Wembley Stadium Project Management Strategic Issues - Essay Example

?Heriot Watt School of the Built Environment Construction Management & Surveying MSc Construction Project Management Assignment Module : Project Management Strategic Issues: D31PS Module lecturer: Dr Bilge Erdogan Done by: ID: Submitted on: Outline Introduction Analysis of the Reasons of Delays or Cost Increase during the Project Analysis of the Relationship between Problems and Project Management Analysis of the Strategy or Operational Project Management Actions Conclusion on Lessons from the Project References Wembley Stadium – Project Management Strategic Issues 1. Introduction of the Project Wembley stadium is the renowned name for English football. It was re-erected in the 2006 by dismantling the ancient construction in use since 1923. The project of constructing Wembley Stadium took additional 5 years than was figured out. It increased the projected costs to more than double the earlier projections. Especial about the Wembley Stadium is its innovative steel arch that adds to the beauty of the Stadium. The steel arc also endures weight and reduces the need for internal support that could have come in the way of viewers sitting in the stadium. The load bearing feature of the arc adds decorum to the seating arrangement. The design of the Wembley Stadium unlike the Sydney Opera House or Guggenheim Bilbao was not new but nevertheless included a design element in the arch that was innovative, leaving no scope to adhere to best practice techniques such as reference class forecasting as there are no past figures to depend upon, being the novel concept. This absence of historical example is many-a-times a red flag in perfect project planning (Strategicppm, 2011). The Wembley Stadium project was contracted to the lowest bidding company, which developed a situation similar to winner’s curse in measuring the cost of the project belligerently. Project cost hiked 36% in between the time of the bid acceptance and signing of contract (Strategicppm, 2011). The Wembley Stadium occupies a distinct place in the event and entertainment industry worldwide and particularly in the history of the UK. The Wembley Stadium has been a host to a number of global events in the 20th century, which included a chain of leading park, theatre and funfair events the like of the 1924 British Empire Exhibition, the 1934 Empire Games, the 1948 Summer Olympics, the 1996 World Cup Finals, the 1978 Eurovision Song Contest, the 1996 European Championships and many other events organised in between (Quintain, 2004). The stadium was razed in 2002 to be reconstructed in 2006 to a 90,000-seating capacity stadium. The new ?757 million Wembley Stadium (NAO, 2003) is now about thrice as big to its earlier size with its arch positioning 140 metres extended from its concourse, which is huge enough to be looked over by the whole of London (Quintain, 2004). The major difference visible is of the arc that replaced the twin towers, the symbol of the stadium. The new Wembley National Stadium equally justifies the fame of the icon it used to be like the old Wembley Stadium (SPG, 2008a). Though a hot debate followed with the razing of the historic twin towers, but it is highly commendable that the final settlement for constructing an arc was welcomed with uproar. The project got initiated in 1996, by raising a hue and cry for a new English national stadium. Soon after holding the national competitions, Sport England decided with a majority Wembley as the most desired location (House of Commons, 2004). The mission of the Sport England was to back the creation of an iconic stadium for three leading sports namely, football, rugby league and athletics (NAO, 2003). The major use of the Wembley national stadium was planned for football and rugby league (NAO, 2003). It was earmarked that after five years of the stadium's functioning, 1% of its yearly turnover would be donated by WNSL for the provision of sports education and other projects (NAO, 2003). 2. Analysis of the Reasons of Delays or Cost Increase during the Project The Football Association (FA) was the leading agency for the stadium project and the stadium was finally enlivened by its subsidiary, WNSL (House of Commons, 2004). WNSL carried accountability for its reconstruction and later on entitled to operate and own the new stadium. The Wembley National Stadium project was totally financed by private sector organisations, with private capital (NAO, 2003). The public sector funding for the building of the stadium was ?161 million out of which ?120 million was contributed by Sport England, ?20 million from the Department for Culture, Media and Sport (DCMS) and ?21 million from the London Development Agency (NAO, 2003). The total funding of the major contributors both the public and private sector and the different uses of the funds were fully detailed. Income earned from the functioning of the Wembley National Stadium is used by the FA for the promotion of football (NAO, 2003). The issue of track inclusion in the architecture created a bit of bitterness between Sport England (SE) and WNSL (House of Commons, 2004). Nevertheless, it was decided afterwards that athletics provisions (track) should not be supported which SE was made to agree on against its will (NAO, 2003). This deviation was seen to be not fair, as one of the major stakeholders expressed the desire to call a meeting to know the outlook of SE before reaching a final decision. It was felt that a value management exercise must have been initiated to discuss the athletics issue, as stated in one of the industry reports wherein all the stakeholders particularly SE could have developed a common understanding on the non-provision of track. On 14th July 1999, WNSL made a call for submission of open bids for the bidding companies of the construction industry for the Wembley National Stadium. Mowlem, HBG, Sir Robert McAlpine and Bovis/Multiplex offered their respective bids to the bidding invitation (Building, 2008). In early 2002, Cyril Sweett was engaged by WNSL as the sovereign consultants and the firm as a follow-up awarded Multiplex contract a clean sheet as offering value for money (SPG, 2008a). At the start, Multiplex was considered the favourite contractor on a guaranteed maximum price (GMP) design and build contract of ?326.5m (which does not include design fees) with a time period of 3 ?-year programme to develop the Wembley Stadium (Building, 2008). The Wembley National Stadium project got completed in 2007 at a stunningly high cost of ?757 million (House of Commons, 2004) with the stadium finally consuming ?445 million (NAO, 2003). The project over-crossed the set limit of time and cost. 3. Analysis of the Relationship between Problems and Project Management Architects Foster and Partners and HOK Sport took charge of the stadium design; Sir Norman Foster designed the arch and the roof structure of the stadium (SPG, 2008a). According to Building (2008) the bidding process was initiated with the awarding of the contract to Bovis/Multiplex consortium in 2000 as the favoured contractor, which was later cancelled and Multiplex was awarded the contract as Bovis preferred to leave in-between when it felt that the contracted price was not worth the project risk (Building, 2008). This was the central cause of the stadium's problem. As a deeply entrenched company in the construction business in the UK, Bovis knew very well that the stadium could not be built at the agreed cost. Nevertheless, because of the believable smart act of WNSL and the presence of mischief related with the design aspect and construction, contractors bid low so that it could wait for claims and differences to better their margins. WNSL could not foresee the trap and an agreement got materialised. But this move counter-fired, causing a chain of accusation and court cases. Furthermore, Tropus was first named as Wembley project manager whose term came to an end and was subsequently replaced by Symonds (Building, 2008). Because of the hue and cry in 1996 for a national stadium, Wembley was finally selected as the favourite site. After two years, SE sanctioned ?120 million for the construction of the Wembley project (House of Commons, 2004). Nevertheless, it was revealed in 1998 that the building cost would be in the bracket of ?320 million if the project could be completed within 4 years (House of Commons, 2004). Subsequently, in the year 2000, the project underwent financial pull, compelling FA to issue a request for more public fund in 2001, but the Secretary of State for Department for Culture, Media and Sport (DCMS) refused and asked Mr Patrick Carter for conducting a reappraisal of the project (House of Commons, 2004). A huge amount of ?1.6 million got consumed in the reappraisal of the project (House of Commons, 2004). Spending such a huge sum of money in the project reappraisal can not be justified for value of money lost in unconstructive way. A review of the project from Tropus should have been taken seriously to order the initiation of the tendering process once again rather than splurging the funds on reappraisal and deriving no value at all from this whole exercise. It was found during the reappraisal of the project that there were flaws on the project by WNSL and DCMS was also aware of the issues about the management processes such as the procurement process; the selection of Multiplex as the leading contractor to construct the stadium was the outcome of such management processes (House of Commons, 2004). 4. Analysis of the Strategy or Operational Project Management Actions The arch execution was the central cause of problem, which was the reason also of removing the subcontractor in-between the ongoing project, which added on a number of problems later on. In the desire to create something unique, not having a precedent, a basic issue arose over the load bearing arc; such a design was not created in the past constructions. Such a scenario gets created when innovation is practiced, as we see it happened in the failure of the Denver Airport Baggage System. It needs to be given due consideration that projects including innovative designs cannot fit in the given deadlines and constraints of time and cost, as the prototypes have to be examined for techniques and procedures, at the minimum when you are expecting an approximation of the time the project would take in completion (Strategicppm, 2011). Incentives were not well coordinated. Relationships between the client and the contractor got tense to the limit of getting to the court, a major cause of which seems to be the fixed price bracket of the contract – any delay had instant ramifications on earnings. Information flow at lower level was more prompt, as the junior staff was well aware of the possibility of delay while the senior management acknowledged it late. It is evident from the fact that a whistleblower in the accounts section shared the project delay information many months in advance before that was formally declared. Further, betting on delay of this project, as is common in the UK, discontinued when it was observed that the staff working on the ground began placing huge bets in the Wembley region (Strategicppm, 2011). These issues were investigation by Mr David James, as it was requested by the then Chairman of Wembley National Stadium Limited. While no hint of the proof of wrong committed was found, serious issues were aroused over the provision of equal opportunity to all the bidders. A decision was nevertheless taken that the procurement process was deficient for not adhering to highest quality controls to be followed as per the prevailing industry trends (House of Commons, 2004). It was observed that an intensive and thorough formal procurement process was not followed by WNSL and it was also noticed that for sanctioning the same project, two different and parallel tendering procedures on different conditions were offered. To strengthen the non compliance of equal opportunity, it was also observed that they had prior discussions with Multiplex before the initiation of the formal procurement process (House of Commons, 2004). As a client of the high-end project, the action was not in adherent to the industry’s best practice. As an industry seen to be slandered with image problem, a genuine and just playing ground was expected to be offered by the bidding client for active involvement in the business processes by all contributors. Consequently, it was finalised by the then Secretary of State for Culture, Media and Sport that the provision of additional public funding would be conditioned on fulfilling a number of tests by both the FA and WNSL (House of Commons, 2004). Nevertheless, these tests were taken afterwards and the project was agreed to be worth appreciation for providing additional support (House of Commons, 2004). DCMS idea of reinitiating the tendering process for the construction contract as a check of providing additional support was rejected on the argument that it stood no possibility of securing the public money (House of Commons, 2004). A right decision was taken in view of the previous decision of reappraising on which an amount of ?1.6 million was spent; retendering might have consumed additional time, thus causing further delay to the project. The gist of the two reports brought out by Tropus and James was also similar, as both of them reached on the conclusion that WNSL never adhered to best practices, thus, was deprived of best value (Building, 2008). It was nevertheless debated that other bidders of the UK construction industry were not given due consideration to stand a good chance to represent for the project (Building, 2008). The arch construction work began in 2003 and its assembling was performed on-site using steel modules manufactured by steel subcontractor Cleveland Bridge. Nevertheless, irremediable differences cropped up between Cleveland Bridge and Multiplex; as a result Cleveland had to leave the project in-between. Another steel sub-contractor was hired, called Hollandia. Cleveland Bridge was not certain on whether the company would be reimbursed for the materials used. This issue was taken to the court (SPG, 2008a). This brought into focus the problem of long-term relationship and efficient logistics integration, so critical in the success of any project of such magnitude. Had the relationship with Bovis/Multiplex not gone sour, the syndicate would not have faced any problem on the logistics front, so critical for the success of this project. Bovis was a deeply entrenched company that knew the complicacies of the UK construction industry and had a robust logistics expertise unlike the Australian company. While agreeing on the EU directives, it was at the same time very significant to analyse the background check of outside-UK companies for such humungous projects delivered by the company in the country where the project is going to be completed. Had there been robust logistics links between Multiplex and its steel sub-contractor, the problem of suspicion regarding payment would never have appeared. 5. Conclusions on Lessons Learnt The design, construction and its different aspects are supposed to be given cost and time surety, which was not seen to be adhered to in the case of Wembley stadium. The innovated design and build which was used for arc building was supposed to permit the client the chance to have greater insight into the design before delivering the design to the contractor only after specifying complete output detail. From the research it is revealed that the GMP innovated Design and Build contract was hastily put together by WNSL without conducting prior-check for its need. This needs to be taken as inappropriate and as discussed above, could lead to hostility. Therefore, the project was marred by a number of legal battles. It was also found that the project was full of hostile relationship both by the behaviour of the client and contractor and the contractor and sub-contractor. All the standard reports as discussed supported durability in relationships and efficiency in logistics management. Insight on the UK construction industry was very crucial which was not so in the matter of Multiplex. WNSL also did not play a positive part by not permitting Bovis to walk out mid-way and hastily entered into agreement with the Australian company. Multiplex was to an extent, possibly deprived of the modus operandi of the UK construction industry and it can be figured out why it entered into a syndication with Bovis. Nevertheless, WNSL move and review of multiplex could be observed to be based on cost factor only and possibly very low cost consideration, which was not in line with following best practices. Robust and efficient logistics management was lacking in the project causing huge differences between the logistics because of the absence of durability in relationship. Multiplex reputation got a push back when it offered its bid for another similar project, the Olympic Stadium because of its unsuccessful handling of the Wembley National Stadium. It is not difficult to search for a lesson that for a construction company to be remaining in its field of business, it is of utmost importance to maintain its reputation in the highly volatile UK construction industry. Past projects completed successfully come handy and play a critical part in the successful bidding for future project. Lastly, it was also observed that the project management could not establish strong communication with stakeholders, which is critical to the success of any project. Confidence of all stakeholders is very important before taking any decision that can change any aspect of a project. Efficient time management and contribution of all interested parties is essential to earn success of a project References Building, 2008. Tropus denies sour grapes claims over Wembley report. Available from: http://www.building.co.uk/story.asp?storyCode=1018827 House of Commons, 2004. The English national stadium project at Wembley: Eighth Report of Session 2003-04. Available from: www.publications.parliament.uk/pa/cm National Audit Office, (NAO), 6 June 2003. The English national stadium project at Wembley. Available from: http://www.nao.org.uk/publications/0203/the_english_national_stadium_p.aspx Quintain, 2004. Quintain scores regeneration goal at Wembley. Available from: http://www.new-wembley.com/WembleyregenerationbyQuint.doc SPG, 2008a. Wembley Stadium, London, United Kingdom. Available from: http://www.designbuild-network.com/projects/wembley/ Strategic PPM, 2011. Project failure – Wembley Stadium. Available from: http://strategicppm.wordpress.com/2011/01/17/project-failure-wembley-stadium/ Read More