Gatwick Airport is investing heavily to become the airport of choice for airlines and passengers across the world. Mark Hansford meets the driving forces behind its £1.2bn investment programme.
Gatwick Airport used to be known pretty much for one thing - chartered flights sending happy-go-lucky Brits off to their lager-fuelled holidays on the Costas. The airport, and particularly its charter flight-centric South Terminal, was a noisy, cramped, unpleasant place to travel from. But since BAA was forced to sell to a collection of new owners led by Global Infrastructure Partners (GIP) in December 2009 that image has been changing rapidly. These new owners are determined to make Gatwick London’s airport of choice - toppling even Heathrow in terms of service and choice of destinations served.
It’s a bold vision, but there is plenty of evidence that the strategy is working; while Heathrow creaks at the seams, Gatwick, with yearly passengers totalling 34M, still has capacity for more and new airlines signed up in the last 12 months, including Korean Air, Air Vietnam and Air China, prove that.
Gatwick’s construction director Derek Hendry is clear: “The message is we’ve got ambitions to grow and we’ve got the capacity.” And for the foreseeable future that is with just one runway - the airport’s owners ended speculation over plans for a second runway in July with the publication of its development masterplan to 2020. It rules out the need for additional runway capacity until 2030, when it expects to reach full capacity with around 45M passengers a year choosing to fly from the airport. It believes that it will be handling 40M passengers a year by the early 2020s.
“The reality is that, certainly in the middle of the day, we have got adequate spare capacity. We have had some good wins and certainly the Far East sector is an opportunity for growth,” he says.
“Now we are independent and we don’t have a head office, we are more nimble; more able to try things out”
Derek Hendry, Gatwick’s construction director
The key to these new wins has been the demonstrable improvement in customer experience at the airport, fuelled by the investment programme.
Of course, investment in airports is regulated by the Civil Aviation Authority, and Gatwick’s current spend was largely put in place by BAA back in 2008, way before GIP was on the scene. But that’s not to say that GIP has not been able to manipulate this agreed spend to its - and its customers’ - advantage. Some work was replanned and rephased, and some new schemes were added. Bottom line is the CAA approved a one-year extension to BAA’s original £1bn capital investment programme, lifting it to a £1.172bn spend between 2008 and 2014.
“For us the key is making sure passenger expectations are met, for example, by cutting queues,” says Hendry. “We have worked very hard; we knew there were often big queues at check-in and security before we took over. Now, it is a much slicker process,” he says.
Asset data is key
Data on its assets is key to a client like Gatwick, and one of the first things the Bechtel/Gatwick team did was develop a standard form for all works information with a BIM model at its heart. This was back in 2010, some nine months before the government placed BIM models at the heart of its Construction Strategy.
BIM at the heart
“We feel like we’re leading the way on BIM,” says Phillpot. Driving its development at Gatwick has been engineering manager Eli Walter. “In the past people were doing BIM but in a haphazard manner. Probably nine months before the government’s announcement, we had decided the same thing; that BIM was going to be key.”
And data is the key. “BIM for us is not for all the pretty pictures, but because it is a smarter way of working; for us it is a data set to be used by everyone - technicians, asset managers and the engineering team,” he says. This ethos is best summed up by a recent IT upgrade that has seen new desktop PCs rolled out across the company. “Everyone has got a new computer and we fought long and hard that every one of them has a BIM reader so the model can be used.”
Of course, as of today, there is limited detail in the model, but that will change over time. “We currently have a huge archive, but it is a dumb archive. The prospect BIM holds is that we can get all that information in a model, so that 25 years down the line we will be able to peer in and see our archive.
“The vision we have is of a technician with an iPad out on site calling up the drawings he needs from the BIM model,” explains Hulse. “That’s something BAA would struggle to do.”
Gatwick’s BIM model is built primarily around Autodesk and Revit, but other platforms could use it if required - for example Civil 3D for highways work.
Phillpot is also confident that contractors see the benefit of BIM. “Contractors can get a huge advantage if they use the BIM model. Modelling in 4D can absolutely help with project planning. Using BIM means you can say absolutely what the asset physically looks like on any given day.”
And pretty pictures do play a part, particularly in winning over airlines when planning works. “You can provide assurance to airlines whose chief concern is their daily operation,” says Phillpot.
“If you can walk them through the look of the airport during works, even it is to show them the space between desks, it helps,” says Hulse. “These are aviation people not engineers and a flat drawing is of no use to them.”
Most of the bigger capital projects in the programme specifically targeted this, with many focused on the horrendous South Terminal, including a £31M new forecourt that was completed in March, a £21M upgrade of its landside concourse that is well underway and completes in December, a significant £45M extension of its security search area that completed in October 2011, a £34M extension of the departure lounge that completed in December 2009, a £8M refurbishment of the immigration hall that completed in October 2011 and a £40M facelift of Pier 2 - one of three piers that South Terminal planes dock at - that completed in October 2011.
The already business-focused North Terminal has seen its fair share of improvement too, with a spectacular £75M extension of the check-in and arrivals halls that completed in December 2011; a new £25M forecourt that completed in July 2010; a £12.8M extension of the security area that completes this summer; and a £39M new baggage handling system that completed in April. Work is also about to get going on a £6.5M adaption of the newest pier, Pier 6, to allow it to handle Airbus’s super-jumbo A380.
“We spent the next 12 months developing how we were going to do business - particularly looking at procurement”
Mark Phillpot, Gatwick’s project manager
Linking the two terminals is still the inter-terminal transit, and this too has seen a £47M upgrade, with all the cars replaced and the Guideway refurbished. And work on the mainstay of any airport - its runways and taxiways - is also part of the plan, with £71M being spent on resurfacing in the next 12 months.
Yet strangely, with all this work going on, a £17M new multi-storey car park actually best sums up the difference in strategies between BAA and GIP. And it also neatly brings in its integrated project delivery team of Gatwick Airport bigwigs and programme management experts from Bechtel.
It was delivered in record time by using off-site manufacture and significantly lower than the original BAA-approved £28M budget.
Post BAA change
Hendry thinks this sums up the change post-BAA. “Now we are independent and we don’t have a head office, we are more nimble; more able to try things out,” he says. Bringing in Bechtel in from day one was key to this.
It, in the form of project manager Mark Phillpot, was actually involved pre-takeover, carrying out due diligence for GIP. This role evolved into Bechtel and Gatwick forming an integrated delivery team, and it was Phillpot who was at the heart of the new strategy. “The strategy was review, develop and implement. The first stage was review; we took three months to ask what does check-in need to look like? What does pier service need to look like?” explains Phillpot. It was this review that immediately identified tackling the queues for security at the neglected South Terminal as key. But the fact that the work could be done - for £45M as early as last year - was only possible because savings were found elsewhere.
“It is all based on the airlines and what they want. We have looked at all the options - extending east, west and south”
Ben Green, Gatwick’s head of piers
“Revisions across the board meant that we could do it,” says Phillpot. That was the heart of the second and third phases - develop and implement - which the car park neatly sums up. “We spent the next 12 months developing how we were going to do business - particularly looking at our procurement approach,” he says. The bottom line is that Gatwick has gone back to prime contracting.”
And it is unapologetic about the move; it knows what it wants, and simply wants the best price to deliver it. Or, as Bechtel man and capital procurement and contracts manager Stephen Brunell puts it: “There are a lot of intelligent contractors out there; we were looking for more competition.”
Switch to frameworks
So it tore up existing contracts and went back to market with a series of frameworks; one for detailed design, which has nine consultants on board; one for professional services such as project management, which has eight consultants and cost consultants on board; one for major construction works worth £5M or more, which has 10 contractors on board; and one for more minor works but which can have a value up to £15M, which has 23 contractors on board.
The division of the construction frameworks by scale of works is seen as important, as it gets Gatwick as client a direct relationship with smaller suppliers and trades. “This gets us down to the right level,” explains Brunell, “and so gets the right risk transfer.”
It is getting this correct allocation of risk that is the prime driver behind the switch to prime contracting. “It is about getting the right risk ownership, it is not about low cost,” stresses Brunell. “For every project we have a concept; everyone on the relevant framework then bids. But for any project the assessment could be 60/40 quality/cost or 40/60. It depends on the risks. When it comes to working on say the runway, that’s our main asset, so the technical, quality side is more important.”
The way suppliers are paid also varies depending on the contract. “On each project we look at the risks, ask what impact the project could have on the operation and maintenance of the airport and then ask, are we going lump sum, target cost, cost reimbursable?” explains Phillpot. “It depends, and it could be a mix. We could even go for a design and build lump sum. In some cases, why not do that?” he asks. And that’s where the car park comes in - it was just that: design and build, lump sum, and built on time and on budget, with Gatwick saving a tidy sum in the process.
Totally different solution
“We just said to the contractor that we wanted a car park with a certain number of spaces, and the solution offered was totally different to that we expected,” says Gatwick head of development engineering Rod Hulse, referencing the contractor’s decision to opt for off-site prefabrication. Hulse and Phillpot work side by side, although Phillpot was handing over his duties to Brunell as NCE visited.
Design and build and off-site prefabricaton also features in the £82.5M reconfiguration of North Terminal’s Pier 5, which is now underway. It is a complex project with the intention of speeding turnaround times for planes by having departing and incoming passengers accommodated on different levels of the Pier by building a second level. This demands both cantilevering out from the existing building and building upwards.
Contractor Carillion will deliver the work as a design and build project, but it was awarded the job only after 30% of the design was already done; this allowed Gatwick to devise and agree a new construction approach with airlines to make savings.
“What we are looking for is a very quick, efficient delivery with offsite prefabrication. If we had taken the design to too detailed a level we would never have got value for money,” explains contracts. “So we took design to 30% complete, then awarded.”
“The approach will vary, as appropriate to that project,” he says. “It is never one size fits all,” adds Hulse.
“It’s a balance,” says Phillpot. “A car park, if well specified, then yes, lump sum feels appropriate. It’s about being smart.”
But making these smart contractual calls demands an intelligent client; and making Gatwick one needed upfront effort.
World class client
“We are also looking at working with world-class contractors; and we have got world-class airlines as our customers; so we needed to be a world-class client,” says Phillpot.
Initially, this has meant flooding the place with Bechtelian creatives.
“In February 2009 some BAA people were offered the chance of joining Gatwick. There weren’t many of us, which is why we needed the Bechtel partnership,” explains Hulse. “We just didn’t have the bandwidth to deliver what needed to be done.”
“Gatwick had to become a standalone company, which it wasn’t before,” says Phillpot. Naturally, Bechtel has stepped up to the plate. “There are 30 people in the Bechtel team,” explains Phillpot. “We started with eight in the review phase, plus four external experts from our San Francisco masterplanning team. That increased rapidly to the 30 we are at now and they work in functional roles and delivery team.”
Hulse adds that Bechtel man and engineering manager Eli Walter’s role was particularly important. “Walter brought in design management processes that didn’t exist in BAA. He set processes up to ensure contractors deliver to them.” This includes putting a BIM model of the airport at the heart of everything (see box).
Getting clarity over roles was key,” explains Phillpot. “The best way to describe what we have done is to say we have simplified. In a lot of places we had contractors overlapping with the client organisation and it had become very messy and very tangled, in my opinion. We needed clarity in ownership and in risk.
“The feedback is that contractors are very happy with knowing the risks and responsibilities they manage. They manage risks that relate to a construction business. We do operational risks,” says Phillpot.
Also pleasing the industry is the recognition that the NEC contract was written as is for a reason. “We also recognised that the NEC is the right form of contract,” explains Brunell. “We recognised it as industry standard.
The problem we find today is you get too many z clauses. So we went back to the vanilla version. We reduced it dramatically back to what it was. You don’t need to change all aspects of it. It’s there; it works.”
It is not just contractors that are now under scrutiny on costs; internal scrutiny is also high, with every project going through a seven-stage process that features a cost and time check at each stage.
“It means we keep the pace up; we know when decisions have to be taken and means we can manage the capital spend profile,” explains Phillpot. “We can ask ourselves are we ready to take certain risk decisions and if not we can develop projects to a certain stage and then pause until we are.”
South Terminal revamp
The £174M revamp of the South Terminal’s baggage handling system in conjunction with construction of a new Pier 1 sums this up. It will be the largest single contract the airport will let, and is high risk with the potential for it to disrupt operations.
By planning the timing, and therefore procuring two projects as one, Gatwick believes it will save £40M. It’s also another example of a project that Gatwick felt design risk was best kept in-house.
“The project integrates with other things and influences everything,” explains Brunell. “So we have developed the design and a BIM modelled design has been issued as part of the tender.”
To the layman it is hard to see how a pier and a baggage handling system are connected. But they are. The Pier is being rebuilt as a hub for short-haul operators who place rapid turnarounds as key. The new pier will feature less stands but will allow planes in and out much quicker. Coupled with this, a new baggage handling system will store bags to any destination at any time, dramatically smoothing operations at check-in. As a project, it’s long overdue.
“The Queen opened the new Gatwick Airport with its integral railway station on 9 June 1953,” says Gatwick head of piers and infrastructure projects Ben Green, explaining that Pier 1 was it then, and that it is life expired. “The new Pier 1 will be much more flexible and allow fast turns; so it is very much designed around the short hauls.”
The Pier 1 project is the largest in Green’s £350M project portfolio and will easily roll over into the next regulatory period, and attention is switching to that. “Right now we’re in year five of a six-year period and have a £750M spend behind us and £450M to go. But we’ve kicked off engaging with our customers on 2014-2020 and we think a similar level of investment is on the table,” says Hendry.
One of the chief targets could be for the airport to provide 95% of planes using the North Terminal with a pier service. But as the airport gets busier, that gets tougher.
Projects on the table include a further extension of Pier 6 - the airport’s newest Pier. “All the time we are trying to optimise capacity,” explains Green. “Once we knock down and replace Pier 1 we will lose stands. So one of the things we are looking at is how we would provide the same level of service. One option is to extend Pier 6 to provide more stands and extra A380 capacity.”
What airlines want
What that project will look like depends on the airlines. “It is all based on the airlines and what they want. We have looked at all the options - extending east, west and south, or even connecting to a new pier. What we build will be the most economically efficient option,” he says.
Other projects will be determined by airline demands. “Some airlines want a premium service, others are looking for rapid turns - so what they want is a very different type and speed of service,” explains Green.
What is clear is that as discussions with the CAA over Gatwick’s next regulated spend start in earnest next year, they will be enlightened by whatever the government comes up with in its long awaited review of aviation capacity in the South-east this summer.
Funnily enough, Hendry thinks that Gatwick should not be overlooked. “We’ve got plans to continue to invest and get the most out of the capacity we have got. I do think there should be an onus on the UK’s existing airports to maximise their existing capacity before we as a nation commit to building more runways,” he says. “But above all else, clarity around UK aviation policy is what is required.”