Ashford’s Integrated Alternatives
Ashford Integrated Alternatives (AIA)
Uniting Utilities: Organisationally
Practical?
Dr Jens Roehrich & Dr Andrew Davies
Innovation and Entrepreneurship Group
Imperial College Business School
Research focus
• Overall research question:
How do integrated utility service providers (i.e. ESCo and MUSCo) create and capture
value in long-term, complex urban infrastructure redevelopment projects?
• Research objectives:
– Developing a taxonomy of alternative business models for delivering urban
water and energy infrastructure services in order to place the ESCo and MUSCo
approach in a wider strategic context.
– Examining comparative cases in detail, addressing the challenges involved in the
development, implementation and delivery of integrated utility services.
– Providing guidance on how to implement alternative integrated utility business
models in different urban environments.
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From Value Chain to Value Constellation/Network
Traditional: value chain
Fails to capture inherent
complexity of roles and
relationships in economic systems –
value creation
Value constellation/network
Understand entire value creating system
Role and relationship reconfiguration
value co-creation
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Research Approach
Research Approach
•
Primary and secondary data
•
Key phase of integrated urban utility delivery:
–
Design (masterplan) – this will involve ideas about
MUSCOs, concessions (PPP/PFI/others), design,
business model plans, user needs etc.
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Comparative cases
Elephant&Castle/UK
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Ashford/UK
Chula Vista/USA
Different degrees of utility stream integration
Utility streams
Business models
Energy
Data
Waste
MUSCo
Increasing degree of integration
Water
End-customers
commercial
ESCo
Individual
utility
companies
mixed
(various
degrees)
private
Value Chain (Ashford and Chula Vista)
Value creation
Product/Service
components
Client
Contractors
Ashford Counicl considered ESCo
alternative for renewable energy
•
A former CEO of the Ashford Borough Council explains the purpose of this study and
the importance of scale in urban development projects.
•
“[...] we tried to engage the developers in all of this because we were basically saying
look you know you are going to have to meet these very challenging environmental
targets. So we got this study going and it modelled what would be the sensible
choices in terms of sustainability and energy for different sizes of development.
•
So for a little group of ten houses or fifteen houses or five hundred houses or a
couple of thousand houses up to six thousand houses, urban extensions basically it
would be six thousand houses and we thought well if big developer what a
consortium of developers are developing at that scale then we could at least illustrate
for them what are the realistic choices because there are actually quite different
choices become meaningful at different scales.”
Elephant & Castle
• Redevelopment project £1.5bn
• 70 acres
• Design and build new pedestrianised town centre,
market square, green spaces and 5,300 new homes
• Southwark Council led project 2002-2020
• Lend Lease – developers
• Huge challenge of outdated buildings and infrastructure,
pollution, traffic, etc.
Value Constellation (Elephant & Castle)
Value creation
Product/Service
components
Value co-creation
Systems
integrator
(consortia)
Sub-contractors
Client
MUSCo challenge on
E&C brownfield site
• “The other thing that differs is that a lot of the projects we have dealt
with in Veolia Multi-Utility Services has been totally new housing
developments, Greenfield sites, so the installation of gas, water and
electric, and in some instances telecoms, would be far easier to
manage from an operational perspective, than what we are doing
here on a brown field site. [...] There is a lot of existing infrastructure
that will remain in place and one of the biggest challenges is to find
a utility corridor for us to install the network because one of the
savings with this model of multi-utility is putting everything in a joint
trench” (Commercial Manager, Veolia).
MUSCo team need strong capabilities
• “I think the advantage of the Veolia Group is the fact that
we’ve got this extra expertise in-house. If you were
setting up, like some of our competitors do, for energy
companies, they have to have the water and the waste
and other people as sub-contractors. We would see that
as a disadvantage simply because you are managing
another entity to do something. So if you keep it inhouse, for us it seems to work better” (Development
Director, Veolia).
Integration across investigated cases
Organisational integration
MUSCo (can include waste)
Waste
Design
Build
Operate Finance
MUSCo
Data
Design
Build
Operate
Finance
MUSCo
WESCo (can include Waste)
Water
Design
Build
Operate Finance
ESCo
Energy
Design
Build
Operate Finance
Utility stream integration
Conclusions
Early involvement at master planning phase
• Managing integration of utility services
• Building capacity and joint working
Utility stream considerations
• Individual and integrated utility service stream(s) reviews (to understand costs, liabilities
and implications before deciding on the degree of integration)
Joint working
• Development of open partnering between manufacturer, distributor and other project
stakeholders is vital to project realisation
• Ongoing cooperation between councils, utility firms, developers and other stakeholders
Importance of council
• Municipal push to deploy innovative business models (enabling or hindering innovation
in delivering integrated utility services)
• Leaders & customers of urban redevelopment projects
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Conclusions
Value network / constellation
• Changing firms’ strategies: from adding services to existing products; occupying new
positions in the value constellation; developing new capabilities
• Integrated utility services models emphasise whole value network
• Focus on value-creating system itself, within which different economic actors work
together to co-produce value
Capability and resource developments
• Organisations mostly do not individually possess necessary capabilities and resources
to plan, finance and manage integrated business models
• Capabilities are distributed across different project stakeholders (need to be accessed
through a value constellation)
• Acquire and build new capabilities; technical and organisational skill sets
Developing business models
• Resource-intensive and time-consuming process
• Establish appropriate legal and commercial frameworks based on project specifics and
characteristics
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