Transforming Asset Management at London Heathrow

Andy Green
Strategic asset management has enabled Heathrow to achieve significant efficiency and cost savings, by taking a whole life value approach.

Since 1955, London’s Heathrow Airport has been connecting people from around the globe, becoming one of the world's busiest international airports. Future plans will increase capacity by 30 per cent, as part of the airport's 2030 master-plan development. However, the airport faces stiff competition from other European hubs and must continue to improve the service it offers passengers and airlines. Current economic and regulatory pressures reinforce the drive for whole-life cost reductions and efficiency improvements. To support delivery of its vision, Heathrow Airport Limited (the airport operator formerly known as BAA) recognised the need to invest in its ageing asset base.

In 2012, Heathrow identified a need to change the way it delivers and manages its capital projects, by driving asset management and whole-life value thinking into every decision it makes. This would result in better value from every pound spent, while continuing to improve the already positive passenger experience. Financial constraints meant that the budget for the renewal of life-expired assets would need to be structured over a number of years, in five-year cycles. This programme of works had to be delivered while driving down operating costs.

The airport needed a better understanding of its assets and we began by helping our client to accurately define a portfolio view and specific asset view of the estate.

A long-term transformational approach was needed, focusing on how the airport’s assets should perform, how to operate these assets differently to make them available over their required service life, and how to minimise maintenance. Faithful+Gould has significant experience in the aviation sector, enhancing a similar asset management initiative for Manchester Airport Group – this effectively aligned all assets to their core business function of 'moving people, baggage and planes'.

As part of Atkins' early design option studies, Faithful+Gould led an exercise that has transformed Heathrow's approach to the management of the asset replacement programme. The airport needed a better understanding of its assets and we began by helping our client to accurately define a portfolio view and specific asset view of the estate. This created a structured grouping of asset systems (e.g. runways, air-bridges, fire mains, etc), enabling informed exploration of the best asset system strategy to maximise performance, efficiency opportunities/ benefits and reallocation of investment against available funds.

Adopting whole-life value thinking successfully identified the best option for dealing with the asset replacement programme of works.

Our evaluation began by facilitating stakeholder discussion on each asset type, to translate the business requirements into specific whole lifecycle performance, risk and cost outcomes. This helped our client identify the precise purpose and operational requirements of each asset type. The emphasis was on finding smarter ways of achieving whole lifecycle asset efficiency, based on identifying operational lifecycle cost reductions, not just capital spend.

Adopting whole-life value thinking successfully identified the best option for dealing with the asset replacement programme of works. It was important to keep within the capital funding limits, as well as reducing the operating costs compared to current expenditure. Investment business case decisions could then be based on lifecycle costs.

Airport operations are not the only potential beneficiary. The techniques are transferable between sectors...

This more creative thinking led to better solutions for long-term performance, looking ahead across the next 20 years. The methodology and whole-life value evaluation criteria worked every time, driving asset management and whole-life value thinking into all project options studies. A cultural change was effected, shifting the thinking around lifecycle asset management and enabling our client to make more informed decisions. A new way of working was established, resulting in a legacy system that will be embedded in all future projects. Lessons learned from the original process will continue to inform and enrich the ongoing estate planning.

The strength of this service lies in its ability to simplify the translation of business asset management objectives into project option studies. Airport operations are not the only potential beneficiary. The techniques are transferable between sectors and can achieve major cost savings on investment projects and/or any retained estate, as evidenced by our client’s comments above. Following our success at Heathrow, we have been commissioned on a similar exercise for Network Rail, to enable them to mandate whole life costing on all future infrastructure projects.