Contract bidding is a hot topic in the railway engineering and transport industry. In the current economic climate, with many major construction projects still on hold or postponed indefinitely, the ability of major contractors to win construction tenders is more important than ever. But it’s not all bad news – the huge government investment in the proposed HS2 line means that contractors are fighting it out for big business. Winning such a large scale construction could potentially mean billions of pounds in revenue, securing jobs and a future in a notoriously unstable market. Andrew Shepherd, part of the High Speed Rail Industry Leaders group, has stated that ‘HS2 has the potential to revitalise the construction and railway engineering sectors and help reshape the economy’.
Despite controversy and public opposition surrounding the project, it is clear that HS2 will hugely benefit the construction industry and engineering sector. The proposed link is estimated to create more than 19,000 construction jobs — 9,000 in phase one and a further 10,000 in phase two. These figures only account for jobs directly related to the construction of the line, with thousands more being created indirectly through supply chains and related business.
Initial construction costs for the project were estimated at £32 billion, but these estimates have risen as high as £42 billion in the last year. Construction firms are also aware of the long-term value HS2 could bring to the sector, with ongoing maintenance sure to be a competitive contract once the project is completed. Network Rail currently invests around £5 billion a year in ongoing railway works, with the largest contract last year going to Costain construction. Costain was paid £184.5 million for infrastructure engineering work, highlighting the enormous value of maintenance contracts in railway engineering. HS2 could be big business for construction firms, all of whom will be looking to take a slice of the HS2 cake – and losing out on these contracts could spell disaster for some businesses.
With a project as large and specialised at the HS2 proposal, bidding for contracts goes far beyond merely attempting to undercut the competition with price — firms will need to deliver a comprehensive proposal, demonstrating their capabilities and commitment to the project in order to secure work. Construction on phase one of the network is set to begin in 2017, with services commencing in 2025 — and construction firms are scrambling to get ahead of the competition and position themselves as the ‘best man for the job’.
The lengths firms will go to
Japanese train manufacturer Hitachi has gone as far as moving its corporate head offices to the UK in order to better position itself as a potential supplier for the HS2 trains (See Rail Professional Interview, May 2014). Having previously won the £5.8 billion contract to supply trains for the Intercity Express Programme in the UK, the firm has now set its sights on the £7 billion HS2 contract to manufacture the high speed trains which will operate on the route. The move perfectly demonstrates the lengths firms will go to in order to win the bidding process, as multiple factors are taken into account when selecting a contractor for a project of this nature.
The move to Britain is part of Hitachi’s plan to grow its business in the European market, including the construction of a new manufacturing facility in County Durham. The move is partly in response to public concern that contracts may be awarded to foreign firms, with British workers potentially losing out on the long-term economic benefits of a project such as HS2. A spokesperson for Hitachi has said that the move addresses ‘any criticism that Hitachi Rail is not British enough. The train parts are made in Britain, using parts sourced across the UK, the staff are British and now the headquarters of the entire global company is based in Britain.’
Key focus points for winning bids
Construction and engineering bid writing specialists at Win That Bid have highlighted some of the key focus points for construction firms aiming to secure contracts in the sector. Major construction firms may have a good measure of their capabilities, and be able to approach a contract knowing instinctively that it will be a success. However, unless they’re able to translate this to paper, going after big contracts like HS2 may be an exercise in futility. The bidding process is a necessary — albeit bureaucratic — step, especially under the watchful public eye on government spending.
Price is and will always be a strong winning factor, especially with a government under pressure to vastly cut spending. Firms bidding for projects such as HS2 will need to carefully consider their ability to deliver under budget constraints. However, with the construction market saturated with high levels of competition, the added value that construction and engineering firms bring to the table will ultimately be what tips the scales in their favour, sealing the deal on these major contracts. Demonstrating a thorough understanding of the project requirements — and thoroughly detailing how these will be met — will be key to securing the contracts. If firms want to stand a chance of getting a slice of the pie, they will need to stand head and shoulders above the competition.
It is imperative that contractors remember that the bidding process is a two-way street and, as much as a project as big as HS2 means those in charge have their pick of which construction firms to appoint contracts to, the project must also be realistically achievable for the contractor. There have been numerous occasions when construction firms have failed to deliver projects on time or within a set budget. With a project under as much public scrutiny as HS2, contractors will need to ensure that the work is delivered. Construction businesses would be wise to focus their efforts on bidding for contracts that highlight their strengths. The tendering process on large projects can be lengthy and complex, often involving numerous firms. A strong understanding of organisational resources and abilities will be essential for businesses to ascertain whether or not they stand a chance of winning a bid for such a large scale rail contract.
There are numerous factors that can influence a successful bid. Matching capabilities to the needs of the client – and highlighting any additional value brought to the table – is key to securing construction contracts over the competition. In the construction industry, the bidding process often begins before the tender even goes out. The HS2 project is a prime example of this, with businesses such as Hitachi already stepping up to the role before the tender has gone out. As such, it will be imperative that those going after the contracts are armed with the skills to submit a bid that stands out next to the heavyweight competition in this sector — not just satisfying every aspect of the brief, but delivering on it afterwards.
Adam Hope of Win That Bid can be contacted at [email protected]