Where are we now?

This week marks the first anniversary of London winning the right to host the 2012 Olympic Games. On that balmy summer’s day, Tony Winterbottom, director of the London Development Agency, told Building from the announcement ceremony in Singapore: “What happens next? We’re going to deliver the Olympic Games.”

Well, that was the intention. There are now six years and three weeks until the opening ceremony and little construction work has actually been done as land assembly and remediation have been the initial concerns. Also the masterplan has been revamped, the procurement methods have been argued over, and the whole programme is still at square one after eight months spent thinking it through. So here is Building’s guide to where the London 2012 Games is currently at.

The organisational structure

The Olympic Delivery Authority is charged with building the venues and infrastructure for the Games. Last year, it appointed former Lend Lease boss David Higgins as chief executive and and American construction veteran Jack Lemley as chairman. Last month this was followed by other senior appointments. Howard Shiplee, who delivered the Ascot redevelopment became construction director; the Labour party’s former PR guru Godric Smith was named director of communications; David Wright, a former Arup director, was appointed director of infrastructure and utilities. Head of safety went to Lawrence Waterman, the pioneer of the occupational health scheme Constructing Better Health. Construction is represented by Sir Peter Mason, the outgoing Amec chief executive who will join in October. The full ODA executive team will be announced by the end of this month.

The contracts

The first contract to be let was the £200m scheme to bury 50 power lines across the Olympic site in Stratford, east London. This went to contractor J Murphy & Sons and French energy company EDF in September; its project director, the LDA’s Winterbottom, says that most of the project will be complete by 2008 – “it’s going very well”.

Last month, Nuttall and Galliford Try were appointed as the remediation and demolition contractors for the Olympic park. However, other awards have been delayed as Higgins has revamped the entire construction programme. He decided to effectively subcontract much of the client role to an “delivery partner”, which will be selected in August. There are currently four teams bidding for the role – Bechtel, an Amec and Balfour Beatty-led team, a Laing O’Rourke consortium, and a team including Bovis Lend Lease and Halliburton subsidiary KBR. It is expected that all four will be invited to submit final bids later this month, following a process of competitive dialogue.

The programme

Higgins says a more detailed programme with project start and completion dates will be revealed this month, but what is known for sure is that construction work will not start in earnest until 2007, when most of the power lines have been completed. Transport work will start early next year in preparation for delivering the materials to site, as well as the rail improvements necessary for getting an estimated 200,000 people an hour on site.

A five member legal panel has already been appointed. This includes lawyers from Berwin Leighton Paisner, Clifford Chance and Pinsent Masons, and they will advise on procurement. The procurement methods chosen should be announced ahead of the Olympic stadium contract, which comes to the market later this summer. Other upcoming key dates include:

• September 2006:the Olympic transport plan will be made available for public consultation
• Late 2006: Procurement of the Zaha Hadid-designed aquatics centre begins
• January 2007: A new planning application will be submitted for the redesigned masterplan for the Olympic park. All land is due to be under ODA control by this stage; it currently owns 92-93% of the land it needs.

There has been speculation about increases to the price of the Games. It has been leaked that the infrastructure cost is £3bn, up from an initial estimate of £1bn, and private investment is likely to be needed to plug the shortfall. One model under consideration is the Milton Keynes’ “roof tax”, a tariff on developers to provide vital infrastructure.

Cost consultant EC Harris has estimated that the construction workload will be £2-2.8bn, adding 1.5-2% to the workload of the South-east each year between 2007 and 2012. Labour shortages are likely to be the key problem when addressing this increase; 150,000 jobs are likely to be created in the next seven years, a good proportion of which will be in construction. According to

EC Harris, all of this is likely to mean an inflation in tender price in London and the South-east of 5.5-6% over the next five years.

A Davis Langdon study in March warned that there would be price spikes in 2007/8 and 2010 as projects are built, and also that the Games would be a drain on skilled personnel and labour.

Legacy

“In February we decided to review everything on the site from a legacy perspective,” says Higgins. It followed on from his decision the previous month to scrap the contracts that were already out for the velodrome construction and the Olympic programme manager role. The latter was replaced by the delivery partner role. These decisions set the Olympics back, but most industry figures have argued that any concerns have been exaggerated – eight months in a six-year programme should not matter, so long as the whole construction process has been improved.

Legacy was arguably the main reason for the rethink, and has even led to suggestions from Lord Coe that the 80,000-seat main stadium could become a ground for a premiership football club after 2012. It has also led to the appointment of some heavyweight regeneration players to the ODA board, including Manchester council chief executive Sir Howard Bernstein and Neale Coleman, Ken Livingstone’s policy adviser.

The changes to the masterplan have also been intended to reduce the possibility of the Games leaving white elephants. For example, the press and broadcast centres have been moved into the heart of the 300 ha site, so that rather than be knocked down as originally planned, they will provide 1 million ft² of office space after the Games.

Construction commitments

On Monday this week, the Strategic Forum got the DTI, the Treasury, the ODA, the London Organising Committee of the Olympic Games, the Department for Culture, Media and Sport, the Office of Government Commerce and the Greater London Authority to sign up to its Charter of construction commitments for the Games.

The document commits the public bodies to several targets in six key areas:

• Client leadership. Commitments include establishing a detailed brief with clear financial objectives.
• Procurement and integration. Commitments include procurement decisions to be made on best value rather than lowest cost and ensuring cash flow for suppliers, such as payment within 30 days.
• Design quality. Commitments include designs to be tested by third-party review panels.
• Sustainability. Commitments include developing an overarching sustainable development strategy and instigating plans to protect the local environment.
• Commitment to people. Examples include: establishing local employment projects and guaranteeing apprenticeship.
• Health and safety. Commitments include all 2012 Games construction projects to be injury-free; companies to sign up to the Strategic Forum’s health’s and safety code; all staff to hold CSCS cards or equivalent.