Making innovation happen in megaprojects
the case of London's Crossrail suburban railway system
School of Construction and Project Management The Bartlett Faculty of the Built Environment University College London
Innovation & Entrepreneurship Group Imperial College Business School Imperial College London
Our research suggests that London's Crossrail suburban railway system is the first megaproject in the world to systematically develop and implement a strategy for innovation. Isolated pockets of innovation can be found in projects—such as the novel solution used to re-design the Velodrome roof during the London 2012 Olympics—but there have been few, if any, systematic efforts to promote innovation in a megaproject. This paper presents the findings of an ongoing three-year (2012–2014) collaborative action research project between the Crossrail and researchers at Imperial College London. Action research is well suited to a setting where an intervention is required to diagnose and solve an organizational problem and produce scientific findings (Miles & Huberman, 1994; Van de Ven, 2007). Undertaken in a collaboration between practitioners and researchers, the aim of action research is to transform the research setting through a process of critical inquiry and action. Our engagement with Crossrail aimed to formulate and implement an innovation strategy to improve the performance and outcome of the project. We identified four stages—or windows of opportunity—to intervene to generate, discover, and implement innovation in a megaproject: (1) the learning stage during the front-end when ideas, learning, and practices from other projects and industries can be used to create an innovative project process, organization and governance structure; (2) the tendering stage when a contractual process can be used by the client to encourage contractors and suppliers to develop novel ideas and innovative solutions; (3) the leveraging stage when all the parties involved—clients, delivery partners, and suppliers—can be encouraged to develop novel ideas, new technologies, and organizational practices to improve performance; and (4) the sharing stage at the back-end when lessons about innovation can be captured, emulated, or replicated on other projects. The first two stages had largely occurred when we became involved in the Crossrail project in 2012. Our intervention addressed the final two stages when we assisted in the development and implementation of an innovation strategy to leverage the innovative capabilities of the project supply chain and share innovative and successful practices on other projects. Because our research is confined to a single case, further collaborative action research is required to verify that our action research can be replicated to promote innovation in other megaprojects.
Keywords: megaproject; innovation; action research; engaged scholarship
Innovation and megaprojects make strange bedfellows. Innovation is uncertain and managers of megaprojects are often risk averse. So why has the UK's largest, most complex and uncertain civil engineering mega infrastructure project developed a strategy to promote innovation? This paper explores how innovation can be formulated and implemented to improve the performance of a mega infrastructure project—a temporary multi-party organization established to create large-scale, complex, and multibillion-dollar physical assets such as transport, energy, water, waste, and ICT systems (Altshuler & Luberoff, 2003; Flyvbjerg, Bruzelius, & Rothengatter, 2003; Gil & Beckman, 2009; Flyvbjerg, Garbuio, & Lovall, 2009; Merrow, 2011). Megaprojects are often late, over budget, and fail to achieve their original specifications and revenue targets. This presents a paradox because more megaprojects continue to be executed despite their poor record for productivity (Flyvbjerg et al., 2003). In most industries it is widely understood that improvements in performance depend on innovation (Dodgson, Gann, & Salter, 2008), whereas in the world of megaprojects innovation is avoided because of its association with uncertainty and increasing costs (Van Marrewijk, Clegg, Pitsis, & Veenswijk, 2008). Sponsors, clients, and contractors are reluctant to introduce novel ideas and innovative approaches. They often seek to minimize the risks involved by relying on tried-and-test techniques, established routines, and proven technologies. They prefer to select the lowest-price bid, transfer risks to contractors, freeze the design as early as possible, and stick rigidly to the original plan.
Over the past decade, the UK stands out as a laboratory for experimentation, learning, and innovation in megaproject delivery models. In the 1990s, the UK government commissioned two influential studies—the Latham (1994) and Egan (1998) reports—to investigate why construction projects had such poor performance records and how this could be overcome by developing new ideas and learning, and by adopting successful practices from other industries. Both reports emphasized the need for innovation. Sir John Egan, one of the report's authors and CEO of British Airports Authority (BAA) in the 1990s, used lessons learned from other projects and industries to develop the radically new model based on a risk-bearing client, integrated project teams, and advanced construction techniques for delivering BAA's £4.3 billion Heathrow Terminal 5 (T5) project. In a review of the progress of the Egan agenda over the previous decade, Wolstenholme (2009) emphasized the continuing importance of the original report's recommendations and need to overcome obstacles to change by encouraging innovation. The Armitt Review (2012) points out that sharing lessons from megaprojects such as High Speed One (HS1) and T5 contributed to the successful delivery model used for the London 2012 Olympics construction program and the ongoing progress of the Crossrail project.
Despite such efforts to promote innovation, the literature on megaprojects has focused on the management of risk (Flyvbjerg et al., 2003), project culture (Van Marrewijk, 2007; Van Marrewijk et al., 2008), contracts (Gil, 2009) and technology adoption (Gil, Miozzo, & Massini, 2012). Where research has dealt with innovation, it has focused on how learning from other practices and industries can be used to create a new way of delivering a megaproject (Davies, Gann, & Douglas, 2009), how radically new projects transform institutional structures (Michaud & Lessard, 2000) and how projects can deal with the risks and uncertainties associated with innovation (Loch, De Meyer, & Pich, 2006; Shenhar & Dvir, 2007). Informed by the assumption that such risks have only “down-side” effects which, if they occur, can only impair project performance (Ward & Chapman, 2003), prior research neglects to consider the “upside” benefits obtained by promoting innovation to deal with unanticipated risks, solve problems hindering progress, and improve performance.
Our research suggests that London's Crossrail suburban railway system is the first megaproject in the world to systematically develop and implement a strategy for innovation. Isolated pockets of innovation can be found in projects—such as the novel solution used to re-design the Velodrome roof during the London 2012 Olympics—but there have been few, if any, systematic efforts to promote innovation in a megaproject. This paper presents the findings of an ongoing three-year (2012–2014) collaborative action research project between the Crossrail and researchers at Imperial College London. Action research is well suited to a setting where an intervention is required to diagnose and solve an organizational problem and produce scientific findings (Miles & Huberman, 1994; Van de Ven, 2007). Undertaken in a collaboration between practitioners and researchers, the aim of action research is to transform the research setting through a process of critical inquiry and action. Our engagement with Crossrail aimed to formulate and implement an innovation strategy to improve the performance and outcome of the project.
We identified four stages—or windows of opportunity—to intervene to generate, discover, and implement innovation in a megaproject: (1) the learning stage during the front-end when ideas, learning, and practices from other projects and industries can be used to create an innovative project process, organization, and governance structure; (2) the tendering stage when a contractual process can be used by the client to encourage contractors and suppliers to develop novel ideas and innovative solutions; (3) the leveraging stage when all the parties involved— clients, delivery partners, and suppliers—can be encouraged to develop novel ideas, new technologies, and organizational practices to improve performance; and (4) the sharing stage at the back-end when lessons about innovation can be captured, emulated, or replicated on other projects. The first two stages had largely occurred when we became involved in the Crossrail project in 2012. Our intervention addressed the final two stages when we assisted in the development and implementation of an innovation strategy to leverage the innovative capabilities of the project supply chain and share innovative and successful practices on other projects. Because our research is confined to a single case, further collaborative action research is required to verify that our action research can be replicated to promote innovation in other megaprojects.
The paper is divided into the following sections. The literature review in Section 2 identifies our current understanding of how innovation occurs in megaprojects and what is required to establish an innovation strategy in this setting. Section 3 explains why we used a collaborative action research to engage with Crossrail's research problem and its efforts to formulate and implement an innovation strategy for the project. Section 4 introduces the Crossrail case study and Section 5 presents our main findings and contribution. Section 6 ends with a brief discussion about the role of action research in supporting innovation in megaprojects and concludes with some suggestions for future research.
2. Understanding Innovation in Megaprojects
The purpose of this brief literature review is to identify what is currently known about how innovation occurs in megaprojects and to consider how an innovation strategy can be applied to this kind of temporary organizational arrangement. But before we can consider these issues, it is important to define what we mean by innovation. Innovation is a novel idea, which may be a recombination of existing ideas or routines a new scheme, business model, or template that challenges the prevailing order, or an approach which is perceived to be new by the individuals involved (Van de Ven, 1986; Dodgson et al., 2008). It ranges from radically new ideas which transform the practices and structures of existing institutional environments to incremental improvements to existing products, processes, and services. The process of innovation involves the development and implementation of novel ideas by people and organizations who over time engage in transactions with others within an institutional context (Van de Ven, 1986).
The literature on megaprojects provides different explanations of project failure (Flyvbjerg et al, 2003; Van Marrewijk, 2007; Van Marrewijk et al., 2008; Merrow, 2011; Sanderson, 2012), but largely neglects to consider how innovation may impact on performance. In their influential book, Flyvbjerg et al. (2003) emphasize that megaprojects often fail to achieve their original objectives because of “optimism bias.” Proposers of a major capital investment assume that they can accurately estimate the costs and benefits of a project and submit a low-cost bid to win the contract. But in reality, things are often unpredictable and rarely turn out as originally intended. Costs outstrip projections and projects often result in lower-than-predicted revenues. Other studies emphasize the importance of culture in explaining poor megaproject performance (Van Marrewijk, 2007; Van Marrewijk et al., 2008). Innovation in megaprojects is associated with high risks and often results in cost increases, which are not accounted for in original estimates (Van Marrewijk et al., 2008, p. 591). As result, megaprojects are characterized by conflict, uncertainty, and poor cooperation between partners, and organizing a collaborative culture is required to improve performance.
Several contributors to Miller and Lessard's (2000) international study describe how innovation occurs in the historical and institutional development of large engineering projects (which can be classified as a mega infrastructure project). Miller and Floricel (2000, pp. 63–64) identify an initial stage of radical innovation in the development of megaprojects associated with new governance structures (e.g. Build-Operate-Transfer [BOT] and the Private Finance Initiative [PFI]), new technology (e.g. ICT control and Building Information Modeling [BOT]) and organizational change (e.g. partnering and integrated project teams). Michaud and Lessard (2000, p. 156) identify a process of change starting with innovative “breaker projects” and resulting in standardized repeated projects. Whereas standard projects are highly commoditized and set in established institutional frameworks, breaker projects depart radically from the prevailing way of doing things. They are at the frontier of an organization's capabilities because of their complexity and risk. They transform institutions and require sponsors and partners to change the rules of the game (Michaud & Lessard, 2000, p. 158). A breaker project creates templates (e.g. BOT and PFI) which may become widely imitated, emulated, and adopted. Through an evolutionary process of alignment, building legitimacy, project-to-project learning, and stabilization of institutional arrangements, breaker projects eventually lead to stable, standardized, and repeatable projects.
Davies et al. (2009) studied a radically new model or template for delivering a megaproject which has influenced subsequent projects. BAA, the client organization responsible for the Heathrow Terminal 5 (T5) construction, brought together lessons and experiences from other projects and industries to create a new megaproject delivery model. It created the “T5 Agreement”: a contractual approach based on client ownership of the risk and integrated project teams, with incentives for suppliers to identify and solve risks or explore opportunities to develop innovative solutions that could not be anticipated at the outset. T5 became a template for the contractual approach, partnering digital modeling technologies and advanced construction techniques (e.g. just-in-time logistics, offsite pre-fabrication and modularization) used on subsequent megaprojects in the UK, including the London 2012 Olympics and Crossrail.
A broader stream of project management research has addressed the uncertainties associated with large and complex projects, which have many of the characteristics associated with megaprojects. In their study of North Sea oil and gas projects, Stinchcombe and Heimer (1985) argued that uncertainty is the major challenge facing project organizations. Whilst many activities can be planned in sequence to achieve desired objectives, there are aspects of a large and complex project which cannot be predicted in advance. Innovative responses are required to deal with unexpected events.
Shenhar and Dvir (2007) argue that innovation in projects is associated with technological and market uncertainties. Technology is defined as the knowledge and capability to create, build, manufacture, and enable the use of a product, process, or service (Shenhar & Dvir, 2007, p. 81). A project's technological uncertainty level depends on the extent to which it uses new or mature technology. Technological uncertainty is subjective because it depends on the knowledge that exists or is accessible to the organization. The level of technology affects how much development and testing is needed to freeze the design and configure the final product. Market uncertainty represents the novelty of the project's product or outcome to customers and potential users. The level of novelty affects the process of defining and marketing a product to meet customer needs and user requirements.
Loch et al. (2006) argue that project risk management techniques help organizations to identify foreseeable uncertainties, assess their impact, and develop contingent plans of action to mitigate them, but are ill-equipped for dealing with the uncertainties found in innovative projects which cannot be anticipated in advance. Contingency planning for innovation is difficult because the interaction of events in megaprojects is often complex and unpredictable. According to Loch et al. (2006), large engineering projects should make use of learning to deal with the unforeseeable uncertainty: the managerial and organizational approach has to be flexible and adaptable as one learns more about the project, its environment, and their interactions over time.
Ward and Chapman (2003) argue that there is a widespread tendency to associate the management of risk with adversity and “downside threats” to the progress of a project. The “upside opportunities” to improve performance are often ignored. In reality the threats and opportunities associated with project uncertainty are two sides of the same coin: they must be managed simultaneously to reduce or mitigate potential threats, whilst exploiting opportunities to improve performance (Ward & Chapman, 2003, p. 98).
2.2 Innovation Strategy
The innovation management literature largely assumes that innovation is driven by the needs of a permanent organization (e.g. 3M, IBM, General Electric, and Canon) and its ability to leverage internal and external ideas to achieve corporate objectives for long-term growth, profitability, and competitive advantage. Many construction firms involved in megaprojects—such as Parsons Brinckerhoff, Balfour Beatty, and Laing O'Rourke—have recently developed strategies for innovation (see for example Parsons Brinckerhoff, 2012). However, our review of the literature found no examples of organizations—sponsors, clients, prime contractors or joint- venture delivery partners—creating deliberate strategies and processes to generate and apply innovation within a megaproject. Consequently, our intervention in the Crossrail project was influenced by prior studies explaining how innovation strategies are formulated and implemented by firms.
An innovation strategy articulates an organization's ambitions and long-term vision for innovation. It establishes an organizational process that creates, delivers, and captures value by combining and coordinating resources—people, knowledge, finance, and technology—to achieve a desired outcome (Dodgson, Gann, & Philips, 2014). Innovation management scholars argue that undertaking various activities to search, select, and combine new ideas must be supported by a clearly defined innovation strategy to achieve a firm's corporate objectives (Afuah, 2003; Dodgson et al., 2008). The formulation and implementation of an innovation strategy is part of the dynamic capabilities that a firm needs to search and select novel ideas and practices, and to reconfigure their resources to fit with a changing and uncertain environment (Teece, Pisano, & Shuen , 1998; Teece, 2000). An innovation strategy benefits an organization when it creates, delivers, and captures value. In an increasingly open and networked world, the innovative search extends beyond the boundaries of the individual firm to combine both internal and external ideas to create value. This more open model of innovation recognizes that people with good ideas are not solely resident within one's own organization, but are instead to be found distributed across multiple organizations (Chesbrough, 2003). An innovation strategy must therefore be able to learn about new ideas and existing practices in other industries and contexts and leverage in-house resources and the external capabilities of suppliers, universities, other organizations, and individuals to achieve the firm's corporate objectives in a rapidly changing environment.
Developing an innovation strategy is a dynamic process undertaken iteratively and informed by learning, drawing on evidence from the external environment, and appraising internal resources, capabilities, and processes, to build, supplement, and organize a firm's knowledge and innovative capabilities in a changing environment (Dodgson et al., 2014). It is assisted by the use of various tools and techniques—such as foresight, road mapping, and innovation audits— to gather and analyze evidence and monitoring activities to make effective choices about the appropriate innovation strategy. A firm's innovation strategy is an important mechanism for reducing the technological, market, and business uncertainty associated with innovation (Afuah, 2003, p. 126). The strategy needs to contain four interrelated elements to deal with uncertainty (Dodgson et al., 2008, p. 95): a strategy which fits with the firm's corporate objectives and context within which it operates; the assets and resources which are available to support innovation; the innovative capabilities that enable those resources to be assessed, configured, and deployed; and the managerial and organizational processes required to deliver innovation. The success of many leading firms is often attributed to an innovation culture (e.g. 3M) which is tolerant, supportive, and encourages learning from failure.
Whereas an innovation strategy helps firms “decide on the right things to do; their innovation processes help them do things in the right way” (Dodgson et al., 2008, p. 98). Processes have to be established to implement and achieve the strategy. Important implementation activities include: providing appropriate resources (e.g. technology support, knowledge management, and training); coordinating innovative activities across the organization; networking internally and externally to build collaboration and foster partnership with key suppliers, users, universities, standard bodies; and other groups; delivering new products, processes, and services on time, within budget and to the required specification; and auditing innovative performance, setting benchmarks, milestones, targets, and indicators to provide feedback (Dodgson et al, 2008, p. 124).
3. Research Approach
Our research examined the formulation and development of the innovation strategy created to support the delivery of the Crossrail suburban railway system project in London. The case was selected because whilst there are many studies of innovation strategies deployed by firms, we had a unique opportunity to observe and participate in process of developing the world's first innovation strategy for a megaproject. Following a period of negotiation, a research team at Imperial College London was invited by Andrew Wolstenholme, Crossrail's CEO, to provide expert advice to his senior management team on the development and implementation of an innovation strategy at Crossrail. In return, Crossrail contributed the access and matched funding for a three-year program of research into the organization and management of innovation in megaprojects.
3.1 Collaborative Action Research
Action research is a legitimate and appropriate approach for our study because it was well suited to a setting where researchers intervene and help practitioners solve an organizational problem. The aim of action research is to assist in the transformation of the research setting through a process of critical inquiry and action. It involves a clinical intervention to diagnose and treat a specific problem, whilst simultaneously generating scientific research (Van de Ven, 2007, p. 281–282). It assumes that for knowledge to be useful it must be actionable: this involves specifying the intended consequences, identifying the action sequences required to achieve those consequences, and understanding the relationship between actions and consequences. To achieve such outcomes, researchers “must often play the highly visible and proactive role of change agent in helping a client solve a problem” (Van de Ven, 2007, p. 282).
Action research requires new ways of integrating research and experience of practice and “cannot be achieved by researchers who keep themselves removed from contexts of action, nor by practitioners who have limited time, inclination or competence for systematic reflection” (Schön, 1983, p. 320). It depends on new forms of collaborative agreements between “practitioner-researchers and researcher-practitioners” (Schön, 1983, p. 323). In collaborative action research, practitioners often seek out a set of researchers comfortable with undertaking the proposed action and willing to engage in the process in real time (Miles & Huberman, 1994, p. 8–9).
Researchers must enter into a formal agreement with the industrial partner because some important matters have to be clarified with participants at the outset to define the purpose and scope of the collaboration, ethical issues (who benefits from the research and who may be harmed), and confidentiality. Whereas a typical research agreement often rests on the assumption that well-trained researchers will gather good data and produce well-founded findings, a collaborative action research agreement specifies outputs such as assistance, consultation, shared royalties, and joint authorship. Action research acknowledges that expertise resides in the participant practitioners as much as the researchers: “participant expertise is developed through the researcher's facilitation during the process” (Miles & Huberman, 1994, p. 48). Practitioners may benefit by having an opportunity for reflection, clarifying ideas, empowerment, learning from other contexts, and developing new competencies. The intervention should have a catalyzing effect on the research setting by enhancing the ability of participants and other stakeholders to take action during and after the research study has been completed.
Action research begins by diagnosing the problem or needs of the industrial partner. Researchers join closely with people in the client's organization from the beginning to help them study and tackle the problem. The team of researchers and practitioners share control over the research design and the conduct and steering of the research. Data are collected and presented to the partner both as feedback and used to design the next stage of engagement. This approach requires sensitivity to the partner's concerns, a focus on descriptive data in the early stages, some participant observation, and a search for underlying themes or patterns. Flexibility and tolerance is required on both sides because some of these matters cannot be fully understood until the research had unfolded. Researchers engage with the partner in problem solving using systematic methods of data collection, feedback, reflection, and action. Action in an organizational setting where an intervention has not been previously attempted requires efforts to learn dynamically as new information emerges. Each deliberate intervention and diagnosis of responses to that intervention has to be carefully monitored over time.
3.2 Collaborative Action Research in Crossrail
The scope of our research collaboration with Crossrail was first discussed in an initial meeting in 2011 between Andrew Wolstenholme, CEO; Terry Hill, member of Crossrail Board; and Professor David Gann of Imperial College London. The two organizations subsequently agreed to fund a high-profile three-year action research project (January 2012—December 2014). A core team of practitioners and researchers was established to help create the innovation strategy including Mark Thurston, Tim DeBarro, Paul Morris of Crossrail, Andrew Davies (who joined University College London in 2012 but continued his involvement in the project), and Sam MacAulay and Rahul Kumar of Imperial College Business School. Crossrail Limited (CRL) established the Crossrail Innovation Forum with the assistance of Imperial College London to create an environment to support innovation without introducing excessive or unnecessary risk. The forum is a quarterly meeting established to monitor and steer the development and implement the innovation strategy involving senior members of Crossrail, Imperial College London, main contractors, and suppliers.
After an extended period of negotiation, a research agreement was established which specified the scope of the work, research questions, and tangible outputs of the collaboration, including work required to produce an innovation strategy tailored to the requirements of the project, two separate academic (Post-doctoral and PhD) research projects, participation in the Crossrail Innnovation Forum (CIF), and assistance with the creation of a process to implement the strategy. It is recognized that case studies can be undertaken to generalize or expand theoretical propositions (Yin, 2003, p. 10). However, rather than seeking to generalize a theory from a single case, our action research was designed to identify the opportunities for intervening in a megaproject and the collaborative research process required to make innovation happen.
The action research team held several lengthy (around three hours) meetings to plan what was required to develop the innovation strategy and overcome resistance to change. While there were many examples of innovation strategies developed by firms, the team found no examples of innovation strategies developed for a megaproject. They conducted an “external scan” of industry-wide innovation practices and an “internal scan” of innovative activities within the Crossrail project and its partner organizations. The external scan was a systematic review of academic and practitioner conducted by the researchers and Dheeraj Bhardwaj, an industry consultant with extensive knowledge and experience of innovation practices in construction firms and other industries. The internal scan produced an innovation status report to identify innovation within the Crossrail program and how it was currently managed. It was based on interviews undertaken by two researchers—each typically one hour in length—with 16 managers involved in the Crossrail project, including the CEO, program director, technical director, procurement, and other senior staff, undertaken between April and July 2012.
After gaining the approval of the CIF, the 18-page “Crossrail Innovation Strategy: Moving London Forward” was published in September 2012. The strategy document outlined Crossrail's vision and process for achieving that vision. CRL's innovation strategy will continue to be implemented until the project reaches completion in 2019. Its implementation depends on efforts to support, monitor, and adjust the processes required to encourage parties involved in Crossrail to innovate. The implementation skills needed to support the strategy include an ability to raise consciousness and equip individuals in the client and supply chain organizations with the knowledge, processes, and incentives required to help them collaborate, search for novel ideas, and generate innovation. Interviews were undertaken with four senior managers in November 2013 to gain their reflection and insights about the progress and challenges involved in implementing the strategy one year after its initial introduction.
4. Research Setting: The Crossrail Project
This section provides an introduction to the Crossrail project to help contextualize our research intervention.
4.1 Project Goals
The idea for Crossrail, an east-west railway across London, first appeared in the 1974 London Rail Study, when it was recognized that another underground line would be insufficient to meet demand for growing capacity. These ideas were taken forward in a more concrete scheme proposed by the Central London Rail Study in 1989, and in October 1990 the government gave the go-ahead, which safeguarded the Crossrail route. After further delays, the Crossrail Hybrid Bill was finally approved in July 2008, becoming the Crossrail Act 2008, and construction of Crossrail formally began on 15 May 2009, when the mayor of London and the Transport Secretary launched the first pile at the site of the Canary Wharf station.
Crossrail is currently Europe's largest civil engineering project. It involves the construction of a commuter and metro suburban railway from Maidenhead and Heathrow airport in the West through central London to Shenfield and Abbey Wood in the West. This 118km railway system includes 21km of central twin-bore 6.2m diameter rail tunnels underneath central London: one tunnel for eastbound and one for westbound train connections. The tunnels are being constructed between existing underground lines, sewers, utility tunnels and building foundations at depths of up to 40m. Nine new stations are being constructed on the central section at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel, Canary Wharf, Woolwich, and Custom House. For the initial service, trains will be 10 carriages long, but station platforms are designed to accommodate 12 to provide additional capacity for growing demand. Operating a mainline-size system, trains will have the potential to carry over 1,500 passengers during peak periods. The signaling system will be designed to control the movement of 24 trains an hour through the central section with the possibility of increasing to 32 trains an hour should extra capacity be needed. On completion, Crossrail will increase London's railway passenger capacity by 10%. It is expected that 200 million passengers a year will use the new link. The new suburban line will bring an additional 1.5 million people within 45 minutes commuting distance from London central business districts.
The cost of the project is £14.8 billon and scheduled to open in phases starting in 2018. The contract for rolling stock is expected to bring the overall cost of the railway to around £16 billion. In 2010, the government's Comprehensive Spending Review confirmed savings of over £1 billion due to a revision of the tunnelling strategy, when the funding available for Crossrail was revised to £14.8 billion from £15.9 billion. Whereas tunnel boring and the construction of sprayed concrete sections were originally planned to occur concurrently, under the revised scheme these activities are now taking place sequentially. While these capital savings could be achieved without reducing the number of stations or tunnels from the program, the revised scheme delayed the opening by a year. Crossrail services through the central London tunneled section will open in September 2018, and a full service will be operating from late 2019.
4.2 Project Organization
Crossrail is a large and complex program of interrelated projects that have to be integrated to create the new railway system. Crossrail Limited (CRL) was established in 2008 as a temporary public client and special purpose delivery organization responsible for the development and delivery of the system, including all its component projects. CRL is the overall program manager and systems integrator for Crossrail. It is accountable to the joint project sponsors: the Department for Transport (DfT) and Transport for London (TfL).
CRL is supported by a program delivery partner called Transcend (a joint venture between AECOM, CH2MHill, and the Nichols Group) and a project delivery partner called Crossrail Central (a joint venture between Bechtel supported by Halcrow and Systra) employed to manage the delivery of the Central Section works. CRL employed the program and project delivery partners to support the design and construction of the Central Section works, the largest, most complex, and challenging component of the overall program. After experiencing difficulties in coordinating the different parties involved, CRL decided that Transcend, Bechtel, and its own staff should form a co-located Integrated Crossrail Program team. This matrix team, which employed about 850 staff in 2012, is responsible for procurement and management of the all the contracts and interfaces between them and the Central Section Works. The integrated team is responsible for managing the large and diverse number of firms involved in the design, construction, and handover of Crossrail, including design consultants, major works package contractors for tunnelling and stations, rolling stock and depot suppliers, utility companies, The City of London Corporation, and oversite developers.
Contractors have formed joint ventures to bring together the capabilities needed to manage individually complex projects for tunnels, shafts, station boxes, and sprayed concrete underground structures. Construction of the first tunnel portal at Royal Oak began in January 2010. Seven tunnel boring machines (TBMs) will be used to construct the tunnels. Precast concrete segments manufactured offsite are being erected in rings as the behind the cutter shield as the TBM advances forward. Sprayed concrete lining is being used to build the larger platform and passenger tunnels at stations. The first two TBMs started work in 2012 moving east from Royal Oak were joined by two other TBMs later in the year moving west from the Docklands. In 2013–2014, up to 14,000 workers will be employed on 40 sites working 24 hours a day to complete the tunnels, build new stations on the central section, and upgrade the existing rail network. Where possible rail and water transport will be used for the delivery and removal of construction materials, but some journeys will be made by road transport.
In 2017 and 2018, Crossrail will begin the transition from a delivery organization into an operating railway. CRL is responsible for the handover of the assets and working closely with Crossrail infrastructure managers and operators throughout the project life cycle from conceptual design, through construction, integration, testing, trial running, handover, and operation of rail services. Rail for London (RfL) is the infrastructure manager, future operator of several Crossrail stations (Paddington, Canary Wharf Custom House and Woolwich), and procurer of the train operating company that will operate Crossrail rail services. Network Rail is undertaking a major upgrade over its overground network to prepare for the cross-London service and interfaces with the Central Section. The London Underground works with CRL to integrate Crossrail works with its own capital projects.
5. Innovation in Crossrail
Our literature review, interviews with senior managers in Crossrail, and examination of project documents and the trade press (e.g. New Civil Engineer) helped us identify four opportunities to intervene and promote innovation in a megaproject. (1) The learning stage occurs during the preparations and front-end planning when there are opportunities to learn lessons from other projects and industries and use successful practices, technologies, and approaches to develop an innovative approach for the organization and governance of the project. (2) The tendering stage is an opportunity to develop new ways of contracting so that suppliers are incentivized and rewarded for developing innovation solutions in bids for components of work within the overall project. (3) The leveraging stage occurs after contracts have been awarded when there are opportunities to encourage delivery partners, contractors, and suppliers to develop new ideas, technologies, and organizational practices which can be applied to improve the performance of the project as moves towards completion. (4) The sharing stage occurs during and after the project has been executed and is an opportunity to share innovation and learning by encouraging the transfer and replication of successful ideas and practices within the project and across other projects.
These distinct but slightly overlapping stages are described in Table 1. CRL had a temporary opportunity to develop and implement new knowledge, novel ideas, and innovative solutions during each of the four stages. Each stage of intervention could be accomplished by CRL on its own, with external parties (e.g. consultants), or with the assistance of academic research collaborators. When we initiated our collaborative research with Crossrail, the project had passed through the learning stage, signed all the civil engineering contracts, and was tendering for rolling stock and railway systems. Our research involved identifying retrospective and current innovative practices in the project (stages 1 and 2) and engaging with CRL to develop an innovation strategy to leverage the innovative capabilities of the project supply chain and share innovative and successful practices on other projects (stages 3 and 4).
Table 1: Innovation interventions in megaprojects.
The learning stage occurred when Crossrail's sponsors were planning the project and establishing CRL as the client organization responsible for managing the program. Efforts were made to learn lessons and recruit senior managers able to apply experience gained on other megaprojects and combine successful practices, technologies, and approaches in innovative new combinations for delivering Crossrail.
When Crossrail gained approval to proceed in 2008, Doug Oakervee, Crossrail Executive Chairman, clarified in an interview with New Civil Engineer the project's overall strategic approach to innovation. He announced that: “we will always be looking for innovation and ways of doing things more economically and they will be prime motivators in all of the incentive schemes” and that “Innovation is the thing we have to work with—and that will be a partnership between us and the delivery partner and designers to deliver in the most efficient way to produce the best economies” (Oliver, 2008a, p. 6). But he emphasized that Crossrail would be “using proven technology, albeit at the leading edge. If you want to waste money, start research and development on a project” (Oliver, 2008a, p. 5–6).
The knowledge and experience gained from other industries and previous megaprojects—such as Heathrow Express, Channel Tunnel Rail Link (or High Speed 1), Heathrow T5, the Jubilee Line Extension, and London 2012 Olympics projects—contributed to the approach used to organize and manage the Crossrail project and deal with a variety of risks and uncertainties associated with a large-scale tunnelling project underneath a large city and integrating stations and integrating the new railway with existing national rail and London Underground systems. Crossrail established a new form of delivery model based on a program partner and a project partner working with the client in an integrated team.
The management team continues to learn lessons, good and bad, from previous megaprojects to deal with different phases of the project. For example, in its efforts to plan and properly resource handover of a fully tested and operable railway, CRL aims to avoid the high-profile chaotic opening of Heathrow Terminal 5 and build on the success of the London 2012 Olympics (Oliver, 2012a, p. 6).
The tendering stage occurred when CRL began the process of selecting the major works involved in the design, construction of tunnels, platforms and stations, and supply of rolling stock and signaling systems. As Andy Mitchell, CRL Program Director, pointed out in an interview with New Civil Engineer “when it comes to innovative ideas…on major projects the natural state of mind is to control risk by using the tried and tested” (Oliver, 2012b, p. 11). Yet CRL took a different approach and established a tendering process to encourage innovation well before the strategy to stimulate innovation was formally implemented (see 5.3 below). CRL created a procurement approach called “Optimised Contractor Involvement” (OCI) where each individual contractor, joint venture, and supplier can bring new ideas and practices to the project, whilst sharing the risk and reward. OCI was established to reduce the downside risks impacting on the project, whilst exploiting upside innovative opportunities to improve performance. It is based on a target cost, pain/gain share new engineering contract (NEC) to encourage contractors to bring their skills and innovation. Under OCI, the contractor is brought in after the target price has been established but early enough to have some input into the design and value engineering. To avoid encouraging suppliers to submit lowest-cost bids, Crossrail put increasing emphasis on the technical element to help select the best solution. This is underlined by the recent move from 60:40 to 70:30 technical/cost assessment ratio. Each of the contracts is let based on the technical ability of the joint ventures rather than on price. The CRL team is playing a “light touch client role, giving the contractors room to bring their skills and innovation and using the target cost, pain/gain share NEC contract to drive performance” (Oliver, 2012b, p. 11).
In addition to helping to mitigate the well-known risks that can hinder progress, the OCI process has been used to generate innovative solutions to deal with a variety of risks and unforeseen uncertainties. It was used to promote cost-saving innovation after the Comprehensive Spending Review of October 2010 called for a major reduction in Crossrail's budget. CRL engaged in discussion with its bidding joint venture organizations about how to create a more efficient way of constructing tunnels and stations. A joint venture between Bam, Nuttall, Ferrovial, and Kier (BFK) won the contract in December 2010 for the western section tunneling from Paddington to Farringdon. The original plan had been to construct the tunnels and stations simultaneously. Under the new “flipped” approach, BFK will bore the tunnels ahead of the excavation and perform the sprayed concrete lining work for the platform tunnels at Paddington, Bond Street, and Tottenham Court Road. The flipped approach, however, meant that station platform work could not be carried out until tunneling was completed and contributed to the one year delay in completing the overall program. BKF's solution helped it win sprayed concrete lining contracts for Bond Street and Tottenham Court Road stations.
The leveraging stage occurs after the CRL contracts have been procured and involves encouraging selected contractors and their suppliers to develop and apply innovation in different phases of the project. Andrew Wolstenholme became CRL's CEO in September 2011 after all the major contracts to build tunnels had been tendered and when station contracts were just about to be let, but well before contracts for major rolling and signaling systems had been put out to tender. He had previously been director for innovation and strategic capability at Balfour Beatty. He was a well-known critic of lowest-price tendering and contractors who avoid risk to maximize their own profits (Wolstehnolme, 2009). From the start, he wanted Crossrail to adopt advanced technologies such as compensation grouting, which was originally developed on the Jubilee Line extension project and Building Information Modeling (BIM) in partnership with Bentley to support the design, construction, handover, operation, and maintenance of the assets. In an interview in New Civil Engineer, CRL Wolstenholme clarified that there was a strategic opportunity to use the Crossrail project “to lever in new ideas, techniques and processes that will genuinely change the industry in future” (Oliver, 2012a, p. 8). He wanted to encourage Crossrail's winning contractors and their suppliers to exploit opportunities to promote innovation by sharing risks and collaborating in integrated project teams.
In late 2011, CRL initiated a research collaboration with Imperial College London (see 3.2) to create an environment where people from contractors and suppliers could innovate and share intellectual property without incurring undue risk. In early 2012, CRL established the Crossrail Innovation Forum and assembled the team of Imperial College researchers and CRL practitioners to develop an innovation strategy for the project. Senior members of the team had previously developed innovation programs to help large contractors (Andrew Wolstenholme at Balfour Beatty and David Gann at Laing O'Rourke) leverage internal and external sources of ideas to achieve long-term corporate strategies for competitive advantage, growth, and profitability. These efforts and lessons learned from innovation programs developed by firms in construction and other industries helped identify what was required for the Crossrail project. But innovation strategies developed for firms could not be copied exactly and transferred to a project. The innovation program had to be specifically designed to take into the account the temporary nature, specific challenges, and context of a megaproject, including a client organization and temporary coalition of delivery partners, contractors working in joint ventures, and suppliers which would be disbanded on completion of the project.
The Crossrail Innovation Strategy was designed to achieve the program's overall goals and vision of creating a world-class railway within time, cost, and other constraints and to share innovation and successful practices to improve the performance of subsequent megaprojects such as High Speed 2. The strategy document outlines the vision and how it will be achieved by creating a supportive brokerage environment which helps ideas flow freely across organizational boundaries so that they can be quickly translated into innovation. People from different organizations are encouraged to work together to search for, develop, refine, and implement new ideas.
Under the guidance of the Crossrail Innovation Forum, the combined CRL and practitioner team is responsible for the day-to-day implementation and management of the innovation program, including the online portal and portfolio of innovation projects. The team consists of three innovation coordinators employed by CRL and an academic researcher who report to a program manager. The online platform is used as “a hopper” to collect and evaluate new ideas for innovation. CRL established a larger group of innovation champions located in projects and functional departments with the specialized knowledge needed to help the CRL innovation team evaluate and select good ideas.
The innovation process begins when one or more members of the Crossrail project supply chain submit a new idea to the online portal. An innovation coordinator contacts the person who submitted the idea and works with local managers and innovation champions to evaluate its potential for the project. Once a sufficient number of ideas are submitted to the online portal, promising ideas are selected and moved to a competition round. The competing ideas are evaluated by an innovation working group comprised of industry experts, representatives of the contractors, and special invitees, which selects those ideas worthy of consideration for seed funding to develop selected ideas into useful products, processes, and technologies. Their recommendations are then reviewed by the Crossrail Innovation Forum, which is ultimately responsible for deciding which proposals will receive funding for further development. At the time of writing, the innovation program had completed one round of evaluation and provided funding to support six innovations. Each second round of evaluation and funding is scheduled to occur every six months.
The sharing stage occurs after participants in Crossrail—clients, contractors, and suppliers— have developed and implemented new ideas, technologies, and practices on the project. Crossrail's innovation program includes a process for evaluating the “innovation readiness” and maturity of new ideas, technologies, and innovative practices. This process is being used to identify innovations that are ready to be reapplied on other parts of Crossrail and transferred to other megaprojects. It is hoped that sharing innovation within Crossrail and across other megaprojects will create a learning legacy to help improve the performance of future projects and the Uk construction industry. Discussions have already been held, with other megaprojects being planned in the UK which may adopt practices and reapply innovations first developed on Crossrail.
6. Discussion and Conclusions
Our collaborative action research with Crossrail provided us with a unique opportunity to observe and participate in a pioneering effort to be the world's first megaproject to develop and implement an innovation strategy. Our review of the literature about innovation strategies developed by firms—or permanent organizations—helped us identify some key challenges involved in making innovation happen in a large multiparty temporary organization. We identified four opportunities for intervening in megaprojects to promote innovation: the learning, tendering, leveraging and sharing stages. Since our collaboration was initiated after the learning and tendering stages were already underway, the focus of our intervention has been to assist with leveraging and sharing innovation. However, innovation strategies developed by firms could not be simply copied and transferred to our research setting. Instead, we had to design an innovation strategy which was tailored to the requirements of a megaproject involving a large coalition of contractors and suppliers who were coordinated by a temporary client organization.
We engaged in five steps of collaborative action research to promote innovation in Crossrail. First, we identified and established a research collaboration between practitioners and researchers willing to invest the time and resources required to implement the strategy. Second, we worked together to diagnose the research problem and identify appropriate forms of intervention. Third, we entered into a research agreement which specified in some detail the scope of work, alignment of expectations, and outputs of the research. Fourth, we conducted research—including an external evaluation of industry practices and internal review of existing innovation activities in Crossrail—to formulate, articulate, and codify the innovation strategy. Fifth, we had to create a process to support, monitor, and implement the strategy, including an evaluation of the readiness level of Crossrail innovations and their applicability for reuse on other megaprojects.
CRL has only recently begun the process of implementing the strategy and it is too early to assess the impact of the innovation program on the performance of the project. Because our research is confined to a single case, further collaborative action research is required to verify if these steps can be replicated to promote innovation on other megaprojects. Future work might also consider how collaborative action research could create a more comprehensive innovation strategy for a megaproject which embraces all four stages of innovation interventions identified in our study. While our intervention in the leveraging and sharing stages could be replicated on other megaprojects, it is likely that other forms of action research would be needed to support efforts to intervene and make innovation happen in the learning and tendering stages.
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Andrew Davies is Professor of the Management of Projects in the School of Construction and Project Management, the Bartlett Faculty of the Built Environment, University College London. He is author of The Business of Projects: Managing Innovation in Complex Products and Systems, Cambridge University Press (2005), co-authored with Michael Hobday, and The Business of Systems Integration, Oxford University Press (2003, 2005), co-edited with Andrea Prencipe and Michael Hobday. He is on the Editorial Board of the Project Management Journal and an Associate Editor of Journal of Management, Industrial and Corporate Change, IEEE Transactions of Engineering Management, and Engineering Project Organization Journal.
1 Matched with that provided by the EPSRC Innovation Studies Centre at Imperial College Business School.
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