Water industry planning flood of new work

The water industry is gearing up to unleash a flow of new work ahead of a decision on their proposals by the regulator Ofwat.

Water and wastewater utilities have all put their spending plans to Ofwat, which will be decided in December 2024.

Glenigan economics director Allan Wilén says: “Water companies have proposed doubling capital investment to £96 billion over the next five-year period. This investment includes major schemes like new reservoirs, alongside smaller projects to improve river quality and reduce discharges.”

The next period of spending, known as Asset Management Plans 8 (AMP8), runs from 2025-2030 and many utilities are already setting up major frameworks in anticipation.

Wessex Water recently appointed a large roster of contractors for its proposed £3.7 billion plans (Project ID: 24251751).

United Utilities has put a £13.7 billion investment plan to Ofwat and set up two frameworks (Project ID: 22358009). Seven contractors are in place to deliver £3 billion of major infrastructure works, while 10 contractors have been recruited for smaller design and build work.

Southern Water has set up a £3.7 billion capital delivery framework covering major infrastructure and works (Project ID: 23077097). Eight strategic partners have been appointed to deliver new pipelines, pumping stations and treatment-works upgrades.

Northumbrian Water’s £3.6 billion AMP8 capital investment programme has 33 firms on board (Project ID: 23130903).

More work downstream

A significant amount of water and wastewater-related work is also in the procurement cycle and yet to be awarded.

Glenigan’s construction industry intelligence has identified 26 schemes valued at £50 million or more with planning permission but with a contract still to be awarded. Many of these schemes are valued in the billions rather than the millions.

South East Water, for example, has proposed spending of £1.9 billion to Ofwat for AMP8 and has yet to agree a framework (Project ID: 24251749).

A £1.5 billion AMP8 framework being set up by Yorkshire Water is currently at the tender stage (Project ID: 23145560).

United Utilities is setting up a £1.8 billion aqueduct resilience programme to overhaul a 109-km network of water pipeline which brings water from the Lake District to customers in Cumbria, Lancashire and Greater Manchester (Project ID: 19384153).

The network is comprised of six tunnel sections that are deteriorating, and Glenigan’s construction industry research suggests that a contractor will be appointed in the first quarter of next year.

Earlier in the cycle

Other major water projects are also at earlier stages of the procurement cycle.

A major tranche of work is being planned by Anglian Water, which wants to spend £5 billion on building two reservoirs each able to hold 50 million cubic metres of water in Lincolnshire and Cambridgeshire. Procurement for the detailed design and construction work will start in January 2025.

The Lincolnshire Reservoir is planned to be 2.6 km wide and 3.2 km long with construction work beginning between 2029 and 2031 and the finished scheme in service by 2039 (Project IDS: 22326278).

The Fens Reservoir will be built north of Cambridge at Ouse Washes and have a width of 2.6 km and a length of 2.4 km and start operation in 2036 (Project ID: 22326269).

Ofwat rule

While many of the spending plans are still awaiting approval, preparations are gaining pace to make a start once Ofwat makes a ruling.