Value is Created Upfront
27 May 2016
With less than 100 days to go until the opening of the Rio 2016 Summer Olympic and Paralympic Games, Ben Price, Director of Project Delivery reflects on the challenges that face any commissioning client and project when procurement decisions are delayed.
It is a universal constant, and yet so often disregarded: that with the passing of time, the scope for change will decrease while the cost of implementing that change increases exponentially. Simply put: Value is created upfront.
Value can be created and engineered most effectively at the early stages of a project; this is when the breadth of expertise, experience and resources of a collaborative project team (client, designers, contractors) can be most effectively leveraged.
This simple immutable truth forms the basis of global project delivery for petrochemical companies who operate gated execution processes. However the silo walls of the international mega event sector are not always permeable to such external wisdoms.
Typically, the decision to award the Host City of the Summer Olympic Games is taken seven years in advance. The challenges of building an organisation in parallel with supporting massive infrastructure programmes should never be underestimated. This notwithstanding, adopting the right procurement strategy and following through with timely decision-making are the bedrock of progress, cost certainty and delivering tangible value for public and private investment. Yet time and time again the leviathan organising committee’s prevarication in procurement makes them a hostage to fortune.
Through arms length procurement approaches, design proceeds with little challenge and tangible input from the market. Time ticks away and supply risks increase for the few capable contractors who can fulfil the requirement. Inappropriate contracting models place undue and expensive risks onto the contractor. Design inevitably requires re-work. The combination of these factors inevitably erodes value whilst simultaneously increasing the final cost of the projects within the programme.
The last year of planning for the world’s biggest sporting event has been carried out against a backdrop of unparalleled political, economic and social turbulence. Such challenges are not uncommon in delivering international projects but in this case have been particularly impactful. Whilst early contractor involvement cannot be viewed as a panacea, it is part of a package of tools that can act as a seat belt when the turbulence hits.
We operate globally successfully delivering projects in multiple sectors. At WNY, we’re excited by rising to the next challenge, whatever or wherever that might be.