Construction of Wembley Stadium - Essay Example

Construction of Wembley Stadium Introduction of the project Since 1923, Wembley Stadium has been hosting English football. The stadium also hosts variety of other sporting activities. The sporting activities apart from football include rugby, music concerts, athletics and cricket. The stakeholders and management committee of Wembley stadium made a decision to rebuild the popular stadium and transform with the state of art facilities. Wembley stadium management board agreed to fund the project to the tune of £798 million. Multiplex Construction Company won the tender to undertake the rebuilding of the popular stadium. The project officially began on October 2000. Demolition of the old structure was scheduled on December 2000 and the new stadium was expected to open in 2003. However, the project was delayed to 9th March 2007. This was because of delays caused by various factors chief among them financial and disputes related issues. Upon completion, the one kilometre circumference Wembley Stadium was supposed to have a bowl volume of 1,139,100m3 and 90,000 sitting capacity with demountable seats. The most spectacular thing is the 1750 tonne and 133-metre tall arch that became the symbol of the stadium. Wembley Stadium has 2618 toilets, state of art conferencing and banqueting facilities as well as 103,000m2 foot print. There were 3500 workers on site who constructed 90,000m3 concrete and 23,000 tons structural steel. There were 444km main cables, 80 km speaker cables, 87 km security cable, 38 km CCTV cables, 71 km cable tray and 14 kilometre fibre optic within the stadium. Other workings were 15000 steel reinforcements, 21,000 sprinkler heads and 1720 km small power and lighting. However, it was not possible to develop retractable new roof of the stadium and fans became disappointed. The work was quite satisfactory as most specification in the contract was met despite the delay occasioned by factors beyond the construction Company. Multiplex Construction Company made £70 million over budget. Reasons that explain the delays as well as the cost increases encountered during the project (3 pages) The planned cost of the total project was £798 million. However, Multiplex was later paid a total of £834 million indicating project variance cost of £36million. There are many reasons that explain the delays and increase in the project cost of Wembley Stadium. The delays caused millions of losses in pounds to the Wembley National Stadium Limited, Multiplex and other outsourcing companies such as Cleveland Bridge (steel contractor) and PC Harrington (concrete contractor). Wembley National Stadium Limited paid additional £36m to the Multiplex (WNSL 2010). In addition, the project delay cost the stadium millions of pounds in terms of unearned income because of diversion of the 2006 Football Association Cup final to Cardiff’s Millennium Stadium in 2006. Other sporting activities were also diverted leading to further losses to the stadium. Cleveland Bridge paid £6.1 million damages for failing to honour the contract to Multiplex and 20% of the legal cost incurred by Multiplex during the legal battle over the breach of contract. Multiplex lost over £10 million in court battles. Multiplex is also contesting claims from PC Harrington. Legal disputes cost the Multiplex million of pounds in legal costs and the one-year delay of the project cost Multiplex Construction Company £70 million. The Wembley Stadium delayed because of financial difficulties, breaches of contract, late beginning, poor workmanship and outsourcing risks (Winkler & Chiumento 2009). The first reason for the delays was financial difficulties. The project was scheduled to start officially on October, 2000 but the management board did not approve the payment on time. As a result, complete demolition was postponed to 2003. Lack of finance incapacitated both the Multiplex Construction Company and Wembley National Stadium Limited from undertaking the specification of the contract as previously anticipated. Financial difficulties were caused by high bureaucracies that existed in the Wembley National Stadium management board. Therefore, Multiplex Construction Company could not start working because the first settlement had not been made as agrees in the contract. Multiplex Construction Company spent more money on administrative costs than anticipated because the project started running on January 2000 and the project management team were already earning salaries before the work commenced. The expenses ran into thousands of pounds. Multiplex spent a lot of money on legal contests against the outsourced companies. The second problem that caused delays in the completion of the project was breach of contract. Cleveland Bridge failed to honour the contract they entered with Multiplex to supply the construction steel. Cleveland Bridge complained of the Multiplex delay in approving their steel designs. As a result, they pulled out of the contract claiming that they were making losses due to the delays in project execution and Multiplex outsourced the services of Dutch firm Hollandia to replace Cleveland Bridge. Multiplex went to court to seek the damages and was awarded £6.1 million by the court. However, the judge criticised them for not seeking out of court settlement. The judge observed that the two companies incurred about £22 million which could have been much lower had they considered otherwise. The third problem that caused the delay in the completion of the project was late beginning. Construction projects require enough time complete and therefore it is not possible to rush. If the projects start later than schedule, many things arise. The net present contractual value reduces because they are discounted and the cost of building rise with inflation. Cleveland Bridge experienced the increasing cost of steel due to delays in implementation of the project. About 35% of £70 million is attributed to increasing cost of building materials and increase in the administrative expenses. The demolition of the old Wembley Stadium was scheduled to be completed on December 2000. However, the demolition was completed on 2003. Apart from increasing cost of construction, the date of completion delay also. The fourth problem that contributed to the delay in the completion of the project was poor workmanships. Due to poor workmanship, the steel rafter in the roof fell on March 20, 2006. As a result, the progress of the project stalled when the 3000 workers was evacuated. On the month of March 23, 2006, the sewer under the stadium buckled. This made the construction engineers and workers to devote most their time in repairing and cleaning up the mess. The two incidences led to increased number of days devoted for their repair. As a result, the date of completing the construction was pushed forward. Multiplex spent an additional £800,000 more than the budget to repair the damaged sewer and roof. The fifth factor that caused delays and increase in the project cost is the outsourcing risks. According to Kendrick (2003), outsourcing risks are many and can delay the project. The suppliers may fail to deliver their work or materials as schedule. In addition, out sourcing may have been done far away from where the project is carried and the project management team may not be in a position to observe and assess the causes of the delays. Multiplex took legal actions against Cleveland Bridge and PC Harrington in an attempt to recover some losses it experienced in the project (Bizley 2008). When Cleveland Bridge pulled away, Multiplex had to spend more time than schedule to negotiate, approve and sign the contracts with Hollandia. On the other hand, PC Harrington always was late in constructing the concretes because it had less capacity than it had indicated in the contract. All the above factors led to a one-year delay in the project. The relationship between the problems identified and the role of management (3pg) It is evident that most of the problems that Multiplex experienced were due to the inefficiencies and ineffectiveness of the project management team. The overriding weakness of the project management team was its in ability to anticipate the future and resolve possible problem that affected the project negatively. The project management team and financial difficulties Multiplex project management team was to blame for some of the financial woes that were affecting the project. The project management team failed to renegotiate the contract when the management board of Wembley National Stadium Limited delayed the demolition of the old Wembley stadium. The project team were short cited and failed to note the increasing levels of inflation that drove the cost of building materials up (Baker 2009). The classic example is the Cleveland Bridge pulling out of the contract when it realise that the project implementation was taking longer time. Cleveland Bridge would have incurred over £ 20 million in losses but end up paying £6.1 million damages only to Multiplex Construction Company. Had Multiplex anticipated the cost of delay, it would have either renegotiated the contract or terminated. The action would have save Multiplex from incurring losses in million of pounds. The project management team and breach of contract It is logical for any aggrieved party to run to court to seek damages for the breach of contract. According to Harris et al (2002), the judge of the court treats all parties equally when breach of contract occurs. However, Dumortier and Taeymans (2001) points out that arbitration is a better option as compared to the corridors of justice. Out of court settlements is a better because it is easier to handle and resolve the issues at hand. Furthermore, the out of court approach saves the parties time and money. Cleveland Bridge and Multiplex spent a whooping £22 million in the court case. The cost could have been much lower if Multiplex Construction Company would have considered arbitration as an option to solve their disputes. Out of court approach to solving disputes, also preserve the reputations of the partners involved as compared to the courts. The project management team and late beginning Multiplex Construction Company should have done enough research and establish some of the factors that could affect the implementation of the project at hand. Through planning could have cushioned the company from the losses it incurred. According to Kendrick (2009), it is important to obtain precise information about a particular issue before moving ahead and implementing it. The decision to rebuild the Wembley stadium was done in haste. Multiplex Construction Company thought that the deal was too good and proceeded without planning exhaustively for it. Multiplex Construction Company also failed to put adequate project monitoring and evaluation in place. As a result, it took a long time for the project management team to identity and respond to issues that affected the progress of the project. Communication in the company was highly flawed and this caused misunderstanding between the workers and their supervisors. Therefore, the project was doomed from the beginning. The project management team and poor workmanships The felling of the steel rafters and the buckling of the sewer pointed some serious errors in the design and actual construction. This was brought about because the project management team did not consider training their workers as a project priority. At some point, consultants had to be called to assist in the construction of the project a move that not only caused ripples in the company but also it made the company to incur a lot of money in professional fees. There was no close supervision on the work being done because the management team was always busy handling administrative issues of the project. The project management team and the outsourcing risks The project management team found it had to tame outsourcing companies. This is because there were no detailed planning and scheduling of the construction work outsourced. Therefore, the other subcontractors failed to work on schedule. The above problem that led to the delays in the project completion and increases in cost could have been avoided had the management team invest in research and thorough planning. The strategic or operational project management actions that could have been taken to control the project better and increase its chance for successful delivery against time and cost targets. To overcome the financial difficulties, Multiplex Construction Company should develop research and development department that will provide market information on costs and other risks that may be associated with the construction project at hand. The information will be used to make informed decisions in the company. Furthermore, it will be used to track the progress of all the construction projects. Multiplex Construction Company should include a clause on arbitration in the contractual document. This will ensure that whoever agrees to enter into contract with Multiplex Construction Company will consider arbitration as an option to settle any contractual differences that may arise. Arbitration as an approach to settle the disputes will help solve the contractual disputes at a faster rate as compared to the courts. It is also a cheaper way of settling disputes (Schniederjans et al 2005; Shi et al 2007). Multiplex Construction Company should strength its planning departments to ensure that all projects are thoroughly planned for before execution. Detailed planning is an essence to successful completion of construction projects. In addition, research and development departments should work hand in hand with the planning department to ensure that the planning process proceeds smoothly (Greaver 1999; Kerzner 2009). Multiplex Construction Company should strengthen human resources department to plan and execute training activities for the workers. Through training, workers will be able to communicate effectively and efficiently across the company. As a result, the workers will be empowered to perform their duties in the construction site and substandard workmanship that was witnessed before will never occur Rost (2006). In addition, the department will be responsible for appraising and supervising all construction workers. Multiplex Construction Company should ensure that the all the details concerning the project outsourcing are well documented and communicated to all parties concerned (Spiess & Felding 2008). In addition, monitoring and evaluation system should be put in place to track the project progress at all stages in construction projects. Multiplex Construction Company should develop stringent vetting process to ensure that only good companies are granted outsourcing jobs. Conclusion of the lessons learned during the project Project financial management is important for successful completion of projects. This is because any project can bring losses either to the company or profits depending on how the financial matters were handled. However, all project management teams should aspire to ensure that project costs are kept as low as possible. The second lesson learned is that it is better to avoid settling issues in the courts. Courts are very expensive and may damage the reputation of the companies involved. Therefore, out of court settlement is the most appropriate way of solving contractual issues. The third lesson learned is that construction companies such as Multiplex Construction Company should plan their activities to ensure that the projects are implemented as scheduled. This is because the costs of delays are very high. The fourth lessoned learned is that poor workmanship result in unnecessary delays and should be avoided as much as possible (Englund &Bucero 2006). In addition, it makes the companies to incur additional costs that could have been avoided if quality work was initially done. Finally, the outsourcing risks can delay the progress of a project. Therefore, it is advisable for all project management team to provide detailed schedule for all the outsourced work. In addition, they need to seek supervisory powers to be able to speed up the work of outsourcing companies. References Baker, D 2009, Multi-Company Project Management: Maximizing Business Results Through Strategic Collaboration, J. Ross Publishing, USA. Bizley, G2008, Architecture in detail, Elsevier, Oxford. Englund, R &Bucero, A 2006, Project sponsorship: achieving management commitment for project success, John Wiley and Sons, New York. Greaver, M 1999, Strategic outsourcing: a structured approach to outsourcing decisions and initiatives, AMACOM Div American Mgmt Assn, USA. Harris, D, David Campbell, D, & Halson, R 2000, Remedies in Contract and Tort, 2ndedn, Cambridge University Press, Cambridge. Jos, Dumortier, Marc Taeymans, M 2001, a decade of research @ the crossroads of law and ICT, Larcier, Brussels. Kendrisk, T 2003, Identifying and managing project risk: essential tools for failure- proofing your project, AMACOM Div American Mgmt Assn, New York. Kendrisk, T 2009, Identifying and managing project risk: essential tools for failure- proofing your project, 2nd Edn, AMACOM Div American Mgmt Assn, New York. Kerzner, H 2009, Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 10thedn, John Wiley and Sons, New York. Rost, J.2006, the insiders guide to outsourcing risks and reward, CRC Press, USA. Schniederjans, M, Schniederjans, A& Schniederjans, D 2005, Outsourcing and in sourcing in an international context, ssM.E. Sharpe, New York. Shi, Y, Zelený, M., Olson, D & Stam, A 2007, Advances in multiple criteria decision making and human systems management: knowledge and wisdom: in honour of Professor Milan Zeleny, IOS Press, Lancaster. Spiess, W & Felding, F 2008, Conflict Prevention in Project Management: Strategies, Methods, Checklists and Case Studies, Springer, Germany. Winkler, G & Chiumento, G 2009, Construction Administration for Architects. McGraw Hill Professional, London. WNSL, 2010, Wembley Stadium - The Venue Wembley National Stadium Ltd, viewed 28 March 2010, . Read More