Our client is a water supply and treatment utility company, serving 5 million customers across the UK
In order to meet the commitments made to shareholders to operate within the Ofwat Financial Determination in 20/21 (and 21/22), our client needed to reduce its budgeted cost base by around £50m in FY21 from the initial budget proposed (around 7% of their cost base)
The company had undertaken three prior rounds of cost saving, of increasing toughness, but was still £10m over budget
Over an intensive 6 week period, the Q5 team worked collaboratively with the leadership team to identify and validate savings opportunities to bridge this gap
Baselined existing budgets and data, understanding the prior rounds of cost cutting
Conducted a set of interviews of key personnel to develop savings hypothesis
Stress-tested these hypotheses, incorporating benchmarking to strengthen the evidence base
Facilitated workshops with the organisation’s senior management to develop an operating model, to ensure that savings identified had grounding in the organisation’s direction of travel (sustainable cost optimisation)
Carried out analysis and design to add rigour to opportunities, to ensure that people, process and supplier related savings were achievable and that risks and mitigations were understood
Facilitated a number of executive review sessions to add ownership, ratify savings and agree accountability for delivery
A projected rate savings in excess of £10m target, with further stretch opportunities identified
A set of savings opportunities, owned by the leadership team, with clear accountability and empowerment for delivery
Opportunities which drive towards a target operating model, rather than eroding organisational effectiveness in search of short term efficiency
For opportunities that required further design, planning was done to understand time, resources and process required
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