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“The lessons learnt from the construction of the Thames Tideway Tunnel can usefully be applied to other construction projects in the water sector, but with caution where anything other than exceptionally large projects are concerned.”

The Company has responded to the Ofwat July 2026 Consultation on draft guidance for water companies delivering projects under the 2013 Specified Infrastructure Projects Regulations (SPIR).  The Thames Tideway Tunnel (TTT) is the only completed project constructed under the Regulations.

The Company broadly welcomes the direction of travel, but says the prospective expansion of SIPR beyond exceptionally large projects makes it important that guidance remains within a discipline decision framework.

The consultation proposes a common regulatory and commercial baseline for major water and sewerage projects delivered by competitively appointed infrastructure providers. Its principal strengths are clarity, lifecycle accountability, ring-fencing, independent assurance and a more consistent approach to risk and value for money.

But the Company believes the chosen model must be justified project by project against credible alternatives and against the full statutory purposes of water infrastructure: resilient service, environmental protection, affordability and sustainable development.

SIPR can be a valuable delivery model for technically discrete, financeable major projects, including wastewater infrastructure. Its legitimacy will depend on transparent model selection, realistic risk pricing, strong client capability, environmental accountability and demonstrable benefits to customers over the asset’s whole life. The final guidance should make those safeguards as explicit as the commercial and financing architecture.

Priority observations and proposed amendments

Make the value-for-money test broader, transparent and repeatable

Ofwat proposes staged value-for-money assessment and an indicative risk-allocation baseline. This is appropriate, but the final guidance should specify a minimum common evidence set. For now, benchmarks will have to be from outside the sector. This can be better addressed as comparable projects are put into motion.

Allocate risk to capability, not merely balance-sheet capacity

For every high-impact risk, the approved matrix should identify the risk owner, control levers, evidence base, price treatment, early-warning threshold, relief mechanism and ultimate customer exposure. Material changes after competition should trigger independent reassessment of value for money, not simply a contractual adjustment.

Retain lifecycle accountability

Ofwat’s starting position—that the IP should normally operate and maintain the asset—can align construction decisions with long-term performance and reduce interfaces. The WCWC supports this as a rebuttable presumption, subject to quantified evidence on whole-system operation, emergency response, water-quality and environmental responsibilities, workforce competence, data interoperability and handback / termination arrangements.

Strengthen governance, independent assurance and public accountability

The proposed Liaison Committee and Independent Technical Adviser (ITA) are important lessons from TTT. The final guidance should require: independent environmental and customer-impact expertise alongside engineering and finance, and published quarterly dashboards covering cost, schedule, benefits, risk, environmental performance, safety, customer charges and forecast completion;

Protect customers from open-ended contingent exposure

Ring-fencing and financeability are necessary, but customer protection requires clarity on who pays when projects overrun, refinancing gains arise, the IP underperforms or the Project Licence is revoked. The guidance should require transparent caps, collars and materiality thresholds; equitable sharing of refinancing or land-disposal gains; strict tests before additional expenditure enters the regulated asset value; and a published affordability assessment before specification and financial close. Special-administration and continuity arrangements should be tested through scenario exercises, not treated solely as legal drafting.

Preserve competition and supply-chain resilience

The proposed split procurement of main works and finance may widen competition, but repeated use of highly standardised, very large packages could narrow the field to a small group of global contractors and investors. Market engagement should therefore test bid costs, market concentration, deliverability, skills, SME participation and the resilience of key supply chains. Ofwat should be prepared to support appropriately bundled or phased solutions where these provide stronger competition and reduce concentration risk.

The Company’s full response can be found in the Consultations section of this website.