Rail Industry Focus

Gearing up for HS2

RTM reports from the HS2 Supply Chain Conference in Birmingham, where we interviewed transport secretary
Patrick McLoughlin MP and HS2 technical director Professor Andrew McNaughton. The conference also heard details from HS2 commercial director Beth West about the work packages available. 

More than 800 people from 600 rail, construction and engineering businesses gathered at The ICC in Birmingham for the HS2 Supply Chain Conference in November, keen to hear from the project’s leaders about the nature and amount of work to come and how they can win business on it.

They also heard from transport secretary Patrick McLoughlin, who gave the keynote speech at the event, and who stressed the
value of the project to rail businesses and not just passengers.

He tackled recent controversies about HS2’s cost, construction time, economic benefits and environmental impact, and sat down with RTM to discuss it all.

HS2 commercial director Beth West also unveiled the work packages and contract types under HS2. These are:

Tunnels – £2.9bn, four main packages, geographically based, determined by tunnel type and construction methodology
(ECI based on NEC3)

Surface route – £2.7bn, three to six main packages, geographically based with interfaces taking into account engineering issues
(ECI based on NEC3)

Stations – £2.6bn, four main packages (one main per station), but with the option of combining the Birmingham stations and splitting Euston into several packages (ECI based on NEC3)

Enabling works – £600m, new framework agreement established using ‘lots’ for different work types and locations

Railway systems – £1.5bn, four to six route-wide packages, functionally based with number of systems per package based on market capability and technical interfaces (ECI or D&B)

Design services – £350m, multi-disciplinary packages to progress design to a level appropriate to the contracting strategy
and provide an ongoing employer’s agent duties as required

Rolling stock, depots, signalling – £2bn-plus, single package, with location of depots to be established by HS2 Ltd (bespoke contract)

Addressing the conference in her keynote speech, which gave a commercial overview of the procurement and contracting strategy, West listed the vital enabling elements. These were, firstly, the need to align incentives with suppliers to ensure everyone benefits, with programme and contract level incentives that cascade down the supply chain. She said HS2 is keen to ensure that the tier 1 contractors cannot just take the incentives and squeeze their own suppliers further down the supply chain.

The second enabler is collaboration, with strong client leadership – “We won’t be changing our mind constantly,” West pledged.

Third is innovation. Although HS2 often makes the point that it is based on proven, tested technology, the fact is that technology moves on, and it now expects to make use of things like BIM (building information modelling), offsite manufacturing, and pre-fabrication. Some assets may seem like they last virtually forever, but things like communications technology and IT are changing very quickly.

The final three key enablers are risk ownership, integration and co-location, and transparency.

West said HS2 understood the client behaviours that frustrate suppliers and add no value, such as sudden redesigns, unexpected reworking and ‘man-marking’, and promised to avoid these.

She said: “To deliver this nationally important project on time and below budget, we need to work closely with suppliers early on, to ensure that sufficient planning is in place before the start of the formal procurement process. This will also benefit business, by giving
them a head start to make the investments they require in recruitment, training and education to support the innovative ways
of working we need to deliver HS2.”

Project timeline

There has been talk in recent months of accelerating HS2’s timeline, kickstarted by incoming chairman Sir David Higgins, currently Network Rail’s chief executive, who said he can’t see why it can’t be completed more quickly.

Stephen Dance, director of infrastructure delivery at Infrastructure UK, the part of HM Treasury charged with supporting planning, prioritisation, enabling and effective delivery of infrastructure across sectors in the UK, spoke in a panel debate at the conference on ‘How HS2 and the industry will work together to deliver the programme’.

He suggested that with the right actions from the rail industry, HS2 could indeed be delivered more quickly, explaining that the timetable is likely to be governed ultimately less by ministerial decisions and funding, and more by the capacity of the industry itself to rise to the construction challenge.

He said: “If we can get procurement right, and industry responding well, and people working together so we can demonstrate that we can deliver the railway people want and need and deserve…I think we will be able to do that [build HS2 more quickly].”

Dance also said that as a country, “once we start big projects, we tend to see them through”.

In an interview with RTM at the conference, HS2 technical director Professor Andrew McNaughton also addressed this question. He called it a “huge and amazing thing” that HS2 has secured a funding stream from the government over a long period, and noted that it’s impossible to predict future governments’ spending powers or decisions. 

“But what we can do,” he said, “is demonstrate that the supply sector can, through innovation and faster delivery, show that it has developed the skills and has got the skilled people we need – builders, designers, constructors, demolition workers, software people – and that innovation is also taking cost out. That makes it very easy for a government to decide ‘we can afford to do this quicker’. Because it’s manifestly clear to the supply industry, if the government chooses, that this programme can go quicker.”

‘British businesses have the expertise to deliver HS2’

Transport secretary Patrick McLoughlin sat down with RTM at the conference just before his keynote speech, and discussed the role of the UK rail supply chain in delivering the project, the vital need for extra capacity, and the next steps in the parliamentary process.

He told us: “What’s encouraging about today – and I’m really pleased that [outgoing HS2 chairman] Doug Oakervee and others have organised it – is to give notice to business that this is going to be one of the largest infrastructure projects we’ve done in the UK for some considerable time. Particularly when you take the overall impact [into account], it’s fair to say that phase one of HS2 is just a little bit more expensive than Crossrail – the target price I’ve given for phase one is £17.6bn.

“It’s fantastic that we’ve got 800 businesses here, British businesses, wanting to be involved and wanting to see what opportunities there are for their companies. So those people who say ‘we haven’t got the expertise’, come here and look at this.”

The government is perceived by the national press to have shifted its core argument on HS2 from journey times to railway capacity.
But McLoughlin rejected that point, saying that capacity had always been an important part of the case for the project. He told RTM: “I don’t think you’re going to do a major project like this and not have controversy. In fairness to Lord Adonis, when he launched HS2, he talked about capacity as well – but the media got more fixated on the speed than the whole story.

“I came up this morning from London, and the train was delayed because of a tragic incident at Stafford but also because of a freight train on the line slowing us down. I’m very pleased that we’re seeing more freight travelling by railway, 60% up in the last 10 years, that’s great news for the country, but we just don’t have the capacity to let that carrying on growing [without HS2].”

But McLoughlin refused to be drawn on the role the supply chain could play in speeding up the project, saying only: “The speed of
delivery will be something that David Higgins will want to look at when he comes in as chairman.”

He added: “We want [phase one] completed in 2026. Twelve years is not a long time for big infrastructure projects like this.”

In his speech, McLoughlin said that he believes that the cost of HS2 will ultimately come in ‘far lower’ than the new total budget, noting that having to be 95% confident has inflated the figure. “We haven’t done anything as ambitious as HS2 for 50 years…Britain is doing infrastructure again,” he announced.

Answering questions from the audience afterwards, McLoughlin said no decision has been made yet on whether HS2 will have a single franchisee, multiple franchisees, be open access, or have some other operating arrangement.

Whole system

Professor McNaughton was keen to stress in his interview with RTM that “HS2 is a complete system”.

He said: “This means everybody who’s involved in it, the actions they take, the designs they make, the decisions about construction or technology, will affect all of the other parts of the system. Therefore a key behaviour for working with us is collaboration. That is one of those totally over-used words, but here you’ve got an engineering system, a people system, an environmental system, and so on, and if you change something on a bridge or a noise barrier or the train or the control system, you’ll change the balance of the system. You can’t just do that by itself; you have to work in collaboration with everybody else.

“We cannot control all of this – we want the people who will supply HS2 to work together. That’s the key message; ‘we give you permission to work together on our railway’.

“We set the framework, the minimum requirements in terms of the environment, operations etc, and we have used existing, proven technology to develop our proposal to Parliament. But the supply chain are innovating all the time, so we’re confident they will come up with better, more advanced solutions, which will achieve the quality we need, the availability, reliability, capacity, connectivity, quicker journey times –  and probably at lower cost. Those are the things we value, and what we’re prepared to pay for.

“We’re trying to encourage people to innovate, but we’re also listening and asking what are the barriers to working together. Are small firms worried that their IPR [intellectual property rights] will be pinched? If you do something specialist, are you the best people to look after it for its whole life? To not just give us a product that we have to maintain – can we have a relationship in which you maintain the product for its whole lifecycle?”

We asked Professor McNaughton about HS2’s relationship with Network Rail, and whether he expects that organisation to act as a supplier to HS2 at any point, or act as a partner or consultant, or indeed whether it could be a competitor in terms of siphoning off talented engineers and project managers.

He told us: “Network Rail have a huge amount of expertise in running the existing railway and we respect that, and we’re privileged that in our core team are embedded a number of Network Rail’s best people, providing absolutely essential skills and knowledge in specific areas. We’re building to a co-operation partnership with Network Rail, which respects our need to build a new railway that in some places interacts with their network. When we’ve finished, the people using HS2 should have as seamless a journey as possible, so Network Rail is essential for helping us. As we have the opportunity to do new things, we can introduce new innovation to them that they can exploit on their network. It’s a strong and close relationship.”

A test-bed for innovation

Attendees on the day also attended seminars on key HS2 topics, such as the role of BIM and innovation, where they heard from Jon Kerbey, head of management systems at HS2 Ltd; Bill Grose of Arup and the HS2 Efficiency Challenge, who wrote for RTM on design codes in the October/November 2013 edition; Adam Matthews of the BIM Task Group; Bob Thompson, executive director at Keller;
and Darryl Stephenson, value engineer at HS2 Ltd.

After hearing about the government’s BIM strategy, some examples of the technology in practice and how HS2 will be a test-bed for innovation, the speakers also outlined the conditions required for innovation to occur – and how the project team intends to engage with the supply chain to share best practice.

Other seminars included sessions on sustainable construction methods, and on skills and capability, addressed by chief executive of the National Skills Academy for Railway Engineering (NSARE), Gil Howarth. The session heard how HS2 presents a “once in a generation skills opportunity”, and Howarth outlined the skills forecast for the rail industry over the coming years, and the vital need for the right education, qualifications, apprenticeships and employment strategies to be in place to address a potential skills gap.

More supply chain conferences are to be organised by HS2 over the coming months and years.

Collaboration

 HS2 Ltd has this to say on collaboration: 

“Recent successfully delivered major programmes and projects in the UK have all had high degrees of collaborative working. Nothing has been delivered on the scale of HS2, so we need to continue to change behaviours in the supply chain so that collaboration is not just delivered on individual projects – this should be a fundamental industry step change. Throughout the duration of the programme, HS2 will be under scrutiny over costs, which means we need to avoid non-productive work. We believe that early contractor
involvement is critical to successful whole-life delivery. We are looking to open up opportunities for collaboration between HS2 Ltd and our counterparties and between our contractors and their supply chain. 

“Through initial conversations with industry, HS2 Ltd has identified some key principles to help HS2 achieve collaboration across
its contracts over a long period of time in order to deliver the best and most cost effective outcomes.”

HS2 timeline

End of 2014 – Government’s announcement of final decision on the chosen route, station and depots for phase two; hybrid bill process for phase one continues 

2015 – Start of engineering design, environmental impact assessment and preparation of hybrid bill for phase two; target date for royal assent to hybrid bill for phase one, containing legal powers to construct phase one 

Next Parliament – Deposit hybrid bill for phase two

2016/2017 – Construction on phase one starts

2026 – Phase one opens to passengers

2033 – Phase two opens to passengers