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Water industry warns of 2010 crash


CONTRACTORS AND water companies this week suggested taking budgets for capital maintenance and major projects out of their five-year spending cycles to prevent a boom-andbust spending cycle.

Such a move could also lead to greater spending efficiency, they said.

The current AMP4 five-year spending cycle completes in 2010 and coincides with the end of the Scottish Quality and Standards 3 (Q&S3) water spending cycle for the first time since water privatisation.

Industry experts said this could spell double disaster for many small contractors, which would normally have gone north of the border to take up the remaining work there.

Engineers have proposed removing capital maintenance costs from the five-year cycle because the work is necessary and ongoing.

'Capital maintenance programmes on an extended cycle would be a partial solution (to boom and bust spending cycles), ' said Mott MacDonald water and environment unit managing director Malcolm White.

Water company representative body Water UK also suggested removing budgets for large projects from spending plans as this would make it easier to plan expenditure.

Ofwat completed a public consultation on the five-year monitoring plans in May, and will publish its recommendations on the length of the review period within the month.

Ofwat has already launched a major initiative to tackle the stop start nature of water industry workload, but this is judged to have failed (NCE 19 August 2004).

It introduced the Early Start programme to let companies bring forward schemes ahead of the start of the AMP4 programme.

This was intended to smooth investment at the AMP 3 to AMP4 change over between 2005 and 2006. 'This didn't have much effect, ' said British Water director Paul Mullord.

British Water has commissioned UK Water Industry Research (UKWIR) to investigate the costs to industry of the fluctuating investment cycle.

'Evidence will put a cost on this. What figure this will be I don't know but I think that people will be surprised, ' said Mullord.

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