Heathrow T5 Construction Costs Over Budget
New information has emerged in respect of the mechanical and electrical (M&E) costs associated with London Heathrow Airport's Terminal 5, which, according to Contract Journal, are over £100 million adrift of the forecast budget. The construction journal added that the number of electrician hours has grown by almost 50 per cent over the original allocation. Specifically, six million man hours in respect of M&E has now skyrocketed to 8.8 million hours, according to information provided at a recent site meeting.
Contract Journal quotes a source with inside knowledge of the Terminal 5 build as having said: "There are some huge numbers there in terms of cost overruns. Every spark [electrician] is being paid £21-an-hour, plus there are the incidental costs of employing people, so the real price to the client is around £30 to £35 an hour. Multiply that by nearly 3 million man hours over budget and you're talking a lot of cash."
Heathrow Terminal 5's M&E work is regulated by the Major Projects Agreement, under which terms favourable rates of pay are guaranteed in return for solid industrial relations and increased levels of production. Contract Journal adds that, although it was anticipated that just 250 pipefitters, electricians and plumbers would be working on Terminal 5 by October 2007, 1,300 still remain on site.
Heathrow's owner - airport operating group BAA - insists that Terminal 5 is running to time and within budget. The new building is set to be opened in March 2008.
A BAA spokeswoman reinforced the company's stance. As quoted by Contract Journal: 'Since the budget was initially set in 2002, the scope of work on T5 has changed as we have progressively taken on additional third-party work."
"We have been reimbursed for this work and T5 remains on time and on budget."
She added: 'Changes to the scope of work have resulted in changes to resource requirements. However, over the next few weeks the number of workers on site will reduce in line with a planned rundown of resources. The final phase of the project's development, operational readiness, is now well underway and the building's systems and process are being tested by members of the public."
Source - Construction International's London Reporter
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