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Follow the money

If BAA aims to be out in front on sustainability and project development, it also wants to be in the forefront on project control.

That is the task of Andrew Hill, finance director of the scheme.

'T5 is a massive undertaking with a large number of direct suppliers and even larger numbers indirectly, ' he says.

Both keeping on schedule and keeping within cost is important.

But very often the two elements tend to run separately and checking and monitoring one potentially comes at the expense of keeping an eye on the other, he believes.

T5 is one of the first major uses of the Artemis project management system in UK construction. 'It is a very robust control system that has major benefits because it shows how each area of the project is performing relative to target, and it does that both on the schedule and on costs, ' explains Hill.

A key point of the system, he says, is that it can give information at programme level or at individual project level. 'But you can also drill down to the sub-project levels which involve packages of perhaps £20-30M and from there to thousands of individual work packages.'

Cost and performance data, analysed in various ways, produces two highly useful indices, the Schedule Performance Index and the Cost Performance Index. These are generated for all the levels and for each package the aim is to keep both above unity.

Developing the system and getting it running on the project - it has been up since April - has been a 'voyage of discovery' he says, not least because it demands a significant amount of information from suppliers.

'Obviously, there is commercially sensitive information within companies but generally, the level of data we require is not a problem, ' he adds.

'We try to disrupt the suppliers as little as possible; we just assure ourselves of the robustness of their systems, and perhaps tweak them a little, though in one or two cases we have asked them to switch. It is not a hugely expensive thing to do.'

But although the process avoids sensitive numbers, it does demand some integration of data and sharing with other suppliers. There is direct access to the system for those entitled to it and reports are regularly made available as needed. Mostly, this is pulled from suppliers' own data acquisition systems.

All this is possible largely because BAA has been developing long-term contractual arrangements with suppliers for some time, and they can see every reason to stay the course for the long term.

'We want to and do work collaboratively with suppliers and they understand the advantage, ' says Hill.

On T5, suppliers are reimbursed for costs and there is an allowance for overheads and profits.

'They are also incentivised to achieve exceptional performance on cost and schedule and are rewarded according to how much they beat those targets, ' says Hill.

'But they have to do pretty well to reach payment and for much of the incentive they have to do well collectively.'

Agreeing a package means setting scope, method, programme and cost with a supplier then monitoring progress.

'If things go wrong we get together with a supplier and try to fix it. It is not a big stick approach but we expect them to step up to the challenge, ' says Hill.

The whole method involves BAA being the primary holders of the risk. To control that it has the new system and also a process of cost benchmarking working with consultants E C Harris and Turner & Townsend.

'You get some pretty powerful clues about what costs should be both at system and component levels, ' says Hill.

If there is a weakness he thinks it might be in monitoring less tangible projects. 'With foundations you can pretty much measure how many piles have gone in but with software design it is harder to know where you are, ' he says.

As the system beds in he sees new challenges coming up for his 35-strong team of accountants and quantity surveyors.

One ongoing issue is to feed into the design and brief development process, ensuring that financing concerns can be raised where appropriate.

But more generally, the challenge is to drive costs from the system and stay in control 'especially as we get into a new interactive stage of the project with the focus switching from civil work and new suppliers come on'.

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