Procurement Strategy In Uk Crossrail Project Construction Essay

This dissertation is about investigating and evaluating the procurement strategy adopted in Crossrail project. A literature review is structured under first four chapters: (1) An Introduction; (2) Crossrail Project; (3) Literature review I; and (4) Literature review II. This is done to introduce the issue.

This dissertation deals with the different procurement strategy applied for cross rail project. Cross rail being one of the biggest transportation project in Europe, have very complex procurement methods which should be very well planned. The thesis observes the methods of procurement adopted by cross rail by comparing it with different standard procurement methods and best practices used in the country. Research is carried out on three different areas of procurement. They are skilled resource procurement, type of contract used and demonstration of value for money. The initial survey carried out indicated that there is a skills shortage in Crossrail project and also some of the areas were identified which needed further clarification in using NEC3 contract.

The dissertation was carried out based on the questionnaire developed as a result of literature review. Interviews were conducted based on the questionnaire. From the results of the research it was possible to conclude that Crossrail following robust project management techniques to deliver the project successfully. However it would be too early to reach a conclusion since the project is still well under progress.

Acknowledgement

First I would like to thank Mr Barry Wood for all his advice and help. It was a great help to have a supervisor like you. It was really interesting in discussing procurement with Mr Wood.

Secondly thanks must go to the employees of Crossrail and TfL for agreeing to take part in the interview. I would also like to thank Mr Rupert Bruce for providing some journals related to my topic.

Finally many thanks to all my friends and the almighty for being a great support and motivation throughout my work.

Chapter 1

Introduction

Rational for the research

The continuing demand for developing transportation infrastructure projects is increasing day by day. This is putting tremendous pressure on public sector for development. Transportation has been a main function of government since long time. In the present scenario, it is difficult to manage and fund mega transportation project because of the financial crunch. This reduced the ability of government to implement big and unique projects by itself. Project delivery is the method by which government encourages the private sectors and other agencies for the development of infrastructures. Transportation megaprojects include huge capital investment, expert and competitive contractors, long period of time and a perfect delivery strategy to deliver the project in time, quality and within budget. To make such mega projects successful, a strong procurement strategy is required. A procurement strategy is to develop a framework keeping in mind the objectives and outcomes of the project. The contractual and commercial strategy will be defined at the design and construction stage itself which will align the project team towards achieving the objective. A good procurement strategy will have a positive impact on project’s performance in terms of time and cost.

Client dissatisfaction is always related to late delivery of project, over budget and poor quality of work. This happens because less importance is given to value for money. The Latham report (1994) proposed change towards more collaborative culture. Partnering through the contract chain was seen as the most efficient way. The Egan report (1998) set out five key drivers which are important for the construction industry. They are committed leadership, client focus, integrated processes and teams, a quality driven agenda and commitment to people. This made a tremendous change in the industry. Innovative approaches in procurement and other areas of construction are encouraged. Value for money is given more importance than cost reduction.

Crossrail Project

This dissertation is mainly focussed on the procurement strategy in Crossrail project. Crossrail is one of the biggest transportation projects in Europe. Cross rail is the new high frequency, convenient and accessible railway for London and the South East. The project value is worth £14.8 billion .From 2018, Cross rail trains will travel from Maidenhead and Heathrow in the west to Shenfield and Abbey Wood in the east via 21 km of new tunnels under central London. It will link Heathrow Airport, the West End, the City of London and Canary Wharf.

Crossrail obtained the Royal Assent in 2008. Crossrail is divided into four distinct sections. They are Central section, western section, north-eastern and south-eastern sections. After Crossrail starts operation, 24 trains are expected to run per hour. This will add 10% to the transportation capacity of London. Crossrail will also reduce the journey time between many key destinations of London.

CRL will be directly buying and managing a relatively small number of contracts with Tier 1 contractors. They, in turn, will be buying a wide variety of goods, works and services from a large number of smaller suppliers and contractors which form the supply chain for delivery. “Cross rail’s approach to procurement is aligned with the UK governments achieving excellence in construction principles, including a fair allocation of risk and reward, early involvement of the supply chain, minimizing of interface risks, incentivizing performance and selection of suppliers on the basis of best value” (NEC,2009).

Research Goals

1.3.1 Aim

The aim of this dissertation is to identify, and investigate different methods of procurement and the issues involved with it in the Crossrail project. Cross rail being one of the biggest transportation project in Europe, will have very complex procurement methods which should be very well planned. The thesis will observe the methods of procurement and the measures adopted to overcome the issues involved in cross rail.

1.3.2 Objectives

In order to achieve the aim, the following objectives will be used,

To examine the skilled resource procurement strategy of crossrail since crossrail will face shortage of skilled resources through its different stages of project.

To establish the logic behind the type of contract used in procuring different contractors and different works involved in Crossrail.

To analyse and observe on how the procurement strategy for cross rail is developed to obtain value for money.

Outline Methodology of the Research

The research process will be broken down into two key stages in order to meet the aim and the objectives indicated earlier. These are,

1.4.1 Literature Review

This stage of the research process provides a comprehensive review of the relevant literature on different types of traditional methods of procurement. A review of cross rail’s policies and procedure will also be done. This is to develop a better understanding of the best practices in procurement and will help in the understanding of cross rail procurement strategy. The literature review will form the foundation for the research and provided a detailed background to the subject to enable the rest of the dissertation to be conducted.

Dissertation Contents

The second chapter will give more thorough introduction on the crossrail project. This chapter will review the project, its vision and objectives and the different procurement strategies adopted.

Chapter three and four deals with different concepts of procurement. A literature review explaining NEC3 contract, value for money and skills issues in crossrail will be done.

Chapter five starts with an explanation of how the case study area was chosen and thereafter sets out in detail the research methodology. It describes the tools used to make this investigation, describes the characteristics of the research sample, and the methods used to translate the results.

Chapter six shows the work conducted and the results obtained.

Chapter Seven will list out the main points from previous chapters to answer the questions which were set as objectives in chapter 1. This chapter will also include recommendations and suggestions for future work.

Chapter 2

The Crossrail Project

The Project

Crossrail project is proposed to support the transportation requirements and economic development of London and southeast regions. “The project comprises new tunnels running west-east through central London connecting directly with existing surface rail routes to Maidenhead and Heathrow in the west, and to Shenfield and Abbey Wood in the east” (Crossrail Environmental Statement, p3). Crossrail is an urban transportation service, instead of a long distance type of railway transportation. It is a type of project in which different type of construction works are involved and all these works are carried out throughout the route together.

Crossrail is a project which has different partners for delivery like Crossrail Central, London Underground, Network Rail, DLR, Canary Wharf Group and Berkeley Homes. “Crossrail has five tunnelling drives, 21 km of twin bore tunnels under the centre of the capital dealing with the complexities that this involves” (Crossrail, 2010). Crossrail also consist of construction of eight new underground stations which will be connected to the already existing Underground and rail networks and four over ground spurs including a connection to Heathrow Airport. Crossrail limited has changed form a promotional body to a world class body which is highly efficient and able to deliver a world class railway after gaining the Royal Assent. “Crossrail limited was a 50/50 joint venture company between Transport for London (TfL) and the Department for Transport (DfT) until 5 December 2008 when it became a fully owned subsidiary of Tfl” (Crossrail, 2010). “Crossrail’s route has four distinct sections: a central section, within central London, and western, north-eastern and south-eastern sections extending into outer London and parts of Berkshire and Essex” (Crossrail Environmental Statement, p6). New twin bore tunnels will be constructed in the central section and in some parts of south-eastern section.

The Central Section

The central section consists of the majority of the construction works. “New stations will be built along the central route of the line at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel and Canary Wharf” (Crossrail, 2010). The new twin-bore tunnels will extend between Royal Oak in the west and Pudding Mill Lane (near Stratford) and the Isle of Dogs, in the east. Access will be provided to the west and east end of the platforms by the construction of two entrances and ticket halls in all the new stations except the Isle of Dogs station and probably Whitechapel station where this facilities will not be provided. For every Crossrail station, connections will be given to the already existing stations which will allow the passengers to transfer to other services, such as the Underground, Docklands Light Railway, other mainline services such as Thameslink, and bus services. Shafts will be provided at regular intervals throughout the route which will be used for emergency access, escape and ventilation. These shafts will be connecting the tunnels with the surface. Some of these shaft structures will be near to the new stations, whereas others will be located on their own. In addition, some temporary shafts will be constructed for tunnelling purposes, and will be filled in once construction is completed. (Crossrail Environmental Statement, p30)

The Western Section

In the western section, there may be a requirement to change the existing Great Western mainline between Maidenhead and Paddington, such as new or realigned track. Added to that, an overhead electrification will be installed along the route west of Stockley Road (Hayes). For this purpose, erection of steel gantries will be required at about every 50m intervals. Demolition or reconstruction of numerous bridges will be required as a result of overhead electrification in order to provide overhead clearance for the electric wires. Major engineering works like construction of a flyover will be required at Stockley to allow access for Crossrail trains to and from Heathrow Airport. New sidings for stabling Crossrail trains will be provided at Maidenhead, West Drayton and Old Oak Common. The stations at Maidenhead, Slough, West Drayton, Hayes & Harlington, Southall, West Ealing, Ealing Broadway and Acton Main Line will be remodelled to various styles in order to accommodate Crossrail trains and to provide more improved and efficient facilities for passengers such as new ticket halls, escalators, bridges and lifts. At a further five stations, platform extensions will be required to serve the Crossrail trains. (Crossrail Environmental Statement, p39)

The north-eastern section

The proposed works in the north-eastern section are renovation of Romford and Ilford stations, extension of platform at nine different stations, a new depot and sidings west of Romford station, construction of an underpass in order to provide access for trains, “new sidings for construction purposes at Alders brook and Pit sea; new sidings for stabling trains at Gidea Park and Shenfield; and a new freight loop (a single track dedicated to freight trains) between Goodmayes and Chadwell Heath, to replace an existing loop at Manor Park” (Crossrail Environmental Statement, p44).

The south-eastern section

East of the Isle of Dogs, the twin-bore tunnels from the central section will continue under the River Lea, before emerging on the North London Line at a portal near Victoria Dock Road and Custom House station. New shaft structures will be built at Blackwall Way and the Limmo Peninsula. New twin-bore tunnels will be driven beneath the Thames to link North Woolwich with Plumstead station on the North Kent Line. New portals will be located at each site and shaft structures will be constructed at Warren Lane and Arsenal Way, in Woolwich. Two new tracks will be provided beside the North Kent Line between White Hart Road in Plumstead and a point about 1,200 m east of Abbey Wood station, to serve up to 12 Crossrail trains per hour in each direction. This will require works to two road bridges and replacement of two footbridges. Custom House station and Abbey Wood station will be reconstructed. Silvertown station, which is likely to have been closed already under powers to construct the Docklands Light Railway extension to Stratford International, will be demolished. Passive provision will be made for a new Crossrail station at Silvertown, should this become desirable following redevelopment of nearby sites. New overhead electrification will be required throughout this section. In order to accommodate this, the existing Connaught Tunnel, which runs between Royal Victoria Dock and Royal Albert Dock, will be reconstructed. Manor Wharf, in Belvedere, will be refurbished and used to load excavated material onto barges. (Crossrail Environmental Statement, p48).

2.2 Crossrail Delivery Strategies

Crossrail has procured a Program delivery partner and a Project delivery partner. The project delivery partner is Bechtel, which is responsible for the delivery of central section of crossrail. The program delivery partner is the Transcend consortium made up from Aecom, Nichols Group and CH2M Hill. Program delivery partner will be responsible for the overall management of the project. (NCE, 2012)

Figure 2.1 – Crossrail Delivery Strategy. Source: Michael A Kay, p155, 2009

2.2.1 Crossrail Program Delivery Partner

The role of Transcend is to coordinate throughout the project. Since the crossrail project is split into many small contracts and small section of works, the major function of program delivery partner will be to manage the interface in merging the different components of work into a single and efficient railway system. To achieve this, program partner will be working closely with National Rail, London Underground Limited and Rail for London. The program partner is also responsible for the work of stations which are privately funded by developers like Canary Wharf Group and Berkeley Homes.

The program delivery partner will be closely working with crossrail limited as an integrated delivery partner. Staff for the program delivery team will be chosen on the basis of efficiency and regardless of the employer. Integrating the two teams in the early stage will be safe for the clients and risks can be shared. In the later stage, if everything is running smoothly, CRL can hire more of its own staff and can reduce the number of staff in program partner. This will increase more in-house control. The role of program delivery partner is very broad as compared to the project delivery partner. (NCE, 2012)

2.2.2 Crossrail Project Delivery Partner

The project delivery partner will be responsible for the delivery of Central Tunnel Section (CTS) in which stations and systems are also included. Bechtel will manage the procurement of all the contracts which will be responsible for delivery of central section. Although the contract will be between CRL and the contractors, the project delivery partner will be acting on behalf of CRL. The CTS is very well defined and therefore will require more traditional approach of project management. The main responsibilities of project delivery partner will be implementation of engineering design, managing interface within the central section, procurement, testing and commissioning. (Michael A Kay, 2009)

Both delivery partners are expected to have strong inputs in finalizing the procurement strategy. Both should make important decision like size of contract and incentivization structure to get maximum output and quality.

2.2.3 Crossrail Stakeholders

Crossrail being a mega project will have many stakeholders. The table below shows all the government and private stakeholders of Crossrail:

Stakeholder

Role

Department for Transport(DfT)

Co – Sponsor. Main interface to national government and HM Treasury

Transport for London(TfL)

Co – Sponsor. Main interface to local government, the Greater London Authority (GLA) and the Mayor of London’s office. Owner of the central section.

Crossrail Limited(CRL); previously Cross London Rail Links Limited(CLRL)

Delivery agent. Formerly a 50/50 joint venture of TfL and DfT, now a wholly owned subsidiary of TfL. Main interface to the delivery supply chain, including both the project and program delivery partners.

National Rail (NR)

Industry partner. Responsible for the operation, maintenance and renewal of the National Rail network. Infrastructure manager of crossrail end to end rail systems. Main interfaces to train operating companies (TOCs) and Freight Operating Companies (FOCs).

London Underground(LUL);a TfL subsidiary

Industry partner. Responsible for the operation, maintenance and renewal of the National Rail network. Infrastructure manager of the central section stations, except Paddington. Main interface to the PPP and PFI LUL contractors.

Rail for London(RfL); a TfL subsidiary

Operator franchising authority or shadow operator of crossrail. Infrastructure manager of crossrail stations at Paddington, Isle of Dogs and Woolwich.

Docklands Light Railway(DLR); a TfL subsidiary

Industry partner. Responsible for the operation, maintenance and renewal of the Docklands Light Railway transport system and for providing crossrail limited(CRL) with access for proposed modification of the DLR

British Airports Authority

Owner of the Heathrow spur

Canary Wharf Group(CWG) and Berkeley Homes Group(BH)

Developers that have agreed to make contributions towards the cost of stations at the Isle of Dogs and Woolwich respectively.

(Table 2.1 – Crossrail Stake holders and roles. Source – Michael A Kay, 2009)

Chapter 3

Literature Review – I

3.1 Skills Issues for Crossrail

Being a mega transportation project, Crossrail will be facing many skills shortage in different departments of its works. According to Crossrail Skills and Employment Strategy, July 2010, the following skills issues will be faced by Crossrail:

3.1.1 Ageing workforce

Across the construction industry and engineering fields there is an ageing workforce and for many years youth were not attracted towards the industry because they did not treated it as an attractive career option. The major issue is that the age profile of Registered Engineers has been rising steadily for 20 years. Now the condition is that almost 50 percent of the Registered Engineers have either crossed their retirement age, or will be reaching their retirement age in 10 years. “In London, the issue is particularly stark with 38 per cent of the engineering workforce aged 45 to 64, and only 10 per cent aged 16-24” (Crossrail Skills and Employment Strategy, 2010). Although there was a remarkable growth in construction industry since the early 1990s, the expansion the workforce was not even. It was different among different age groups. “The number of older workers aged 55 years and over in the industry has increased by 65 per cent since 1990, while those aged 24 and under has fallen by more than 40 per cent over the same period.” (CITB Construction Skills, 2011).

3.1.2 Underground construction skills gap

Crossrail will have a huge requirement of skilled tunnellers.But the main problem is that since the last 30 years, the construction industry which is involved in underground works, has suffered from cyclical peaks and troughs of work due to which it failed to maintain an experienced workforce because the work were lacking continuity of employment. Not only Crossrail but there are a number of major projects in London like a number of National Grid tunnels (2009-2016), Thames Water tunnels – Thames Tunnel (2012-2020) and Lea Tunnel (2009-2014), and London Underground (LU) line upgrades from 2010 onwards. “On an international level, there is the £2.5bn expansion of the Copenhagen Metro, and the 3bn Dublin Metro will be delivered between 2009 and 2018” (Crossrail Skills and Employment Strategy,2010). There is no estimate of labour available for this project but the amount of funds required for this project indicates that a huge number of workforces will be required to execute the work. The effect of these entire projects will definitely create a tunnelling skills shortage and this can only be overcome by giving proper training to a significant number of construction workers.

3.1.3 Logistics training needs

While excavating for crossrail tunnels, a huge quantity of excavated materials will need to be removed from the site. Although Crossrail has to remove much of the material by using rail transport and also by using barges, some materials will be removed by using road transportation system. Also, the road transportation system will be required to deliver the materials required for the station site. According to Crossrail, there will be around 3,500 frequent lorry drivers. In addition to these drivers, there will also be a small number (around 25) of operatives at consolidation centres, around 60 people with logistics skills at site operations and around 20 at lorry holding areas and central control. (Crossrail Skills and Employment Strategy, 2010)

3.2 NEC3 – The Construction Contract

The NEC is a major attempt to draft a simple and direct standard form contract from first principles without attempting to build upon the standard forms that already exist. The specification prepared in 1987 set out the aims of those drafting the NEC.

3.2.1 Overview

As per Fenwick Elliott, 2007, the aims were to:

Attain an advanced degree of clarity when matched to other existing contracts;

Use of a simple language which is commonly used and avoid legal jargon;

Repeat identical phrases if possible;

Specifically and unmistakably allocating roles and responsibilities to the right Person;

Aim for clarity above fairness; and

Avoid including details which can be more adequately covered in a technical specification.

To summarize, it can be said that using three core principles like flexibility, simplicity and clarity, the authors drafted core clauses which are applicable to all NEC contracts. The core clauses were then used as the basis for six main options (Nicholas Gould, 2007) .Under NEC3 these six main options remain:

Option A (priced contract with activity schedule);

Option B (priced contract with bill of quantities) provides that the contractor will be paid at tender prices. Basically, a lump sum contract approach;

Option C (target contract with activity schedule);

Option D (target contract with bill of quantities) provides that the financial risks are shared between the contractor and the employer in agreed proportions;

Option E (cost-reimbursable contract); and

Option F (management contract) a cost-reimbursable contract, where the risk is therefore largely taken by the employer. The contractor is paid for his properly incurred costs together with a margin.

As per the experts of the NEC contract, the greatest strength of NEC is that it believes in partnering approach and at the same time adopts a project management technique which is proactive. There are perhaps three ways that this is clearly demonstrated in the NEC form. First one is the early warning system. According to this system, early identification of problems involved in the project and finding an early resolution is encouraged. The early warning system says that an experienced contractor would have or ought to have recognized the need to give the warning failing which, the contractor will not be compensated for the issue. Therefore contractors are encouraged to be active in early warning procedures so that any problems arising in the future can be avoided in the initial stages and inadequate cost recovery can be avoided.

“Second, those risks for which the employer is not expressly responsible under clause 80.1 are risks for which the contractor is liable. Finally, the target cost option most clearly reflects the early warning proactive management approach by affecting the financial bottom line of the parties, in particular the contractor” (Fenwick Elliott, p7, 2007).

3.2.2 Target cost contracts

In traditional form of contracts, a lump sum contract is used to carry out the work on the basis of which contractor will be paid. This sum will only be adjusted for the changes which will be done by employers or for any other risk items which will be mentioned in the contract for matter such as design errors. In this type of approach, the work will always be awarded to those contractors who quote the lowest price to do the job. In the present scenario, this type of procurement is highly discouraged and rarely practiced especially in the public sector department where best value or value for money is mostly preferred.

It is now usual in the public sector where best value applies for procurement systems to provide for payment to the contractor based upon its recorded costs. To make sure that there should be no cost overrun which will be difficult to control in the future, a target for these costs is fixed at the beginning stage. This target is adjusted in such a way that any changes made by the employer and other price risk allocated to the employer under the contract are taken into account. Incentives are given to the contractor so that cost can be kept minimum. To ensure this, a gain share / pain share mechanism is fixed at the initial stage of the project. The costs are recorded and compared with the target cost. Any saving from the work will be shared between the contractor and the employer in a pre-agreed manner. Same thing happens when the recorded price exceeds the target price.

3.3 Value for Money

Value for money is always beneficial to the client. It means that the project is worth doing and is more refereed in business terms rather than financial terms. Value for money is all about creating a better working environment. The term value means to make sure that a right choice is made about getting best balance of benefits in terms of cost and risk. Value management is a defined and systematic approach for the analysis and development of a project so that chances of achieving these requirements are increased and value for money will be achieved. “Value engineering is a continuous process in which all the components and processes involved in construction are critically appraised to determine whether better value alternatives or solutions are available.” (OGC, Risk and value management, p7, 2007). This helps in reducing wastage and managing all those inefficient processes involved in the different stages of construction.

Value management is very important because it gives an option for stakeholders to give their input in the project by encouraging more participation, teamwork and end user buy in. The benefits which can be obtained by following value management approach is more focus on business needs, more flexibility to make the future needs simple, taking stakeholders into consideration to get different views and developing more options, considering various options by being innovative and creative, prevention of unnecessary wastage and inefficiency and encouraging teamwork to find solutions. (OGC, Risk and value management, p8, 2007).

Value management aims to maximize project value within time, cost and quality constraints. However, sometimes extra capital expenditure is required at the start of the project to improve whole life project value. It is important that the value management method is based on the whole-life cost of ownership instead of acquisition alone. “Issues of health and safety, sustainability, design quality, build ability, operation and maintenance and disposal should all be considered during value management reviews and evaluation of options” (OGC, Risk and value management, p9, 2007).

Departments should act as intelligent customers by discussing with suppliers all the elements of the contract price including level of service, timescale of the assignment, skill mix of the supplier’s team and how costs are to be remunerated. Optimizing the cost of delivering a service or goods over the full life of the contract rather than minimizing the initial price, introducing incentives into the contract to ensure continuous cost and quality improvements throughout its duration, aggregating transactions to obtain volume discounts, collaborating with other departments to obtain the best prices and secure better discounts from bulk buying is the best approach. Developing a more effective working relationship with key suppliers to allow both departments and suppliers to get maximum value from the assignment by identifying opportunities to reduce costs and adopt innovative approaches.

Chapter 4

Literature Review – II

4.1 Inspiring Future Talent

It is very important for the crossrail project and also the for the industry that more and more young people get attracted towards the construction and engineering industry and choose it as their career paths. CRL will inspire young people by offering them with opportunities to work in the industry in the form of work placements and Apprenticeships with the help of its supply chain partners.

4.1.1 Young crossrail programme

Young crossrail programme, as the name itself suggests, was established in 2003 to help, engage and encourage young people and their family members along the proposed route. The programs have two broad objectives. One is to provide education about crossrail with the help of presentations which will display the exact and accurate information about the program. The second objective is to provide education through Crossrail as a context to support the learning process and existing government initiatives. As the crossrail programme is in delivery stage at the moment, young crossrail has been reviewed and the whole focus of the program is to support and help education and also to increase the interest of students and young generations in developing their career path in transport, engineering, construction and rail infrastructure projects. Young crossrail programme will be more focused in working with primary and secondary schools which are within one mile area of the route. This will help them in engaging with young people and their family who will be most directly affected by the program. Young Crossrail will continue to work with schools and extend its engagement to the 16-19 age groups. (Crossrail Skills and Employment Strategy, p16 -18, 2010).

Since Crossrail is one of the prestigious and largest infrastructure project in Europe, students with interest in areas like transport, engineering or construction industries, can use it as a case study. Young Crossrail therefore plans to have an additional offering through a dedicated website and downloadable web resources. Therefore, resources will be available to all the students, their families and also to the teachers. The number one priority and key value of crossrail is to ensure each other’s health, safety and wellbeing. This is applicable to every single person who is involved in crossrail. This person can be the one who is involved in the project and also all those who live or work near crossrail sites. Crossrail is developing a series of resources to communicate the dangers, which will be around the work sites or on busy lorry routes, to all the students of schools which are in close proximity of crossrail routes. This is to meet the crossrail’s Target Zero programme for safety. (Crossrail Skills and Employment Strategy, p16 -18, 2010).

One of the most important skills set which will be required for a good future of construction and engineering industry is Enterprise capability. It is the ability to react positively during changes and also to develop and implement innovative ideas. As a result of this, these skills have been chosen as an area of main focus for young crossrail programme especially for the 14-19 age groups. “Delivered in partnership with STEMNET – the Science, Technology, Engineering and Mathematics Network – Ambassadors are available to attend talks and events at schools close to the Crossrail route, as well as Further Education colleges across London and the South East” (Crossrail, 2012).

To date, the above mentioned Crossrail STEM Ambassadors have conducted different types of activities to engage youth. Some of these activities include mentoring sessions, careers fairs, talks, networking events and competition judging. The Ambassadors working in this are fully CRB checked and are qualified to speak about the crossrail project and also to share their work experiences. Even though the Young Crossrail program is specifically meant for schools which are near to crossrail worksites, the Ambassador programme is a nationwide scheme operated by STEMNET. (Crossrail, 2012).

4.1.2 Work placements

Crossrail programme will support 14-19 Diplomas, Young Apprenticeships, and wider vocational programmes through the supply chain, encouraging suppliers to offer placements through the procurement process. It will be a contractual requirement for the suppliers to offer a minimum of 350 placements between 2011 and 2017. CRL will work with partners to act as broker between contractors and schools/ colleges to find students suitable work placements. A reporting structure will be developed by CRL in order to track and monitor placements and make sure that everything is working properly. Crossrail launched a professional placement programme in June 2010. The main purpose of this program was to provide the upcoming graduates a chance to work with the biggest infrastructure project in Europe. As a part of this program, the trainee graduates were engaged on a professional development scheme with any of the CRL’s scheme or its industry partners like Network Rail, TfL or Transcend. This was done to help the graduates in gaining experience in various areas like finance, HR or Engineering disciplines of CRL. The period of placement varies from 3 months to a year. Moreover, CRL is also offering work placements for teachers in schools. This will allow them to have exposure and experience in the project. This will be very important because teachers can keep future talents up to date by inspiring them and teaching them about current industry skills and techniques. They can encourage students by sharing their experience on site and help students to increase their interest and level of motivation. The Crossrail programme will provide 400 Apprenticeships, through the supply chain. The different trades of apprenticeships offered, amongst others, will be Electrical, Mechanical, Finishing Trades and Tunnelling. (Crossrail Skills and Employment Strategy, p18 -20, 2010).

“Contractors will be under obligation to employ apprentices and support their learning via contractual requirements. All Apprenticeships will be to a minimum NVQ Level 2 and be offered within a Qualifications and Curriculum Authority (QCA) framework” (Crossrail Skills and Employment Strategy, p19, 2010). Also Level 3 apprenticeships will be delivered if necessary; to support the government objectives which are to make sure that 70 percent of workers under the age of 30 attains a Level 3 qualification. CRL will also follow and take lessons learned from successful projects like the Olympic park. In the Olympic park project, an Apprentice Manager was appointed to supervise all learners by liaising with contractors, training providers and all the functioning bodies. This is to ensure the best positive outcome for the learner, employer and CRL. CRL is also working in association with national bodies particularly the National Apprenticeship Service (NAS), to develop robust models for identifying, monitoring and offering Apprenticeships. (Crossrail Skills and Employment Strategy, p19, 2010).

4.1.3 Driver training

CRL has a specific mission to arrange and perform training programmes for the entire lorry and van drivers working on the programme. This will also include a module on cycle awareness. “A course has been developed based on an updated version of a programme developed for TfL’s Freight Operator Recognition Scheme (FORS)” (Crossrail Skills and Employment Strategy, p14, 2010). It is designed for frequent lorry drivers who work on the Crossrail programme and in particular any LGV driver. The main focus of the programme is heavily upon the lorry driver’s awareness of using the busy London’s roads with exposed road users. The content of the training program is developed in such a way that it includes particular crossrail routes, the main reason for collisions with cyclists, driver fatigue and also the legal aspects on the impact of drugs, alcohol and using mobile phones while driving. Expert opinions and inputs are sought from the Centre for the Protection of National Infrastructure to develop the training programme modules. Since it is not enough just to provide a safety training, CRL will further ensure that the driver induction training are monitored and reviewed frequently. Also, if there is any need to provide practical safety induction training for lorry drivers, then an additional safety training program for the same will be introduced to meet that requirement. All the contractors and sub – contractors who will provide transport services to CRL will be deemed to register under TfL’s FORS or equivalent and should achieve a minimum Bronze membership level within two months of being awarded a crossrail contract. This will not only ensure the safety practice but also will demonstrate a commitment towards following best practice. CRL also expects all contractors to work towards silver and gold membership of the FORS scheme (Crossrail Skills and Employment Strategy, p19, 2010).

4.2 Tunnelling and Underground Construction Academy

TUCA is very important, both for CRL’s delivery plans and also its legacy to the industry. Although UK has executed many prestigious tunnelling projects and has expertise and knowledge in such projects, there is not a training facility in the UK on which the industry can depend upon and can become a focal point of the industry. As per the research conducted by crossrail, the current underground construction training provisions in UK are not sufficient to meet the needs of crossrail programme’s workforce requirement either in terms of capacity or in terms of specialisms.

CRL will increase relationships and will also promote training across the industry by establishing TUCA. With this, CRL will be helping in developing new qualifications and in the improvement of health and safety standards followed in the industry. “CRL sees its role as the developer of TUCA, working closely with the SFA, Construction Skills and Tunnel Skills, industry bodies such as the British Tunnelling Society and other key tunnelling clients such as LU, Thames Water, National Grid and EDF” (Crossrail Skills and Employment Strategy,p22, 2010). From TUCA, Crossrail wants to ensure that construction industry gains maximum advantage and the academy helps not only for crossrail project but also for other projects after it. The only underground construction academy in Europe was the Hagerbach Test Gallery in Switzerland. “The test gallery provides research and development in underground construction and is home to the international Centre for Geotechnics and Underground Construction (CUC) and the International Centre for Safety in Tunnels (ICST)” (Crossrail Skills and Employment Strategy,p23, 2010). Although Hagerbach is very different training facility as compared to the one which is required in crossrail, CRL has developed a partnership with Hagerbach so as to ensure complementary training between the two establishments.

The design of TUCA is being established in combination with key stakeholders from the industry, Crossrail programme partners and academic/ education institutions. The facilities involved in TUCA will be sprayed concrete lining ad the operation of a tunnel boring machine. The main aim of TUCA is to inspire and encourage all those who join the academy for training. With the help of its learning environment, educational and exhibition space, TUCA will help in increasing the understanding of the industry and by doing so will attract and retain new talents. The curriculum of TUCA is developed mainly to meet the underground skills shortage in the industry. Crossrail’s underground skills shortage will also be met through this academy. The academy also focuses on the skills shortage of future similar projects as well. By closely working with its contractors and industry experts, CRL expects all the personnel working with crossrail to obtain the underground safety passport through TUCA. This will be irrelevant of the experience of the personnel. By doing this, CRL will make sure that a high level of standard is followed and a standard level of competence is followed to meet the health and safety requirement of CRL. (Tunnelling and Underground Construction Academy, 2011).

In addition to safety passport training, there will be many other programmes which will be made available to contractors. This will enable them to increase the skills of their workforce and also deliver the crossrail programme with more efficiency. TUCA will deliver NVQ qualifications. NVQ stands for National Vocational Qualification. It is a competence based qualification which means that one learns a practical task related to a particular work and will help in developing ones skills to improve the efficiency in performing a task. (Directgov, 2012). CRL expects the contractor’s personnel to obtain NVQ Level 2 qualification within a year of commencement of their role. TUCA will offer NVQ level 2 and 3 training in different areas of construction like joinery, finishing trades, and scaffolding. This will be done in partnership with other construction skills providers. “It is expected that TUCA will partner with local FE colleges to provide Skills for Life and ESOL training to complement the provision of NVQ qualifications” (Crossrail Skills and Employment Strategy 24, 2010).

TUCA is expected to be used for many tunnelling projects in future in order to develop and train the work force. CRL will establish TUCA as an independent facility with the ability to be self-supportive in terms of finance and governance. TUCA will maintain a strong relationship with Tunnel Skills and tunnelling contractors, so that underground construction methods can be improved and skills gap can be fulfilled. CRL will also work in partnership with different universities for further development and will also offer both research and Masters Study opportunities. (Tunnelling and Underground Construction Academy, 2011)

4.3 Optimised Contractor Involvement

Since Crossrail is a mega project and its civil engineering works are too large and complex to be procured as a single contract, the major challenge in front of CRL was to develop a contract package which will make sure of effective competition and that which ensure maximum output with the available resources. The contract strategy should also make sure that all the leading UK based and international contractors are attracted towards it and hence encouraging a healthy level of competition. However, it is also important to ensure that the contract strategy should be flexible enough to react to market condition during the time when work is put out to the market. By giving consideration to all these things, CRL decided not to use a traditional design and build type of contract and instead of that adopted an Optimised Contractor Involvement (OCI) approach. The OCI approach is very efficient since it involves the contractor in developing and finalizing the design process. This will be very beneficial because it encourages early input from the contractor and also minimizes the cost of tendering involved in the process. OCI is also beneficial in minimizing the requirement of design resources which are very less in supply at the moment in construction industry. The particular benefits of this approach are seen as:

Contractors are encouraged to provide their input in developing and finalizing the design process.

Reduced tendering costs.

“The contractor would be brought into the ownership of the design through the selection process and by the requirement to give early warning of problems and through the use of incentives to minimise the cost consequences” (Crossrail Briefing Material, p94, 2008) and

“Flexibility in the timing of the award of contracts to fit in with Programme gateway hold points where necessary” (Crossrail Briefing Material, p94, 2008).

The OCI approach consist of a selection process which is of two stages and also a contract of two phase in which the commitment to construction will be made at the end of the first phase of the contract. In this process, the employer will initially complete the design to the extent in which tendering process can be started. The design in this stage will not be in a very detailed form. The tenders will be invited on the basis of this design with any contractor design elements being specified but altogether the design details and requirements during this stage will be minimum. After the pre – qualification stage of the tendering process, a two stage selection process will be followed. The first stage will be based on the assessment of technical and quality competence of the contractor. This will help in further short listing of bidders and the number of bidders moving to the second stage will be reduced. In the second stage, the short listed bidders will be allowed to carry out a review of the employer’s design in order to achieve maximum efficiency and develop a value engineered solution.

After the review and at the end of second stage, the shortlisted bidders will submit their final bids including the target price of contract. Normally the contract is awarded on the basis of bids which offer maximum value for money. “The first phase of the contract would provide the opportunity for further value engineering, construction planning and mobilisation and the timing of the end of the first phase can be programmed to coincide with the requirements for overall Programme reviews needed before commitment to construction is given”. (Crossrail Briefing Material, p94, 2008).

4.4 Responsible Procurement

Responsible Procurement is a method in which it is ensured that the goods which are obtained, the works and services which are executed are done in such a way which will not threaten the lifestyle of future generations. CRL has identified many areas and issues which will be very important for crossrail project. The objective is to create a better quality of life for London’s communities now and in the future. “The Crossrail Programme will play a major role in helping to deliver this vision and will be aligned with the GLA Group Responsible Procurement Policy, 2008, which identifies three key principles:

Strong and diverse economic growth.

Social inclusivity to allow all Londoners to share in London’s future success.

Fundamental improvements in environmental management and use of resources.

The GLA Group Responsible Procurement Policy, 2008, aims to improve sustainability through procurement across the following seven themes:

Encouraging a diverse base of suppliers;

Promoting fair employment practices;

Promoting workforce welfare;

Meeting strategic labour needs and enabling training opportunities;

Community benefits;

Ethical sourcing practices; and

Promoting greater environmental sustainability.

CRL will follow and implement the GLA group responsible procurement policy and will integrate it as a part of crossrail’s procurement policy and procedures. “Internal guidance material is being developed that turns policy into actions appropriate to the specific characteristics of the goods, works or services in question” (Crossrail Briefing Material, p90, 2008). The Processes will consist of different templates for different stages like pre – qualification, tender invitation requirements and different contractual provisions. This will be designed in such a way that responsible procurement will be promoted and encouraged and will be in line with the commitments made by CRL during its development stage. In order to make sure that responsible procurement policy committed by the contractors during the procurement stage are delivering the desired results, proper level of reviewing and monitoring system will be employed. (Crossrail Briefing Material, p94, 2008).

Chapter 5

Research Methodology

5.1 Scope of Chapter

This chapter is aimed at explaining how the procurement strategy in Crossrail project was investigated. It describes the tools used to make this investigation and furthermore explains the characteristics of the research sample, and the methods used to translate the results.

5.2 Statement of Research Aim

The aim of this research is to investigate study and discuss the strategy adopted by CRL in the procurement of Crossrail Project.

5.3 Research Questions

The research deals with three main areas in Crossrail procurement. They are skilled resource procurement, type of contract used and value for money. Hence the research questions are designed based on this to determine the following:

What can be done to resolve the issue of ageing workforce in Crossrail project?

What can be done to reduce the shortage of underground construction skills gap?

What is the rationale behind using NEC3 type of contract in Crossrail project?

How is value for money demonstrated in Crossrail procurement?

5.4 Method of Data Collection

The research methods that are used to collect data which are relevant for this dissertation are literature review and interviews.

5.4.1 Literature review

Literature review is “a systematic search of published work to find out what is already known about the intended research topic” (Robinson & Reed, p 58, 1998). A literature review helps in many areas like establishing the needs of the research, increasing the level of understanding of the researcher and it also helps the researcher to avoid researching in the area where research is already conducted. The purpose of literature review is not only to understand the topic but also to gain maximum knowledge about the problems and issues at hand. The literature review for this project was carried out to get a general knowledge and context of the topic. It focussed specially on the literature available in the UK. The literature was collected from various sources like Crossrail website, Libraries and by personnel from the industry. From the literature review, information was collected about

Skills issues faced by Crossrail.

Types of contracts used in Crossrail project

The strategy used in engaging contractors

The meaning of responsible procurement

The meaning of Optimised Contractor involvement

Different programmes employed by Crossrail to address skills shortage

Meaning of Value for money

Based on the literature review, a questionnaire was developed based on the areas which required further clarification for developing the research output. This questionnaire was used to interview the personnel from the industry who directly or indirectly are associated with Crossrail project.

5.4.2 Interviews

Interviews are very useful because very important and specific data can be obtained through it. The interview also helps in collecting a general overview of thoughts of industry experts. Here the industry experts were contacted through email and telephone to arrange interviews. The interviews were then carried out based on the questionnaire which was developed by literature review. During the interview, permission was sought to record the whole interview process so that any information which was not noted down during interview can be recalled at the time of data analysis and interpretation. This technique was helpful in getting more expert opinion from the people who are working closely with Crossrail project. The personnel selected for interview were from Crossrail and TfL. By doing literature review and interviews, both qualitative and quantitative information were collected.

5.5 Rational of the Research Questionnaire

The research questionnaire which was used for this project is in Appendix A. The questions are categorised into 3 main sections. A brief description of them is as follows:

5.5.1 Skilled resource procurement

This part of the questionnaire was designed on the basis of skilled resource factor. This section sought to obtain respondents view on various issues that were highlighted in the literature review chapters. These issues included the influence that different Crossrail programmes like Young Crossrail and TUCA have over skilled resource procurement of Crossrail project.

5.5.2 Type of contract

The second section of the questionnaire was designed to obtain answers on the type of contract used by Crossrail. Here also, the issues that were raised in the literature review were highlighted. Issues such as interface management, 70:30 Technical Price ratio in bid assessment and the logic behind the render selection criteria were used.

5.5.3 Value for money

Section three covered the third and final factor under investigation. In this section, the respondents were asked to identify the areas and activities employed by Crossrail which demonstrated value for money in the field of procurement. Also other factors which should be considered in megaprojects like Crossrail is used as a question in order to obtain some extra information from the past knowledge of the respondent.

5.6 Research Sample

In order to collect research sample, it was clear on which aspect of the industry should be selected. It was decided to select opinions from different people. Due to this decision was taken to sample each of the area that exists in contact with the Crossrail project directly or indirectly. In total fifteen people were contacted through email and telephone. The initial response was overwhelming with fifteen out of fifteen replying, although interview were done only with three people because most of the people contacted were from Crossrail and many of them advised to interview the procurement director and Head of skills for getting th most appropriate response. Two of them declined for the interview. From here, the remaining three respondents were contacted again and interviews were arranged. The type of respondent who agreed to take part in the interview is as follows:

First interviewee was the Procurement Director of Crossrail Project.

Second interviewee was the Project Manager of Transport for London.

Third interviewee was the Head of Skills and Employment of Crossrail.

5.7 Method of Analysis

The data in the following chapter will be analysed by using the response received from interviews. The issues raised in the literature review will also be taken into consideration.

Chapter 6

Analysis of the Results

6.1 Scope of Chapter

This chapter reports the findings of the interview and includes the analysis of responses of the questionnaire. Although the data collection method was not a pure questionnaire type method but a questionnaire was developed for the interview and hence responses were sought on the basis of it. To get more clarity on questionnaire response, this chapter is divided in the same three sections like the questionnaire. They are:

Skilled Resource Procurement

Type of Contract

Value for Money

Here section-wise analysis of the questionnaire will be done.

6.2 Response on Skilled Resource Procurement

Questions 1 to 5 were based on skilled resource procurement. These were questions which primarily focused on the skills issues faced by crossrail. Questions were asked about the success of the projects like young crossrail and TUCA, which Crossrail has started to overcome skills issues. The response was to focus on what big public program means in real terms to government. Government is much focused on adding back economic and social sustainability aspects. So by spending such a huge amount, it will be made sure that economy should get maximum benefits from it. TUCA is a really good example of that. Crossrail has secured a service provider called NCC (National Construction College) and they run the academy. They are an expert in this field and have accreditation to run such academy. Crossrail is not a training provider and wanted an expert to come in and hence NCC was chosen and was fully facilitated them to run the academy. Programs like young crossrail are for adding value for the future. The government has got a chain of major projects like thames tideway, HS2 etc. These skills can be utilized in such projects. Also there is a lot to do in terms of operational phase of Crossrail after 2018. There will be skills requirement during that stage as well and these skills can be utilized at that time. TUCA started operation in September 2011 to train people to work in tunnel excavation. The training facilities which are included in TUCA are Spray Concrete Lining and a tunnel mock up workshop. This will help students in gaining experience in underground construction works. From TUCA, more than 70 Apprenticeships are employed in Crossrail project. These apprenticeships are employed by the Tier 1 contractors of Crossrail as a contractual obligation. These numbers are expected to rise as the project progresses.

TUCA will offer training for around 3500 people throughout the life cycle of the project. Thousands of these people will be employed in the construction work of Crossrail during the peak period of 2013 to 2015. TUCA will not only train and provide people for the construction work of Crossrail but also will be retained as a specialist training provider for future tunnelling projects.

6.3 Response on type of contract

Question 6 to 11 primarily focused on the type of contract used by Crossrail. Questions were asked on the benefits of using NEC3 type of contract. Other questions were based on the criteria for bid assessment and about managing the interfaces. Crossrail has used NEC3 type of contract primarily because NEC3 offers a suite of contract. It offers service contract, goods contract and whole range of works contract. NEC3 is embedded with a whole bunch of project manager procedures. There is debate over NEC3 that it is very administrative but that’s not always the case because NEC3 asks you to account for change. It focuses on accountability and transparency. The other interesting fact about NEC is embedded corporate governance. In this, the project manager is responsible for his actions. In other forms of contract, sometimes the contractor has to wait to get an instruction but in NEC the contractor continue to proceed with the work. The idea of the contractor sitting around and wait till the instruction is given to him formally will not be suitable for megaprojects like crossrail. The hours or days contractor wait for instructions will cost very high and will also delay the schedule of the project. NEC allows the contractor to carry on with the work and instructions will be given while the work is carried out. An important activity for CRL will be the management of interfaces. An Interface Management Plan (IMP) will be generated that defines the controls to be applied to ensure each contractor and other parties satisfy their interface obligations. This will be supported by a database that identifies all interfaces and allocates responsibilities. Each interface will have a specification signed off by the interfacing parties that will become one source of requirements for their design. Crossrail is using 70:30 technical price ratios rather than the usual 60:40 ratio. It is difficult to tender in a fixed price or lump sum contract in a big project like Crossrail. Crossrail is looking at the outturn and hence buying target price contract and not cost price contract. Crossrail is sharing risk on a 50-50 basis which is a big ask for both parties. Crossrail is looking for the best technical solution because contractor is going to spend on it to get it delivered. Crossrail is very complicated project and the contractor has to work in a highly challenging environment. In this project, CRL is not looking for low prices because they want sustainable output. CRL is committed to improve the market place. CRL wants the contractors involved in Crossrail project to make profit. The government is more focused in delivering a sustainable and a high quality project rather than a low cost one. By sharing the risk, a huge amount of litigation process is also reduced and hence will save a lot of time and cost spend on it.

6.4 Response on Value for Money

Question 12 and 13 were focused on value for money approach of Crossrail. For procurement of megaprojects like Crossrail, there is no specification of what so ever on value for money. Basically cost, quality or time is not used to define value for money. Instead of that a constant challenging approach is used. The procedures are constantly challenged and questioned on whether that is the right way to do and if it can be done in a