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27 Sep 2017

When projects break the bank: Sydney Opera House

by Louis Cointreau, Head of France and Montréal - France

Introduction

The Sydney Opera House is widely acknowledged to be a landmark in the history of architecture. Its iconic and revolutionary design is universally known, and is a pillar of Sydney’s identity.

One would have expected the genius Danish architect behind the design, Jørn Utzon, to be covered in glory and to have had a career of glittering major architectural projects. Yet he left the project halfway through, fleeing Australia and never to return, being notably absent from the 1973 opening ceremony. He never worked on another major project!

Part of Utzon’s downfall is attributable to the sky- rocketing construction costs: they were originally estimated at AUS$7m but increased to AUS$102m, an eye-watering 14-fold increase.

What catastrophes occurred to cause this project to go so far over budget?

This article reviews some of the factors that contributed to the contractual meltdown and the lessons that can be learnt.

Project (un)preparation

Utzon was selected as the winning entry in the architectural competition in 1956, however come 1959 the design of the opera house was still very conceptual. That year the client (New South Wales government) decided that construction activities had to start regardless, in spite of Utzon’s protests that the design was not sufficiently advanced.

The project quickly felt the consequences of this fateful decision with major modifications being required in the midst of the construction process. To take a compelling example, it became clear that the roof shells were too heavy for the support columns only after the columns had already been erected; all columns therefore had to be torn down and rebuilt.

The contractual arrangements between all the project stakeholders were based on flimsy assumptions, notably in terms of cost and schedule. This led to numerous disputes and disagreements during the execution of the works, and explains the massive cost increase. This situation is not unusual and sadly, wrong and overly optimistic cost and time estimates are a common feature of many major construction projects (see the numerous works of Bent Flyvbjerg on this very subject1).

Lack of control

The project suffered from a lack of project management procedures, including a complete absence of change control. The project did not have a specific project manager; Utzon assumed de facto responsibility, taking all the design and construction decisions himself. The result was that Utzon had a free rein in the definition of the design, of which he took full advantage making numerous changes to the works. It was a recipe for chaos and between Utzon’s creativity and the aforementioned constructability issues, the Opera House’s design was significantly modified:

“The general form went from just a freehand form, into a parabolic, then ellipsoid form. The  final  shape chosen was spherical, because of the ease of construction and ease of calculating the structural integrity.”2

To compound matters, the client also requested various changes to the design, notably when four theatres were instructed, whereas only two were planned in the original design3.

These late modifications caused significant delays and cost increases:

“Civil and Civic, the contractors said that 700 drawings had been issued, almost half had come after the expiry of the initial contract, and that there had been 695 amendments issued in the first phase of the project alone.”4

Late settlement of commercial issues

Initially the client fixed no financial limit to the project, however in the absence of visible progress on site, the  government  began  withholding   payments   to Utzon. Predictably, the absence of payments resulted in Utzon leaving the project in 1966 and the client was required to hire other architects to complete the scheme.

When Utzon left, he took his sketches and blueprints with him so the new architects had to implement numerous modifications and in some cases redesign parts of the works again from scratch, notably for the interior of the building 5.

Had the commercial issues been properly managed and controlled then relationships between the parties would in all likelihood not have deteriorated to a point of no return.ConclusionIn spite of its many problems, which  are  only  partly described above, it is incredible that the project ended up being a financial success. Leaving no sustained burden on public finances, the construction costs were reimbursed as early as 1975 through the implementation of a lottery system 6. After leaving Australia almost clandestinely in 1966, Utzon’s vision was eventually acknowledged by the award of the 2003 Pritzker Architecture Prize 7. The real cost of this troublesome project was therefore to deprive the world of further masterpieces from an architectural genius.

Applying robust contract management procedures like those routinely implemented by  Systech  for  its clients would have undoubtedly prevented the financial meltdown and delayed completion. Such an approach would have ensured that the works were priced and timed appropriately, changes kept under control, and that commercial issues were settled in a fair and timely manner.

  1. See Flyvbjerg, B., Holm, M. S., & Buhl, S. (2002). Underestimating costs in public works projects: Error or lie?. Journal of the American planning association, 68(3), 279-295.And Flyvbjerg, B., Bruzelius, N., & Rothengatter, W. (2003). Megaprojects and risk: An anatomy of ambition. Cambridge University Press.
  2. MIT students (2011), Project Evaluation – Sydney Opera House, https://ocw.mit.edu/courses/civil-and-environmental-engineering/1-011-project- evaluation-spring-2011/projects/MIT1_011S11_proj_ex01.pdf (retrieved on 25/10/2017)
  3. Heaton (2014), Opera House Named to Over-Budget Hall of Shame, Sourceable
  4. Baume, Michael. The Sydney Opera House Affair. Sydney, Australia. Halstead Press, 1967
  5. Murray, Peter. The Saga of the Sydney Opera House. New York, New York: Taylor & Francis , 2004
  6. MIT students (2011), Project Evaluation – Sydney Opera House
  7. http://www.pritzkerprize.com/2003/announcement (retrieved on 25/10/2017)
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