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Major opportunities for SMEs on HS2 – Kirby

Small and medium sized businesses will win 60% of the contracts in the HS2 supply chain, according to the organisation’s chief executive Simon Kirby. 

Speaking at the Supply Chain Conference in Manchester yesterday, and having joined HS2 from Network Rail Infrastructure Projects earlier this year, 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”. 

Many major works packages will be procured between 2015 and 2019. The phase 1 categories will be: 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. 

Vision and ethos 

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, and RTM asked what opportunities HS2 would offer to northern suppliers. Kirby told us: “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. 

The Supply Chain Conference 2014 was the second conference held this month by HS2 to help promote business engagement with the project. The aim was to ensure that the best companies can identify and compete for contract opportunities. 

Beth West, HS2 commercial director (pictured below), 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.”

When it comes to awarding contracts, HS2 plans to use the early contractor involvement (ECI) approach. According to the company, this contracting supports improved team working, innovation and planning to deliver 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, which is aimed at meeting HS2’s objectives and which leads to the agreement of a target price. Stage 2 covers the period of 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 the best way to see how we package in-cab and lineside 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 

Alistair Kirk, programme and strategy director at HS2 Ltd (pictured below), added that the company has spent considerable effort in detailing its overall delivery strategy for the programme and the organisational structure required to achieve success. In outline HS2 will adopt a matrix organisational structure, with delivery being executed through three key delivery business units: Development; Phase One 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.”

On top of this, Kirk stated that HS2 intends to establish a programme-wide approach to building information modelling (BIM) that establishes a “common flow of working to deliver maximum efficiencies and value for money” across the whole life of the programme.  

He stated that he prefers to call BIM building information management, 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”. 

West added that HS2 is carrying out work with regards to BIM, and is looking at how HS2 can help facilitate companies to use BIM. “We are looking at what we need to put into place as the framework for suppliers to use their own system,” she noted.

During the Q&A session, Kirby also confirmed that the signalling approach for HS2 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.”

(Images: c. HS2 Ltd) 

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