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Thames Water seeks out contractors for £3bn alliance

Client to ‘completely change the delivery of work’ in Thames Water’s 2015-2020 construction programme via new spending panel.

The client will ask contractors to pair with consultants into single design and construct teams, four of which will sit on a new seven-man panel which will decide how to spend around £2bn to £3bn between 2015 and 2020.

Thames Water will be represented on the alliance board, along with a programme manager and a ‘technology innovator’, with contractors expected to share supply chain members as they carry out essential upgrades to water pipes, treatment facilities and sewers across London and the Thames Valley in the next asset management period (AMP6).

Following a six-month consultation process, during which Thames Water talked to more than 40 supply chain members about its future procurement, it intends to switch to an alliance model from 2015 but will bring in its alliance team from May to start planning and counteract problems with the ‘boom-bust’ nature of water procurement.

The alliance will help to prepare a business plan for AMP6, which will be submitted to the regulator Ofwat ahead of the 2014 industry review of prices.

Thames Water Alliance

The alliance will consist of a team of seven members who will put together a business plan covering construction works from 2015 to 2020 (AMP 6).

The seven members will comprise four contractor/consultant teams, a programme manager, Thames Water and a technology innovator.

There will be two non-executive positions for an independent monitor and an SME representative from its supply chain.

The alliance will have a board that will vote on proposed schemes. Work will be carried out either by one of the design-and-build teams, or directly by a supply chain member on a pain-gain incentivised contract based on the entire programme.

Savings made over AMP6 will be shared between the seven members.


Thames Water capital delivery director Lawrence Gosden told CN: “We have decided to completely change the way we go about the delivery of work and we are going to form a single yet large alliance, which is quite a change from where we are at the moment.

“One of the biggest killers of innovation is not having enough time, being right in the middle of the AMP delivering capital output, whereas if we start that process two years earlier [we can do] all of the exciting things we want to do but [currently] don’t have time; that’s what this next two years is about.”

Mr Gosden stressed that he was happy with the performance of the incumbent contractors and that they would be welcome on the new alliance, but warned that the company needed to get “more bang for its buck” in AMP6.

He said: “Our incumbent contractors are performing really well. Many are operating at zero accidents, they have an exemplary health and safety record, but our challenges going into the future are different.

“We have rising asset deterioration and increased investment required, but there is a huge affordability challenge.

“So we have to get way more bang for the buck and investment for the money we can deploy. The way to get that is to innovate.”

AMP5 contractors:

Black & Veatch - working on improving and maintaining sewage and water treatments plants in the Thames Valley region. They are also delivering the Mogden project.

GB (Galliford Tryand Biwater Treatment [now MWH Treatment]) - are delivering the Long Reach project.

GBM (Galliford Try, Biwater [now MWH Ltd] and Mott MacDonald) - are working on north and south London water and sewage treatment works.

Interserve are delivering the Riverside Projects, both for upgrade and digestion.

MGJV (Morrison Utility Services/Galliford Try) - are working on south London water pipes and sewers.

J Murphy is a leading civil engineering and building company delivering the Deephams inlet works.

MVB - (Morgan Sindall, VinciConstruction Grands Projets and Bachy Soletanche) - working together to deliver the Lee Tunnel.

Optimise (J Murphy and Sons, Barhale Construction plc, Clancy Docwra Ltd and MWH) is working on north London and Thames Valley water pipes and sewers.

Tamesis (Laing O’Rourke and Imtech Process) is delivering both the Beckton and Crossness projects.

These contractors will continue to carry out work until the end of AMP5 in 2015, after which point the alliance will decide whether to assign work to one of the four new design-and-build entities, or to award work directly to a supplier.

The alliance will not preside over several major projects, the identity of which are still to be confirmed but will include the Thames Tunnel and the deal to rebuild Deephams sewage works in Edmonton, with Tamesis (Laing O’Rourke and Imtech Process) and AMK (AECOM, Murphy and Kier) in the running for that scheme.

Mr Gosden said work on alliances being carried out by major clients including Anglian Water and Network Rail had been studied as part of the consultation, which also revealed frustration among suppliers at the difficulty of getting innovative construction solutions recognised.

He added: “We had a lot of feedback about how difficult it is for tier 2 and 3 suppliers to bring some of the value and exciting products they bring into the Thames programme.

“We want the alliance to have a fully integrated supply chain able to reach into tiers 2, 3 and 4 and bring out some of the brilliant ideas and use them on the programme.

“There are people who are brilliant at this. We need the alliance to come on board and really flesh that out.”

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