Patrick Reynolds, Freelance Reporter
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Increased costs loomed as a growing risk for Crossrail before main construction contracts awards for the mega underground transportation scheme beneath the heart of London. TunnelTalk learned how a 'Project Assure' initiative reduced costs below the project's original £15.9 billion estimate. Andy Mitchell, Programme Director of the multi-billion project briefed Patrick Reynolds on how he spearheaded the process.
Crossrail Programme Director, Andy Mitchell
- In late 2009, Crossrail launched an initiative called 'Project Assure' to review design and construction plans for the multi-billion project. The initiative was born of a need to address urgently the related challenges of time and cost risk in light of the project already forecasting costs significantly more than the stated, and approved, budget of £15.9 billion.
- When completed, just before the fourth quarter of 2010, the Project Assure re-evaluation led by Andy Mitchell, who had joined Crossrail recently as Programme Director, helped resolve the risks via a combination of pushing back the opening date and cutting escalating costs. A range of options was presented to the Crossrail Sponsor Board of its principal client organisation, Transport for London (TfL), with the assurance that the changes could be achieved without blunt sacrificing of stations or other major infrastructure elements of a scheme that will see almost 42km of large diameter running tunnels and mined underground stations excavated below the streets of London.
- Early this year (2011), the result of the review announced. It confirmed that services would start towards the end of 2018, a full year later than previously planned, and that Crossrail also expects to close-out construction of the project at below £15 million. The re-programming delayed award of the main tunnel contract and required a later start for the first TBM, although otherwise the various tunnel drives are mostly unaffected in terms of number and duration (Fig 2).
Multi-billion project to transform rail travel through London
- But achieving these results was not an automatic, pre-planned outcome. Rather, the project was able to draw upon, and create the first major branded approach and at a larger scale, to some processes that were employed in other projects, large in themselves but smaller than Crossrail. And, timing was critical, said Mitchell. He explained he was able to lead the team to take on the challenge at a critical juncture, just before major contract procurement was set to escalate.
- From Crossrail's experience, he believes that the value-based review could offer benefits to other major projects.
- A key message he would pass on to other construction managers and engineers, is to look at using such a 'comprehensive cost review' (CCR) system. There can be notable benefits, he said, but it needs to be performed at the right time. Not too early but before construction starts. It needs also supportive project sponsors, but they should only stand to benefit not least from greater confidence in risks being reduced further.
Crossrail was not due to come into operation until 2017-18, as provided for under the Royal Assent granted in 2008. Much effort by then had been spent on initial design and planning across the huge scheme, but as Mitchell pointed out, "by late 2009 it was clear that design development was not maintaining the rate of progress needed to meet the opening deadline."
- "The programme became more challenging," he said. "There was a tendency for decisions to be time-based rather than value-based, and that focus on deadline was leading to increases in the cost of the scheme. By late 2009, shortly after I joined the leadership team, the estimated cost had reached nearly £17.8 billion – about 12% more than the budget figure."
- To address the alarming trend, preparations were made to use an uncommon project-based comprehensive cost review (CCR) process. Projects including the ThamesLink scheme in London, and WestRail in Hong Kong, had used similar processes but in Crossrail it would be adapted and formalised for larger-scale use with an extensive supply chain. As a result the CCR initiative was branded as Project Assure, to help ensure focus by all involved, which in effect was everyone.
Fig 2. At least seven TBMs will complete the underground railway beneath London and under the River Thames
- To pull together the project's web of activities, and provide a consistent and binding foundation for all parts of the project and its teams, a baseline was established. It consisted of five successive steps for which information was required – functionality, specification, design scope, time and cost. Mitchell notes that the process was "not cheap nor quick to do". Ensuring the five steps were aligned – and stayed that way – was vital to properly evaluating the stated project outcomes, or 'wants', against what was being learned about their costs in terms of money and time.
- Making sure the baseline steps were aligned was the differing aspect to conventional value engineering. But to keep the alignment was also to generate small and large iterations to revise assessments, which would become faster and be more efficient. As a result, the team could present the cost implications of various features or functionalities of the project to sponsors to ensure there was full awareness and acceptance of the costs, or evidence that change was needed.
- To help drive the process, and ensure the baseline steps remained aligned, Mitchell led weekly review meetings to check-off tasks, appreciate findings and allocate next steps. Each team was required to follow a common template for lodging and evaluating options, which were graded for potential value and likelihood of adoption, and included information on the chain of approval that would be required.
- "Those most likely and most valuable were prioritised, but eventually all items were either driven to successful conclusion or closed down," he said.
- The changes were vital to help overcome the risk of costs increasing in pursuit of a deadline that could prove increasing difficult to achieve, explained Mitchell.
- Coincidentally, the CCR process ran through the period when a General Election in the UK brought a change of government. It launched a new focus on costs across the nation under its own Comprehensive Spending Review (CSR), including support or not of many publicly funded projects. It also saw the procurement period for the first main tunnel contracts extended, but with Project Assure drawing to a close there were opportunities to further pursue cost savings by calling for contractor ideas and suggestions for construction sequence switching or bundling of contract bids.
- Following the first tunnel contract awards, the pursuit of yet further cost savings and efficiencies has continued through another idea-generating stage, in the Optimised Contractor Involvement (OCI) process.
- By early 2011, the Crossrail team was already on track to bring in the project at less than £15 billion, which is much less – almost £3 billion less - than the overrun level before the initiative, and is also approximately £1 billion below the original budget, so far.
- The Project Assure approach offers a tool to check costs versus function before a project moves into heavy construction contract commitments. Mitchell recommends it highly to other construction professionals.
UK Government backing for Crossrail - TunnelTalk, June 2010
Roll out of final tunnel contracts for Crossrail - TunnelTalk, March 2011
Scheduling for success at Crossrail - TunnelTalk, April 2011
Herrenknecht lands six central Crossrail TBMs - TunnelTalk, May 2011
Bids called for remaining Crossrail stations - TunnelTalk, April 2011
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