Examination of Witnesses (Questions 560-570)
ODA
15 JANUARY 2008
Q560 Mr Binley: It has been said
that the cumulative effect of the Olympics on construction price
inflation will be between 1% and 1.5% in London and the South
East. Have you done any work on that and do you have any view
of what that might be?
Mr Shiplee: We have our view of
what inflation is, but, if you are saying are we creating an inflationary
situation—
Q561 Mr Binley: Well, that is what
somebody said and I want to know whether you believe that is right
and, if you do, how much you think that will be?
Mr Shiplee: Well, on the basis
that, at peak, we are only 14% of the London market, my answer
would be no.
Q562 Mr Binley: Well, I am going
to come to something else a little later which you might know
then. Secondly, some estimates last year said that the total cost
of construction price inflation arising from the Olympics equated
to almost £4 billion. Did you read those estimates?
Mr Shiplee: I did not and I could
not comment on that. It sounds to me—
Mr Binley: Well, it is pretty important.
Chairman: It was the Taxpayers' Alliance,
the source of that.
Q563 Mr Binley: That is exactly right,
and their record has been very good indeed on matters of this
kind, I might add. Might I then come to the final question because
my concern is that there is a lot of focus on construction in
the South East with Crossrail, Heathrow, the Sustainable Communities
Project, Gatwick extensions, and I could go on. Have you been
made aware of any impacts of the Olympic construction programme
on adjacent sites and what is your view of availability of resources,
recognising the whole of that construction project marketplace?
Mr Wright: Clearly, we understand
and recognise that, absolutely right, and the major contractors
who are tendering, or will tender, clearly also are well aware
of that. They are national firms, most of the current tier ones,
and so far they have been able to recruit adequate resources to
meet the need, so there has not been any evidence so far of them
being unable to recruit resources. Clearly, we are not yet at
the peak and the type of resources will change. You have been
round the site and you will have seen the kind of work we are
doing and that changes as we move into building venues, which
starts this spring and then into the summer, and then on into
the fit-out and again the types of skills change. As we get towards
the latter stages, the types of skills start to become perhaps
potentially more constrained and there will have to be close attention
paid, and part of the training and the upskilling is going to
assist in that, but there will need to be close dialogue with
the adjacent contractors. We have Stratford City of course on
our boundary and the Olympic Village is of course part of the
Olympic project, a major project in its own right, and many other
private-sector developments that are occurring as a result of
the Olympic factor around the Park with the downturn that we are
now beginning to see that that might be modified to an extent
and we need to keep a close eye on the next two years as we get
towards our peak, but at the moment we are okay.
Q564 Mr Binley: You are in early
because your project finishes on a time-limited basis in 2012
and, if it ain't, you are in real trouble, but others are not.
Are you leaving a legacy of a shortage of resource as a result
of that? I understand you are upskilling some people, but my concern
is that there is going to be a further influx of people into the
South East and that is going to be a real problem for the North
and the Midlands.
Mr Shiplee: I cannot really comment.
I do not think that is an Olympic issue.
Mr Binley: I just want it on the record
and I am grateful to you.
Q565 Mr Wright: Just very briefly,
what is the retention rate of the labour force because of the
competition obviously that there is certainly within the City
in the construction industry?
Mr Wright: We are at any early
stage, so, in terms of the evidence so far, it is good, but we
have been on the site just over a year, so it is very early days.
What is quite pleasing to note is that, for instance, people who
became employed, and certainly there were some unemployed who
became employed in one of the early contracts which has now finished,
have been re-engaged by a subsequent contractor, so I think there
is some evidence beginning to emerge that we are able to sustain
employment across contracts, such that the labour force will move
on with contractors as the work progresses and the types of contractor
complete one job and others come in to start the next. At the
moment, we are seeing some continuity and we are quite pleased
with the current status.
Q566 Mr Wright: What numbers would
you say there would be in terms of vacancies on a regular basis
or are you up to full complement?
Mr Shiplee: I cannot give you
exact vacancy lists, but what I can say is that we have, with
the five boroughs, the LDA and Jobcentre Plus, formed an operation,
a brokerage system, which actually identifies need for the contractors,
feeds that into a process which then feeds those needs out into
the five boroughs and beyond, as appropriate, in a way which gives
us a structured recruiting programme for the Olympics which of
course gives us an immediate concentration on the five boroughs
and then feeds it out from the five boroughs into Greater London
and then further on. That is something that we kicked off at the
turn of the year and that is starting to prove effective in terms
of the recruitment processes, particularly focused on the local
area.
Mr Wright: A comment I would like to
make in respect of the five boroughs and the Greater London area
is that this has been sold as a United Kingdom bid and I think
it is vitally important that areas further afield share in that
particular resource. It just appears that the concentration is
within the M25 area rather than trying to spread the resource
to where other people in my area up north perhaps may well be
able to bring expertise and also reduce the unemployment levels
in those areas, so it is just a comment, that I do not want to
see the concentration that appears to be there in five boroughs
and the Greater London area.
Q567 Chairman: I think that was just
a comment. There are two quick questions to finish. The first
is that we are talking of a deadline of 2012 and all construction
projects have deadlines and timetables, but yours is particularly
written in tablets of stone. What risk does that pose to you?
Is there anything that the Government can do to make your client
position stronger or are you content with the position you enjoy?
Mr Wright: I worked on the Greenwich
Peninsula project which had its own fixed deadline and in actual
fact in many cases it is extremely helpful in focusing, as Mr
Wolstenholme said, the entire team from the earliest possible
moment that, when everybody comes on, they know that the completion
date is what it is and it is not going to change, so that drives—
Q568 Chairman: And the contractors
do not see an opportunity to stitch up the client?
Mr Wright: Clearly that could
be the case and you cannot pretend that that is not going to be
an issue, but our policy is that we have a programme that allows
us a float, so we are not working up to the wire. We have a programme
that gets us in early, we are on programme and on track to do
that, so we get in and give ourselves a bit of breathing space,
such that we are not so vulnerable to being held, if you like,
to ransom at the last stages.
Q569 Chairman: So it focuses minds,
it is not a problem and you are content with the power you enjoy
and the relationship with your contractors?
Mr Wright: I think the relationship
is extremely good with all parties thus far and we have had very
good support.
Q570 Chairman: We have asked you
questions specifically on the Olympic project and we are trying
to learn lessons about big projects and construction generally
and particularly, in your case, some of the public sector issues.
You have talked a lot about legacy, good relations, training,
health and safety, employment policies and so on, all these issues,
which for you, because of the politically exposed situation which
the Olympic Delivery Authority is in, are very important, but
to what extent when you go on to your next big project, whatever
it is, will those same issues be important to you and why or is
the political dimension of this project giving them a particularly
high focus?
Mr Shiplee: My personal experience
is that I was five years in Hong Kong and what was very important
to the administration there when we started was health and safety.
Why? Because during the process of delivering that project, there
was a change of site and it was absolutely classed as essential
by HMG that they should demonstrate that they had acted properly
in accordance with looking after the people who would be transferred
to China at a later date, so these sorts of imperatives are not
just special to us, but I think they occur in many places in different
ways. For all of us, having just suddenly come to a conclusion
that these are really good things to do and, gosh, we woke up
this morning and that is how it was, for all of us, and I am sure
Mr Wolstenholme is the same and Mr Wright here, we have worked
our way through understanding why this is important, probably
seen some places where it has not happened and realised that actually
it is a good thing to do it this way because it is a better way
to go about it, so I think the issue is that people are very committed.
I am very committed, my colleagues are very committed and that
commitment will be taken on, but of course we will have learnt
some more during this process.
Mr Wright: There are some core
principles which I think we hold true and will take with us. There
are certain specific elements in every project which cause you
to reconstitute those into a slightly different mix, if you like,
and I think the lessons learned are fundamental in major projects
and can be transferred from one to another.
Chairman: Thank you very much for carrying
the torch for the Olympics so effectively this morning, gentlemen.
We are very grateful to you and thank you very much indeed.
|
