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Executive Summary Report

Construction Logistics

Consolidation Centres

‘The BAA Construction Logistics Consolidation

Centre operated by Wilson James and Mace is one

of the most progressive demonstrations of how

lessons learnt from other industries can improve

the performance of the construction industry...

I feel that the lessons learnt are of great

importance to the UK construction sector... This is

something that you can do and this operation can

be transferred to other project types.’

Nigel Griffiths MP Minister for Construction

This report is the culmination of a one-year Department of Trade

& Industry (DTI) sponsored research project under the ‘Partners

in Innovation’ scheme. The report provides an examination of

how Construction Logistics Consolidation Centres operate, the

benefits they bring, difficulties encountered and how they can

be adapted to suit a variety of construction projects.

A copy of the full report is available on request by emailing

info@consolidationcentre.com.

Project website: www.consolidationcentre.com

“There should be greater focus

on supply chain management

and logistics to facilitate the

elimination of waste”.

Why Research this Subject?

Logistics Consolidation Centres are a new innovation to the

construction industry. Traditionally, supply chain management

and logistics skills in the construction industry fall some way

behind other industries, such as manufacturing and retail, and

there is opportunity to learn from their success. In these

industries improvements, in supply chain management and

logistics techniques have been adopted over a number of years

to improve efficiency and profitability.

In order to enhance the performance of the construction

industry it was recognised in “Accelerating Change” that…

“There should be greater focus on supply chain management

and logistics to facilitate the elimination of waste”.


So why is this important? Overall, the construction industry

contributes up to 10% of the UK’s annual GDP

(Source: “The Social and Economic Value of Construction”,

Pearce, 2003). Previous research has shown that up to 20% of

all construction costs are transport-related (Source:

“Construction Transport – The Next Big Thing”,

Building Research Establishment, 2003). If just a small

improvement were made in reducing the amount the industry

spends on transportation and distribution this would yield

massive cost savings.

In addition, the UK’s national and local road networks are

becoming more congested every year. This further decreases the

efficiency of all types of urban freight distribution. Whilst the

introduction of congestion charging in major cities addresses

part of the congestion problem, it will no doubt add to the cost

of construction in these locations. An ever-increasing emphasis

on environmental considerations, (congestion, pollution, noise)

not least from a legislative point of view, means that the

construction industry must address this challenge.

Construction goods, (excluding steel frames, ready-mix concrete,

etc.) are delivered into the Centre during the daytime in relative

bulk – prior to being ‘called off’ by trade contractors in the

quantities required for use in the immediate future in

workpacks, following a ‘just-in-time’ approach. Goods are

checked on arrival at the Centre for quantity and condition,

ensuring any problems are highlighted at an early stage.

The Centre does not store goods in the conventional sense (no

more than 7 days is the ideal). It distributes ‘just-in-time’ to

meet the daily needs of construction sites - demand pull - the

‘Holy Grail’ of supply chain management.

Goods are consolidated, which means that multiple part-loads

are combined into single shipments. This process maximises

the efficiency of distribution vehicles and leads to a substantial

reduction in overall vehicle numbers delivering into a

congested environment.

Radical solutions and innovative working practices are needed to

overcome these problems. This research focuses primarily on the

Heathrow Construction Consolidation Centre, which supports the

delivery of major capital construction projects at Heathrow

Airport, London. In addition, the research is supported by an

examination of the Stockholm Logistiks Consolidation Centre,

which serves the largest urban regeneration scheme in Sweden

and shares remarkable similarities with Heathrow.

The aim of this research was to show how the benefits

and lessons learned could be applied to the wider

construction industry.

What is the Heathrow Construction

Consolidation Centre and How Does it Work?

The Heathrow Construction Consolidation Centre operates as a

distribution centre for construction materials, plant and

equipment that are used on construction projects at Heathrow

Airport (Terminals 1 – 4). Aside from Terminal 5, BAA typically

spends £300 million per annum at Heathrow alone on a wide

variety of projects to update and improve the existing terminals

and infrastructure. This is a huge undertaking, given that the

airport typically handles 65 million passengers per annum and

airport operations and passenger service must continue

unhindered by construction activity. The main purpose of the

Consolidation Centre is to promote the efficient flow of

construction goods from supply chains to actual points of use

on projects. It is neither a ‘warehouse’ or ‘builder’s merchant’.

The key feature of the Centre is that goods are delivered not just

to the site entrance – but to specified locations as close as is

practicable to the workface, by material handling operatives.

They are specialists in their field and use an extensive range of

vehicles and mechanical handling equipment necessary to

complete distributions safely, efficiently and without damage.


Executive Summary Report

Construction Logistics

Consolidation Centres

In addition they deal with all associated issues, such as overall

co-ordination of distributions, (to avoid clashes) ‘walking’

intended access routes, arranging road closures, lifting plans,

health and safety of site workers and the general public,

(erecting pedestrian barriers, etc.) ensuring that order is created

in the distribution process. Trade contractors are left free to

concentrate on their core tasks, without worrying about the

coordination and supply of goods to site, or the need for their

specialist trade operatives, (who are often working in short time

windows) to be diverted away from production to assist with

material handling.

The Consolidation Centre is reliant upon the information it

receives from trade contractors. A series of simple processes and

systems have therefore been developed to facilitate the

operation of the Consolidation Centre. This includes a

comprehensive programme of KPI’s to measure the performance

of the Centre and its impact on the construction projects that it

serves. Ambitious performance targets have been set and

achieved – measuring, for example ‘right goods, right quantity,

right condition, right place and right time’ –

with the emphasis on continuous improvement.

Economic Benefits

● Net project construction costs can be reduced by 2%.

● Delivery costs can be reduced for material suppliers.

In particular, waiting times for off-loading deliveries can

be reduced by 53 minutes on average (Consolidation

Centre compared to Central London sites). Additionally,

92% of delivery drivers surveyed said that they allowed

an extra 30 to 60 minutes to their travel time to meet their

scheduled delivery slot on City Centre sites. Lastly, the impact

of any congestion charges can be mitigated.

● An improvement in plan reliability on projects by up to

5%, by increasing the certainty of material deliveries to

sites and using the Consolidation Centre as a ‘production buffer’.

● Improved productivity - skilled trades are able to spend more

time at the workface. This will become even more important

as the shortage of skilled trades is forecast to worsen.

● Better planning – by using the consolidation process

more disciplined planning by trade contractors is introduced

● Improved delivery certainty – 99% successful

● Reduced potential for theft of materials

● Collection of unused materials for use elsewhere

These processes and systems could easily be adapted for use on

other construction projects as required.

What are the Principal Findings

of the Research?

A comprehensive report has been completed which details:








The research process and methodology

What is a Consolidation Centre and how does it work?

Resources required including people, buildings,

vehicles and equipment

Processes and systems

What are the benefits?

Alternative models

Transferability to the wider construction industry

The principal findings of the report demonstrate how using a

Construction Logistics Consolidation Centre can enhance each of

the key tenets of sustainable construction (economic,

environmental and social) and how consolidation methodology

can be adapted for wider use in the construction industry.


Executive Summary Report

Construction Logistics

Consolidation Centres

Environmental Benefits






Reduced pollution - CO2 emissions for local delivery

journeys can be reduced by up to 40%.

Reduction of local vehicle movements – by up to

20,000kms in a 12 month period, decreasing traffic

congestion and noise.

Reduced congestion – suppliers and trade contractors

deliver to the fixed point of the Consolidation Centre,

rather than having to find ever-changing drop off points

for different sites. In addition the Consolidation Centre

distribution teams know exactly where to distribute

materials to and what the local constraints are at

the outset.

Reduced waste – materials delivered to site ‘just-intime’

reduces on-site damage.

Recovery of re-usable materials, e.g. pallets, cable drums,

stillages, hoardings, etc. which are often disposed of

using traditional distribution methods.

Social Benefits




Minimising the impact of construction work on the

local community.

Improved safety – reduced site storage mitigates

accident risks.

Improved security – using ‘known’ vehicles

helps security.

Transferability

All or part of the Consolidation Centre methodology can be applied

to other construction projects. This might include the use of a

dedicated distribution centre, vehicle marshalling/holding area,

goods taken to the workface by site-based or mobile distribution

teams or any combination of these. Each solution will be a hybrid

to suit the circumstances of the project(s) that it serves.

Most likely applications are:-

● Major city centre developments, with difficult traffic

and access constraints

● Urban regeneration schemes

● ‘Live’ operational sites with limited ‘possession

working’, e.g. underground railways, hospitals,

shopping centres, other airports

● Major capital projects – e.g. London Olympics 2012

● Security sensitive sites – e.g. military, prisons,

financial institutions, government facilities

● Multiple projects with common supply chains –

e.g. retail fit-out programmes


Further Information

For further information about Construction Logistics

and Consolidation Centres, contact:

Wilson James Ltd. - Ian Lister, Tel. 01702 346222,

Email: ian.lister@wilsonjames.co.uk

Mace Ltd. – John Brooks, Tel. 020 7554 8000,

Email: jbrooks@mace.co.uk

BAA plc – Chris Ctori, Tel. 020 8745 2792,

Email: chris_ctori@baa.com

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