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Thames Water paves way for 12 year spending plan

This week’s announcement that Thames Water had chosen capital works partners signals the start of a possible 12-year spending programme, a senior figure within the firm has said.      

“We are looking at a 12-year vision,” said Thames Water capital delivery director Lawrence Gosden. “This is a new direction for us, it’s very different.”

Two design and build consortiums, a programme manager and a technology and innovation specialist were this week set to sign two-year early contractor involvement (ECI) contracts with the water company, allowing them to contribute to the development of its Asset Management Plan 6 (AMP6) business plan before it starts in 2015.

When the AMP6 period formally ends in 2020 Thames will have the option of extending the contracts until 2025.

 “I thoroughly envision that they will deliver,” Gosden told NCE.

The two consortiums are SMB (a Skanska, MWH Treatment and Balfour Beatty joint venture) and CVA (comprising Costain, Veolia and Atkins). MWH has a second role in the alliance as programme manager, and technology firm IBM is the alliance’s technology and innovation specialist.                    

The alliance is set to carry out up to £3bn worth of work. A significant proportion of  this will be paid for on a risk/reward basis, to be evaluated across the alliance as a whole.                                

Speaking to NCE earlier this year (NCE 17 January), Gosden said that Thames planned to have four design and build consortiums.

Gosden this week told NCE that this strategy was ultimately abandoned. “[Four design and build consortiums] is what we originally envisioned,” he said. “But this gives us the chance to keep the build simple, with fewer people around the [alliance] table. The two we have easily have the capability to deliver everything we need.”

During the ECI period the alliance will develop the business plan for the five-year programme.

“Starting two years early we will go in on the first day of AMP6 ready for construction having had the thinking time and the planning time beforehand,” said MWH chief of global strategy and corporate development Ian McAulay, who represents the programme management aspect of MWH’s work in the alliance.

It is hoped that early development of the plan will also help the rest of the supply chain. “The alliance will give a lot of forward visibility, which goes a long way towards helping the supply chain,” said Atkins managing director of environmental and water management Mike Woolgar.       

The ECI period is also intended to foster innovation from the alliance.

“When you get long term visibility to the supply chain it will encourage investment. This in turn will encourage innovation,” said Skanska executive vice president Bill Hocking. 

The decision to appoint IBM as technology and innovation specialist is another step to encourage innovation and has been welcomed by other alliance members.

“Having a new player will bring a new perspective,” said MWH managing director John Abraham, who is working with SMB.

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