Multiplex vs WNSL: The squeeze is on …

So how bad can it possibly get? The Wembley stadium project is presently eight months late and something like £400m over budget, but that is just the interim position. According to the latest statement from Multiplex, it may not be finished until June 2007.

The announcement of this delay began a three-day war of words between the main contractor and its client, Wembley National Stadium Limited. Multiplex blamed WNSL for the delay and WNSL vehemently denied it. News then emerged that fighting had broken out in the form of a referral to adjudication, the first step in a legal battle over damages. How much money will be involved is anyone’s guess, but a plausible estimate is £200m.

The principal question now is what a set piece legal battle between client and contractor will mean for the project. Last week, the Football Association stepped in to the conflict for the first time to announce that it remains confident the stadium will be ready for next year’s FA Cup Final. Here’s Building’s best guess at what the real implications for the project are, based on the public utterances of the rival parties.

SITE ACCESS

What they say

WNSL

“We can only begin the final stage when Multiplex has sufficiently finished its works. At that point we will be able to enter the stadium to start the handover process.”

Multiplex

“There are a number of critical works and activities that are the responsibility of WNSL and the timing of the completion of these works is under the control of the client.”

What this means

The animosity and mistrust between the two sides runs so deep that they are refusing to be on site alongside each other. WNSL alleges that Multiplex is blocking its access, and in any case is claiming that it cannot begin the commissioning works for which it is responsible until Multiplex has handed over the stadium. This includes checking essential communications systems and CCTV circuits. Multiplex alleges that WNSL is not ready to undertake its works, and so it is up to the client when it chooses to come on site.

The commissioning works need the input of the client to ensure that they meet WNSL’s requirements. Originally, it was intended that WNSL would come onto the site during the final stages of Multiplex’s work so that these two phases could be conducted together, with contractor and client collaborating to save time.

The fact that this is not happening not only prolongs the programme, but also means that several areas of work completed by Multiplex, such as floor coverings, will have to be torn up and relaid once WNSL and its subcontractors have put their cables in.

PRACTICAL COMPLETION

What they say

WNSL

“The contract with Multiplex has two critical future milestones which Multiplex has deliberately confused. Multiplex is required to hand WNSL a completed stadium which is defined in the contract as ‘practical completion’. WNSL then has to work with Multiplex to finish certain works and to hold the various test events … to achieve operational completion.”

Multiplex

“Unless and until WNSL holds and successfully completes the series of test events, and obtain the required approvals, Multiplex will be prevented from achieving practical completion.”

What this means

Multiplex is arguing that under the terms of its contract it can only achieve practical completion, and therefore be paid for its work, once the stadium is ready for use. This means that WNSL will first have to complete its own works. Any delay by WNSL, such as Multiplex is alleging, counts as an “act of prevention”, and may entitle the contractor to claim compensation.

WNSL, however, argues that Multiplex will achieve practical completion once it hands over the stadium for WNSL to carry out its work, and does not need to wait for the stadium to be fully commissioned. If WNSL is correct, Multiplex would continue to be liable for the delays until it hands over the stadium, offset only by any amounts Multiplex can counterclaim for design changes. However, WNSL says there are no significant design changes.

As the original contract for construction was famously brief – it is understood to have been tendered on the basis of a two-and-a-half page document – it is unlikely that either side has a clear-cut case. The two are in adjudication to clarify contractual terms, and the issue of practical completion is likely to be covered by the eventual ruling.

FURTHER DELAYS

What they say

WNSL

“In the absence of a detailed programme of work from the contractor that we can rely on, we estimate that Multiplex will finish its work at some point late this year.”

Multiplex

“In the absence of a detailed programme having been provided by WNSL, Multiplex has conducted its own analysis of the programme to completion of the client works … [this suggests] that it is unlikely that the stadium will be able to hold a test event for 90,000 spectators before June 2007.”

What this means

The only point on which the two sides seem to agree is that there is no overall detailed programme of work, and as such neither is in a position to give a definitive completion date. WNSL claims that it has a detailed programme for its own works after handover, and that it will need two to three months to make the stadium operational. However, the client is no longer party to all information from the site, and Multiplex’s own analysis suggests WNSL will need until next summer to carry out its obligations.

Multiplex claims that, contrary to comments from WNSL, the only significant work it still has to complete before handover is the installation of 10,000 seats, which it says will be finished by early September. WNSL claims Multiplex also needs to finish its repairs to the drainage system, which Multiplex denies. Despite this, it is understood that it has not shown a detailed programme of work to anyone involved in the project. M&E subcontractor Honeywell, currently embroiled in a legal dispute with Multiplex, has asked for this to be made available to the court.

THE IMPENDING COURT CASE

What they say

WNSL

“Multiplex was appointed to design and build the stadium to a fixed cost. It is Multiplex’s responsibility to deliver the stadium and it is WNSL’s responsibility to ensure that they do.”

Multiplex

“Multiplex has advised WNSL of its entitlement to extensions of time to October2007 and of its intention to pursue legal proceedings in that and other respects, including WNSL’s acts and omissions which are preventing Multiplex’s ability to achieve practical completion.”

What this means

Multiplex has begun its legal battle against WNSL with an adjudication hearing due to be concluded this month. Multiplex believes that the client has made about 600 design changes which entitle it to extensions of time to October next year, and is arguing that WNSL’s failure to enter the site for commissioning increases the entitlement to extension of time still further.

The claims are currently estimated to be worth about £150m, a figure which will increase every day the project is delayed. The parties look certain to go to court, probably by the start of next year.