Posted by Catherine Welch, Partner
Has Spurs’ decision to use construction management been an own goal?
When a football club is aiming to win a league title, it employs individual players to form a team. The club signs contracts with the players, and pays each player as per their own contract terms. The club takes responsibility for the outcome of the season, and for the individual player performances along the way. The club also employs a manager to direct and enthuse the team to work towards the same goal; winning games at each stage to ultimately lift the trophy at the end of the season, and for the club to win the league title.
So why I am writing about football when considering construction projects?
There’s no escaping the truth. Construction projects of any size can be complicated. The employer’s aim is usually to have a project completed on time, on budget, and matching their design and function expectations. For the contractors and consultants involved, they want to do a good job, get paid on time, and earn sufficient profit to operate and prosper as successful businesses. There are similarities between a football club striving to win a league title, and an employer delivering a construction project as originally intended.
There are several ways an employer can buy construction services from contractors and consultants. One reason why costs can spiral, delays can occur and tensions between the parties can develop, however, is where the employer doesn’t choose the most suitable buying process for the particular project.
Construction management is one way to buy construction services. Mainly due to the consequences of the economic climate in recent years, employers are increasingly using construction management. This is where the employer separately appoints multiple contractors and consultants across various trades. Each contractor or consultant is responsible for their own work, and the employer pays the contractors and consultants direct. The employer is responsible for the overall health and safety risks, the co-ordination of the design and sequencing of all the works, and for ultimately delivering a synchronised project. To assist, the employer also appoints a construction manager to direct and facilitate the smooth and integrated completion of the project.
One particular football club has been putting construction management into practice. Tottenham Hotspur is replacing its previous stadium at White Hart Lane with a new 62,000-capacity venue stadium in north London. The original plan was for the new stadium to be ready for play towards the start of this season in September 2018.
Completion of the project has been delayed for several months, however, and the associated costs for Spurs have been increasing. Renting out Wembley stadium as their temporary home will not come cheap for Spurs. They are also having to slot in their games around Wembley’s existing bookings, including playing evening kick offs. The club recently announced further delays, and now it does not expect to be able to play at the new stadium until mid-March 2019. Spurs are now scheduled to move three further domestic matches to Wembley, and to play only five matches this season at the new stadium. Whilst the arguably negative PR coverage continues, the continuing practical impact is being felt by the fans, the players, the visiting teams, and the club’s bank balance. Despite the ongoing delays and increasing costs, Spurs’ chairman, Daniel Levy, has reinforced Spurs’ commitment to “delivering an exceptional match day experience for everyone”.
Whilst it’s difficult to speculate about the true causes of these delays and increased costs, reports have suggested there have been significant concerns with the stadium’s critical safety systems, as well as numerous other issues involving delays, quality concerns, safety concerns, and budget overruns. Given Spurs have used construction management on this project, speculation surrounds whether their issues are particular to this buying method, or to the construction industry in general.
Construction management works best for employers experienced in delivering construction projects, who have both the time and manpower resources to dedicate to the project. The employer’s role is very much ‘hands on’ from a construction perspective. The identity of the construction manager is also key, as well as the working relationship between both parties. Unlike in one alternative buying method, design and build for example, the employer does not have the benefit of one contractor with the single point of responsibility for the design and completion of the project. In addition, the overall cost certainty for the project isn’t known until the employer has engaged the last contractor, and by that time the budget may have already been exceeded.
With a construction focused employer, however, the flexibility afforded by using construction management can lead to works starting before the full design is finalised, and a shorter overall timescale for completion of the project. The employer can also retain more control over the quality of the design, and can make design changes more quickly. A key factor in the employer choosing construction management is often the lower initial cost budget for the project, as a main contractor’s overhead and profit element is non-existent. As current live example projects demonstrate, however, using construction management will not always guarantee delivery of a project at a cheaper price than if the employer had used one of the other alternative buying methods.
The analogy between football and construction projects doesn’t seem too far fetched after all.
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