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Running water

Project 102A

Anglian Water's demonstration scheme is different to most, not being a project but a complete restructure of the way it carries out its capital works.

'This is not a physical scheme but an organisational one,' explains Phil Butler, head of commercial consultancy at what is now Anglian Water Services - Technology Group.

The transformation, headlined Anglian Water 2000 is being driven by increasingly tight operating parameters for the water companies. OFWAT, the water industry regulator, has powers to limit water charges and says in the next five year period Anglian must cut its bills by11%. 'And there are tighter European environmental and other standards to achieve, on beaches for example,' says Butler. These will require extra expenditure.

On top of the difficulties of balancing the income and expenditure equation in the UK, Anglian Water is ambitious. Like many water companies it is increasingly operating worldwide, taking on clean or wastewater franchises for cities from Santiago in Chile to Wellington in New Zealand. Butler was flying to Poland after meeting NCE.

At present Anglian has 5M UK customers and 4M abroad.

By 2007 it aims to have 10 times as many overseas and to be one of the top 10 world companies, as well as first in the UK. The measure will be share price and profit, modified by responsiveness to customer and other indicators, says Butler.

Anglian also wants to be a major player in industry initiatives such as partnering, promoted by Egan and Latham. The organisation is keen to take the best of these techniques to improve overall performance of engineering and contracting 'asset delivery' by concentrating resources and opening up interactions between interested parties.

In essence Anglian is putting in place much tighter controls on project delivery. 'We identified the demonstration projects as an important way to share information from our initiative and find out what others are doing,' Butler says.

Butler has set a 20% reduction in capital construction cost and an equal saving on capital management as targets, to help make a maximum contribution to growth.

Anglian inherited a regional structure when privatised at the end of the 1980s, which was retained for the engineering side even after the group's administration was concentrated into one headquarters in 1994. But five engineering divisions, later reduced to four, tended to work separately on their projects with little crossover of resources or knowledge.

'We could find ourselves repeating lessons already learned elsewhere on perhaps a half a dozen projects,' says Dave Lyon, head of the newly created technical standards and development section.

'On top of that, project controllers would tend not to release spare people or resources to other divisions, in case they needed them themselves,' he says.

These issues were brought under the microscope in a major study Anglian Water Engineering carried out in first six months of 1998, in conjunction with management consultant AT Kearney.

'We also had some early results from changes made following an initial review in 1996,' says Butler. Project managers in one Anglian office were separated from the technical team to concentrate on pushing the job through. The efficiency improvements were marked enough for Anglian to introduce the policy group-wide as part of the Anglian Water 2000 project.

'The true engineer has a tendency to get caught up in solving technical problems, even when commercially there may be a better way round it,' says Butler. 'Previously you could say we just managed projects rather than project managed them.'

That separation, with a new breed of project managers in liaison with the end-users - Anglian's operational managers at water purification plants and sewage treatment units on the ground - will be at the heart of the company's reorganisation plan. A host of asset supply procedures and details are being rethought to ensure that the whole new structure is 'sustainable'.

From now on all projects will have a dedicated project manager, charged with primarily commercial objectives. 'They take courses on Prince 2 project management methodology and will be assessed on it,' says Butler.

The project manager assigns responsibility for technical implementation to responsible engineers and support teams drawn from a technical engineering pool. Anglian has closed the regional offices and created a single engineering unit, housed since August in Peterborough. The office layout illustrates the new approach; open-plan seating includes the bosses, such as Butler. Meeting rooms allow necessary private discussions and a 'breakout area' allows groups to meet and provides quiet for individuals to concentrate.

'We are even looking at the possibility of engineers having a 'mobile' desk so that they can assemble in work groups as needed, in a completely flexible manner,' Butler says.

In future, professionals will make career choices in consultation with their boss as to which path to follow - project manager or technical engineer.

For some engineers, the upheaval has been traumatic and they have taken severance deals. But around 200 are among the 350 staff now in Peterborough.

The reorganisation is just the start of Anglian's rethinking. Flexible team-based working will be combined with strategic partnering for example. Anglian has been working through a long and sometimes arduous process to knock its list of 250 suppliers down to just 12 partners for civils, process and network (pipeline) tasks. Two rounds of shortlisting by detailed questionnaire-based information gathering were followed by Anglian management visits to firms as 'reality checks'. The 12 strategic partners will be partnering their own supply chain. 'You don't get the full benefit of partnering unless it is carried out all along the supply chain,' says Butler.

As well as working to a target cost contract, partners will supplement engineering resources from the central pool to deal with the annual capital spend of £350M and overseeing £16bn worth of assets.

Anglian has broken its capital works operations down into a complex seven stage acquisition sequence (see chart) initiated by the asset manager at strategic level, where a five year programme of asset needs is considered.

If his 'pitch' for a new asset is successful - judged by cost effectiveness and return - a 'project delivery programme' is set in train.

At various stages, direct control or 'responsibility' is handed over to others though the client manger keeps a watching brief.

All this is controlled by a live flow control process set up on the firm's Intranet. On computer, the chart can be 'drilled down' by clicking on boxes for detailed explanations and charts of what is required for a particular stage. At a deeper level specific templates for forms and so forth are given.

The project teams will be helped by a store of experience gained from other schemes. This knowledge gathering exercise includes an Intranet 'Knowledge Bank' where engineers can 'make deposits' as well as draw on past developments and ideas. They will even get a 'balance statement' of ideas submitted and withdrawn, to be used in career review procedures.

The Anglian Water 2000 development team is already exploring new ideas, and will shortly begin a job and asset maintenance (JAM) procedure to get better information about the real cost of operating and maintaining various aspects of plant.

How the success and impact of the Anglian Water 2000 project can be measured is less clear.

The 20% cost saving targets can obviously be checked against estimates as projects proceed and against similar past schemes. But exactly which of the M4I Key Performance Indicators can be used is still to be worked out and some specific indicators might be developed, says Butler.

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