The Water Industry Forum (WIF) has published a paper warning the water sector needs to act differently to successfully deliver AMP8.
In the paper, joint authors Turner & Townsend, Galliford Try, JN Bentley and Atkins, identify the challenges for AMP8, gather their collective learning from previous AMPs and outline a way forward for the successful delivery of AMP8.
The paper, The Optimal Delivery Model for AMP8 - A View from the Supply Chain, is based on a series of workshops with the authors facilitated by WIF and supported by Turner & Townsend.
The process also included feedback from five water companies on an early draft of the paper.
With Ofwat and other regulators expected to define high expectations for company business plans through the price review mechanism, PR24, the paper outlines potential responses to the challenging and volatile backdrop for water service delivery, 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.
It warns that failure to tackle these 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.
Areas of focus highlighted in the paper include a need to be collaborative when sharing risk across the supply chain and the water companies, incentive models to incorporate social value and net zero and closer alignment between tender scope and actual delivery requirements.
The paper also calls on water companies to build capital delivery approaches around two distinct delivery models - a programmatic approach and a client-side ownership approach.
Jason Jones, director at Turner & Townsend, said: “The pressures facing the water sector are larger than ever, with the failure of elements of the supply chain a distinct possibility if action is not taken. Cooperation across the sector has never been more important, and for the first time, this paper brings together the views and experience of the supply chain.
“It sets out clear and defined ways in which the water sector can improve outcomes, benefit the environment, and manage risk. The sector is being proactive in stepping up to meet the demands of AMP8 and is acting now to best prepare itself for successful delivery.”
Martin Hennessey, director of capital delivery at Dŵr Cymru Welsh Water, which provided feedback on the paper, added: “I welcome the paper as it both highlights the range of challenges facing the water sector and the wider construction industry, and identifies the areas that require change in our AMP8 delivery models to respond to these market challenges and to make the sector more attractive.”