Water companies must overhaul their relationships with supply chain partners if they are to successfully deliver the billions of pounds worth of upgrades and new projects needed in the coming years.
That was the message from water company capital delivery teams, who stressed the need to step away from traditional heavy engineering solutions of the past and embrace flexible, innovative approaches.
Looking ahead to the next asset management period (AMP8), United Utilities’ capital delivery manager, Fern Curtis, explained the organisation’s shift in thinking.
“As we push forward through enterprise and direct procurement, we will be stepping away from some of our engineering standards,” she said. “We’ve been a very engineering centric organisation but we’re recognising that to deliver the scale and tap into the innovation that’s out there we’ve got to be much more agile and flexible, so my ask to the supply chain is to show us what can be done.”
She said the experiences of these partners working in water sectors around the world as well as companies across the UK will be invaluable to enable UU to follow best practices and deliver its programme as efficiently as possible.
Curtis said the northwest firm had equally ambitious proposals submitted for AMP8. She described it as a “massive challenge” to coordinate the delivery and ensure consistency and stability between up to 50 supply chain partners.
“The scale of the programme means we can’t directly oversee everything – the supply chain must be able to act autonomously,” and she said building trust into the culture of work will be key.
With a greater focus on nature-based solutions, the company is looking to deliver many small, low-value but high volume projects, which Curtis said would require standardised design and delivery coordinated across all the contractors UU works with. She said a big change will be working with many more smaller contractors. As well as up to seven tier one suppliers, the company anticipates “spending billions” with tier two and three suppliers.
Martin Jackson, head of strategy, architecture and produce management at Northumbrian Water, echoed that his company was exploring an operational overhaul. He said it had become clear that Northumbrian would not be able to deliver what was required in AMP8 for customers and the environment with its existing operational practices.
This will include forging new partnerships with suppliers and contractors to facilitate the necessary, rapid growth.
The emphasis on whole catchment approaches and making use of nature-based solutions opens up opportunities but also presents logistical challenges to coordinate between multiple groups, contractors, stakeholders, partners from local authorities, environmental groups, regulators and more.
The scale of capital delivery in the coming five-year period will require significant ramping up, which Richard Price, chief engineer at Pennon, said the organisation has begun already to avoid a dip between AMP cycles.
He stressed the importance of providing insight and management action with clear visible pipelines of work and explained the final two years of AMP7 were designed to ensure a “smooth and boring” delivery rate. The company will also commence its AMP8 plans from spring 2024 to get a head start.
For Pennon there will be greater emphasis on forging partnerships with tier one contractors, which will be a pivot from its current model of working with multiple tier two and three suppliers.
Each emphasised the importance of partnerships being sustainable with clear communication and an onus on the water companies to create the right environment for contractors to be able to deliver.
Jackson echoed this and added that Northumbrian was looking outside of the sector to learn from experiences of other industries too.
“There needs to be joint incentivisation to create relationships where both partners win,” Jackson said. “The right environment for innovation needs diversity of thought and cross-pollination of ideas. It’s all about co-creating for the future.”
Jackson, Curtis and Price appeared on a Utility Week webinar, in association with Autodesk, discussing the changing nature of client-contractor partnerships in AMP8. Listen back to the full discussion here