TfL Embracing Innovation

 

Simon is a project manager for London Underground (LU) and is currently engaged on the Bank Station Capacity Upgrade (BSCU). He picked up the Project Professional of the Year accolade at the APM Awards 2013 for his work on the scheme.

The scheme is designed to enhance the capacity of the station and improve journey times, provide customers with step-free access from street to platform and the station will benefit from a new fire and evacuation strategy.

Bank 3 EntranceThe business case for the project was clear as the current infrastructure simply can’t cope with the peak demands on the system. Delays often occur which can create knock-on effects on the underground system.

Planning to find a solution began in 2003 and some years later, after substantial research, it became apparent that the only real opportunity for development was a large redesign of the underground infrastructure in the area, which included a new 600-metre tunnel.

This required a significant purchase of property around the area. Simon says: “It met the business need but it was very expensive and took a lot of time because of the constraints of worksite availability. We felt we’d produced the best solution we could do at that time, but the budget and time ran over what our business plan was saying.”

Bank 4 - LayoutThe concept design stage for BSCU was coming to completion in late 2011 and the project team began to look at procurement. “We learnt some lessons from our Victoria and Tottenham Court Road projects around lost opportunities in terms of innovation,” explains Simon. “We knew we could get more out of the market.”

Most of LU’s major projects need to go through the Transport and Works Act planning process, which requires a period of consultation and potentially a public inquiry. After that time, the project proposals go back to the secretary of state for approval. Typically, the process can take 18-24 months, which creates a challenge, says Simon. “If the market presented us with an innovation that could save money or increase the benefits of the project, we would obviously want to embed that into the project. However, this would mean going through the approval process again, which would set you back another 18 months or more.”

Ideas in advance

It was decided that for the BSCU project, the team would go to the procurement phase earlier, pushing the Transport and Works Act planning process back by two years.

“We designed a process that allowed us to embrace innovation and ask for ideas in advance of going to government for approval,” says Simon. “The contractor, quite rightly, would argue that giving up innovation before a contract is awarded is not good for business. So we created a confidentiality agreement, which stated that we would provide all of the information we had and those invited to bid would agree to share suggested innovations.”

All the project information that LU had was shared with the bidders; there were no surprises.

“It took a lot of work with the legal team but once it was in place it reassured the contractors that any innovation they discovered that we wanted to use would remain confidential or be purchased.

And of course, those with the best innovations would stand a better chance of winning the contract. “LU entered a five-month period of tightly controlled negotiating with four contractors. Independent observers were brought in to mediate the process and discussions on how contractors’ innovations could be incorporated into the project plans began.

Simon explains: “We paid each contractor a contributory sum to enter the dialogue process. Bidding for a contract like this and researching to unearth innovations is an expensive business for the supply chain;

Perhaps we could have paid more.” This method – dubbed Innovative Contractor Engagement – was a standout feature of the procurement process, but it wasn’t the only novel addition to the project, as Simon explains. “What made us stand out as a project team was the design of a new project front end version of the ‘iron triangle.’

Traditionally we have the cost-time-quality triangle; when we went to board approval we said we believed we could give them 15 per cent additional value on the project by using the new procurement process. But when we tried to determine what 15% value we wanted to buy, we found that the traditional iron triangle was more suited to the ‘back end’ delivery cycle of the project and not the front end ‘development’ cycle, hence we designed our ‘front-end triangle”

Tweaking the Triangle

“I believe Professor Peter Morris describes this as the management of projects,” says Simon as he begins to explain his personal innovation on this project.

“We are all well aware of the iron triangle when it comes to project managing, but what we needed was a modified triangle for the management of projects, a greater focus on value creation.”

Simon explains “Once you have these elements you can create a base case and then start to work out the evaluation criteria weightings and put a value on bidders’ innovations.

“We weren’t focused on scoring the price of bids as it was ‘bid to cost’; it was still important but we didn’t give it a weighting. Instead, we focused on the product by looking at the benefits and dis-benefits in the business case.

Simon’s project management innovation was the ‘front-end’ triangle (see above), which  is concerned with the ‘management of projects’ analysis and determine the value of a quality point.”

And the winner is

On 1 August 2013 the BSCU project contract was awarded to Dragados SA – the construction arm of ACS Group. The firm managed to move the return­ on-investment ratio from 2.4: 1 to 3.5: 1. London Underground was also able to take 10 per cent off the budget – from £625m to £563m.

Simon says: “We enhanced journey time by 19 per cent and the closure of the Northern line in the area was reduced from 22 weeks to 17.”

Bank 1 - EntranceDespite shifting the project timescale back 24 months to allow for the ICE process, innovations will see the project completed 18 months ahead of the base­ case solution.

It has been an experimental process for Simon and his team but, based on the success of ICE, it is a process LU are already rolling out across other projects. In the future, the cost and complexities surrounding ICE will inevitably be reduced.

As Simon concludes: “The more we do this process, the easier it will become and the more efficient we will be in delivering more effective products.”

Simon will be one of our top presenters at #eva19. You can read more about the Innovative Contractor Engagement procurement approach in Project magazine.