Construction for water companies buoys up workloads

Construction for water companies

A buoyant level of construction activity for water companies has been one of the key drivers of a marked rise in the value of new work for utilities companies in recent months. According to the latest Glenigan Index, the value of new construction starts in the utilities sector rose by a dramatic 73% in the quarter to August 2018, compared to the period a year earlier.

Healthy levels of investment by the water utilities under the industry’s AMP 6 programme over 2015-20 was a recurring theme in the recent financial results from the major contractors.

In August, Costain said its programmes for Thames Water, Severn Trent and Southern Water were performing well, as was its joint venture for the Eastern section of Thames Tideway project. Costain also noted that bid activity for AMP7 which covers 2020-25 was well underway with several water industry clients seeking contracts with an early start to help develop their business plans.

Investment plans

The medium term construction pipeline in the sector also looks positive. Water companies are planning to invest at least £5 billion a year over the next five years, according to the industry body Water UK.

Amongst the larger water companies, Severn Trent recently said that it was on track with a £100 million reinvestment programme and that its business plan for AMP 7 is progressing well.

News from other water companies also bodes well for tender opportunities in the sector. Earlier this month, Thames Water submitted its five-year business plan to Ofwat which will prioritise investment in infrastructure over dividends to shareholders. It involves an £11.7bn investment plan which includes £2.1bn to boost resilience and reduce leakage over 2020-25. It is also looking at plans for a ‘strategic reservoir’ for the South East and for water transfers.

Elsewhere, Yorkshire Water is inviting contractors to join a multi-supplier framework for a £1bn programme of civils and building work, covering 2020-25, with a possible three-year extension. A complex civils framework will involve some £750 million of work whilst a minor framework has lots covering minor civil and building works and specialist activities for water retaining structures (Glenigan Project ID 17135261).

Opportunities across the UK

The construction opportunities across the UK water sector are reflected in Glenigan Construction data. In the North West, work is set to start later this year on United Utilities £19.5 million waste water treatment centre at Worleston, near Crewe where a Laing O’Rourke/Imtech/Atkins joint venture is the contractor (Glenigan Project ID 18285876). In the East of England, work is also due to start this autumn on Anglian Water’s £15 million industrialisation/plant rooms framework, with work running over the next five years (Glenigan Project ID 14422599).