Major opportunities for SMEs on HS2

Source: Rail Technology Magazine Oct/Nov 2014

Approximately 60% of contract opportunities arising in the HS2 supply chain will be awarded to small and medium-sized enterprises (SMEs), Simon Kirby, chief executive of HS2 Ltd, told delegates at the Manchester Supply Chain event. David Stevenson reports.

Speaking at the Supply Chain Conference in Manchester, having joined HS2 from Network Rail Infrastructure Projects earlier this year, Simon Kirby said the opportunity to build a new world-class railway that’s “fit for our country’s need is really why I joined HS2”.

Kirby said every HS2 supplier must have the same vision and ethos. They will be innovative and creative, and they will have strong ethics and robust training and education programmes.

“High-quality and coming in on budget will be essential for HS2 to start,” Kirby told the 750 delegates. “We want the best companies to partner with on this programme. If you only remember one thing we want from our partners: safety is our strongest value. Our partners must have a strong safety culture and long records of achieving high standards.”

It was stated, in broad terms, that HS2 will help the UK in four ways. Firstly, increasing jobs across the country; secondly, transforming skillsets in the infrastructure industry; thirdly, improving equality, diversity and inclusion in the construction industry; and fourthly, it will bring new people into the industry.

“We’re working with the design industry to create a design vision for the railway and its passengers. We’re building momentum and we’re ready to begin procurement in 2015,” he added.

Approximately 500 firms were represented at the event on 23 October. RTM asked Kirby what opportunities HS2 would offer to northern suppliers, and he said: “We see the end supply chain having suppliers right across the country. In the north west there is a great supply chain and they are inputting into phase 1 electrification, Northern Hub and have been involved heavily with WCML.

“It is about how they start to engage with first tier potential partners, ourselves and coming to the events [like the supply chain conferences] to engage and get involved in taking the project forward together.”

Supplier guide

HS2 Ltd has launched its supplier guide, which has been developed to help suppliers find out more about the HS2 project and what will be required from companies to get involved.

HS2 will focus on the following categories to deliver phase 1: Design & Services (£0.4bn); Tunnels (£3bn); Surface Route (£3.8bn); Stations (£2.9bn); Railway Systems (£1.7bn); and rolling stock for both phases (£7.5bn).

For each category HS2 says it will buy a “relatively small” number of high-value, direct contracts. However, other large infrastructure projects, including Crossrail, have shown that for every direct contract the client buys, many more indirect opportunities are created.

Many of the major works packages in each category will be procured between 2015 and 2019. HS2 commercial director Beth West said: “We want greater collaborations not just up and down the supply chain, but across it too. At this stage, I encourage you now to think about what you need to do to become a HS2 supplier.

“Towards the end of this year we will develop individual work procurement plans in each category. These will have more detail on scope and schedule.”

HS2 plans to use the early contractor involvement (ECI) approach to support improved team working, innovation and planning and thus value for money. It also involves an integrated contractor and designer team, appointed under an incentivised, two-stage contract.

Stage 1 involves design development and construction planning, to meet HS2’s objectives and which leads to the agreement of a target price. Stage 2 covers detailed design and construction.

“We will ECI for our civil engineering contract and for others where possible and appropriate,” said West.

She added that the company has also started building a rolling stock team and “efforts will be ramped up in this area”.

“We’ve  started  looking at  the  best  way  to  see  how we package in-cab and line-side signalling, together or separately, and for the rolling stock. Also, the design and how we package the construction of the depot and how we procure long-term maintenance,” West said. “Over the next 15 months we will be working intensely to develop our rolling stock strategy – starting procurement shortly thereafter.”

It was also noted that HS2 will be committed to fair pay throughout the supply chain. Officials are also considering the possibility of direct payment to sub-contractors where main contractors are failing to do so in the timescales that HS2 require. “However, we haven’t yet settled on the number of days, but that’s something we will consult with you [the supply chain] over,” West added.

Performance and incentives will be based on a three-pronged approach: programme; geographical area; and contract. West stated: “Our incentives will award collaboration which minimises the overall cost to HS2. All of our programme for level area incentives will be self-funding; that means they will be linked to savings against an established budget.”

HS2 delivery

HS2 programme and strategy director Alistair Kirk said the company had tried hard to detail its overall delivery strategy for the programme and the organisational structure for success. It will adopt a ‘matrix’ organisational structure, with delivery executed through three key business units: Development; Phase 1 Infrastructure; and Operations.

“A key element of our strategy was the development of a programme management framework that will govern and control all of our work,” he said. “This will define all of our policies, strategies and processes that will follow.

“We intend to procure work on fewer higher value contracts. However, HS2 will retain package integrated responsibilities and the associate prime risk.”

HS2 will establish a programme-wide approach to BIM that establishes a “common flow of working to deliver maximum efficiencies and value for money” across the whole life of the programme. 

Kirk prefers to call BIM building information ‘management’, rather than ‘modelling’, as it isn’t just about 3D, 4D and 5D model visualisations: “It’s about putting in place a common ethos and way of working and language and common data flow. If you’re an SME, that needs to be built into your approach.”

During the Q&A, Kirby confirmed that the signalling will be ETCS with ATO overlaid. However, how that is procured and how it will affect rolling stock is still to be defined.

At the end of the day, transport secretary Patrick McLoughlin, after being delayed on the Tube, trains and trams up from Westminster, told the audience: “The HS2 debate, I believe, has now shifted from whether we should build HS2 to how we should build HS2. In infrastructure terms HS2 is just around the corner.

“Big infrastructure projects like this are never without controversy, I wouldn’t expect them to be without controversy. But we need to look and take a long-term view in how we develop and make sure that our northern cities can develop.

“I know that the future of HS2 is in good hands, let’s make HS2 something that Manchester, Birmingham, Leeds, Sheffield and Britain can be proud of.”

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