PR24 outcomes hinge on next asset management plan delivery models, report warns

Elements of the supply chain could fail and the delivery of outcomes for customers and the environment be at risk unless appropriate delivery models are adopted in AMP8, warns a new report from the Water Industry Forum.

The paper, The optimal delivery model for AMP8 - a view from the supply chain, calls on water companies to build capital delivery approaches in 2025-30 around two distinct delivery models, which are applicable to both infrastructure and non-infrastructure work and can be used in a complimentary manner to cover all aspects of the expected AMP8 programmes:

• a programmatic approach with visibility of a committed and adequately defined long-term workload to allow for a long-term, sustainable relationship with the supply chain; and

• a client-side ownership approach, with late engagement with the supply chain, providing the supply chain with certainty of requirements and clarity on process and integration risk.

The paper – jointly authored by Turner & Townsend, Galliford Try, JN Bentley and Atkins, and drawing on wider workshops and feedback from five water companies – highlighted the “challenging and volatile backdrop for water service delivery” for AMP8, “beset by supply chain disruption from Brexit and Covid-19, high inflation and skills shortages, and more rigorous biodiversity and sustainability goals changing the nature of the market".

Moreover it highlights the likely “most diverse workload since privatisation” featuring:

• an increased proportion of smaller, less complex capital maintenance projects;

• an increased focus on nature based, low carbon schemes;

• the need for development of more strategic catchment / urban level integrated solutions;

• a baseload of conventional "concrete and pipe" solutions; and

• a significant volume of large / "mega" projects, particularly associated with addressing water supply-demand deficits.

Elsewhere the report highlighted a need for collaborative risk sharing; incentive models to incorporate social value and net zero; and closer alignment between tender scope and actual delivery requirements.

It warned that failure organise optimally could lead to further supplier issues, cost increases, and suppliers choosing to move away from the water sector – all resulting in an inability for water companies to meet Ofwat’s required regulatory outcomes.