20 | Alliances 2014


Thames Water plans a significant amount of work to upgrade deteriorating infrastructure over the coming years. To deliver this, the company felt a different approach was needed in the shape of − an alliance.


Thames Water’s fantastic four


THE START of AMP6 may be 18 months away but Thames Water has already selected the four companies it wants to help deliver its multibillion-pound capital investment programme. The four companies are MWH (programme manager), IBM (technology and innovation provider) and two design and build consortia, CVA and SMB.


The alliance − its name will be announced next month − is set to carry out between £2B and £3B of work. Thames Water’s investment programme for the five years from 2015 will be finalised following the 2014 water industry review of prices by regulator Ofwat. There is also the potential to extend contacts after this five-year period to 2025.


The alliance has signalled a complete transformation in the way Thames delivers its capital investment.


Lawrence Gosden, Thames Water’s asset director, explains that the decision to use the alliancing model was driven by the response received following a massive consultation exercise last year with the industry supply chain. He says the exercise gave “a real understanding of what the pressures are”, and led to Thames changing completely the way it works and to form a single, large alliance.


A supplement to WET News


Gosden says: “We have a significant amount of work to do upgrading our deteriorating infrastructure over the next 25 years and beyond, while keeping customers’ bills affordable. If we are to achieve this, a different approach is required.


“That is why we have formed an alliance to deliver our AMP6 programme. This represents a complete


“It is all the more important that decisions are


based on facts and data, and advances in technology are letting us do this.”


transformation in the way we carry out investment. Our focus will be on delivering value, as opposed to just cost-efficiency. We will take a long-term view, as well as making sure we meet out shorter-term goals.”


Business plan


Thames originally felt the “new” alliance format should comprise a programme manager, four design and build organisations, contractor / consultant teams, and a technology and innovation provider.


However, Gosden says the strategy to have four design and build contractors was dropped in favour of just having two. He says the two selected (CVA and SMB) are capable of delivering everything needed, giving Thames the opportunity to keep the build simple with fewer people around the alliance table.


Having selected the alliance partners, Thames has awarded them Early Contractor Involvement (ECI) deals, enabling the company and the alliance partners to create the AMP6 business plan and define the scope of technology and innovation services to be delivered in AMP6 and beyond.


Gosden explains: “By forming this early, two years before the start of the next five-year regulatory period, we stand the best possible chance of delivering the safest, most sustainable and most innovative solutions – those which don’t necessarily involve simply pouring concrete.” Tim Coles, head of capital procurement for Thames Water, added: “We have procured an option to offer the longest contract term ever awarded by Thames Water. Rather than taking a purely commercial and technical approach, we have focused on behaviour by putting our people and our partners’


people through interviews, site visits and workshops. “This process has reduced the procurement process from up to 18 months to four and has significantly lowered the cost of bidding for the bidders involved.”


Common thread It is not the first time that Thames has gone down the alliance route. In AMP3, the company had three large alliances working and Gosden says that at the end of these there was a question about whether value had been achieved.


Thames moved away from this having realised a commercial rather than a traditional contract approach was probably needed. The new alliance board will comprise representatives from Thames and from each alliance partner.


MWH is the programme


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