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AMP6 will focus on more than just price

The transition from Asset Management Period 5 to AMP6 is rapidly approaching. The procurement process for major frameworks is well under way, and in some cases complete.

We are looking into the next AMP knowing that a step-change is required in the way we deliver projects and programmes of work. The focus is on TOTEX, service incentive mechanism (SIM) and ‘outcomes’.

With the introduction of these new measures, the procurement and tender process is undoubtedly becoming tougher. The key factor is that the tender process is now about the entire solution and is less reliant on purely the lowest price.

While price is still crucial to our clients, so are AMP6 key drivers such as OPEX, health and safety, CO2 reduction and corporate social responsibility. 

TOTEX will increase the demand on tender resources across the supply chain to ensure that we meet every client requirement.

Working with clients on a new approach

Water industry clients are also keen to adopt an offsite build approach for a large proportion of their programmes where possible. By manufacturing in a controlled environment, health and safety risks are significantly reduced for the entire supply chain.

Rigorous quality testing is undertaken prior to delivery to site, ensuring that the client receives a fully functioning product. Reducing site activity also has less of an impact on water customers, improving the SIM.

A major driver of the forthcoming AMP, SIM is designed to improve the level of service that water companies provide to their customers, measured both quantitatively and qualitatively.

“The introduction of TOTEX will drive more innovation rather than the reticence we have encountered over AMP5 in implementing new technologies and innovation”

We have been working more closely with our clients in terms of programme visibility, which has been important in terms of maintaining our workload over AMP5 and across the transition.

Stable future for the sector

For us, company activity within the water sector for the remainder of AMP5 is healthy. The securing of capital maintenance frameworks assists us in spanning the transition.

We are therefore not expecting as much of the dramatic cyclical drop that is characteristic with the industry.

Although we have seen a reduction in high-value capital projects, the flexibility of our business has allowed us to develop our asset refurbishment and optimisation teams, which we see as cucial in the next AMP.

The introduction of TOTEX will ultimately drive more innovation, in contrast to some of the reticence we have encountered over AMP5 in implementing new technologies and innovation.

TOTEX is beyond simply driving costs out by adopting different products and methods. Our focus will remain on working closely with our clients on the entire solution and not just the asset.

Mark Hanrahan is business development director at NMCNomenca

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