Project Front End and Procurement Case Study
London Underground’s Bank Station Capacity Upgrade Project
1. Introduction
This case study provides a brief narrative of the front end of London Underground’s Bank Station
Capacity (BSCU) project. It starts with an explanation of the client organisation, followed by a brief
overview of the scheme and its physical location. It then discusses the organisational design of the
project, its governance arrangements and the project schedule. The final three sections cover the
procurement model, the key project documents and the transition into delivery. The narrative finishes
before full sanction for construction of the project is granted. The project was completed in 2022.
2. The Client Organisation – London Underground
Transport for London (TfL) was created as an organisation to run transport infrastructure in London
under the 1999 Greater London Authority Act, which bestows powers on the Mayor of London to
create and operate TfL and establishes the Standing Orders which “…lay down the decision-making
structure and proceedings, and the scheme of delegation” (TfL, 2018b). Under the direction of the
Mayor of London, TfL prepares a transport strategy, this case study works from the strategy
published in 2018 (TfL, 2018a).
TfL’s remit covers all modes of transport – road, river and rail - within Greater London, most notable
of which is London Underground (LU), the largest of its subsidiary organisations. Figure 1 below
shows in simple form the arrangement of organisations between the UK government, Department
for Transport (DfT), the Mayor of London and TfL. Since its inception, TfL has undergone various
organisational changes, but for ease of explanation here is split into rail, surface and corporate
functions.
Figure 1 - UK Government - TfL Organisation Structure
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Within this corporate governance structure, TfL have established a Programmes and Investment
Committee which oversees TfL’s capital investment programme. The BSCU project formed a part of
this investment programme and was subject to the authorities of this committee, as set out in the
Standing Orders. One aspect of this investment programme authority process was the establishment
of an oversight committee entitled the Independent Investment Programme Advisory Group (IIPAG).
The innovative procurement route undertaken by the BSCU project was subject to the review and
approval of IIPAG during 2012/13 (see sections 5, 6 and 7).
3. Project overview
The Bank Station Capacity Upgrade (BSCU) project was a large inter-organisational construction
project. The client, and project promotor, was London Underground Limited. The project was fourth
in line of a programme of major station capacity projects for Transport for London (TfL). The project
was managed by the Capital Projects Directorate of London Underground (LU).
The project was situated in the main business and financial district in the City of London, densely
populated with offices and cultural buildings and within a Conservation Area. The Bank underground
railway station was a critical piece of public infrastructure for those commuting to and from work in
the City but had in recent years, due to population growth, become heavily congested to the point
that the capacity of the station could no longer cope with passenger demand.
The primary purpose of the project therefore was to relieve passenger congestion within the station
by creating additional capacity, thus improving journey time and fire and evacuation measures. The
scope of work included the purchase and demolition of commercial property, the construction of an
additional 600m of new rail tunnel to be connected to existing one hundred and twenty year old
tunnels (the new tunnel is shown as the dotted black line in Figure 2 below), extensive reconfiguration
of existing, and the construction of new, underground passenger walkways and passages, an
additional twelve new escalators, two new lifts, additional power supply with associated cabling and
mechanical equipment, new communications equipment and a new station entrance to replace the
demolished commercial buildings.
These works were to be undertaken on two worksites above ground, and within the confines of the
underground railway station below ground. There were extensive above ground construction
logistics on an already congested inner city road network.
4. The physical location
The physical location of the project was in the heart of the financial centre of the City of London. This
meant that the project was being undertaken in a densely populated and heavily congested part of
the city in direct view of some of the most politically, financially and culturally powerful people in the
City of London. Located predominantly in a designated ‘conservation area’, it interfaced with over
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sixty properties (containing over six hundred different parties) that ranged from brand new
commercial office developments to 17th Century churches, and tunnelling within metres of the Bank
of England. As described above, two worksites were planned above ground (shown in the red
shaded areas in Figure 2) with extensive transport logistics from and between each one, which would
support all above and below ground works. The granting of the statutory planning consent for the
project would be subject to agreement from all the affected parties associated with these worksites
and the underground works.
At worksite one, the project was to purchase the six properties on the site that would be demolished
and replaced by a new, single, commercial property that would incorporate a new station entrance
and whose financial benefits were incorporated into the project’s business case. The project office
was accommodated in one of these properties during stage 1 and prior to full sanction of the project.
Post full sanction, five of the six properties were to be demolished with one retained for the
management staff for construction.
Worksite two occupied a road which was subject to full closure, the removal of public utilities and the
construction of an eight-metre diameter shaft from which all the tunnelling and excavation of material
would take place. The road was surrounded by commercial offices and its use as a worksite was
subject to significant objection by stakeholders. This worksite was originally planned to
accommodate all the project staff undertaking the construction work.
Figure 2 - Physical Location of BSCU Project
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5. Project organisational design
The organisational structure of the BSCU project and its relation to London Underground and IIPAG
is presented in Figure 3 below. This is presented for indicative purposes only and the formal and
informal relationships are indicated by simple lines of secondary and primary communication.
However, such a representation shows that beyond the dyadic contractual relationship between the
client and the contractor, their existed an inter-organisational context that brings complexity to the
project in terms of task interdependency and hence organisational routines.
Primary Transport for
communication London
Secondary
communication
Contract
London External Assurance
Underground (IIPAG)
External LU Client Specialist
Stakeholders PM Team Consultants
Main
Contractor
Design Sub Specialist
Consultants Contractors Consultants
Figure 3 - BSCU Project - London Underground organisation structure
The design of the project delivery organisation in conjunction with the innovative procurement model
(see Section 8) led the project to have the following key organisational and timing features and is
presented graphically in Figure 4:
• The project was led and managed internally by LU (the client – an owner, project-based
organisation), supported by external consultants and responsible for managing all external
relationships with stakeholders, specifically in gaining statutory planning authority through the
TWAO;
• The client had a single contract with a Main Works Contractor (the contractor) who would be
accountable for both the design and construction of the works and who would be in contract with
and supported by their supply chain of designers and works sub-contractors;
• The external consultants working for the client and the supply chain working for the contractor
were contracted in separate dyadic relationships, however the project tasks to be achieved led
to high degrees of interdependency between these external parties as well as between
themselves and the client and contractor.
It should be noted that this was the first time for the client and contractor to work together in an inter-
organisational arrangement such as this.
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Primary
communication
Client Contractor
Corporate Corporate
Secondary
Board Board
communication
The Project Board
Supply Partner
G5 (Project Executive)
Group
Senior Management Team
(Operational Coordination Group)
The Business Rhythm
(Meetings and Reports)
Project Management Plans
Figure 4 – BSCU – Project delivery organisation
6. Governance and Assurance
Connecting the corporate governance structures from the TfL legislative framework was the London
Underground project management manual, entitled Pathway. The Pathway manual incorporated
several individual handbooks that set out the LU corporate governance arrangements for the
management of capital projects, are aligned with Standing Orders.
Due to the complex nature of managing capital projects within the regulated railway industry, these
handbooks were extensive in number, but most notably within this suite of handbooks was the
Investment Governance handbook. It is this handbook that sets out the levels of authority delegated
down through the organisation, as granted through the Standing Orders. These delegated authorities
relate to Finance, Scope change, Procurement and Land. It also establishes the level of Investment
Assurance to be undertaken on any given project, determined by its size, scale and value.
It is this Investment Assurance process, that establishes the stage gate reviews that needed to be
undertaken as a project transitions from one life cycle stage to the next. “This process provides
confidence that TfL processes and policies defined within Pathway have been followed. A Stage
Gate is required to move from one Pathway stage to another (including the final, Closure, stage).
Stage Gates are evidenced by Stage Gate Certificates, which must be submitted when applying for
authority as proof of investment assurance”1
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TfL, Pathway – Investment Assurance. 2014. pp.11.
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It was this Investment Governance process that the BSCU project was subject to as it sought to gain
full sanction from stage one to stage two of the project.
7. Project schedule
The BSCU project had commenced in 2003, going through a number of transformations in terms of
its scope and business priority. In late 2010, the DfT wrote to TfL, stating that the capital investment
funding settlement for the project was subject to its completion no later than 2021. At the time that
this date constraint was placed on the project, the emerging ‘concept design’ in 2011 was presenting
a scheme, that while having an acceptable business case of approximately 2:1 (the government
threshold being 1.5:1), the emerging budget exceeded TfL’s business plan, and the planned
completion was projected to be late 2023, over 18 months beyond the stipulated DfT date.
This led LU to explore opportunities to innovate in the way it procured design and construction
services, which is described in Section 8.
Authority for the design and statutory planning of the project had been granted in July 2013. Full
authority for the project was to be granted in April 2016 and was subject to the satisfactory completion
of the design and granting of statutory planning consent through a Transport and Works Act Order
(TWAO) application that was subject to a public inquiry led, managed and approved by the Minister
for the DfT. The public inquiry was completed in May 2015, with the TWAO being granted in
December 2016.
The fixed end date of the project given by the DfT created a traditional ex-ante defined project life
cycle, the main dates and milestones are presented in Figure 5 below.
Achieving the transition from stage 1 to stage 2 would be subject to TfL Board governance and
assurance (described in section 6). It required the completion of the detailed design, satisfactory
presentation of an approved budget and risk profile and the award of statutory planning consent
(TWAO) by the DfT. Without the TWAO, the project would not proceed.
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Issue ICE Tender – April 2012
Contract Award – July 2013
Concept Design Complete – May 2014
TWA Order granted – Dec 2015
Stage Two Work Commencement Notice – April 2016
Project Completion - July 2021
Procurement Stage 1 - Design Stage 2 - Construction
Figure 5 - BSCU Project Schedule
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8. Procurement Model – Innovative Contractor Engagement (ICE)
Being fourth in line of a programme of station capacity upgrades, LU grasped the opportunity to build
on their organisational knowledge and learning from the previous three projects. In doing so, the
BSCU project acted as a ‘vanguard’ project and ventured into unchartered territory in implementing
a novel procurement methodology that was entitled Innovative Contractor Engagement.
The innovative procurement methodology had the following key features:
• It sought to protect supply chain innovation (through a joint confidentiality agreement) during
the tendering process and in advance of contract award, in order to reduce the uncertainty that
was causing the cost and time escalation;
• It sought this innovation through a negotiated dialogue phase in advance of formal issue of
the tender documentation, where the client shared the complete suite of project information that
had been developed since 2003, mitigating information asymmetry;
• The application for statutory planning through the TWA would be incorporated into stage 1 of
the contract and a bespoke break clause was included that gave the client discretionary authority
to instruct stage 2, or not. This was entitled the Stage Two Works Commencement Notice
(STWCN);
• The winning tender was awarded based on the additional value it created within the projects’
business case, focusing primarily on the enhanced business benefits derived from the winning
tenderer’s innovation and with the business case then incorporated into the main design and
build contract.
Full details of the implementation of the ICE procurement model can be found in the report entitled
‘Innovative Contractor Engagement (September 2014)
9. Key project documents
The ICE procurement model generated two key documents (artefacts) that governed the relationship
between the client and the contractor (in addition to the corporate governance of both the client and
contractor organisations):
The first was a ‘relational’ based contract that was structured on the basis of completing the works
within a target cost arrangement, where the client and the contractor would share the pain or gain,
from achieving the project above or below budget respectively. This contract shared the risk between
the client and the contractor, where the client primarily took statutory planning, stakeholder and
financing risk, and the contractor took design liability and construction productivity risk. UK Law,
client corporate governance and project governance were stipulated within this contract. It was within
this contract that the bespoke ‘Stage two Works Commencement Notice’ break clause at the end of
stage 1 was included.
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The second document was a non-contractual ‘alliance protocol’ or what later became termed a
‘management protocol’, that sought to help in governing the behavioural relationship between the
client and the contractor in order to manage the uncertainties and the interdependencies that the
client knew to be inherent in these types of complex public infrastructure projects. The building blocks
of this relational framework were established during the negotiated dialogue stage of the innovative
procurement model.
10. The transition to delivery
By June of 2015, two years into the contract, the project had been successful in being granted
planning for the commercial development on worksite one and the utility diversions, while
challenging, were progressing on worksite two. It had completed and been granted approval for
‘concept design’ by May 2014 and the project had progressed well into detailed design. It had
avoided a protracted and drawn-out public inquiry for the TWAO and in June 2015 it formally
submitted the application to the Secretary of State.
It had purchased four of the six properties on worksite one through negotiation and served a year’s
notice for all tenants to leave by January 2016. The compulsory purchase of the final two properties
would be subject to the granting of the TWAO. It had reached agreement with the stakeholders
surrounding worksite two, but this had resulted in constraining the size of the site and the plans for
the operation of construction and the accommodation of the construction staff.
The relationships that had developed between the client and main contractor during the ICE
procurement and the shared values and objectives that were enshrined in the management protocol
had worked well for the management team. It was not without its challenges like other projects of
this type, but the project continued to win industry awards for the procurement and relational
approach to managing the project. It had become a strong team, working collaboratively together
not just at management level but between designers, sub-contractors and relationships back into the
engineering and sponsor teams in the LU and main contractor organisations. All the project
participants were collocated in a single office and those visiting found it difficult to tell which
participant was from which organisation.
It had become a feature over the previous two years of the project to hold team events or workshops
to take stock of where we were and plan for the near future. These were in addition to monthly
‘breakfast’ meetings where we got the whole team together to share information, and these became
a part of the project’s business rhythm. Having submitted the TWAO and now well into detailed
design, on the 29th of June 2015, G5, the five senior members of the joint management team, took
the Senior Management Team (SMT) away for the afternoon to reflect on what had been achieved
and plan for the impending transition in nine months’ time, from design (stage one) and into
construction (stage two).
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It was at this workshop that G5 experienced a realisation that all was not well in the performance of
the team. The focus of the team on the public inquiry and submission of the TWAO had masked over
an underlying inertia and lack of communication between the functional teams of the project,
specifically the design and construction teams. It was apparent that we were a long way from being
ready for the transition into stage 2.
