The term "technical debt" was applied to an effect in software engineering identified in the 1970s by Professor Manny Lehman. Lehman was trying to identify how the new field of software was similar to previous fields of engineering such as civil engineering, which deals with infrastructure and other hardware.
It was intended to appeal, as a metaphor, to indicate future costs to rectify present-day design choices and externalities. Manny’s work was intended to help estimate the cost of large software projects in a better way than looking out of the window and saying something like, “I think it will be a million and a half”.
What seemed odd with technical debt during my years engineering was that technical people and their managers always seemed to state in the fashion of, “you will need new tyres and an oil change”.
This persists in news stories of the perfidy of Thames Water. Financial debt can be stated in legally definite ways in loan paperwork, including tax liabilities. Indeed, fiscal matters are often described as “ironclad”, or “rules”, and debated in sacred terms. They pertain to the rights of rich and powerful people. By contrast matters of the commons pertain to the rights of the people. Tragic.
Technical debt is mentioned in statements of the form, “It would take many years of work, skilled staff, new pumps, new pipes, a reservoir and a clean up plant to make the tree-huggers happy”.
This is odd for two reasons. First, the informal estimate of hardware and labour effort could be turned into a project plan and cost estimate fairly easily by qualified engineers. This would be done by a water company, by a third-party consultant, by the Environment Agency or by civil servants working for the Environment Secretary.
Second, the regulatory theory used for water companies in the UK is termed "regulated asset base". If the assets to be regulated are subject to any technical debt, then why is this not explicitly accounted for to the regulators.
You might think that this financial translation of raw technical debt is very complicated. Yet it need not be. The example of doing car maintenance annually is understood by millions.
The financial statement is often a 12-month Road Fund Licence, an annual MOT, a major or minor service and possibly some exceptional items. Depreciation and replacement can be calculated using accounting conventions used by millions of people. The detail of pumping stations etc. is greater, but is finite and can be handled by contract consulting firms who would have engineers and accountants on staff.
So, Ofwat, what is the Technical Debt of Thames Water? And why do you not know? Or tell us?
Peter Chambers is a Liberal Democrat member from Hampshire.
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