Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Firms fret over BAA shake -up

Contractors fear an end to cost-plus deals as top client plans procurement changes

FIRMS on BAA's ground-breaking framework contracts are worried that the airport operator is planning to toughen its negotiating stance with contractors.

The airports operator ? which is planning to spend £6.8 billion on capital works over the next nine years ? has spent months in discussions with its supply chain over potential procurement changes.

The managing director of one firm involved with BAA's frameworks said: 'I think there is a perception within BAA that they have been soft. Some firms have been paid well when their performance has not been brilliant, so BAA wants to take a more traditional approach.

'It's sad in a way because others have worked hard for them in the past because they strike a different path to the norm.' The company is renowned for its innovative approach to construction and its pioneering use of integrated teams. On Heathrow's Terminal 5 project, it bears all the risk on the job and pays suppliers on a cost-plus basis.

But BAA construction director Roger Bayliss said change was on the way. He added: 'Some frameworks are coming to the end of their term and we are thinking about how we take them forward. We are determined to drive value and, although we still believe in frameworks, we believe we have not used all the flexibility that they have offered us.

'Frameworks do not determine the contractual vehicle for each piece of work. On occasions we will move away from costplus contracts where we are having an adult discussion with our suppliers.' BAA first established frameworks more than 10 years ago, with major players such as Amec, Laing O'Rourke, Taylor Woodrow and Mace now involved.

Its supply chain review was set in motion by former technical director Richard Petrie, who left the company last year. It is being followed through by Mr Bayliss and commercial director Ken Owen.

The chief executive of a second BAA framework firm said: 'We've heard that BAA is looking at a two-stage fixed price job at one of its airports, which is a bit surprising.

There's no doubt they're having a serious look at frameworks.' The source added that BAA was considering bringing more firms into the deals and taking a more 'hands-off' approach to its projects.

Mr Bayliss denied a less involved role for BAA with its suppliers, but said: 'We are bouncing around a lot of ideas at the moment.

'We will be hands-on and we will not do anything which would undermine our commitment to long-term relationships and frameworks.

'It has got to be a 'win-win' for all parties and we are not about to do a U-turn, or even a left turn, on that.' n BAA has rejected an £8.75 billion takeover bid led by the Spanish construction giant, Ferrovial.

The company said last week that it had 'no hesitation' in rejecting the bid, which 'did not begin to ref lect the company's unique portfolio of airport assets'. BAA owns seven UK airports.