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Modern times indicate the number, complexity and scope of the largest construction projects that have been increasing rapidly over the last few decades (Miller and Lessard 2000). The diverse and complex nature of such projects both historically and indeed presently inevitably result in the overrunning and tardy completion of the largest projects. Various examples of this have been examined from several industries, the causes of which have been few and far between. The derivation of these causes stem predominately from the changing nature of the social, economical and political climate both on the national and international platforms. Evidently a number of measures have been assumed in order to channel the recurrence of such predicaments, which will be outlined in this paper. Notwithstanding the success of these measures, alternative theories have been coined but not as yet harnessed in order to prevent the recurrence of budget overruns and late completions. I propose that many of these novel suggestions will undoubtedly be the future for large projects and in particular in relation to international projects.
This paper will evaluate diverse construction project that has suffered form both budget overruns and late completion and will in detail focus on the occurrence and actions that can be implemented to avoid such recurrence on other projects. It is only by identifying these factors; safety measures can be implemented to manage and avoid such causes, which can easily be detected and recommended. The projects that will be concluded in this paper have there own uniqueness in terms of project/design complexity and are very well known for its contribution as unsuccessful projects in the civil engineering industry. The choice of the Wembley stadium was not only because of its recent construction but also the use of a modern method of procurement, showing that traditional contracts still have its place in the market. The Jubilee Line Extension is an older project, which was more heavily involved with political and environmental issues, being known as the world most expensive construction project. This paper also evaluates the measures that can be taken to avoid recurrences on future project and identifying how these measures were implemented in a more recent project, being the Heathrow Terminal 5, which was known as a successful scheme, delivering the project under budget and critically on time. The chosen projects discussed are as follows:
Jubilee Line Extension
Heathrow Terminal 5
Figure 1: How Wembley Stadium Project was funded
Source: National Audit OfficeThe £757 million Wembley National Stadium is recently been known as one of the largest mega projects, most costly and extremely complex construction schemes that has face the history of construction in the UK. The contract to build the new Wembley stadium was first put to tender in late year 1999 under a fixed-price contact to overcome the financial concerns over the new stadium. In the year 2000 Multiplex Construction, Australian based company came to an agreement with the clients Wembley National Stadium Limited- WSNL under a design-and-build contract and was also let on a fixed-price, lump-sum basis. This made provision for a building cost of around £352 million, with total project costing a remarkable £757 million (Design Build Network, 2009). Funding the Wembley stadium project ran into trouble before the backing of the stadium had been secured. A government funding body Sport England handed over £120 million lottery grant to WNSL to continue with the project (Andrew Myliu, 2005). Figure 1 (House of Commons, 2004), shows how the Wembley stadium project was funded. Like all mega projects the Wembley stadium created enormous technical and logistic challenges, which the clients, contactors and construction team had to settle leading the project to suffer form both budget overruns and late completion.
The Wembley stadium did not only run over the initial budget but also fail to complete by the projected completion date February/March 2006. For this mega project the main contractors did not only face problems with clients but faced enormous difficulties with subcontractors, which eventually lead to the late completion, which influenced the increase of the overall budget. One of the main aspects that prevented these issues was firstly by the type of contract that was agreed between the two parties. I believe that trying to win the bid during the tender stage Multiplex did not give enough thought if the type of contract was the best and viable option for their organisation to choose after taking all possibilities into account. Under the design-and-build procurement method the main contractor in effect becomes the agent for the client. They would manage all other contractual relationships and the associated construction risks, which would ideally be the role of a client under traditional contracts. Also under the fixed-cost contract, the client (WNSL) was protected from exposure to budget over-runs or delays in construction shifting project risk to the main contractor. Multiplex were confident and looking forward to securing a healthy profit from the project, which was the main advantage from this type of contract. This obviously did not happen for this particular project.
From looking at the project situation it can be seen that the clients WNSL has dumped all possible risks onto Multiplex, which leaded them to be responsible for the problems that occurred during construction. This obviously resulted in the budget overruns and late completion, which could have easily been eliminated if the risks were shared between the two parties. I clearly agree with the comments made by Simon Murray, former director of major projects at Rail track, who says that in principle, "having a single party who you deal with and who takes responsibility is good, but it shouldn't be absolute. It's naive to put all risk onto the team doing the project. And if you are doing something of national significance, the idea that you can dump risk is absurd" (Andrew Myliu, 2005). It can be seen in this particular construction project that the legal agreement and the contract strategy can have a huge influence in dictating whether the project budget will overrun and possibility of tardy completion.
Under the contract agreement Multiplex was responsible for both the design-and-build of the project. The projects greatest technical challenge was the structural design. The main feature was the steel arch, which both had to be constructed and erected. For this Multiplex awarded steelwork firm Cleveland Bridge 81 weeks, £60 million lump-sum, fixed-price subcontract in order to fabricate, supply, deliver and erect the arch and roof of the stadium (Andrew Myliu, 2005). Due to the financial difficulties faced by Multiplex the steelwork contractors Cleveland Bridge decided to abandon the job in 2004 as they did not believe that they would be paid for the materials. In addition there were also irrevocable difficulties between the two parties. This problem had lead to two high profile court cases where both companies sued each other for a breach of contact. For any project, team work is important to success and all that has been learnt form this project is failure of all parties within the construction team to establish and implement effective working relationships, which could had drive the project to a successful completion. Due to disagreements between the parties it added an additional pressure and cost for Multiplex to complete the project. In saying so, Multiplex would not have been involved with the steelwork firm, which would have been dealt by the client independently, under a different form of contract reducing their overall risk.
The start of the project was almost delayed by two years over the financial and political difficulties but eventually got underway in late 2002. It was found that there were serious problems occurring form late and incomplete designs by the civil and structural engineers (Mott Stadium Consortium). At the same time there was delay in providing design information that was needed to move ahead. This prevented Cleveland Bridge to fall behind schedule and felt that Multiplex were responsible. Multiplex believes that WNSL were mainly responsible for the changes in design causing the project to run late. It can be seen that changes in design specification can lead to management and performance problems. From Table 1 (Simon Jackson's 2007),which shows the perceived reasons for causing building construction projects to finish over budget, it can be seen that 'design changes' is ranked number one for causing building construction projects to finish over budget. This was clearly visible in the Wembley project where the design alterations and late information caused a large amount of cost increase, as well as delays and disruption to the subcontract works. The delay for this project was put at 50.5 weeks (Andrew Myliu, 2005). This is an important lesson that future construction projects would have to focus on if they are to have a successful completion.
Other problems, which all contractors have to be aware of, are the unforeseen conditions, which under traditional contacts both the client and contractors are liable for. During construction Wembley stadium had a problem, which involved a temporary roof support rafter falling by over half a meter. This resulted in evacuation of 3,000 construction workers and delayed work. Other problems such as light issues that were present, which also delayed work adding on to the overall project completion time. The stadium that was scheduled to open on 13 May 2006 was completed in March 2007 after extensive delays and cost overruns. It was later reported that the contractors Multiplex made a total loss of £147million.
The Wembley project will give valuable lessons for the future project construction teams, especially the Olympic team (London). The clients WNSL believed that the design-and-build contract was the way forward and would be a solution for all its problems. As we know this would be viable option if the contractor had all the resources, time and money required for the project. For such contractual schemes there has to be a tight rigorous work programme implemented. For this particular project the client did not get their finish product on time and the contractor did not make a profit. If the work was understood and communicated between the two parties successfully the project would had been within the budget and completion date.
Jubilee Line Extension (JLE)
Figure 2: Map showing route of JLE through London
Source: University of WestminsterThe jubilee line extension is known as one of the biggest engineering project in London and cost just over 3.5 billion, making it on the most expensive project in the world. In 1989 the JLE was reborn after previously being abandoned due to political reasons. The line was to link Westminster to the Docklands and beyond to finally Stratford. Figure 2 (University of Westminster, 1999), shows the route of the JLE and the London Borough, which it passes. The project had an initial cost of £1.2 billion, which clearly went over budget. The actual construction commenced in 1993 with a projected completion 1997, however actual completion was in year 1999. Similar to the Wembley stadium the JLE suffered from both substantial cost overrun and late completion.
The JLE was delayed throughout the course of the projects by four major events. This included an 18 months halt while the private sector funding was secured. This occurred due to mixed public and private funding, which caused difficulties and could have been avoided via private funding (Heathrow Terminal 5). Also the collapse of the Heathrow Express tunnels, which implemented the NATM system, this had an enormous impact on three of the most complex JLE contracts. Another event was failing of the Moving Block Signalling system caused further delay in the completion of the project. The final major event was the decision to site the Millennium Dome at Greenwich, where the correct location needed to be identified causing delays for the completion of the project. The contract was based on the JLE Condition of Contract- a hybrid of the ICE 5th edition and the international FIDIC form, which was modified, the contracts were perceived as adversarial (Keith Potts, 2007). It is an important requirement that through a particular type of contract the identification of roles and responsibilities of the parties are well understood and known. Based on the contracts for the JLE project this aspect was not clearly revised and resulted in problems with the role of the Engineers, disintegrating the project performance.
The JLE had clear objectives to provide a mass transit railway, which were not the reasons for the delays but I believe was the design modifications throughout the cycle of the project, which was the main cause of the cost overruns and late completion. Research has indicated that later changes in the design specification can lead to management and performance problems. This was clearly the problem with JLE, as they had lack of communication between the tender drawings and the working drawings. Throughout the project no changes made were controlled and managed properly causing serious suffering for the project. The design management did find difficulties as many of the design were freeze by the civil & architectural groups as the final designs elements were still at conceptual stage. There was absence of effective project controls, which in return lead to cost overruns and poor performance. The programme system became ineffective due to substantial changes and no clear targets and milestones were in place to control and monitor progress.
The JLE project had huge political and environmental pressures for the completion date as it was a main transport link to the Millennium Dome. I believe due to this external factor the project team made urgent schedules and created hugely ambitious project deadline of 53 months, which prolonged to a total of 73 months. If the project team were under less pressure a more accurate and realistic fixed completion date could have be delivered at the same time the costs projected for the final completion may have been more realistic allowing additional funds to be secured before starting the project. I believe that success to all construction projects is team work and communication. As for the JLE it was found that the teams were not created early, which shows no positive relations and enthusiasm for the success of the project.
One key aspect, which I believe improves the likelihood of project success in terms of delivery and cost, is the project culture and team based partnership. For the JLE the project was managed through the project director, project manager and its large project team. During the course of the project this approach became inflexible and adversarial and did not help in bringing the project back on course. From the history of construction projects it can be hypothesized that projects that lead to adjudication in court represents failure. This was clearly present not only in the Wembley stadium project but also in the JLE project where legal actions were taken against some contractors. At final completion the project was estimated to cost nearly 70% more than the initial budget, form £1.2 billion to £3.5 billion. It overran by 20 months, taking from projected completion of 53 months to final completion of 73 months (Mitchell, 2003).
Another very famous civil engineering project, which suffered from both budget overruns and late completion, was the construction of the Millennium Bridge. This project was of particular interest to me because it was to be the first pedestrian footbridge that would be constructed over the Thames River for more than one hundred years. Also in terms of engineering, the Millennium Bridge was to be innovatively designed and boasted a very complex, yet innovative steel structure similar to the Wembley stadium.
Before any construction could begin, archaeological excavations had to be undertaken on both banks (Urban 75, 2003). This was necessary because the bridge was to be joining two very aged areas of London. The excavations proved useful as many remains of structures dating back to the Middle Ages were uncovered. Construction of the bridge commenced with piling in May 1999 and finally ended with sections of the bridge from each end being joined together at the centre in April 2000. On the day the Millennium Bridge was opened, 10th June 2000 an estimated 80,000 to 100,000 pedestrians crossed the remarkable structure. Unlike any other construction project where the cost overrun and late time completion is roughly known, the Millennium bridge project suffered these problems after the completion of the project. It was found that many of the pedestrians experienced a swaying motion as they walked along the bridge. Because of this, the Millennium Bridge was nicknamed the 'wobbly bridge' and was closed within two days of opening because of safety precautions of the uncharacteristic swaying.
After many tests it was concluded that a damping system would need to be employed. In my opinion, damping was an effective remediation choice as firstly, movement of the bridge can be restricted and also simultaneously, the energy from the structure is absorbed. In this project, two forms of passive damping were used: Viscous and Tuned Mass dampers (Urban 75, 2003). The Viscous dampers were fixated under the bridge deck and near the piers. They acted as shock absorbers and were used to prevent lateral movements. The Tuned Mass dampers, also located beneath the bridge deck, were responsible for restricting vertical movements. These additions proved successful in preventing any further oscillation or swaying movements.
One key aspect, which I believe is that if a project is known to have technical innovations /uncertainty, it has higher chances of difficulties. This was clearly seen with the Millennium Bridge where the architects proposed extraordinary aesthetical design which the engineers, Ove Arup and Partners, could not entirely deliver whilst ensuring stability. For such engineering project the use of high technology is vital and more designing and consultation time could have provided better results. The failure of the bridge functioning shows poor communication between the parties and became the main factor of stripping the success of the project. I believe that the engineers should have ensured the proposed design by Foster group was structurally able to withstand the high loads that the bridge was subjected. This could have been obtained form regular meetings and clear communication between the contactors and clients in the conceptual design stage and to see if it required any alteration to allow it to be perfectly stable before the start of construction. As analysed form other design projects such as the Wembley stadium and the JLE that design alterations can influence cost overrun, but the Millennium Bridge made design alterations later, not only recurring additional costs but putting pedestrian lives at risks with an unstable bridge, which I believe is unacceptable as such high levels of engineering. I believe that the to prevent such a prolific delay and budget overruns of a similar magnitude in future, I think that the engineers should voice their concerns regarding the architect's proposals as early as possible. This will then allow for changes to be made to the design before any construction is underway hence delay is minimised and there is a reduced chance of budget overrun.
The bridge was reopened on 27th February 2002, incurring a delay of almost two years. This delay was caused by the engineers because they failed to successfully deliver a stable structure which the client had specified. Due to the necessary alterations and testing, an extra cost of £5m was added to the cost of construction which was £18m. This additional cost is substantial in relation to the cost of the project but was necessary as the bridge was not structurally sound.
The Scottish parliament is another famous typical example that converted a prestige design for a new government building into a hugely expensive and delayed project. The project had concerns form the very beginning when a sensitive site on the edge of a park was chosen form other available sites in Edinburgh. The project was struck with number of scenarios such as procurement method to design alterations, which resulted in the official cost to change form initial value of £40 million to a final cost of £431 million with a three year delay in project completion, where expected completion was 2001 and final completion occurred in 2004.
The Scottish Parliament was delayed through the course of the project by many factors. One of the key aspects that were not well thought out by the client was the procurement method that was to be implemented, similar mistake made by Multiplex however this time is the client that made the huge mistake and not the contractors. The parties decided to select a fast-track contacting method, which is known as construction management. This is a different type of contract, which involves splitting a large project into number of smaller packages, which are than designed, tendered and let independently of one another. The main reason for this particular choice made by the client was the ability to speed up the construction as the overall design of the project dose not have to be complete for progress to be made. Obviously this type of contract can have many impacts, which came to reality in this particular project. The main aspect is that client is unaware of the total cost of the project until work has begun. This type of contract is considered risky for the client for running individual packages. The clients were responsible for more than 60 packages and due to the lack rigorous programming and planning, which was required, it fell in a deeper hole. I believe as well as many experts agree that construction management was not the most suitable procurement vehicle for this project (Sam Fortescue 2004). I believe for this project to have succeeded and similar project in the future a different type of contract should have been implemented, which shares the risks between both client and contractors. If the client wanted to avoid full risk and responsibilities (Wembley Stadium), they could have taken a competitive price on a fixed-price arrangement. I believe a better option if for the industries to move towards partnering in the supply chain, which would results in few disputes and better concentration and focus allowing the project to finish on budget and time.
It can be argued that construction management as a procurement route may have been a reasonable or even only contract option to make an early start on the project independent of the overall design. But such methods require rigours planning, good communication between parties, as well as good leadership and team work, which could have made the project successful if these elements were present. It was found in an inquiry that the project managers (whose role is to lead and influence the project) were not fully engaged. They failed to appreciate the downside of costs and risks that were involved with managing 60 contactors (Sam Fortescue 2004). The huge cost overrun came form the poor management of the project, which also resulted in the late completion.
One other major aspect that can be related to the choice of procurement and complexity of the design is the alteration of the design throughout the course of the project. Over the five years of construction cycle there were around 18,000 design changes, which obviously resulted in the cost overrun and the late completion of the project. I believe that if the overall designs of the project were prepared before construction than chances are that less cost and time would have bee required to finish the overall project. Also due to the complexity of the contract and the number of contractors involved in the construction of the project, it was found that if one contractor had a problem, it would tend to ripple through all the others, which would go on to cause further delay and design changes. As the contracts in this project was with client, they went onto picking up all the cost, which resulted in the 'Scotland's iconic new parliament building costing more than 10 times the original estimate and opening three years behind schedule'(Sam Fortescue 2004).
Heathrow Terminal 5- A Successful Project
The example of the mega construction project such as the Heathrow Terminal 5 can be admired and be an inspiration for future project to avoid cost overruns and late completions. Even though above I have mentioned specific measures that could be taken to avoid their recurrences it is important to reemphasise these points in general and illustrate it with a successful construction project such as Heathrow Terminal 5. At £4.3 billon, T5 was the greatest construction project in Europe, running like clockwork it finished 'under budget' and 'on schedule'. It success is attributed to the commitment made by the clients, BAA, who found a complete new way of working focused and proactive collaboration with its contractors (Patrick Weaver, 2008).
One of the main elements that can be seen as the main reason for cost overruns and late completions is the idea of design changes once the project has started. This was seen in the all the projects analysed above. To avoid such measures all designs need to be thoroughly checked by both the client and the contactors before the start of construction. For this a clear communication and regular meetings between the parties need to be organised to come to a final conclusion of the designs rather than plunging straight into construction. There is always a possibility that small elements of the design may need to be altered through the course of the project. This was also the case in the Heathrow Terminal 5 project, but did not become the reason for failure as the changes made to the design were controlled and managed properly as a team.
As for the type of procurement method for the project, it should be a decision that should not be rushed into and considerable constraints and options should be analysed to best adapt the client and the contractors, if the project is to be successful. The T5 contractual agreement manages cause and not effect. It was based on commitment, trust and teamwork creating a long-term relationship between parties. The team had clear identification of individual roles within an integrated team, which was lacking in the above projects causing them to fail. They invested heavily in 'soft skill' of communication and leadership that made this innovative approach work so well (Patrick Weaver, 2008).This is the way forward for the future construction projects.
As mentioned earlier that to have a successful project it is important to form a strong leadership, good management, clear communication, clear objectives and team work. Many of these elements were discarded in the above projects and there are many routes available to avoid them in the future. One of the ways to avoid lack in team work was implemented by the Heathrow T5 scheme, which integrated teams by allowing contactors to work in partnership in collaboration centres. To improve communication regular meetings should be held between the parties for any discussions, which may be important or not. Heathrow T5 kept regular meetings with its 42 stakeholders. In terms of leadership the client BAA chose industry experts to head integrated teams and key roles. As implemented by Heathrow T5 future projects can use Project management software, which allowed them to make effective use of team targets and key milestones in the project. All these measures, which have been proven successful by the Heathrow T5 project, can be implemented to avoid any recurrences of cost overruns and late completions in the future projects.
In the domain of construction project cost overruns and late completions it can be seen that there are many factors and problems that need to be well thought-out before a project can commence. The key elements that were common among all the construction projects that were unsuccessful was 'design change' during construction, which contributed heavily in the cost overrun and late completion of the projects. Some projects have different concerns like the JLE who were under enormous political and environmental pressure, which affected their performance in delivering the project on time. As clearly seen from the Heathrow Terminal 5 success, new techniques and approaches need to be developed and implemented to avoid problems in the course of the project. Especially for mega projects were cost overruns and fines for late completion can be so high due top the enormous scale, it would be better option of some money being invested in team working exercise in collaboration centres, which would pay huge dividends and success for the delivery of the project.
Table 1: Perceived reasons for causing building construction projects to finish over budget
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Sir John Egan (1998), Rethinking Construction, pp. 1-37