Southern Water supplies water to one million householdsand sewerage services to two million households in areas of Kent, Hampshire, Sussex and Isle of Wight. Nearly 550 million litres of water per day are supplied to over two million people across the South East from around 104 water supply works and are transported through over 13,000 kilometres of water mains. Southern Water also has 390 wastewater treatment works, cleaning wastewater before it is returned to the environment.

4D is a joint venture between United Utilities, Costain and MWH, established in March 2005 to help deliver Southern Water’s major capital schemes over a five year period through the Single Entity Contract, with an option to extend the contract into the next five-year AMP programme. The programme comprises 250 schemes including improvements to wastewater and sludge treatment works, a programme protecting homes from sewer flooding, first-time sewerage schemes, Combined Sewer Overflow (CSO) schemes and projects to upgrade infrastructure to meet population growth. In addition, 4D is delivering a smaller programme of water treatment
and supply improvements.

The Single Entity Contract is one of the most radical business models in the UK water industry and represents a groundbreaking approach to delivering one of the most intense programmes in Europe. From a standing start, 4D had built up to a monthly spend of £26 million by November 2006.

Southern Water’s key objective for this contract was tooutsource the delivery of part of its major capital works programme to a single organisation that would undertake programme and project management, solution identification and development, design, procurement, construction, commissioning and take-over, as well as the management of environmental and third party issues. To do this successfully
the water company put a great deal of effort into defining its five-year AMP4 programme. Each project was given a defined contract brief, tender target cost and target takingover date. The contract gives 4D control over how the programme is delivered to meet these targets without going back to the client for each project approval stage. This is done through 4D’s own approval and governance panel,
with Southern Water undertaking an audit role of processes and systems.

Other main drivers for Southern Water were to achieve costcertainty in terms of overall cost and rate of spend, and certainty over delivery. The client achieved this by through a sophisticated incentive mechanism based on target costs and target take-over dates. Reliability of performance of the new assets is underpinned by guaranteed performance criteria, design standards, standard specifications and equipment supply frameworks. A significant aspect of the SEC is that it outsources risks to 4D. Apart from the risk of client scope change and changes in legislation, the contract transfers all other risks to 4D including environmental risks and ground conditions. Effective risk management at both project and programme level is therefore fundamental to the successful delivery of the programme and to 4D itself.

Summary
The groundbreaking Single Entity Contract represents a new approach to delivering large scale and technically challenging programmes in the water industry. A key hallmark of the contract is that it defines the parameters of the programme and empowers 4D to take control of delivery. 4D has risen to the challenge and has successfully managed an intense programme within tight financial parameters. The programme is running on time and within budget and savings are being delivered at the rate of 10 per cent annually. The seeds of success were sown at an early stage in the contract. The transition period was well structured and managed, which is reflected in the achievement of £75 million of capital spend and 14 takeovers in the first year. The nature of the contract empowered 4D to eliminate unnecessary bureaucracy. The joint venture invested time and effort into forging a truly integrated team with the right people with the right skills working together to find the most innovative and cost-effective solutions to some complex technical problems. In autumn 2007, Southern Water announced that 4D is the preferred bidder for a major £300 million scheme to provide improved wastewater
treatment services for Brighton and Hove, and in April 2008, Southern Water’s Board approved a five-year extension to the Single Entity Contract. These announcements represent a significant vote of confidence in the joint venture and its commitment to delivering engineering excellence, innovation and value on time, every time.