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06 Mar 2018

When projects break the bank: Montréal Olympic Stadium, 1970 – 1976

by Louis Cointreau, Head of France and Montréal - France

This article is part of the series on “When projects break the bank”, in which Systech analyse landmark construction projects that have greatly exceeded their planned schedule and/or budget with a contractual eye.

Introduction

In November 2006, the province of Québec, through its Olympics Installations Board, served the last payment of the $1.5-billion debt incurred following the organisation of the 1976 Montréal Summer Games[1]. Québécois spent 30 years obliterating their public budget, compensating dearly for the explosion of extra costs in the construction and operation of the Games.

Montréal’s then mayor, Jean Drapeau, famously boasted, while presenting the Games’ initial budget: “The Olympics can no more lose money than a man can have a baby”. The Olympic Stadium construction costs were estimated at 124MC$, but sky-rocketed to 839MC$ (“final” costs as of 1976), an eye-watering 570% increase[2]. What catastrophes occurred to cause this project to go so far over budget?

A significant contribution to these extra costs came from the design and construction of Montréal’s Olympic Stadium, nicknamed rather aptly “the Big Owe” in a thinly-veiled reference to both its architectural uniqueness and financial blunder. This article will review some of the factors contributing to the meltdown from a contractual perspective, and what lessons can be drawn from this financial debacle.

Design delays

When Montréal was awarded the Games in May 1970, Jean Drapeau completely changed the whole concept for the Olympic Stadium after seeing the Parc des Princes Stadium, newly built in Paris based on famous architect Roger Taillibert’s design. Drapeau reportedly fell in love with the stadium (who could blame him?), notably its elliptical shape and massive pre-cast concrete ribs.

This authentic coup de foudre led to Drapeau’s decision to hire Roger Taillibert as main architect for the Olympic Stadium. The latter presented his first designs in June 1972, throwing two years of preparatory work into the bin and starting the complete design of the works again from scratch.

Mr Taillibert seemingly gave priority to artistic considerations over down-to-earth constraints, such as schedule and budget. In a 1976 interview to Civil Engineering, he bluntly outlined his vision on the matter: “That’s all Canadians and North Americans talk about— money, money, money. It doesn’t interest me at all,” telling a reporter “Are you aware that the building of the stadium and velodrome constitutes a great moment in the history of architecture and technology?”[3]

Compounding the aforementioned delays, Taillibert was himself late in the provision of design documents.

In addition the stadium’s design paid insufficient heed to construct-ability. The whole structure was comprised of pre-cast concrete ribs that cantilevered out over the stadium, with the ribs being post-tensioned together during the erection phase. Due to the stadium’s design each rib was unique in its shape and design; the construction of the same proved a nightmare due to the need to have a perfect alignment between ribs. Additionally the design did not allow sufficient room for the use of internal scaffolding, forcing contractors to use numerous cranes for positioning the ribs into place.[4]

These design delays and construct-ability issues gives a striking example of the consequences of unchecked power on the design of the works. Part of a Contract Manager’s role is to ensure that obligations can be complied with, and to monitor deviations from these obligations, while ensuring that cost and schedule consequences are addressed. Raising these issues from the onset creates a balance with desires to change the design from that set out in the contract.

No control of changes

The Olympic Stadium project also suffered from an absence of control of modifications to the design of the works. The original project organisation was rather dysfunctional; Mayor Drapeau acted as a “super Project Manager”, in spite of his absence of engineering or architectural qualifications. He is reported to have spent a lot of time reviewing plans in detail and going to the construction site to give direct orders to contractors, without consideration of associated consequences.

During the build the architect was given a free rein over his design, leading to numerous changes to the works in the course of their execution. The below example of the parking water cascades gives a striking illustration of a costly change with doubtful added value to the Québécois taxpayer: “Late in the game, Taillibert insisted on adding a water cascade to the top of the parking garages connected to the stadium, adding at least $8 million to the cost. The parking garages, originally budgeted for an extravagant $25 million, cost $60 million, or about $13,000 per parking space. The water cascade also would require 113 million litres of water (Auf der Maur, 1976)”.[5]

The delays and additional costs associated with executing such “nice-to-have” design modifications significantly contributed to the project’s mayhem. A strict control of changes is paramount to any construction project’s success. Late modifications to the design, “gold-plating”, “scope-creeping” are common causes of costs overruns and disputes between parties to a construction project. The Contract Manager must ensure that such changes are addressed in a timely and fair manner.

Insufficient control of subcontractors

The project’s chaotic situation presented several tactical advantages for the subcontractors that were hired to construct the stadium. The very nature of the Olympic Games prohibited an  extension of the time for completion of the stadium; hence the planned opening date had to be complied with under any circumstances. The more delays to the design of the works, the more intense the pressure on the Client to comply with the delivery dates, and the more powerful the subcontractor becomes in its commercial balance of power with the Client.

Compounding the problem was the agreement of “cost-plus” contracts with the subcontractors, which provided little incentive for them to comply with the delay, and a great incentive for a dismal productivity by numerous personnel. Although the subcontract with contractor Duranceau featured a bonus for a timely delivery, Duranceau actually had much more financial incentive to increase its manpower and resources with little productivity. In addition each modification to the works gave an opportunity to negotiate exorbitant prices, with little choice for the Client but to accept the subcontractor’s terms.

Another feature of the project’s dysfunctional organisation was the absence of control of its subcontractors by either the architect or Mayor Drapeau, notably regarding costs and  schedules. This lack of oversight opened opportunities for the subcontractors to manipulate site reporting figures, such as exaggerating the number of personnel or cranes mobilized on site, which further increased costs and delays to the Client. Unsurprisingly, after Drapeau and Taillibert’s were evicted from the project, a stronger approach to subcontractors delivered immediate results on their productivity: “In early 1976 the Province gave an ultimatum to contractors that if work did not speed up, the project would be shut down and the Games moved elsewhere. In perhaps one of the best illustrations of how the system was being abused, this ultimatum resulted in a productivity increase of 500%”.[6]

Part of a Contract Manager’s role is to provide advice on pricing models for main contracts or subcontracts, and their consequences on the balance of power between project stakeholders. The Contract Manager also ensures that an adequate system of record-keeping is implemented, so as to ensure that cost and schedule consequences are properly monitored and addressed, notably with subcontractors.

Conclusion

The looming disaster eventually led to the takeover of the project by the Québec province and the eviction of both Mayor Drapeau and architect Taillibert from the project’s organisation. The Olympic Stadium was not fully finished as the Olympic flame rose above the opening ceremony but proved sufficiently fit for the purpose. Nonetheless the extravagant costs cast a long shadow over the Québec finances.

While this article falls far short of addressing all of the factors that contributed to the financial meltdown, we believe that this disaster could have been partly mitigated by implementing practices promoted by contract managers: control your design, control your changes and control your subcontractors. And definitely hire Systech to provide expert advice that will help your teamsto resolve delays and commercial issues!

 

  1. “Quebec’s big owe stadium debt is over.” (2006). CBC News, Dec. 19, Æhttp://www.cbc.ca/canada/montreal/story/2006/12/19/qc-olympicstadium
    .htmlæ
  2. Province of Quebec.(1980). Rapport de la commission d’enquête sur le coût de la 21ème olympiade: 1980, Vols. I and II, Les Presses du Service des
    Impressions en régie du Bureau de l’Editeur official du Quebec, Quebec
  3. Patel, A., Bosela, P., and Delatte, N. (2013). “1976 Montreal Olympics: Case Study of Project Management Failure.” J.Perform.Constr.Facil
  4. “Project Management Failure : the 1976 Montreal Olympics” (March 2014). Structural Engineer
  5. Patel, A., Bosela, P., and Delatte, N. (2013). “1976 Montreal Olympics: Case Study of Project Management Failure.” J.Perform.Constr.Facil
  6. Patel, A., Bosela, P., and Delatte, N. (2013). “1976 Montreal Olympics: Case Study of Project Management Failure.” J.Perform.Constr.Facil
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