Collaborating to drive outperformance: Anglian Water in AMP6

For more than a decade, Anglian Water has introduced collaborative delivery vehicles in an attempt to drive outperformance across its capital programme.

Facing increased demands from regulator Ofwat to reduce costs while delivering customer outcomes and effectively maintaining their assets, Anglian Water needed a new and more innovative way to deliver work.

The tried and trusted traditional procurement and commercial models were not producing the reduction in cost base required, so its response was to develop a collaborative alliance of designers and contractors with an incentivised commercial model.

The first iteration of the model was developed over 10 years ago and has now evolved into a mature alliance that has consistently exceeded the efficiency targets set by Ofwat for each investment period.

One alliance

Anglian Water is the largest water company by geographical area in the UK and the largest projects in its capital investment programme are delivered by the @one Alliance.

This collaborative organisation of design-and-build contractors, designers and Anglian Water will deliver around 800 schemes worth approximately £1.2bn in the current five-year investment period.

The alliance initially consisted of five partners alongside Anglian, with a common programme pool to incentivise performance and promote the sharing of best practice across the entire supply chain.

The @one Alliance has evolved to include six partners and nearly all tier 2 and tier 3 suppliers are employed directly by Anglian, thereby helping to forge long-term relationships.

AMP it up

One of the keys to a successful alliance is ensuring that the goals of all partners are aligned.

Right from the start the @one Alliance’s contract commercial terms are set ‘back to back’ with Anglian Water’s agreed business plan for the five-year AMP cycle.

The collaborative nature of the alliance has also led to shared practices, which have led to substantial reductions in both capital and operational carbon release.

Underpinning the shift in approach are two elements: the enabling and encouraging of greater collaboration across the supply chain; and a robust system of benchmarking that gives all parties greater clarity of both baseline cost and desired value.

In practical terms this means the integration of different partners with different specialist skills working together to innovate and drive commercial outperformance.

Innovation has led to improvements in building techniques, a drive for standardisation both in terms of approach and products, and a desire for prefabricated materials leading to a reduction in time on site.

Collaboration between suppliers across the programme as a whole has also led to efficiencies of scale in sourcing of materials including making use of bulk buying.

Cultural shift

It has not always been plain sailing, though, as it takes time to develop the right model of risk and reward needed to establish a culture of trust and collaboration both within Anglian Water’s own organisation and among the partners themselves.

But the benefits have been tangible, so much so that Anglian Water has decided to extend its alliancing model with the establishment of three new alliances in AMP6, across all aspects of its capital and maintenance spends, each a potential 15-year agreement.

These long-term arrangements mean that suppliers have the security of knowing they are part of a multi-year partnership, which makes them focus on long-term outcomes as well as short-term performance.

With partners given the support and security they need to propose radical solutions, the supply chain can make fundamental improvements to the way contractors and other service providers mesh together.

The @one Alliance remains the largest alliance. Along with Anglian Water, it comprises of six partners – Balfour Beatty Utilities, Barhale, Grontmij, Mott Macdonald Bentley, MWH and Skanska – and continues to deliver complex, big-ticket construction and refurbishment projects.

The three new alliances are:

• Integrated operational solutions comprising Barhale, Kier MG, Morrisons and Anglian Water delivering smaller capital projects and reactive maintenance works to operational assets.
• Integrated metering and developer services comprising Clancy Docwra, Kier and Anglian Water delivering replacement meters and dealing with developer requirements.
• Integrated maintenance and repair, which is split into two specialist areas: water, comprising Kier MG, Clancy Docwra and Anglian Water delivering proactive maintenance and repairs to water assets; and water recycling comprising Clancy Docwra, Claret Civil Engineering, Public Sewer Services, Danaher & Walsh and Anglian Water, delivering proactive maintenance and repairs to sewer assets.

Anglian Water’s appetite for alliance arrangements has even extended to the provision of its IT services and the creation of a commercial outperformance and construction economics framework.

First published in Construction News