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FORUM | COMMENT This is hundreds of millions of pounds that could have been spent elsewhere – namely in the water and sewerage infrastructure VIEWPOINT One contractor charged a water company for a full fleet of company car usage when only half were actually used for the job. In another instance, pension recovery costs for a full complement of staff were charged by a contractor when only a portion of the staff were eligible. Inflated staff rates, and the number of hours billed are just two other areas where, according to the Orange Partnership, contractors have been overcharging water companies. The Orange Partnership says this culture has cost the water industry a staggering £500M in AMP5 (see front page). That is the cost of a water company's five-year capital investment programme! And this is hundreds of millions of pounds that could have been spent elsewhere – namely in the water and sewerage networks – and in contributing to lower bills for customers. The Orange Partnership says it wants to warn the water companies about the overcharging as the industry builds up towards AMP6. I would like to think that the water companies scrutinise their costs with a fine tooth comb. If they don't, why not? by Irfan Rehman Maureen Gaines Editor TEAM Editor Maureen Gaines maureen.gaines@fav-house.com Production Editor Mike Smith Advertisement sales Deborah Lilley deborah.lilley@fav-house.com Classified sales Danielle Wood danielle.wood@fav-house.com Team administrator Clare Klos clare.klos@fav-house.com Production controller Sharon Miller sharon.miller@fav-house.com Publisher Angela Himus angela.himus@fav-house.com ABC Average circulation Jan-Dec 2011: 6,110 Published by: Faversham House, Windsor Court, Wood Street East Grinstead, West Sussex, RH19 1UZ T: 01342 332000 F: 01342 332001 Subscriptions: - 1 year: UK £99 Overseas (airmail) £113/$198 - 2 years: UK £171 Overseas (airmail) £199/$349 Publisher's note: This issue includes editorial photographs provided and paid for by suppliers. Online: Search WET News' archives for more jobs, news, features, products and services, events and training courses. Visit: www.wwtonline.co.uk Subscriptions: 0208 955 7045 or Totex is an opportunity for robust incentives THE UTILITY, sector's regulatory Totex (Total Expenditure) should present water companies with their best opportunity to date to show once and for all that the lowest possible price isn't the first, best or only solution. We've long championed whole life costs, most recently offering our customers a 20-year-plus life on our agitator gearboxes, so on the face of it, Totex should be a positive move, with real potential. Some say that there has been precious little time to prepare for it. However, if one's principle is always quality over price, built on top quality engineering design and manufacture, then a change of mindset isn't necessary. It has been reported that water companies who fully embrace Totex should be able to create efficiencies up to 15% greater than those achievable under separate Capex and Opex operations. Realistically, this looks like being a major challenge, but if those efficiencies can be achieved then we're hopefully getting closer to a win-win. Ideally, Totex should see water companies practice what they preach by awarding work on the basis of improved operating and whole-life costs, even when initial set-up costs appear higher or supposedly 'uncompetitive'. Changing attitudes in purchasing / accounts departments on this subject would be a major breakthrough for the better of the whole industry. Let's hope that by treating Capex and Opex equally there will be more consistency and increased collaboration between water companies, their contractors and suppliers. With this should come more opportunity and flexibility to demonstrate those true whole life costs − from those of us who can provide equipment such as our new RL-3 non-ragging impeller, that can cope with the industry's current and future needs – and whom can importantly provide an equally high standard of back-up. We're still referred to as 'the supply chain', but most of us now do far more of course than just 'supply'. At Chemineer our technical and practical expertise means we can prove our whole life costs for anoxic zone and activated sludge applications, so with Totex it would be very refreshing to know that this is being taken into serious consideration, rather than the bottom-line seemingly cheaper price offered by those with only very short-term solutions. It is possible to be open-minded and creative in developing the right assessment and scrutiny criteria for bids. For several years we've enjoyed a first class relationship with one water company who has worked hard to remove the 'buy cheap' or 'buy what we've always bought' mentality', encouraging instead the model of bottom-up costing. With Totex, water companies can also hopefully do more to provide robust incentives for suppliers to deliver operating efficiencies. Irfan Rehman is sales manager at Chemineer UK. www.chemineer.co.uk Putting you in control of your systems Z-Tech Control Systems Ltd FHcustomerservices@abacusemedia.com WET News is registered at Stationers' Hall. Origination by Faversham House Group, and PH Media, Roche, Cornwall. Printed by Pensord Press, Tram Road, Pontllanfraith, Blackwood, NP12 2YA. Copyright 2014. Faversham House. No part of this publication may be reproduced without prior written permission from the publishers. Every effort is made to ensure the accuracy of material published in WET News. However, Faversham House will not be liable for any inaccuracies. The views expressed by contributors are not necessarily those of the editor or publishers. Text paper is printed on PEFC accredited paper. For more info see www.PEFC.org. License number PEFC/16-33-141. Technical articles of full page, or more appearing in this journal are indexed by British Technical Index. © 2014 Faversham House ISSN 1364-4513 A member of: Systems Engineers C&I Technicians M&E Engineers For systems maintenance and renewal call: 01223 653500 www.z-tech.co.uk January 2014 | WET News | 7

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