Posts Tagged ‘AMP’

A welcome change of direction for AMP 6?

November 22, 2013

Tony Hoyle, General Manager for ABB’s UK Measurement Products business, explains how the AMP process could finally be undergoing a much needed change of direction.

After years of acting contrary to the interests of many of the parties within it, it would seem that the AMP process is finally starting to undergo some welcome changes. Especially encouraging is Ofwat’s focus on ‘long term outcomes’ and its aim to give water companies greater flexibility in how they deliver them.

The prospect of a focus on the long term offers encouragement for those keen to see a smoother AMP process. In particular, a focus on the longer term would certainly help to avoid the detrimental impact caused by the ramping up and ramping down of activities during the transition between previous periods.

Partnerships and early starts

A quick scan of the marketplace offers encouraging signs of a changed approach to the new AMP period. Several of the UK’s largest water utilities are already well underway in selecting partners for their AMP 6 projects so that they can get work underway as soon as Ofwat releases funding.

The establishment of long-term partnerships could well present a workable and effective template for future AMP periods. As well as allowing the fulfilment of the immediate objectives of an AMP period, they could also provide the much-needed framework for continuity that has been badly lacking in previous years. By enabling partner companies to count on their continued association with a water company outside of the five year period, the creation of long-term partnerships could yield a wide variety of benefits that have not been fully realisable within the previous AMP structure.

Breeding innovation

In the same period that Apple has created and refined its market-leading iPhone and iPad products, there has been relatively little if any real change in the technologies used by water companies to treat, distribute and collect potable and wastewater.

The AMP process has done little to encourage technological innovation. Faced with an uncertain environment caused by the five year structure of an AMP period, companies have had little incentive to risk investing time, money and resources into new products and services.

It is to be hoped that the prospect of a more long-term approach will help pave the way for greater innovation. For suppliers especially, the prospect of working with water companies on projects across the AMP periods provides a much more attractive environment in which to provide and develop new products and services.

Summary

All of the indications are that AMP6 could well be the first all-round win scenario in the scheme’s history, delivering benefits for water companies, suppliers and customers. Whereas in the past water companies were reliant on Ofwat to set their investment priorities, the greater freedom being afforded within AMP 6 means that they can now focus more on their existing infrastructure, leading to potential improvements in performance that could increase effectiveness and, ultimately, profitability.

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AMP – let’s have some common sense

January 12, 2010

Tony Hoyle, Flow Products Manager, ABB Limited, looks at AMP and suggests a how the AMP process could be run more effectively.

 

According to a quote I read recently; “common sense is the knack of seeing things as they are, and doing things as they ought to be done.” 

When it comes to AMP, the UK Government is sadly scoring in the ‘must try harder’ region of the common sense spectrum.

Even to the lay person, shutting down an entire industry every five years makes little sense. In the time between the peak spending of AMP periods, skilled labour is lost to other sectors and equipment suppliers wind down their operations. When the new AMP period kicks in and spending starts to increase again, the result is always the same – it becomes that little bit harder and more costly to find the right workers and equipment.

The logic of continuing this approach at a time of economic recession is even harder to fathom.

So for the benefit of the common-sense challenged, here are some suggestions for how the AMP process should be run.

1. Staggering

Firstly, why not give water companies their own five year timeframes?

Staggering AMP periods would create a situation where some companies are peaking when others are slowing down, giving constant employment for skilled workers within the industry.

Given that many of the more prepared water companies had their draft plans ready months before AMP 4 even ended, this approach shouldn’t be too difficult to achieve.

2. Restore Scotland’s AMP timetable

As an extension to the above, why not restore Scotland’s AMP equivalent spending timetable so that it’s once again out of phase with those of England and Wales?

Though it was undoubtedly done for all the right reasons, the decision to align Scotland’s spending periods with the rest of the UK has actually made things worse.

Previously, Scottish projects offered gainful employment for out of work contractors and suppliers when the English and Welsh AMP periods went quiet. Why not return to this position at least?

3. How about some financial stimulation?

Earlier this year, the Government promised to inject extra investment into the UK’s infrastructure projects to help stimulate economic activity.

Despite delivering proven benefits for other sectors, most notably the UK car industry, nothing so far has materialised for the water industry. In fact, Ofwat has again over-ruled the requests from water operators for more money and called on them to cut their water prices.

Which begs the question of where the money for investment is meant to come from. Unless money is injected into the industry, the danger is that water companies will ultimately move to protect their shareholders, cutting new projects and storing up potential obstacles for the future or paying less attention to leakage and the wasted water and energy associated.

My suggestion would be that water companies should be given financial incentives to get projects started early, or at the very least, allowed to get at their AMP funding at special low interest rates if done during 2010 before the traditional peaks of mid AMP (2011 and 2012) period.

4. Benefit from competitive labour

Whenever an AMP period peak finishes, it becomes steadily more costly to retain skilled workers, who are understandably lured away by the promise of work in other sectors.

Either staggering AMP periods perhaps north and south or giving water companies early and assisted access to their AMP funding could help overcome this problem, creating an environment where work was ongoing and smooth rather than being subject to the peaks and troughs of AMP spending.

 Listen to the water industry!

Much of the above is what the water industry has been saying for years. Yet the message still doesn’t seem to be getting through.

It boils down to this. There is another way to approach AMP – the question is whether the Government is interested in taking it and helping the UK economy now. Before it’s too late.