Airport body will prioritise firms in good financial health when handing out contracts for third runway
The man in charge of Heathrow’s £14bn deal to build a third runway has admitted the collapse of Carillion last year has made the airport redouble efforts to make sure it works only with firms that have healthy balance sheets.
The country’s second-largest contractor sank a year ago this week, ushering in a year of upheaval at some of the country’s biggest firms. Both Kier and Galliford Try have had to launch rights issues while Interserve admitted last month it was in talks about a second rescue package in less than nine months.
Meanwhile the country’s biggest private contractor, Laing O’Rourke, has still not filed its 2018 accounts, with chair Ray O’Rourke admitting in the autumn that “historic turbulence” in the industry has meant auditors, banks and regulators are being extra vigilant over signing them off.
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Last week the firm said it had agreed the terms of a refinancing deal but these were “currently in the process of being taken through final credit approval protocols and documentation by each lender organisation”.
Carillion was carrying out some FM work at Heathrow when it collapsed and had completed a Terminal 5 satellite building, called T5c, back in 2011. The £300m scheme was the first major project at the airport after Laing O’Rourke completed T5 three years earlier.
Now Heathrow’s expansion programme director, Phil Wilbraham, has told Building the airport will be extra vigilant over which firms it appoints ahead of the construction work set to begin in earnest in just two years’ time.
Wilbraham – who spent eight years at Carillion and its predecessor Tarmac, heading up its TPS consulting division, before moving to Heathrow in 2003 – said: “Ultimately we will only contract with companies that we feel are strong and that we can work with.
“We want a really health construction industry. We absolutely want these companies to thrive and bring their best people to Heathrow.”
His comments come as the airport prepares to appoint the first contractors to work on the scheme by the end of the year.
Wilbraham said it will hold an open day by the middle of this year for firms interested in claiming spots on frameworks for demolition, earthworks and utility diversions. Dutch firm Fugro has already begun ground investigations work at the site.
The first major package of work in the programme is a £1bn scheme that will include moving part of the M25 motorway to make way for the new runway. The country’s busiest road will be shifted 150m west and lowered 6m between junctions 14 and 15, the M4 junction, to allow for the runway to be built over the road.
Wilbraham said moving the M25 alone will cost close to £600m, while other infrastructure set to be moved includes stretches of the A4 and the A3044, nearby rivers, and an immigration centre at Harmondsworth.
Main building works will begin in early 2025 and will centre on a new terminal building for the runway as well as extending the T2 terminal, which was completed in 2014. These two jobs have a combined pricetag of £2bn.
Architect Grimshaw was appointed masterplanner for the scheme in 2017, fending off interest from a number of big-name architects including Zaha Hadid Architects, Foster + Partners and T5 architect Rogers Stirk Harbour + Partners.
But Wilbraham said Heathrow will go back out to the market to find architects to design the new terminal buildings. “We will have a signature architect that will lead on the building,” he said.
Wilbraham said the airport body was still deciding whether to appoint main contractors to jobs on a scheme-by-scheme basis or to draw up a framework of firms for the work numbering no more than six.
Other firms already working on the scheme include Mott MacDonald, Arup, Atkins, Jacobs, Wood – formerly Amec Foster Wheeler – and planning consultant Quod, which are all part of the engineering design team.
Heathrow is also working with Mace, Turner & Townsend, Jacobs and Arup on project, cost and programme works management.
A planning application will be submitted to the government’s Planning Inspectorate early next year.
A third runway is born
2006 Proposal for third runway is published by Department for Transport
2010 Championed by Labour, the plans are scrapped by the Tory/Lib Dem coalition on its first day in office
2012 Coalition sets up Airports Commission on how to expand London’s airports
2015 Airports Commission concludes a new third runway at Heathrow is the best way to expand UK capacity
2016 Tory government backs Airports Commission’s recommendations
2018 MPs vote to back expansion by 415 votes to 119
Early 2020 Heathrow to apply for planning consent order
2022 Main construction work to begin
Late 2026 Third runway due to open
2033 Entire scheme due to complete