It is a year of total focus on the details for the project team responsible for delivering London Underground’s next fiendishly complex major scheme - the £625M Bank Station Capacity Upgrade. That total focus is being aided by a step-change in team working.
London Underground’s (LU’s) Bank Station upgrade is set to be the most keenly observed infrastructure project for some time. But not for all the reasons one might think. It is technically and logistically complex.
But the reason it is gaining widespread interest is its pioneering procurement approach - LU’s Innovative Contractor Engagement (ICE) procurement method.
Using this method, LU agrees to pay contractors for innovations they produce during procurement, even if they do not win the contract (NCE 23 February 2012).
Spanish contractor Dragados beat three joint ventures (JVs) to the job. Its travelator-led solution scored streets ahead of its rivals in LU’s carefully weighted evaluation system (NCE 5 September 2013). Overall,
Dragados’s solution boosts the scheme’s benefit to cost ratio from 2.4:1 to 3.5:1. Estimated journey time benefits are increased by £148M to £923M while the estimated final cost is cut by £61M to £563M.
It did this, it suggests, by engaging its tier two supply chain in a way that has never previously been done on a UK infrastructure project. Suppliers - be it specialist designers, logistics experts or tier two contractors - were engaged on an exclusive, confidential, low or no-fee basis throughout the lengthy procurement process on the understanding that they would be signed up as alliance partners if Dragados won the job.
Dragados won the job, and its team, bolstered by one or two new additions is now hard at work. It is working on a nailed-down, detailed delivery plan ahead of a public inquiry this spring, and submission to the Transport for London (TfL) board. It is scheduled to give full funding approval and go-ahead for construction in April next year.
There is also a confidence borne out of the team unity engendered by the ICE approach that has given rise to some fundamental thinking around the future make up of project teams.
“We were the only bid team that wasn’t a JV and that wasn’t for the want of trying,” recalls Dragados project director Danny Duggan. “But we were a new entrant to the UK market and we were on our own. That wasn’t planned.
“Tier one contractors engage very little with tier two contractors when bidding - if at all. So this is unique”
Don Houston, Byrne Bros
“But what has happened here has caused us to question our strategy. We have realised we don’t necessarily need a JV for risk share or financial strength - we have got that through our parent ACS. So why do we need the hackneyed model of a JV at tier one level?
“So we are looking to take this approach here forward into our future stations strategy,” he adds. That, of course, only works if the right suppliers are happy to be engaged. So are they?
The feeling within the team is that the mood was right from the start - vital if the supply chain was to commit time and resource for free or heavily reduced rates during the 15 month bid period.
“The other bidders pretty much didn’t engage with the tier twos,” notes concrete frame specialist Byrne Bros project director Don Houston. “It is a fundamental point.
“From my perspective, tier one contractors engage very little with tier two contractors when bidding - if at all. So this is unique.”
A key tenet of the procurement process was that LU disclosed all project information and this included a priced risk register so everyone could understand the key drivers and key wins.
“It allowed us to understand what mattered,” explains Duggan. “We found big solutions working with Cleshar on possession management and with T Clarke on power supply. And they were driven by us having visibility of a priced risk register. You don’t normally get that and we worked through it as a group.”
“Decisions were made in an open forum and everything was discussed,” explains sprayed concrete lining (SCL) consultant Dr Sauer & Partners managing director Gerald Skalla. And that was important.
“Small things matter. For example, us knowing the exact type of plant that a contractor intends to use can make a difference to our sprayed concrete lining design.
“We came out of meetings knowing that we could make the changes we wanted; we didn’t have to go through a tier one designer. Dragados allowed a free flow of engineering knowledge to provide a better option. We were always focused on the technical solution. How will this get built?”
“From the LU side of the fence during the dialogue phase it shone through that the Dragados team listened,” reflects Hyder major projects director Nigel Hayward. “It was responsive. It was a dialogue.”
And that continues. “We have seen that continue in the post-bid stage,” notes structural engineer Robert Bird Group’s regional director David Seel, a relatively new addition to the team.
“Us knowing the exact type of plant that a contractor intends to use can make a difference to our sprayed concrete lining design”
Gerald Skalla, Dr Sauer & Partners
“We came in at the end of the concept design stage and immediately had full access to the tier two suppliers; the focus was not on the design but how to assemble.
“Traditionally there is a long process of detailed design before the tier two contractor is engaged and trying to come up with innovation at that stage can be really frustrating. You can have an idea that could save millions of pounds and shave months off the construction programme but such is the inertia around the detailed design that it cannot be changed. Everyone can know the saving is there, but you still can’t have it.”
But what of that elephant in the room - the amount of time each bid partner was expected to put in for free, or at least, for significantly reduced rates?
“It took a long time. We all spent at least a year working on reduced or no rates. We needed to be careful here, to make sure this was a sustainable procurement strategy.
“Only one team can win, and the three other teams put significant money on the table,” cautions Skalla, while noting that LU did make a contribution to the losing teams’ efforts, buying their ideas to bolster the planning application.
Contractors are more understanding of the situation.
“Bid costs have rocketed in the last five years. Our pre-contract department has doubled in size,” notes Houston. “But while this model here is quite rare in the civils sector, it is quite common in building.”
Duggan says his firm tried to be fair. “We tried to leverage intellectual property where we could, but not abuse it,” he says, adding that, ultimately, the process will continue to evolve.
Now, the focus is on bedding in the collaborative behaviours instilled during the bid stage.
“All infrastructure projects are procured using the NEC - which is a collaborative contract. But they are not necessarily procured collaboratively,” notes Houston. “It’s just not applied as intended.”
“We tried to leverage intellectual property where we could, but not abuse it”
Danny Duggan, Dragados
Bank - thanks to ICE - will be different, says LU programme manager Simon Addyman. “Securing the intellectual property was the primary concern of ICE. But if you prioritise value at the early stage you start to drive the behaviours,” he notes.
“It’s clear that we are not yet perfect,” adds Duggan. “We think we are working at about 65% efficiency. But we are a long way down the road.”
The big test will come when the project moves to site. “We have the fundamentals to go to site.” says Addyman. “But that’s the key test - are they going to move into delivery without a dip in performance?” Duggan believes they will.
“This is a high performing team,” he stresses.
Which is just as well, as Addyman and LU have high expectations.
“I do not expect to be going back in March 2016 to the Transport for London board with any client change on costs or schedule,” he states.
Actually, as things stand now, the costs will be slightly lower, and the passenger movement will be slightly faster. And the supply chain will benefit financially from that
“The evidence is that the product we put together at bid is further improved,” says Duggan. “The real work is being done here. I am adamant it is going to show benefits.”