No room for manoeuvre

Is Multiplex entirely to blame for what has happened at Wembley? I would argue not.

The guaranteed maximum price (GMP) contract is the real villain, because by adopting it, Wembley National Stadium Ltd pretty much tied its own hands. It wanted to stand back and not get involved in case its input came back to bite later in the form of a variation.

Politicians perceive GMP contracts as a panacea for all cost overruns. A GMP ought to be good for a client who wants to make sure they will spend no more money than they have budgeted for. But it doesn't give them the flexibility to go in and help get the job done on time. Clients can become intimidated by the terms of their own contract.

A hypothetical exchange at Wembley might have involved Multiplex asking for clarification on what the client wanted in, say, the hospitality suite finishes, and receiving the reply: "It's all in the GMP, you know what to do." Under GMP the client and contractor often end up circling each other around the contract, and the management of basic information becomes very difficult.

A different contract will recognise the need for mechanisms to enable the owner to take action to move the project forward when difficulties arise. In the hospitality suite example above, for example, Wembley Stadium could have worked with Multiplex to find a solution to move the project forward, rather than opting for trench warfare, guarding only the GMP.

If the contracting relationship allows constructive involvement, changes can be made which can save the contractor time and money and help them deliver the project on time and within budget.

It's the same with time issues. The classic contracting relationship leaves the real risk of delay with the owner, but gives them no tools to manage those risks. Will any amount of liquidated damages really compensate for all the consequences of the new stadium being a year late?

Progress monitoring

With wembley having adopted the role of absentee landlord multiplex can only look to the supply chain for solutions

A solution could be for the contract to make provision for payment to the contractor for proper time management and reporting. If this is not done the client then has a budget for stepping in to do their own progress monitoring to find out how the project is progressing. So even if the contractor fails to monitor progress properly, the client can get reliable progress information enabling them to make informed decisions on likely completion dates, financing adjustments and productive acceleration options.

As it is, the allergic reaction to involvement as a result of the GMP contract and its isolation from the management of time risks mean that Wembley can do little more than commentate on the downfall of its own development.

Related to that are the issues Multiplex inherited from the design, which was novated to it to make the contract design and build. By doing that Wembley was washing its hands of the design risk, but also cutting itself off from being part of the solution.

Co-operative relationships

On its supply chain relationships, does Multiplex deserve a reputation for being a hard-nosed, street fighting contractor? I don't think so. My reading of the situation is that Multiplex has very co-operative relationships with subcontractors in Australia, which it forged of necessity in a more heavily unionised labour market. It hoped to replicate that here and was caught off guard by adversarial mindsets embedded in the UK supply chain. Multiplex was a bit naive, maybe, but it learned fast.

It's impossible to envisage how the many technical problems that have blighted the project have not been fuelled by the extreme financial pressures the contract places on Multiplex. With Wembley having adopted the role of absentee landlord, Multiplex can only look down the supply chain to find solutions to its problems. This inevitably led to it applying pressure on subcontractors, seeking performance related to time and cost which is likely to be at odds with a high-quality product.

It is conceivable that if the contract relationship between Multiplex and Wembley had served both parties well, then Multiplex's reputation as a highly competent contractor, which was surely one of the reasons it was selected for this landmark project, would have been seen here and would have led to a better product in a shorter time. cm