LONDON UNDERGROUND
London Underground has completely overhauled its relationship with the supply chain for its station upgrades, moving to a model dominated by SMEs and ‘craft’ suppliers rather than bigger companies. RTM got insight into the change from Gary Downie, LU’s head of station upgrades.
E
ngaging directly with the people actually doing the work – sounds a simple enough idea, doesn’t it?
But London Underground’s new Stake delivery model has grabbed a lot of industry attention, as well as being part of an HM Treasury Infrastructure UK initiative.
The ‘main contractor’ principle has been eliminated, cutting out sub-contractor layers from the supply chain.
Gary Downie, LU’s head of station upgrades, explained: “In the past London Underground used main contractors to deliver its programmes – the tier 1s and tier 2s. We had minimum contact with the people who were actually doing the work, because you tend to fi nd that the tier 1s and 2s don’t actually employ people to do the work, they just employ subcontractors.
“Under Stake, we’re now contracted with these tier 3 and 4 contractors – we’re engaging with the people who are actually doing the work, rather than with a third party.”
Risky business
LU is hoping to cut costs by up to 25%, and at least 12%. This is partly to do with taking on risk itself, rather than having main contractors pricing it in.
He said: “When the tier 1s and tier 2s give you a fi xed price, they tend to heavily load prices
90 | rail technology magazine Jun/Jul 14
‘A breath of fresh air which values our skill and knowledge’
LU’s programme director for stations, Miles Ashley, said: “Construction supply chains have become multi-tiered and fragmented, and it could be said that the industry has lost sight of the importance of craft skills in delivering effi ciently.
“Great craftsmanship is the key to the success of any infrastructure project, and our Stake approach allows long-term engagement with the people at the workface and recognises that they are the most valuable part of our team.”
One supplier, Alex Morrissey, director of tiling contractor DMC, said: “Stake is opening up opportunities to value engineer and innovate in ways that weren’t possible under conven- tional sub-contracting arrangements. It’s a breath of fresh air which values our skill and knowledge.”
The key principles of Stake are: engaging with the SME contractors who actually do the work on-site; simplifi ed contract arrangements with LU taking the majority of the risk; giving a long-term commitment to suppliers; having competent and capable resources; creating a ‘one team’ approach; and ‘production leads, everything else enables’.
with risk. [But it’s now] on a cost reimbursable basis, on a target cost, so we’ve actually taken on all of the risk.
“We’re also hoping to get a lot more input from the tier 3s and 4s into the planning of the work, and also to get some of their innovation coming into the work. We’re managing those people directly on site now.”
Culture change
It was piloted at Embankment, and Downie admitted there was a “culture change” for both LU as client and the contractors. LU adopted DS Consulting’s ‘Collaborative Planning’
methodology. The Embankment refurbishment shows the idea works, LU says.
“It’s a completely different model, and very much an open book and cost-free job. It’s also about longevity. We’ve got a seven-year programme, so the Stake contractors have a seven-year look ahead, which they’ve never had in their business before.
“That’s a big plus for them, so they can now look at engaging their employees by putting training in place. It’s not feast or famine, and we’ve got continuity of workforce all of the way through, so we’ve got named people working on the job – they’re not bidding for the job every
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