...cost. Twice a year he will gauge the contractor’s performance against objective criteria, such as schedule, quality and safety. But he will also exert his authority over some of the award with subjective and unilateral decisions.

“It’s [BAA’s] money, and I’m willing to use it as a carrot. I’m not in favor of sticks,” he adds. Morgan says he will exclude liquidated damages from future contracts.

Morgan’s attention now is focused on Heathrow, where BAA is over a third of the way through procuring a $6.6-billion program to improve passenger facilities. Around half the work already has been committed under the previous strategies, leaving Morgan with the other half to reshape.

Where Morgan’s new approach will matter most is on Heathrow’s biggest contract, covering construction of the new $1.6-billion, 11,300-sq-m Terminal 2. Under a design-build contract for the building work worth over $1 billion, a joint venture of Laing O’Rourke Ltd., Dartford, and the construction division of Spain’s Ferrovial S.A., Madrid, has submitted costs, which BAA is now reviewing.

If it successfully negotiates costs, the joint venture will take on the terminal’s construction as the “integrator,” says Morgan. “One of the things we will probably do is require much of the work at the second and third tier to be competed,” he says.

If affiliates of the joint-venture partners compete for work, BAA staff will have a say in the contract awards to ensure value for money. Ferrovial has controlling ownership of BAA, but to Morgan, it’s “just another subcontractor,” he says.

With serious construction at Heathrow yet to begin, Morgan’s approach still has to be tested. But he says he has found little resistance to his ideas from BAA’s supply chain. Internally, “I don’t think anybody is opposed to competition,” he says.

“There are folks who have been raised on the philosophy of partnering and alliancing. And we are introducing some more traditional approaches...[while] taking the best from the Egan philosophy with some of these more-focused incentives that I’m used to. People are adapting pretty well.”