Thames Tideway Tunnel (TTT) is a major project to build critical sewerage infrastructure for London. It will relieve pressure on existing, aging infrastructure and prevent sewage overflow discharging into the River Thames. The scale of the investment needed meant an innovative method was required for funding, where new investors own, build, manage and maintain the tunnel, in return for a fee charged to homeowners and businesses through Thames Water’s bills. This method of funding was the first of its kind and presented important challenges from a due diligence perspective, as the project’s associated risks would impact the cost of capital of the competing investors bid.
Thames Tideway commissioned Arcadis to undertake the Vendor’s Technical Due Diligence (TDD), in order to provide investment bidders with confidence that technical risks were understood and adequately mitigated and managed, so consequently bid a low cost of capital.
Arcadis brought together an international team of consultants with relevant expert knowledge to help demonstrate how TTT was addressing: technical, geotechnical and hydrodynamic design, organisational design, project development, program, risk, estimated project costs, contract forms, tendering processes and operational costs. The key skill in writing a report such as this is to produce something written by people from one discipline being able to be understood by people from other disciplines.
The level of confidence that Arcadis was able to demonstrate in its due diligence report, played a role in the actualisation of the consortium of investors who have taken the licence to progress the project at a lower cost of capital than forecast. Therefore, once built, the tunnel will cost bill payers of London approximately a third less than originally anticipated. In addition, the success of the project and the funding at only 2.5% mean TTT is likely to become a future model for infrastructure projects in the UK and Europe.