Traditionally seen as delaying schemes, the utilities sector has evolved although challenges still remain. Steve Menary reports on the companies that ensure water, gas, electricity and broadband are delivered to home buyers on time
Waiting for the gas man? Or an electric connection? Or someone to switch on the water? Hold-ups with utility connections often hung over the fragile process of a legal completion for housebuilders but as the market evolves, those hitches are reducing.
At one end of the market, liberalisation has allowed Independent Direct Network Operators (IDNO) to challenge the old dominance of direct network operators, while a shift to multi-utility contractors continues.
“With selection of competent utility designs and installers, connection delays on site is now a rarity,” says Nick Marsh, engineering manager at Redrow’s south west division.
“Further work is still needed with telecommunications or a fibre connection, but as the market grows other companies are now able to offer this service. BT/ Openreach has to raise its game.
“The biggest issue [with utilities] is the timing; each authority has its own time scales for various applications, such as to divert, move, connect or even a drawing change. This issue is being helped now that independent companies can work on the DNO infrastructure. The market place has been opened up for companies wishing to provide a better service at a more competitive rate.”
One of those companies to successfully take advantage of the introduction of IDNOs is GTC.
(Pictured) GTC has taken dvantage of the introduction of Independent Direct Network Operators
“Almost the entire process for both gas and electricity is now in GTC's direct control from identifying the connection point to the existing network, design work and installing all new utility networks, to making the final connection,” says sales and marketing director Tom Brough.
“This removes potential interface barriers with owners of the upstream networks. In water and telecommunications there are still industry systems and processes in place that rely too heavily on interaction with the monopoly network owners. These can create unnecessary delay in completing connections.”
From April of this year, significant changes will be made by regulator Ofwat to allow businesses and domestic customers to switch water suppliers. Greater liberalisation in the water utility sector cannot come soon enough for some housebuilders.
“The biggest issue with utilities generally is the lack of response and poor up front discussion with water authorities,” says Andrew Dicker, technical director at Legal & General Homes.
“At the point competition was introduced in gas and electric the delivery of these elements were streamlined and it gave developers choice. Until this happens in water you will still have delays in delivering schemes as water is generally the first service to be laid.”
While the number of options to housebuilders from operators in gas and electricity is growing through the introduction of IDNOs, the market is also seeing a shift to multi-utility contractors.
“Both options have their merits,” adds Nick Marsh. In the south west, Redrow regularly uses multi-utility contractor TriConnex along with Aquamain for water utility work, CM Utilities for gas and Western Power Distribution and UK Power Solutions for electric work.
Marsh adds: “Redrow has noticed that multiutility companies are improving. As water and telecommunications regulations come in line with gas and electricity, a multi utility company will be the favoured choice.”
Andrew Dicker agrees, saying: “Over the last few years I have moved over to multi-utilities as this gives the developer one point of communication, although this is just for new service supplies.There is still work to be done on diversions but good progress so far.
‘Multi-utility companies are more flexible and can work with the ever-changing business on site and sometimes tight timescales which larger incumbents just cannot adapt to quickly enough.
For me, multi-utility is the best way forward however I would never move away from direct incumbents as some of them are OK.”
Multi-utility company Murphy Utilities says that it views the market from a developer’s perspective. "Housebuilding is challenging enough without the added difficulties of coordinating three or sometimes four sets of contractors to provide utility connections," says Ash Nixon, Murphy's business development manager. "Our teams are multi-skilled and will install everything as they go – gas, water and electric on each visit."
The provision of a dual or multi service "means that supplies, wherever possible, are installed in the same trench, which not only helps minimise disruption in the surrounding neighbourhood and onsite, but also is better for the environment." notes Ian Foster, operations director for Fulcrum which has mutli-utility capability.
Challenges for gas and electricity providers include existing utility networks - which are already working at full capacity - not having the ability to service additional homes without extra work to upgrade them, Foster says. "This could add unavoidable delay to a utility project."Statutory bodies
Murphy observes: The utility industry as a whole is a complex sector due mainly to the number of statutory bodies in the market place. Whether it’s gas, electricity or water, each area network owner operates to their own timescales and procedures, which can make it difficult to deliver a consistent service across all regions.”
For now, regional divides between multi-utility and more focused contractors remain with the water sector again an issue.
(Pictured) There are regional divides between multi-utility and more focused contractors, says Service Connections, with multi-utility being the norm in Yorkshire and North West England
Keith Macaulay, a director at multi-utility contractor Service Connections, says: “In different parts of the UK developers still have different approaches. In Yorkshire and North West England, for example, multi-utility tends to be the norm while in the north east of England, it’s mainly dual fuel, gas and electric only.
“This is mainly because the local water distribution company are awkward to deal with and it’s difficult to make money installing water infrastructure on anything but larger developments.”
However, the growing shift in favour of multi-utility contractors is increasingly being noticed amongst the specialist contracting fraternity themselves.
“Anywhere north of Birmingham, multi-utility appears to be the developer’s choice,” reflects Bryan Lamont, business development manager of Utilities Direct, which works predominantly on water work on new build housing.
(Pictured) Utilities Direct mainly concentrates on water work on new build housing
“We are mindful that we will have to be a multi-utility group. The developers don’t want more than one call to make. If someone lets them down, they are stuck. In two to three years I think that [multi-utility] will be the preference for all developers.”
By then, a major upsurge in new build housing is likely to be underway and that could pose some problems in terms of utility delivery, if current experiences in some areas already undergoing a boom is any guide.
“In certain areas of the country, Manchester in particular, we are finding the biggest issue we’re having is finding a local point of connection for electric,” explains Macaulay.
“Due to the volume of homebuilding in these areas and the lack of investment by the local electric distribution company, we’re finding ourselves having to go further and further away from the development location to find a point where we can join onto the local electric network.
“This means developers are having to pay much higher costs for their electric infrastructure than they should, in my opinion, as much of the cost in providing utilities to a new development are in the amount of off-site excavation, backfill and reinstatement, not just the cabling.
“Other than that, increasingly many of the sites have utility diversions and/or disconnections associated with them – possibly because there seems to be more citycentre developments going ahead which naturally means there is more infrastructure around or within the site area.”
Greater infrastructure investment is part of the government’s plans to help solve the housing crisis. But taking short cuts on utilities in the midst of this housing boom could be expensive for housebuilders.Preparation
Macaulay advises housebuilders not to accept quotes based on guessed points of connections which can be found to be incorrect and says the only solution to resolve issues around diversions and disconnections in utilities is preparation.
He adds: “With the new connections, it’s a matter of knowing where your connection points on to the local utility company networks will be at an early stage. It at least highlights any unforeseen additional costs or delays that may result.
“We work with many developers in sourcing the existing utility infrastructure drawings for the area of land within or surrounding their proposed development. From that we decipher which utility mains are likely to need diverting and or disconnecting and we issue a summary report to the developer with our recommendations.
“We then contact the statutory companies whose apparatus will be affected on behalf of the developer to get quotations for the necessary disconnections or diversions. If this work is carried out early enough, potentially before the developer even buys the site, then costs and timescales can be built into the client’s budget plan and build programme without having to cause delays.”
Having largely moved past the stage where utility connections can delay completions, housebuilders gearing up for expansion will be looking to avoid stepping back in time as residential work gains pace.
TriConnex(Pictured) TriConnex says it has a service-led culture
Chris Doré, business development director of multi-utility provider TriConnex, notes that as developers are not used to having their utility provider sitting alongside the rest of their specialist consultants “changes of design, phasing, programme and third party issues are often not communicated as soon as they are evident”.
And when it comes to the level of delays and general complications that developers experience in this field, it is in “some way” linked to the duration and level of deregulation and competition within each utility market.
To overcome the various obstacles, in 2010 TriConnex conducted months of research, then designed a business from the customer’s perspective, rather than from that of an asset owner, Doré explains.
As part of TriConnex’s service-led culture, dedicated operations managers ensure that site co-ordination and planning takes place.
Virgin Media has called for a modernisation of planning laws in the government’s forthcoming Digital Economy Bill to bring broadband in line with other utilities.(Pictured) "Britain is benefitting from competition between infrastructure builders to deliver better broadband" – Paul Buttery, Virgin Media
The bill had its second reading in the House of Commons just before Christmas, when there was a wide ranging debate on issues from a universal broadband service to the creation of a new Electronics Communications Code and granting extra powers to regulator Ofcom.
Virgin Media’s chief operating officer Paul Buttery says: “Rights known as 'wayleaves' are needed to connect homes to broadband networks that,like water pipes, run along streets. But the costs for broadband companies to connect homes are far greater than those faced by water companies, and the red tape much more cumbersome.
“Government should act to modernise the planning system in the Digital Economy Bill.” Over the past year, the number of properties with poor broadband connections fell from 2.4 million to 1.5 million according to Ofcom’s latest Connected Nations report as private sector companies such as Virgin ploughed in billions of pounds in private investment.
Ofcom suggests that an average household needs a broadband speed of 10 megabits per second to meet typical needs such as high definition film streaming and watching catchup services such as BBC iPlayer.
Despite the improvement, Ofcom’s group director Steve Under says: “Too many people are still struggling for a good service. We think that’s unacceptable.”
Virgin Media has committed £3 billion to connecting four million homes to superfast broadband and Buttery says that greater liberalisation will help improve services. “Britain is benefitting from competition between infrastructure builders to deliver better broadband,” says Buttery. “89% of premises now have superfast broadband, with more than a million new superfast connections in the last year alone.
“Rather than spending more taxpayers' money, government should focus its energies on removing the barriers to greater private investment.”
Research commissioned by Sky confirms the importance of broadband to home buyers. Broadband and TV services ranked in the top five essential services, with 55% of people expecting to have TV services in place either before they move in or within 48 hours.
Chris Collinson, Sky’s sales and marketing director, comments, “Sky is committed to delivering solutions for property developers and their clients. The demands of modern living mean that people have less time to wait for services to be installed and being connected has become essential to people’s lives.”
Murphy Utilities www.murphygroup.co.uk/
Service Connections www.serviceconnectionsltd.co.uk
Utilities Direct www.utilitiesdirectltd.com
Virgin Media www.virginmedia.com