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Alliancing 'ticks all the right boxes'

Having decided to put all its capital investment through an alliance model, Anglian Water opted to create four work-related consortia rather than a super alliance.

Anglian Water looked at the motivations and the type of work that the alliances would need to deliver in deciding the model to carry out its capital investmentAnglian Water looked at the motivations and the type of work that the alliances would need to deliver in deciding the model to carry out its capital investment

The clock is ticking away as the industry gears up for the start of AMP6 next April. Water companies have either sourced or are in the process of sourcing their capital delivery programmes early to ensure the smooth transition to AMP6, and Anglian Water is no exception.

For the past ten years, the lion’s share of Anglian’s capital investment programme has been delivered through
@One, the alliance set up in late 2004 in preparation for the start of AMP4 in 2005. Also, there “were nine or ten different ways” of delivering capital investment, with different contracts to underpin them. However, from AMP6 Anglian is adopting a different approach, although still very much based on an alliancing model.

Jason Tucker, Anglian Water’s head of capital delivery and supply chain management, explains: “Alliancing for Anglian Water was clearly new to the business back in 2005. So when we were doing our reflections on what we needed going forward there were a few things that triggered our approach that ultimately led to the AWS [Anglian Water Services] board signing off our AMP6 contracting strategy back in November 2012.

“The alliance model in every department has come out on top in terms of the relationships, bringing innovation and delivering the right sort of challenges and success not just financial, but non-financial as well – in health and safety and carbon challenges and corporate social responsibilities.
“It [alliancing] ticks all the right boxes.”

Motivations
Rather than opting for one super alliance, though, Anglian looked at its business needs and future business needs over the next 15 years. Whilst other organisations have based their operations on geography, or set up alliances for particular regional patches, Anglian looked at the motivations and the type of work that the alliances would need to deliver.

Essentially, says Tucker, the strategy became not one of lots of alternatives to alliancing but ‘how do we effectively put all our investment programme through an alliance model?’.

The answer has come in the shape of four alliances that are tasked with delivering Anglian’s capital investment programme for the next three five-yearly AMP cycles. These are:

  • Integrated Main Works Capital (IWMC), comprising Balfour Beatty, Barhale, Grontmij, MMB, MWH and Skanska. Black & Veatch is a reserve partner
  • Integrated Operational Solutions (IOS), consisting of Barhale, Kier MG and Morrison Utility Services
  • Integrated Metering & Developer Services (IMDS), comprising Clancy Docwra and Kier MG
  • Integrated Maintenance & Repair (IMR), the successful partners have yet to be announced

Solid history
IWMC, which replaces @One and the Special Projects team, will focus on the very large and complex schemes while IOS will deliver small replacement and refurbishment projects. Anglian’s metering programme and developer connections will be handled by IMDS, and IMR will look after the repair and maintenance work.

The alliances’ partner contracts may run for 15 years, with a review after every five years. Collectively, this makes them one of the longest collaborations in the industry.

Tucker says: “The ten years gave us a good solid history of performance. But what came out of our review was that ten years in with @One we hadn’t quite capitalised on everything that we could have done. Long-term alliances were definitely what we needed to establish, hence the reason we’ve gone for the five plus five plus five, to give us and our supply chain the opportunity to co-invest in the future.”

He says ten years “seems hell of a long time” but the longer Anglian can discuss mutual joint investment with its supply chain, the better. “Whilst we happen to be governed within five-year business plan and regulatory financial cycles, we’re conscious that a lot of the decisions we’re making in investment not only in assets, which certainly on the M&E side have a 15-year timeline, but in terms of our IT systems in how we train, develop and maintain a competent and skilled workforce over a longer period, five years just isn’t really enough. Even in ten years there’s still some limitations so we wanted to go for the 15.”

Ethos
In selecting its alliance partners, Anglian’s evaluation process took into account alignment of values, ability to demonstrate behaviours, and the quality of the people that were being put forward.

“When it actually comes down to forming alliance partnerships, the last ten years have told us it’s as much about the values and the ethos, and ways of doing business with a supplier and the people who would be working alongside us and with us, as it is about the technical capability,” explains Tucker.

To help develop and implement the AMP6 procurement process, Anglian worked with collaborative working specialist JCP. This ensured the selection process focused on the behaviour of staff.

Tucker says: “Whilst we had dealings with people like JCP and to some extent used them in the periphery of sourcing activities, we never really put them centre stage and put so much weight behind a real behavioural assessment programme. We put the whole thing centre stage, and that’s something we’ve never really done before.

He says that in terms of gelling the teams, Anglian will continue working with companies like JCP and others to ensure the right principles are in place, and that all four alliances are underpinned by challenging and innovative commercial models.

“We’re not leaving this to chance. We are looking to give these a flying start,” says Tucker.

(This article appears in AllIances 2015, which will be published in the November issue of WET News on November 3)

Topic: AMP Cycle
Tags: Alliances , AMP6 , Anglian Water , supply chain , Innovation , capital investment

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