In his drab autumn statement at the end of November, with its forlorn outlook for the UK economy, Chancellor of the Exchequer, George Osborne, gave more weight to how support for economic activity could come from accelerating major spending, as on construction projects.

Few projects in Britain come bigger these days than the Crossrail scheme in London. However, there is likely no traction to be had by attempting to speed-up this scheme, which has already won significant benefits on cost and schedule from extensive value management scrutiny.

An integrated review – called ‘Project Assure’ – led to a cumulative saving of almost GBP 1bn (USD 1.56bn) from the official budget, which was going to be bust anyway by more than GBP 2bn (USD 3.13bn), so the savings were even greater. The opening date was delayed by a year to 2018.

Crossrail programme director Andy Mitchell led the Project Assure initiative. While observing that the process was neither ‘cheap nor quick to do’, and advocating the benefits to be won from reviewing the cost to achieve perceived value in project features, he cautions that there is a window of opportunity to perform the task. Do it too early and the benefit is not secured. “You can clear barnacles too early and they regrow,” he says.

But once main construction procurement takes off, it’s too late, he adds. The key is to have sufficiently developed design data for a rapid and meticulous squaring of costs against perceived value in the eye of sponsors and funders. Based on data, they will judge the acceptability of the cost. On Crossrail, the incremental process allowed overall costs to come down, and the programme to be stretched, without swinging a blunt axe to large project features. No stations or branch lines were lost.

The leaner budget plus firmed-up schedule for Crossrail now appears far too locked-in to hold potential for absorbing extra budget, or accelerated spending, especially as the project is well advanced. In approximately six months, the first TBM is due to be launched at Royal Oak Portal in west London. Station excavations are progressing well across the capital – at Canary Wharf the construction of the box structure is almost complete.

While there may not be leeway on Crossrail to gain much from late changes and upset, Project Assure has shown that it is not necessarily too late for value-thinking on large live projects. That success could make a difference elsewhere, not least in a more austere climate where the proof of value-for-money will be more hotly pursued, especially where fresh funding is potentially available.

Climbing costs
When Crossrail achieved Royal Assent in 2005 the plan expected mainline trains to start running through the scheme’s 42km of tunnels by 2017. However, in late 2009 the pursuit of that timeline was inflating costs on the public-private scheme, which had an official budget of around USD 15.9bn.

The schedule was reliant on an assumed rate of progress in design development being met, explains Mitchell who joined the leadership team in 2009. He says the rate of progress did not happen.

Because the programme became more challenging, and as a result there was a tendency for decisions to be time-based rather than value-based. “Increasingly, the effort was to try and hold the schedule,” he adds.

But the focus on maintaining the opening deadline was leading to escalating costs. Mitchell says that by late 2009, shortly after he joined, the estimated cost had increased to GBP 17.8bn (USD 27.8bn) – 12 per cent more than the official figure. The design was not finished and procurement for construction had not started.

Quickly, he worked with the senior management team to pull the supply chain together for an internal ‘comprehensive cost review’ (CCR). The initiative was branded ‘Project Assure’.

Project Assure
The core idea of Project Assure was to create an opportunity, and an insistence, says Mitchell, to ask: Before we commit to a big spend, are we really sure?

Crossrail’s cost-value initiative was not quite a first-of-its kind. Similar processes had been employed on ThamesLink in London and WestRail in Hong Kong, says Mitchell. But this was the biggest, most formal and extensive effort yet. Given the scale, the branded focus was important for communication.

A baseline was needed for the huge task, a way of holding the efforts of the web of organisations involved and the data being generated in a co-ordinated manner. This reference bar would consist of five successive steps of enquiry on the various features of the project – their functionality, specification, design scope, time and cost.

“But these five steps had to be kept aligned, ensuring the data on the different project features stayed linked and matched. This need for alignment within features, and across the project, is what makes the system different to standard value engineering,” says Mitchell. He adds that trying to do value management without the alignment would be ‘hellish hard’.

As data came in there were constant iterations of assessment until the numbers firmed on various features and those most likely, or most valuable, were prioritised. They were all checked with sponsors to get the thumbs up – all steps are fine, including cost – or thumbs down – which meant the cost were too much and so the values of the other steps, such as functionality, need to be changed until approval was gained.

“But this can’t be done early,” says Mitchell. “A sufficient breadth and depth of design data is required.”

To drive the process, he led weekly review meetings that ticked off what had been done and issued the next tasks. The teams working on tasks used common templates to lodge and evaluate options, grade them in terms of potential value and also how likely it was they might be adopted. In addition, note was taken of the approval hierarchy for possible changes.

Project Assure also had a risk register in operation, using risk analysis to help cut down on scheduling problems.

The main effort of the initiative ran from late 2009 through to the end of the third quarter of 2010. The rescheduling followed this period of work, and by early this year the Crossrail team was on track – with procurement still underway – to have the budget come in at less than GBP 15bn (USD 23.5bn).

The Crossrail team hopes to deliver for a lower cost still, and notes the Government expects the project to cost no more than GBP 14.5bn (USD 22.7bn), as announced in last year’s Comprehensive Spending Review (CSR) and repeated in its annual update on Crossrail for Parliament in July. There is, though, a ‘funding envelope’ of GBP 14.8bn (USD 23.14bn) agreed following the CSR, notes Crossrail.

Further savings – OCI
With the Government’s CSR underway in the latter stages of the Project Assure process, and the hiatus meantime until its future was confirmed, the Crossrail team extended by some months the procurement period for the first main tunnelling contracts. That period and the negotiations on submitted bids also gave rise to further pursuit of cost savings, including suggestions for changing the sequence of construction and also bundling bids.

From the numbers of large JVs in the prequalification stage – “which allowed for flexibility in our approach to bundling,” adds Mitchell – there was a shift on the west tunnels to an approach pitched by a couple of bidders. They suggested a sequence switch to bore with TBMs first and then breakout for station construction; there were also bundled offers for combining tunnel and station works.

The combination was picked in the west, says Mitchell, but adds, “Even that could have been tough to do if we didn’t have a schedule we could believe in.’ Project Assure had delivered on that front.

Yet another stage of pursuing opportunities for saving costs as well as gaining greater efficiencies was created under the ‘Optimised Contractor Involvement’ (OCI) process in the 90 days after each contract award.

This is another attempt at refining plans and costs with ‘all good ideas on the table’, says Mitchell. Many different opportunities have been identified but some general themes have emerged: improving constructability, collaboration on common scope, improving contract interfaces, logistics, optimising the balance of temporary and permanent works, and also rationalising requirements.

Mitchell cited examples of the good ideas that emerged as including changes to shaft locations, using different materials and changing the construction sequence. He adds that some ideas have impact on more than one contract. Having started with 300 ‘good ideas’ under OCI from the first tunnel contracts, he expects that once all the station contracts are awarded, the total will be approaching 1,000, and which will be whittled to the best.

An example of constructability is given as the enlargement sequence for the station platform tunnels for Liverpool Street and Whitechapel stations, on Contract 510 (C510). The original plan was for rapid enlargement in a confined space but the proposed new method is gradual enlargement to allow for ‘safer, more cost effective construction,’ says the Crossrail team.

On optimising the balance of temporary and permanent works, Crossrail cites a move made at Bond St station to regain time for the programme: a temporary shaft was sunk to allow SCL works to begin without waiting for access following completion of the delayed eastern ticket hall.

Within contracts, the value engineering clauses urge effort to continue beyond the initial OCI phase, and there is also the motivation of the 50-50 pain-gain share on the target price contracts. Elsewhere in the project, key lessons won from the OCI phases will be used on the remaining contracts, notably improved constructability and logistics, says the Crossrail team.

Beyond Crossrail an approach like Project Assure could see major benefits won – if done at the right time, early in the construction phase says Mitchell. As long as it is not too early.

Crossrail programme director, Andy Mitchell Preparation of tunnel eyes at Royal Oak Park portal, west London, for the first TBMs on Crossrail