Procurement Strategy In Uk Crossrail Project Construction Essay

Procurement Strategy In Uk interbreeding path jutting Construction EssayThis talk is some investigating and evaluating the procural strategy adopted in Crossrail discoer. A literature round off 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 diametric procural strategy applied for cross rail project. Cross rail being one of the biggest transportation project in Europe, have very complex procural orders which should be very well planned. The thesis observes the methods of procural adopted by cross rail by comparing it with polar standard procurance methods and high hat practices used in the country. Research is carried out on three different beas of procurement. They are skilled resource procurement, type of take up used and demonstration of encourage for funds. The initial survey carried out indicated that there i s a skills shortage in Crossrail project and likewise near of the areas were identified which needed further clarification in using necrotizing enterocolitis3 ignore.The dissertation was carried out base 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 stomach the project successfully. However it would be too early to r exclusively(a)(prenominal) a conclusion since the project is still well under progress.AcknowledgementFirst I would like to thank Mr Barry woodwind 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 r elated to my topic.Finally umpteen thanks to all my fri culminations and the almighty for being a great support and motivation through and throughout my work.Chapter 1IntroductionRational for the researchThe continuing guide for developing transportation infrastructure projects is increasing day by day. This is putting tremendous pressure on public sector for developing. 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 cut offd the ability of government to mechanism big and unique projects by itself. Project voice communication is the method by which government encourages the private sectors and other agencies for the development of infrastructures. Transportation megaprojects include extensive jacket crown investment, expert and competitive captureors, long period of time and a perfect talking to strategy to deliver the proje ct in time, quality and indoors budget. To come upon such mega projects successful, a strong procurement strategy is mandatory. A procurement strategy is to develop a framework keeping in mind the objectives and outcomes of the project. The contractual and commercial strategy pass on be defined at the design and reflection stage itself which entrust align the project team up towards achieving the objective. A equitable procurement strategy go forth have a positive impact on projects per unioniseance 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 take a shitn 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 winding fabrication. They are commit leadershi p, client focus, coordinated processes and teams, a quality driven agenda and commitment to spate. 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 ProjectThis 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 gravelible 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 primaeval 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 limpid sections. They are Central section, western sectio n, 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 class 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 take in the supply chain for delivery. Cross rails 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, in centivizing per human bodyance and selection of suppliers on the basis of best value (NEC,2009).Research Goals1.3.1 AimThe aim of this dissertation is to identify, and investigate different methods of procurem ent 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 ObjectivesIn order to get hold of 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 piss 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 ResearchThe research process will be broken guttle into two key stages in order to meet the aim and the objectives indicated earlier. These are,1.4.1 Literature ReviewThis stage of the research process forgets a comprehensive review of the applicable literature on different types of traditional methods of procurement. A review of cross rails policies and procedure will also be done. This is to develop a recrudesce 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 full stoped background to the subject to enable the rest of the dissertation to be conducted.Dissertation ContentsThe 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 resultant the questions which were set as objectives in chapter 1. This chapter will also include recommendations and suggestions for future work.Chapter 2The Crossrail ProjectThe ProjectCrossrail 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. Itisa 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 take aim, DLR, Canary Wharf Group and Berkeley Homes. Crossrail has five tunnelling drives, 21 km of twin bore tunnels under the centre of the groovy dealing with the complexities that this involves (Crossrail, 2010). Crossrail also consist of construction of eight new underground displace 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 extremely efficient and able to deliver a world class railway after gaining the Royal Assent. Crossrail limited was a 50/50 joint embar k 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). Crossrails route has four clear 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 SectionThe central section consists of the majority of the construction works. New stations will be create along the central route of the line at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, sinlessnesschapel and Canary Wharf (Crossrail, 2010). The new twin-bore tunnels will extend between Royal oak tree in the west and Pudding Mill Lane ( nuzzle Stratford) and the islet 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 all(prenominal) 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 railroad track, other inject services such as Thameslink, and bus services. Shafts will be provided at regular intervals throughout the route which will be used for emergency access, melt down and ventilation. These cracks 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 passing shafts will be constructed for tunnelling purposes, and will be filled in once construction is completed. (Crossrail Environmental Statement, p30)The Western Secti onIn the western section, there whitethorn be a requirement to change the existing Great Western mainline between Maidenhead and Paddington, such as new or realigned track. Added to that, an belt electrification will be installed along the route west of Stockley Road (Hayes). For this purpose, erection of steel gantries will be needful at about every 50m intervals. death or reconstruction of numerous bridge over will be required as a result of strike 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(prenominal) railroad 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 sectionThe 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 looping (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 sectionEast of the Isle of Dogs, the twin-bore tunnels from the central section wi ll 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 demolis hed. 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 turn over, 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 StrategiesCrossrail 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 top 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, 20092.2.1 Crossrail Program Delivery PartnerThe 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 everythi ng is running smoothly, CRL can hire more of its own ply 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 abundant as compared to the project delivery partner. (NCE, 2012)2.2.2 Crossrail Project Delivery PartnerThe 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 conclusiveness like size of contract and incentivization structure to get maximum output and quality.2.2.3 Crossrail StakeholdersCrossrail being a mega project will have many stakeholders. The table on a lower floor shows all the government and private stakeholders of CrossrailStakeholderRoleDepartment for Transport(DfT)Co Sponsor. Main interface to national government and HM TreasuryTransport for London(TfL)Co Sponsor. Main interface to local government, the Greater London Authority (GLA) and the Mayor of Londons office. Owner of the central section.Crossrail Limited(CRL) previously Cross London Rail Links Limited(CLRL)Delivery agent. erstwhile a 50/50 joint venture of TfL and DfT, now a wholly owned subsidiary of TfL. Main interface to the delivery supply chain, including twain the project and program delivery partners.National Rail (NR)Indust ry 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 subsidiaryIndustry 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 subsidiaryOperator franchising authority or trace operator of crossrail. Infrastructure manager of crossrail stations at Paddington, Isle of Dogs and Woolwich.Docklands Light Railway(DLR) a TfL subsidiaryIndustry 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 DLRBritish Airports AuthorityOwner of the Heathrow spurCanary 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 3Literature Review I3.1 Skills Issues for CrossrailBeing a mega transportation project, Crossrail will be liner 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 Crossrail3.1.1 Ageing workforceAcross 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 fascinating 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 all 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 gapCrossrail will have a huge requirement of skilled tunnellers.But the main problem is that since the lowest 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 wor kforce 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 power 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). in that respect 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 needsWhile excavating for crossrail tunnels, a huge tot al 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 safekeeping areas and central control. (Crossrail Skills and Employment Strategy, 2010)3.2 NEC3 The Construction ContractThe 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 OverviewAs per Fenwick Elliott, 2007, the aims were toAttain an advanced degree of lucidity when matched to other existing contractsUse of a simple language which is commonly used and avoid legal jargonRepeat identical phrases if possiblespecifically and unmistakably allocating roles and responsibilities to the right PersonAim for clarity above fairness andAvoid 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 extract A ( determined contract with activity schedule) weft B (priced contract with bill of quantities) provides that the contractor will be paid at tender prices. Basically, a lump sum contract approach preference C ( sign 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 proportionsOption E (cost-reimbursable contract) andOption 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 denomination 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 know 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 contractsIn 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 aw arded 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 realise 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 redemptive from th e 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 notesValue for money is always beneficial to the client. It means that the project is worth doing and is more refereed in line of products 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 boost 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 advanced(a) 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 manageme nt 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 suppliers 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 4Literature Review II4.1 Inspiring Future TalentIt 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 Apprent