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Tube to reward failed bidders if cost saving ideas taken on

London Underground (LUL) is to pioneer a new version of the popular early contractor involvement contract on its mega £500M Bank station remodelling contract, NCE has learned.

It believes its version will better incentivise contractors to devise and share money saving ideas at tender stage.

LUL’s incentivised contractor engagement model was developed by the stations team in its capital programmes directorate. It will reward contractors with a half share of actual savings if their ideas are used even if they fail to win the construction work.

“It’s a fact of life that the person with the best idea doesn’t always win the job,” said capital programmes director David Waboso. “But with innovative contractor engagement, if their ideas save money, they will get a share of it.”

Shared savings

“For example, if we get a £50M saving [by using a contractor’s solution], they will get half that £50M.”

“We are taking it on a step from early contractor involvement (ECI),” explained Waboso.

“As well as having them [contractors] involved, we are asking them for their ideas for the best way to build something.

“For example, we are asking: ‘how would you fit in the escalators?’, ‘how would you dig the tunnel?’,” said Waboso. “It could save us a lot of money.”

“We are taking it on a step from Early Contractor Involvement”

David Waboso, LUL

With the new approach, Waboso believes there will be sufficient incentives for contractors to share these ideas.

Under conventional ECI, contractors tend to hold back good ideas at tender stage, fearing the client will share them with other bidders, undermining their competitive advantage.

Innovations sought

The scope of innovation sought by Transport for London includes but is not limited to

  • Construction site arrangement including land take, secondary sites
  • Constructability, sequencing, logistics, traffic management
  • Methodology and construction techniques

“With [the new approach] we can have their ideas, but the suppliers can share in the savings - even if they don’t win the construction contract,” said Waboso. “The market is up for it,” he said.

Waboso said the details of how the system will work were still being worked on, but stressed that the approach would be pioneered on LUL’s highly complex Bank station remodelling.

LUL parent organisation Transport for London (TfL) invited expressions of interest to carry out the upgrade last year.

LUL will prequalify contractors best able to take on its outline design and bring innovative ideas forward.

The Bank station capacity upgrade project will create a new ticket hall at surface level and includes the diversion of around 570m of the southbound Northern Line running tunnel plus the formation of a new southbound platform, south-west of the existing platforms.

Work is expected to start in June 2013 and finish by the end of 2021.

Changed organisation

Waboso said the quest for innovation is one of many indications that LUL is a much-changed organisation since taking control of the former PPP upgrade contractor Metronet in May 2008.

“LUL has been through a significant change programme,” he said. “It’s a sea change. Go back to history. Infracos would have done this work; LUL was an operating company.

“Bringing Metronet back into the business spawned this team as LUL suddenly became a huge delivery organisation - one of the biggest in the country.

“It is not easy stuff and we had to this while delivering. We didn’t have the luxury of stopping [the Tube upgrade programme]

“But if you look at our record, what we’ve delivered in the last year is phenomenal,” he said.

  • A six part BBC2 behind-the-scenes documentary on the work of London Underground is showing on Mondays at 9pm. Catch up on last Monday’s episode on the BBC iPlayer here.

 

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