Water work sees surge in confidence
More firms than ever before see water and wastewater as an area where clients are likely to seek the services of an environmental consultant.
Water has always been a core area for the environmental industries, but now, it seems, there is an increasing optimism that this is a ripe for growth and expansion.
In last year’s survey, water languished mid-league, perceived as the seventh most important growth area by the consultants.
But now, even though it is trumped by hot topics such as climate change and waste, it is up to fifth place and seen as having a higher growth potential than contaminated land remediation and even CSR consultancy work.
“I think there are three aspects to this. First one, from a general macro-economic market perspective – this has come up because other things have gone down.
Big ticket utility job are less infringed by the vagaries of the general economic market.
“Contaminated land and corporate reporting are classic examples of things we’ve seen take a bit of a kicking over the last 18 months.
Asset Management Plan – about to enter a new AMP5 that runs for 2010 to 2015.
“There are times within that [AMP] cycle when industry is spending and times when it’s not.
“What we’re seeing is an increasing importance of water in a variety of arenas, making it a much more interesting market than it has been for a number of years.
Said water is increasingly seen as part of the wider environmental picture – considered in a range of projects rather than large scale development and infrastructure.
Neil Kemble, client relationship director Hyder, linked water’s rising star to two key factors.
Foremost is the cyclical nature of the British water markets, with water plc spend based around the five-year Asset Management Plan (AMP) periods that determine how and when big capital projects can be carried out.
Next year will see the beginning of a fresh cycle, AMP5, which brings renewed optimism to the sector.
The second factor, according to Mr Kemble, is the difficulties faced in other areas of environmental consultancies and some water work being seen as low-hanging fruit.
“In my view what we’re seeing is because of the AMP cycle and also because organisations have been seeing a downturn in their normal markets due to commercial pressures on developers and the private sector in particular so they’re looking to other areas to work.
“Water is the biggest game in town that’s relatively easy to target.”
He pointed out that the Ofwat determination was published last week and delivers the framework in which the water plcs will spend over the coming years.
“It’s an increase in the previous AMP cycle,” said Mr Kemble.
“One of the things that stands out is that there’s expected to be an extremely high peak in critical expenditure in year two (2011/12) and a steep fall in 2014/15.
“The peak is higher than it was in AMP4 but on the face of it, it looks like the dip is going to be a lot deeper.
“It’s a good place to be over the next couple of years, but as time goes on it’s going to get a lot harder.”
During the AMP5 cycle, he said, the last of the UK’s big capital expenditure infrastructure projects were likely to be completed and while more would doubtless arise in the future, that would be a trickle rather than a flood of work.
He also said that most of the water companies and the consultants the served them were already well down the road towards negotiating the big contracts, and those who had not yet aligned themselves to be involved in this process would likely need to find work somewhere within the supply chain, rather than from the top table.