Heathrow R3 aims for construction sector legacy

At the launch of Heathrow’s plan to establish logistics hubs around the UK, the Airport stated its intention to grow sustainably and in doing so to provide jobs growth for the whole of the UK, and a productivity revolution in the UK construction sector.

John Holland-Kaye, Heahrow’s CEO said that the new runway would help add 40 direct long haul routes, which he said would be “transformational for the whole UK in a World beyond the EU”. More than that, the Airport wants to help world-leading business clusters evolve in locations around the country in areas such as offsite manufacturing which would be a legacy left behind after the new runway and associated facilities are built.

In what would be a welcome shake-up of the UK construction industry, the £16bn expansion will, hopes the Airport, revolutionise the way Britain builds major infrastructure.

Heathrow CEO John Holland-Kaye announced that the airport would be making a major push to support more off-site construction in the UK as it begins to deliver its expansion plans for Britain –  a move designed to boost productivity and help rebalance the economy.  The announcement comes as new research from economic consultancy WPI Economics revealed  growth in the sector could lead to a £15bn boost for the construction industry outside London by 2020.

Speaking to council leaders and representatives from the construction industry, Heathrow kicked-off the hunt for four UK sites to host the new off-site logistics hubs which will help deliver its expansion programme and drive growth across Britain.

Heathrow’s new logistics hubs will pre-assemble components of the expanded airport before transporting them in consolidated loads to Heathrow. By not building everything on-site at one of the world’s busiest airports, the logistics hub will play a key role in supporting the project’s efficient delivery, will make the project more affordable and will reduce emissions by transporting assembled components to site in fewer lorries. The new logistics hubs will also spread the jobs created from the project across more communities.

While off-site construction has enjoyed some success in the construction of homes – reducing costs by up to 25% and speeding up project delivery by 30% – the approach has had a limited role supporting major infrastructure projects. With Heathrow expansion set to be one of Britain’s largest infrastructure projects, the airport is aiming to drive a step-change in Britain’s construction industry and give Britain a leading-edge in an untapped new sector that can then be leveraged to support other major projects around the world.

Heathrow CEO John Holland-Kaye said: “The global construction industry is set to be worth £15 trillion by 2025 – that’s a huge prize that Britain deserves a bigger share of and Heathrow can help.

“We want to use Heathrow expansion to not only upgrade Britain’s infrastructure, but cultivate a new world-leading sector and drive growth across the whole country. Boosting off-site construction will help make expansion more affordable and environmentally friendly and give Britain a lasting legacy of expertise that it can sell around the world – helping Britain lead the pack in global construction.”

Matthew Oakley, Director at WPI Economics, said that the UK construction sector has shown reticence in adopting offsite construction methods, and that its productivity improvement lags way behind manufacturing. He explained that their research and modelling indicated that the sector could grow by £15bn by 2020, an increase of 15%, if Heathrow’s procurement of a third runway could help produce a shift from the current 10% of UK construction using offsite manufacturing to around 25%.

In siting the logistics hubs around the UK, Heathrow aims to encourage clusters of offsite focussed businesses located around them supplying the various manufactured materials for assemply and transportation to Heathrow. This should assist the even spreading of the economic benefits of R3’s construction much more effectively than if all material’s were simply delivered direct to the expansion site.

Another benefit to shifting the assembly work of construction materials away from the Airport would be a reduction in the number of onsite workers required. Phil Wilbraham, Expansion Programme Director at Heathrow explained that the peak labour requirement for the construction of T2 was 8,000, while that for R3 is forecast to be 14,000 if the same construction methods are used. That would clearly provide a number of problems, not least the congestion that would be produced around the site. That clearly cannot happen.

Kevin Rowan from the TUC highlighted the safety benefits. Offsite manufacturing larely removes the risk of fall from height accidents, one of the key killers in UK cosntruction.

The event sought to interest as many locations as possible in bidding to host a logistics hub, and given the audience of around 150  local leaders from around the UK, there is significant interest. The Airport said that the successful bidders would be able to create a lasting economic shift in their locality – including a change in skills development in the talent pool. The scale and enthusiasm of the audience would suggest they will have plenty of choice.

Don Ward, of Constructing Excellence, who some time ago piltoed a construction logistics centre for London in Bermondsey, said that even now there were no “formulaic models” to use to establish such logistics hubs.

It’s not just Heathrow that would benefit. If the Airport’s approach is successful, then other mega-projects such as HS2, Old Oak, or Crossrail 2, would be able to use the learning and improve their delivery. John Holland-Kaye described how David Blunkett, while chairing the Heathrow Skills Task Force, pulled together the chairs of these large projects to talk about when and where the various skills would be needed for their delivery, and how those skills needs could be met.

There are tensions. The UK’s current construction supply chain is, according to the recent Farmer Report, not fit for such a collaborative purpose. Some of the questions in the debate came from concern over competition, and current business models. There is a willingness to change the model at Heathrow. Phil Wilbraham taked about contracts which incentivise collaboration and move away from the traditional tier one, tier two, tier three model. This will need to be done well to generate the desire in the industry to change – without incentive, it will remain the same.

The programme is now open for Expressions of Interest, and the Airport hopes to publish a longlist of potential locations in 2018.

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