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Setting a wheel in motion

Site Report: Piecing together the contractual jigsaw on the London Eye project has been quite a task for solicitors Garrett. Project manager Mace opted for its favourite construction management solution, but then had to convince contractors and backers it

RARELY has a construction project elicited such interest from the public. The Dome leaves people cold; the Jubilee Line Extension only causes comment because it is still not fully operational; but the BA London Eye has got them all gawping.

Teenagers jump to their feet on the train to get a better look; families pose for photos with the wheel in the background; passers-by stop by the site hoardings to read what's going on.

With such attention focused on this project, it was disappointing when the first lift attempt in September ended in failure, causing a monthlong wait while brackets were redesigned.

But for those involved in the project, this was just the latest hurdle of many.

Architect David Marks, who came up with the idea for the wheel, summed it up at the time: 'This is a minor setback in the context of the overall project: we have been working on it for six-and-a-half years.'

But despite the drawn out build-up, circumstances cut the construction period to just 15 months.

This led project manager Mace to plump for construction management to procure the job, splitting it into packages so that some could be put out to tender later and risks allocated accordingly.

The original procurement route was lumpsum turnkey, which would have involved the expense of all risks being paid for in the package.

Construction management is an unusual mode of procurement for a project of this kind.

Mace and the client's solicitors, Garrett, had to work hard to convince the key contractors, insurers, banks, various land-owners and other third parties that it was the best way forward.

Siobhan McCloskey-Oudahar, the Garrett's partner who negotiated all the trade contracts, recalls: 'No sooner would you get something agreed with one party than you would have to go off and talk to somebody else about the same thing.'

Nevertheless, she relishes working on such a complex job. Ms McCloskey-Oudahar is no stranger to construction management con-tracts. With her previous firm, Cameron McKenna, she worked on Mace's first ever construction management job.

Familiarity with the form of contract saved time, she says, since there was no need to go through it with a fine toothcomb, questioning every clause.

But Garrett is a relative latecomer in the wheel's development.

The project first started in 1994 with a competition, organised by the London Evening Standard, to design something to mark the turn of the millennium. All the entries, including David Marks'wheel, were rejected.

But Mr Marks was so convinced his idea was a goer, he decided to pursue it himself and succeeded in getting BAon board in 1996.

In March 1998, BAemployed Mace as the project manager. 'At that time the project was just floating on a team of consultants,' says Mace's project manager, Ian Crockford.

The set-up was pretty nebulous at that stage. The client body had yet to be formed, since it was missing an operator. It is now made up of BA, architects David Marks Julia Barfield, and The Tussauds Group.

Mace's main task was to get the wheel rolling with Mitsubishi, which had been devel-oping the concept design for five months.

But when Mitsubishi put its proposal on the table in September 1998, it was met with dismay by the client.

'Mitsubishi returned with designs that did not reflect the initial concept,' says Mr Crockford.

Mitsubishi had questioned the safety of a continuously rotating wheel, suggesting instead that the rotation should be stepped. It had also proposed rocking capsules, rather than the stable type the wheel now has.

Another major change was that Mitsubishi had beefed up the slender design of the wheel, which the client felt was central to the concept and necessary to achieve planning permission, changing it to something Mr Crockford says looked rigid and industrial.

But the final nail in the coffin was that Mit-subishi could not meet the December 31 deadline, proposing an Easter 2000 opening.

'Bob Ayling [BAchief executive] was saying:

'December 31 or else'but they could not do it,' says Mr Crockford.

Mace's task then became to conduct a full project review and work out how the wheel could be built.

The solution was to approach the key trade contractors that had been involved in the initial design consultation with Ove Arup and Partners: Dutch steel firm Hollandia and the capsule manufacturer, French outfit Pomagalski.

Alittle persuasion got them on board, says Mr Crockford, and then Tilbury Douglas, which hadn't worked in a construction management environment before, was taken on for the civils work.

Next they had to convince the banks of the scheme's viability.

'We had to do a joint selling job,' says Ms McCloskey-Oudahar. 'They had been ex-pecting [Mitsubishi's] one-stop solution. They knew that; they were comfortable with that.'

Construction management splits the risks, a concept with which the banks were unhappy.

Discussions and trips to The Netherlands to view Hollandia's operation were required before the project won its backing.

Much negotiation was also needed to establish the insurance cover, which varied from that provided for in Mace's standard construction management contract.

The banks wanted a project-wide deal to cover the works, third party liability and professional indemnity for design.

Usually the first element is covered by the project, the second may be taken by individual trade contractors and the third element is almost always covered by individual firms.

'It is this unusual project-wide insurance that will be covering the delay caused by the failed lift,' says Mr Crockford, who values the project at £35 million.

'The project professional indemnity insurance allows the client to claim in addition to the contractors. If the consultants or the contractors do not claim, the client can, which is very unusual. I am glad we did it like that now.'

When the first lift had to be abandoned, a frantic rethink ensued. Not only did the clips attaching temporary cables for the lift have to be redesigned, but Mace and the contractors had to work out how to bring forward jobs scheduled to take place after the lift, to minimise the effect on the programme.

'We could have been in crisis, with people slapping claims in all over the place,' says Mr Crockford. 'The Mace culture is to try to create a non-adversarial project approach and, with Garrett's help in setting up the contracts, we have achieved that.'

Ms McCloskey-Oudahar points out that Dutch and French contractors tend to have a less adversarial approach anyway, although she stresses that the British contractors on this job have been equally positive. 'You sometimes get claims-conscious contractors, which these ones have not particularly been, so they are not arguing over every dot and comma in the contract,' she says.

The main trade contractors connected with the wheel - Hollandia, Pomagalski, Littlehampton Weld-ing and TClarke - are all on cost plus fee contracts. This means they will be paid for the extra work they have had to do.

On reflection, says Mr Crockford, this was the best approach, since paying for the likely risk on a lump sum basis would have been very expensive.

The other two main contracts were awarded later and are lump sum because there is less risk to be paid for.

These are Alandale's fit-out job in County Hall to provide ticketing and retail areas and Waterers'landscape package.

But it's not all over yet for Mace and the trade contractors. The successful attachment of the first capsule in the first week of November came as a huge relief.

This project is subject to health and safety rules covering fairground rides, which has further complicated things contractually. The next big hurdle is to assemble all the relevant documents and warranties to allow engineers Allott & Lomax to verify that the wheel is safe.

'Getting all the verification documents together is a battle,' says Mr Crockford, adding that, unlike many projects, this must all happen well before the end of the programme.

Everything must be signed and sealed by December 31, when 150 guests will experience the wheel's first revolution laden with passengers. The public will be allowed on it early in February, when operating teams have been trained up and the landscaping and re-fit work is complete.

Judging by the interest to date, there should be no shortage of punters.