Heathrow uses single procurement work plan to manage T2 contracts

Gurjit Degun
2 December 2013

Heathrow Aiport has used a single procurement plan across its business to leverage its position and help it understand every contract while building terminal two (T2).

That’s according to Ian Ballentine who spoke to CIPS Fellows before a private tour of the new terminal, which is due to open in spring next year. Construction work on the new terminal began in July 2010, and the old building was demolished in November 2010. It forms part of a wider project to redevelop all the old terminal buildings at the London airport.

He explained the single procurement plan across the business helped the team run a report at any stage of the project and understand every contract linked with T2.

Ballentine said: “We can understand the risks, when it’s being delivered, who’s delivering it and we could link it up into the T2 wider [project] plan so that we could see when they are expecting things to happen to make sure when the contracts are appearing, understand the risks if they overrun, and whether we’ve got that built into the plan.”

He explained the team had a “quite complex” strategy because there were so many factors to consider. These not only included working within a budget but also understanding many types of governance, such as procurement strategy and risk, and meeting key milestones. The team also had to take into account Heathrow’s business objectives such as sustainability targets.

Ballentine said when it came to sourcing goods and services at T2, there were two options.

He told the Fellows: “For the things that we needed to procure, do they need sourcing? Or do we have a contract in place that we can use as it is or we can revise slightly? So this was where we try and use what we’ve got and leverage our position.”

For example, the team decided to go out to the market for a new cleaning contract because of the timescale. “We understood the risks and the plan, we also know how we will build it back into the wider procurement process.”

Chris Elliott, acquisition director at Heathrow, added the biggest challenge has been to make sure businesses in the supply chain were being paid on time.

“The macroeconomic times put a lot of pressure on the small-to-medium businesses that might operate in tier two or tier three of the supply chain, so very much we and our tier one partners have to make sure that payments flow down to ensure that we’re managing risk from a supply perspective. Something that happens on T3 for example could impact on T2 in terms of supply being stretched and creating a risk.”

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