.
Conventional Operating Cost and Risks
The issue of assessing operating costs of a water plant really boils down to one thing: flawed assumptions. We often underestimate what it takes to manage the water plant. We need to ask: Is the process design robust enough? Do the operators have enough knowledge to handle spikes and upsets in the feed water? Have we really thought this through?
• Energy – This is always an important criteria and it is surprising how often it gets overlooked. Even when it is included, one must make sure all of the energy-consuming areas of the process, such as intake and waste disposal pumping, are included in the calculations.
• Chemical Consumption – Have the projected requirements considered the variability and fluctuations in the feed water? Has there been a realistic assessment of the true design basis? This is actually an area that is sometimes overestimated because the full design basis is rarely what you actually see. Unfortunately, poor operation (see “Manpower,” below) will eventually wipe away any savings.
• Membranes and Consumables – The evaluation may assume that membranes will have to be replaced at a certain rate per year (e.g., 15 percent) but just one serious membrane fouling event will throw off the entire analysis. Has this been realistically accounted for? Do you have the manpower/knowledge that will ensure adhering to 15 percent or is this just a number on a spreadsheet?
• Waste Disposal – Waste disposal costs are emerging as some of the most significant in the industry today.
• Manpower – At the end of the day, the constant is knowledgeable and experienced manpower. This will make or break all of the issues above. If you don’t have qualified resources, incorrect operation or even suboptimal operation can start a chain reaction that requires more chemicals than needed or creates membrane fouling that will increase chemical as well as energy consumption, which will in turn reduce recovery and hence generate more waste. Just a few hours of suspect operation can negate any well-intentioned operating cost analysis and this adverse impact can last for years.
Profound & Intangible Cost and Risks
• Downtime – When you start looking at the risk of non-operation, or the difficulty of operation with a water treatment plant beyond the paradigm of just that utility section, you get to a much bigger problem: downtime. The impact can be assessed by answering one simple question: What is the most expensive water? The answer is: no water. When a plant is down, an end user may have to buy expensive water from an outside source or, even worse, shut down their operations due to the lack of water. These factors are seldom factored into the evaluation.
• Environmental Risk – This is the impact of not meeting current and future anticipated regulations. Again, it is costly. At best, one may have to pay fines. In a worst-case scenario, one may face a plant shutdown.
• Brand Risk – This may have the most far-reaching and expensive consequences. Brand risk is the end customer’s perception of your ability to optimize water footprint and ensure adherence to standards of environmental stewardship. More and more, we are seeing consumers link their purchase decisions to their perception of a company’s environmental stewardship, which includes the way it deals with water, and penalize those companies that ignore this commitment. Quantifying this risk is difficult but it’s real, and it’s safe to say that the impact is profound.
Mitigating Risk
Based on these risks, it is important to recognize and understand the complete sphere of impact around a water plant. As the saying goes, the first step to correcting a problem is identifying that there is a problem.
It is then important to evolve and have the confidence and the progressiveness to look at a different model of how to manage water. This includes adoption of an integrated accountability-managed operations approach rather than doing things the way they have always been done.
An accountability-managed approach, including outsourcing critical operations functions to the right partners, will provide the assurance and insurance of experience and expertise, and that will alleviate risk.
Outsourcing: A Partnership, not a Transactional Relationship
Keep in mind that it takes deep experience to run a plant and very few entities can truly keep a water treatment plant operating for years on end within the required key performance indicators that were established when it was designed. If the decision is made to outsource operational responsibility as part of a water-risk mitigation strategy, it is critical to look for a resource that not only can offer a complete solution but has also demonstrated a proven long-term partnership view, not just a transactional approach.
Outsourcing and public-private partnership types of contracts have been gaining momentum in our industry and with the ever-increasing challenges in variable feed waters and mission criticality of performance, this type of contracting evolution makes a lot of sense for the end user. It creates long-term accountability from an experienced and knowledgeable operator as well as ultimate predictability of the cost of operations. In a way, this contracting methodology is an insurance policy for water operations.
Increasing water scarcity has created challenges in the form of more difficult water sources. Most of the time, these sources involve increased salinity and onerous constituents. Treating these waters consistently and reliably comes with increased complexities and risks and requires significant experience. With the challenges of today’s water sources, coupled with high performance standards of operation, it’s not as easy as it used to be for an end user to manage their own water facility completely on their own. IWW
About the Author: Devesh Sharma is the managing director of Aquatech, a global leader in water purification technology for industrial and infrastructure markets. He has been with Aquatech since 1997 and he has worked in virtually every facet of the company over the past 20+ years. He also serves on the Board of Directors of the International Desalination Association, the American Middle East Institute and the Carnegie Science Center of Pittsburgh.
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