Using cost-benefit analysis to appraise investments
An United Utilities case study

Page 5: Working with stakeholders

United Utilities 17 Diagram 6In a public service industry like water, gas or electricity, it is essential to make investment decisions that respect the requirements of many different stakeholders.

United Utilities sought to find a solution that met with commercial criteria, met budget and also minimised negative impacts on the community. By working closely with the Environment Agency, United Utilities was able to come up with a socially and environmentally acceptable solution.

Satisfying stakeholders

In terms of satisfying stakeholders, United Utilities considered (and by selecting option 1) fulfilled the following key requirements:

  1. United Utilities 17 Image 9Convinced its own shareholders that the decision was good in terms of financial criteria and maintaining the excellent reputation of the company.
  2. Convinced the Environment Agency that wastewater would be treated to the required standards so that the EU directives could be met in this area of the North West.
  3. Demonstrated to landowners that their land rights would be respected and that huge areas of land would not be taken away from them.
  4. Provided fishermen and consumers of shellfish with good quality stocks and supplies.
  5. Provided swimmers with bathing waters that are of a high standard.

The table below summarises the financial and environmental impacts considered as part of the investment appraisal in order to assess the overall impact of the three options. This clearly shows how option 1 provided the most effective balance of commercial and environmental factors.

United Utilities 17 Diagram 7

United Utilities | Using cost-benefit analysis to appraise investments

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