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JUSTIFICATION FOR LARGE SCADA SYSTEMS

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					                           Justification For Large SCADA Systems
                                   by David Hope, B.E. (Hons.), Sydney Water Corporation.

                                                   http://www.davidhope.net


SUMMARY

The Sydney Water Corporation’s IICATS Project has been the largest single water utility SCADA (monitoring, control and
telemetry) project undertaken over the last decade in Australia. It was designed to cover assets such as water and wastewater
pumping stations, water reservoirs, and minor geographically distributed assets.

In this paper a brief history of the Project is given, and a picture of the overall vision painted. The Project has had changes in
direction over its life, and the author will cover:

 the original business decision to go ahead with the Project,
 the 1993 business review of the Project which resulted in a reduction in the initial scope to cover the water system only at a cost
  of $94M,
 the 1998 decision to proceed with much of the remainder of the original scope (mainly wastewater pumping stations) at an
  estimated cost of $57M.

The experience of Sydney Water Corporation in justifying SCADA systems is similar to that of most utilities. Although hard
tangible benefits can, and should, be identified to meet business justification requirements, many unquantifiable or unanticipated
benefits have subsequently been demonstrated. These less tangible benefits add considerable value to the investment and help to
illustrate that the use of modern SCADA technology is a fundamental strategic tool for operations as the new century approaches.

To ensure the benefits are properly evaluated, the tactical and strategic needs of all users in an organisation should be taken into
account when formulating and justifying a proposal. In stategic terms, embracing the potential benefits offered by appropriate
modern technology is necessary in maintaining an organisation’s competitive position, and in meeting contemporary expectations.

The author, David Hope, from Sydney Water Corporation, is an end user of SCADA, and has been responsible for obtaining
approval for the 1993 and 1998 Business Cases. This paper presents the business issues from a non-technical perspective.
                                                                   Investigations began in 1987, and in 1989 an initial Business
1    INTRODUCTION                                                  Case gained approval in principle for the replacement of all
                                                                   the old telemetry at an estimated cost of $Aus100 million.
Sydney Water Corporation’s (SWC) principal business is the
supply of water and sewerage services to over 1.5 million          The proposed new system was given the name IICATS -
homes and businesses in the Sydney metropolitan and                Integrated Instrumentation, Control, Automation and
Illawarra areas. The nett current value of the operating assets    Telemetry System.
is around $Aus 13 billion, and the annual income from these
operations exceeds $Aus 1.0 billion.                               The current status of IICATS is:
                                                                    Illawarra IICATS was completed in 1994 at a cost of
Since 1960, telemetry has been used to monitor the                      $Aus12 million, including some site upgrades. It covers
performance of water and sewage pumping stations, and water             about 150 water and wastewater sites in the
reservoirs. This telemetry was designed, assembled and                  geographically separate Illawarra Region. The system
installed in-house, and eventually featured a variety of                was supplied by MITS-Megadata.
technologies, depending on the “era” of installation at each        Metropolitan IICATS - Water was completed in 1997 at
site. The technology more-than-met the needs of the                     a cost of $Aus94million and covers 350 sites. It included
Corporation until the late 1980’s.                                      considerable provision for the later connection of sewer
                                                                        assets. The system is a proprietary system supplied by
As business needs changed, driven by higher customer and                Logica of the UK.
community expectations, the limitations in reliability and          Metropolitan IICATS - Wastewater was commenced in
capability of the old technology was beginning to become                1998, and is due for completion in 2002. The estimated
increasingly apparent. This led the Corporation to consider a           capital cost is $Aus57million, covering 700 sites. Sewer
program of complete replacement, taking advantage of the                sites will be connected to the same telemetry kernel as the
opportunities for improvement in its operations offered by the          water sites. The kernel will be upgraded as required.
rapid advances taking place in electronic and information
technology.                                                        This paper will concentrate on the justification of
                                                                   Metropolitan IICATS, and the benefits obtained.

                                                                      2   DESCRIPTION OF METROPOLITAN IICATS
                                                                   management functions of the Corporation as a whole could be
The major components of the Metropolitan IICATS- Water             optimised.
Telemetry System are shown diagrammatically in Appendix
A. The components are:                                             The original objectives for the project were to:

 The IICATS Telemetry system software kernel                       Improve levels of customer service as a result of improved
 Four telemetry computers (DEC Alpha 3000/400’s)                    real-time information and capability
 350 intelligent remote terminal units (RTUs)                      Reduce recurrent expenditure through more efficient
 An intelligent and resilient wide-area communications              systems operation and maintenance by availability of
  network, utilising a Telstra X.25 network with around 60           better information and systems diagnostics, and by system
  Sydney Water owned packet switching exchanges                      automation
 50 windows-based workstations                                     Reduce capital expenditure through improved planning,
 Connection to Corporate mainframe and web browser                  and optimisation of existing infrastructure

RTU sites vary in complexity from Ryde Pumping Station,            In more recent times, objectives or business drivers have been
where 13 large units pump to 5 main destinations, to simple        expressed thus:
flow meter or pressure monitoring sites. A typical large site
might contain an elevated reservoir, two surface reservoirs         Financial performance - Return on Investment
and a four unit pumping station.                                    Meet customer contract
                                                                    Meet requirements of Regulators (e.g. EPA, Health,
Features of the system include:                                      WorkCover)
                                                                    Display competitive performance to maintain Operating
 Distributed intelligence at each RTU, allowing                     Licence
  independent operation and storage of data in the event of a       Meet contemporary expectations of performance
  communications failure                                            Meet performance benchmarks compared to other
 Ability to down-load programs and data to RTU’s from               organisations
  the Telemetry Computer                                            Position the Corporation for changing demands in the
 Ability to take manual control of sites                            future
 Ability to supervise the operation of multiple sites from         Minimise risks by avoiding/managing incidents
  the Telemetry Computers (e.g. schedule pump operation to
  save energy, or move water through reservoir storages to         The use of these strategic business drivers, which reflect high-
  match Water Filtration Plant production to demand)               level Corporate planning, allows SCADA projects to be
 Flexible alarm reporting                                         placed in a strategic context where the benefits to the
 Greatly increased information about each asset to assist         organisation as a whole may be more easily evaluated.
  operations, maintenance and incident management
 Trending of data from various sites to facilitate fault          4   ORIGINAL BUSINESS CASE - 1989
  finding and system optimisation
                                                                   The original Business Case included nearly 2000 sites in the
These advanced features allow the water supply system to be        Sydney and Illawarra water and wastewater systems, and had
operated in an integrated way, not as a series of individual       an estimated capital cost of $A100million.
“islands” of assets, as previously.
                                                                   The general objectives are stated above. The formal
The water system is operated and monitored from a specially        justification relied heavily on broad assumptions and global
established Systems Operation Centre, which is open 24 hours       estimates of future savings in operation, maintenance and
per day. The sewerage system is also monitored using the old       capital for the water and sewer assets, within the context of
system field devices and communications, re-routed through         the vision. Typically, savings of 5 or 10% of total expenditure
the IICATS top-end.                                                on these items were used.

3   VISION AND BUSINESS DRIVERS                                    On this basis, the project had a pay-back period of about six
                                                                   years.
In the late 1980’s, the revolution taking place in information
technology was seen at strategic management levels within          5   BUSINESS REVIEW - 1993
Sydney Water as providing an enormous opportunity to help
break old, unproductive work, management and power                 By 1993, the estimated capital cost of Metropolitan IICATS
paradigms(remember that word!), by empowering people and           had risen to $150 million, and an intensive financial review
encouraging teamwork.                                              was ordered by the incoming Managing Director.

The vision for IICATS was that it would provide integrated
information and modern capability to a wide range of users
including planners, operators, contractors, business strategists
and senior management, so that the customer service and asset      Items to be given special consideration included:
   staging the project
   reducing capital requirements                                 The planners gave some indication that licencing and
   financial viability                                           regulatory requirements were liable to tighten considerably in
   operators needs, and                                          a few years’ time, and that the old system was unlikely to meet
   extending life of existing system                             minimum standards when that happened.

No benefits were to be claimed unless they could be properly      The wastewater system implementation was therefore staged
quantified and unless the responsible manager was prepared        to follow the water implementation, with allowance in the
to sign off that the benefits would be achieved by being          water implementation made to ensure that wastewater could
reflected in future budgets.                                      be readily added to the same telemetry kernel.

Rigorous needs and benefits analyses was undertaken               6   WASTEWATER SYSTEM BUSINESS CASE - 1998.
involving all users of the telemetry system, including system
planners, operators and business planners.                        The preparation of the Business Case was preceded by a
                                                                  strategic level Value Management Study (VMS) in 1997.
The results were as follows:                                      Apart from being mandatory for large projects in Sydney
                                                                  Water, the VMS provides an ideal forum to:
Water System
                                                                   Bring all the prospective users together to ensure a broad
The major quantifiable benefits were:                               understanding of all needs and opportunities arising from
                                                                    the proposal for the Corporation as a whole
Capital savings - $A35million                                      Confirm overall requirements
Savings in sizing the clear water tanks at the planned             Test alternative options
privately-owned Water Filtration Plants serving over 90% of        Provide guidance on scope, justification and other aspects
Sydney’s population. Without IICATS, much larger storages           of the proposal in the context of the Corporation’s
would be required at the plants to even out supply and              strategic plans
demand.
                                                                  The VMS identified the major relevant areas of Corporate
Energy savings - $A1.8million per annum                           need as:
Scheduling pumps to run in off-peak periods & limiting
number of pumps running to reduce demand charges.                 Regulator - Environment Protection Authority (EPA)
                                                                   Licence compliance
Efficiency gains - $A1.5million per annum                          Reporting on performance
The new technology allowed more effective use of staff, and        Demonstrated diligence in management
improved productivity.                                             Demonstrated excellence in extracting the best overall
                                                                     performance from the wastewater system
All these quantifiable benefits have now been achieved.
Some smaller quantifiable benefits are scheduled for later        Shareholder
years.                                                             Efficiency of operation reflected in cost per property
                                                                   Protection of Environment
The Net Present Value (NPV) analysis based on these                Return on funds invested
quantifiable benefits, and on discounting the sunk costs,          Enhanced incident management capacity
showed a positive return period of greater than 10 years - only    Credibility in the community
marginally financially viable. However, by relying on very
strict criteria for quantifiable benefits, the calculated NPV     Employees
represented the most pessimistic result, unlike many business
                                                                   Appropriate tools to enable business needs to be met
cases where the most optimistic, and usually unrealistic,
                                                                    effectively
benefit scenario is used to calculate the financial indicators.
                                                                   Modern standards of information availability
When the sensitivity was checked using relatively modest
estimates of benefits classified as unquantifiable (e.g.
                                                                  The VMS concluded that:
maintenance, incident management, capital avoidance or
                                                                   The existing telemetry system did not have the minimum
deferral), the payback period is reduced to around 5 years.
                                                                     capability or reliability to meet these needs, in particular
                                                                     to avoid         successful prosecutions under NSW
Wastewater System
                                                                     environmental protection laws(particularly for dry weather
                                                                     overflows from pumping stations), or to meet new
The wastewater operators already received a monitoring
                                                                     requirements for sewerage system licencing to be imposed
service from the existing telemetry system, which just met
                                                                     by the NSW Environment Protection Authority (EPA).
their current needs, although it was sometimes unreliable. The
system was still capable of being maintained, despite the fact     IICATS is now proven technology which can meet these
that some parts were over 30 years old. The operators were           requirements, at the same time maximising the
not able to find enough benefits to justify the capital              Corporation’s investment in the IICATS telemetry kernel
expenditure at that time.                                          The project should cover all Sewage Pumping
                                                                     Stations(monitor and remote control), Wastewater
   Treatment Plants (monitor main parameters), and a
   selection of wastewater system pilot sites (overflows -               Most of these benefits related to better access to
   some with remote control, sewage flow gauges, and                     information, better co-ordination of resources, labour
   rainfall gauges). The pilot sites will allow testing of               savings due to future reorganisations which would not be
   opportunities for whole system operation, and positions               possible without the IICATS tool, better image in the
   the Corporation for the future.                                       community, ability to demonstrate due diligence,
                                                                         assistance to other programs, reduction of risk and better
The VMS considered a series of options ranging from                      incident management.
indefinitely patching up the existing system, to providing a
“Rolls-Royce” solution which involved the renewal of much            All quantifiable capital and operational benefits were fed into
of the existing control equipment. Options involving                 the Corporation’s Cost/Benefit Analysis and Economic
retaining existing equipment, or monitor only via IICATS,            Model, with the following results for the pessimistic case
were rejected as not meeting minimum standards when                  (pilot sites excluded):
measured against current strategic needs and objectives.
                                                                              Capital Cost               $54M
The option recommended in the Business Case involved                          Internal Rate of Return    8.1%
connecting all available signals at existing sites, to ensure that            Net Present Value          $1M
IICATS remote control and monitoring reliability were                         Benefit Cost Ratio         1.02
secured, without chasing all standard IICATS signals by
replacing starters, etc. Seven options, with varying scopes and      Sensitivity analysis shows that the Internal Rate of Return
implementation strategies, were considered in detail and             (IRR) will fall between 8.1% and 13% as the confidence
subjected to financial modelling.                                    factors on operational savings mentioned above rise to 100%.
                                                                     The project is on the borderline of acceptance with a
The recommended option featured a programmed                         minimum IRR of 8.1%, but when coupled with a sensitivity
implementation over four years, compared to ad hoc                   analysis showing the higher possible range above, and
replacement, which was assessed at taking place over an eight        presented within a strategic needs framework, the full value
year period. Based on the actual results of previous projects,       of the project can be appreciated. Implementation risks have
the capital savings due to an organised, programmed approach         been minimised in this case by using proven and familiar
were taken as a minimum of 10% of the total capital cost. This       technology.
approach also had the advantage of delivering benefits four
years earlier, and considerably reduced the risks posed by           7   CASE STUDIES
breakdowns of old equipment over an extended period.
                                                                     7.1 Water Quality - Chlorine Residuals
Justification
                                                                     Four reservoirs on the south-western outskirts of Sydney were
The justification resulted from a rigorous analysis of options,      requiring regular manual re-chlorination to keep chlorine
along with a detailed assessment of benefits accruing to users.      residuals to specified levels. Investigations using IICATS
                                                                     revealed that, using traditional operating procedures, the
Major benefit elements were:                                         reservoirs were acting mainly as balancing tanks, with limited
                                                                     flow in and out. Alternative operating options were
Capital saving: 10% of the total capital cost due to                 formulated and assessed, and some of these options were then
programmed approach.                                                 trialed using the IICATS automatic remote control capability.
                                                                     In the past, multiple site visits would have been required to
Operational Cost Savings:                                            trial different control settings. The pumping regime has now
                                                                     been changed using a few keystrokes at a workstation to allow
 21 Benefits were quantified resulting in estimated annual          levels to move up and down to a greater extent. With the
  savings of $2.2million per annum.                                  regular cycling produced, chlorine levels are now maintained
                                                                     eliminating the need for rechlorination. This saving came
   These benefits were split into:                                   under the “unquantified” heading in the Business Case, but
   Direct Cost Savings (reduced overtime, maintenance                has saved over $300,000 per annum, and eliminated
   contract payments, etc.) - 45%                                    undesirable spikes in chlorine levels at the customer’s tap.
   Opportunity Cost Savings (existing staff freed to do other
   work) - 55%
                                                                     7.2 Incident Management
   Confidence factors ranging from 20% to 80% were
   applied to each item in this category to ensure that the          IICATS was used extensively during the recent
   value used in the financial model gave the most                   cryptosporidium/giardia water quality incident in Sydney.
   pessimistic result. The net amount claimed in the Business        From Sydney Water’s Systems Operation Centre, estimates of
   Case using this method was $1.15 million.                         travelling time for contaminated water could be made, and
                                                                     time stamped information from IICATS was used extensively
 31 Benefits which could not be quantified, which were              to help verify clearance of contamination. Operationally,
  assessed High, Medium or Low Value.                                reservoirs were isolated to prevent or contain contamination,
                                                                     and adjustments to control settings were made to ensure
customers continued to receive full quantities of water, even         contractors, business strategists, and senior management.
though over 30 reservoirs were off-line at times.                     Decisions should not be made which limit the use of
                                                                      systems to a single group of users in the organisation.
During the water quality incident, a valve linking the 30 km         Business Cases should be based on all the needs of the
long, twin 1800mm pipelines from Warragamba Dam to                    Corporation, from the tactical to the strategic, if they are to
Prospect Water Filtration Plant closed suddenly during a              succeed. They need to take a broad and innovative
maintenance activity. This caused “water hammer” along the            approach to matching the needs to the potential of the
full length of the pipelines, causing all anti-vacuum valves to       available technology. The thinking that goes into the
activate, as designed, to protect structural integrity. This          development of the Business Case should ensure that the
resulted in spectacular water spouts, but also meant that the         SCADA System reflects the Business Needs.
normal Spring flow to the Filtration Plant of about 1400             Business Cases should be put together by users.
megalitres per day was interrupted for over 13 hours, while          Benefit analyses should make an attempt to value
the anti-vacuum valves were re-set. IICATS was utilised from          unanticipated and unquantifiable benefits, otherwise
the Systems Operation Centre to ration water throughout the           opportunities to gain the most out of SCADA systems may
distribution network, at a time when many reservoirs were             be missed. A useful technique is to calculate minimum
isolated. In a convincing demonstration of the capability and         quantifiable benefits, and then carry out sensitivity
value of IICATS, no customers went without their normal full          analyses by allocating dollar values to various realisation
quantity of water.                                                    scenarios for unquantifiable benefits.
                                                                     Based on hard, tangible benefits, SCADA is often a
7.3 Dry Weather Sewage Overflow                                       marginal investment. It is often the strategic value that
                                                                      prompts water utilities to invest in SCADA.
The pumps at a Sewage Pumping Station failed due to a                SCADA users should be prepared to change their
control problem. Due to a communications failure in the old           organisations and work practices to exploit opportunities
telemetry system connected to the site, the pump failure alarm        for benefits.
was not received. Furthermore, limitations in the old telemetry      The new IICATS technology has delivered all the
meant that the alarm was not re-transmitted when                      quantifiable Business Case benefits forecast to-date.
communications were restored, allowing a continuous                   Moreover, considerable additional benefits have been
overflow of sewage for several days before the problem was            realised. Of particular value have been some of the
discovered on site. Following implementation of the new               unquantifiable benefits - those that did not count in the
IICATS technology, such a situation will not occur, allowing          financial evaluations - covering normal operations,
Sydney Water to meet its diligence requirements under the             information management and incident management.
current tough NSW environmental laws.
                                                                  And lastly, a few thoughts from a SCADA user about the
8   CONCLUSIONS                                                   future...

 SCADA Projects have their best chance of success when           SCADA buyers in the future will be looking for systems that
  evaluated in terms of all the strategic needs of the            match what’s available in other computer-based systems.
  organisation, including future positioning. Minimum             They will expect RTU’s and Telemetry Computers to behave
  standards of performance should be established, taking          for them like their PC; their communications network to
  into account all needs.                                         keep up with advances in telecommunications and the
 SCADA systems with the advanced overall functionality           Internet; their workstations to give seamless access to other
  of a system like IICATS should be seen for their value as a     computer applications; and their configuration to be done
  powerful, integrated information system, linked to other        without programming. They will expect to be able to buy
  Corporate systems such as the customer service,                 hardware and software from a range of suppliers, and for
  geographic information, business planning and                   these items to be compatible and standardised. They will
  maintenance systems.                                            need to be able to upgrade parts of their systems in stages
 SCADA systems should take full advantage of the                 when demands or business drivers change.
  opportunities provided by modern information and
  electronic technology to maximise potential benefits.
 Modern SCADA systems can be an integral part of the
  success of a water and wastewater organisation. These
  systems bring with them an advanced capability and a
  flexibility which allows organisations to operate to the
  expectations of their customers, regulators, owners, and
  the community at large into the future, and to remain
  competitive.
 All potential users/stakeholders should have extended
  input to decision making through processes such as Value
  Management Studies, as SCADA is an expensive tool
  which can yield great benefits if the right proposal is
  formulated and the full potential is harvested. These users
  include planners, operators, customer service staff,
                                                     ABSTRACT


The Sydney Water Corporation’s IICATS Project has been the largest single water utility SCADA (monitoring, control and
telemetry) project undertaken over the last decade in Australia. It was designed to cover assets such as water and wastewater
pumping stations, water reservoirs, and minor geographically distributed assets.

This paper covers the major business cases and business decisions made throughout the Project, the first being in 1989 and the
latest being in 1998.

The experience of Sydney Water Corporation in justifying SCADA systems is similar to that of most utilities. Although hard
tangible benefits can, and should, be identified to meet business justification requirements, many unquantifiable or unanticipated
benefits have subsequently been demonstrated. These less tangible benefits add considerable value to the investment and help to
illustrate that the use of modern SCADA technology is a fundamental strategic tool for operations as the new century approaches.

To ensure the benefits are properly evaluated, the tactical and strategic needs of all users in an organisation should be taken into
account when formulating and justifying a proposal. In stategic terms, embracing the potential benefits offered by appropriate
modern technology is necessary in maintaining an organisation’s competitive position, and in meeting contemporary expectations.

The author, David Hope from Sydney Water Corporation, is an end user of SCADA, and has been responsible for obtaining
approval for the 1993 and 1998 Business Cases. This paper presents the business issues from a non-technical perspective.

For current information, visit http://www.davidhope.net
                           KEYWORDS

SCADA
Telemetry
Justification
User Needs
Strategy
Benefits
Financial Evaluation
Business Study
Sydney Water Corporation
IICATS
Water Utility
Business Decisions
Business Cases
Benefits
Business Drivers
Water
Wastewater
Sewerage
Future