BAA 'old boy' network at risk from Ferrovial

FRAMEWORK AGREEMENTS will not survive a Ferrovial takeover of BAA, industry experts agreed this week. Companies outside the deals are looking forward to winning work from their 'comfortable' rivals.

The five-year, open-book deals with shortlists of firms have been in existence for almost 15 years and have arguably produced what they were set up to achieve - Terminal 5 delivered for a predicted cost.

But BAA itself has recently been reassessing the procurement method and has begun letting some work on a lump sum target-cost basis.

'Ferrovial will denitely take a look at the frameworks. It procures and manages for a living so it will be a question of the existing management explaining the benefits, ' said one senior consultant. 'It's likely Ferrovial will say 'very nice, but this is how we do it'.' The Spanish firm has encountered frameworks at its Bristol subsidiary and was reportedly unconvinced by the costs of the arrangement.

'Ferrovial is a major contractor so you'd think that if there is work to be done then it will do it itself. But they haven't done that elsewhere. We think there will be a lot of opportunity for those not in the 'old boy' framework network to ght their way in, ' said one major contractor.

The Spanish contractor and concession group has bid £10.1bn for the UK's leading airport operator. Acceptance of the offer by shareholders is expected on 26 June (See analysis page 14).