HS2 and Heathrow Terminal 5: A case study on Project Management influence

Updated: Jul 27


Introduction


Construction projects can vary from very small local magnitude to large national dimensions with inherent features that make them complicated enterprises to run (e.g.HS2) characterised by high levels of complexity, uniqueness of works, uncertainty and extensive planning. Hereafter comes the role of the project manager which is responsible for the development and delivery of a project to the client’s requirements and specifications.


As an established discipline, management of whole projects from client’s idea to funding coordination, project managers (PM) have the responsibility of control and delivery of the procurement, production, administration, design, construction and personnel management of projects. As defined by the Construction Industry Council (CIC) the primary purpose of project management is to add significant and specific value to the process of delivering construction projects (CIOB, 2014).


London Heathrow Terminal 5, UK


The BAA Heathrow Terminal 5 (T5) was designed to add 50% to the capacity of Heathrow and has been described as a complex multidisciplinary project with a peak monthly spend of £80 million. Completed in 2008, T5 used an innovative legal contract, the ‘T5 Agreement’ which in essence was a cost-reimbursable form of contract in which suppliers’ profits were ring-fenced and the client retains all the risk (Potts, 2008).


By moving away from a lump-sum contract, BAA payments to contractors were based on meeting milestones set in that agreement as well as financial rewards of success due to project finishing on time and within budget was shared. Furthermore, by prioritising time and quality over cost, BAA decided to cover the costs when contractors made mistakes with the aim that they would be much more likely to own up quickly to the mistake and hence save money and time since all the risk was on the client’s side.


The philosophy of this project was found successful since T5 finished on time and under the agreed budget (Potts, 2008).


Further Reading


High Speed 2, UK



On the other hand, High Speed 2 has a less successful story. From an original budget of £32.7 billion set in 2012, current speculations of the Oakervee review expects the cost to be around £106 billion as shown in Figure below (Pratley, 2020).


The Oakervee review stresses the need for altering the procurement and contracting model used to cut cost as well as reflect on ways to improve cost estimates at early stages where a better evaluation of cost and time should be considered (Oakervee, 2019).