WET News

"Each year, there's a few million pounds, I suspect, that's not collected because people have just given up" Prof Rudi Klein, SEC Group. P8 News+ Government must ensure new homes are resilient to flooding, as new research reveals current planning policies is blamed for not encouraging SuDS sufficiently. P4 Onsite: Windermere WwTW uses UV lamps to disinfect final effluent so how did UU take the cost out of this energy intensive process? P11 Insight: Water network management is complex – ensuring there is enough water to meet demand, maintaining an extensive pipe network – but accurate flow measurement plays across the spectrum of activities. P16-17 WET NEWS WATER AND EFFLUENT TREATMENT NEWS • • Specialist Engineering Contractors' Group calls on the government 'to protect or ringfence' cash retentions to remove the insolvency risk. Construction SMEs foot bill for £1bn-plus of cash retentions MARCH 2017 Volume 23 • Issue 3 Murphy strengthens water offering with ADBI buy "…the cost-saving has been the biggest benefit but for me the fact I haven't had to touch them is a bonus!" Gavin Sisson, United Utilities. P11 EC takes Ireland to court for wastewater infrastructure upgrade failure S ome of the leading contractors in the UK are owed more than £1bn pf cash retentions, the Specialist Engineering Contractors' (SEC) Group has revealed. The organisation has analysed the accounts of the UK's top 12 contractors, and found that the nine which published separate figures for retentions are owed more than £800M. This is an indication that the 12 together are owed more than £1bn of cash retentions, said SEC Group. It added that more than 80% of the £1bn – in excess of £0.8bn – would have comprised the retentions withheld by these companies from their supply chains, the over- whelming majority of whom would have been SMEs. One contractor's accounts, said the SEC Group, showed that it was holding a retention amount against its supply chain that was significantly greater than the amount withheld against it by its customers. Cash retentions are deducted from due payments and, therefore, legally belong to the companies that have carried out the work. Thousands of SMEs in the industry wait for two or three years to recover their outstanding retentions. Professor Rudi Klein, chief executive officer at the SEC Group, said the analysis was extremely timely given that publication of a government review of the retentions system is imminent. He said: "There is no other industry sector in the UK where such a large amount of cash is at risk especially for SMEs. "By the time these monies are released back to SMEs in the supply chain some years would have elapsed. In a high pro- portion of cases the retention represents the profit element for SMEs." It estimates that £0.4bn would have been held by public NEED TO KNOW • Small firms lost between £40m and £50m worth of retention monies as a result of insolvencies up the supply chain • The 200-year-old system of cash retentions in the construction industry exists as security in case a firm does not return to rectify defects • SEC Group estimates that £0.4bn would have been held by public sector bodies sector bodies. In this case the retentions provided by the top contractors would not be at risk (since public bodies do not go into insolvency), but there is still a significant risk for the SMEs lower down the supply chain. SEC Group is urging the government to introduce legislation to protect or ring- fence cash retentions to remove the insolvency risk and to ensure that retentions are released on time. Such legislation already exists in parts of Europe, Australasia and North America. Klein told WET News: "These retentions are in effect a loan. You are providing a loan as a form of security in case you don't go back and remedy defects. "The trouble is this loan is funded primarily by the supply chain. Nobody would provide a loan for £1bn without security but that's effectively what's happening with these figures. There's £1bn, this is the top 12 companies, mainly funded by the supply chain without any security whatsoever." The SEC Group is hoping that the government will eventually legislate that where you demand a cash retention to ringfence these monies there is security in place to mitigate against insolvency risk. See Interview, p8. ® MICROFLOW-i Non-Contacting Low Power Liquid Velocity Sensor • Low power consumption • Loop powered • Ideal for remote monitoring • ATEX approved (Ex ia) • Lightweight, compact design • Non-contacting • Maintenance-free • Minimal installation costs • No interruption to operational flow • Cost-effective NEW www.pulsar-pm.com Malvern, Worcs, WR14 1JJ, UK T: +44 (0) 1684 891 371 E: info@pulsar-pm.com MF-i-WET-News-FCBanner-265x90mmmm.indd 1 13-Feb-17 4:45:46 PM M urphy has taken over AECOM Design Build Ireland (ADBI). The decision to buy ADBI helps Murphy broaden its water offering to meet market needs. The company said the acquisition will strengthen its existing presence in the sector by bringing significant design, engineering, commissioning, operations and maintenance expertise to its water sector offering, notably in Ireland. Murphy will be in a strong position as it expands further into complex and integrated work, as clients in the UK and Ireland set out their future investment plans. ADBI's clients include Irish Water and NI Water. Steve Hollingshead, CEO at Murphy, said: "This is an exciting acquisition for Murphy and one that really adds to our skills and experience in the market. It will build on our current offering, and improve the value and service we can give to our clients and their customers. It is another positive step forward in our ambitious business plan to grow and develop over the next decade." T he EC is taking Ireland to the EU Court of Justice for failing to ensure that urban wastewater in 38 towns and cities across the country is adequately collected and treated to prevent serious risks to human health and the environment. Under EU law (Council Directive 91/271/EEC), towns and cities are required to collect and treat their urban waste- water, as untreated wastewater can put human health at risk and cause pollution. The 38 agglomerations with inadequate wastewater infra- structure include Cork City, Dundalk, Longford, Ros- common Town, and Waterford City. The referral decision also raises additional concerns about the failure to ensure that a correct operating licence has been issued for the treatment plants serving Arklow and Castlebridge. The commission initiated the infringement against Ireland in September 2013, followed by warnings in September 2015 and September 2016.

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