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15 October 2006

Work has begun at the Olympic site in East London

With the Olympic Delivery Partner now announced, expect the momentum for building the London Olympic Games to pick up fast. The FM sector needs to get involved in the procurement process now, says Paul Forrest, to ensure its place supporting the Games and the legacy

The London 20012 Olympic will be a once in a lifetime opportunity for the UK. The potential for regeneration of run down areas of east London and for the revitalising of British sport is prompting nationwide excitement and debate. As Lord Coe has said, the aim is that the Games “will provide a vital legacy for the whole nation”.

The lifecycle of the Games involves three stages: the pre-games, the Games event and legacy periods, each of which will raise issues relating to procurement and the priorities of the facilities management industry in the coming years.

The two areas most likely to have an impact on the UK economy will come from tourism and investment in infrastructure. The impact of tourism is likely to be felt throughout the lifecycle of the Games, from the pre-event ‘buzz’ around London to potentially increased levels of tourism post-Games owing to improved infrastructure.

Similarly, the construction necessary for 2012 will be used during the Games and the infrastructure then adapted post-Games for legacy use. Infrastructure projects, including the construction of the Olympic village, Olympic Park, media/sponsors centre, transport facilities and training camps are likely to be costly but should prove beneficial to the UK in the longer term.

A recent Experian report valued the Olympics impact for the construction industry at £9bn and the projects involved are diverse. Therefore there are opportunities for the involvement of a wide range of businesses in construction, FM, training, catering, security and a host of other activities, both in London and around the regions.

The principal infrastructure required outside London is the preparation camps for each participating nation's team. These are chosen by each country’s National Olympic Committee (NOC), and can be based up to three hours from the Games venue. Many national teams are very small, limiting their needs for a large range of facilities, however, some larger teams may choose locations reflecting the requirements of their individual sports rather than the whole team.

There are, therefore, opportunities around the UK for providing and maintaining training facilities for a cross section of facilities and service providers, not just large companies.

The organising committee for London 2012 will make available a guide detailing all the approved facilities for training camps in the UK to the NOCs by 2008. Organisations are now being encouraged to apply for approval. In light of this, facilities owners should be working on developing plans now, and working with facilities managers to ensure they can providethe services needed to the required standards. Partnering at this stage would also allow FM companies to influence the factors that make managing the built environment efficient, sustainable and cost effective.

Procurement policy
The Olympic Development Agency (ODA) is currently tendering for a contractor to perform the integrated design and build for the Olympic Stadium. Although at this stage the tender does not appear to request the involvement of FM services, there may be an opportunity for FM teams to involve themselves as advisors to those tendering, or in partnership with a tendering organisation, adding value to the tender by demonstrating benefits that can be derived from early FM involvement in infrastructure projects. The successful contractors will be appointed in January 2007.

Successful post-Games use of facilities is pivotal to the overall success of the event. It has been recommended therefore that in the pre- Games phase infrastructure should be constructed to maximise its effectiveness for its end use in the ‘legacy’ phase. Such infrastructure should then be overlaid onto the venue, and be as temporary and portable as possible.

For example, in Atlanta, the Olympic Stadium now houses the Atlanta Braves baseball team. The stadium was built with this use in mind, providing space for a baseball triangle. Critical to the success of this project was a strong relationship between the constructors and the end users, not just the Olympic delivery authorities.

Taking note of these methods will help smooth the transition from Games to post-Games use of facilities. However, thus far the London 2012 organisers do not seem to have promoted the involvement of facilities management in these early stages. The procurement of FM services has not been widely publicised, and it is still unclear whether contracts will be given for a range ofvenues or venue by venue, or whether FM contracts will cover all stages of the Games lifecycle.

The ODA aims to pursue a common procurement approach with the London Organising Committee of the Olympic Games (LOCOG), the Greater London Authority, Transport for London and the London Development Agency. A draft copy of the ODA’s procurement policy has been released for discussion whilst LOCOG’s procurement policy has not yet been prepared. The final policy will be published later this year, allowing for consideration of feedback from key stakeholders, and input from the ODA’s development partner, CLM. The policy will apply to all procurement relating to both the Games and the Legacy. CLM, the ODA’s Delivery Partner will manage the project, but ODA will be the contracting authority.

The Games organisers are committed to sustainable development and will use its purchasing power to support this. Therefore, it seems that if FM companies were to advise in the early stages of development, they may add considerable value to any tender submitted. Large projects will also be broken down into smaller separate projects, potentially allowing for involvement of a wide range of FM companies.

Procurement code
The organisers are currently working on a ‘Procurement Code’ which will define how procurement will be conducted. For each project to be contracted-out, there will be a procurement plan, which will reflect the Policy and Code. The ‘Office of Government Commerce’s Successful Delivery Toolkit’ and ‘Achieving Excellence in Construction’ will provide best practice guidelines, and be followed by the ODA, and regular checks will be carried out as projects progress to ensure they do so as envisioned.

Many businesses have yet to grasp the truescale of the opportunity provided by the Olympics. Others believe the ‘best contracts’ have already gone. But Morag Stuart, Head of Procurement at the ODA reassures businesses that “the vast majority of the numerous contracts to help deliver London 2012 will only be let from the end of this year at the earliest”. Therefore the time to act is now.

The message for SMEs is that there are a huge number of opportunities that will arise from the Olympics. The selection process will take into account the value and risk profile of projects to ensure that, where appropriate, smaller businesses can win contracts. However, Supply London, which is helping smaller businesses gain opportunities from the Olympics, recommends businesses should not apply for contracts worth more than 20 per cent of their revenues.

Smaller businesses need to start preparing now for these opportunities and familiarising themselves with whole procurement process. The process is likely to include assessment of businesses’ performance in a range of areas, including financial probity, technical capabilities, health and safety, diversity and equal opportunities, and environmental issues.

A network will be set up to act as a central point for information about opportunities andprocurement for the Games, similar to the Sydney Commerce Centre that operated for Sydney 2000. This network will provide business training and support, details of opportunities for businesses, and advice on networking (source: London 2012).

Beyond 2012
Austrade Athens estimated in August 2004 that Australian companies won contracts worth up to A$200m (approx £80m) for the Athens Olympics. An interesting element of this success is that the majority of businesses who won contracts for Athens were SMEs, many of whom gained expertise and contacts to apply for the contracts through ‘Business Club Australia’, a networking club set up by the Government that put exporters in touch with Olympic visitors in 2000.

The existing quality of the FM industry in the UK, combined with the expertise that working for London 2012 will provide, will mean the FM industry is well placed to win contracts for future Games in a similar manner.

FM is recognised in most major infrastructure projects in the UK as a key element of the design and build process. For example, in PFI projects, the FM sub-contractor is integral to the bid process. However, in March 2006 Mick Dalton, BIFM Chairman, said he had been told there was no place for facilities management in the design stage of the Olympics (source: BIFM).

However, the procurement process is still being finessed, and if the industry wishes to contribute to the success of the Games improving both opportunities for itself, and the end results of the infrastructure projects, it should act now. By lobbying the ODA and LOCOG to start considering FM aspects of projects they are planning, there is an opportunity to demonstrate the value that FM can add through early involvement in the process, and find a place for it in the pre-Games phase.

.....Paul Forrest is the lead partner for Risk Advisory Services and Management Consultancy Services at BDO Stoy Hayward LLP, and has also worked with LOCOG on identifying opportunities for businesses as a result of London 2012.

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