Welsh challenge for Galliford

Galliford Northern's contracts manager Stuart Smith describes his company's progress with Welsh Water in AMP2 and explains how a series of new projects will be managed in AMP3.

We began work for Welsh Water in AMP2 on a ‘target-cost’ basis, under IChemE Green Book rules. We then moved to a partnering approach and opened all our books to Welsh Water. This worked well from their point of view and we also developed a guidebook for partnering called PACT (project achievement through cooperation and teamwork).

In AMP2 our competitor, Amey Construction, was originally chosen for six schemes, worth up to around £6M each. But because we performed better than Amey as work progressed, we ended up getting a total of eight projects in AMP2 and Amey lost a couple. All of the projects we worked on in AMP2 were on a partnering basis, except for the first Green Book contract.

For AMP3, we decided to set out our stall early on. We ran a series of presentations to the water company and were consequently awarded the whole of Welsh Water’s projects for north Wales in AMP3. This includes £50-£60M of work upgrading combined sewer outfalls (CSOs) and four new coastal STWs with a contract value of £20-£30M. There will also be a significant amount of work in central and southern Wales unlike in AMP2. During AMP2 most of the work was around Anglesey in the north, but work will now be carried out as far south as Aberystwyth.

In AMP3 the contracting arrangements have changed slightly, Welsh Water now wants us to work in alliance with five other partners. The work will be done under similar partnering arrangements, with extra costs shared between the partners and any savings split at the end of the five-year period. Galliford will be working alongside civil engineering contractors Morrisons, Laing and AMEC. The process side will be completed by Paterson Candy and Meica Process.

In AMP3 Galliford will be responsible for the early stages of each project, including feasibility studies, design and site planning. Environmental consultants will be used to make impact assessments of each proposal.

The recent purchase of Welsh Water’s parent group Hyder plc (by Western Power Distribution) could have an effect, because although we have been chosen for the aforementioned work and given ‘letters of content’ to this effect, the actual contract in each case is not actually secured until just before the work begins. I think, however, it would be very strange if the new owner were to go completely against the decisions of Welsh Water.

Likely competitors

Potential competitors for some of the work include Mowlem and the Kier Group, but no longer Amey. We are well placed for work in this part of the country and it has to be said that there are not that many specialist workers with the right kind of experience in north and central Wales. If anyone else were to work in this area they would therefore have to meet a lot of relocation and transport costs. Galliford has a team of five consultants in north Wales which are commissioned to complete water-related work.

So far Galliford has been given a list of 10 STWs to build or upgrade in AMP3, including four at £3-4M each. The four largest STW projects are Nefyn (£3M), Amlwch (£4M), Fairbourne (£3M) and Barmouth (£3M). At this stage we have not reached a decision on the process type for each plant. Our task is to enable Welsh Water to meet more stringent discharge standards by building better STWs and CSOs. We are not involved in the sludge treatment strategy, which is being handled in-house by Welsh Water. Ofwat has not allocated a lot of money for water companies to spend early on in AMP3, so we will probably not be able to begin building until 2003-2004. This is a slight problem, but we have initiated the designs and have done a lot of forward planning to see if we can avoid any ‘pinchpoints’ in terms of cashflow. Probably the biggest challenge will be to deliver the majority of the programme by 2003-2004, given the plans set out by Ofwat.

In addition to the work already allocated, Galliford is also about to bid for a major project at Holyhead and Prestatyn worth £35M. The plan is for two new STWs to be built 60km apart. The design, build and operate (DBO) scheme would be one of the largest on which Galliford has worked.

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