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The award of the 2012
Olympic Games to London is expected to generate one of the largest
construction and regeneration initiatives in Europe and give a significant
boost to the construction industry as billions of pounds is invested in
building new stadia, arenas, housing and infrastructure.
Preparing for the Games will add a substantial increase in construction
output, representing around 10% of all UK construction output at the peak of
the
Olympic workload in 2010.
Whilst some infrastructure activity
has already begun, the bulk of construction work on the venues themselves is
not likely to occur until 2007. The Olympic
Delivery Authority (ODA)
is spending two years acquiring all the necessary land, preparing project
plans, and getting them approved, and a further four years building the
facilities, which it is hoped will be completed by the end of 2011.
Commissioning of designs for the main venues is due to begin in the second
half of 2006, with the
construction of the
Olympic Village due
to commence in July 2007 and work on the main stadium, aquatics and media
facilities commencing in spring/summer 2008.
Construction work on
Olympic venues is expected to peak in 2010, whilst the bulk of
infrastructure development is due to take place during 2006 and 2007. There
is a certain amount of overlap with ongoing transport and infrastructure
developments taking place as part of a long established programme of
development in the Capital and surrounding areas. Projects such as the
CTRL, Stratford
International and
the M25 Heathrow Spur
are due to complete in 2007.
By 2011, most of the
major construction activity is scheduled to have been completed and by 2012
the transition to the ‘Legacy stage’ of the construction process will begin
after the Games are held. The
bulk of construction involving temporary works to existing venues such as
Hyde Park,
the O2
and
ExCel
centres together with alterations to regional stadia such as
Old
Trafford
and the
Millennium Stadium
in Cardiff is not likely to occur until 2012. These smaller temporary works
have not been reflected in the above chart.
However, most recent
Olympic building programmes have resulted in some delays and, consequently,
the programme should be regarded as a guideline only. It is likely that
certain projects will be subject to delays and changes in budget plans over
the next few years.
The bulk of Olympic
construction expenditure
is
likely to occur within the period 2008-2011, with
annual
output
likely to range from £700m - £1.2 billion. In terms of overall workload, the
Olympics is therefore expected to add around 1.5% output to all
new
build
construction output over the period 2007-2012,
and an extra 2% to all types of construction work generated over the 5-year
period 2007-2012.
The
Olympic Park,
which lies at the heart of London’s
plans for the 2012 Games, has been subject to
recent revisions
to optimise the layout of facilities and enhance the Legacy benefits from
the project. Key changes include the integration of the Olympic Village
more fully with the Stratford City development, the relocation of the
International Broadcast Centre within the Park security cordon and the
relocation of temporary car and coach parking.
A
key factor in the London bid proposal was for the post 2012
Legacy
development
centred on the site in the Lea Valley in East London, currently a high
priority regeneration area and one of the most deprived areas in the UK.
All sectors of the local
economy are
expected to benefit from the Legacy phase, and significant developments
include the creation of around 12,000 post-Games jobs, the provision of
around 4,500 affordable housing units and improvements through improved
community, commercial, retail and business developments.
The
overall costs
of staging the 2012 Olympic Games had originally been estimated at between
£2.3 and £6.5 billion, with funds being supplied through the Government,
lottery grants and council tax. However, it is likely that the final cost of
constructing all venues and associated infrastructure for the 2012 Games and
Legacy development may finally reach £7 billion and the Government is
currently exploring options for Public Private Partnerships (PPP) and
private finance. The ODA
is also considering private investment to make up the estimated £2 billion
shortfall. The ODA is understood to be considering the establishment of a
special fund to help pay for infrastructure needed for the Legacy phases of
2012.
Preparatory work on
the Olympic Park has already begun and a number of
tenders and contracts have been issued
including the
contract for preparatory infrastructure to replace overhead power lines that
currently cross the Lower Lea Valley awarded to the
Murphy Group,
the appointment of the
EDAW Consortium
to design the Olympic Park and the appointment of Nuttall and Morrison
Construction as remediation contractors to clear and prepare the site of the
Olympic Park. The ODA is currently assessing short listed bids from
Bechtel; CLM
(Laing O’Rourke, Mace, Davis
Langdon and CH2M Hill); G3 (Great Games
Grouping -
AMEC, Balfour Beatty, Jacobs Engineering) and
Legacy 2012
(Bovis Lend Lease,Capita
Symonds, Kellogg, Brown & Root) for the
role of Delivery Partner
to oversee the design, management and
construction of the permanent venues and infrastructure required for the
Games. The
final appointment is due to be made in late summer 2006.
There is a clear intention
that the
Olympic construction programme will make heavy use of
prefabricated
and
offsite manufacturing techniques
in order to improve quality, value and timescales on projects. The
ODA intends to make
many of the venues
adaptable or relocatable
and original
designs were developed to incorporate this need.
Four arenas will be built using a
modular system,
which will be capable of relocation anywhere in the UK and be used in a
variety of
roles.
The 2012 Olympics will
be among the first to use the new
EU procurement directive,
introduced for public sector contracts, which allows for "competitive
dialogue" with short listed bidders to ensure that contracts are more
collaborative in nature.
With the exception of
the tunnels for the power lines, construction contracts are unlikely to be
put out to tender until 2007 and will be advertised in the OJEU. To
ensure design
excellence for example, the main facilities within the Olympic Park will be
procured by major design competitions, similar to the one used to select the
designers for the Aquatics Centre. Other appointments for smaller venues and
temporary venues will be procured by the appointment of an architect
supported by a professional team. In addition to the main Olympic venues
worth many millions of pounds or more, there will be many other smaller
contracts for catering, retail, ‘back of house’, administrative and training
facilities presenting opportunities for all sizes of organisations to
work as sub-contractors.
The
ODA
has indicated that the 2012 venues
will be built on a
design-and-build basis
speeding up the
construction process but limiting architects' influence over design. The ODA
has also announced that it will be using the 3rd edition of the
New Engineering Contract (NEC3)
for Olympic design and construction
projects,
which requires a partnering approach to design and construction. Use of NEC
suite of contracts is in line with use of partnering agreements on large
public contracts, but not all contractors are familiar with this type of
contract, suggesting that those teams with experience of using NEC and
partnering are likely to be in a stronger position when tendering for
contracts.
It is expected that a
number of other contractors will join together with architectural practices
and engineering and cost consultants to form consortia to bid for various
Olympic and Legacy
construction contracts which will be
publicized by the ODA from 2007 onwards. The ODA is keen to
establish a framework where it will
have access to a shortlist of qualified contractors who are backed up by
engineers and architects and has
indicated that
the 2012 venues would be built on
design-and-build
basis thereby speeding up
the construction process.
Manufacturers, suppliers and construction firms are already factoring in the
economic benefits from the Games into their financial forecasts, with a
number of firms expecting to see potential for growth in the construction,
building products and allied markets of between 5 and 10% over all phases of
the Olympic construction programme.
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