Limber up for the olympics

Better than Barcelona, slicker than Sydney and anything has to be better than Athens. No, we’re not talking holiday destinations, but construction of the London 2012 Olympics facilities.

Reversing the trend that the country is a nation of losers, Lord Coe and his team pulled off a spectacular bid, which many thought would fail at the final hurdle.

If all goes well the event could be a fantastic showcase for construction and help attract the thousands of workers demanded by the sector, stem the escalating manpower crisis and see the creation of world class facilities.

The task is massive. We’re looking at an estimated £9bn price tag, with construction taking up £2.5bn of it.

Much of the work involved was going ahead anyway but a 500 acre site in Stratford, East London will form the centrepiece alongside nine new venues that include the main 80,000 seater Olympic stadium. Work is already underway on two key venues – the £70m Aquatics Centre and the £30m Velopark cycling centre. Plans for the Olympic village include 5000 new homes and landscaping (see Construction timeline).

One key aim is to achieve the first sustainable Olympics and Paralympics (no waste and low emissions) and to adhere to the “no white elephant policy,” ensuring any facilities not needed or planned for after the games will be temporary buildings.

Securing the games not only brings a much-needed boost for the capital’s transport and sports facilities. But a major boost for the economy.

Arup provided a cost-benefit analysis, that looked at the implications of bidding and staging the games. The cost of London’s bid alone was £13m, but benefits could run into billions. Sydney spent over £2bn staging the games but was able to generate an extra £4.2bn of which £2.4bn was from additional tourism. On the downside, Athens is still trying to come up with billions to pay for hosting the games and it’s reported that Montreal (1976) will finally finish paying for the privilege of staging the games this year.

Hosting the Olympics is big business. If you get it right the whole world remembers and if you don’t, the whole world remembers you even more.

What this all means is that securing the Olympics can leave you feeling like double Olympic champion Kelly Holmes. Unfortunately, if all goes wrong, we may resemble a dejected Paula Ratcliffe in Athens.

With that in mind, CM looks at what needs to be done to ensure the capital stages what many people now reckon could be the greatest games ever.

What does it mean for the industry

The Games is a major coup for construction. The industry will need to raise its game to show that it can turn plans into reality and create a lasting legacy. Securing the Olympics also helps plug a workload gap. Forecasters have already predicted a dip, so bagging the Olympics could not have come at a better time.

There has also been talk that construction inflation could increase by up to 2 % in London and the South-east. However cost consultants Gardiner and Theobald is urging the industry not to panic about the impact of construction and the availability of resources just yet. It believes the impact will be limited to projects within 50 miles of the games. On a more positive note, shares in UK construction companies have rocketed, and consultants Deloitte suggests that 12,000 jobs in the sector will be created.

Slick Sydney, bold Beijing

Construction values vary differently from country to country. Health and safety may not be a major priority in countries such as Athens and Beijing. But it needs to sit equally alongside the welfare of workers and design quality. In this respect, Sydney got it right.

Hailed as the best games ever, the Sydney Olympics success story was not just about the glory for the medal-winning athletes. It’s more about how the magic was made. An official Olympic report into the Aussie Games reveals the main aims were the development of world-class sporting venues on a very constrained site and the protection of the natural environment.

An Olympic co-ordinating Authority was charged with building most of the venues and turning the Homebush area (essentially Wasteland) into a sporting and recreational precinct. There was a major transport strategy that integrated rail, bus, coach and ferry facilities as well as a pedestrian and cycle network.

Procurement methodology varied from venue to venue. For example the stadium was on the basis of a build, own, operate and transfer (BOOT) contracts and canoe slalom procurement was on a design and construct contract.

Smooth industrial relations helped. A code of conduct was set up that included a no-strike dispute settling procedure.

Health and safety was left in the hands of contractors and a conscious decision was made to have only major builders and contractors with good health and safety and industrial relation records on initial bids to ensure a smooth and orderly start to the construction programme.

In contrast, Athens provided a fraught build up to the games that included the International Olympic Committee (IOC) taking out a £93m cancellation insurance policy and delivering an ultimatum to organisers to finish the stadium roof or forget it. However it did get built on time. Problems were not down to contractors but a tortuous and dispute-prone procurement process, as CM uncovered in June 2004.

From Beijing, the capital can learn to get on with construction speedily. Peter Head, Director of Arup says the Chinese have a head for business and are able to build complex buildings fast. A process used in Beijing has been set up to look at ongoing costs. Known as the pound principles, it sets out a view from the IOC that costs should not be allowed to run away and get out of hand. Common sense must prevail.

Planning

The old business adage known as the five Ps – Perfect Planning Prevents Pathetic Performance, still rings true. If you just dive in and start building think trouble with a capital T. There is still a lot of detailed planning processes to go through and the scheme is still not totally defined. At the moment, time is on our side, the trick is not to waste it.

Security, health and delivery are the three essential ingredients and you can’t afford for any one of those to go wrong

Dennis Lenard, chief executive, Constructing Excellence

Who’s the Project Daddy?

Most people would agree that there needs to be one overall client authority. But at the same time there is a growing consensus that each project should be managed by its own project management team. Graham Watts, chief executive of the Construction Industry Council, says it would be wrong, and possibly against the rules, to have one company managing it all. There is enough work for everyone and innovation should not be stifled.

Skills

At the moment no one knows what is exactly needed, but Dennis Lenard, chief executive of Constructing Excellence is hoping to set up a taskforce to identify the skills needed for the games. He has already written to the DTI on this issue. He adds: “The skills that you need in delivery for Olympic facilities are not the skills CITB and others are talking about. These are skills using advanced technology, labour saving equipment, skills involved in off site manufacturing and capability.”

How will contractors get involved in the main decision making process?

The Strategic Forum for Construction is hoping to unveil its Olympic taskforce this month. This will be the body that will interact with government, industry and the various Olympic agencies. It will include construction Minister Alun Michael. Watts says it will act as an early warning system to ensure that high level problems are dealt with and channelled to Government.

Clear lines of communication and employ good people

There needs to be clear delivery command centre. This includes no turf wars between government departments. One way to overcome this is to do what the Greeks did and put a sole minister in charge. Currently London has Olympics minister Tessa Jowell, but that doesn’t stop others attempting to get a piece of the action. John Prescott, maybe? Or mayor Ken Livingstone? In terms of construction, world class teams need to be appointed who have experience in delivering major projects and expertly integrating supply chains.

Procurement, cost and contract

The Olympic Delivery Authority (ODA) will control work on venues but it isn’t set up yet. Meanwhile, the London Development Agency is temporarily in charge, and claims to be trawling the private and public sectors for best procurement practice.

The ODA will need to choose forms of contract carefully to control costs. (Think Construction Management and the Scottish Parliament.) Originally the Greek Olympics were going to cost £740m, but the expected final cost is rumoured to be £8bn.

Construction lawyer Helen Garthwaite of Taylor Wessing is plumping for the NEC Third Edition suite. Others commentators will push their favourites, but at least the ODA has a better range to choose from than it did 10 years ago to match the needs of each project – including some tried and tested partnering-type ones.

Beyond contracts, design changes are often the killer, says Watts. “You will need a very clear approach to fixing designs at a point in time and then not changing,” he adds.

Clean Games

We are not referring to stamping out steroids. A concerted effort must be made to ensure contracts are open and transparent. Beijing is operating a very strict anti-corruption policy and has adopted an open tendering process. An independent committee awards tenders and monitors projects. All contractors can be subjected to audit by the state. London may have to adopt a similar model if the aim is to be clean and seen to be clean.

Local involvement... and don’t forget the little guys

Local companies need to be in with a chance to compete and win contracts to build or supply services to the games. The London Development Agency will be setting up an Olympic Business Intelligence Unit in the Lower Lea Valley, to give local businesses warning and notice of potential contracts. The Forum of Private Business (FPB) has written to the London’s 2012 organisers calling on them to ensure small businesses get a fair share of the contracts available. It has warned that big businesses would attempt to bully themselves to the front of the race to win the golden array of Olympic contracts.

Security

Recent attacks on the capital as well as attacks in Munich in 1972 and Atlanta in 1996 have made security the number one issue for the Games. Detailed thought will have to go into examining logistics, materials handlings, systems and processes. Workers will need to be vetted and work on secure sites. Access will have to be monitored and well policed. All security measures will need to be priced into contracts.

Disputes

They’re endemic to high-profile, time-sensitive jobs (think Multiplex vs. Cleveland Bridge at Wembley). Why not defuse disputes before they arise? One idea already mooted is an Olympic development adjudication board, or dispute resolution authority, that ensures projects are not held hostage to disputes and are dealt with fast. Garthwaite, urges the ODA to consider on-site adjudications and not to rule out mediation as the first point of call.

Okay, give me a worst-case scenario

Here it is, courtesy of Lenard: “We have health and safety problems, we have security problems and we have delivery problems. And then I would love to be an international contractor. I’d come in to take over the rest of the construction work in the UK, because nobody in the UK will ever get another construction job. Security, health and delivery are the three essential ingredients and you can’t afford for any one of those to go wrong.”