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Perfect Partners?

Olympic costs - Olympic delivery partner CLM is under the cosh. But isn't it being set up as a scapegoat?

LAST WEEK the group of politicians charged with keeping tabs on London 2012's progress demanded to know more about the Olympic Delivery Authority's (ODA) delivery partner CLM (News last week).

The Commons Culture Media & Sport select committee wanted to know why it is expected to cost £400M to employ the consortium of CH2M Hill, Laing O'Rourke and Mace to manage the transformation of a derelict, polluted brown d site into a 202ha park with world-class sporting facilities in four years - on time and under budget. The Department of Culture, Media & Sport (DCMS) and the ODA, now has two months to respond.

But the select committee is not alone in asking how the £400M gure was reached.

Culture Secretary Tessa Jowell clearly knew something that the ODA and CLM didn't when she told the Committee on 21 November that, of the con med £900M increase in the cost of delivering the park, £400M was to cover the cost of CLM's fee (NCE 23 November 2006).

When asked about this the following day, CLM deputy programme director Bob Card said it was news to him. Likewise, ODA chief executive David Higgins has always maintained that CLM's contract is worth £100M plus. One of the losing bidders told NCE that its price had been £250M.

But this week the ODA changed tack. 'Any overall cost is speculative at this stage.

In every case CLM is paid on the basis of its performance including its ability to deliver value for money, ' it said.

Events on select committee underlined the fact that the Olympics is clearly a political project, where government decides when and how to release information on cost. And CLM staff could be forgiven for thinking they are being lined up as scapegoats for the ballooning budgets.

The DCMS is also beeng up the team it employs to monitor the Games and will hire private sector experts to help keep costs under control.

Hardly a vote of condence in CLM.

The delivery partner role was introduced by ODA chief executive David Higgins and former chairman Jack Lemley after they took up their posts in January 2006.

Tearing up the original brief for a project manager, they decided that a delivery partner, a hybrid project/programme manager, was a better proposition.

The ODA was a newborn construction client, unable to grow fast enough to tackle the task ahead. So hiring a delivery partner meant gaining procurement and project management expertise instantly.

The delivery partner was to act as a virtual client, dening the scope of the venues and infrastructure, managing cost and doing its best to mitigate risk.

Six months on the select committee has found Higgins and Lemley's original explanation of the delivery partner's role unsatisfactory.

The original 90 day review period, needed to redene the scope of the project and nail down the costs has now taken CLM six months.

According to an ODA spokesman, the review work concludes today and CLM will be 'fully mobilised' tomorrow but what that actually means is extremely vague. The ODA spokesman con rmed that it has yet to even agree what CLM will do in 2007.

Meanwhile work on contracts already let continues unabated.

The masterplanning team will be handing in its planning application this month. Designs for the aquatics centre have been nalised, a contractor is being sought, and the demolition and remediation work has already started in those portions of the Park already acquired.

So if progress is going as well as the ODA would have us believe, before CLM has become directly involved, then why does it need a delivery partner?

Those already working on Olympic contracts report sightings of CLM staff as few and far between.

'I wouldn't say they are really working with us at the moment, ' says one insider.

'I would expect to see more of them after 2 February, but for now they just occasionally pop in to see what we're up to and request the odd document now and then.' Unfortunately CLM is unable to proclaim its achievements for itself - all communication is controlled by its masters at the ODA.

On CLM's behalf the ODA says that CLM has:

Fully aligned delivery plans, policies, systems and tools with the ODA

Worked with the ODA to put together the detailed delivery schedule that will ensure the Games are delivered on time

Put together an expert team and fully co-located with the ODA at the Authority's Canary Wharf HQ.

The ODA adds that having completed its main mobilisation tasks by the end of 2006, CLM has been able to trial run its full programme management role during January.

And it has also been managing the contracts to bring the power lines cutting through the Park underground and to remediate the Olympic Park.

The ODA says that this elongated planning period will ensure CLM can do better the job of controlling cost and mitigating risk during the peak construction period between 2008 and 2011.

But the recent and unresolved controversy over the cost of the Games threatens to crush any positive incentive CLM has to do this.

The delivery partner makes its money on a pain-gain basis - that is, when projects are delivered on or ahead of time and on or under budget, they are given a proportionate nancial reward by the ODA. Conversely, if projects overrun, CLM will share its client's pain.

The construction budget for the Olympic Park is nally due to be made public this month in the ODA Corporate Plan, and CLM has worked closely with its client and the government on this.

And therein lies the problem - CLM is made up of seasoned industry professionals, who, while apparently winning the job by demanding lower fees than Bechtel, would have nothing to gain by optimistically pricing the entire package of work.

So, for example, after months of research, CLM may have decided that the most realistic budget for the project is £10bn - it then has to get this past DCMS, and more importantly, the Treasury.

No doubt nothing but the most optimistic of budgets is going to make it past a government whose departments have a track record of under-pricing infrastructure projects. The DCMS has also been persistently hounded for the perceived sharp rise in cost from the initial £2.37bn stated during London's bid to host the 2012 games.

The end result is that CLM faces a Herculean task in finding any kind of signicant savings for which it could be rewarded.

Its main aim will be to avoid projects going over budget - because if they do, it and the ODA will pay - the only difference being that CLM isn't bank rolled by the government.

Who is CLM?

The ODA and CLM refuse to conrm the identity of the individuals working for them and will only say that CLM has 100 staff on its books and has allocated a project director and project designer to all major venues.

Some key staff were revealed when CLM won the role:

Chief executive and programme director: CH2M Hill engineering and construction director Ron Brookes Chairman: Ray O'Rourke Deputy programme director for planning and integration:

CH2M Hill international group president Bob Card Deputy programme director for delivery: Laing O'Rourke construction director for T5 Steve Cork Deputy programme director for project controls and contract, design and engineering: Mace infrastructure director Mark Reynolds Head of programme and planning: Mace director Gary France Head of risk management: Mace head of risk management Phil Brown

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