London Heathrow Terminal 5

London Heathrow Terminal 5

Executive Summary

This paper takes as its starting point the fact that complex projects, interpreted as multiple dependent interactions between many stakeholders over time, challenge traditional procurement practices based on the serial purchase of discrete components. The paper examines how the procurement management of such projects - procuring complex performance - can be conducted. The paper utilises contrasting case study example of high-profile UK construction project procurement. We will study London Heathrow Terminal 5 in a great details.

London Heathrow Terminal 5

Introduction

Recent scholarship, galvanised by the influence of Turner (1999)work on service logic and environmentally grounded work such as Mont (2004), has begun to question the manufacturing bias and inheritance in many approaches to services. As the economy is increasingly servitized(Levy 2000), the work of business-to-business procurement professionals is increasingly characterised by purchasing a combination of product and service. One example of this phenomenon is the blurring of traditional boundaries of ownership, design and post-construction performance in major construction projects. This development in part at least reflects previous disappointments with traditional 'design construct and hand over' to the client models, where the construction team takes no responsibility for post-construction performance, ease of use and flexibility (Baden-Hellard 1995).

The contractual forms that are emerging to support this newly 'servitized' construction model must incentivise the construction industry to provide new levels of service, for example innovative environmental practices, ease of maintenance, flexibility once in use, and ease of ultimate disposal. The client must, in effect, procure complex performance (as opposed to a complex building), clients increasingly value the 'in use value' of the building or infrastructure over the bricks and mortar construction.

The construction industry then is a good sector to study how clients are procuring complex performance (PCP). PCP has been defined byCooke & (2009) in terms of a matrix comparing high and low transactional complexity, versus high and low infrastructural complexity. This is a helpful meta-analysis, but the concern of this paper is with the practices that make up procuring complex performance. The overall aim is to understand the practices that compose PCP in major construction projects that are also product-service systems. Therefore given that procurement is relatively well accepted as professional purchasing, and performance from above indicates a product and a service being bought in combination, our focus here is on an initial working definition of the complex part of PCP. In line with, for example, (Raferty 1994) definition of technological complexity we see complexity in this context as being that which prevents the buyer from simply buying discrete components (including service systems) and combining them together - i.e. the task cannot be accomplished by the serial and additive transaction mode of traditional (manufacturing) procurement. (Lock 2006)

To explore this issue of procuring for complex performance, the paper take the design and construction phases (therefore excluding the operation phase) of complex construction product-service systems, located in the UK. The project is the construction and delivery to the client operator of a new terminal at London Heathrow ...