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Utilities CAPEX & OPEX – The Lost Opportunity

By Rees Westley, Head of Utilities at Business Critical Solutions

With the perpetual pressure on clients to reduce construction costs, in a market sector that has been further tested by skills shortages, BREXIT and the recent global pandemic, there is an intensifying requirement for project stakeholders to become ever more creative when considering utility delivery strategies.

Optimising utility procurement and delivery is often overlooked when unlocking potential cost reduction, schedule improvement and risk mitigation opportunities that provide the client with a true competitive advantage in the marketplace. Realising that unique strategy on a scheme can sometimes be the determining factor as to its commercial viability. Additionally, assured delivery can also be a competitive advantage in securing that first tenant.

A project team will often look to its supply chain when seeking to reduce its construction costs. However, contractors and suppliers can only be challenged so far before quality and standards become compromised. The supply chain may however provide some of the answers to unlocking substantial capital savings capable of changing the course of a project. Furthermore, these opportunities deliver continued cost and sustainability efficiencies throughout the operational life of a project.

“Project utilities are quickly becoming the dominant driver for the ‘how’ in business strategy, to gain competitive advantage in the site supply and connectivity stratagem”

Managing risk is an all-too-common occurrence in construction with principal risks in procurement being inherently associated with time, cost, and quality. The forces of which need to be managed (held in equilibrium) in accordance with the project scope. Cost inefficiency in utility procurement and programming risks will remain whilst traditional techniques are followed. These can however be mitigated using dynamic strategies that factor management and acquisition requirements throughout the project lifecycle. This moves the paradigm from reactive cost cutting to proactive cost saving.

As with all types of risk mitigation, measures should be implemented and managed by industry leading experts best placed to do so. A traditional approach will deliver same results, to paraphrase Albert Einstein, executing the same strategy over and over will not produce a different result. Often 90% of the cost of opportunity is lost at the point of contract. By designing a delivery strategy that is unique to the project, the client will realise the greatest return on its investment.

“Previously we have stated that the data centre is the heartbeat and engine of the economy, taking that analogy further, utilities are the umbilical cord that supplies the infrastructure around us. The capital cost of these connections (excluding enabling, construction requirements and future operational costs and requirements) can often form 5% of the total out turn cost and form a significant part of early project risks, yet utilities are often not considered until the early design stages of a project.

This will, to a large extent, limit opportunity and increase costs. It is therefore essential to employ experts best placed to implement the most effective strategies during feasibility and master planning. We understand that utility networks are dynamic, and we use our expertise and extensive knowledge of these networks and the stakeholders who operate within them to maximise efficiencies through design development, procurement, and delivery.

At BCS, we adopt strategies that deliver up to 70% cost savings and assured outcomes. The expertise and value that we bring to each project offers more than just cost and time certainty but also commercial, social, economic, and environmental dividends that continue to provide benefit long into the operational life of a project.