Jacobs - VolkerStevin Joint Venture Appointed to UK's United Utilities Construction Delivery Partner Framework

Rhea-AI Summary

A joint venture between Jacobs (NYSE:J) and VolkerStevin, known as C2V, has been appointed by United Utilities as a Construction Delivery Partner (CDP) for their $3.8 billion capital investment program. This initiative, running from 2025 to 2030 with an option to extend to 2035, aims to modernize water services in North West England.

C2V will handle project management, design, build, and commissioning for complex infrastructure projects, including water and wastewater treatment and energy solutions. This marks United Utilities' largest environmental program to date.

Jacobs and VolkerStevin have previously supported United Utilities for over a decade, delivering critical infrastructure projects. The program's success will depend on regulatory approval from Ofwat, expected by December 2024.

Both companies emphasize the potential for social, environmental, and economic benefits through this collaboration, aiming to enhance water services and infrastructure resilience in the region.

Positive

• A $3.8 billion capital investment program announced.
• Collaboration between Jacobs and VolkerStevin leverages 20+ years of experience.
• Focus on modernizing water services in North West England.
• Potential five-year extension of the framework, increasing project longevity.
• Comprehensive project scope includes water treatment, wastewater treatment, and energy solutions.
• Enhanced collaboration with United Utilities and supply chain ecosystem.
• Jacobs' past support has secured strategic funding from Ofwat's Innovation Fund.
• Use of smart sensors and AI-driven predictive analytics through Jacobs' Aqua DNA for network performance enhancement.
• Jacobs has been ranked No.1 in Sewer/Wastewater Treatment by Engineering News-Record.

Negative

• Program success contingent on regulatory approval from Ofwat by December 2024.
• Potential delays in project initiation pending final Ofwat response.
• High financial risk associated with $3.8 billion investment.
• Challenges in executing the most ambitious program United Utilities has ever undertaken.

Insights

Financial Analyst

Jacobs' appointment as a Construction Delivery Partner (CDP) in a joint venture with VolkerStevin for United Utilities’ significant capital investment program is substantial. This venture is expected to support a $3.8 billion capital investment program over the next five years, marking United Utilities' largest environmental program to date. For Jacobs (NYSE:J), this partnership could mean steady revenue streams and enhanced credibility in the infrastructure sector. Their involvement in such a massive project speaks volumes about the company's capabilities and reliability.

However, it's important to consider the financial implications carefully. While such large-scale projects can enhance revenue, they often come with significant upfront costs and associated risks. Investors should monitor Jacobs' quarterly financial reports for changes in capital expenditure and operational costs. Additionally, the Ofwat review in July 2024 could impact the project’s progression and budget allocation, potentially affecting stock prices.

Environmental Analyst

This initiative is set to advance environmental performance in North West England, addressing the water sector's unprecedented challenges. The emphasis on environmental benefits and sustainable infrastructure aligns with the current global trend towards green investments and environmental, social and governance (ESG) criteria. For Jacobs and VolkerStevin, the focus on green and resilient solutions can enhance their reputation amongst clients who prioritize sustainability.

Furthermore, the program’s impact on water and wastewater infrastructure improvements could have long-term environmental benefits, potentially attracting more eco-conscious investors. However, the project’s success will depend on the effective implementation of innovative technologies and collaboration among all partners. Failure to meet environmental goals could tarnish reputations and reduce investor confidence.

Market Research Analyst

From a market perspective, this joint venture highlights Jacobs' and VolkerStevin's strategic positioning in the UK's water infrastructure market. By securing a pivotal role in United Utilities' capital program, these companies reinforce their market presence and competitiveness. This move could potentially open doors for similar opportunities in other regions.

However, it's essential to consider the broader market trends and regulatory environment. The water services market in the UK is highly regulated and the outcome of Ofwat's review will be critical. Investors should be aware of potential regulatory roadblocks and shifts in market dynamics that could impact the joint venture’s success. Monitoring sector-specific news and updates from regulatory bodies will be crucial.

Framework supports $3.8 billion capital investment program over next five years

United Utilities' largest ever environmental program to advance water services modernization in North West England

DALLAS, June 11, 2024 /PRNewswire/ -- A Jacobs (NYSE:J) and VolkerStevin joint venture, C2V, has been appointed by United Utilities, one of the U.K.'s largest listed water companies, as Construction Delivery Partner (CDP) to support their major capital investment program. It will be the most ambitious and challenging program United Utilities has ever delivered.

C2V will deliver project management, design, build and commissioning solutions for complex capital projects covering water and wastewater treatment, pumping stations, reservoirs, bioresources and energy.

All organizations on the specialist framework will form an integrated delivery organization with United Utilities to deliver its planned circa $3.8 billion (£3 billion) capital program from 2025 to 2030, with an option to extend for an additional five years, from 2030 to 2035.

"The water sector is facing unprecedented environmental challenges. This framework positions United Utilities to deliver its largest ever program to advance environmental performance and critical water services in North West England," said Jacobs Senior Vice President Kate Kenny. "With our 20+ years' experience working in the region, we can further contribute vital water and wastewater infrastructure solutions that deliver stronger, greener and healthier customer and environmental benefits."

VolkerStevin Managing Director John Cox said: "We're looking forward to collaborating with United Utilities, enterprise partners and the supply chain ecosystem to deliver the region's biggest ever environmental program. The enterprise model presents a unique opportunity for our businesses to collaborate, transform the way in which we work together and deliver more social and environmental value to the North West region than ever before. We are excited to take the next step in our journey with United Utilities to build a stronger, greener and healthier North West England for everyone."

United Utilities Capital Delivery Director Jane Simpson said: "We're really excited that we have secured some strong delivery partners to ensure we can deliver on our ambitious plans to transform infrastructure and services in the North West.

"It will be our most ambitious program yet and by putting this partnership in place with some of the best design and construction companies in the country, it allows us to get to work quickly and deliver the transformation that we know our customers want to see." 

The Water Services Regulation Authority for England and Wales - Ofwat - will review United Utilities' proposals and give its draft response by July 2024, with final plans agreed by December 2024. United Utilities provides water and wastewater services to around seven million people, supplying three million households and 200,000 business premises.

Jacobs and VolkerStevin have supported United Utilities as C2V for the past 10 years – delivering both water and wastewater projects providing safe, secure and resilient water resources and improving river water quality across North West England.

Jacobs is also part of United Utilities' new Strategic Solutions Team supporting program optimization for their major capital works. Jacobs supported on United Utilities' current engineering services framework for the past 10 years, providing strategic studies and business planning through to asset optimization, project and program management—working together to ensure the resilience of critical assets such as the Haweswater Aqueduct. United Utilities implemented a Dynamic Network Management approach, powered by Jacobs' Aqua DNA—a Digital OneWater solution that collects live data and enhances wastewater network performance using smart sensors and AI-driven predictive analytics—to proactively address challenges and prevent issues. Jacobs has supported United Utilities with successful regulatory submissions to Ofwat, while also being one of their lead partners in successfully securing strategic funding from Ofwat's Innovation Fund.

Since 2006, Jacobs has been ranked as the No.1 design firm in Sewer/Wastewater Treatment (2023) by Engineering News-Record. As one of the largest service providers to U.K. water authorities, Jacobs helps plan, develop, finance, design, deliver and maintain world-class water infrastructure solutions that manage this essential resource.

At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With approximately $16 billion in annual revenue and a talent force of more than 60,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector. Visit jacobs.com and connect with Jacobs on Facebook, Instagram, LinkedIn and X.

Certain statements contained in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not directly relate to any historical or current fact. When used herein, words such as "expects," "anticipates," "believes," "seeks," "estimates," "plans," "intends," "future," "will," "would," "could," "can," "may," and similar words are intended to identify forward-looking statements. We base these forward-looking statements on management's current estimates and expectations, as well as currently available competitive, financial and economic data. Forward-looking statements, however, are inherently uncertain. There are a variety of factors that could cause business results to differ materially from our forward-looking statements including, but not limited to, our plans to spin off and merge with Amentum our Critical Missions Solutions  business and a portion of our Divergent Solutions business in a proposed transaction that is intended to be tax-free to stockholders for U.S. federal income tax purposes, the timing of the award of projects and funding and potential changes to the amounts provided for under the Infrastructure Investment and Jobs Act and other legislation related to governmental spending, as well as general economic conditions, including inflation and the actions taken by monetary authorities in response to inflation, changes in interest rates and foreign currency exchange rates, changes in capital markets, the possibility of a recession or economic downturn, geopolitical events and conflicts, and the impact of any future pandemic or infectious disease outbreak, including the related reaction of governments on global and regional market conditions, among others. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements, see the discussions contained under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recently filed Annual Report on Form 10-K, and Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations; Item 1 - Legal Proceedings; and Item 1A - Risk Factors in our most recently filed Quarterly Report on Form 10-Q, as well as the company's other filings with the Securities and Exchange Commission. The company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.

For Jacobs press/media inquiries:
E: media@jacobs.com   

For VolkerStevin media inquiries:
E: jenny.haydon@volkerstevin.co.uk 

 

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SOURCE Jacobs

FAQ

What is the value of the capital investment program involving Jacobs (J) and VolkerStevin?

The capital investment program is valued at $3.8 billion.

When will the Jacobs and VolkerStevin joint venture start the United Utilities program?

The program is set to start in 2025 and run through 2030.

What type of projects will Jacobs (J) and VolkerStevin undertake in the United Utilities program?

The projects include water and wastewater treatment, pumping stations, reservoirs, bioresources, and energy solutions.

What is the potential extension period for the United Utilities framework involving Jacobs (J)?

The framework has an option to extend by an additional five years, from 2030 to 2035.

What regulatory body will review United Utilities' proposals?

The Water Services Regulation Authority (Ofwat) will review the proposals.

When will Ofwat give its final response on United Utilities' proposals?

The final response from Ofwat is expected by December 2024.

What is the significance of Jacobs' Aqua DNA in the United Utilities program?

Jacobs' Aqua DNA uses smart sensors and AI-driven predictive analytics to enhance wastewater network performance.

How long have Jacobs and VolkerStevin supported United Utilities?

They have supported United Utilities for the past 10 years.