London Olympic Stadium Essay
- Length: 4 pages
- Sources: 4
- Subject: Business - Management
- Type: Essay
- Paper: #55235496
Excerpt from Essay :
Construction of London Olympic Stadium
Within the management-orientated system, the solution proposed is Construction Management (CM). Under the CM system, the Client employs an Architect and a Construction Manager, who oversees the works of individual Contractors (Smith, 2003). The system ensures that the Contractor and the Architect are put on an equal footing before the Client, and that the Construction Manager is able to provide design advice, particularly in regards to buildability. Compared to the Management Contracting (MC) system, the Client still enters in a contractual relationship with the Contractors (Masterman, 2002). This relieves some of the risk from the Construction Manager, and also allows the Client to better control the hiring process and the performance of the Contractors. This may be a key element in ensuring the timely and quality delivery of the Stadium project (Turner, 2005).
The organizational structure proposed is summed up below:
* Programme Manager does not have contractual links with other parties except for the Client.
Architect (Concept Design)
Architect (Stadium Design)
The CM system can achieve the key objectives of Time and Quality in this project (Smith, 2003). Thus, CM has been associated with a 'prestige' level of quality, according to the Construction Round Table's guide to the building process, cited in Masterman. In addition, Masterman points out that research shows that on average, design and construction are completed more quickly than using conventional systems (Turner, 2005). The Cost of the project may be mitigated by increased competition and control over costs achieved if the employer enters direct contracts with contractors. Other advantages include a better working relationship within the project team and more constructive attitudes at managerial and operational levels (Masterman, 2002).
In regards to the payment mechanism, the project is complex and high profile; therefore, risk should be shared to some degree between the Client and the Contractor. The solution suggested is the use of a cost-reimbursable system, more specifically target cost (Turner, 2005). Cost-reimbursable systems are open-book accounting, based on payment of actual cost incurred by the Contractor plus overheads and profit. Amongst the cost-reimbursable systems, target cost is the more suitable for this project, as it could give a provisional indication of the final cost (Smith, 2003).
In accordance with CIRIA Report R85, cost-reimbursable contracts should be used in case of:
1.Inadequate definition of the work at the time of tender due to emphasis on early completion and/or an expectation of substantial variation in work content
2. Work of exceptional organizational complexity i.e. multi-contract situation, involvement with statutory undertakers and/or when access is restricted
3. Work involving technical innovation or exceptional technical complexity
4. Any other situation involving major unquantifiable risks to the Contractor, including effect of inflation, work below ground level and/or abnormal industrial relations
5. Some recurrent work
The Architect for the in-depth design would generally be expected to work in parallel with the Construction Manager and some of the Contractors; the estimation of proper Bills of Quantity might be difficult at the beginning (Smith, 2003). The specific requirements of the Client, the problematic ground conditions, and issues related to the inflexibility of time and quality standards may cause substantial variation (defined by CIRIA R85 as more than 15-20% of the tender price). Organizational complexity is present through multiple contracts; access might also be a problem due to the ongoing works on several adjacent sites (Masterman, 2002). Technical innovation and technical complexity are also issues to consider, as the stadium's design must reach iconic level and allow for the later conversion into the 25,000 seat permanent stadium. CIRIA R85 also argues for the cost-reimbursable payment system when the Client has a particular interest in maintaining good labor relations, which is an important aspect here particularly due to visibility issues (Masterman, 2002).
Cost-reimbursable - target cost contracts create a high degree of collaboration amongst the parties, and are suitable for large projects where work is well defined, technically complex and highly risky, where input from contractors is desirable and the client wishes for training or development of local skilled labor (Turner, 2005). Disadvantages of target costing include agreement on when to adjust the target or setting the target at an unrealistic low level. To mitigate this, the partnering charter should include provisions for target adjustment, while the competitive dialogue tendering system outlined below could avoid setting an unrealistically low cost level (Smith, 2003).
In the event that there were any cost increases that were seen as non-recoverable then they managers had to go to the government and get a release of contingency, referring to the £2bn pot that had been set aside for overspend. They were not able to seek any release of contingency, but clearly they were not immune to the impact of the credit crunch and the deteriorating property market (Masterman, 2002). The reality for Armitt is that at that stage in the programme, there were fewer and fewer opportunities for cost saving and more and more opportunities for costs to rise. With construction activity on the vital venues and facilities starting and major infrastructure contracts let, the time for change was running out. For example, the saving from reorganizing venues for handball and basketball and moving fencing out of the park took nine months to plan and approve (Smith, 2003).
Coming up with similar high-value savings would be di-cult as there was less time available. That is not to say further changes would not be required to the 2012 plans, not least due to the so-called "Beijing factor." Lessons from the Games in Beijing could cause a rethink of designs or operations even at this late stage (Masterman, 2002). Armitt's role would be to ensure that any changes that are proposed at that stage were made with a full understanding of the consequences (Turner, 2005).
For people who would not understand construction Armitt tried to bring a greater understanding of the construction process and the risks and the capacity of the industry. He tried to give people con-dence in the industry to deliver. In the immediate term the biggest challenge was building things on time and to budget -- that was what they were there to do. Controlling costs in the current global economic situation would not be easy (Masterman, 2002).
The Olympic Stadium is a major work projected to take place in view of the 2012 London Olympics. The Stadium will have 80,000 seats and will host, amongst others, the opening and ending ceremonies, as well as the main athletics events. The focus of attraction for several million Olympic watchers, it has been identified as a "flagship venue" by the London Olympic organiser. The new construction will be part of the wider Olympic Park, which includes several buildings and venues (Smith, 2003).
The Client of the Olympic Park is the Olympics Delivery Authority (ODA). From an analysis of its senior management team, it appears to be a knowledgeable Client with a lot of experience in projects. However, taking into account the uniqueness of the project, its large size and major public impact, this analysis considers that the Client needs enhanced support in delivering a successful project (Masterman, 2002). It is thus recommended that the Client employs a project management consultant (Programme Manager), which would support the projects' delivery (Turner, 2005).
The Olympic Park is treated as a programme of projects. The advantages of working with a programme rather than individual projects are comprised by efficiency and effectiveness goals (effective resource utilisation, knowledge transfer, management of the project interfaces, improved coordination) and business focus goals (alignment of projects to the wider culture, values, requirements and drivers of the organisation) (Smith, 2003). Thus, managing through programmes should, at least theoretically, produce coherency and better coordination of the projects. In practice, there are several…