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Wessex takes 50% of AMP4 work in-house

News analysis - Wessex Water will be the only major water company to carry much of its 2005-2010 workload in-house. The men in charge talk to

WESSEX CONSTRUCTION Services general manager Sean Cater is understandably excited about what the next five years holds for the construction business at Wessex Water. For the fi st time the company has planned for 50% of its five year work programme to be carried out in-house. The contracting arm now has an arsenal of 1,100 staff, to deliver 50%, or £415M, of the construction programme over the next five years.

And, rather than employing consultants to project manage the programme as the company did back in 2000, Wessex Engineering Services will take the lead, under the guidance of engineering director Andrew Randle.

'Our programme is split into two sectors: treatment and process is one, networks the other. We will do half of each sector, and go outside for the rest. We have a list of prequalifi ed contractors who will bid for work, ' says Cater.

The list includes 20 contractors, 19 mechanical and electrical contractors and 11 consultants. 'We have to benchmark with others to show that we are not paying more than if we went to the market, ' explains Randle.

Cater agrees: 'We have to stay lean and mean, like any contracting business. If we don't mix in-house with external contracting we could end up like a DLO (direct labour organisation) and costs would rise.' Another strategy for keeping costs down is to take over the project management of the programme. 'We have been through alliancing in our joint venture with MWH in AMP3.

We had some successes but ultimately felt that we were paying a bit of a premium, ' says Cater.

'They would manage the contracts and then sub-contract and sub-contract, shipping off the risk and taking a slice down the middle, ' he says.

So, at the end of 2002, after two and a half years in the alliance, Wessex terminated its agreement with MWH and decided to go it alone. The decision coincided with the takeover of Wessex by Indonesian company the YTL Corporation.

'The YTL family are contractors, they understand the business and are keen to get the best deal. They encouraged us in this direction as they have their own experience in this type of delivery, ' says Randle.

'Since December 2002, we have saved £10M against our initial proposals, ' he says.

'In AMP4, Wessex Engineering Services will take design to 30% completion, achieve planning permission and land entry, and review the detailed design, ' says Randle. 'Previously the overheads for this were up to 15% of the project cost, but doing it in-house means that it is only 5%, ' he says.

Bernadette Redfern

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