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Learning legacyLessons learned from the London 2012 Games construction project

The ODA’s Delivery Partner approach – Creating an integrated framework for mutual success

AuthorJames Jacobson BEcon MScCommercial Manager, ODA

Appointing a delivery partner allowed the ODA to keep the construction of the Olympic Park on track

AbstractThis case study presents a best practice framework for working with a Delivery Partner on major projects. This is developed by highlighting the experience of the Olympic Delivery Authority (ODA) with its Delivery Partner, CLM, on the London 2012 construction programme. Despite significant economic challenges and public scrutiny, the project has been delivered within time and budget constraints and is fit for purpose.

The successful outcome is in no small part driven by the success of the client and Delivery Partner relationship. This case study reviews the ODA’s approach to working with a Delivery Partner and the lessons learned. It then proposes a best practice model for mutual success for use by clients and Delivery Partners in the future.

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The ODA and CLM have worked together to deliver the venues and infrastructure for the London 2012 Olympic and Paralympic Games

IntroductionThe ODA’s primary role was to ensure that the delivery of the venues and infrastructure that support the London 2012 Olympic and Paralympic Games be delivered on time, to budget and be fit for purpose. This was done with consideration to the principles of how the ODA would deliver against the 2012 construction commitments. This was further underlined by six themes/priorities against which successful delivery would be measured: – health, safety and security; – sustainability; – design and accessibility; – employment and skills; – equality and diversity; and – legacy.

The scale of stakeholder involvement made the London 2012 construction programme a challenging stakeholder management project. By appointing a Delivery Partner, the ODA could successfully manage outward and satisfy the stakeholders while enabling CLM to ‘get on with’ the work to deliver the project and manage the supply chain.

To create a mutually successful partnership, success needs to flow both ways. This has been achieved in the ODA Delivery Partner structure by ensuring that the success of the ODA and the achievement of its objectives align directly to the financial and reputational success of the Delivery Partner.

A best practice approach and framework for working with a Delivery Partner has been established through interviews with key members of the ODA, the Delivery Partner and the supply chain.

The lessons from this programme illustrate how definition, selection, alignment, development and management of the Delivery Partner can lead to achievement of project objectives.

To create a mutually successful partnership, success needs to flow both ways.

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What is a Delivery Partner?The National Audit Office defines partnership as a joint-working arrangement where the partners: – are otherwise independent bodies; – agree to cooperate to achieve

a common goal; – create a new organisational

structure or process to achieve this goal, separate from their own organisations;

– plan and implement a jointly agreed programme, often with joint staff or resources;

– share relevant information; and – pool risks and rewards 1.

The Government is increasingly seeking to work with partners to deliver projects on its behalf. Similarly, private sector clients continue to engage with project and programme management organisations to deliver major projects where they do not necessarily wish to hold the resources in-house.

A Delivery Partner can be defined as a partner organisation with a client for project and programme delivery. The Delivery Partner is not typically part of the design and construction supply chain, but a partner to the client.

Centralised programme management ensured a consistent approach to project management was achieved on external sites such as Lee Valley White Water Centre

The role of the Delivery Partner is to provide specific skills and resource to the client organisation where the client lacks the: – capability: skills, tools, process,

systems and procedures; – experience: previous experience

of projects of a similar type or scale;

– resource: level of resource available; and/or

– desire to undertake the project in house.

Furthermore, working with a Delivery Partner provides: – a single point of accountability; – early and rapid mobilisation; – wider expertise; – wider access to resources; and – the ability to operate as a thin

client.

As a start-up organisation with a finite end date, the decision was taken for the ODA to approach the market for a Delivery Partner to work alongside to deliver the construction programme. The Delivery Partner structure has enabled the ODA to manage its key priorities while maintaining a strict oversight of the delivery process.

The Delivery Partner structure has enabled the ODA to manage its key priorities while maintaining a strict oversight of the delivery process.

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The ODA Delivery Partner FrameworkAs concluded in the Wolstenholme Report, the ODA has proved to be an excellent intelligent ‘thin’ client with an expert Delivery Partner between Client and Supply chain2.

The ODA Delivery Partner approach has been mutually successful, allowing the ODA to deliver its objectives and the Delivery Partner to achieve financial success and an enhanced reputation. The structure of the ODA Delivery Partner model (Figure 1) and the phases that were undertaken are outlined within this section to demonstrate what has worked successfully for the ODA and CLM.

This case study has identified the process by which a client can engage with a Delivery Partner to achieve mutual success on a project. It has demonstrated this through the lessons from the Games construction programme. The recognised phases of the Delivery Partner approach are1 Project definition2 Delivery Partner definition3 Delivery Partner selection4 Delivery Partner alignment5 Development6 Management/delivery7 Complete

The approach is broken down into phases to illustrate the development of the Delivery Partner approach/model through the project lifecycle.

The purpose of the framework (Figure 2) is to provide a high level guidance to both a client and the Delivery Partner on the key considerations which lead to project success through the project lifecycle.

This could be utilised in both the public and private sector and enable a client to assess the criteria to bring a Delivery Partner on board to achieve mutual success, as has been achieved on the Games construction programme.

The ODA ensured that project objectives were clearly defined from the outset on the Games construction programme.

CLM Project Director

ODA Delivery Directors

CLM Executive CLM Project Managers

ODA Project Sponsors

Figure 1: ODA’s delivery management matrix

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Figure–2:–The–ODA–Delivery–Partner–Framework–provides–a–high–level–overview–of–a–best–practice–approach–to–clients–working–with–a–Delivery–Partner

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Project definitionKey steps: – Establish the outline objectives. – Establish the project scope. – Define the role and scope of

the client team. – Establish the client team targets. – Identify the key client risks.

Key considerations: – What are the stakeholder

requirements? – Who are the decision makers? – What is the size of the client team? – Initial project delivery strategy

agreed? – Can the client team run Delivery

Partner selection?

To fully define the role of the Delivery Partner on a project, it is important to first fully define the project and the role of the client organisation. The ODA ensured that project objectives were clearly defined from the outset on the Games construction programme.

The client then has to make an early decision on what size of team it wishes to have. The key considerations for doing this are: – What level of accountability does

the client want to hold? – What level of resource is readily

available to the client? – What delivery model presents best

value to the organisation? – Are there efficiencies to be gained

through appointing a Delivery Partner?

LOCOG

IOC

ODA

CLM

Supply chain

Olympic Board

GLA

LOCOG

Government

BOA

The ODA’s role was to: – be a comparatively small,

intelligent client to the Delivery Partner;

– operate in the middle ground between the London Organising Committee of the Olympic and Paralympic Games (LOCOG) and the construction industry as supplier (Figure 3); and

– engage with industry and develop further the brief and requirements.

After assessing internal resources and the market appetite for taking on a project of this scale, the ODA made an early decision to appoint a Delivery Partner to carry out the programme management role rather than doing it in-house.

Delivery Partner definitionKey steps: – Define the Delivery Partner’s

objectives. – Define the scope of the Delivery

Partner’s role. – Choose the procurement route. – Establish the evaluation criteria. – Select the form of contract that

enables the level of commercial tension and encourages the desired relationships and behaviours.

Key considerations: – Will/can risks be shared? – Are accountabilities defined? – Will the type of contract allow

for an evolving scope/role? – Have lessons from working with

previous Delivery Partners been considered?

Figure 3: The ODA’s organisational role within the Games structure

The ODA made an early decision to appoint a Delivery Partner.

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The ODA compiled a number of position papers which detailed what was required from a Delivery Partner. The position papers worked well in setting the scene about what it was the ODA was looking for and what they wanted from the Delivery Partner.

The primary objective became:‘to procure delivery partner who would be accountable for managing the delivery of the planning, design, construction, commissioning, maintenance and conversion to legacy mode, and for cost management (monitoring, reporting and control) up to the conclusion of final account in accordance with the ODA’s time-certain, quality and budget objectives and priority themes’ 3.

There were a number of Delivery Partner characteristics which were important to the ODA from the outset. These were that the Delivery Partner: – must be able to lead and manage

the design and construction industry output; and

– will, therefore, lead and manage the supply side of the construction industry, including supply chain management. This is the Delivery Partner’s fundamental role.

Choosing a single Delivery Partner enabled a clear definition of accountability for the delivery of the programme. This subsequently eased programme-wide management and governance by the ODA. A decision was taken that the ODA would engage a partner that would provide capability and resources with sufficient governance arrangements to allow a robust commercial arrangement to ensure total alignment between the ODA and the Delivery Partner project managers.

The type of contract chosen for the ODA Delivery Partner procurement was the NEC3 contract. This was chosen as it reflected the ambition of the organisation to operate an environment of mutual trust and cooperation which was a key principle of the contract. It also allowed for the progressive agreement of task orders which allowed the ODA to offset risk against delivery for specific tranches of the work.

This meant that the contract could be amended at progressive stages and the key performance indicators revised to reflect the evolving nature of the project. Choosing this contract aligned the Delivery Partner to the ODA’s objectives. Likewise, the use of the NEC3 contract through the supply chain enabled the supply chain to be geared to the ODA’s objectives.

Delivery Partner selectionKey steps: – Find the ‘right partner’.

Key considerations: – Does the Delivery Partner have:

– technical expertise? – management capability? – team experience? – the resources?

– Is there cultural alignment? – Are there any behavioural aspects

to be considered? – Does the bid represent value

for money? – Is there compatibility of key

personnel and assured tenure?

The ‘right partner’ will offer support, advice and guidance as needed, but will also provide the right level of challenge when needed.

The ODA chose to use the competitive dialogue approach to procure a Delivery Partner 4. The ODA decided to use this approach as it allowed bidders to develop alternative proposals in response to the ODA’s outline requirements. The process adds value by encouraging innovation while maintaining competitive pressure during the bidding process.

Furthermore, this exercise networked the proposed executive teams from the bidders with the ODA executive and enabled an early assessment of the relational compatibility and behavioural alignment of the teams. Ensuring the team would be culturally and behaviourally aligned and willing to adopt an integrated approach to management was a key priority for the ODA.

The NEC3 contract was chosen as it reflected the ambition of the ODA to operate an environment of mutual trust and cooperation.

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The outcome of the competitive dialogue process was that the joint venture, CLM, was selected consisting of: – CH2M HILL: a major American

programme manager; – MACE: an international

programme and project manager; and

– Laing O’Rourke: a major UK construction company.

CLM was chosen for its broad skills base and excellence in both programme and construction management and was seen as the ‘right fit’ for the ODA.

Delivery Partner alignmentKey steps: – Alignment of objectives. – Incentivisation of objectives. – Define the contract particulars. – Establish organisation structure.

Key considerations: – Do incentives reflect project

objectives? – What behaviours will be

promoted? – Are accountabilities clearly

defined? – Are the interfaces established?

Team Stadium (an integrated ODA, CLM and contractor team) worked collaboratively to deliver the stadium well within time and budget constraints

Once the Delivery Partner is identified it is the responsibility of management from both organisations to begin the process of alignment. Alignment of objectives and cultures ensures the organisations are able to function with a single goal and focused direction. An aligned organisation will be developed with clearly defined roles and responsibilities.

The ODA/CLM experience was unique in that it was two start-up organisations coming together to deliver one of the UK’s biggest ever projects. Culture and relationships have been a defining point for the success on this project.

The project has utilised the NEC3 form of contract which helped define behaviours from the outset. Leadership and organisational structure also helped to establish the right cultures and behaviours and foster an open, honest and communicative relationship with an appropriate level of commercial tension.

Ensuring the team would be willing to adopt an integrated approach to management was a key priority for the ODA.

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The Delivery Partner contract: – NEC3 contract (Professional

Services Contract) – Performance-based contract – Delivery Partner proposes its own

tasks and services for the ODA’s acceptance

– Incentivisation

For the partnership to be successful it was imperative that the parties are brought into the objectives. This was done through contractual mechanisms and the establishment of strong, open and honest relationships from the top of the organisation. Successful incentivisation in the contract was a key mechanism for achieving the mutual success of both organisations and aligning success and objectives.

The ODA contract provided financial incentives to the Delivery Partner to: – meet or exceed:

– key delivery targets and performance indicators which the ODA set and revised from time to time;

– key deadlines and milestones; – minimise risk exposure and

propose/implement strategies to mitigate against residual risk;

– prioritise health and safety; – engage with the local community; – control costs effectively and ensure

that the quality of construction and other deliverables are consistent with the ODA’s agreed quality standards and specifications;

– effectively manage the supply chain and ensure compliance and consistency with the ODA’s procurement policies;

– deliver the ODA’s sustainability, environmental, equality and diversity objectives;

– deliver the ODA’s legacy objectives.

It was vital to ensure that all requirements of the service are included within the incentivisation mechanism. CLM was engaged as a joint venture and it was absolutely imperative to ensure that the joint venture was fully aligned before the ODA tried to align with them.

Within the Delivery Partner contract there are various incentive mechanisms to promote efficiencies and the right behaviours: – Achievement of base profit through

meeting reporting and governance requirements.

– Achievement of enhanced profit through reaching key performance indicator targets.

– Pain gain: keep the cost of their resource down against an agreed target price so that if they use fewer resources than planned they will share gain and, vice versa, for pain.

– Programme level incentive: work as an integrated team to achieve an overall programme objective and support cross-programme functions to drive total programme cost down.

The contract and incentive model have driven CLM’s performance and the Games construction programme. It has aligned achievement of ODA objectives with the success of the Delivery Partner.

DevelopmentKey steps: – Integrate the teams. – Establish the policies and

procedures. – Implement governance and

assurance. – Establish budgets and cost control. – Undertake procurement (align the

supply chain.

Key considerations: – What is the appropriate level

of delegated authority? – What are the reporting

requirements? – Are change management and

corporate governance processes agreed?

– What systems are required for delivery?

Governance and assurance has allowed the monitoring of the programme and control of key decisions under delegated authority levels.

Alignment of objectives and cultures ensures the organisations are able to function with a single goal and focused direction.

The delegated authority levels were established based on the profile and scale of the project.

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The ODA and CLM worked together to establish an appropriate level of governance and assurance for the project.

The governance regime and boards which were implemented have been very successful in providing integrated governance and a level of assurance and control throughout the programme. Programme, change and commercial boards have ensured CLM are clear where they need to go to gain approval/seek advice on projects.

They provide a clear and efficient route to seek approval/ratify change and the CLM internal board ensures that only the appropriate items are raised at these boards.

The delegated authority levels were established based on the profile and scale of the project. Balancing governance requirements against efficient delivery was achieved early by defining the level of delegated authority of the project managers at £250,000. Above this level was a clearly defined delegated authority structure which was well communicated and understood.

The ODA’s reporting regime is shown in Figure 4. This shows the high level of reporting at regular intervals.

From the beginning of the programme, the ODA looked at meeting structures, delegations and underlying structures for the ODA and for CLM and also at how these needed to evolve as the programme progressed.

The ODA also looked at the underlying process to support the above, the reporting requirements and ensuring that the information that came through from the lowest levels was of a standard and of a level of integrity that ensured it was fit for decision making.

AssuranceReporting

Performance data

Performance report

Project status reports

Monthly programme report

Programme report

Ministerial briefings

National Audit Office value for money review

Programme support and assurance team

Programme assurance office

Performance assurance

Project management/ Sponsor client reviews

Contractor quality assurance processes

Figure 4: The ODA’s reporting regime

Parliament

ODA

Delivery Partner

Project management team

Contractor

Sub-contractor

Department for Culture, Media

and Sport/Funders

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The organisational structure, as shown in Figure 5, reflects how the organisation was mutually agreed and balanced. It is imperative that the ODA did not hinder the Delivery Partner in any way in the discharge of its contractual obligations whilst at the same time provided an appropriate and effective level of challenge and assurance.

The contract management of contractors is with the Delivery Partner for all day-to-day operations as they are the named Project Manager in the contract. The ODA is reliant on honest, transparent relationships to ensure the accurate reporting of risks and issues – this is also aided by the integrated risk and audit.

Management/deliveryKey steps: – Establish programme-wide risk

management (client risk). – Implement effective programme

and project management. – Establish information management

requirements. – Manage cost and commercial

elements.

Key considerations: – Who is managing the Delivery

Partner contract? – Is the Delivery Partner

empowered to discharge its contract obligations?

– What management information is required?

– Are changes mutually agreed?

The Delivery Partner must adopt and adapt delivery processes and procedures to suit the project and they must be in charge of implementing the systems to enable the management of information. The ODA experience has shown that the Delivery Partner must provide the delivery management systems and define the requirements for the systems while incorporating the client’s requirements. This was a key lesson from the experience of the ODA. The systems, processes and procedures for delivery are the vehicle for achieving project management success.

Finance Director

Delivery Director

Other Directorates

Design Director

Project Sponsor 2

Project Sponsor 3

Project Sponsor

Project Sponsor 1

Project Delivery team Delivery Partner team

Programme Assurance

Office Programme and Project Support

Standardisation

Information

ODA Chief Executive Officer

ODAODA client side

programme sponsorship

Delivery PartnerProgramme

delivery management

Executive Management Board

Figure 5: Delivery Partner process

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The CLM project teams operate under the programme-wide processes and procedures, and the CLM Senior Management team operate across the projects and manage across the functions. Risk management is undertaken by the Delivery Partner with a project- and programme-wide focus. The programme-wide incentives ensure the Delivery Partner remains focused on managing the ODA’s risk and encourages these risks to be looked at across the entire programme and not just the individual projects.

CompleteKey steps: – Ensure the achievement of

Delivery Partner milestones. – Ensure there is a phased

demobilisation of Delivery Partner resources.

– Ensure all lessons are learned and knowledge captured for future projects.

– Ensure a structured handover approach is undertaken.

– Ensure the project legacy is achieved.

Key considerations: – Has the Delivery Partner scope

been delivered? – Has a demobilisation strategy

been agreed? – How are lessons learned

captured? – Are commercial obligations

closed? – Is a handover to maintainer/

operator programmed?

The process of close-out is managed in components of business close-out, commercial close-out and delivery close-out. It is imperative to capture all information and knowledge from the Delivery Partner before their demobilisation. Similarly, it is important to ensure the close-outs are undertaken at the right time before demobilisation. All reports need to be written at the appropriate time in the process.

ConclusionsThe experience of the ODA and CLM has been unique in terms of the scale, complexity and constraints of the project, however, there are key lessons that can be drawn down from the experiences on the project. The successful outcome of the project is in no small part driven by the success of the client and Delivery Partner relationship. Through consultation with key people on the programme it has been possible to put forward a best practice framework for mutual success. This best practice framework is for use by clients and their Delivery Partners in the future.

It is imperative to capture all information and knowledge from the Delivery Partner before their demobilisation.

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References1 National Audit Office (2001). Joining up to Improve Public Services

– Report by the Comptroller and Auditor General. HC 383 Session 2001–2003, London. Available from: www.nao.org.uk/news/0102/0102383.aspx (accessed 31 August 2011).

2 Wolstenholme, A. (Chair) (2009). Never Waste a Good Crisis – A Review of Progress since ‘Rethinking Construction’, and Thoughts for Our Future. Constructing Excellence, London.

3 Official Journal of the European Union (OJEU) (2006). Notice 2006/S 33-036394 UK-London: construction project management services.

4 Olympic Delivery Authority (2007). Delivery Partner Procurement using Competitive Dialogue – A Lessons Learned Study. Office of Government Commerce, London.

AcknowledgementsThank you to all the interviewees who gave up their time to express their views on the ODA’s Delivery Partner approach.

Thanks also to Mike Cornelius, John Fernau, Karen Elson and Clare Ramsden of the ODA for their facilitation and guidance during the preparation of this case study.

Peer reviewers – Dr Robin Henderson, Dissertation Supervisor, Aberdeen University and

Director of MY Consultants Ltd – Alan Muse, Director of QS and Construction Professional Group

Interviewees – Howard Shiplee, Director of Construction, ODA – Simon Wright, Director of Infrastructure, ODA – Mike Cornelius, Director of Legal & Commercial, ODA – Kenna Kintrea, Head of Programme Assurance, ODA – Simon Gibbs, Delivery Partner Contract Manager, ODA – Marc Bryant, Lead Commercial Manager, ODA – Brian Gayton, Delivery Partner Commercial Manager, ODA – Sam Scriven, Commercial Manager, ODA – Deborah Bartlett, Procurement Leader, ODA – Ian Galloway, Chief Executive Officer, CLM – Ken Owen, Commercial Director, CLM – Peter Ellis, Head of Contract Management, CLM – Paul Dickinson, Commercial Leader, CLM – Morag Stuart, Former ODA Head of Procurement, Ex-ODA – Martin Rowark, Head of Procurement – Crossrail, Ex-ODA

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© 2011 Olympic Delivery Authority. The official Emblems of the London 2012 Games are © London Organising Committee of the Olympic Games and Paralympic Games Limited (LOCOG) 2007. All rights reserved.

The construction of the venues and infrastructure of the London 2012 Games is funded by the National Lottery through the Olympic Lottery Distributor, the Department for Culture, Media and Sport, the Mayor of London and the London Development Agency.

For more information visit: london2012.com/learninglegacy Published October 2011 ODA 2011/031