Water and Effluent Treatment Magazine
Issue link: https://fhpublishing.uberflip.com/i/300621
6 WET NEWS APRIL 2014 The UKRN is a new vehicle for co-operation that supports the separate independent regulatory frameworks of the individual regulators. The three main objectives of the new network are to improve the consistency of economic regulation across sectors, deliver efficiency of regulation, and identify scope to do better Regulators form new networking group • A new grouping of the chief executives of the UK's nine economic regulators, the UK Regulators Network, will enhance investment and efficiency for consumers. I f acronyms are your thing you will be pleased to learn that there is yet another one to add to the list, UKRN. It is not as pronounceable as Ofwat and easily confused with UKCN espe- cially because the membership of both is almost the same. UKCN, the UK Competition Network that was set up last year, is an alliance of UK sector regulators and the Competition and Markets Authority with the aim to "ensure the consistent and effective use of competition powers across all sectors". The UKCN "brings together" the Competition and Markets Authority with the Civil Aviation Authority, Financial Conduct Authority, Ofcom, Ofgem, Ofwat, Office of Rail Regulation and the Utility Regulator for Northern Ireland. This year's new network is the UK Regulators Network (UKRN). It also consists of the chief executives of the UK's nine economic regulators tasked with "improving coordination across regulated sectors to enhance investment and efficiency for the benefit of consumers". The UK Regulators' Net- work's members include the Water Services Regulation Authority (Ofwat), and the Water Industry Commission for Scot- land (WICS), but the latter par- ticipating only as an observer. "The government welcomes the creation of the UK Regulators' Network (UKRN), with its focus on key issues including facilitat- ing efficient multi-sector infra- structure investment projects and action on customer engagement and switching in regulated mar- kets," the government said in its Budget statement in March. The government intends to consult on whether further measures would support and embed the work of the UKRN." "The UKRN is a vehicle for co- operation that supports the sepa- rate independent regulatory frameworks of the individual regulators. It will allow regulators to work closer together on issues of cross-sectoral significance and to learn lessons across indus- tries which help to improve reg- ulation and the promotion of competition in order to secure better outcomes for consumers." The three main objectives of the new network are to improve the consistency of economic reg- ulation across sectors, and deliver efficiency of regulation. The UKRN will focus on "facilitating efficient multi-sec- tor investment projects, promot- ing customer engagement and switching in regulated markets, assessing cross-sector resilience and cyber-security and develop- ing a clear understanding of the overall affordability of regulated services for consumers," the net- work said. Cathryn Ross, chief executive at Ofwat said: "Independent, stable regulation has delivered a lot. In the water sector, there has been significant improvements in service while bills would be more than a third higher without our challenge on efficiency. It makes sense to look at where regulators can share expertise and take a joined-up strategic approach to deliver greater benefits for consumers. "I look forward to doing that through UKRN." Chairmanship of the UK Reg- ulators network will rotate on an annual basis, with the Office of Rail Regulation chief executive chairing until Spring 2015. Rich- ard Price, the inaugural chair of the group, chief executive of the UK Regulators network, said: "UKRN is an opportunity for regulators to build best practice and to identify ways to deliver greater benefits for the consum- ers they serve. "By sharing expertise and analysis across our regulated industries, we can get new insights and make sure there is a joined-up strategic approach which reduces regulatory bur- dens, gives investors greater confidence, and delivers better for consumers." Price said: "We have come together to build on these suc- cesses so that each of us, in our own sectors can raise the perfor- mance of independent regula- tion in promoting consumer interest, securing a stable envi- ronment for efficient investment and innovation and more effec- tive dialogue with government." It is hard not to become cyni- cal about yet another group of the groups. Although the noble aims of the new grouping cannot be dis- missed, the mechanism does seem overly elaborate given that it is not an unreasonable assumption that all regulators would be looking closely at each other for inspiration and more than willing to provide it. A few meetings of relevant people, and they would proba- bly be a little lower in the rank- ing than the chief executives, seems more than adequate to facilitate the knowledge exchange that yet another net- work is meant to achieve. "It makes sense to look at where regulators can share expertise and take a joined-up strategic approach to deliver greater benefits for consumers." Cathryn Ross, chief executive, Ofwat YOU SAY "By sharing expertise and analysis across our regulated industries, we can get new insights and make sure there is a joined-up stategic approach that reduces regulatory burdens..." Richard Price, UKRN chair "The government welcomes the creation of the UK Regulators' Network (UKRN), with its focus on key issues including facilitating efficient multi-sector infrastructure investment projects and action on customer engagement and switching in regulated markets," George Osborne's Budget statement "It makes sense to look at where regulators can share expertise and take a joined- up strategic approach to deliver greater benefits for consumers. I look forward to doing that through UKRN." Cathryn Ross, chief executive, Ofwat NEED TO KNOW The three main objectives of the new network: • Improve the consistency of economic regulation across sectors • Deliver efficiency of regulation • Improve understanding of how independent economic regulation works in the interests of consumers, markets, investment and economic performance News+ APRIL 2014 WET NEWS 7 • Putting flexibility and freedom into the framework • As framework renewal seasonal consumes procurement teams in the UK's water utility companies, Dave Warner discusses the pros and cons of the framework process, for both big and small fish in the world of water. R egular as clockwork, wa- ter utility companies re- new their Asset Manage- ment Plans (AMPs) every five years. For contractors and sub- contractors working within the water industry it is imperative they align themselves with, and 'work in' with the five-year cycle of financial planning in order to prosper. At CSG, we have one-year, three-year and eight-year strate- gic plans in place to coincide with the various stages of the buying process. We have had a buoyant presence in the water industry for more than 30 years, with sales and marketing strate- gies continually revised and refined to work seamlessly with the public sector's unyielding procurement machine. The use of framework agree- ments for the purchase of goods and services has been common- place in the industry for many years, and governs the relation- ship between water companies and contractors over a defined period of time, usually five years, although it is occasionally the case that a project will 'roll on' for an additional 12 months before being reviewed. O‹en a water company will appoint several contractors and consultants under a particular framework agreement and then identify the most suitable skill- set for a specific project. In many ways, frameworks are extremely effective: they offer compliance with EU pro- curement legislation, continuity and an opportunity for the teams concerned to gain experience and learn from project-to-project. Healthy competition Framework agreements also reduce the time and costs associ- ated with procurement for both customers and suppliers. They provide a set of terms common to each project undertaken within the period, which stream- lines contract negotiations for future individual projects. However, they are not with- out fault. Such is the length of the agreement, both organisa- tions are locked into a set of con- tractual terms for many years. More freedom within the framework process, could help stimulate healthy competition ensuring end-users get the best value for money, as well as keep- ing abreast of market changes and ever-evolving technological developments. In addition, the cyclical nature of framework procure- ment can potentially breed apa- thy with existing suppliers, as towards the end of any five-year term, the teams on the job will invest time and money design- ing new projects, yet there is no guarantee they will be re- appointed to complete the work. This has a knock-on effect for sub-contractors, whereby they have to wait anywhere between six to 12 months from the start of any new framework to go through the design process, begin the building stage and consequently start ordering again. This is again amplified by the fact that the majority of PLCs' frameworks, start and end at the same time, the impact is an immediate drop in sales as the market suddenly shrinks to a fraction of its for- mer size. However, there is a trend developing towards more flexible arrangements and an increase in the occurrence of open bids and special projects, which levels the playing field somewhat for smaller businesses. Special projects encourage a more detailed and in-depth ten- der from potential suppliers, which equates to a more cost- effective, value engineered and longer-term solution. This more flexible, and bespoke approach to individual projects, will help ensure utility companies are provided with the right tools, the right services and at the right price. Our recent contract to provide up- front design assistance, plus valve and actuation specifica- tion across eight sites for Dŵr Cymru Welsh Water's Go to Green initiative, with leading contractor Black & Veatch, illustrates how a departure from traditional framework sourcing was able to provide first class products, as well as effectively minimise lifetime running costs across a whole system. Seventy percent of our busi- ness is with the water industry; as such the team strives to deliver 100% of the industrial valve requirements for water treatment works and water PLCs, with extensive stocks dic- tated by the cyclical process of framework buying. The over-arching aim whether working with a water PLC or contractor, is to provide a comprehensive specification for each project, and actively design the most cost-effective system of working across clean and dirty water sectors. Winning formula There is, however, a growing need to offset the water indus- try's cash flow pattern in the UK, and the diversity of our business interests, which REALITY CHECK • Framework agreements also reduce the time and costs associated with procurement for both customers and suppliers • The majority of PLCs' frameworks start and end at the same time, the impact of which is an immediate drop in sales • The five-yearly cycles have created peaks and troughs of workload in the industry • The regulated periods have resulted in up to 40,000 job losses News+ More freedom within the framework process, could help stimulate healthy competition ensuring end-users get the best value for money include supplying industrial products into other sectors including; construction, hous- ing, highways, and telecommu- nications compensates for the downtimes in framework spending. By definition 'frame- work' is a supporting structure, and ultimately in our industry a way of life, however we do wel- come this increasingly flexible approach, which is proving to be a winning formula for sup- pliers and end users alike. Dave Warner is divisional man- ager, Valves and Actuation at CSG. www.castings-services.co.uk NEED TO KNOW 1 Frameworks offer compliance with EU procurement legislation 2 Sub-contractors have to wait six to 12 months from the start of any new framework to go through the design process, start building and re-order supplies 3 The next five-yearly cycle, AMP6, will start on April 1, 2015 4 The cyclical nature of framework procurement can potentially breed apathy with existing suppliers SHARE YOUR OPINION... yoursaywn@fav-house.com