Insight

Will Spurs’ stadium delay hit construction management’s reputation?

25 October 2018 | By Neil Gerrard

Mace is pulling out all the stops to deliver the delayed stadium before the end of the year

Mace is getting the hairdryer treatment from Tottenham over delays to its new stadium. But will this put clients off using construction management, asks Neil Gerrard.

It wouldn’t be the first time in football that the manager has got the blame. With Tottenham Hotspur’s new £800m stadium, though, it is construction manager Mace that has found itself in the spotlight.

The stadium had been due to open for a match against Liverpool on 15 September but issues with “critical safety systems” meant a delay that sees the club continue to play its home games at Wembley. It is still unclear when the project will be completed.

Meanwhile Mace and the construction team have been getting the “hairdryer treatment” from Spurs chairman Daniel Levy. He has blamed “several contractors” for the delay, said the planned opening date “was not over-ambitious”, and that “the stadium would have been ready if not for the safety issues”.

But does this mean clients should be put off construction management (CM) in the future?

Spurs stadium goes to extra time

November 2015
Mace appointed as construction advisor; later becomes CM

February 2016
Final planning approval received from Mayor of London

May 2016
Mace starts on site; September 2018 completion targeted

August 2018
Spurs says stadium will not open in September

October 2018
Spurs says it is unable to give revised completion date

In truth, Spurs had little choice but to use CM for the new stadium, a huge and complex project. It is understood the football club couldn’t find a single contractor that would take the work on a fixed-price basis.

Instead, Mace was initially appointed in a construction adviser role that evolved into a CM arrangement. But, like a chairman buying players without consulting his manager, it is thought the club negotiated up to 100 contracts itself.

Mace built its reputation in CM and has delivered over 500 projects using that route. A spokesman for the firm said: “CM is a highly effective model to deliver complex projects as it allows complete  transparency and provides both the client and the contractor with the flexibility to manage risk appropriately.

“Given the wider economic uncertainty at the time we were negotiating to build the stadium, we believed that CM was the only viable option for a project of this scale and complexity.” 

Mace started on site in May 2016, which meant it was given just over two years to demolish the old structure and build the new stadium. 

“The programme was clearly unachievable. Anyone in their right mind would look at it and go ‘that doesn’t seem right’,” a source close to the project said.

Mace’s chief executive Mark Reynolds is understood to be on site nearly every day of the week, trying to progress the job as quickly as possible.

But, of course, the nature of CM means that Spurs is picking up the tab for the overruns.

“If Mace were left holding a JCT contract with a price of £250m and they ended up delivering it for £300m, they would have a very different problem,” said Jason Farnell, managing director of consultant CRM and a CM advocate.

The pitch has now been laid at Spurs’ stadium

“The only thing that can really hurt you on CM is not delivering the scope of services in your agreement. Because you are a consultant, professional negligence is where you would be challenged and that is difficult to do,” he added.

Gareth Jones, director of CM specialist InCo Projects, doubts CM is to blame for the Spurs stadium delay. “Huge projects like this inevitably have challenges and, regardless of the procurement option, the problems [that have occurred] would probably still have happened,” he said.

“When you are looking at the type of client Mace is dealing with and the complexity of delivering a stadium, people will appreciate the difficulties,” Farnell added.

The project source said: “Once it is all finished, Mace will think “we did a good job there” and rightly be proud of what they have achieved. Whether that is perceived in the market is another thing, but if I were a client, I would always go the CM route.”

CM’s return to favour

Why construction management jobs are becoming more common

Anecdotally, CM’s popularity seems to be on the increase. Sir Robert McAlpine is thought to be using CM on around half its workload, including the Stirling Prize winning Bloomberg HQ in central London, a £946m project. Mace is also using CM on the second phase of Battersea Power Station, valued at over £1bn, where it replaced Skanska.

“At Battersea, you have got a 120-year-old listed, retained structure that has been messed about with for the last 40 years; the prospect of being able to put a lump sum price to that without putting in massive premiums is probably unachievable,” said CRM’s Jason Farnell.

“At Battersea, you have got a 120-year-old listed, retained structure that has been messed about with for the last 40 years; the prospect of being able to put a lump sum price to that without putting in massive premiums is probably unachievable.”

Jason Farnell, Construction Risk Management

“Contractors will look at a job like that and say, ‘We won’t accept the risk unless it is in an environment where we are able to control the risk we are taking on’. Clients will think, ‘If we let that out on a lump sum, hard money contract, we are going to end up potentially paying a massive premium or we are going to end up in dispute’. So both decide they are better off with CM.”

CM margins range between 2% and 6%, not dramatically different from contracting. For clients, the advantage is having construction expertise from the start of the project, while retaining control of their budget and supply chain choices.

InCo’s Gareth Jones: “We did a hotel in Canary Wharf last year and the client went for CM because they wanted to use a couple of their regular subcontractors on the project. But they didn’t have all the subcontractors they needed. They also like to change the design. CM worked for them because they knew wouldn’t get clobbered with additional costs when they decided to make changes.”

A warning from Farnell: “People think CM is interchangeable with hard money contracts. But they are different skillsets. You need a contractor who is capable of delivering in a CM environment.”

Comments

To say “the stadium would have been ready if not for the safety issues” is like saying "that airliner is ready to take passengers except for the lack of wings". Safety is critical issue where you have large numbers of public, often influenced by alcohol in a confined space. Get the safety right and the aesthetics can be dealt with later ... you're unlikely to be hurt by the wrong colour seats.

Paul Eccles, 29 October 2018

Deja vu on CM. Clients want everything for something. Mace are the best of the best if they do not get it right then there has to be a reason why! Time for the Client to take a look at themselves!

Terence Warom, 29 October 2018

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