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Olympic chief banks on partnering to deliver the Games on target

NEWS FEATURE

London's Olympic Park and its facilities must be ready for the opening ceremony in July 2012. John McKenna finds out how its organisers plan to work with contractors to deliver the Games on time.

PARTNERSHIP BETWEEN client and contractor is key to the successful delivery of London's Olympic Park. That was the message from Olympic Delivery Authority (ODA) chief executive David Higgins when he unveiled plans for the procurement of the project's programme manager last month.

In a clear reference to the delays and cost overruns that have plagued construction of the new Wembley stadium, he said the programme management contract would be 'different to many contracts which focus solely on penalising failure'.

Wembley is being built as a design and build contract. It is expected to cost contractor Multiplex at least £116.4M in costs beyond the £445M fixed price agreed with client Wembley National Stadium and in penalties for late completion.

While the Football Association has been able to move this year's cup final to Cardiff, it has lost revenue and credibility. Higgins and his team are acutely aware that they will not have the luxury of being able to switch to a stand-in Olympic Park if London is not ready for the opening ceremony on 27 July, 2012.

For this reason the ODA has examined complex but successful UK construction projects like Heathrow's £4.2bn Terminal 5 (T5) and the £5.2bn Channel Tunnel Rail Link (CTRL). It concluded that working hand in hand with contractors was the best way to meet the deadline and the budget.

Whoever wins the prestigious contract to manage construction of the £2.3bn Olympic Park will be known as the ODA's delivery partner. It will be expected to manage planning, design, construction, commissioning, maintenance, costs and conversion to 'legacy mode' after the games. All of this will be done in close consultation with the ODA, with which the delivery partner will share an office. Both teams will share cost savings and the ODA will reward the delivery partner for elimination of risk.

This teamwork strategy, focusing on reward and partnership, follows the approach promoted by the Institution of Civil Engineers' nonconfrontational Engineering Construction Contract (ECC). This was used on both T5 and CTRL, which are on budget and on schedule.

Heathrow Airport owner and T5 client BAA adapted the ECC when drawing up the T5 Agreement, the project's construction contract. This involved contractors working as part of totally integrated teams including principal subcontractors as well as designers, BAA itself and British Airways, T5's end user.

Just as the ODA plans to do with its delivery partner, T5 contractors are paid on a cost-reimbursable basis. Performance is encouraged by offering bonuses for beating target costs and completion dates.

Contractors also share some of BAA's 'pain' when time and costs overrun.

But there are critical differences between the London Olympics and T5 and CTRL. The main one is that CTRL's owner London & Continental Railways (LCR) and BAA are both informed clients. They have large in-house procurement and project management teams, which supervise and manage risk at all stages of design and construction.

By contrast, Higgins wants the ODA to be a slim client without the resources of a BAA or LCR. Instead it will devolve most of its power to its programme manager, which will provide the resources and expertise.

'You need people who have already worked together on big projects and the ODA doesn't have those people in-house, ' said procurement consultant Frank Griffiths, who has advised BAA and the Department for Transport on procurement.

Griffiths applauds the ODA's decision to appoint an experienced delivery partner, but he has reservations about the procurement process and feels a number of issues have yet to be addressed.

T5 was able to encourage design innovation through partnering and, as a nine-year project, it had the time to do so. London's Olympic Park is being built over a much shorter timescale - four years' construction, with a year for commissioning.

'There is a need for simplicity in this, with proven designs, available components and ttings, ' Griffiths said. 'Designers might be tempted to go for name-seeking innovation but there should not be any untried engineering or embellishments.'

Wembley's main woe was its oneoff, innovative steel arch, standing 133m tall and with a 315m span.

An acrimonious dispute between stadium contractor Multiplex and steel subcontractor Cleveland Bridge delayed the arch and the project, escalating costs.

Griffiths identifies the culture clash between the public and private sectors as another risk the ODA will have to grapple with.

'The organisational structure is frighteningly complex, ' he said. He points out that the ODA is overseen by an Olympic board (whose members include the Mayor of London and the Culture Secretary) all of whom will have their own agendas.

'These so-called stakeholders are likely to want to have their say, ' Griffiths said. 'However, they have little knowledge of what's actually involved in construction projects and their main concerns will be to get re-elected.'

The line-up

The Olympic Delivery Authority (ODA) expects more than 60 companies to bid for London's Olympic Park programme management contract, most as part of consortiums.

Those already declaring an interest include Balfour Beatty/Amec, Parsons Brinckerhoff, Bechtel, Capita Symonds/KBR/Franklin & Andrews, Arup/Gardiner & Theobald, Mace/Davis Langdon and Lend Lease Projects.

The deadline for bids is 25 April.

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