In just over a week, on July 27 and with the Games only a year away, thelast major venue for the 2012 Olympics will be completed. The eye-catching ZahaHadid-designed Aquatics Centre has also been built in Britain, by FTSE-100construction group Balfour Beatty and a long list of suppliers.
In fact, according to Armitt, 98pc of the facilities for the Olympics havebeen built by British companies. That is almost £6bn worth of business, or1,400 contracts, that have been directly awarded by the ODA to UK companies aswell as thousands more businesses further down the supply chain. Altogether anestimated 75,000 firms are expected to win work related to the 2012 Olympics.
As Britain battles with fragile economic growth and businesses desperatelyseek work around the world, these complex Olympic venues stand as a monument towhat the country’s workforce can achieve. This has been the biggestconstruction project in Europe and one of the biggest ever mobilisations of anation’s manpower outside a time of war.
“In 2008, it was China’s opportunity to say to the world – 'We havejoined’,” Armitt says. “I think our message is, 'Look at what British companiescan do. Look at the quality, the imagination and their capability to manage.’ Ithink the Games themselves will be imaginative and intimate. I am expecting an enormoussense of party in London. That is something we do very well.”
ThatUK companies, pretty much on their own, have built the Olympics venues isimpressive. That they have done so during the worst global recession for 80years makes the accomplishment even more notable.
While politicians, the media and public will long debate whether the £9.3bninvested in the Olympics should have been used elsewhere, the spending hasprovided a vital stimulus for the construction industry and employment in eastLondon. Of the thousands of companies involved in building the Olympicsfacilities, only 10 have gone bust. The most significant was P Elliott, anIrish construction group building part of the Olympic Village, which became caughtup in the Irish property crash.
However, despite these financial challenges, Armitt believes the recessionmay have aided the Olympics project.
“It would be wrong to deny the recession has helped,” he says. “It was good inthe sense that it clearly kept down prices – and labour availability, which wesaw as a risk a few years ago, has not really been an issue.
“The whole procurement atmosphere has been better than may have been thecase. If you go right back to the beginning there was a shortfall ofcontractors. There was a boom [in the UK] and there was not a list a mile longof people who wanted to do this [work on the Olympics].
“Companies could see what had happened to the reputation of the guys atWembley [the 2001 badly-delayed project to build a new national stadium]. Also,if you look at the Aquatics Centre, they knew it was going to be difficult tobuild.
“So, if you are a contractor, you were saying, 'It’s going to look great on thefront cover of the annual report when we have built it but if we haven’t madeany money then that is the only return’.”
Before 2007, with the economy booming and other construction contractsavailable, companies could afford to turn down the opportunity offered by workon the Olympic project.
“Our lists were relatively short,” says Armitt. “Whereas by the time we gotto the [Olympic] Village three or four years later, we were more active in choosingcontractors because there was a lot more competition.”
The team that built the Olympic venues in Stratford and elsewhere in the UK includessome of Britain’s best-known construction companies, such as Balfour Beatty,Carillion, and Sir Robert McAlpine, each of whom led work on one of the majorvenues. However, the majority of names on the list are smaller companies, suchas Weldex in Inverness, RMD KwikForm from Walsall and Burdens from Bristol, whosupplied the materials and services.
“These projects are built by SMEs,” says Armitt. “The big companies are overseeingthe performance of the SMEs”.
Businesses in London and the South East secured 50pc of the contracts butevery region in the UK has contributed. Among the few contracts that went toforeign firms was the work to build the roofs for the Velodrome and AquaticsCentre, which went to German specialists.
All the contractors went through a detailed vetting process, which, saysArmitt, was about more than price.
“It would be on price, their previous track record and their attitude to thevalues we wanted to adopt here. We have our five themes of legacy,sustainability, safety, employment and training and equality. So you sit downwith people and talk about these things to try to get a feeling for whetherthey understand where you are coming from and whether they are ready to take onthose extra challenges.”
Such considerations led to some companies being rejected after they failedto grasp the ODA’s values. The detailed selection process also helped avoidsome of the mistakes made on previous major public sector projects. As anexample, part of the problem with the over-budget Wembley experience was thatthe Australian group Multiplex, chosen to build the stadium had no previousexperience of stadium projects in Europe.
Armitt and his team chose Sir Robert McAlpine to lead the Olympic stadium buildbecause they were impressed by their work on Arsenal Football Club’s EmiratesStadium. “As far as possible” other suppliers and constructors were chosenbecause they had worked on the North London project, Armitt said. So, Populouswas the architect and Watson Steel of Bolton provided the metal.
The result, according to Armitt, is “an elegant structure which is also a Meccanokit”, a reference to the temporary nature of the upper-half of the bowl, whichis designed to meet the goal of a sustainable legacy. The stadium includesexamples of British engineering at its best. Some of the steel used in thestadium is recycled leftovers from a major gas pipeline project, which weretracked down and then reshaped.
The ODA says that it worked closely with contractors throughout the Stadium’sconstruction to ensure the plans became a reality, despite the challengesthrown up by the recession. It cut its payment times from 30 days to 18 days toease cash-flow problems and kept a close eye on the financial health ofcontractors. This allowed it to support the takeovers of any firms that werefound to be struggling, such as Slick Seating, the provider of seats for thebasketball arena, and the renewal of contracts.
The concept of target pricing contracts was also introduced to keep controlof budgets. This meant a design-and-build price was agreed prior toconstruction, with the ODA and contractor then sharing any upside or downsideto the costs as the work progressed. This arra-ngement created incen-tives forall parties to keep down costs.
However, for all the logistical success of the ODA in managing aconstruction site with 14,000 workers, Armitt insists the overall success ofthe projects was “totally” down to the British companies involved.
The ODA did not have to chose British contractors, indeed European procurementrules mean that it couldn’t. The process for public sector contractors has tobe open and transparent, meaning companies from the continent could win. Thishas been demonstrated in the rail industry, where Siemens defeated Bombardier,which has a UK base, to build Thameslink trains.
So, for example, when pitching for the Aquatics Centre, Balfour Beatty hadto beat off competition from two shortlisted continental European companies.
“I would argue the UK construction industry is in many ways the most proficientin the world,” Armitt says. “British consulting engineers and designers, inparticular, have a fantastic reputation. UK contractors have been workingabroad since the 19th century. A lot of engineers in the Middle East ask whereyou studied, because they studied in the UK .
“The companies here have been able to lay the ghost of this belief that existsin the UK – more than it does overseas – that the UK is not the world’s best atproducing major productions on time, to budget and to this quality. For thoseof us who have been in the industry all our lives we actually know that is nottrue. The problem is that the odd ones that go astray become the ones that everybodytalks about.”
The construction of the Olympics has not been entirely smooth, however. Aswell as losing 10 contractors to the recession, plans for the private sector tofund the Olympic Village have had to be scrapped. Instead, the Village will besold to the private sector after the Games, with the ODA understood to be inexclusive talks with property company Delancey and its backers Qatari Diarabout a deal.
There have also been complaints from politicians that contracts have notbeen shared across the UK. For example, Welsh businesses have won less than£600,000 of tier one Olympic contracts, compared with more than £5bn that wentto English companies.
Armitt denies construction has been overly-dominated by London and the SouthEast, pointing to the Basketball Arena, which was built by Barr of Scotland,and the thousands of companies supporting the project through the supply chain.
However, the ODA chairman accepts that for some companies it was not viable tobe involved in the Olympics. “The further you are managing from your base, themore difficulty you will have and the more risks you are taking. So it might notbe appropriate for a business 300 miles away from here to take a contract,” hesaid.
Despite preparing to hand over control of the Olympic Park to Lord Coe’s organisingcommittee, Locog, Armitt is not yet ready to call the Olympic project asuccess.
In the last 10 years, successful construction work at the Millennium Domeand Heathrow’s Terminal Five has been overshadowed by operational disasterswhen the venues opened.
“Here, I think we still have the challenge of transport,” Armitt says. “Peoplewill not be worried about the architecture of the stadium if they arrive twominutes late for the start of the 100m.”
Britain, therefore, still has plenty of work to do before it can declare theOlympic build a complete success.
Some businesses are already complaining about the lack of any firm plansfrom the Government to promote the country’s businesses and success stories.Other nations have booked London venues during the Games to advertise theircommercial strengths.
“It is a big opportunity that does not last that long,” says Armitt. “Probablyfor this year and the year after the Games. But after that, the world moves onand people are looking at other things.”
Britain has built the Olympics, and done so during a period of economic andpolitical upheaval. But can it make the most of the opportunity?