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Ashford’s Integrated Alternatives Ashford Integrated Alternatives (AIA) Uniting Utilities: Organisationally Practical? Dr Jens Roehrich & Dr Andrew Davies.

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Presentation on theme: "Ashford’s Integrated Alternatives Ashford Integrated Alternatives (AIA) Uniting Utilities: Organisationally Practical? Dr Jens Roehrich & Dr Andrew Davies."— Presentation transcript:

1 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

2 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. © Imperial College Business School Research focus

3 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 © Imperial College Business School

4 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. Research Approach Imperial College Business School Research Approach

5 Comparative cases © Imperial College Business School Elephant&Castle/UK Ashford/UK Chula Vista/USA

6 private End-customers commercial Business models Energy Water Data Waste Utility streams Individual utility companies MUSCo ESCo Increasing degree of integration mixed (various degrees) Different degrees of utility stream integration

7 Value Chain (Ashford and Chula Vista) Product/Service components Client Contractors Added value Value creation

8 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.”

9 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.

10 Value Constellation (Elephant & Castle) Systems integrator (consortia) Product/Service components Client Sub-contractors Added value Value co-creationValue creation

11 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).

12 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 in- house, for us it seems to work better” (Development Director, Veolia).

13 MUSCo Waste Data Energy Water ESCo Utility stream integration Organisational integration DesignBuildOperateFinance DesignBuildOperateFinance DesignBuildOperateFinance DesignBuildOperateFinance WESCo (can include Waste) MUSCo MUSCo (can include waste) Integration across investigated cases

14 Conclusions © Imperial College Business School 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

15 Conclusions © Imperial College Business School 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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