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 week.
In what could be read as 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 on a design and build contract. It is expected to cost contractor Multiplex at least £116.4M as costs exceed the fixed £445M price agreed with client Wembley National Stadium and penalties for late completion kick in.
While the Football Association has been able to switch this year's FA Cup final to Cardiff, it has lost out on revenue and credibility. And Higgins and his team are acutely aware that they will not have the luxury of a Plan B if the Olympic Park is not ready for the opening ceremony on 27 July 2012.
As a result, 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) and concluded that working hand in hand with contractors is the best way to meet this deadline on time and to budget.
Whoever wins the contract to manage the Park's £2.3bn construction 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 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 positive teamwork approach, focusing on reward and partnership, is based on the ethos of the ICE's nonconfrontational Engineering Construction Contract (ECC).
This has been employed on T5 the CTRL, both of which are on budget and on schedule.
Heathrow airport owner and T5 client BAA adapted the ECC when drawing up its T5 Agreement - the project's construction contract. This involved contractors working as part of totally integrated teams, which include 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 costreimbursable basis.
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.
In contrast, Higgins wants the ODA to be a slim client. It will devolve most of its power to its programme manager who will bring resources and expertise to the table.
'You need people that have already worked together on big projects and the ODA doesn't have those people in-house, ' says procurement consultant Frank Griffiths, who has advised several government departments and major private clients on procurement.
Griffiths applauds the ODA's decision to appoint an experienced delivery partner but he has reservations about the procurement process and feels there are a number of issues yet to be addressed.
T5 was able to encourage design innovation through partnering and as a nine-year project had the time to do so.
The Olympics, on the other hand, are being built over the significantly shorter timescale of four years construction with a year for commissioning.
'There is a need for simplicity in this, with proven designs, available components and fittings, ' says Griffiths.
Wembley's main woe was its innovative steel arch, a one off, standing 133m tall and with a span of 315m. An acrimonious dispute between stadium contractor Multiplex and steel subcontractor Cleveland Bridge delayed the arch and the project, escalating costs.
Griffi ths identifies the culture clash between public and private sectors as another risk the ODA will have to grapple with.
'The organisational structure is frighteningly complex, ' says Griffiths. He refers to the fact that the ODA is overseen by an Olympic board - including 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. However, they have little knowledge of what's actually involved in construction projects and their main concerns will be to get re-elected, ' says Griffiths.