Identification of the tender evalution and project procurement of Wembley National Stadium
The case study is about the construction of the Wembley English Stadium which was the England National Stadium. It is used for rugby and football leagues. The stadium was meant to be completed in 2006. This is the life cycle of the project since the time the contract was given. The project estimated cost was 757 million pounds where the England Football Association (FA) was contributing 148 million pounds. Commercial lenders like banks will be expected to contribute 433 million pounds. Other contributors to the funding are the public sector financiers also providing 161 million pounds. The project is being managed and has been given too organizations that are private sector and largely financed by private capital with a detailed examination for value for money for the whole project. Two hundred and twenty million pounds will be provided by the department of media, culture and sports while the London Development Agency will provide 221 million pounds (Arve, & Martimort, 2016).
The contract will be operated and owned by the Wienbly Stadium Limited a company owned by the FA as a subsidiary. The objective of the stadium is to a national stadium to hold football and rugby matches. After its operation, it will donate one percent of its revenues to enhance sports development and other projects. In 2001 June, the Football Association requested for further funding from the public. The architects of the 90,000 capacity stadium were HOK Sport and Foster and Partners. The Engineers who took the contract are Mott MacDonald and the funding was done primarily by Sports England through the Wembly National Stadium Limited (WNSL).
The Department of Sports and Culture Media, the FA and the London Development Agency are also partners in development of the stadium. As an iconic achievement, Wembly National Stadium has a capacity of 90,000 people and it is the largest roof covered seating capacity stadium across the world (Bernstein, 2015). The signature feature of the stadium is the circular section lattice arch with an internal diameter of 7 m with a 1, 033 ft span that is 140 m tall and erected 22 degrees off true. Initial work for the construction of the stadium was to begin in 2000 and the new stadium was to be completed in 2004 but the contract was delayed by multiple court cases which include legal and financial difficulties. However, the new stadium albeit few delays was handed over to the FA on 9th march 2007 with the stated final estimated cost valued to be about 1 billion pounds (Davis, Jefferies, & Ke, 2017).
In 2005 October, Richard Carbon, the minister of sports announced that there will be the FA cup final to be held in the stadium despite the six feet of snow. In 2005 however, the builders admitted that there was material risk and in February 2006, the material risks were confirmed and so the FA cup finals could not be held in the facility. It was noted that after the contract and procurement, the delays started from the very moment after the contract. The procurement process to the contractor followed the approach of twin track. Multiplex, who won the contract of building the 90,000 capacity stadium were given preferential treatment since the beginning of the contract (Flammer, 2018).
There was an uproar of the awarding to Multiplex where some people concluded that the process of procurement is unlikely to satisfy the best standards and practice although no evidence of corruption was shown. The procurement process also lacked a level playing ground for all participants since Multiplex is a well-known company. In 2003 December, the arch contractors, Cleveland Bridge subcontractors warned the main contractor Multiplex on the rising cost in the projects and problems with the steel job due to design changes for almost a year. As a measure to stamp authority, Multiplex removed Cleveland Bridge from the project and were replaced by a firm form Netherlands known as Hollandia.
The problem for the contractors is starting over again. On march 20th 2006, the development new roof rafter made of steel fell off forcing more than 3000 construction workers to evacuate the project therefore raising more question on the completion dates in an already out of schedule project (Hyytinen, Lundberg, & Toivanen, 2018). In 2006 march, the sewer lines beneath the stadium bucked as a result of underground movements. The initial problem was that the pipes was not properly laid out while the repair would take almost four months. Although most people believed that this would not have any effect on the completion and the impact of the stadium time and scheduled completion. The main contractor in March 2006 announced that the stadium will not be ready until December 2007. All the planned events and competitions scheduled to take place in the stadium were taken to other suitable locations.
On October 19th 2006, announce that a turf for the athletics competitions were laid down while in October 2006, Multiplex announced that the venue would be open by early 2007 (Iossa, & Waterson, 2017). The Football Association subsidiary WSNL was expected to pay 36 million pounds to the main contractor Multiplex as the amount of the original fixed price of the contract. The stadium was ready by May for the 2007 FA cup finals. The website for wembley stadium announced that by march 3rd 2007, the facility will be ready for public viewing for the people of Brent. The project keys were given to the The Football Association by the contractor on March 9th 2007. It was ready to be opened for any competition, concerts, the FA cup semi-finals and finals and any other events which is big.
Complexities and risks of the project on leadership governance and organizational aspect in relation to the outcome.
Wembley has had various complexities and risks. The likelihood of damage resulting from the failure to carry out an activity, such as insurance also affects the outcome from the construction. Given that the main investments are associated with the creation and construction of the project, we can formulate a definition of innovative risk.
Innovation risk is the probability of unforeseen or additional costs for the project, non-receipt or shortfall of the expected income from invested funds in any development or production of new goods or services. The constant presence of risks in investment activity impedes its development. It is precisely because of the fear of risks that many promising ideas remain unclaimed and unrealized. At the same time, investment activity is attractive, as it allows you to make profits and excess profits. All risks are associated with the fact that the project illuminates the future condition of the subject, and it is characterized by uncertainty (Mahapatra, Levental, & Narasimhan, 2017).
Uncertainty – ego incompleteness, insufficiency or inaccuracy of information about the conditions of the project. It should be noted that uncertainty is not a given characteristic, it is usually temporary. Uncertainty implies in the future various scenarios for the development of the project, which can affect both the beneficial and the adverse effects on the course of the project and its results. The boundaries of uncertainty may be known, unknown and partially known. For example, for a specific project, we know the needs of the market for any existing product; at the same time, it is not known what the legislation will be in relation to our product (Li, Zhou, & Huang, 2017).. Partial uncertainty occurs when, for example, it is known that the cost of production will be in a certain range.
Any uncertainty creates an associated risk for the project. In such conditions, a direct risk assessment is very important for any investor, according to which he can decide whether the project is acceptable or unacceptable to him. Risks ultimately lead to financial losses, which include non-receipt or non-receipt of income or direct losses (i.e. loss of invested funds).Assessment and risk management is one of the main sections of any project. Risk management is foresight, analysis and risk assessment (first stage), development of a set of measures to avoid risks in some cases and minimize losses – in others (second stage) and unconditional implementation of all measures at the stage of project implementation and operation (third stage).
Risk analysis and assessment is one of the stages of risk management. Risk analysis uses various approaches: simplified and more complex. In general terms, the technology of risk analysis and assessment is as follows:
– collection of information and its systematization for risk analysis;
– risk identification;
– development of a project risk map;
– qualitative risk analysis;
– collection of additional information
– quantitative analysis and risk assessment.
To collect information, it is useful to know the classification of risks. In practice, in the educational and scientific and practical literature there are various approaches to the classification of risks.
In a generalized form, they can be classified into three main groups:
1) stage of the project life cycle of Wembley (initiation, planning and development of the project, project implementation, completion of the project, operation of the project);
2) functional risks (managerial risks, marketing risks, risk of deviation from the project implementation schedule; risk of inferior financing; operational risks);
3) The environment of occurrence (internal – at the organization level – and external).
At the stages of initiation, planning and development of a project, the risks of an organizational and marketing plan are most likely, such as:
At the stage of initiation, planning and development of a project, managerial risks may arise, namely: a project can be “imposed” or “recommended” for development by management (director, owners) or third parties (investors, business partners, society) contrary to common sense and in the absence of an economic justification or by adjusting it to the necessary calculations. This may occur due to the lack of a reasonable investment policy, extremely low literacy and management competence, an adventurous approach to business, or due to the vested interests of individuals (Saussier, & Tirole, 2015).. The expert method is the processing of independent expert assessments for each type (factor) of risk and the calculation of the integral risk indicator. It is used, as a rule, with full and partial uncertainty. The probabilistic method is the collection and processing of statistical data of past periods relating to the essence of the project, the allocation of risk events, the parameters of their influence on the elements of the project.
The simplest and most obvious method of risk analysis and assessment is to develop a risk map of the investment project. It is based on the elements of a probabilistic method and expert. At the first stage of this method, a list of threats or risks is formed, then they are given expert estimates on two parameters: the probability of a particular risk and the consequences for the project from the occurrence of risk. The consequences of the occurrence of risk are the alleged possible damage in the form of direct losses or lost revenue.
Identify or suggest key mitigations and possible learnings.
The article is devoted to assessing the effectiveness of large-scale sporting events for the socio-economic development. The world experience of research in the field of large-scale sporting events that can be used by England in organizing major international competition. Conclusions are drawn on the main areas of research in the field of large-scale sporting events in the world; recommendations on their planning taking into account foreign experience are given on the example of a specific region.The results of the analysis of foreign experience in assessing the socio-economic effectiveness of large-scale sporting events in specific territories are presented, on the basis of which the main areas that should be taken into account in Russian practice are highlighted.
Results. The traditional mistakes of the host countries are shown: underestimating the costs and reassessing the benefits of holding a large-scale sports event; ignoring the specifics of the event and its impact in economically developed countries and countries with economies in transition; lack of communication between the objectives of the event and plans for the development of territories. the main directions of assessing the socio-economic effect of holding a large-scale sporting staduims and creating a high-quality infrastructural heritage are considered.
The need for a preliminary assessment of the effectiveness of a large-scale sporting stadium in the Brent region is emphasized, taking into account the best world practices in five basic elements of heritage: economic, social, communicative, political and infrastructural.
Large-scale international events, such as the World Cups, Olympic Games, and world EXPO exhibitions, have historically been held not only to increase the prestige of the host country and strengthen feelings of national unity and pride, but also to give an impetus to more efficient socio-economic development both the country as a whole and the regions and cities in the territory of which it is directly held large-scale project of international level (Palguta & Pertold, 2017).
As experience shows, the organizing countries received different results, often far from expected. Instead of the planned inflow of investments, an impulse to the development of business activity, an increase in employment and an overall increase in the attractiveness of the territories of specific regions and cities, many faced the problem of servicing excess infrastructure, unclaimed sports and entertainment facilities, which created problems not only for current budgets, but also burdened on the shoulders of future generations. The latter goes against the principle of sustainable development, which ideally should be the starting point for planning any large-scale events in the territory of a particular region or city. The main conclusions from unsuccessful practice include the thesis of the inappropriateness of the un adapted dissemination of experience of individual countries and the use of any templates (Titl, & Geys, 2019)..
The increased risks of corruption are due to some characteristic features of a major public event. In a particularly vulnerable position is the Agency for the preparation and conduct activities reflecting a wide variety of risks and seriousness their possible consequences. Some risks are directly related to features of public events such as significant the amount of money and resources involved in their organization and a large number of contracts or special sources revenue.
References
Arve, M., & Martimort, D. (2016). Dynamic procurement under uncertainty: Optimal design and implications for incomplete contracts. American Economic Review, 106(11), 3238-74.
Bernstein, L. (2015). Beyond relational contracts: Social capital and network governance in procurement contracts. Journal of Legal Analysis, 7(2), 561-621.
Davis, P. R., Jefferies, M., & Ke, Y. (2017). Psychological contracts: Framework for relationships in construction procurement. Journal of Construction Engineering and Management, 143(8), 04017028.
Flammer, C. (2018). Competing for government procurement contracts: The role of corporate social responsibility. Strategic Management Journal, 39(5), 1299-1324.
Hyytinen, A., Lundberg, S., & Toivanen, O. (2018). Design of public procurement auctions: Evidence from cleaning contracts. The RAND Journal of Economics, 49(2), 398-426.
Iossa, E., & Waterson, M. (2017). Maintaining competition in recurrent procurement contracts: A case study on the London bus market. Transport Policy.
Li, J. C., Zhou, Y. W., & Huang, W. (2017). Production and procurement strategies for seasonal product supply chain under yield uncertainty with commitment-option contracts. International journal of production economics, 183, 208-222.
Mahapatra, S., Levental, S., & Narasimhan, R. (2017). Market price uncertainty, risk aversion and procurement: Combining contracts and open market sourcing alternatives. International Journal of Production Economics, 185, 34-51.
Palguta, J., & Pertold, F. (2017). Manipulation of procurement contracts: Evidence from the introduction of discretionary thresholds. American Economic Journal: Economic Policy, 9(2), 293-315.
Saussier, S., & Tirole, J. (2015). Strengthening the efficiency of public procurement. Notes du conseil d’analyse économique, (3), 1-12.
Titl, V., & Geys, B. (2019). Political donations and the allocation of public procurement contracts. European Economic Review, 111, 443-458.
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