Parent company Ferrovial set to muscle in on UK market with £1.5bn Heathrow East project

BAA has delayed picking contractors for more than £9.5bn of airport projects until March next year, it has emerged.

This is 10 months later than expected and, by then, the nine firms chasing work on the airport operator’s framework will have been bidding for places for more than a year. Firms in the running include Laing O’Rourke, Balfour Beatty and Spanish group Ferrovial, which owns BAA.

Heathrow East

It is understood that the delay has been caused by a Civil Aviation Authority review into price controls at Heathrow and Gatwick.

Contractors have been told that the framework will not be appointed until the review is complete, but details of large individual projects are emerging.

It is understood that Laing O’Rourke and Ferrovial will share work on the £1.5bn Heathrow East building that is to replace Terminals 1 and 2 after Terminal 5 opens in March. This would be the first large project undertaken by the Spanish firm since it bought BAA in June last year.

Heathrow East was designed by Foster + Partners. Work is expected to start in 2009 and BAA hopes to open the first phase in time for the 2012 Olympics.

It is also believed that Balfour Beatty will build the £400m Midfield Pier that will connect Heathrow East to the rest of the airport.

Carillion announced last week that it had won a £300m contract to build the Terminal 5 satellite building, T5c.

A source close to the bidding process said: “BAA won’t make formal announcements, but more projects will be handed out before the end of the year.”

BAA first invited the contractors to bid to join its “complex projects framework” in January.

It was thought that BAA would announce the framework in May and, more recently, in November.

The nine contractors are Laing O’Rourke, Ferrovial, Carillion, Balfour Beatty, Skanska, Taylor Woodrow, Costain, Morgan Ashurst and Mace. All nine are expected to be on the framework, but will be awarded varying degrees of work. It is understood that the bulk will go to Laing O’Rourke, Ferrovial and Carillion.