The leadership, innovation and commercial nous needed to deliver low carbon projects contribute to leaner businesses.
It is no coincidence that four of the most commercially efficient client organisations in the infrastructure sector are also pioneers in reducing emissions of CO2 arising from the construction and operation of assets.
- From 2016 carbon reduction will be a mandatory criterion on all of National Grid’s major projects as it seeks better value for its £2 billion a year investment in new infrastructure.
- Heathrow Airport is targeting a 30% combined capital and operational carbon saving by 2020 at the same time as growing passenger numbers and improving customer satisfaction.
- In the last five years Anglian Water has halved capital carbon and reduced operational carbon by 10%, while achieving a capital cost saving of 20%, measured against a 2010 baseline. Its focus on carbon has been so commercially beneficial that it is targeting a 70% capital carbon saving by 2030.
- Carbon is one of Crossrail’s key performance metrics, reported to the company’s board at monthly progress meetings. To date a 10% capital carbon reduction has been achieved against the baseline design, with the final carbon account expected to be 7%-8% better than baseline.
All four companies presented at the half day ‘Carbon Crunch’ conference hosted by Mott MacDonald chairman Keith Howells at the Institution of Civil Engineers, London, on 28 November. Carbon Crunch marked the anniversary of publication of the Government’s Infrastructure Carbon Review (ICR). And it responded to research conducted by the Green Construction Board (GCB) to find out how the 28 ICR signatories (including Mott MacDonald) have fared in advancing the low carbon agenda over the last year.
The ICR highlights the central importance of leadership, innovation and procurement in advancing low carbon, low cost solutions, while the GCB’s research examined the infrastructure sector’s relative maturity in these three areas. In particular it highlighted the challenge that most of the 28 signatories are experiencing building carbon reduction into procurement.
National Grid, Heathrow, Anglian Water and Crossrail are all ahead of the pack in these areas and reaping commercial rewards from being so. Headline messages were clear:
All have challenged the status quo, using the low carbon agenda to shake up thinking within their own organisations and in their supply chains. They have set goals – in Anglian Water’s case radical ones – and demanded that everyone pulls out the stops to achieve them. Failure isn’t an option. Each organisation is almost religious about carbon reduction and the benefits it brings – the leaders believe it and preach it, they empower grass roots activists to spread the word and put new ideas into action, and they recognise and reward achievement.
For these organisations, delivering projects is not about the process, it’s about the outcomes. They are specifying the services that need to be supplied by new or improved infrastructure, and the performance it needs to achieve. But design, construction and supply are all up for grabs. Questions like ‘why’ and ‘what if’ are important: they interrogate accepted practices and industry norms – and find that often there is considerable margin for change and improvement. And they don’t just encourage collaboration, they mandate it. By working together, communicating, sharing risk and reward, cross-fertilising ideas, and exchanging data and best practices companies sharpen one-another’s thinking and make incremental improvements. And from time to time, collaboration produces leaps in imagination that dramatically advance technical and operational performance.
Procurement departments have a central role in advancing low carbon, low cost solutions – they must be challenged to write carbon into tender and contract documents. This is where risk is allocated, innovation encouraged and performance incentivised. Simply, if carbon isn’t in the contract, motivating and enforcing performance is difficult if not impossible. Carbon figures differently in the procurement strategies of each of the four organisations: for one, carbon reduction is worth a potentially pivotal 5% score in tender evaluations; for another achieving predetermined performance levels is a condition for payment at gateway stages in the project lifecycle, with bonuses awarded for outperformance. All are delivering the blunt message to their supply chains: ‘If you don’t reduce carbon, you won’t win work.’ And all are at different stages in development of cost and carbon modelling tools that they and their suppliers can use to establish baselines, against which to measure savings.
To promote collaboration and innovation, and get best value from it, clients are establishing longer-term relationships with smaller numbers of suppliers, enabling them to really understand client issues and objectives, develop and improve innovations, and achieve decent return on investment. They are also organising their assets into ‘classes’ that share common characteristics and that will benefit from similar design, construction and operational solutions.
Crossrail has linked success in reducing cost and carbon to remuneration for its own and Tier 1 suppliers’ senior staff. This recognises the importance of incentivising individuals, not just organisations. Ultimately, success in reducing carbon and driving commercial efficiency depends on people – on the attitudes and behaviours of staff. Creating a clear link between low carbon results and bonuses or career progression provides strong personal motivation to make a difference.
Each of the four carbon crunch presenters is operating in a different environment and is on a different low carbon journey. However, they were unified in their certainty that carbon reduction and commercial efficiency are aligned. The mindset and behaviours, and the skills, strategies and governance needed to drive down capital and operational carbon are the same as those needed to run a tight and successful business.