Tenders open for London 2012 Olympic Games

21 August 2007

There have been three significant developments in the process of London's 2012 Olympic Games construction, according to AMA Research.

First, a new planning application was submitted in February 2007, one of the biggest in European history; the revised Olympics budget was announced by the Government in March 2007 and the ODA has chosen its principal delivery partner to oversee developments on the Olympic Park. Furthermore, the ODA has now begun to tender for the design and construction of a number of 2012 venues, which has finally opened up competition for the estimated 2,000 contracts to be let over period up to 2012.

The ODA announced its Olympic Park Delivery Programme on 25 July 2006, outlining the key timelines it intends for planning, design, construction and testing. The planning and design stage ends in mid-2008, and the enabling and construction phase of work begins in mid-2007 and lasts until mid-2011.

The ODA has, so far, spent two years acquiring all the necessary land, preparing project plans, and getting them approved gaining full possession of the Olympic Park site in July 2007 when it will start a demolition programme which will take nine months, levelling some 256 buildings.

Around 93% of the land needed on the Olympic Park site is now in public control and demolition and clearance work has now begun. The ODA aims to clear most of the land in east London by the time the Beijing Olympics are staged in 2008. Around one fifth of the Olympic Park has now been cleared, with demolition work on other parts of the site continuing. The first major earthworks and remediation work has begun in many parts of the site and following extensive work to relocate businesses and residents and secure the Olympic Park site, demolition work will now accelerate as the ODA takes vacant possession of the site.

With the Olympic Village site already cleared, work has begun to divert the overhead power-lines through the area allowing construction work to start early next year, a year earlier than planned.

A strong start has also been made on plans for the 'big 4' Olympic venues - detailed planning and design work on the Olympic Stadium is making good progress with designs set to be revealed later this year; a selected designer for the VeloPark has just been announced; a shortlist of companies has been announced for the contract to construct the Aquatics Centre and a shortlist of companies has been announced to develop the Olympic Park media centre (IBC/MPC) for the Games and in legacy.

The draft Olympic Transport Plan was published at the end of 2006, and following extensive consultation, the full Transport Plan will be published later in 2007. The ODA has also announced its funding of the £104 million scheme to upgrade Stratford Regional Station – a key gateway to the Olympic Park and expects to secure planning permission enabling work to start on site early in 2008. The Docklands Light Railway (DLR) system is also undergoing continuing expansion, with the extension of the London City Airport branch to Woolwich Arsenal currently under construction and is due to be completed in February 2009.

One of the most significant developments for the construction industry has been the launch of the ODA’s e-tendering service for the procurement of construction contracts announced in February 2007, which will help businesses compete for up to 2,000 Games contracts. The service enables construction firms and interested parties to view current and advance notice of future contract opportunities ranging from work designing sports venues and landscaping to providing occupational health services and logistical support to construction projects. The service will enable businesses to identify major 'Tier one' contracts, which are signed directly with the ODA and are likely to be significant in size, ahead of tender competitions and take part in the tender process online. Already in 2007 a number of major contracts for 2012 venues have been advertised in this way.

A number of key Olympic contracts are currently out to tender including utilities services across the Olympic Park; the construction of structures, roads and bridges to create an open and accessible Park; and the first design contracts for temporary venues for the 2012 Games.

There has also been progress on the Games' environmental impact, with the publication of a sustainability strategy detailing proposed green standards for the Olympics and focusing on low carbon, low waste, green transportation and high reuse of materials during construction.

Perhaps the most controversial development surrounding the 2012 Games in the past 12 months has been the announcement by the Government that the final estimated budget had more than trebled from £2.4 billion estimated in the original bid to £9.35 billion.

At the time of London’s 2012 bid as outlined in the Candidature File, whole categories of costs were omitted, including tax, contingency margin and security. The original budget had used the costs of an urban development corporation as a benchmark for the Olympic Delivery Authority’s running costs, with the result that these costs had been seriously underestimated.

With the bulk of construction work on 2012 venues yet to begin on site, it is still too early to assess the full impact of the 2012 Olympics on the UK construction industry. However, the bulk of Olympic construction expenditure is likely to occur within the period 2008-2011, with workload generated by the 2012 Games expected to add around 1.5% output to all new build construction output over the period 2007-2012. An extra 2% in all types of construction work (12% of activity in London) is expected to be generated over the 5-year period 2007-2012, which equates to between £2 and £3 billion to output values in the same period.

At this stage, it is difficult to predict the precise impact that the Olympics are likely to have on output and therefore forecasts are only approximate. An increase in output of around 2.8% is expected in 2007 as preparation and infrastructure works continues on a number of venues, with the bulk of Olympic construction expenditure likely to occur within the period 2008-2011. Olympic workload is expected to peak in 2010 with increases of around 9% in output. The sustained increase in output is expected to slow slightly in 2011 as many venues are completed ahead of the Games, and forecast to rise again in 2012 as the Legacy construction phase begins and when many permanent works are reconfigured to provide post-games facilities.

The full report is available from AMA Research for £625 (EUR 930).