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All in agreement
30/06/2006 | Channel:
In an industry not necessarily recognised for its emphasis on modern supply chain practices the T5 project is breaking new ground
In recent years the UK construction industry has seen a string of prestigious projects go over time and over budget – the ongoing debacle that is New Wembley being a prime example. Keen to avoid such embarrassing results in the future, the sector is looking at ways to maintain greater control over large projects, with more effective supply chain management being identified as a key area.
The £4.3 billion Heathrow Terminal 5 (T5) project represents an ideal example of how the construction industry is embracing entirely new ways of working The project, which is due for completion in March 2008, will allow Heathrow to maintain its position as Europe’s leading international hub airport and provide much needed state-of-the-art facilities to help meet the future demand to fly.
The scheme will see the creation of a main terminal building along with two satellite buildings, the second of which will be complete in 2011 and will allow Heathrow to cater for 35 million passengers per annum. In addition to these three buildings, T5 will incorporate extensions to the Piccadilly Line and the Heathrow Express, which will be housed in a six-platform rail station located underneath the main terminal building.
The creation of a spur road onto the M25, a 4000 space multi-storey car-park, a 600-bedroom hotel and a brand new air traffic control tower, along with the diversion of two rivers completes the programme of works.
Work started on this landmark project in September 2002 following the longest planning inquiry in UK planning history (three years and ten months). Today the
project is over 80 per cent complete and T5 remains on target to open on schedule
and within budget. The T5 team is currently focusing on the final six months of the construction phase, which will be followed by a further 12 months of testing,
commissioning and going live.
So, what has allowed a project of this magnitude and complexity to adhere to, and in many ways exceed, its original targets? Shaun Cowlam, head of site and logistics on the project, feels that T5’s new highly innovative ways of bringing together its supply base have been fundamental to this success.
In fact, having joined the project in January this year, Shaun was immediately struck by the T5 Agreement.
“The T5 Agreement represents a very innovative new way of working for the construction industry,” he begins. “From the outset it was recognised that the scale and complexity, and the very tight time deadlines that we have to work under, would
require a different culture and a different way of managing risk. The T5 Agreement has allowed us to take a collaborative view, working with very integrated project teams, where we, BAA and our suppliers work together creatively, allowing and encouraging innovation and all recognising that we’re in this together so success is success for us all.”
He continues: “Certainly this has bred a new culture where achieving a task and a job is more important than taking a fairly narrow, selfish commercial viewpoint.
“I think that has allowed people to focus on constructing the project on time, keeping within budget, and not necessarily rushing away to lawyers if there’s a problem. Because of course, BAA manage and own all the risk, which has taken the risk away from all our suppliers. That allows us to get to a number of problems very quickly and to resolve them without any bickering between us or the supply base.”
This much closer working environment and greater collaboration between the various parts of the supply chain has clearly brought a range of benefits to the
project. Although Shaun feels it is difficult to calculate an exact figure in terms of cost
savings, he believes the other advantages are clear to see: “You only have to look around other parts of the construction industry where delays and other cost escalations are not uncommon to see how successful we’ve been. What we’ve managed to do here is focus people in a positive way where coming in on time and on budget is a given, and we actually expect much better than that.
“I think that the T5 Agreement has been fundamental to that new relationship, which we have with our suppliers. We are an integrated team, we share information to gain visibility both of the supply chain and of the programme. We operate from the same system, and that visibility helps people make decisions, it creates flexibility because they understand what the situation is and importantly they can identify problems
downstream and can start to address them early,” he adds.
This far closer working relationship can be seen perfectly on the T5 construction site where only a percentage of the current 7000-strong workforce are directly employed BAA staff. “As a new boy coming in I’ve been amazed to discover that some of the people who are absolutely central to the programme are supplier staff whose loyalty is to T5, they are driven in the same way as the BAA staff. It’s one team, that’s the message,” comments Shaun.
“We have encouraged suppliers to try new and innovative ways of working right the way through this programme, and we’re in the business of giving them the greatest freedom of manoeuvre. Perhaps a good example is that quite a lot of construction has been conducted off-site in a manufacturing sense, so produced off-site and then brought onto site and fitted. We’re looking at a whole series of initiatives like that to make sure that we capture the innovation and creativity of our suppliers, to give them the opportunity to deliver a quality product and project on time and below budget if possible.”
Using these integrated teams to break T5 down into much smaller, more manageable milestones has also been vital to the project’s success. This method allows the suppliers and teams involved to take ownership of their part of the project and concentrate all their efforts on this one area.
“The planning process required us to achieve certain statuary milestones, which affected our ability to deliver T5, both in a planning sense, but also in delivering the
capability. Behind those are a whole host of milestones within the programme, broken down into sub-project milestones, which allow us to control progress and to identify and monitor what are the critical path issues,” says Shaun.
Examples of statuary milestones that have been completed include the rediversion of the two rivers and the completion of the new control tower, which should go live in winter 2006/07. “So far we’ve met all our regulatory milestones either ahead of time or on time,” explains Shaun. “Our culture here is very much one of ‘don’t wait for the milestone to deliver, look for opportunities to deliver early and at lower cost.’
“Now that we are in the final year of the construction phase we are using milestones in a much more rigorous way to make sure that we are achieving the programme that we need to achieve.”
Shaun goes on: “This main construction stage will be over by the middle of next year
and we want to have a really good product to hand over to the T5 commissioning and trialling team, so they can get straight on with their job. We’re conscious that any delays in our build would actually compress their time and we don’t want that to happen.”
Far from just bringing advantages to this project, Shaun feels that initiatives like the T5 Agreement have the capability to benefit the wider construction sector. “For an industry that perhaps has not been able to take advantage of new technologies and new ideas as quickly as others, I think the T5 Agreement has been a useful catalyst both to take the process forward and to open peoples’ minds.
“The benefits of the collaborative team approach is that we all understand each other much more clearly, there is no confrontation, when this project comes in on time and on budget we will all be winners and our suppliers will share that credit as well,” he adds.
With such substantial volumes of goods and materials required for a project of T5’s size, it is easy to see how the logistics side of the programme accounts for around £300 million of the total budget. Therefore at the outset of T5 it was recognised that the complexity and scale of the project needed a logistics system that was both agile and responsive, but also very well controlled.
The creation of a nearby consolidation site together with a dedicated rail link into T5 has enabled the majority of bulk materials to be brought on-site by rail and as a result road transportation has been minimised. “Our consolidation site has now moved away from manufacturing into supporting our material supply distribution process,” explains Shaun. “We hold a limited amount of buffer storage there, but we operate an internet based booking system called Air Build, which all our suppliers use in order to book slots for access into site.
“During the current construction stage clearly we have a significant volume of large items, as we move to retail fit-out we’ll have many more suppliers on a much smaller scale, but that will add much more complexity. Therefore we plan to use Air Build as a way of having visibility of people’s demands for access and material distribution, and also for control. The beauty of the system is that a supplier has certainty that he will be able to gain access to his part of the site where and when he requires it.”
Keeping stock levels to a minimum and operating a just-in-time delivery system is the aim for Shaun and the T5 team, but the unpredictability of the construction industry doesn’t always make this possible.
“Construction is not a totally predictable science, weather and other factors can
come into play, so we do need a bit of flexibility. We have storage facilities at our
consolidation site where we can hold buffer stock, particularly for material coming from Europe, but we aspire to keep the site very clean, we don’t want it cluttered with material that’s just parked there waiting to be used.”
Accurately estimating the materials requirements of the site is also a key factor in keeping stock levels low. This is another area where T5 is utilising the latest technology to achieve the best results. “We use a system called Project Flow, which estimates our on-site material needs. That encourages people to understand what they need, where they need it and when they need it, and it doesn’t encourage them to over-estimate, which in the past the industry has been characterised by,” says Shaun.
“The supply chain is then able to react to that demand and give confidence to the end users that when they ask for a piece of equipment or a service there is certainty that it will be supplied. It’s a confidence building measure. I’m not saying it’s perfect but from what I’ve seen from my past experience the way it’s been managed on this project is a significant step forward.”
Concluding, Shaun feels that many of the new and innovative working practices used on T5 could benefit the entire construction industry going forward: “Speaking to colleagues from the sector and our supply base here, I get the impression that they were not fully aware of how agile and responsive a modern supply chain can be. Despite this I think there is now a growing understanding that a more agile, smarter supply chain can be very responsive, means you can keep the site much cleaner and tidier, and allows you to have a much more accurate view of what your requirements are.
“Certainly in programme management terms, where the construction industry is probably ahead of the game, clear project management and clear demand setting allows you to establish a supply chain that meets the needs more accurately and more responsively. So I see an open-mindedness there and I hope T5 has played its part in helping people understand that.”