How healthy is the water sector looking this year?
In the water industry, we work in five year cycles according to when the regulator sets us price limits. This April, we’ll be getting to the end of the third year so it will still be a busy year for contractors. But things will wind down in 2009.
Where are the major opportunities for contractors?
Well the Thames Tideway is an enormous job. The tender has gone for the first phase, so that’s a big opportunity. Then there’s also the new sewage treatment works in Brighton and Hove. Hopefully that job will go ahead this year - it’s been on the books for about 15 years.
Will there be any changes to the supply chain?
Many water companies are looking more and more outside their framework agreements for suppliers. This is opening up the industry a bit more.
What are the main challenges for water companies to attract contractors?
The margins are not as high as in other sectors. Also, with so many big, sexy jobs coming up, like the Olympics and Crossrail, it’s difficult because engineers would rather work on those than smaller, fiddly bits of work that tend to dominate our sector.
Have you noticed a skills shortage?
Yes, obviously it’s an industry wide problem but we’ve found that we’re most lacking in people on a consultant level. We’ve had to recruit from overseas but these people only tend to stay for around three years, taking their experience home with them. We’re then left with a skills shortage on a senior level, where we’re already suffering from the general age profile of staff.
Will there be any regulatory changes?
Our regulator Ofgem is talking about slight changes that will force water companies to estimate their capital expenditure better. At the moment, there is usually a 20 to 25 per cent discrepancy between how much money a water company says it needs and how much the regulator believes it needs. This will help contractors get a better idea of the target price of projects.