Utility Week

UTILITY Week 16 05 14

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UtILIty WEEK | 16th - 22nd May 2014 | 9 Interview Y ou've got to be in it to win it, so the saying goes. Thames Water is taking this advice literally in regard to delivery of its sixth asset management plan (AMP6). It has ditched its traditional role as the "client" of the contractors employed to carry out capital and operating work in the period 2015-20. Under a new alliancing arrangement, Thames effectively becomes one of their number. Eight2O is an alliance of eight powerful firms: Thames Water; two large design and build joint ventures – CVA (Costain, Veolia, Atkins) and SMB (Skanska, MWH, Balfour Beatty); technology company IBM; and a pro- gramme manager, also MWH. Thames holds a 50 per cent stake; CVA and SMB 20 per cent each; IBM 5 per cent and MWH in its programme manager role 5 per cent. The companies are rewarded and penalised on the basis of collective performance, according to their stake size. Incentives are aligned to Thames' PR14 business plan outcomes. And the board works by unanimous agreement, so no decision can proceed unless all parties agree. Eight2O will deliver at least half of Thames' AMP6 programme, and it could end up being a lot more. So how has this Musketeers approach to AMP6 deliv- ery come about? Thames' PR14 customer research posed a challenge that will be familiar to companies across the sector: how to maintain levels of service while keeping bills affordable. Thames opted to throw the problem out beyond its own walls. Lawrence Gosden, hitherto Thames' asset direc- tor (from next week he takes on a new role heading the company's wholesale wastewater operation as part of a broader business reorganisation), explains: "We went out to our entire supply chain, right down to subcontrac- tors – plus people we didn't work with and industry bod- ies – and asked how we should tackle this conundrum for customers… We went out on the road… some of our contractors told us we were the first client organisation ever to have set foot in their offices, which is staggering. It shows something, doesn't it? "We badged the whole thing, 'the listening phase'. It's hugely therapeutic to stop for a minute and just listen. It's powerful. But it takes a lot to be able to do that – a huge investment." You cannot write innovation into a contract, says Gosden, but you can "provide an environment to allow innovation to flourish". He continues: "You need collab- oration for people to feel able to put their best ideas on the table, and for everybody to succeed from that." Fast forward to May 2013 and Eight2O was founded. The alliance has a number of interesting features, beyond its basic structure and incentivisation package. First, it has swept away capex and opex boundaries and will work entirely on a totex (total expenditure) basis, in line with PR14 principles. Second, embedding a technology innovator within the alliance is a departure from the traditional practice of tendering IT on a contract-by-contract basis. IBM will perform a number of roles, chief among which will be smart analysis of the billions of points of data Thames herds, plus other publicly available datasets. The objec- Lawrence Gosden, asset director/head of wholesale wastewater, Thames Water Graham Keegan, chief operating officer, Eight2O

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