WET News

4 ALLIANCES 2018 ALLIANCES 2018 Collaboration still a winning formula Consortia and joint ventures remain key to improving efficiencies in water utilities' capital delivery programmes. W ith AMP6 now having reached the half-way mark, the water and wastewater companies' capital delivery programmes are now in full swing aer a slow start to the regula- tory cycle. As s always, the water sector contin- ues to be dominated by the impact of the five-yearly annual cycle with most con- sortia and joint ventures now reporting increased workloads with AMP6 well and truly under way. Just as well as attention is swily turning towards AMP7, as regulator Ofwat begins to pre- pare the water companies over what it will expect from them in the next Price Review (PR19). But there appears to be a growing optimism that the slow start to project start-ups in AMP6 will result in a smoother transition to AMP7 in April 2020. Blame for the slow start to AMP6 was placed firmly at regulator Ofwat's door as projects were delayed while the water industry got to grips with new regulatory demands – mainly adoption of a total expenditure (totex) methodology, and the introduction of outcome delivery incentives (ODIs) to drive greater efficien- cies. This led to a shi in emphasis for the industry's supply chain as the water companies sought different skill sets to help make more of existing assets. However, it is the delays to these pro- jects that could just save the industry's contractors and suppliers from the nega- tive impact traditionally associated with the transition from one AMP cycle to the next. The trend for water companies to use joint ventures and consortia to deliver their capital delivery programmes con- tinues, as this issue of Alliances high- lights. Alliances 2018 is the only guide offering an insight into the collaborative between Kier and Interserve. Earlier this year, Severn Trent and the JV parted company reportedly because of disagree- ment over budget. The Kier/Interserve JV had been work- ing on a £100M infrastructure deal as part of Severn Trent's £300M Birming- ham Resilience project. This work has been picked up by Doosan Enpure and NMC, which have formed a new collaboration in the shape of DNM Alliance. Barhale, MWH and Galliford Try are among a number of contractors and con- sultancies that are old hands when it comes to the alliancing model. But even they have new partners in some cases where they have joined new joint ventures and consortias. This brings with it another round of adopting a new joint culture in order to bring efficien- cies. As a result, behaviour assessments are becoming a growing trend. An obvious shi has been brought about by retail separation, and it is inter- esting to see how different areas of the industry are interpreting and approach- ing AMP7 challenges as a result.With regulators remaining focused on effi- ciency, ever-improving customer service and demonstrable value for money, facil- itating innovation across the industry is going to be key. Closer, more collaborative working and alliances have had a major impact impact in the sector as companies spread risk. This collaborative working is expected to be a feature of AMP7. Technology integration, digital engi- neering and BIM (Building Information Modelling) will also be key to AMP7, especially as there are real cost advan- tages to utilities that can utilise smart systems overlaid across existing treat- ment and infrastructure assets. A continued focus on capital ventures formed by the leading civil and process engineering companies and con- sultants serving the water sector. We have taken the leading joint ven- tures (JVs) and consortia and profiled each one in turn. There has been more focus on long- term thinking also being reflected in the way some water companies are looking to procure the firms that will deliver work during AMP6. Many have opted for alli- ances, and frameworks that run beyond the traditional five-year AMP period. It is possible that this longer-term thinking and the continuity provided by extended contracts will smooth out the traditional rollercoaster ride that the transition from one AMP cycle to the next usually brings. With the AMP6 emphasis being on totex it is inevitable that there has been change in delivery models as the water companies looked at their procurement strategies. This has meant joint ventures and their parent companies assessed how best to respond to the demands and expectations of the AMP6 marketplace. The arrival of AMP6 saw a number of new consortia introduced – ESD, CiM6, KCD, BNM Alliance, for instance – and these will have bedded in by now. In the run-up to AMP6 there was a hive of activ- ity as contractors and consultants jostled for the best opportunities to win work. The activity was more intense this time around as contracts that had been in place for five or ten years were up for grabs again. Miss out for AMP6 and that could mean another five, ten or 15 years pass before some contracts come up again. Not all working relationships are suc- cessful, though, and this was certainly the case for Severn Trent Water and its preferred partner, the joint venture

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