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Olympic supply chain interventions remove £600m risk

More than 400 interventions took place by procurement chiefs on Olympic tenders and contracts to reduce the risk of suppliers going bust and delaying construction timetables.

The figure was released this week after more than 200 Olympic learning legacy reports were published detailing work carried out on the construction of the Olympic Park and Athletes Village.

A total of £600 million of supply chain risk was removed from the 2012 construction programme as tier one contractors were asked to compile in-depth financial monitoring of their supply chains.

More than 80 tier one contracts and 2,700 ‘critical’ work packages were monitored across the Park and Athletes Village and 25 contracts, representing Olympic Delivery Authority spend in excess of £2 billion, were cited as having an increased level of potential risk.

A total of 403 interventions were recorded by Olympic delivery partner CLM (Laing O’Rourke, Mace, CH2M Hill) and tier one contractors in response to an increased level of supplier risk on contracts worth £640m, with £433m removed at the tender stage.

Of the 403 interventions, 296 occurred at pre-procurement stage, with 74 at award stage and a further 33 after contracts had been awarded.

A case study highlighted in an insolvency management report was that of formwork contractor SJW Civil Engineering, which was identified by the delivery partner as being a high financial risk.

The company was bidding for work worth £3.5m across seven tenders with two tier one contractors. Despite concerns expressed about its finances, the firm was awarded a £500,000 contract at the Eton Dorney rowing facility based on previous experience with main contractor Morrison Construction and a competitive tender.

A total of £300,000 had been spent when the firm entered insolvency. The Olympic report states that its failure is reported to have cost the Galliford Try subsidiary around £250,000 in additional fees.

However, a contingency plan to reschedule the delivery programme, procure additional materials and retain labour resulted in the project meeting completion milestones.

The learning legacy reports cover 10 themes including procurement, sustainability and project management, and trade bodies including the Royal Institution of Chartered Surveyors, the Chartered Institute of Building and Institution of Civil Engineers will now host a series of events over the next year aimed at sharing the construction lessons learned on the Olympic sites.

ODA chairman John Armitt hailed the scale and speed of the effort to build the 2012 venues and infrastructure as unprecedented and said it would act as a catalyst for future inward investment.

Health and Safety executive London 2012 director Stephen Williams said the industry can now provide a safety blueprint for both the staging of the games and the continuing legacy work.

He said: “We are keen to use the lessons learned to make sure good practice is transferred to the wider industry but also to use the construction experience to achieve a safety legacy for other industries.

“A key theme at the launch of the report was these lessons now need to be transferred to smaller, less high-profile projects and how the role of the client is key.”

Mr Williams said the practice of encouraging near-miss reporting on Olympic sites now needs to be employed by the wider industry and not just the bigger tier one contractors after a survey of workers found that 75 per cent felt safer on their Olympic project than other schemes.

“If you look at what can be transferred from Olympic sites, near-miss reporting systems can be set up very easily,” he said.

 

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