BAA rejects T5 agreement for T5c

Under the “T5 agreement”, airport operator BAA took financial risk away from its suppliers and on to itself, which allowed it to promote team working and have greater logistical control.

The successful completion of the £4.3bn Terminal 5, which is set to open on time and on budget on 28 March, is thought to have been largely owing to BAA’s willingness to take on risk and play a central role in managing the building’s construction.

However, BAA has decided not to use the agreement on its first major construction project after T5’s completion – the £300m “T5c”. This will be seen as a move away from the ground-breaking procurement approach crafted by company.

A source close to the project said the exact form of contract BAA would use had not been decided yet, but said more risk would be placed on the contractor than was the case at T5, and that it was likely to be a lump sum arrangement. He said: “BAA wants some accountability from its contractors. I’d be very surprised if it used something like construction management as it would be taking on all the risk again.”

This news comes weeks after it emerged that BAA would be making up to 200 redundancies in its construction projects division at the end of January.

BAA wants some accountability from contractors instead of taking all the risk source close to baa

In an interview to be published in Building next week, Andrew Wolstenholme, BAA’s construction director, said it would use a “where the cap fits” approach to procurement from now on.

He said: “What we’re doing with the next generation of frameworks is picking out the learning from T5 and acknowledging that one cap doesn’t fit all our projects.

“The projects will be run very much in a T5 style, and we will handle risk in appropriately different ways.”

T5c, T5’s second satellite, will be built by Carillion and will be the first large project taken on by BAA’s third generation of framework contractors.

Groundwork contractors are already on site, with completion anticipated for 2010. It will be a similar size to existing satellite building T5b, which is 442m long and has 17 departure gates.