Examination of Witnesses (Questions 510-519)
ODA
15 JANUARY 2008
Q510 Chairman: Can I say how grateful
I am to you, Mr Shiplee, for the time you gave us last week when
we visited the site. It was a fascinating and rather intimidating
experience with what is required to be done there, but we were
very impressed with the determination that you all showed and
thank you very much. You said to me when we met at Stratford Station
last week that the question was not so much what construction
can do for the Olympics, but what the Olympics can do for construction
and we are really looking at that focus of what will be learned
for construction and the construction issues that come with the
Olympics, and we are not looking at the Olympics. Bearing in mind
the gypsy's warning we had from our last witnesses, as you probably
heard, we do not really want to double-guess you, but we are looking
at the construction issues which flow from what you are doing.
There is a whole stack of things we could ask you about today,
particularly the sustainability issues which we asked you about
when we were on the site last week, so we will not repeat those
to try and save time, but I would like to begin, as I always do,
by asking you to introduce yourselves for the record, although
obviously we met Mr Shiplee last week, and explain your roles
in the ODA.
Mr Shiplee: My name is Howard
Shiplee and I am Director of Construction for the ODA and my responsibilities
are very clear. They are for the delivery of construction and
I am also responsible for procurement which of course is the first
critical step in the process. I think it is important to make
the point that we, as the Executive Management Board, work as
an integrated team across a whole range of disciplines which cover
everything from design, delivery, sustainability, environment
and all of those matters, so I am a member of a very integrated
team under the leadership of David Higgins and our Chairman, John
Armitt.
Mr Wright: My name is Simon Wright
and I am a Director in the ODA and I am responsible for infrastructure
and utilities, which is taking it from the point of identifying
the requirements through to developing the business cases, consultation
with stakeholders and agreement with the concessionaires or utility
providers or other contractors up to the point at which Howard
takes it on to execute it, delivery.
Q511 Chairman: I just want to ask
a few questions on the scale of the task and what progress you
are making before we get into the issues really more directly
relating to construction. Can you just give us some way of understanding
the scale of what it is you are actually doing to put it in context
for us in some way?
Mr Wright: Clearly, this is a
unique project and it is one of the largest in Europe, if not
the largest currently in Europe, both in scale and complexity.
Our focus is on the Olympic Park site, though clearly there are
other components to it, but most of my comments revolve primarily
around the Stratford City/Olympic Park site. We are where we wanted
to be, we are in line with our programme and the milestones that
we set out some time ago, but it has been a hard struggle and
it continues to be so and we are not in any way complacent. The
achievements to date are significant, as you will have seen. We
have acquired, through LDA, the land, so we have ownership of
the component parts of the land and we have managed to close the
highways, such that we can get on with the works, so we now have
a safe and secure site in order to work within that very large
area which you saw. We have been able to proceed with the contaminated
land treatment and moving the earth around in order to get the
profile for the development of the venues. As you will have seen,
the Park is bisected with rivers and rails, so it is quite complex
topographically and we have managed to link it up with temporary
connections so that it keeps the traffic off the roads and we
can move the material without going on the highway. We have made
good progress with the utilities and we have entered into contracts,
that is preferred bidder, with the energy provider for a sustainable
energy centre on site, and we have also entered into a preferred
bidder agreement with an electrical network provider, and both
of those contracts have significant private-sector injections
of capital into the works at a long-term concession. The scope
of our work has been clearly identified, the briefs are now completed
and clearly we are in deep dialogue with LOCOG, who are co-locator
with us, we have taken the lessons from previous Games and decided
that we need to be absolutely interlinked with the London Organising
Committee, so we sit in the same building as them, and we have
a long, detailed and in-depth dialogue with many other stakeholders.
One of the key complexities of this is the diversity and numbers
of stakeholders that we need to engage with effectively at the
right time, bring them on board, make sure they are consulted
with, communicated with effectively, and then we are seeking to
achieve aligned objectives bearing in mind we cannot deliver everything
and what everybody is expecting—
Q512 Chairman: You are beginning
to anticipate some of the questions we want to ask.
Mr Wright: We are where we need
to be and where we wanted to be at this point in time.
Q513 Chairman: Of course, as Mr Shiplee
emphasised, this is not a project, it is a whole series of projects.
How many work packages, how many projects are you defining as
part of the overall programme?
Mr Wright: I think the total number
of contracts could be over 500.
Mr Shiplee: Perhaps to put that
into context, that is what I would call "primary contracts".
When you then dig down and move forward into the supply chain,
we potentially finish up, we think, with about 15,000 transactional
contracts when you look down the supply chain, all of which are
important to us, so just to reinforce what my colleague is saying,
that puts into context the scale of what we want to look at and
the intrusive nature of how we want to deal with all of our suppliers.
Q514 Chairman: But this is a programme
overall, is it, something like twice the size of T5 in terms of
its scale and complexity, that sort of order roughly?
Mr Wright: In value, yes.
Q515 Mr Clapham: It is an enormous
project and, when we visited last week, I think we were all impressed
by what we saw, a project that covers, I think it is, 635 acres,
twice the size of T5, 500 companies and an enormous job there
to integrate those companies. Now, it has been said that perhaps
the building of the Olympic Stadium provides the best opportunity
to mainstream best practice in UK construction. Could you say
a little about, for example, how you came to decide on the way
in which you are going to approach the matter? For example, could
you give us an overview of the construction commitments and, in
doing so, could you say what their origins are?
Mr Shiplee: The construction commitments
of course come out of the Strategic Forum, as you know, and the
Olympics was seen as an opportunity to, if you like, rev-up learning
in the industry and it was a very convenient hook on which to
hang the need to uplift understanding across many areas and to
inject a greater level of understanding and buy-in of the types
of issues that we have been talking about this morning. We talk
about demonstrations, and I suppose you might as well be upfront
about these things, there is no point just talking about it, and
we have put the Olympic Stadium, which is the largest and most
significant piece of our activity, the one that will be most visible
to everyone, we have put that forward as a demonstration project.
We believe we are going to put ourselves right there in the goldfish
bowl and say, "We will demonstrate that we are doing what
we said we intended to do and we are following the construction
commitments", so we are doing that because we think it is
important to do that both to test ourselves and to support the
construction commitments and the Strategic Forum.
Q516 Mr Clapham: So, when you were
actually sort of bringing together your approach, did you look
at what had been done on T5? Did you take any examples from T5?
Mr Shiplee: One of the challenges
that we have is that we do not have the time or luxury to spend
a lot of time going back to school to learn from all these things.
What we have got to do is very quickly either pick up the things
which we have all learnt in our respective careers as a team which
the ODA Board brings together and, as well as that, to learn quickly
from best practice as fast as we can. Of course, we have talked
extensively and we have continuing dialogue with T5 and a number
of other major projects. Interestingly, the contractor we have
secured for the stadium is the same contractor who built Emirates
and we had some very interesting discussions with Arsenal about
what they thought were the important factors in their relationship.
Q517 Chairman: We want to come back
to that in a minute.
Mr Shiplee: In my own case, I
come from a major project background and last night I dug something
out which I thought might be a little helpful because a lot of
the lessons are not new lessons, they are simply lessons that
people continue to forget and ignore. I led a joint venture in
Hong Kong for Hong Kong's international airport terminal and we
were asked by our five international partners upon completion
to give them a report as to why it had been successful for the
customer, for us as the contractors and for our supply chain.
Very quickly, these are the items which you may find of interest:
safety; a clear contractual framework; commitment to an environment
for success; clear procurement processes; recognition of relationships
and a relationship of risk; leadership at every level; partnership,
not conflict, throughout all of the relationships; constant evaluation
of performance; awareness of what is going on around you, not
just what you are doing yourselves; absolute urgency; a structure
and a communication structure that tells people, explains to people
and, finally, listens to people; training; planning, planning
and planning; effective information technology as a base framework;
and, finally, teamwork. That was good for seven years ago now
and, from my point of view, those lessons have not changed at
all, so that is my philosophy. That accords completely with my
colleagues' philosophy and we are building on that to bring other
issues into play as well because of course all of that is about
construction, but there are other issues to do with sustainability
and to do with legacy which are other areas where we have got
to pick up quickly the bouncing ball, not reinvent wheels, and
use best practice.
Q518 Mr Clapham: So it would be correct
to say that what you have done is actually to build on your experience
and what has been done elsewhere to develop, if you like, a bespoke
set of principles which are unique to what you want to achieve
on the site?
Mr Shiplee: I would not like to
say that we are unique, but I just think that we are, as a group,
as a board and as an organisation, very aware of the significance
of all of these issues, and we understand what they need and we
understand what it means in terms of the industry and our stakeholders.
Of course, we will not get everything right, but I think our level
of awareness is such that it gives us a very high probability
that we will get most of it right, which has got to be the case.
Mr Wright: We come from a mixture
of public sector and private sector backgrounds, so there is a
blend of experience there from major projects in both sectors.
Q519 Mr Weir: I was interested in
what you were saying, Mr Shiplee, about the main stadium putting
yourselves in a goldfish bowl. Certainly the 2012 Construction
Commitments state that the procurement decisions will be made
on the basis of best value rather than lower cost, but clearly
there is a great level of attention and perhaps concern at the
cost of the Olympics, so does that make it possible for you to
look at best value rather than lower cost or are you effectively
being pushed towards a lower cost whatever?
Mr Shiplee: I can answer that
question absolutely categorically by saying that yes, we are buying
to best value and not to lowest cost. I cannot provide you with
the evidence of that in open forum because it is commercially
confidential, but, if the Committee wanted to see evidence of
that, we could provide such evidence.
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