Written by Trevor Morton
Europe’s largest ever single civil engineering project, Crossrail carries just as much risk as it does opportunity. Trevor Morton gets to grips with its ERM approach to dealing with those risks
Those who commute by train and/or underground into and around Central London, the City, Docklands, and now the newly-invigorated, post-Olympic east London, are no strangers to risk. As regular travellers know, on any given day, a number of well-classified risks in their own right can occur. Signal failures, network congestion, breakdowns and station closures often conspire against commuters, and most days it can be a relief just to get a seat. Eighty per cent of the capital’s commuters travelling in, out and around London do so on rails. It is a transport system that, at peak times, is arguably in overload, with many considering it as a detractor to investing or working in London.
So it was that in July 2008, London’s stoic travelling public were granted some hope of relief when Parliament finally gave its approval and the Crossrail Act was passed. The outcome is by any measure, an epic civil engineering project due for completion in 2018. Two major railway tunnels are being bored, crossing the heart of the capital. Major projects in their own right, the construction of six new labyrinthine stations below street level is underway. Factor in a multitude of projects to neatly integrate the new with the existing infrastructure on the train and tube network, plus the creation of the support facilities required and you have a complex programme of gargantuan proportions. On completion, Crossrail will link Maidenhead, Heathrow Airport, and Hillingdon to the west, through Central London and out to Shenfield and Abbey Wood in the east. Following this, the central section will integrate with the existing national rail network serving a further 37 stations.
Enabling a 10 per cent increase in network capacity, which will bring a further 1.5 million people within a 45 minute commute of London’s key business districts will require Europe’s largest single civil engineering project to date. The delivery of a joined-up railway set to benefit the whole of London and the South East falls to Crossrail, a wholly-owned subsidiary of Transport for London. Joint sponsors include Transport for London and the Department for Transport who, with others, will stump up a staggering £14.8 billion. As if bequeathed to the current administration by a Labour Party in terminal decline, the Crossrail project might have been mistaken for a poison chalice. Given the litany of disastrous public sector projects in the preceding decade, one could be forgiven for thinking the inevitable. With the civil engineering sector well versed in post-contractual renegotiation of fees and timescales, coupled with the near calamitous tunnelling incident just a few miles away at Heathrow, the scale of the commercial and technical risk is enormous for Crossrail.
Tunnelling on such a scale, let alone under the capital city, is not without risk as recent history shows. It is only 18 years since London Heathrow narrowly avoided catastrophe. On the night of 20 October 1994, a major construction project to build the Heathrow Express rail link was abruptly halted when a tunnel under construction collapsed. Miraculously, no one was hurt. The following 48 hours saw the collapse of two further tunnels bringing Heathrow Terminals 1, 2 and 3 near to the brink of closure. A systemic failure in the application of the New Austrian Tunnelling Method (NATM) under Heathrow airport resulted in a six months delay to the Jubilee Line extension project underway elsewhere across London. The resulting costs were estimated at around £15m.
The collapse at Heathrow is on record as one of the UK’s worst civil engineering disasters in quarter of a century. It severely delayed the £500m Piccadilly Line extension for which Balfour Beatty and its Austrian advisers were fined £1.2m and £500,000 respectively for its inappropriate tunnelling methods and blatant cost-cutting. Kevin Myers, the Heath and Safety Executive’s chief inspector of construction at the time, said human errors were a result of “foreseeable organisational failures”. According to Myers: “The collapses could have been prevented but for a cultural mindset which focused attention on the apparent economies and the need for production. Other warnings of the approaching collapse, which were present from an early stage, went unrecognised.”
So how has the risk landscape changed for twenty first century civil engineering? According to Simon Burtonshaw-Gunn, professor and divisional leader of industrial management at the University of Northampton, contracts have, in the past been “driven by cost, given the relatively small number of large civil engineering companies competing for the equally small number of big-ticket contracts”. Factor in compulsory competitive tendering (CCT), the kudos of prestigious contracts, the business imperative to win-at-all-costs, and quality inevitably begins to suffer. Pressure to achieve the “lowest-cost bid” is passed on to the subcontractors that make up the typical civil engineering supply chain.
The Heathrow Airport disaster of 1994 is a classic example of this. “Traditional procurement systems and the contractual and legal framework by which participants are bound together have been widely and regularly criticised as being confrontational and adversarial,” says Burtonshaw-Gunn.
Currently in the process of excavating some 4.5 million tonnes of earth to create the 13 miles (21km) of tunnels, Londoners living above the routes will be relieved to know that Crossrail’s approach to risk marks a sea change now taking place in the construction industry. The nature of Crossrail’s tunnelling and heavy civil engineering works means that insurance and risk management functions are very closely aligned. Crossrail is required to comply with the Joint Code of Practice for Tunnelling Projects that demands that risk management is embedded throughout the organisation, including contractors who are actually carrying out the works.
Rob Halstead, head of risk management at Crossrail, explains the complexity involved and the importance placed on effective risk management to ensure successful project delivery: “From the outset, those leading the Crossrail project recognised that managing the complexity and extent of the technical and commercial risk was critical to its success.
“A single page policy statement drafted by the CEO was unequivocal about the role of risk management in the new venture. It set the tone and got people on board,” he says.
From the outset in 2009, the vision was to create an integrated enterprise-wide risk management system that would eventually be used by all partners to support the delivery phase. With the benefit of starting from a blank canvas, and to a tight schedule, Halstead and his team delivered and embedded a system that supports a shared approach to risk management within a 12 month window. Instrumental to the approach was emphasis on the design phase which was undertaken without any preconceptions or constraints of the software that would eventually be used.
“We looked to consistency in the approach to risk management with an emphasis always on best practice,” he explains. “For our implementation of enterprise risk management platform, we focused on effective use of core functionality avoiding any unnecessary innovation. We saw that simply using more and more functions of the software was
Following selection and procurement of an enterprise risk management software suite from risk software provider Active Risk, the work carried out in the design phase enabled implementation and deployment to be completed within four months. For the subsequent task of embedding of risk management, an equally ambitious but necessary target was set. With clear objectives, effective communication and high levels of commitment, the goal was achieved within the 12 months. This achievement was recognised by the senior management team as well as independent third parties engaged to monitor the project’s development. With a relatively small team of risk professionals in place, well-defined processes and the ERM platform online across the organisation, risk management seems firmly embedded at Crossrail. Further, ERM reporting is integrated and consistent with other management reporting.
Sharing the load
Three years on, and Crossrail’s requirements for an enterprise risk management approach are not confined to itself and its immediate partners. With the project now in the main construction phase and reliant on the supply chain to deliver the physical works, Crossrail requires its Tier 1 contractors to implement the same approach, to ensure that risk management is effectively implemented and to facilitate the sharing of risk information between the parties. Delivery of the programme includes a supply chain made up of lead consortia consisting of Bechtel with Halcrow and Systra. Programme partners include CH2MHill, Nichols and Aecom with support from Turner Townsend. Crossrail’s Halstead sees a shared ERM system as a way of reaching out to the supply chain and improving the engagement between the parties. “The take up of the ERM system within Crossrail and by the supply chain partners is witness to the commitment to manage risks and to achieve objectives” he explains. “The culture at Crossrail supports risk management, emphasising the values of simplicity, accountability and openness. Risk is routinely considered at every level of the organisation as part of normal business. The risk management process has been designed to deal with the complex technical challenges that a construction project on this scale faces and yet is simple and flexible enough to gain widespread acceptance.”
The contrast between the 1994 approach to grand projects and 2012 is best summed up by Andrew Wolstenholme, Crossrail’s CEO. “When we take on a supplier [at Crossrail] we look at 60 per cent of the score going towards the people, process, the organisation, the quality side, the risk management side and 40 per cent going towards the commercial side. The types of organisations that we want to work with are those that can demonstrate, that on a programme the size and scale of Crossrail, that they can actually manage and lead their risk process through every phase of the programme through to successful completion.”
The stakes are indeed high, but an embedded risk approach could very well see the train arriving on time, and in tact. And for the travelling public of London and the South East, this risk approach may mean that long-awaited relief could well be in the pipeline.