A View from Heathrow CECA - David Ferroussat - Infrastructure Procurement Director Phil Wilbraham - Development Director
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A View from Heathrow
CECA
David Ferroussat – Infrastructure Procurement Director
Phil Wilbraham – Development Director
28 September 2016Our Vision
Who owns Heathrow
Only four of the world’s 50 major airports are fully
privately funded. Heathrow is many times larger in
scale than its closest private comparator – Sydney.
Our shareholders represent a cross section of the
world’s leading private infrastructure investors and
include sovereign wealth funds, pension and
investment funds, and infrastructure operators.
Over the last ten years they have provided a scale
of investment unprecedented globally in privately
financed airports.“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.” Klaus Schwab, Founder and Executive Chairman, World Economic Forum (January 2016)
IT - Key Themes
Experience
Seamless Passenger
Journey
Supported by
Airport Community Digital Community
Information at your fingertips Platform for Participation
Cloud First Policy
Improved productivity & clock speed
Resilience
Enabled by
Operating Model
Digital CultureHeathrow 1946
Heathrow’s future
Market Relationships
Make vs Buy Modelling
Key Facts about Heathrow’s 3rd party spend
c.50
Strategic 1st Tier suppliers
1st Tier c.1500 suppliers
2nd Tier c.2000 suppliers
3rd Tier c.5000 suppliers
£1.7b spend per year
Heathrow uses almost 1,200 suppliers across all four nations of the UKHow we select our Suppliers
Supplier Relationship Management
Engagement Maturity Model- Assessment Output - Example
HAL Supplier Plan to Close Gap
Desired Relationship Line
Engagement Maturity Assessment
Traditional Engaging Collaborating Partnering
Assessment Areas 1 2 3 4 5 6 7 8 9 10
Strategy & Performance
The client has a clear and well articulated The client vision should be well The suppliers vision is also A joint vision is created between both
vision understood by both parties senior understood by both parties, and parties enabling the whole team to get
Vision
management understood in context to the under this one vision and create their
contract down through the teams strategy
The basic supply chain market drivers are The drivers are split into client and The drivers are split back to their The drivers are built into a single
understood (eg labour, key products, IPR supplier based on who can best elements enabling an understanding framework with joint ownership of them all
Contracting drivers etc..) influence them to enable value or where there is joint ownership, and in order to help both parties drive up value
reduce risk a framework established to jointly and reduce risk
manage these risks/opportunities
Client has defined a clear set of targets and The client identifies what The client holds itself to account for The targets for both parties are built into a
supplier KPI's performance it equally needs to targets and KPI's as well as the single set of goals set to both parties and
Targets and KPI's deliver against in order to best supplier enabling a clear set of end not assigned to each. They both work
enable the supplier to perform well to end deliverables together, winning and losing based on oth
their performance but never blaming
The client has defined the reports and The client has identified what The client and suppliers work There is a single suite of reports produced
information required under the contract information and reports it will be together to create an agreed set of together by both parties and is created
Reporting
giving to the supplier to aid in their reports under a single brand to not differentiate
performance and planning who has produced each report
supplier objectives are clearly defined Objectives of client and supplier are Objectives of client and supplier for Single set of objectives are created and
under the contract more openly shared at senior level this contract are shared, challenged expanded for all roles in the partnership
Objectives aligned and communicated down
through the whole direct team
The supplier has clearly defined cost and Some form of incentive structure is An equitable pain/gainshare is A single target cost is established which
performance plan within the contract, but put in place which if achieved will implemented with clearly defined usually is on a long term basis with annual
Incentivisation
where any benefits gained or cost impacts enable benefit / cost impact to both targets and levers to enable this to pay-outs
are not shared client and supplier happenSupplier Charter
Responsible Procurement
Responsible Heathrow is our commitment
to supporting the UK and local economies
whilst managing our impacts on
communities and the environment
• Responsible Procurement is ensuring that
Heathrow’s goals and commitments are also
deployed through the:
• products and services that Heathrow buys
• organisations that Heathrow does business with; and the
• contracts that Heathrow manages.
• This includes:
• Reducing our environmental impacts (e.g. waste (70% waste
recycled), noise, biodiversity, 34% reduction in CO2)
• Looking after our passengers and people (e.g. health &
safety, fair employment practices, ethical trading)
• Promoting economic growth and investing in communities
(e.g. support sustainable economic growth, connecting local
businesses to new growth)What could you do?
• Find out more about doing business with Heathrow and
becoming a supplier:
http://www.heathrowairport.com/about-us/partners-and-suppliers/procurement
• Register as a supplier for Heathrow and see opportunities on
our e-tendering portal:
https://procurement.heathrow.com/esop/gbr-hal-host/public/web/login.html
• Attend Heathrow Business Summit events – understand
Heathrow’s supply chainDelivering Critical Capacity
Q6 & H7 DeliveryHeathrow has invested £11bn between 2003 and 2014
- one of the UK’s largest private-sector investments
Terminal 5 A, B & C
Terminal 2
- £4.3bn investment Integrated baggage
- Winner of Skytrax - £2.5bn investment
award for world’s - New automated hub Terminal 1 - Opened to
best airport terminal connecting baggage passengers in
- Home of BA across all terminals - Decommissioned 2014
- 110m bags a year in 2015 - Future home of
- Operational in 2014 STAR Alliance
Terminal 3
- New A380 pier,
check-in, forecourt
and car park
- Refurbished
departure lounge,
immigration, and
baggage reclaim
- Home of oneworld
Terminal 4
- New and extended
check-in area
- New A380 pier,
security screening,
immigration, and
connection areas
- Home of Sky TeamSingle Till, RAB based, RPI-X ‘building blocks’ Regulation
Airport charges limited to increase by RPI-1.5% each year in Q6
Heathrow is allowed to earn a return on assets of 5.35%
Assets Costs Income Charges
5.35
%Incentive based regulation
Key levers to outperform Q6 settlement
1
Reduce opex to a level
less than included in the
Increase
settlement
commercial
revenues and
attract more
2
passengers Increase commercial
revenues more than the
level included in the
settlement
Reduce opex 3
Increase passenger
volumes more than the
level included in the
Increased settlement
returns
Invest in Business Cases that either
4
increase revenues or reduce costs
5 Meet and exceed SQR standards
• The sustained improvements we 6
Deliver the defined scope of capital
projects less than Gateway 3
make in the first years of the
quinquennium have the greatest 7 Deliver capital projects on time
impact
• Everything gets reset in H7Evolution of the Heathrow Client Model
The Q6 Development Operating Model
Portfolio Team
Programme Geographical
Delivery
Business
Gate 3
ownership
Programme
Q6 Project Handover
Management
Business Delivery Final Account
and Business OR
Cases
Change
Design Contract
Award
Benefits
Asset Information
Development Capex Core Capex
Regulatory Triggers & P50 Triggers & incentivised to
costs reimbursed
Incentivisation baseline set @ Gate 3 deliver below P50
P80We are now one team
Portfolio Team ‘creative,
beat the plan’
‘investment business case &
Airport Passenger Asset
Baggage benefits,
Resilience Experience Management
Programme cross functional solutions
Programme Programme Programme
stakeholder engagement &
consultation’
Jacobs Arup Arup Atkins
Airfield & Airfield &
T1/T2 T4 T3 T5 Landside Landside ‘contract & supplier
Delivery Delivery Delivery Delivery North South management, efficient
Team Team Team Team Delivery Delivery delivery aligned to
Team Team operations,
year on year improvement
VFM’
Morgan
Balfour Beatty MACE Ferrovial Sindall
‘assurance, control,
PMO processes, support and
facilitation’
Turner & Townsend Wilson James
Commercial & Controls Consultant Heathrow Logistic IntegratorA model based on Professional Collaboration
Keeping Everyone Safe Uncompromising Working Together
commitment by all parties to Health and Work collaboratively and keep all relevant
Safety parties involved and informed
Professional
Competent or skilled in a particular activity
Treating Everyone Giving Excellent
with Respect Cost &
Commercial Heathrow Sub- contractor Service
Consultant
Encourage Provide the basics
everyone to put 2nd Tier
Designer
Design of delivery brilliantly,
their views forward constructively
Delivery Logistics
constructively, Integrator Integrator challenge, bring the
listen to each other best market
and respond Collaboration innovation to us
respectfully Business relationships formed by committed
organisations to maximise performance for the
achievement of aligned objectives and creation of
additional value
Doing the Right Thing Improving Every Day
Focus on the right things that make the Continually improving what you deliver
biggest difference and how you deliver itMoving from Q6 to H7
The H7 Model – continuity of project delivery is key, all that is changing
is the portfolio “lens”.
Continuous delivery of projects
Q5 to Q6 seen as completely
(for when they are needed) – Q6
separate blocks of work
or H7 has no project impact
Q6 H7
Project x Project a
Q5 Q6 Project y Project b
Project x Project a
Project y Project b
Project x Project a
£M pa
£M pa
Years Years
Starting new projects all on the Sustainable year on year delivery
1st day of an investment period performance.
results in annual drop in delivery
performance.Expansion Strategy
Two phases – third runway expansion, existing airport improvement
Delivers
Phase 1
120mppa
by 2025/6
T6A T5A
Phase 2 T2A
by 2036 Adds
+10mppa
T4Major Programme Spend Profile
8,000
7,000
6,000 Crossrail 2
5,000
HS2 Heathrow
Hinkley Point Expansion
£m
4,000
3,000
2,000
1,000
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Heathrow Hub Capacity (R3) Thames Tideway Tunnel
Crossrail HS2
Silvertown Tunnel Crossrail 2
HE Projects Lower Thames Crossing
Hinckley Point C Thameslink (London Stations)
Northern Line Extension HAL Q7/ Q7
Wylfa nuclear station Battersea Power Station
Nine Elms Chelsea Barracks
Tottenham Hale regeneration Brent Cross/ Crinklewood regenerationRole of Heathrow
Programme Management Organisation - Principles
Programme Programme
Client Partner Client Partner
(Mace) (CH2M)
HAL Client
Programme Programme
Client Partner Client Partner
(Arup) (T&T)
Heathrow will lead the Client organisation
Single integrated organisation with best “athlete” for each role
Equitable incentive model binding us all together
Client organisation will be long term and an integral part of Heathrow
Working with Heathrow’s Values and Behaviours, with aligned targets
We will encourage Diversity, Talent Development and everyone to play their part
within ‘Team Heathrow’Project/Procurement Overview
Government Decision Secretary of State Approval New Runway Opens
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Programme Client Partner
Concept Solution Design Packages
Logistics Packages
Enabling Works Packages
Delivery Design & Construction Packages
= AwardProposed Delivery Packaging – Phase 1
Decant & Landside Airside
Airport Campus
Demolition Infrastructure Infrastructure
Control Landside
Runway T6A T6B Tunnels
Decant & Tower Infrastructure
Demolition
Runway Roads TTS and
Taxiways Landscaping baggage
Building Building Building
Stands Car Parking tunnels
AGL Utilities
Airside
Energy
Rivers
roads and
Landside tunnels
TTS TTS connectivity Southern
Systems CTA tunnel
Baggage Baggage
Other
Infrastructure
ICS ICS ICS
Logistics & Site ServicesYou can also read
