By Joshua.Chambers

01 Jul 2010

The Olympic Games construction project is constantly being scrutinised – not only by the media, but also by large numbers of stakeholders. Joshua Chambers talks to the man under the spotlight: ODA chairman John Armitt

John Armitt can do a good impression of Ken Livingstone, although it is perhaps a little too throaty to convince as the former Mayor of London. I suspect I could have coaxed an impersonation of Boris Johnson out of him, too, had Armitt’s press secretary not noticed that my dictaphone was still on.

One wonders how many impressions the chair of the Olympic Delivery Authority can do. After all, he has a large number of potential subjects: because of the complex architecture of Olympic delivery, Armitt reports to a wide range of people.

Asked about the complexity of managing projects in the public sector, Armitt admits that management is often more straightforward in private business. “In many ways, the private sector is usually simpler,” he says. “I’ve worked in both and there is no doubt that, by and large, the private sector is likely to be faster moving because it’s got a less broad church that it has to satisfy at any point in time.”

However, he refuses to criticise the organisational structure of the Olympics, even if he doesn’t directly answer the question as to whether he would design the same system if starting from scratch. “I think the structure’s worked well, actually,” he says. “The key thing about any structure is that the people in it know exactly what’s expected of them, so we as the ODA know pretty well exactly what’s expected of us – which is to deliver the infrastructure, to deliver the venues, to deliver the transport plan.” He then goes on to describe the impenetrable management structure that governs work towards the Olympics, and this takes three or four minutes (see box).

Constant scrutiny

Those working on the Games face a huge amount of scrutiny, and the pressure of a very public deadline. Throughout the interview, there are a series of ‘pings’ as new messages enter Armitt’s inbox; yet he remains relaxed. Toweringly tall and totally at ease, he looks as though he was designed by the construction industry, for the construction industry. And that calm demeanour is an essential attribute in his role: it’s his job to fight the ODA’s corner in government and the country while the chief executive, David Higgins, puts pressure on to the building contractors.

In fact, Armitt says he turns the pressure of that very hard deadline into the ODA’s “biggest advantage”, using it to keep the construction firms under control. “So often, contractors project a completion date – let’s say it’s two years away – and then, six months in, they’ll be saying: ‘It’s going to be very difficult, we might be a week or a month late.’ The advantage of the Olympics is that an absolute commitment is an absolute date,” he says. “Nobody wants to be the organisation or the individual who is potentially going to delay things by not making decisions.”

“None of them want to be seen as the one who is late, because the glare of publicity on the project is very high,” he continues. “While the Daily Mail might not report that so-and-so is running late, the technical press within their own sector would almost certainly do so.”

Pressure points

Meanwhile, the pressure for contractors to find savings recently increased: the Department for Culture, Media & Sport has just asked the ODA to find another £27m of savings this year.

As Armitt admits: “You fundamentally make most of your savings in the front end: it’s in the planning, in the design, in the specification. Once you’ve actually started building, it’s [harder to find] further savings because so much has then been fixed into the contract.” Yet he’s confident that more savings can be squeezed out, even at this stage. Contractors are on ‘target-price’ contracts, he explains, “so the contractors are incentivised to make savings. They start off with a target price agreed by us, and there is an opportunity to increase the profit by coming in below that target price. We split the savings with them, so we get a saving and they get a small [additional] profit.”

This incentive isn’t new, but Armitt argues that his team will increase the pressure to make use of it. “I’m confident that over the period we will reel it in,” he says. “I have confidence in my team; I have confidence in the numbers that I see. A lot of the people in the ODA – particularly those on the construction site – are well known in the industry and have been working with some of the contractors for some time. Some of us used to be those very contractors, so we know the way they work; we know the way they think; we know how the pressure points work.”

This point can’t help but sound menacing: hearing it, I was glad that I’m not a contractor looking for an easy life on the Olympics site.

Village life

Overall, the ODA has made 600m of savings since November 2007; £27m of new cuts is small fry in comparison. “We found the savings, essentially, through scope; through procurement programmes,” Armitt says: “You can procure for less than you’ve got in the budget, so what you’re constantly doing is looking at what’s being designed and saying: ‘Can we make it cheaper?’”

It was fortunate that the ODA was overachieving: the credit crunch severely affected the prospects for significant private investment – particularly in the Olympic village. Currently, the ODA is spending £1.2bn out of its £2bn contingency fund, and the majority of this is on the village.

Investment in the legacy project has also become harder to find, and a separate legacy company has been set up to manage this part of the project. Armitt explains that the Olympic site “will be a construction site for 25 years”. This is undoubtedly meant to sound heartening, but somehow it doesn’t.

Indeed, the legacy project looks likely be the part of the Olympics that faces the squeeze if the government seeks to find further cuts. The contracts on the site are the least developed and, given the points that Armitt has already made, would provide the most opportunity for savings. As he says: “If you were in the legacy team, you would like us to spend all our contingency fund to give you the most wonderful legacy – but sorry, that’s not the game.”

Boosting staff

While the Olympic legacy is in separate hands, ODA employees are still concerned about the future. Many left permanent jobs for their current temporary contracts, and while this indicates their enthusiasm for the Olympics project, it could also be a worry as they start to reach the end of their contracts.

“That’s a problem with any project environment,” says Armitt. “Towards the end, an employee might say: ‘Crikey, in six months’ time I’m going to be out of a job.’ It’s an issue if that person is offered another job but is still wanted here for five months.”

In these circumstances, retaining staff depends on good management. “Often it has to do with maintaining morale; a lot of it has to do with them feeling that they are needed and wanted,” says Armitt. “I think that people like what they do here, so there undoubtedly is a disappointment when they can see that their job is going to come to an end before 2012. We will finish the bulk of what we’re doing by the middle of next year; a year before the Games, we will have a run-down in the number of people.” In the meantime, he adds, “the challenge is keeping them on board.”

Armitt’s solution here is communication: keeping staff in the loop so that at least they know where they stand at all times. “We actually involve people in the issue, in the problem,” he explains, “so they can see they are a part of the process and that they’re not sitting there and all of a sudden out of the blue you get the thud of an envelope on the desk saying: ‘You’re not required in a month’s time’.”

He trys to set out an image of a supportive employer, saying that “there are always things that you can do in that regard, by supporting people, even just by people feeling that they can sit down with you.” However, he doesn’t name any formal processes or supporting mechanisms to help staff find new employment or further their careers.

This must be a worry for many at the ODA, especially given the fragility of the economy. “Well, that’s the flip side, isn’t it?” comments Armitt. “From our point of view, that’s an advantage. If there are fewer opportunities it means people are less likely to be tempted off somewhere else – but for the individual, clearly it’s a concern.”

Spiralling security

Armitt sees the biggest potential cost of the Games as security; a subject currently being reviewed by security minister Dame Pauline Neville-Jones (and assessed in this issue of CSW – see p21). He says of the review: “If you were in charge of security you must almost be doing it on a daily basis, because security is constantly shifting on the basis of intelligence.”

All of a sudden, he’s doing his impersonation of Ken Livingstone, and John Armitt is transformed. “As Ken Livingstone said: ‘I don’t know why we’re all worried about the budget for security, it’ll be what it’ll be and, you know, if we have a big problem the week before, then we’ll spend a lot more money, won’t we?’”

Then he drops back into his own voice: “In a way, Ken was right, because if there is a major outrage in London six months before the Games, that is going to put one hell of a pressure on the security people and on everybody else. On the other hand, when it’s all quiet, people tend to say things have settled down, which is the most dangerous situation because you take your eye off the ball and then you’re more exposed.” Armitt’s delivery may be jovial, but his point is a serious one.

We leave his 23rd floor, Canary Wharf office and its panoramic view of London, and head downstairs for a photo. On the way down, I ask him about his future. Will he work for the legacy company? “No.” He’ll be resting, taking a break for a bit? “Hopefully, I’ll be finding something else useful to do,” he says. Certainly, he doesn’t look as though he needs a rest. He poses for the CSW photographer, then gets on the train to City Hall. He is a little late – but, as ever, he remains impeccably relaxed.

The man with many bosses: the ODA’s accountability

The ODA works with Seb Coe’s London Organising Committee of the Olympic Games (Locog) and both have to please the International Olympic Committee (IOC). As Armitt puts it: “We build the theatre, Seb puts on the show.”

Then there are the UK departments involved. Jeremy Hunt leads the government’s work from the Department for Culture, Media & Sport (DCMS), which contains the Government Olympic Executive (GOE). Other departments with a stake are Communities & Local Government (CLG), the Department for Transport (DFT), and the Home Office (HO). These departments are all on the Funders Committee, and Armitt says the ODA produces an “inch-thick” quarterly report for them.

There is an Olympic Board, containing representatives from DCMS, Locog, and the British Olympic Association 
– the organisation responsible for pulling together the British Team.

London has a clear interest, with the London Mayor heading up local scrutiny. This is followed by the local authorities, with Newham taking a particular interest in the housing.

The ODA also answers to the National Audit Office (NAO) and Public Accounts Committee (PAC).

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