Water Demand Analysis

From Series of Digital Solutions for Utilities  

By: Mehrdad Varedi

The importance of water demand forecasting for utilities.

This post talks about the following:

•  The Importance of Demand Forecasting for Water Utilities
• Challenges with Excel and Manual Processes for Demand Forecasting
• The Risks in Demand Forecasting and How to Reduce the Risk?

Are you interested in more details, such as: 

• How much data is enough for accurate forecasting?
• How to reduce the variability in revenue and meet financial targets with confidence? 
• Pricing for meeting financial and sustainability targets at the same time.
• Make benefit of tier pricing and optimize tiers to meet the goals.

Contact me at: varedi@waterlix.com or 

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Importance of Accurate Forecasting

Meeting Financial Targets, Support Planning Team 

Water utility companies have a lot to handle. They have a lot of assets to manage i.e. pumping stations, distribution/collection networks for water and wastewater treatment centers, etc. Also, they have a lot of operational challenges to come over. These activities require provisioning income and planning efficiently to meet the demand and provide the expected service levels.

The water demand is the only source of utilities' income, and it is not under their control hence meeting their financial goals requires accurate water demand forecasting.

Demand forecasting also is used in the water network hydraulic analysis. It is a valuable source in risk analysis and project assessment by asset managers and urban planners.

Challenges with Excel and Manual Processes

Why switch to more robust systems for water demand forecasting?

We all know that we are in a transitional point since the appearance of desktop computers around 30 years ago. Tools like excel that once were magic for every task now have better alternatives. 

Using locally developed software from ten years ago may seem enough for decision-making although it is a good idea to think about having modern tools for demand analysis to avoid risk. 

Why not have a couple of modern tools for peace of mind to avoid a potentially big headache. These days, cloud computing and the accessibility of open source tools have reduced the cost of ownership for software as service products. In many cases, you can try them using a free trial period.

As the historical data grows by tens of thousands to millions of records annually, the complexity of problems such as missing values or abnormal readings in billing systems needs a thorough review. Inaccuracy in the input data makes the forecasts very unreliable and inaccurate. Faster tools to work on large datasets are a must-have, and reducing manual work along with more data validation tools is a necessity. Many ERPs don't support integrated systems for the evaluation of imported readings. Even in that case, human errors may still happen.

There are stories about the failure of billing systems that causes chaos in utilities. It has happened and may happen again. Demand analysis is not just a user of billing data. It can act as a control layer to assure that the ERP data issues won't affect the utility income.

Geographical distribution of demand is another aspect that is not easily possible in simple applications or manual processes. Geo-Spatial features are a differentiator of modern applications that can make life easier. As mentioned before, asset managers, urban planners, and hydraulic analysts benefit from such reports.

The Risks in Demand Forecasting 

Ways to mitigate the risk

One source of prediction and relying on one expert's opinion might be a scary decision.

Large cities have a demand manager because of the importance of the matter. The demand manager usually is a person that needs to have a close connection with other departments such as IT, taxation, economic development, etc. to gather data for a better forecast.

Having a specialist for the demand prediction is a wise investment, especially for the larger utilities, although relying on one estimate is still a big risk.

But, how to avoid it? Having multiple tools to cross-check the results is one way. Using a reliable tool and professional advice from companies that do the job for other utilities is a wise decision.

Communication between utilities and user groups that use similar tools and learning from each other success is also a great way to use tools more effectively and avoid mistakes. Cross validating results with another colleague helps notice the simple errors that may cause trouble.

Another risk is the loss of key people. It reminds the importance of independence to individuals and relying on a system and procedures instead of individuals. Getting connected to a community of users and using software tools guarantees continuity of the demand analysis.

Waterlix Inc. 

Mehrdad Varedi, Founder

varedi@waterlix.com