Wembley: the battle begins

October 2005. It is 11am on a cold autumn morning in the offices of Building, when a call comes in from Ashley Muldoon, Multiplex's project director on Wembley: "G'day mate - I'm returning your call to find out what bullshit stories you're writing this week," he says sharply with his easily distinguishable Australian twang.

The conversation, like the two dozen before it, follows a familiar pattern - a quick-fire, heated, telephone duel in which allegations of site problems are quickly batted away with fierce denials by Muldoon before he eventually loses his patience and concludes: "No. You need to listen to me, mate: the stadium is on time and will be ready for May no matter what. And if everyone around us is not ready, then there will be an empty stadium sitting at Wembley come cup final day."

The relationship between Muldoon and the journalists has been built up over a number of months. Since the stocky, thirtysomething, self-styled hard man arrived from Australia over two years ago, Building has got to know him well. Journalists have been on numerous site visits with him, have listened to progress updates and have reported dozens of stories about the dramas unfolding on the site - which included everything from sniper threats to accidents to bust-ups with subcontractors and unions.

What was most noticeable up until Christmas last year was Multiplex's defiant attitude - in particular Muldoon and Multiplex's refusal to acknowledge that the project has ever been in trouble. Last summer Muldoon even posed for a Building cover shoot with Noel Henderson, Multiplex's then chief executive, before declaring that the stadium would be ready before Christmas. This assertion was made in a half-completed stadium structure.

When Christmas came, it did not bring a completed stadium; it brought a statement from Multiplex to the Australian stock exchange that there was "a material risk" the ground would not be ready in time for the cup final. And it was around this time that the intimate telephone conversations with Ashley Muldoon began to grow rarer.

Today the Wembley stadium project is the most high profile construction fiasco in a generation. Multiplex is at least 10 months behind schedule, has fallen out with its subcontractors, unions and client and could lose up to £180m in the process. Now the drama is about to move from the stadium to the High Court, where Multiplex and Cleveland Bridge, its sacked steel subcontractor, are about to litigate their dispute.

This case, which begins on Tuesday, will place UK Construction Plc under the spotlight of the world at the same time that the Olympic Development Authority is finalising plans for the Olympic village in east London, one of the most important projects in London.

Furthermore, Multiplex is now squaring up to the client, Wembley National Stadium Ltd, which it is accusing of causing delays to the stadium. The contractor claims that WNSL ordered up to 600 design changes to the project.

Whatever the outcome of the court cases, we can be sure that m'learned friends will benefit - nobody expects the legal costs to come in under £10m. But other questions are less clear. What issues will the legal arguments centre upon? What was the course of events behind the Wembley fiasco? And what will it mean to the reputation of UK Construction Plc? Building investigates the events that have shaped the Wembley saga …

Building’s headlines in the coverage of the Wembley saga show how the project went from hopeful to problematic to desperate

Arch enemies: The bust-up with steel subcontractor Cleveland Bridge

The structure of Wembley stadium is dominated by its 1750 tonne, 133 m high arch. The fabrication and erection of the arch was the key works package, and therefore the key site relationship was that between Multiplex and the company building it, Cleveland Bridge UK, a steel specialist based in Darlington, County Durham.

The project never recovered from the disruption caused by the failure of the relationship between Multiplex and Cleveland Bridge

On the face of it, the story of Cleveland Bridge's involvement at Wembley is a simple one. It built and erected the arch, but Multiplex was unhappy with how quickly it did so, and how much it was paying for the work. So in July 2004, Multiplex sacked Cleveland Bridge and recruited Dutch contractor Hollandia to finish off the arch and roof structure at a premium rate. As events were to show, the project never recovered from the disruption caused by the failure of this relationship. As a result, the Football Association lost its showpiece May cup final, and Multiplex stands to lose millions of pounds in penalties, cost overruns and goodwill.

Next week's legal case is expected to hinge on a series of events that have already been referred to in legal claims and counterclaims. The disagreements between it and Cleveland Bridge began as far back as 15 February 2004, when the two attempted to resolve a series of disputes over cost overruns by signing a revaluation of Cleveland Bridge's work. However, this agreement, which was designed to draw a line under previous squabbles, has become the central dispute between the parties.

Cleveland Bridge is claiming that Multiplex revalued its work up to that date at £32.6m. However, when Multiplex made the payment in July, it cited a valuation of £23.9m. Cleveland Bridge alleges that Multiplex reneged on the deal; Multiplex claims the figure was only agreed "for cash flow" and had been expressly subject to "clawback".

At the same time, Multiplex refused to pay Cleveland Bridge £1.25m for lifting the arch. Multiplex alleged that Cleveland Bridge had failed to fabricate within specified tolerances, and that this resulted in an eight-week delay to the lifting, with consequent cost overruns. Instead, Multiplex deducted £1.6m as "costs incurred due to member misalignment" and £4.1m in respect of "inefficient site works" and "unreasonable and unsubstantiated costs" incurred between February and June 2004.

As far as Cleveland Bridge is concerned, responsibility for the delay of the arch lies with Multiplex. It claims it was entitled to an extension of time because the raising the arch was "delayed by the failure of Multiplex's subcontractor PC Harrington to use the correct grade of concrete in the arch foundations". Furthermore, it says Multiplex knew the wrong type of concrete was being used and "failed to issue any instruction to Harrington to use C60 grade concrete". Although Multiplex admits that the wrong type of concrete was used, it says it became aware of the fault in March 2004, when it required PC Harrington to re-pour the concrete. It denies that the concrete repairs delayed the lifting of the arch.

In a pre-trial hearing in March, Mr Justice Jackson, the head of the Technology and Construction Court, gave both parties a word of warning. He said: "May I tactfully suggest that we focus on the issues that matter, not on colour." Despite this, the animosity between the two parties means there is strong potential for emotional speeches from the witness stand. In particular, the attention will be on Muldoon, who was quoted by the Cleveland Bridge lawyer as describing the subcontractor as a "shower".

Other witnesses are understood to include, for Multiplex, its construction managing director Matt Stagg, who has since left the firm, Stuart Kersley, Chris Ong and site manager David Watkins. Cleveland Bridge is expected to field former chief executive Roddy Grant, managing director Brian Rogan, ex-finance director James Child, Richard Thomas and engineer Andy Hall.

The first sign that Wembley would not be ready in time emerged after the firm building its arch, Cleveland Bridge, left the site following a row with Multiplex in July 2004. The Darlington based steel subcontractor was given 28 days to remove all of its staff and plant from the north London site and its £55m steel contract terminated following concerns over their progress. Dutch steel firm Hollandia, who had been runner up to Cleveland Bridge when the contract was awarded, was parachuted onto the site immediately to finish off the project. Cleveland Bridge was forced to make 200 staff redundant and within days indicated that it would take legal action against Multiplex.

Armageddon vs Trafalgar

Multiplex and Cleveland Bridge have accused each other of underhand strategies even before the disputes over payment reached a head. The outcome of the case may hinge on which of these claims is accepted by the court.

Cleveland Bridge alleges that as early as January 2004 Multiplex was operating the "Armageddon Plan". This, it is claimed, was intended to destroy the steel specialist by hitting it with a large claim for defective work and delay so it would "fall over under the pressure". As evidence, Cleveland Bridge cites the now-notorious Multiplex email from Matt Stagg to Ashley Muldoon: "Plan B: CBUK fixed and fuck them later?"

They told us it would be complete by the end of June and then handed us a programme saying it would be finished by September. This is Multiplex’s fiasco

FA source

Multiplex claims in reply that Cleveland Bridge had devised "Project Trafalgar": a plan to stop work on the pretext that Multiplex had repudiated its contract. Multiplex alleges that the plan was drawn up in May because Cleveland Bridge realised that it had dramatically overspent its budget on Wembley.

One of Cleveland Bridge's underlying claims is that the stadium was not designed properly, which forced it to adjust its work programme and thereby increase costs. Cleveland Bridge alleges in its claim that as early as 2003 there were "serious problems arising from late and incomplete design by the civil and structural engineer Mott Stadium Consortium and delays in providing design information". Multiplex admits there was late and incomplete design by MSC, but denies that this caused grave problems.

The Mott consortium declined to comment on the case.

As the reference to Mott MacDonald indicates, the battle with Cleveland Bridge is likely to be only the beginning of Multiplex's court appearances in the next year or two. The firm's relationships with its client, consultants and other key subcontractors also came under intense pressure and all will be subject to forensic examnation.

Wars of words: Multiplex vs everybody else

Two weeks ago it emerged that Multiplex has opened up a new front in its legal war - this time against its client, Wembley National Stadium Ltd. Throughout this debacle, the client has steadfastly maintained that it had a fixed-price contract, and that as a result the FA would not pay for any cost overruns. Multiplex now claims those overruns were partly the result of nearly 600 design changes ordered by WNSL.

A senior source at the FA admits that there were some changes to the project, but maintains that none affected the stadium's main steel superstructure, and that Multiplex is still working on it two months after the project's completion deadline. This, the source maintains, shows that the contractor is to blame for the delays. "The contractor is late, and has to come to terms with the fact that it is ultimately responsible," the source says. "They told us that the project would be substantially complete by the end of June and then they handed us a construction programme that said it would be finished by September. This is Multiplex's fiasco."

However, putting the performance of Multiplex to one side, the role of WNSL and the FA will inevitably be subject to scrutiny. One senior industry source says that although the FA was shrewd in its original contract negotiations, it should acknowledge some culpability for the project's failure.

The source says: "The FA employed a good man in Mike Jeffries [former Atkins chairman] to oversee this project as chairman of WNSL, but nobody is coming out of this looking good. It's true that the stadium will eventually look fantastic, but at what cost? One site death, a whole raft of litigation and another high-profile British project battering our industry's reputation.

"Whatever happened to the client being the innovator, demanding best practice in partnership with the contractor? It's just not good enough, is it? Especially on such a landmark project."

When Building contacted the client WNSL, a spokesperson reiterated the FA's position, referring Building to a statement it made on 31 March that said Multiplex had told them the stadium would be substantially completed by the end of June, with handover by the end of September. WNSL rejected all responsibility for site problems, such as steelwork, industrial relations and sewage issues (see below).

Nobody is coming out of this looking good. It’s true that the stadium will look fantastic in the end, but at what cost?

Senior industry source

The FA's response is that it and WNSL have become embroiled in the wider problems of the Multiplex group. The contractor is on the receiving end of a class action in the Australian courts, brought by shareholders who claim that Multiplex's management misled them over the progress of the project. The FA source says: "What has become clear, though, is that Multiplex have stated that they have claims against us as a client when we haven't received any such claim. You have to consider their reasoning for doing this, especially given the litigation they face in Australia."

The full extent of the client's role in the affair may have its days, and weeks, in court. Building understands that the original cost consultant, Franklin + Andrews, could be key witness. F+A has its own version of the "little black book" that contains details of every design change that has occurred on the project. This information should prove crucial in the event of legal proceedings and a source at the firm described its involvement as "continuing".

Meanwhile, other main players involved in the design of the stadium could be facing cross examination. As mentioned above, part of Cleveland Bridge's case is that the Mott Stadium Consortium - comprising engineering consultants Mott MacDonald, Connell Wagner and Sinclair Knight Merz - provided late and incomplete designs. Cleveland Bridge says this should have entitled them to an extension of one year.

The project's architects, Foster and Partners and HOK Sport, are also likely to play some part in any legal process. Rod Sheard, a partner in HOK, and Mouzhan Majidi, a director of Foster, are the main men here, but the enticing prospect of Norman Foster himself taking a turn at the stand cannot be ruled out. Foster and Partners and HOK both referred Building to WNSL.

Five of Multiplex's subcontractors - Phoenix Electrical, MJN Colston, PC Harrington, Permasteelisa and Bison Concrete - lodged claims worth a total of £20m last summer. The common contention was that they should be granted extensions of time and extra costs owing to the disruption caused by the departure of Cleveland Bridge. One senior subcontractor source said this week that subcontractors had been granted time extensions but that firms had been affected by the need to tie up resources for four months longer than expected, and that claims were likely for that reason.

One thing that is never going to happen, according to the subcontractor, is Multiplex recovering money from contractors further down the supply chain. "I don't know why they would come after us, we've got nothing to give them. I've got about £2 in my pocket and that's it, and they know it." Plumbing contractor SGD has already gone into administration, blaming Wembley for its demise, and security installation specialist AR Security was forced to leave the site in January on the grounds that it did not have enough money to carry on.

The cash flow problems among the supply chain are so great that Multiplex has had to step in to ensure its remaining subcontractors stay the course. For example, it is understood that Phoenix Electrical has been granted time and financial concessions from Multiplex to allow it to cope with design and programme changes, and last month, Multiplex was forced to reach an 11th-hour agreement with Hollandia and labour agency Fast Track to prevent 200 steelworkers stopping work on the roof. At one stage, Multiplex offered to employ the workforce directly.

Brian Ingram, managing director of Phoenix Electrical, says Multiplex has always been reasonable with him and his firm despite the project's problems. "In an organisation with that amount of people, you do have a cross-section of different animals. They are not all nice guys - some of them aren't - but in general they are gentlemen."

Another subcontractor, who does not want to be named for legal reasons, is less laudatory. "The claims on this site with subcontractors have gone nuclear; the problem with Multiplex has been that it is so defensive."

Death of a concrete worker and other site disasters

The aggravation for Multiplex on Wembley extends beyond its supply chain. The trade unions on the site also have a story to tell about the way the main contractor has handled site issues. On 23 January 2004, a crane lifting a working platform collapsed, killing Patrick O'Sullivan, an employee of concrete contractor PC Harrington. That was a turning point in relations between Multiplex and the unions. After that occurred, attempts by the contractor to accelerate the works met resistance from the unions, who were concerned with the causes of O'Sullivan's death - which is still an open case for the police and the Health and Safety Executive. The result was a continual struggle over the safety of the works.

I think [as a result of Wembley] for the bigger jobs there will be a question mark on the UK’s ability to deliver them to a set timescale and price

Major contractor managing director

Building understands that these disputes recently came to a head in a legal dispute between the T&G and Multiplex over the role of Melvyn Moss, one of their convenors on the site, who was dismissed after a row with Multiplex's management.

The case centred on whether the union should have a role on the site at all, and as a result relations between T&G and Multiplex broke down. Moss refuses to comment on the issue, but Bob Blackman, the national officer at the T&G, says: "We've found Multiplex an extremely difficult company to work with. They tend to have a very hostile attitude towards trade union representatives that have a difference of opinion with them."

Jerry Swayne, a regional secretary at rival union UCATT, is a little more reserved in his take on Multiplex, having built up a relationship with the contractor at Wembley and other projects, such as the White City retail development in west London. "We've always had a good relationship with Multiplex and they've kept us informed of developments on the site," he says. "Ashley Muldoon is a forceful character but we've always managed to get along." Swayne, who would not be drawn on Multiplex's relations with other unions on the site, says Multiplex's relations with subcontractors are more strained. "We hear they can be taskmasters with subcontractors but maybe you have to be when you're losing that much money on a project and it's that far behind."

Multiplex is being forced to carry out remedial works on the Wembley drainage system after it emerged that buckled pipes could cause the stadium to flood with sewage. The problem, revealed in Building in February, was finally admitted by Multiplex three weeks ago in a statement to the Australian stock exchange, when the firm said that defects had been found in about 25 locations along the project’s

12 km of sewerage. Contractor PC Harrington is working to fix the problem, and is also understood to be working to tackle minor subsidence on the south side of the stadium.

A Multiplex spokesperson had this to say: "The job of building Wembley has without doubt attracted national attention, which brings with it significant amount of rumour and hearsay. On site, our peak workforce has been in the order of 3500 men and women. These individuals, like Multiplex, have been committed to delivering England with its finest-ever football stadium and, as the stadium moves closer to completion, the nation will soon see for itself just how much effort the Wembley team has employed to deliver a world class product.

"Multiplex is committed to its people and to building firm relationships with our subcontractors, as well as deepening our supply chain in the UK. Likewise, we are also committed to, and indeed do enjoy, positive relationships with the various trade unions representing the workers on our sites and we expect this to continue.

"In terms of our health and safety standards, anyone who has been involved with our company, particularly at a site level on any of our projects both in the UK and internationally, would know that Multiplex adheres to strict international guidelines and has rigorous health and safety checks and measures to ensure these standards are met."

The death of Patrick O'Sullivan and the ensuing union rows were far from the only disasters to befall Wembley since construction started. In February last year the contractor received threats that crane operators would be shot by snipers unless it paid £20m.

The next on-site crisis was the revelation in mid-February this year that defective pipework in the 12 km long drainage system could cause the stadium to flood with sewage. Subcontractor PC Harrington is currently undertaking remedial works to 25 separate locations in the system.

And then site workers on 20 March were put in danger when a 50 tonne steel rafter fell from its temporary position. Fortunately nobody was hurt, but 3000 workers were sent home on full pay, costing the project at least £600,000. Multiplex and the HSE are currently investigating the cause of the incident.

The family (pictured) of Patrick O’Sullivan, the PC Harrington worker who was killed on site in January 2004 after a tower crane feeding a concrete pour collapsed. O’Sullivan died after a work platform being lifted by the tower crane fell 30 m to the ground. Another man was seriously injured. The incident led to a row between the unions and Multiplex when the contractor took control of safety induction from the unions days after a memorial march for O’Sullivan.

Wembley security guards were put on full alert in February last year after an anonymous extortionist threatened that Multiplex’s crane operators would be shot by snipers. The threat claimed that personnel on Multiplex sites worldwide would be attacked unless the firm paid £20m. Although no shots were ever fired, some crane drivers are understood to have refused to work.

Wembley's legacy: Good for football, bad for builders

No doubt the numerous battles that Multiplex has fought over the past three years would have been forgotten if the stadium had been delivered on time. As it is, they have become permanently incorporated into the narrative of how a construction team failed to complete the most important cultural project in Britain. And the failure has raised questions about the competence of the wider industry. Inevitably, one project that goes wrong attracts more attention than 10 that go right, and schemes such as the British Library, Portcullis House, the Scottish parliament, Bath Spa and the Jubilee Line extension all live on in the public's memory.

And of course a large percentage of the population of Britain is drawing a parallel with the 2012 Olympic Games.

And not just in Britain. Geoff Wright, the head of construction at developer Hammerson, said Wembley was becoming a joke for foreign clients. "It's causing quite a lot of difficulty," he says. "I was speaking to a foreign client the other day and he said, ‘Of course, English projects don't finish on time.' It's projecting the image that all British projects are late." One managing director of a major contractor agrees. "I think for the bigger jobs there'll be a question mark on the UK's ability to deliver big projects to a set timescale and a set price," he says.

"What is vital for the Olympics is to establish a procurement route where you establish certainty and risk and who's the best person to hold that risk."

Richard Hall, a senior partner with Faithful & Gould, says that although Wembley has damaged the image of the industry, the Olympics can be delivered on time and on budget, providing the right processes are followed. "I think it's a bit unfortunate the way that UK construction is being portrayed," he says.

"You never hear of the success stories such as the Emirates Stadium, only the few problems schemes. What we've had is two main disasters. On the Scottish parliament we never established the right scope for it - the client never established what it wanted. It wasn't the contracting policy that was at fault, but that the scope of works was ill-defined. With Wembley it's the exact opposite - the scope was obvious and it seems from what the client is saying that it hasn't been changed. So all the responsibility was on the contractor. It was obviously not do-able at that price. Multiplex had to cut costs from day one, got in a muddle with the subcontractors and ended up going late."

The lesson that Hall draws from this, therefore, is that major projects should not be let by lowest tender bidding. "The only way to deliver these jobs on time and on budget is to pre-plan by drawing everyone together and seeing what prices they come back with," he says. "And if one bid is 10% less than everyone else's, you throw it away."

But one senior figure close to Carillion says the failures at Wembley says more about the Australian than the British construction industry. "I don't think it's fair to use Wembley as indicative of UK construction," he says. "It's just one project that in any case was produced by an Australian contractor. You've got to look at them and ask ‘Did they try and work with the UK industry?' It's a bit strange that people aren't looking at all the thousands of projects that are delivered on time and on budget.

Clients must look very carefully when they take on contractors and ask themselves whether they really know the market

Senior industry source

"Clients must look very carefully when they take on contractors and ask themselves whether they really know the market," he adds. "It's all to do with cultural alignment and the way you work together - it's pretty much the most important feature now."

Another senior contractor agrees that, regardless of blame, Multiplex has done badly out of Wembley. "Unless you've been part of the procurement process it's very difficult to know where the tension points were, and whether it was all down to Multiplex's skill or lack of skill. It's certainly not done them anything like as much good as it should have."

Hammerson is among the firms that would think twice about working with the Australian contractor again. "We look at everyone on their merits, but factors will include whether they're litigious and whether they're proactive or reactive," says Wright. "Looking to the future you have to wonder what the chances are for them in the UK."

Wembley was hit by a safety scare on 20 March when a 50 tonne steel rafter fell from its temporary position on the roof, causing the entire site to be evacuated. The collapse cost an estimated £600,000 in wages as the workers were sent home on full pay, and the collapse has affected the temporary works programme on the stadium. Multiplex and the Health and Safety Executive are investigating the incident; Multiplex is assessing whether the subcontractor, Hollandia, was accurately following its method statement when the collapse occurred.