Money to be made building olympic village

In terms of scale, no other sporting event comes close to the Olympics. It is made up of 12,000 men and women from 202 nations playing 32 different sports. By comparison, soccer's World Cup is one sport played by men from 32 countries. The opening ceremony at the Beijing Olympics, held later this year, will be watched live by over a billion people around the world, writes Richard Gillis 

For the people charged with bringing the Olympics to London in 2012, the phoney war is at an end. After the initial euphoria of winning the bid in 2005, there has been a reality check, as the news agenda has shifted toward the costs of hosting the games. The budget for hosting the games was initially set at £2.4 billion (€3.2 billion), with an extra £1 billion put aside for "legacy infrastructure". This figure has since increased to £9.3 billion, prompting one British MP to call it "the most catastrophic piece of financial mismanagement in the history of the world".

Fears are fuelled by the experience of previous hosts: Montreal is still paying the debt of building its Olympic village for the 1976 Games; cynical Sydneysiders refer to Olympic Park as Jurassic Park, so disillusioned are they about its long term value to the city. So the pressure is on the Olympic Delivery Authority (ODA) to do just that, deliver.

The Olympic Park will focus on the design, construction and overlay of the "big five" venues. These are the Olympic stadium itself, a new aquatic centre, a velodrome, the athletes' village and a new media centre. However, it is the infrastructure work, which includes building a new electricity sub-station supplying the park via hundreds of miles of power cable and building the roads and bridges that will link this "city within a city" to the outside world.

The first ODA contract was awarded to J Murphy and Son, a London based construction firm with strong links to Newbridge, Co Kildare. The Murphys were employed for the £230 million power lines project, enabling electric cables to reach the Olympic Park via underground tunnels.

Companies contracted to the ODA are forbidden to talk on the record to the media, and a spokesperson for J Murphy and Son would only say that its work was ongoing and it was actively seeking other Olympics work.

The Murphy contract was the first of approximately 7,000 direct contracts issued by ODA. These are managed on their behalf by a consortium, CLM, made of three companies including building group Laing O'Rourke.

The 7,000 lead contractors are expected to generate a further 75,000 sub contracts, 15,000 of these in the construction industry. "The bulk of the work available by tender will be supplier opportunities," said an ODA spokesman, confirming that more than 500 contractors have so far won contracts worth more than £1 billion. Nearly all of these are companies based in the UK, around 98 per cent, and two-thirds are SMEs, half of which are London based.

"The vast majority of business opportunities remain to be let and this year represents a huge opportunity for UK businesses," the ODA said.

Sir Robert McAlpine Ltd, the British owned building company responsible for Sydney's Olympic stadium won the tender for the main stadium in London as it was the only bidder. Similarly, Balfour Beatty Plc, the UK's biggest construction company, was the sole contractor bidding to build the aquatics centre. Two non-UK firms, Hochtief AG and Eiffage SA's subsidiary Eiffel, pulled out of the tender process early.

ODA chief executive and former Land Lease chairman, David Higgins, reinforced the perception in an interview in The Guardian recently: "There's a lot of uncertainty [ in the market] but I believe the slowdown means there will be more competition for our tendering process. We've got good prices and great organisations involved. I'm convinced that in six to nine months' time we'll have a who's who of the construction industry in the UK on site."

When asked whether Irish businesses would be disadvantaged by their location, the spokesman said it is a scrupulously fair procurement process, which is open to all companies across the EU. "According to us, it's [ J Murphy and Son] a UK firm, we pay the bills in London."

The Irish Times contacted a number of larger building and construction companies across Ireland to gauge their interest in the "Olympic opportunity". The majority of the larger groups said that while it was of interest, their UK-based subsidiaries would manage the relationship. For example, Ascon Rohcon is part of the Barr Group, and will leave any Olympic-related work for its UK based sister company, Edmund Nuttall. Similarly, Sisk, one of Ireland's largest construction firms, will seek work through its Sisk UK subsidiary.

One prominent Irish winner is Dublin based architects Hennegan Peng, who designed a visitor centre for the Giants Causeway. The agency won the tender to design one of the key footbridges in the centre of the Olympic Park.

The footbridge spans 26m over the River Lea at a focal point between the Olympic Stadium, Aquatics Centre and Basketball Arena. A notable selling point of the Hennegan Peng design was its legacy use. During the games the bridge will have a total width of 55m to accommodate increased spectator numbers. After the games temporary sections of the bridge will be removed leaving two narrower bridges that span either side of Carpenters Lock, a 1930's structure on the River Lea Waterway.

The services required to make the Olympics happen go far beyond the architecture and construction industries. Many other sectors, such as security, ticketing, transport, catering, marketing and internet services will all be vying for work.

To facilitate this, competefor.com, a match making website, has been created, aimed at bringing together contract holders and prospective suppliers. Of the 75,000 supply chain contracts, the ODA estimate that around a fifth of these, or 15,000 contracts, will be available through the competefor.com website.

The business network is intended to match small and medium-sized companies to the lead contractors.

The site will also advertise direct contract tenders, and provides useful reading for Irish businesses seeking a slice of the pie.