CWC’s integrated cost management software keeps its accounts in order. Commercial director Ian Ferguson explains how it works
No business wants an unexpected bill or rocketing costs throwing out its budgets. The executive who makes sure that doesn’t happen to Canary Wharf Contractors is commercial director Ian Ferguson. He is charged with cost planning and monitoring, as well as administering payments to hundreds of trade contractors and suppliers.
He says the systems in use at CWC stem from the second phase of construction, when the company started to develop in-house pricing expertise. “When Canary Wharf came out of administration in 1993, the first of the new buildings required cost planning advice from outside cost consultants in order to establish the market view,” he says. “There quickly came a point when CWC felt it had sufficient feedback to establish costs more quickly and accurately in house.”
CWC’s cost planning procedures involve considering alternative designs as well as how they are phased and sequenced, together with undertaking comparative cost exercises for different construction methods. Advice is also sought from the contractor’s specialists in building services, structures and architectural elements to fully understand the scheme. Their expertise is absorbed to create realistic budgets.
Under Ferguson’s guidance, CWC has developed procurement and post-contract financial requirements that are employed on every project. Computer programs have also been developed, resulting in the creation of an integrated cost management system, dubbed “C3” (construction cost control).
Ferguson explains: “Because we decided on a construction management approach, where contracts are awarded directly with trade contractors and suppliers, we had to have a computerised system capable of handling the large volume of contract administration, including payments and change control”.
C3 allows CWC to manage the placement and outturn costs of trade contracts against the budget figures and tracks ongoing payments via a sophisticated tool that incorporates interim valuations. The system also offers financial reporting ranging from full details to one-line project summaries of budgets, commitments, pending commitments, future estimates and actual expenditure. It even generates the sign-off paperwork for variations and trade contractor valuations.
Elements of the program can be seen in systems used by other contractors but it all started at Canary Wharf
“Due to the number of trade contractors involved, we wanted to ensure consistency of documentation and cost control for both internal reporting and audit requirements,” says Ferguson. “The system, which forms part of the terms of the contract with the trade contractors and suppliers, allowed us to achieve this.”
Additionally, C3 can provide detailed cost information for external funding organisations and monitor changes to the project made by a tenant.
Ferguson adds: “Elements of C3 can be seen in a variety of similar systems used by other contractors, but it all started here at Canary Wharf. Without such a system, we could not have controlled the construction costs to the extent required.”
With an eye to the future, Ferguson says the system can be easily used by other clients and on other forms of development. CWC is currently working on a web-based version of C3 in preparation for future construction projects outside the wharf.
“It can be made as simple or as complex as the client wants.” And Ferguson is in a better position than most to know what clients want. His 30 years as a quantity surveyor include 13 years at the wharf as well as stints on the Petronas Towers in Kuala Lumpur, residential schemes, hotels, civil engineering projects, pharmaceutical works, refurbishment contracts and theme parks.
He says: “I suppose I have experienced all there is to do on major mixed commercial and retail projects, certainly in respect of the key financial issues such as budgeting, procurement and post-contract control, including negotiations with clients, consultants and contractors. I have been very fortunate to be involved in such a wonderful landmark and I look forward to completing the remaining development and getting involved in other developments outside the wharf.”
WHARFpeople - Brian Payne
Brian Payne joined Canary Wharf Contractors in 1997 as one of three quantity surveyors seconded from a cost consultant to help organise and run the procurement and post-contract administration on shell-and-core trade packages. He specialises in cost management of mechanical and electrical services and for his first job at the wharf – building an extension to One Cabot Square – he was right in the thick of the action. “It was quite an experience to have an hour each day of vibration as the additional piles were sunk through the basement,” he says. “After this, the site office was relocated to a barge anchored on the dockside – again a first for me.”
His next task was placement of the trade contracts for all the M&E services on the 46-storey 25 Canada Square tower. He performed the same duties on the 32-storey building at 10 Upper Bank Street. During this period, he teamed up with commercial director Ian Ferguson to procure the M&E services for four buildings at Heron Quays.
For the past three years, Payne has devoted most of his time to cost planning but he still likes to keep in touch with the trade contracts. “Alongside my cost planning role, I still maintain certain services contracts from post-contract stage through to final account, which helps to keep me in touch with current trends and now includes various packages on the refurbishment of 30 South Colonnade to accommodate Reuters,” he says. “We have changed and supplemented the cooling towers, added chillers and refurbished the existing shell-and-core services to give additional life and added essential cooling to the rotary UPS [uninterruptible power supply] generator rooms.”
Payne says his eight years on the wharf have been “enormously interesting because the work goes beyond office projects and involves modern services technology”. And he can’t wait for more: “Roll on the next project.”
WHARFpeople - Stanley Fields
Stanley Fields is never going to get bored at work. Together with his colleagues Brian Payne and Francis Cheung, he provides cost planning on a vast range of architectural and engineering projects. Fields says: “Being a small team, life can be pretty demanding and there is always plenty of variety, with projects from a 200,000 m2 development to the reconfiguration of an entrance lobby or a minor landscape scheme.”
At the height of the Canary Wharf development, Fields was working on cost planning for offices with a lettable area of 500,000 m2, two winter gardens, a retail mall, a DLR station refurbishment, bridges, parks and associated infrastructure.
He has also been involved in some unusual landscaping schemes. These have included coloured gravel, trees to disguise a concrete deck, moveable mesh curtains, suspended pods and lily pad-shaped terraces with basket balconies.
Before coming to the wharf five years ago, Fields spent more than 30 years as a quantity surveyor in the UK and abroad. “When I joined the company, I was given the opportunity to develop a cost planning function that allowed me to participate in the early stages of the design process and influence design decisions, hopefully to the benefit of the project,” he says.
“Through our long-standing connections and excellent relations with specialist contractors, we are able to call on their expertise to assist us in the budgeting process and suggest appropriate buildability solutions to the proposed design. All our cost plans need to be as thoroughly detailed as possible to stand up to scrutiny.
“The presentation and agreement of the completed documents is an important part of the process and we strive to at least match the standard of those produced by an external consultant.”
And the work isn’t going to let up any time soon. “There is still a considerable amount of development [in excess of 600,00 m2] to complete on the wharf,” he says. “This includes the proposed new Crossrail station and associated infrastructure for which cost plans or feasibility studies have already been completed. Then there is the work off the wharf such as Wood Wharf and projects further afield.“These projects will keep the cost planning team busy for the foreseeable future.”