WET News

2 WET NEWS NOVEMBER 2014 COMMENT "It means that every- one has got to 'up their game' if they are to be successful..." NEWS+ NOVEMBER 2018 When Scottish Water's £100M Shieldhall Strategic Tunnel project in Glasgow will be completed. Costain and Vinci Grands Projets jv Glasgow Tunnel Partnership is the preferred design and construction bidder. "We founded our business on collabo- ration, innovation, transformation. That's our mantra for delivering our AMP6 business plan successfully" Jason Tucker, Anglian Water's head of capital delivery & SCM 50% of the global popula- tion live in cities and consume 60% of the world's drinking water, reveals Siemens Building Technolo- gies' Tony O'Brien. 60% 50% IN A NUTSHELL "People think we treat drinking water at Blue Plains. Gross! Your drinking water comes from the Washington Aqueduct" @dcwater 4.8MW The amount of renewable power that proposed solar panels will generate at Dwr Cymru Welsh Water's Five Fords WwTW. Plans have been submitted to Wrexham County Borough Council. £22B The amount of money that is expected to be spent over the ™ ve-year AMP6 cycle "I'm very proud to be rejoining a company so ingrained in British engineering..." Balfour Beatty's new CEO, Leo Quinn, who fi rst joined in 1979 as a civil engineer "We will continuously use the latest survey monitoring technology in real time to monitor bridge and highway structure movement before, during and after the TBM completes its journey" Costain's Matt Crabtree on UU's £34M tunnelling project. 20 The number of years water quality in the South-west has steadily improved, according to the Environment Agency F irst it was Balfour Beatty, and now Morgan Sindall has become the latest company to issue a pro t warning. Both are blaming problem contracts for their respective pro t warnings (see below and p3). Morgan Sindall cites delivery pressures, namely cost overruns and delays, in its construction and infrastructure division. The contractor says the problem contracts will be completed within the next six months. In the case of Balfour Beatty, KPMG has been brought in to review the infrastructure group's contract portfolio in the Construction Services UK division. The review is focusing on commercial controls on cost to complete as well as contract value. In other words, the problem will be resolved relatively quickly in the case of Morgan Sindall, but is likely to take longer for Balfour Beatty. AMP6 putting pressure on prices The impending arrival of AMP6 is next April is creating excitement in the industry. Contractors that missed out in the last rounds of AMP4 and 5 are back in the frame seeking out opporunities this time around. The only problem is, the increased competition is putting pressure on pricing and quality (see front page). Unsurprisingly, not everyone is happy about that. Surely, though, this is good for the industry. It means that everyone has got to 'up their game' if they are to be success- ful in AMP6 and beyond. More than £22B is expected to the be the capital delivery spend over the next ve years. That's a lot of money to be contending for a just a piece of. Of course, the winners will be the ones who can innovate, collaborate and bring greater e" ciencies for their clients. Workload visibility is key to overcoming AMP cycle issues Sticking with the ve-year regulatory cycles, are the water companies spending the £440M transition investment that Ofwat was allowing to be brought forward from AMP6? I asked the question recently to be told by one utility that the nal determination would not be announced until December! But wasn't the whole point of the transition investment supposed to be about spending that money before the nal determinations were decided? Richard Coackley, chair of the Cyclicality Working Group, says improving visibility of workload is the industry's next challenge in eliminating the negative impact of the regula- tory AMP cycle (see front page). He rightly says that the transition investment is there to help mitigate the cyclical impact in the supply chain, adding that the industry needs to make it known the release of the investment and in what speci c area of delivery needed. "If we don't use it... we'll lose it," says Coackley. Well put! Pure air, we care. Aware of tomorrow www.pureairsolutions.nl M organ Sindall has is- sued a pro t warning following a number of problem contracts in London and the South-east. The con- tractor cited "delivery pres- sures" in its construction and infrastructure division such as cost overruns and delays, in an interim management statement for the period from July 1, 2014 to date. The contractor said operat- ing pro t margins for the full year are now expected to fall from 1% in 2013 to between 0.3 and 0.5%. In the statement, it said: "The deterioration in per- formance over the period relates mainly to a small number of xed-price construction con- tracts which are due to complete within the next six months and were procured over a year ago." It said additional resources had been used to complete the contracts, which were worsened by in¤ ationary pressures since winning the deals. "Also, where programme overruns are now anticipated, forecast contractual penalties ¥ Contractor expects operating pro™ t margin to fall from 1% in 2013 to between 0.3 and 0.5% this year. Morgan Sindall blames problem contracts for pro t warning have further increased the potential contract costs." During the period, the con- tractor's £15.8M GlaxoSmith- Kline Carbon Neutral Labora- tory of Sustainable Chemistry for The University of Notting- ham was destroyed by re, which further impacted the divi- sion's performance. Work on the laboratory commenced on site in autumn 2013 and was due for completion in early 2015. The construction and infra- structure committed order book was £1.55B as of September 30, 2014, down 5% from the end of the half-year, but up 3% from the start of the year. The group said its t-out divi- sion had traded strongly as a result of increased bidding activity, with an order book of £260M as of the end of Septem- ber, up 17% from the end of the half-year and up 83% from the start of the year. Its a© ordable housing divi- sion remained level with the prior year, with a number of units scheduled for completion in the fourth quarter. NEED TO KNOW The problem contracts are ™ xed-price construction deals, and which will be completed within the next six months Morgan Sindall reported that its 2013 pre-tax pro™ ts were 34% down on the ™ gure for 2012 due to similar problems John Morgan, chief executive, said the problems were "short-term and localised" Morgan said the rest of the business was performing well and that "medium and long-term opportunities and prospects for the group remain very attractive, as demonstrated by the higher quality order book and pipeline "The deterioration in performance over the period relates mainly to a small number of ™ xed-price construction contracts"

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