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Ofwat’s recent approval of extensive capital investment plans by water companies signals exceptional growth prospects for civil engineering contractors. This regulatory green light unlocks substantial funding for infrastructure upgrades across the water sector.

Water treatment plant

In December, Ofwat announced a huge package of work upgrades worth a total of £104 billion which is to be accelerated to create cleaner rivers and seas and secure long-term drinking water supplies.

The programme means investment by the water companies is set to quadruple over the period up to 2030, with much of it devoted to meeting new requirements set by the Environment Agency and other government bodies.

Boost to civils outlook

The upturn in water industry investment will bolster the overall outlook for civil engineering activity over this year and next. The latest Glenigan Construction Industry Forecast 2025-2026 predicts that after a 26% rise last year, the value of underlying civil engineering starts will increase by 5% this year and a further 7% in 2026.

The scale of the programme reflects mounting public anger over poor water quality. Investment in cutting spills from storm overflows is to rise by nearly a half to almost £12 billion by 2030 in a programme involving some 2,884 projects.

Meanwhile, £6 billion is to be spent on upgrades to combat nutrient pollution at around 1,000 sites and £3.3billion on nature-based solutions to boost biodiversity.

Most significantly for civils contractors in the medium and long term, £2 billion of development funding is to be spent to unlock £50 billion for investment on 30 major projects designed to secure long-term water supplies.

This will include nine new reservoirs and nine large-scale water transfer schemes. In 2023, Ofwat approved three new reservoirs in Oxfordshire, Lincolnshire, and Cambridgeshire.

Promising work pipeline 

Glenigan data provides details on the buoyant work opportunities in the sector along with the promising long-term pipeline.

London is set for some significant new investment in its water infrastructure after heavily indebted Thames Water recently secured a £3 billion rescue package.

A contract notice is expected to be published in early May for the Thames Water Capital Delivery Major Projects Pipeline, which will involve spending £1.34 billion on remaining AMP7 and upcoming AMP8 major projects. Work is set to get underway on the projects later this year (Project ID: 23069150).

Meanwhile, in the North West, a contractor/consortia is expected to be appointed by late June on United Utilities’ huge £2.9 billion Haweswater Aqueduct Resilience Programme, near Lancaster. The scheme involves the overhaul of 109 km of water pipeline which has six tunnel sections, and which carries a third of the region’s drinking water. The work is divided into numerous packages and is set to run for 82 months (Project ID: 19384153).

Frameworks offer good opportunities for securing work in the water sector. In the West Midlands, the £14.9 billion Severn Trent AMP 8 water and wastewater framework is set to get underway in April. It will involve new, refurbishment and extension work and run up until 2030 (Project ID: 24250402).

Moving East, a decision is expected in April on a major Anglian Water flagship project, the £400 million Cambridge Waste Water Treatment Plant Relocation. The scheme – seen as a key element in a regeneration scheme for North East Cambridge – is a Nationally Significant Infrastructure Project and will involve work running for some 35 months (Project ID: 20287986).

Meanwhile, ‘market engagement’ is underway with tier contractors for Anglian Water’s proposed £2.5 billion Fens Reservoir near Cambridge, and a development consent order is set to be submitted early next year. The scheme at Ouse Washes will involve 30 million cubic metres of water storage (Project ID: 22326269).

On other major water storage projects, Thames Water has submitted detailed plans for a £2.2 billion reservoir at Culham Reach near Abingdon in Oxfordshire (Project ID: 93116493). Elsewhere, detailed plans are expected to be submitted in 2028 for the £2.5 billion Lincolnshire Reservoir, near Boston (Project ID: 22326278).

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