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Water industry contract talks start earlier than expected

Talks for the next cycle of Asset Management Plans have started a year earlier than usual to avoid the usual “boom and bust” work cycle, according to Galliford Try’s group managing director for construction.

Ken Gillespie told H&V discussions on AMP6 between water providers and contractors are under way far earlier than usual.

“It is certainly the earliest we have been in conversations,” he told H&V. “We are at least one year ahead of where we would normally be.”

The cyclical nature of the water industry’s procurement process has come under fire from the government and Ofwat because the majority of work is concentrated on the middle of the five-year cycle.

The AMP5 framework runs from 2010-15, and Galliford Try expects to see related work peak in 2013.

This trend led to calls from Infrastructure UK chief executive Geoffrey Spence in July for water companies to “manage their supply chains better”.

Mr Gillespie said it is too early to say what impact the early engagement on AMP6 will have for his company financially.

According to IUK, thousands of jobs and billions of pounds could be saved if the water industry follows a set of recommendations to address the stop-start cycle of investment.

Its joint report with Ofwat, Smoothing Investment Cycles in the Water Sector, produced recommendations to address concentration of investment within AMP periods.

The study called for a set of best practice tools for water companies and its supply chain “for the collaborative development and publication of standard pipeline information and sector skills and capability statements”.

It would mean a rolling 12-18 month pipeline of investment that can be clearly communicated with Tier 1 suppliers and the rest of the supply chain.