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One year into AMP6, efficiency gains are already being made

Author: Ross MacKenzie, Water Sector Director

One year into AMP6, efficiency gains are already being made, says Ross MacKenzie

AMP6 began just over a year ago, and for us as a partner on three AMP6 frameworks, it has been a good yet challenging year. The move towards “totex” and the 20% efficiency challenge means many of the water companies have got new outcome delivery models. Every company has a different strategy to drive efficiencies: some have been out of the blocks quickly and are delivering early; while others have used the first year to develop the best way to work together.

One thing that is consistent is the intent for us to stand shoulder to shoulder with our customers to drive the efficiencies that will help them meet the outcomes they need. Our involvement with customers is closer than it has ever been before, and we now have a greater understanding of their priorities and the targets they must meet.

The questions being asked of us are different; more focused on the outcomes that need to be achieved for our customers’ customers, rather than on how we intend to deliver them. And because we’re talking about total expenditure, we also understand the operational impact of what we’re building.

The move to totex has changed how we do things on site. There is much greater input from operational teams, so we can understand their needs and develop the best solution for a totex approach, rather than just a great capital solution.

The emphasis on partnering in AMP6 should not only happen at the strategic level; it should make everyone’s approach more collaborative.

Each water company is addressing the affordability challenge differently. At the beginning of the AMP period, our customers set the direction for us to achieve. Now we’re more engaged with them, and talking about how we’re going to achieve that together. 

And we are doing the same with our supply chain. We need to get them involved earlier, so that we can realise the benefits from top to bottom. We will only be successful if we create a single drive towards efficiency; and in order to do that we must bring our suppliers closer to our business. That is how you get improved business performance, share ideas, minimise risk and drive the right behaviours.

And, by adopting a “whole programme approach”, and getting suppliers and whole life project managers involved at the needs identification stage, you have the best chance of gaining efficiencies right across the value chain.

As we move further into the AMP period, innovation is likely to become more important. Much of what we’ve done to date has been about addressing the 20% challenge, but we know we will need to stretch beyond that. In order to get there we will have to find new ways to innovate. Focusing not only on innovation through new assets, and asset optimisation but also with how we help change the operational approaches and create optimal ‘habits’ for teams to ensure future operation of new and existing plants remain optimised. New ways of measuring performance data and delivering information in real time to the teams is going to be fundamental to safeguarding compliance, removing waste through lean interventions and optimising energy balance.

Costain has introduced “Factory Thinking” to our water projects. This approach is based on production line thinking: more standardisation, off-site assembly and production control to minimise waste and maximise the programme benefits. That way we will get the 20% efficiency improvement over the line and deliver better results for our customers.

Now that we have more of an understanding or our customers’ challenges, we can use our skills to help manage their programmes. And because we’re involved at that highest level, we can be efficient in our approach to the AMP delivery, focused on the operational benefits and improved service to our customers’ customers.

That connection of everything from top to bottom will drive efficiencies for our customers and allow the bedrock to be formed that will enable us to go on to be more innovative as the relationships evolve.  We’ve made a very positive start to AMP6, we now need to crack on!

 

This article first appeared in the Institute of Water Journal.