Capital Investment Plan 2009 - Heathrow Airport

A principal objective for any CIP publication is to set out the budgets for the proposed
investment activity. CIP 2008, itself based on the CAA regulatory decision for Q5, was
used by HAL to prepare project specific budgets for Q5. These budgets, known as
Current Control Budgets (CCB’s) are monitored on a monthly basis and can only be
adjusted via the change control process. (Refer to section 5.7 for information on change
control.)
CIP 2009 is, at its most basic level, a publication of the current state of budgets for
possible investments at Heathrow. Appendix Q: Cost Schedules provides the detailed
listing of project budgets while Appendix C to Appendix O inclusive shows the
information against each projects via the relevant PDS.
In future publications of the Heathrow CIP assumed budgets for Q6 and beyond will be
shown however, until the relevant regulatory processes have been completed, such as
budgets will not become fixed. A number of projects that commence in Q5 will
complete in Q6. While no regulatory settlement exists for Q6, and the general
preparation of a Q6 and beyond capital investment plan needs to sit within the context
of the issues outlined in section 2, this publication needs to show the “roll over” nature
of those Q5 projects into Q6. In order to do this the element of Anticipated Final Cost
(see section 5.2.2), excluding R2 and inflation for the projects that is forecast, at
February 2009 month end, to be incurred during Q6 is shown in Appendix Q: Cost
Schedules as the Current Control Budget. I.e. for projects that start in Q5 but complete
in Q6 the Q6 Anticipated Final Cost has been assumed to equal the Q6 Current Control
Budget. This methodology has been adopted to allow the full cost phasing of currently
planned works to be shown without prejudice to future consultation and regulatory
decisions on Q6.
In line with the information presented in section 5.4 HAL is using CIP 2009 to set Q5
budgets to a “real” 2008 / 09 coat base. These budgets are those that have been
arrived at by;
• February 2009 month end data,
• Change Control (see section 5.7) process, and
• CIP 2009 inflation assumptions (refer to section 5.4).
For clarity the R2 risk pot is treated as a budget for a “project” called R2. Refer to
section 5.7 for further information.
CIP is produced in constant prices (refer to section 5.4). However, on a monthly basis
HAL presents to the CIP Working Group information on budgets including on allowance
for inflation. The inflation allowance is shown as a bottom line adjustment to the
individual project budgets shown in the CIP, the project budgets remain in the current
CIP cost base.
5.2.2 Anticipated Final Cost Information
The monthly reporting that HAL undertakes with the airline community, via the CIP
Working Group, focuses on performance of projects against budget. That performance
is measured by viewing the Anticipated Final Cost (AFC) against the CCB.
The CIP, as a budgetary document, does not present AFC information for the totality of
the investment, but does, from CIP 2009 onwards, provide project specific AFC
information in the PDS documentation.
Internal File Name: 0903XX-CIP 2009 Main Document-V71-IG 37