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🚰 "Outcome Based Contracting"

The Water Values Podcast

Photo by Campaign Creators / Unsplash

Table of Contents

Host: Dave McGimpsey
Guest: Alyson Watson | CEO | Woodard & Curran
Category: 🚰 Utilities

Podcast’s Essential Bites:

[5:38] “Our clients in the public sector, who are water utilities, or wastewater utilities […] typically are public health professionals, and […] their number one charge is to provide a service and to protect public health. And they hire firms like ours to deliver those projects. And the thing I think we're leaving on the table there is from the perspective of the engineering firm, for example, we have lots of people with great ideas, [who] want to incorporate different technology and innovation. And the public sector, rightly, is concerned with protecting the public health, and generally wants to incorporate proven technology that's been shown to be effective and not take that risk. And at the same time, as a private entity, we have a risk tolerance. […] If we could […] really focus […]  on what outcomes are we trying to achieve? What does the community need? What does the utility need? […] Can we get to the point where we're agreeing on what are the outcomes we are trying to achieve and then let the different partners focus on the areas that are consistent with their mission and vision, and combine those strengths?”

[7:24] “For example, we’re able to, as a private firm, take the risk on integrating an innovative new technology and do something potentially faster, cheaper, more efficiently, and reap those benefits. Or if it doesn't pay off, be bound to redeliver it in a more traditional way, so that the utility is getting what they need, which is those outcomes, but we're able to increase the pace of adoption and integration of technology and innovation. Because right now we need that. The scale of challenges that we're facing really demands that we're able to integrate new approaches in a much more robust and a faster way than we've been able to in the past.

[13:13] “We really can't expect people to just suddenly start thinking in terms of outcomes, when that has just not been […] our education and that's not been how we've approached things historically. So what we can do […] is to start talking this way internally. So start thinking about, what [have] we traditionally measured and tracked? And how might we evolve from those traditional KPIs […] to talking about outcomes? And that can be something like, instead of talking about profits, for example, what are we actually trying to achieve with those profits? […] Our goals instead of x dollars could be we want to reinvest in our people to this level, we want to provide this level of opportunities to our staff, we want to be able to make this level of contribution to charitable organizations.”

[15:49] “I love the example in Flint, Michigan, where there was an investment in a machine learning tool, which actually achieved a 70% hit rate. So this tool would take in all this data, and prioritize service lines for replacement. And they had a 70% hit rate, meaning when they dug up the line for replacement, it had lead 70% of the time. They didn't have a good way of knowing how to prioritize, and this tool, which is non traditional, and typically would be hard to get scoped, had this really positive outcome. So […] if your goal is to find and replace lead service lines, and you can let go a little bit of the how you're going to get there and integrate a different tool, but focus on the outcome, you're able to incorporate this new approach, which has this really high hit rate from an outcome perspective.”

[16:45] “When Flint went back, hired a consultant that went back to a more traditional approach, that hit rate dropped to 15%. So here's an example where traditional approaches and thinking about […] traditional asset replacement models, […] the outcome was inferior to the outcome that was generated through an innovative approach.”

Rating: 💧💧

🎙️ Full Episode: Apple | Spotify
🕰️ 33 min | 🗓️ 11/16/2021
✅ Time saved: 31 min