London – ?After a slow start to the current Asset Management Plan - AMP5 (2010-15) - suppliers have reported a steady flow of projects with the water utilities, which are investing around £27 billion over the a five-year period to modernise their infrastructure and systems.
By the final year of AMP5, though, the investment tap is likely to be firmly shut and remain so until 2017 - in line with previous AMP cycles - a stop-start effect that has led to widespread job losses among suppliers to the sector and skills migrations to industries offering more stable terms and conditions.
As well as skills gaps, this ‘boom-and-bust’ investment cycle has introduced major costs and inefficiencies, as equipment suppliers and system integrators are required to supply equipment, technology, manpower and expertise at more or less the same time.
“The five-year cycle is driven by the need to regularly review water prices and ensure that the utilities plan their asset investment within specified time frames,” explains Alastair Moseley, executive director of the Environmental Industries Commission (EIC) - an influential trade body representing the environmental technologies and services industry.
This, said Moseley, leaves the water companies unable to commit even to planning projects in a following AMP. Cyclical delay then occurs, as the early years of each AMP are required for design, planning and achieving necessary approvals, before the main construction work can start.
“This process can easily take 18 months to two years to complete,” noted the EIC expert. “Projects tail off with no new work able to start until business plans for the following AMP have been signed off by Ofwat/Defra - usually during the last year of the AMP.”
While the situation seems somewhat better than in AMP4, Moseley reported: “It is almost certain though that later in 2012 and until 2013/14, there will be pressure on availability of skills, materials and equipment and the industry should still be bracing itself and preparing.”
(Full analysis in March/April edition of Process Engineering)