Select Committee on Business and Enterprise Minutes of Evidence


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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