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Design And Other Lessons From The Sydney Olympics - A Venue Owner's Perspective

by Alan Patching

This paper is based on a paper presented to an international seminar on design of Olympic Facilities hosted by the International Olympic Committee in Lausanne Switzerland, and which was subsequently published by the IOC

Abstract

The modern major Olympic venue represents a significant infrastructure investment. The compelling desire for a 'showcase' facility to enhance the 'Games' experience and win maximum international exposure, not only for the venue owner but also for the host nation, must be balanced with a logical analysis of, and adherence to a plan which will guarantee long term survival of the venue as a business. Such an analysis must take into consideration, inter alia, issues such as corporate and financial structure of the owning entity, operational arrangements, long term design dictates, and preparing for and 'bumping out' of the Olympic requirements for the venue in a manner which does not unduly or negatively impact on everyday revenue producing venue operations.

The Sydney Olympics were described by IOC President Samaranch as 'the best ever'. His Excellency also described Stadium Australia as 'the most impressive stadium I have seen in my life.'. Notwithstanding this, the lessons learned from the Sydney Games fall into the 'what could have been done better' category, as well as the much heralded 'what was done well'. This paper is designed to help others learn from our mistakes as well as from what Sydney did right.

Introduction

"And the winner is Sydney".

For his Excellency Juan Antonio Samaranch, just another announcement, albeit an important one, in the course of his Presidential duties on behalf of the International Olympic Committee. For the world at large, just another 25 second item on the evening news, albeit one that heralded the potential for an outstanding millennium Games experience. For Australia, a sense of high excitement and expectation, albeit tempered by some concern about underestimation of the cost of staging the Games, and the consequential exposure for taxpayers. For a relative handful of Government executives and private sector entrepreneurs, the commencement of a period of extraordinary opportunity, albeit with associated challenges the like of which even the most experienced practitioners could not reasonably have foreseen.

The purpose of this article is to present the lessons 'learned the hard way', so that those who follow in creating not only future Olympic Games facilities, but also sporting and entertainment venues generally, might avoid the negatives in their endeavours.

It is written in full recognition of and admiration for the well-publicised 'positives' of the Sydney Games experience. Importantly for future venue owners and those from government who might contract with them, it is written from the perspective of the formally appointed owner's representative of the major Games venue, so that those who follow in the role of venue owner might focus on and benefit from the lessons we learned on our Olympic journey. To add balance to this perspective, an overview of the development of Olympics venues generally and a description of some of the other venues for the Sydney Games is presented hereunder.

Celebration of Success

It is interesting to take a look at a typical Olympic venue from the middle of the last century and compare it with a modern Olympic venue. By today's standard, many, possibly even most, of the venues for the fifties, sixties and seventies were comparatively rudimentary. The older venues were about sport, and funded by Governments or well heeled sporting authorities as longer term facilities for the sports lovers of the community. Today's venues are more than simply sporting arenas. They are stages for world television spectaculars. They are hospitality houses for the elite of the corporate world. They are this way because of a kind of cyclical situation that has evolved. Television broadened the popularity of sporting super stars, which led to increases in pay which led to more television demand and so on (we had stars before, just not so highly paid or widely known. Imagine what Australian tennis player of the sixties Rod Laver would earn if he was beginning his winning career today.) Sponsors were attracted to the media coverage and were welcomed by players and sports seeking increased revenue. Venue design was 'improved' to cater for the needs of the sponsors and the corporates who would provide a significant amount of revenue. Other sources of revenue were also sought, like concerts and conferences. Readers of this paper will clearly understand the cycle referred to. Perhaps the most competitive area for its effect to be demonstrated was, and is, the Olympics. It seems that each contender offers bigger and better facilities in an effort to win the Games and the exposure it brings for their city and their country.

Sydney was no exception.

The legacy of the approach is perhaps the finest collection of community and sporting facilities in a specific location in the world today. In addition to the Homebush Bay developments which include aquatic centre, main stadium, indoor arena, baseball stadium and hockey arenas, equally impressive facilities for rowing, canoeing and equestrian events have been constructed relatively close to Sydney. These facilities, individually and collectively, are among the best in the world, and were unquestionably a key reason for the success of Sydney 2000.

For some of the venues however, serious questions have been raised about their post Olympic sustainability. The main stadium has only eleven sporting events committed for its post Games year, and the indoor arena similarly was not used anywhere near its capacity. Why was this? The author's opinion is the reasons are two fold. Firstly, management of the matter of finalizing deals with intended users might not have been as outstanding as the visionaries behind the ventures expected. Secondly, the New South Wales Government could better have guaranteed the immediate post Olympic success of Homebush Bay simply by ensuring all major stadium based sporting events were played at the Olympic facilities. To do this they would have had to orchestrate the closure and sale of the Sydney Football Stadium, a venue which, unlike the Olympic Stadium, is not serviced by rail transport, yet is a close to city centre venue which invariably causes traffic chaos whenever it hosts an event. Perhaps understandably, Governments are not known for making necessary hard decisions whenever there is any possibility of a media or community backlash. Those in favour of moving all major events (with the exception of cricket tests) to Homebush Bay promote the insistence on use of public transport for events patrons. Such a move would make the Olympic facilities with their excellent rail service very attractive indeed.

The point for future Olympic venue owners is that the sustainability of any major development, and certainly any as expensive as an Olympic venue, should be at the core of any decision to proceed, and that sustainability criteria should be clearly and preferably independently established prior to project approval, especially if public funds are in any way involved.

Let us look beyond the short term problems to the long term possibilities. For there can be no doubt about the potential of the facilities constructed for the 2000 Games. Following is a very short vignette of some of the venues.

The Aquatic Centre

Constructed well prior to the Games and possible the most used of the facilities, the aquatic centre comprises a ten lane competition pool, an eight lane training pool, a water polo, diving and synchronized swimming pool, and recreational pools. The distinctive roof arch allowed for construction of temporary seating for the Games bringing capacity to around 15,000. The atmosphere in the venue for Games events was electric. From the point of view of public perception and of competitors, it's a very successful facility.

The Olympic Stadium

The largest Olympic stadium ever constructed, it held around 118,000 for major events. It has been reconfigured since the Games with the upper level end stands being removed. These will be replaced by roofs at the end of the conversion contract. The Olympic track has been removed and some 90 metres of the lower bowl seating on either side of the arena has been motorized and placed on rails. It is moved in some 15 metres for rectangular field sports and out again for oval field sports. This feature was decided upon and designed after commencement of construction to enhance the prospects of sustainability of the venue post-Olympics. A minimum number of oval field sports is being played this year, but the owners hope for a significant increase in coming years.

The Olympic Village

This comprised a mix of temporary and permanent housing and was a very successful complex for the Games. The post Games village development, known as 'Newington' is proving to be a successful residential community. Reasonable proximity to ferry wharf, rail and bus transport, and of course, the Olympic facilities, has no doubt been a key feature in its success.

The village featured many conservation measures in its construction, as did other venues. Old bricks were crushed and used in landscaping, waste concrete in road base etc.

The Superdome

The country's largest indoor arena, it was the home for basketball and gymnastics for the Olympics and for Paralympic basketball. Moving lower level seating allows for a crowd capacity of 15,000 to 20,000 over five levels. The roof is tension held from external towers allowing for excellent internal sightlines.

It is a fine piece of architecture with immense potential for sporting and entertainment and community events, but like the main stadium, usage at the time of writing has been well short of capacity.

Olympic Railway Station

This was a pivotal part of the Sydney 2000 success story. It continues to be used on a daily basis and will be an essential part of the long term sustainability of the entire Homebush Bay development. The rails system is key to the ability to empty the site in around an hour even when major events are being held at two of the major venues on at the same time.

The writer will refer to other venues in verbal presentation of his paper, and has written these brief vignettes as testimony to the previously mentioned dichotomy of the huge Olympic success of the venues and the somewhat uninspiring usage immediately post Olympics.

Let us now look specifically at some of the development problems experienced on the main Olympic stadium.

The reader will benefit, in grasping an overview of the structural environment within which Stadium Australia was delivered, from the knowledge that some 120 separate contracts were executed to finalise the deal. Of these, some 40 documents were declared 'material contracts', meaning agreements of significant importance, any breach of which carried clearly defined and quite onerous consequences.

One of the major problems that the Stadium Australia Group ("SAG") faced in delivering the main Olympic Stadium arose from SAG being a split entity (comprising the owning Stadium Australia Trust ("SAT") and the operating Stadium Australia Management ("SAM") more details later herein), Others arose from the operations interface with design and construction activities, and from membership issues. These key problem areas were made more difficult to manage because of the fact that the Games were to be delivered by a dual entity arrangement at the 'client' level. This comprised the Sydney Organising Committee for the Olympic Games – "SOCOG" – and The Olympic Coordination Authority – "OCA". Let us investigate the challenges that were faced in some detail.

Structural Considerations

It would be an act of great circumspection to discuss design issues relating to the Sydney Olympic Stadium at any level without first understanding the environment in which the project was to be delivered. That environment was largely borne of the organizational, financial and operational structures established for delivery of the venue, and the 'political' behaviour that evolved from several of the relationships within those structures.

Organisational Structure

The following diagram shows the general corporate and high level contractual structure, which controlled the delivery of Stadium Australia:

There is nothing unusual or extraordinary about the organisational structure at this level. Notwithstanding this, the diagram does indicate that major point of interest for discussion purposes the Australian Olympic Committee and the New South Wales Government delivered the Games using two separate entities just as SAG responded to its contractual obligations using two entities (at the senior level) also.

For purposes of clarity, I have chosen to approach the matter of structure in what is best described as a hierarchical manner, and one that aligns with the more senior contracts executed.

Government Entities

The diagram shows the relationship between the two Government entities that delivered the Games. These were the SOCOG and OCA. Essentially SOCOG was responsible for the marketing, promotion and ticket sales, the media relations, and the actual management and operational control of the Games events per se. OCA was responsible for delivering the venues for the Games, and for overall coordination of transport, security, communications and the like. The Government Structure in regard to these latter functions involved other entities working with and/or reporting to OCA, but breakdown and explanation beyond that given is not required in addressing the topic of this article.

From a simplistic perspective, OCA 'owned' the land on which the venues were erected and maintains long-term ownership interest in the venues, while SOCOG effectively became the Games 'Operator'.

From a venue owner's perspective (and, I suspect, from any reasonable and objective perspective) this dual entity arrangement gave rise to several challenges. This might not appear very different from any two-entity (owner and operator) property arrangement, whether for hotels, entertainment or sporting venues. However, it was unusual in the case of Stadium Australia in that the 'owner' entity, OCA (in the context of the SOCOG – OCA relationship) would not actually 'own' the property for the first 30 years of its life. During that period, Stadium Australia Trust (SAT) would own the facility, and OCA's ownership interest for that first 30 year period would be represented by SAT, along with the interests of all other unit holders in the trust.

The effect of this was that issues arising between SOCOG and OCA often (usually!) became problems for SAT. These problems were quite often magnified by the fact that we had no direct contract with SOCOG in relation to construction requirements, and, for the most part, had to deal through OCA representatives on these matters, particularly up until we neared the time of SOCOG's occupation of the venue for operational purposes. Prior to this our only formal contact with SOCOG was via its (very capable) representative on the Design Working Group. Eventually, this person ceased attending these multi party sessions and our communication with him was, after that, via OCA representatives. On numerous occasions I got the impression that the specific objectives of SOCOG and OCA in relation to construction of the Stadium were not one and the same (at least in degree). The attitudes of key people charged with construction and operational issues often seemed quite different. For example, some issues seen by an OCA representative as vitally important to SOCOG were reported by the SOCOG Venue Manager to be of little consequence. Nonetheless, by some magical formula, probably involving as much good luck as good project management, it all turned out OK on the night, as it were. And that is really all that matters to the world at large.

At this point, some specifics are called for. The contract in which the terms of our (SAT's) delivery and ownership of the Stadium for 30 years were defined in what was called the Project Agreement. OCA was a party to that Agreement. SOCOG was not. Certainly, an 'Olympic Overlay' defining SOCOG's requirements was specified in the Project Agreement documentation. However, at no time did the SAG personnel responsible for producing the venue have the opportunity to discuss in detail with SOCOG representatives their requirements prior to execution of the Project documents. In fact, I understand that not all the key senior people who were to operate the venue for the Games – the people who really should know what was required to stage the event – had even been appointed at the time of our contract negotiations.

I am not saying that I believe all of the key operational people should have been appointed more than four years prior to the event. I am saying that, with the benefit of the Stadium Australia experience, we should have insisted on the contractual right of direct access to SOCOG personnel at the earliest time possible and throughout the entire development period thereafter.

I like contracts that are constructed with a big 'front door' so nobody feels the need to create several back doors.

So what is the message regarding this issue for future Olympics?

I am a firm believer in the principle that all input to any project during the design and construction phase (at the very least) should be via the owner or its technical representative. The ultimate expression of this philosophy is a situation where the owner is also the operator. My own perspective of SOCOG and OCA was that they were two very different organizations with very different cultures, and this did not make our dealings as straightforward as they might otherwise have been.

I recommend to future Games hosts interested in their venue owners' needs that the SOCOG and OCA equivalents be combined as one entity under a single management with a single culture and a balanced focus on short term Olympic needs and long term 'ownership' requirements.

Future owners are advised to insist on direct contact with Olympic events operators regarding their requirements of the venue for those events.

Intending Games hosts and potential venue owners can cover the issues that can arise from separate government owner and operator entities for an Olympic Games, at least in part, by discussion with those who have had previous experience. Such discussion should sensibly be extended to include those who actually delivered venues and not be restricted to the Government entities involved.

Issues Arising From Venue Ownership Structure

The second 'high level' structural issue having a major impact on delivery of Stadium Australia arose from the structure of SAG. Given no limitations, I would always recommend that the owning entity also directly control all operational functions regardless of whether external operators were employed to delivery some (or all) of these functions or they were delivered by 'internal' staff.

SAG was structured, following appropriate professional advice, for local taxation effectiveness, and this necessitated a management / operational entity which was quite separate (with its own Board, CEO, etc.) from the owning entity. The SAG management / operations entity, SAM, had the responsibility to, inter alia, secure hirers, manage membership, manage operations and maintenance and to pay the bulk of Stadium income to SAT as rental (The venue was sub-leased from the owning SAT to SAM upon certification of completion of construction).

While I do not believe such an arrangement to be preferred over the "owner in direct control of operations" model apart from for compelling local taxation effectiveness, it was not of itself the only cause of the design problems which arose from the private sector ownership side. Some of these rather flowed from the financial arrangements which SAM was required to enter into to meet SAG's financial objectives. I will address design issues arising from those arrangements later herein.

Financial Considerations

Stadium Australia effectively is, from a financial perspective, a joint venture arrangement. The New South Wales ("NSW") Government provided the land and approximately 15% of the funding (loan funds and grants) and will own the venue after 30 years. SAG, in return for funding, designing and constructing the project, received the right to own and operate (and the obligation to maintain) the facility for 30 years prior to transferring ownership to the government.

The funding raised by SAG included some $350m (all figures in this report are in Australian dollars) from membership schemes (which included an Olympic tickets element) and $160m in construction debt finance. On completion, this construction finance was replaced by $125m in term finance and in the order of $35m in equity. Group partners who had operational interests in the facility for various periods provided a substantial amount of this equity. The driving principle was that, to raise the necessary equity, it was necessary to estimate potential income over certain periods of the life of the project and to effectively 'sell' the various operations rights to provide for an up-front contribution satisfactory to the owners (i.e., a total contribution sufficient to cover the equity required) and other terms satisfactory to the partners.

As a sideline comment to the main purpose of this paper, it should be mentioned that, with the benefit of 5 years of hindsight, the project was probably over optimistically bid by the private sector. This made it a good deal for government, but one in which the project was left with excessive debt.

The membership scheme comprised two categories; a Platinum membership of some 600 people and a Gold membership of some 34,000 plus. The Gold membership was later changed to a Stadium Gold membership of approximately 17,000 and a Code Membership arrangement, which allows the various football code hirers to cater well for their own members during events held at the venue. This in turn makes the venue attractive for these hirers.

All Stadium members (except Platinum members) pay an indexed nominal annual renewal fee. The membership rights include 'free' access to virtually every sporting event held at the venue for its 30-year 'private sector' life, and priority rights to tickets (at cost) for concert events. Membership rights also include access to well appointed club lounges, bars and dining rooms. Platinum members enjoy superior arena seating and lounge facilities, pay no annual fee, can bring a guest free of charge to virtually all sporting events at the Stadium, and have the right of use of a car park at or adjacent to the venue.

I have presented this very brief overview of Stadium Australia's funding structure as a background to the influence these arrangements had on the design and construction of the venue. The members' rights as defined in the prospectus certainly had a major influence on design decisions for the project as it progressed. Another major impact on design arose from the fact that the various future operators were also equity holders which at times led them to seek to insist on a higher level of input to the design than is ideal from an owner / developer's perspective.

The building contractor also held a significant equity in the project, and this, from an owner's perspective, was a positive factor. I recall numerous occasions when the contractor was prepared to forego its rights under the construction contract in favour of a better product, and a more cooperative contractual relationship with SAT, based purely on its ownership in the venue. Without this level of cooperation from the contractor's senior executives, dealing with the numerous demands of the various parties (many of which we considered to be in excess of the contract requirements) would have been an even more difficult task than it was.

In addition to these influences, the following are design aspects that might be seen to be above and beyond a standard or 'general admission' only type stadium design (if indeed such a thing exists in the world of the modern sports arena!):

The need for:

  • Platinum members' arena seating to a higher standard than other arena seating.
  • Platinum members' lounge, bar and restaurant area to be a superior standard.
  • Gold members' lounge and bar area to a very high standard of finish.
  • Gold members' bistro and a la carte restaurant areas convertible to approximately 1000 person banquet hall. (This banquet area duplicated on opposite side of venue for 'code' members' lounge).

The influence / pressure on design of these areas by the financing arrangements for the facility were made even more complex by the fact that both owning and managing entities of SAG were public listed entities and the membership sales were conducted via an underwritten public float based on a very detailed prospectus. Concept designs were presented in the prospectus together with prose describing in reasonable detail various design aspects of members' facilities.

The implications of these facts on the design of the facility were significant, particularly when examined in the context of a project budget, which contained not a single dollar of contingency. Most significant of these implications were:

  • No major points of the members' facilities design could be changed without pre-agreement from the Banks, the float underwriters and OCA, regardless of whether such changes were seen by the owners as being in the interests of members or not. (In fact some changes (improvements) were made without full, formal and advance compliance as, thankfully, the parties allowed commonsense to prevail over process).
  • A usual technique of controlling costs within budget is value analysis (or value engineering). Project finishes can often be targeted by a value engineering process. (Two full analyses and several part analyses were conducted during the construction of Stadium Australia). The complexity of the formal process in place because of the funding arrangements for the venue virtually ruled out any significant adjustments to members' areas, etc., during design development and construction periods. In fact, the standard of finish in members' areas was well above expectations, in part the result of the contractors' risk management in relation to high-level expectations for these areas. However, there were several instances during the (finance restricted) other stages of the project when I thought about what pressures might have been alleviated by diverting some cash from members' areas while still maintaining a level of finish the equal of, or better than, any other stadium members' area in existence.

So what are the finance/design interface lessons from the Stadium Australia experience for future owners? I believe the following are the most important.

  • The financial reality is such that hi-tech current generation stadia are costly projects and are unlikely ever to be built with prime focus only on an Olympic Games (at least, from an owner's perspective). It is most likely that private sector government joint ventures including the Build Own Operate and Transfer ("BOOT") type approach under which Stadium Australia was delivered will become more and more the norm.
  • The high cost of state of the art stadia will mean that a range of funding arrangements (of the type used for Stadium Australia) are likely to prevail as the rule rather than the exception. It is recommended however, that such funding arrangements be kept as simple as possible in the circumstances. A public listed float of the project is not recommended due mainly to the complexity it adds.
  • It is recommended, if at all possible, that the private sector owning entity be a single entity controlling design, construction and operations. If this cannot be achieved, it is essential that the owner maintains absolute control over all design and construction, and Olympic related issues, including those relating to operations, until after the Olympic period.
  • Provided that owners can ensure a solid events program into the future (and if this cannot be done, the feasibility of a private owner proceeding with the development would need to be seriously questioned) a stadium membership arrangement remains a fund raising concept that should be considered. If contemplating a membership scheme to raise capital, potential owners are advised to ensure that either:
    • A range of finishes options are defined in marketing documents / proposals relating to such membership, or
    • these documents describe the ambiance that can be expected, perhaps with reference to a number of benchmark spaces in other venues or public facilities.

The first approach will allow reasonable changes as the design for the entire project is developed, without recourse to (prospectus driven) time consuming approval procedures outside of the direct owner – contractor relationship. It also would allow some reasonable adjustment for the benefit of the entire project and without unexpected downgrading of members' facilities, should financial circumstances dictate a general value engineering of the project be the optimum approach to maintenance of key budget and feasibility objectives.

The second approach is even more flexible, suggesting a minimum standard which can be expected, but allowing some reasonable adjustment in originally conceived finished during project delivery. In a 'document and construct' contractual delivery system, it might also prevent over-design, as part of the contractor's risk management process, with its consequent restriction on movement of funds to other design components where they might be better allocated and expended.

Clearly, the approach to be adopted would need to be defined in consideration of other factors including the contractual delivery system being used, and whether or not the contractor held an ownership interest, etc. In any case, while I recommend this degree of flexibility in the proposal for a membership scheme, I also recommend that a minimum standard which is at least the equal of the expectation set by the proposal, is clearly defined in the construction contract documents.

Construction/Operations Interface

Stadium Australia was designated to be a two-stage project worth in the order of $650m with $470m of that being expended to bring the facility to a state of readiness for the Olympic Games. Unusually for a major complex project, there was absolutely no contingency in the budget for design and construction period issues. The legal theory was that the project concept was so well documented, the Brief was so thorough, and the contract was so all encompassing, that a project contingency was unnecessary.

Furthermore, all stakeholders had been involved in many long and arduous 'due diligence' sessions about the project and had 'signed off' on the concept at a 'well-developed' stage prior to the formal contracts being executed.

Unfortunately, the reality was a long way removed from the theory. The following gives an idea on what the reality included:

  • Parties with vested interests on both sides of the SAT contractual arrangements effectively ignoring developed concept design drawings in the executed contract documents in favour of revisiting all significant design elements of the project from scratch.
  • Over 1500 multi-party meetings being held on design issues with OCA involved as compared with something in the order of 150 meetings allowing OCA's involvement being anticipated by the project documents.
  • Interpretation by various parties' representatives (again, on both sides of the SAT contractual arrangements) of clearly written Brief provisions in a most extreme manner seeking what the owner considered to be contractually unjustified project enhancement at the owners' cost.
  • Various of the operational entities insisting on redesign of, upgrade of and addition to various operational aspects of the Stadium, despite there being no funds available, no contractual basis for the requests, and most certainly no guarantees or underwriting offered in relation to the revenue increases that the proposed changes would allegedly have delivered.
  • This occurred despite these same people having provided the business plan revenue expectations and having signed off formally on the designs they later wanted to change.

A brief review of the following diagram of the SAG structure will give some insight into the origin of some of the complexities faced:

Ownership Management

The Group had two separate Boards, one controlling ownership, the other controlling management and operations. During design and construction, the SAT board was more focused on building to the contracted design, within budget and on schedule. The SAM board needed to be more focused on future operations, membership sales, etc. I believe this slight difference of focus gave rise to many issues, not the least being those arising from many unhelpful design change proposals not being quashed well before they got to SAT for consideration.

A single, combined ownership and operations entity with a single board and senior management controlling contruction and operations might have been more effective in maintaining a balance between construction program and budget imperatives and genuine operational necessities, and in short circuiting unhelpful 'wish lists' from some sources gaining impetus.

While I considered the behaviour regarding change proposals by some parties as quite unreasonable, I did understand the motivation behind them. After all, while the equity contribution of each of the operations partners was relatively small relative to the total project budget, it may have been significant on their organisations. Any upgrade of the facilities that might enhance the opportunity for revenue increase, or indeed might contribute to a better image for the venue and those involved, would have been seen as most attractive, and worth pursuing regardless of any agreement in place. In any case, from the perspective of the various operational parties, they were required to give input to the design as it was further developed, so why not exploit the opportunity.

From the owners' perspective, the effort spent dealing with change proposals and with revisiting every facet of the contracted design severely increased the owner's costs. The expectation was th= at, because of the state of development of the design scheme and because of the tight contracts in place, there would be need for only one project director, a relatively junior project management assistant and an administrative assistant, to monitor completion of the design and all of the construction. Because of the situation that developed, we required a project director, four senior project managers, a technical assistant and two office administration personnel, to deal with the workload.

Despite the pressures from the government representatives and from our own camp, I agreed to relatively few significant changes to the contracted design. It would be sensible for both Olympic host governments and Olympic venue owners that follow to avoid the unnecessary cost and wasted effort that we experienced by seeking to minimise the number of (design) change oriented people in their teams.

The following recommendations are offered to assist in avoiding problems:

  • Execute the contracts for the facility on well developed design concepts, and upon fully developed designs where possible.

    • Do not execute the contracts until all parties are in agreement regarding the concepts to be developed. If operational parties are not party to the senior contracts for the project, include a provision in any contracts that operational parties execute that they expressly accept the design for the facility and will offer input to ongoing design or documentation only in accordance with their contractual arrangements. Ensure that these contractual arrangements restrict the opportunity for input by operators to that required by the owner. This does not mean that operational input is not required. Rather, it means that once operational input has been received and encompassed into design documents, the opportunity for change should be severely restricted.
    • Preferably structure the venue business so that ownership controls all input to the design in a manner that prevents unwanted or unworthy design change suggestions getting developed and supported to the extent that unnecessary time, effort and money is expended in processing them.
    • This is probably best achieved by having a single ownership entity with management and operations being conducted via functional divisions within that single entity.
    • Appoint a project director experienced in project management and in overseeing of building operations (previous stadium, convention centre or hotel experience, for example).
    • Fully entrust that project director (and make him / her accountable for all aspects of project delivery).
    • Structure the project to have all operational input controlled by the project director during design and construction phases. Specifically there should be no input from any operational entity accepted except via the project director. It will take a strong board and senior executives to enforce this.
    • Have a specific (contractual, if necessary) mechanism to prevent operational approaches regarding design change "through the back door".
    • Don't even think of taking on a major venue project without a reasonable contingency sum, the size of which should remain confidential to the owner and its key representatives.

    The 'Preparation for the Olympics' Phase

    The Stadium Australia contractual arrangements provided for ownership's direct control of design and construction, sub-leasing of the facility to SAM on practical completion of the project, and a relatively tight occupation period for SOCOG prior to the Games. The owner effectively had little control of the daily operations of the facility in the period leading up to the Olympics, despite having the prime responsibility, via the Project Agreement, for delivery of the facility for the Games.

    The problems that flowed from the 'handover for the Games' arrangement included:

    • The contractually allotted time was nowhere near sufficient for SOCOG to complete its preparations, and all involved recognised this.
    • SAG agreed to earlier SOCOG access than contractually stipulated. This was arranged via SAM's operations people. It was an interactive process involving a high degree of co-operation between all parties. It was complicated by many minor disagreements between SAT and OCA regarding 'Olympic Overlay' facilities to be provided by the owner progressively during the pre-Olympic period of revenue producing operations.
    • Because the SOCOG 'bump in' was so differerent from the contractual expectations, it was undertaken by a series of negotiations involving SAG's operator and representatives from OCA and SOCOG. Generally speaking, the owner's representatives (as nominated under the Project Agreement) were not involved. There was little formal documentation of some of these negotiations, which were conducted in a cooperative spirit aimed at giving SOCOG maximum exposure to and experience with the venue prior to the Olympics while having the minimum impact on everday Stadium operations. However, as the Olympics neared there were a number of key issues that had not been resolved and senior representatives of both SOCOG and OCA requested my involvement to finalise these issues. I did not agree with the manner in which our people were dealing with the issues but I took the approach that, as the complaining parties had not involved the owner in many of the negotiations to that point of time, and these often crossed construction related issues controlled by the owner, then the parties could not reasonably expect the owner to get involved at such a late stage of the process. By this time things were getting a little political, with the process being driven not so much by what might be a reasonable solution but rather by what might be gained by putting pressure on the other parties as the Games deadline neared. It is ludicrous that such a situation could be allowed to develop.
    • Issues also arose around 'Test Events' conducted by SOCOG. An example is the level of cleaning (track, seating areas etc) that SOCOG and OCA required for these relatively lightly attended events.

    And the messages for future Games organisers and Games venue owners:

    • Take the position that, regardless of how contracts are structured, it will be virtually impossible to predict all the dynamics involved to ensure venues are handed over to Games operators for test events and for preparation for the Games generally, and so change should be expected as the norm.
    • Venue owners' representatives should strive to keep all executive decision making authority regarding use of the venue at least until after the Games period, and should insist on personally controlling all negotiations regarding use of the venue and on having such negotiations appropriately minuted. This would probably occur in any case if the operations were controlled as a division of the ownership entity rather than as a separate entity.

    Realise that, if a venue is to rely on events for its financial existence in the peiod leading up to the Games, then operators, whether a division of the owning organisation or a separate outsourced entity, will always focus on maintaining the facility to facilitate everyday use of the stadium by its long term hirers. Try to negotiate an arrangement wherein the staging of 'in advance' occupation of the venue by the Games operator is realistic, is defined in detail, and openly addresses (in detail) the issues and risks inherent in the everyday operations/Games preparation interface, and how these will be dealt with on manifesting.

    • Don't simply copy the contract provisions from venues used in previous Games. Speak to the people involved from both Games operations and venue ownership to find out what contract provisions did not work, as well as those which did.
    • For most Games, a high level multi party venue coordination group would be expected. This would typically deal with high level issues such as keeping venue owners informed regardng Games preparations generally, and resolving major disagreements relating to the use of specific venues. In addition to this it is highly recommended that venue contracts call for formation of an everyday operations group which should be chaired by the owner or its representative, and should be established as the only forum in which changes to the formally contracted venue usage arrangements can be discussed and agreed. Unless operational divisions of owning companies take full and ultimate responsibility for dealing with these issues (and this would be virtually impossible given the manner in which Games venue usage agreements are primarily structured between the Games organisers and the venue owners) it is unreasonable to expect them to undertake change of arrangement negotiations on behalf o the owner.

    During the Games

    Regardless of the issues that arise leading up to an Olympic Games, the atmosphere generated by the event will probably provide the bonding agent necessary to have all parties working together for success during the Olympics period. It is sensible for the Games operators to utilise the experienced staff of the venue operator in staging the events, and the terms on which this should occur should be defined in the formal contractual arrangements. I have no doubt whatever that a significant factor in the successful running of events at the Olympic Stadium was SOCOG's decision to use the SAG operator's event management staff, whom I consider to be second to none.

    Venue owners should insist on a clause in contracts giving them the right to have a representative present at all times both in the period leading up to the Games and for every event during the Games. This representative should have access to all areas of the venue, including athletes, media, and Olympic Family areas, although there might be terms negotiated regarding the time for access to certain sensitive areas. The owner has a right to protect its interests when performance pressure on events operators might lead to less than ideal short cuts in the approach to venue usage.

    In addition, with the huge emotional letdown for Games venue operators post event, owners would be ill advised to rely entirely on remedy provisions of contracts to protect their investments. In any case, having an ownership presence at all times can benefit Games organisers also. Having said this, SAG was fortunate, as the people who managed Stadium Australia during the Games did a grand job of maintaining the building to a high standard.

    In summary, the Games period should not be expected to present too many issues if the preparation has been thorough and professional. However, Sydney can provide some lessons regarding the post Games 'bump out' period after the Olympics and Paralympics.

    Post Games 'Bump Out' Period

    There are a number of key factors to be considered for this period. These include:

    • The owner will want the venue returned to condition for long term normal operations as soon as possible after the Games
    • The Games operator's personnel (the SOCOG and or OCA equivalents) can be expected to experience a huge emotional letdown after the intense period of preparing for and staging the Games. For this reason, and because of the need to reconnect with family and friends, and to simply have some time for themselves, these people simply may not have their hearts in the post Games bump out, at least not to the degree that the venue owner might expect.
    • If there are any outstanding 'bad tastes in mouths' arising from unresolved pre Games disputes, the bump out period is when these are most likely to surface.

    I propose that the bump out is handled in the following manner to avoid these issues developing into major problems:

    • Any contracted equipment suppliers should be required to remove their gear within a defined period after the Games under threat of financial penalty. In addition, any damage caused by such suppliers should be rectified at their expense. Owners should insist on some bank guarantee or security deposit being held by the Games operators to be released only on clearance by the Owner in respect of both these items.
    • Other bump out should be contracted as the responsibility of the owner, with Games organisers paying costs on some pre-agreed basis. (in this regard it is unlikely that a lump sum amount could be negotiated well in advance of the Games as the syle of ceremonies and many other factors unable to be decided early in the contractual process will have a major bearing on the amount of bump out work involved. For new venues, owners might chose to pass this work on to construction contractors under project delivery contracts.
    • In the event Games organisers do not accept this approach, owners are advised to insist on some financial penalty being paid by Games organisers for late bump out and to insist upon an independent authority, such as an experienced architect, engineer or project manager being jointly appointed by the parties to determine whether or not such penalties should apply in specific circumstances.

    The Games Legacy

    Finally, venue owners should realize that their venue might benefit from much of the fitout completed by organizers for the Games. Certainly the organizers will seek to convince the owner of such value. This can lead to disagreement after the event.

    The organizers can be expected to attempt to either:

    • Convince the owner of the benefit of certain fitout components pre-Games in an effort to secure an owner contribution to funding or
    • Reduce their bump out expenses by convincing the owner that removal of certain items of fitout is not in the owner's best interest.

    It might seem like a simple enough matter to resolve this issue. However, it can involve hundreds of thousands, even millions, of dollars and my advice is to negotiate the matter in full and have it included in formal contractual documentation.

    In Conclusion

    Olympic Games provide a fantastic opportunity for both host countries and the owners who develop and construct the venues in which the Games will be staged. However, the very nature of the Games is likely to lead to a level of corporate politics, even at the most senior levels, above that normally encountered on major development projects. Remaining aware of the impact of the financial structure for a development and the practical purpose that justifies its long term existence, will lead owners to insist upon a design that is appropriate not only for the staging of a superior Games program, but also for the long term benefit of the venue. This 'design' process should not be limited to the documents which define the manner in which a venue will be constructed, but also should extend to cover the contracts that define every aspect of the relationship between the venue owner, the people who will operate the venue for that owner, and the organization/s that will 'stage' the Olympic events.

    To achieve optimum design of projects and contracts for practical and financial considerations, all parties involved with future Games are advised to consult not just the Games authorities from previous events, but in particular the owners of the venues involved. You can bet that the manner in which venues were eventually delivered was not completely in line with what the contracts defined, and so learning from previous events contract documents only should not be regarded as a sufficiently thorough approach.

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