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Efficient Water Infrastructure Development in Northern Ireland Case Study

Explore how Northern Ireland efficiently developed water and waste water infrastructure through public-private partnerships and strategic investments. Learn about the challenges, solutions, and successful outcomes of Project Alpha and Project Omega. Discover key lessons learned for successful infrastructure projects.

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Efficient Water Infrastructure Development in Northern Ireland Case Study

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  1. Case StudyWater and Waste Water Infrastructure – Northern IrelandMartin Darcy Regional Workshop on Concessions/Public-Private PartnershipsTirana, 11-12 December 2007

  2. Drivers • EU Directives • Scale of overall investment needs • Water reform and lack of internal implementing resource • Strategic Investment Board (SIB)

  3. Options • Mix of public and private sector investment • New build or renovate • Greenfield or existing sites • Low technology or new technology

  4. Preferred Solution • Publicly financed investment only to the credible limit of the public sector’s ability to implement effectively • Private sector investment would deliver the rest - estimated at €350m of €1.4bn total • Private sector investment programme (PPP Programme) broken into two major multi-site procurements: • Drinking Water projects – named ‘Project Alpha’ • Waste Water projects – named ‘Project Omega’

  5. Project Alpha - Objectives • To provide 50% of Northern Ireland’s drinking water capacity • To achieve quality standards compliant with EU Drinking Water Directive • To achieve the above to meet legal deadline

  6. Water Treatment – Project Alpha • 5 Existing sites • Estimated €200m of investment • No land acquisition issues • Few planning difficulties anticipated • Relatively straight forward contract structure • One procurement process for all five

  7. Water Treatment Issues – Project Alpha • The most attractive and bankable structure had ‘balance sheet’ issues; this led to a major crisis of confidence amongst some stakeholders • Raw water data • Raw water consistency • Sludge management

  8. Preparation, Procurement and Initiation– Project Alpha • May 2003 – Inception • January 2004 – Project Launch • May 2004 – Call for competition • May 2006 – Financial Close (ahead of schedule by 3 months) • September 2007 – construction work almost complete and ahead of schedule

  9. Outcomes – Project Alpha • Winning bid = €70m capital cost saving over initial engineers estimates • Whole life savings of 19% • Project procured 3 months ahead of schedule • Claimed by the advisers to be a ‘World Record’ time for a major infrastructure financing

  10. Waste Water – Project Omega • Renovation / new build and rationalisation with investment requirement estimated at €150m • Three key geographical areas • One procurement process for all three areas • Rationalisation element gave great scope for innovation • No preconceptions about which technical solutions to use • Several bankable templates already in existence

  11. Project Omega Issues during Preparation Stage • Sludge management • Trade effluents • Infiltrations • Flow and Composition base data • Planning issues concerning some sites • Land acquisition required on at least one site

  12. Project OmegaIssues During Procurement Stage • Urgent investment need requiring an Advance Works Contract – high risk strategy for Authority • Reform of the Northern Ireland Water Service – ‘the Authority’ • The sale of the Preferred Bidder to a private equity consortium • Inadequate leadership from senior management at Preferred Bidder

  13. Project Omega – Key timings • Advisers appointed January 2004 • OJEU December ’04 • Preferred Bidder appointed January ‘06 • Financial Close March ‘07

  14. Project Omega – Outcomes • Project signed one month later than forecast • 11% improvement in whole life vfm compared to the Public Sector Comparator • Construction on Schedule • Represented the successful conclusion of a major PPP Programme

  15. Main Lesson Learned on the Entire Programme • Investment in thorough evaluation and good preparation pays back through good results in: • On time delivery • Value for money • Avoidance of legal challenges

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