Page 1 of 8

London 2012 Olympics

Olympic & Paralympic Stadium
Initial Evaluation Report
CLM-1020101-REP- Initial Evaluation-v10
!ocument "istory#
!ocument O$ner#
Paul Dickinson
Revision "istory#
%ersion !ate Reason &or c'an(e )ut'or
V1.0 7
th
Feb 2007 Approved ssue Paul Dickinson
)pprovals#
!his docu"ent re#uires the follo$ing approvals.
*ame Si(nature +itle !ate %ersion
%raha" &arter 'ead of (tadiu" Area
)ob *night 'ead of +ontracts ,
Procure"ent
(teve +ork 'ead of (outh Area
!istri,ution#
!his docu"ent has been for"all- distributed to.
*ame +itle !ate %ersion
an +rockford Pro/ect (ponsor
Deborah &artlett 0a/or Venues
Page 2 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
+a,le o& Contents
Introduction
1.0 Purpose 3
2.0 &ackground 3
3.0 4ist of !enderers 3
5.0 Description of !endered 6orks 3
7.0 (u""ar- of *e- ssues
7.1 +o""ercial 3
7.2 +ontractual 7
7.3 Progra""e 8
8.0 Detailed !ender 2valuation. 8
7.0 (u""ar- 7
8.0 )eco""endation 8

Page 3 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
10 Purpose
!he purpose of this report is to provide the 1DA and ke- stakeholders $ith initial feedback on
the tender sub"itted b- (ir )obert 0cAlpine 4td 9()04: dated 22
nd
Dece"ber 2008. t is not
intended to be a full- detailed evaluation but rather an overvie$ for +40; 1DA and ke-
stakeholders to understand the basis of the tender and be a$are of an- ke- issues arising out
of it.
20 -ac.(round
Follo$ing the P<< process a single bidder $as selected to proceed through to the nvitation
!o =egotiate 9!=: (tage. &ecause of this uni#ue position the 1DA have sought legal opinion
to ensure that; not$ithstanding the selection of a sole tenderer; the process nevertheless
co"plied $ith the re#uire"ents of 2> )egulations. &ased upon this advice the +o"pliance
1versight %roup 9+1%: and 2?ecutive 0anage"ent &oard 920&: gave their authorit- to
proceed $ith ()04 as sole bidder for the != (tage.
/0 List o& +enderers
As onl- one tenderer pre@#ualified to proceed to the != (tage a single tender has been
received. +onse#uentl-; it is not possible to provide a direct co"parison bet$een tenders
received. t has been possible; ho$ever; to co"pare the tender received against the +ost
Plan &udget. !his is set out in 7 belo$
00 !escription o& +endered 1or.s
!he scope of $orks that for"s the basis of the tendered $orks co"prisesA
!he Design and +onstruction of the 1l-"pic (tadiu" and 6ar"@>p !rack and Facilities to
enable 4ondon 2012 to host the 2012 1l-"pic and Paral-"pic %a"es.
All necessar- design to deliver the post 2012 4egac-.
!he design and construction of 2?ternal 6orks and 4andscaping $ithin Bones ) , (.
20 Summary o& 3ey Issues
21 Commercial
A su""ar- of ()04Cs tender price is set out belo$A
Stadium &
)rena
Landscapin(
& E4t 1or.s
1arm-5p
)rea
D E000 E000 E000
1 0easured 6orks 283;100 71;320 13;870
2 Preli"inaries 58;708 12;807 2;512
Su,-+otal /067809 9/762: 187082
3 ()04 1verheads , Profit
9Fee:
11 35;078 F;232 1;788
+otal Indicative Construction
Cost at 2008 prices /0/7880 6/7126 1:7929
5 Professional Fees 12.7 52;F78 11;855 2;228
7 ()04 1verheads , Profit on
Professional Fees 7 2;157 782 111
8 ()04 Pre@+onstruction +osts F;711 2;778 5F3
Page 5 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
+otal Indicative Cost at 2008
prices /697290 10:768/ 207880
Cumulative +otal 228760/
!he su" above sets out the e?tent of their priced $orks; ho$ever; the tender contains a
substantial nu"ber of e?clusions; $hich $ill have a financial i"pact upon the tender su";
such asA
Pro/ect contingenc-. ()04 have proposed the su" of ;20m; but it is unclear $hether 1DA
or ()04 o$n this contingenc-.
nvitation !o =egotiate Process Agree"ent 9PA: costs of ;19m
+ost ndices set at <tr 5 2008
=o allo$ance for inflation
=o allo$ance for 4egac- +onversion and Facilities 0anage"ent
=o allo$ance for $ork to the &ridges
!he tender su" 9including +ontingenc- and PA costs: of ;2:9m is co"parable to an initial
1DA budget of ;/:1m
1
; thereb- giving a net difference of -;20:m
=ote; since the sub"ission of the ()04 tender the 1DA has confir"ed their revised budget
for the (tadiu" onl- as being ;2:2m 9including contingenc- and PA costs:. !his is
co"parable to ;080m $hich is co"prised as follo$s.
(tadiu" +ost 9see above: E3F8"
!he proportion of the 2?ternal 6orks cost 9see above: that
should be included $ithin the (tadiu" +ost E21"
!he proportion of the contingenc- allo$ance 9see above:
that should be allocated to the (tadiu". E51"
;080m
<ee Level#
()04 have set their fee percentage on cost for 1verheads , Profit 9the GFeeC: at 11D.
Further discussion is re#uired $ith ()04 to understand ho$ this fee percentage is broken
do$n bet$een GoverheadC 9indirect head office costs not $orking area overhead: and GprofitC.
!he initial vie$ b- +40 is that it is higher than e?pected considering risk is identified
separatel-.
n developing the GincentivisationC and Gshould costC "odels +40 used an 8D fee that $as felt
to be representative of the "arket place; presentl-; especiall- on non co"petitive; open@book;
public sector procure"ent routes $here the fee band is t-picall- 7D @ 8.7D that also includes
an allo$ance for insurance.
A paper prepared b- Price$aterhouse+oopers
2
9P$+: sets out the issues and their vie$ in
respect of fee levels $here no co"petitive tension e?ists and atte"pts to identif- si"ilarities
$ith other public procure"ent processes.
1
&ased upon an initial 1DA budget of E585.7" less E87.8" for nflation and E28.1" for 4egac- 6orks. =o specific allo$ance for
the 6ar"@>p !rack , Facilities $as set out in the 1DA &udget.
2
P6+ paper H %overn"ent profit for"ula and non@co"petitive fee pricing
Page 7 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
P$+ suggest; initiall-; that the fee percentage should be bet$een 8D and 17D. 'o$ever;
$hen considered in the conte?t of other profit deter"ination "echanis"s for non@co"petitive;
cost rei"bursable t-pe arrange"ents $ithin public sector procure"ent; this could be bet$een
5D and 8D dependant upon allocation of risk.
!o deal $ith this "atter +40 have re#uested that ()04 carr- a revie$ of their previous
pro/ects setting out their anticipated and actual overhead and profit recover- to establish a fair
and reasonable fee percentage that could be applied to the stadiu" pro/ect. 1DA I +40 $ill
endeavour to carr- out a si"ilar e?ercise of as "an- construction pro/ects as possible.
22 Contractual
()04 have set out a schedule of ke- contractual issues $hich re#uires further discussion
and clarification is re#uired. Discussions bet$een 1DA I +40 and ()04 are ongoing but the
.ey contractual issues are set out belo$A
Incentivisation and =s'arin(> principles in respect o& +ar(et Cost
()04 are prepared to bear pain for overspend against the baseline target cost but onl- to
the e?tent of putting at risk a proportion of their profit. !his effectivel- "eans that ()04
onl- seek to li"it their risk in respect of their profit e?pectation. t does not affect their
overhead recover-. 1DA $ill respond further on this "atter.
Parent Company ?uarantee @PC?A
()04 are onl- prepared to offer a P+% fro" (ir )obert 0cAlpine 'oldings 4td and not
the >lti"ate Parent +o"pan-; =e$arthill. 1DA have stated their position that the- re#uire
a P+% fro" =e$arthill; ho$ever; the- are carr-ing out due diligence on (ir )obert
0cAlpine 'oldings 4td in respect of their financial standing. Further discussion is re#uired
pending the outco"e of due diligence.
Per&ormance -ond
()04 consider $ording of the perfor"ance bond proposed b- 1DA as Gon@de"andC and
therefore unacceptable. 1DA have advised ()04 that the Gon de"andC "echanis" onl-
applies $here it is supported b- an ad/udicators a$ard. Discussion is on going.
Contractor 1arranties -ac.ed ,y PC?
()04 have confir"ed this proposal is unacceptable. 1DA have stated that the P+% "ust
follo$ the Gstep@inC to ensure the contract re"ains guaranteed in favour of the ne$
2"plo-er. Discussion is on going.
Collateral 1arranty &rom Employer in <avour o& SRML
1DA have confir"ed to ()04 that no $arrant- $ill be provided in favour of ()04. ()04
$ill contract directl- $ith 1DA and +40 are engaged as 1DACs deliver- partner.
<inancial Security
()04 re#uire suitable financial securit- of pa-"ent. 1DA have stated their position that
no securit- $ill be provided. Discussion is on going.
Standard o& !esi(n O,li(ation
()04 re#uest that their liabilit- is li"ited to that of reasonable skill and care. 6hilst 1DA
have accepted that; generall-; liabilit- can be li"ited to reasonable skill and care ele"ents
that have a bespoke Gstate of artC nature $ill nevertheless need to be fit for purpose. 1DA I
+40 to ascertain $hat these bespoke ele"ents are.
5nlimited Lia,ility &or not ac'ievin( .ey dates
()04 $ill not accept unli"ited da"ages. 1DA have advised ()04 that liabilit- $ill be
capped but the level of da"ages and all associated ke- dates have not been set.
Page 8 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
Restriction on Contractor>s c'an(e to Company Control
()04 $ill not accept an- restriction on $ho controls the ()0 %roup of +o"panies. !his
is non@negotiable.
!elay !ama(es provisions deleted
()04 $ill not accept unli"ited da"ages. 1DA have advised ()04 that dela- da"ages
$ill be capped but the level of da"ages have not been set.
)cceleration Provisions
()04 $ill not accept an- provision that forces the" to accelerate the $orks $ithout an
accepted #uotation and progra""e.
2/ Pro(ramme
!he headline contract progra""e included $ithin the tender sets out the follo$ing ke- issues.
+o""ence"ent on site H 3 "onths earlier than currentl- progra""ed co""ence"ent
date of 31
st
0arch 2008. !his is pri"aril- due to the bulk e?cavation proposed b- ()04
for the (tadiu" bo$l.
38 "onth construction period for the (tadiu"
(tadiu" co"pletion date of 30
th
(epte"ber 2011 H this is currentl- 7 "onths later than the
planned date for the co""ence"ent of test events in Februar- 2011.
80 !etailed +ender Evaluation Procedure
!he ne?t stage is to produce a detailed evaluation report. !his $ill evaluate ()04Cs bid in
accordance $ith the assess"ent criteria set out in the nvitation !o =egotiate 9!=:
docu"entation issued during the fourth #uarter of 2008. !he assess"ent criteria stated in the
!= $ere.
a: Deliverabilit-
b: (uitabilit- of !echnical and Design (olution
c: Value for 0one-
d: +o"pliance $ith +o""ercial and +ontractual )e#uire"ents
!he process $ill co""ence $ith a Gco"pleteness and co"plianceC check. !his $ill then be
follo$ed b- the "ain evaluation.
Completeness & Compliance
!he != docu"entation specified a nu"ber of deliverables that are considered necessar- for
Gco"pliance and co"pletenessC. 2?a"ples include a covering letter and an e?ecutive
su""ar-. !hese ite"s $ill not be scored as part of the for"al evaluation but their inclusion or
o"ission $ill be recorded and the ()04 $ill be re#uested to provide an- "issing
docu"entation.
Met'odolo(y &or !etailed Evaluation
t is intended to split the evaluation into t$o distinct ele"ents that $ill be dealt $ith;
concurrentl-; to reflect the nature of the assess"ent criteria.
Part 1 @ !echnical 2valuation H Deliverabilit- , (uitabilit- of !echnical Design (olution
Part 2 @ +o""ercial 2valuation @ Value for 0one- , +o"pliance $ith +o""ercial and
+ontractual )e#uire"ents
Page 7 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
!he technical evaluation $ill be undertaken using an evaluation "atri?. !he co""ercial
evaluation $ill be assessed b- $a- of a co""entar-. !he "ethodolog- for both parts of the
evaluation is e?plained belo$.
t $as clearl- stated in the != that the assess"ent criteria $ere not $eighted hence no
$eighting s-ste" $ill be used in the evaluation.
Suita,ility o& +ec'nical !esi(n Solution and !elivera,ility
!he technical evaluation $ill be undertaken using the attached evaluation "atri?. !he bid
sub"ission $ill be assessed b- a nu"ber of +40 and 1DA tea" "e"bers each assessing
specific ele"ents related to their specialist kno$ledge and e?perience. 2ach topic $ill be
assessed against the re#uire"ents laid out $ithin the != b- $a- of nu"ber of ke- #uestions
against $hich the assessors $ill "ake a /udge"ent. !he bid response to each #uestion $ill
be graded according to the scoring regi"e outlined belo$.
Scorin( Re(ime Mar.
'ighl- Developed 7
'igh 4evel of +o"petenc- 5
Above Average 4evel of )esponse 3
)e#uires Develop"ent 2
>nacceptable I =o )esponse 1
!his scoring regi"e does not allo$ assessors to Gsit on the fenceC. t re#uires that each
assessor decides $hether or not the response "eets or e?ceeds the "ini"u" standards
9scores 3 or "ore: or re#uires further develop"ent 9scores 2 or belo$:.
!his assess"ent process has the advantage that it clearl- identifies those ele"ents that $ill
naturall- be the focus of attention in the negotiation stage follo$ing the assess"ent process.
Commercial & Contractual
!he co""ercial and contractual assess"ent $ill be undertaken b- "e"bers of the 1DA and
+40 co""ercial tea" $ith support fro" 1DACs legal and financial advisors and $ill assess
the bidderCs confor"it- to the co""ercial and contractual re#uire"ents. !he results of this
assess"ent $ill be provided b- $a- of a co""entar-.
%alue &or Money
!he value for "one- assess"ent $ill also be undertaken b- "e"bers of the 1DA and +40
co""ercial tea" and 1DACs financial advisors. !he assess"ent $ill anal-se and evaluate
the bidderCs proposals and cost plan to deter"ine $hether the pricing structure and pricing
level provides value for "one-. !his $ill include bench"arking against si"ilar contracts
$here possible. te"s such as the fee level; percentage on@cost proposed and ke- rates $ill
be the "ain focus of the assess"ent. !he process $ill also assess confor"it- $ith the 1DACs
budgetar- re#uire"ents and affordabilit- envelope. !he results of this assess"ent $ill be
provided b- $a- of a co""entar-.
:0 Summary
&ased upon the above the current position is as follo$sA
!he tender su" is significantl- in e?cess of the 1DACs budget;
!he tender progra""e provides for co"pletion 7 "onths later than the planned
co""ence"ent of planned test events;
Page 8 of 8
1l-"pic , Paral-"pic (tadiu"
nitial 2valuation )eport
(ignificant re@designed solution; of the (tadiu" onl-; $ill be necessar- to "eet the revised
1DA budget of ;2:2m;
*e- contractual provisions $ill re#uire 1DA involve"ent to achieve resolution;
+larification re#uired of the list of e?clusions as part of the final negotiations;
+oncluding the detailed tender evaluation; planned for "id Feb 2007.
90 Recommendation
!he pri"ar- ob/ective is to develop an 1l-"pic and Paral-"pic (tadiu" that "eets the 1DA
revised budget and baseline progra""e to allo$ the planned co""ence"ent for test events
in Feb 2011; unless instructed other$ise. !o do this the follo$ing actions are re#uired.
+onclude the detailed tender evaluation b- "id Feb 2007 providing bench"arking data
$here possible.
Develop a re@designed solution to "eet 1DA budget of ;2:2m for the (tadiu" onl-;
Develop construction progra""e concurrent $ith the re@designed solution to allo$
co""ence"ent of test events in Feb 2011;
Agree short ter" progra""e to facilitate pro"pt resolution of re@design options and
solutions;
ntegrate +40 $ithin the design process to ensure co"pliance $ith design; brief and cost;
(eek 1DACs position on ke- contractual provisions; i.e. those $hich are non@negotiable;
and
+onclude 6orks nfor"ation concurrentl- $ith the developing brief.