Severn Trent Water announces AMP5 contractor appointments

March 13, 2009
Midlands-based water and sewage services company Severn Trent has awarded the contracts for the major projects planned as part of its next asset management period (AMP5), which begins in April 2010. Eleven companies (Balfour Beatty, Barhale, Biwater, Costain, Enterprise, Interserve, LoRImtech, May Gurney, Mott MacDonald Bentley, Morgan Est and North Midland Construction) have been appointed at an earlier stage than is usual -- a year ahead -- in the AMP process...

MIDLANDS, UK, Mar. 10, 2009 -- Midlands-based water and sewage services company Severn Trent has awarded the contracts for the major projects planned as part of its next asset management period (AMP5), which begins in April 2010.

Eleven companies (Balfour Beatty, Barhale, Biwater, Costain, Enterprise, Interserve, LoRImtech, May Gurney, Mott MacDonald Bentley, Morgan Est and North Midland Construction) have been appointed at an earlier stage than is usual -- a year ahead -- in the AMP process. This will enable them to make a head start on the design and planning work. The size of the program will be determined following Ofwat's decision later this year on water and sewerage prices for 2010-15. The value of the current program (2005-10) is £2.8bn.

"This means we will have our 'one supply chain' established and working together so each contractor will be able to hit the ground running when AMP5 officially kicks off on April 1, 2010," explained Paul Goddard, Severn Trent's Commercial Manager, Purchasing and Supply Chain Management.

The successful contractors have been selected from an original list of 47, using a new process including e-auctions which is designed to shorten the selection period. The process focuses on a number of areas including safety, corporate responsibility, and environmental management, as well as pricing.

Paul added: "We've announced the contract awards at least a year ahead of the schedules we've used in previous AMPs, which means that when the new investment period starts in spring 2010, construction can begin immediately - avoiding the notorious roller-coaster effect which is so wasteful of time and resources. British Water, for example, estimate this cost to be as much as 2.6% of their total project costs."

Severn Trent says its new approach will help improve design efficiency, reduce construction costs, improve the links across the supply chain, eliminate waste and drive innovation.

The contracts awarded by Severn Trent Water are for 10 years, covering two AMPs, for a co-located, integrated design and build model - giving the supply chain stability, and the chance, at an early stage, to invest in people, training and equipment.

"While price is obviously a factor, we've made our decision based on a whole host of factors that are of equal importance," said Paul. "Our prime concern has been to select contractors whose ethos and working approach fit best with that of Severn Trent. We recognize that contractors are also looking for like-minded clients. With cultural and behavioral alignment, we can, together, achieve so much more.

"We're very excited about creating this extra time to work together. Our integration plan covers the next 12 months and includes development of business plans and joint training events as together we set up the co-located, integrated teams.

"We have set ourselves challenging target capital efficiency targets and we'll be doing everything we can to outperform these. This will put everyone in our 'one supply chain" in great shape for the next 10 years."

Severn Trent Water serves more than 3.7m homes and business customers in England and Wales. Its region stretches from mid-Wales to Rutland and from the Bristol Channel to the Humber.

###