Risk Management and Procurement Strategy for Wembley Stadium Project

This paper discusses the risk management and procurement strategy for the Wembley Stadium project. It explores the risks associated with stakeholders, such as injuries on site, financial shortage, flooding, disagreements with subcontractors, and damages/theft of equipment. It also evaluates the likelihood of occurrence, consequences, and mitigation strategies for each risk. The paper further discusses the procurement strategy and the management of procurement risks.

RISK MANAGEMENT AND PROCUREMENT STRATEGY FOR WEMBLEY
STADIUM PROJECT
Name
Institution
Date

Introduction
Wembley national stadium was intended to be among the best stadium with a good
seating capacity of about 90,000 seats. This will thus make the stadium to be among the world’s
best stadium which can be holding big games such as cup finals and other sports including the
drama concerts. A plan to improvise the stadium was thus developed but during the project
implementation of the plan, the project was faced by risks which mainly emanated from its
stakeholders such as the contractors (John, 2014). It was also faced by other procurement issues
which led to a halt in its completion. This paper is going to focus on the risk associated with the
completion of the project, their causes and consequences, the likelihood of occurrence, the
measures to be taken to make sure that the perils are alleviated and also delineate the
procurement strategy, defining the tendering process that should have been taken and also the
main performance measures to be undertaken (Basu, 2017).

PART 1: RISK MANAGEMENT
(I) ASSOCIATED RISKS WITH STAKEHOLDERS
(a) Injuries while on site
Multiplex is the main contractor in stadium construction and thus Wembley National
Stadium limited who was the host in conjunction with the architect employed in the name of
foster Partners and HOK Sport were to make delivery of project services. Multiplex has
employed site operators who are prone to accidents while at work. The injuries are likely to be
caused by poor workplace safety. This is likely to cause delay and even death of employees
(Davies and Mackenzie, 2014).
(b) Financial shortage
According to Masterman (2014), every project needs a sponsor to make it successful. A
project should be funded to ensure that the operations do not stop. Money injected to the project
is usually used in different ways such as paying employees who work on the projects, purchasing
the materials needed in the project and also financing other things as per the project requires.
Sport England was the main financier of the Wembley stadium construction project. A risk is
posed where there might financial shortages likely to be caused by inflation of equipment prices
and rising demands by workers for a pay increase and this might delay project completion.
(c) Flooding
In the construction project, an architecture who is responsible for designing the project
and delivering services needed. In this Wembley stadium construction project, Foster and Partner
and HOK Sport were chosen as the architecture as they are leading design firms and also leading
firm in designing and project delivery service (Grant, 2014). The way in which the stadium will
be designed will be likely to be affected by floods resulting from rainfall and spillages from

nearby rivers. This will likely to result in damages of the stadium including the equipment used
and eventually cost of repair will be needed.
(d) Disagreement with subcontractors
Football Association is a football body that was formed to oversee all the aspects of the
games in England. This body usually holds a various tournament that is usually held in Wembley
stadium and thus they are a stakeholder that will benefit most if the stadium is well completed.
Disagreements between subcontractors and the body might arise because the association might
be willing to have the stadium constructed so as to hold the football, rugby, and other
competitions while the subcontractors might be willing to construct a football stadium
(Virolainen, 2018).
(e) Damages and theft of equipment
Cleveland Bridge was the original and the main sub-contractor who supplied the steels
used in the construction of the stadium. Equipment supplied might be stolen or even get damaged
due to lack of security and this will eventually lead to delays and extra cost for replacement.
(II) LIKELIHOOD OF RISK OCCURRENCE, CONSEQUENCES AND RISK RATING
On-site injuries
The likelihood of injuries resulting from workplace activities is likely to be small but
once the accidents occur, the consequences are severe. Workplace injuries are likely to be
minimal with their occurrence rated with a scale of 1-5 where 1 means that the risk occurrence is
minimal and a scale of 5 meaning high occurrence is expected. Injuries and workplace accidents
have been rated with the occurrence probability of 2 meaning that their occurrence is minimal.

The consequences have been rated as 5 meaning that once the accident occurs, it will have an
adverse effect on the project (Masterman, 2014).
Financial shortage
There is a need to find other sources of financial resources because no one knows the
future. With the growing economy where technology is rapidly advancing means that prices of
equipment might either go up or down depending on the cost incurred in production processes.
Employees also will be demanding for pay increment to keep pace with the rising standards of
living. For this reason, the likelihood of financial shortage tends to be high and this might delay
project completion. The shortage is rated at a scale of 2 which means minimal occurrence
likelihood. The consequences of the financial crisis are rated at 4 on the scale of 1-5. This means
that the financial shortage will have an adverse effect on project completion (Virolainen, 2018).
Flooding
The design of the stadium should be in a way that flooding cannot affect the operations
taking place in the stadium or even destroying the equipment used in its construction. The design
should be in a way that any spillages from nearby rivers or rainfall will not affect the
construction or operations. The likelihood of floods to occur has been rated 2 in a scale of 1-5
with the consequences being rated at 4. This means that flood occurrence is minimal but once it
occurs, it will have an adverse effect on the project (Masterman, 2014).
Disagreements with subcontractors
Disagreements might arise as a result of the way the stadium should be designed and
constructed. The likelihood of these disagreements occurring is rated at 3 on a scale of 1-5 while
the consequences are rated at 5. This means that the likelihood of these disagreements occurring

is very high with the consequences expected to be averse to the project. Project completion might
be delayed.
Damages of equipment and theft
Equipment damage might be caused by the employees themselves and intruders who
might steal the equipment. Theft of equipment and damages might be caused by the lack of
security of that equipment. The likelihood of theft and destruction of equipment has been rated at
3 while consequences of occurrence at 5. This means that project equipment theft and destruction
will cause shortages and thus delaying project completion (Virolainen, 2018).
(iii) PREVENTION/ MITIGATION
On-site, injuries are least expected to occur but once they occur, the consequences are
hostile. These injuries will be dealt with through proper training of personnel handling the
equipment as well as workplace safety measures to prevent their occurrence. New employees
will undergo induction training to enable them to have firsthand information about the operations
conducted (Masterman, 2014).
Financial shortages will have a negative impact on project completion due to delays
brought about by lack of finances to make purchases for equipment and other resources. This
will be prevented by seeking support from various donors such as financial institutions,
government and also borrowing from other sources.
Flooding will be prevented through proper design of the stadium with construction of
flood walls as well as proper roofing so as to prevent rainfall from the stadium. Disagreement

with contractors will be minimized through mutual agreement between parties in order to agree
on what each party expects from the other.
Damages to the equipment and thefts which is caused due to lack of adequate security
measures will be minimized through the installation of CCTV cameras in the site in order to
monitor employees and others who might be having intentions for stealing the equipment.
(IV) LIKELIHOOD OF OCCURRENCE AND REVISED RISK RATING
Onsite injuries are least expected with a rating of 1 in a scale of 1-5 while the
consequences are rated at 2 meaning the risk score is very low. Damages and theft of equipment
have been rated at 2 to the measure put in place while the consequences are also rated at 2
meaning the risk score is very moderate (Gordon Murray, 2019). Disagreement with
subcontractors has been rated at 2 with the consequences being considered at a rate of 3. This
means that if disagreements occur again, the consequences will still be adverse but the risk score
is very low. Flooding has been dealt with proper roofing and flood wall being installed and hence
risk level is very low with the likelihood of occurrence is rated at 1 while the consequences are
rated at 1 meaning the resultant flood will not affect the construction (Masterman, 2014).
(V) MONTE CARLO RISK ASSESSMENT TOOL
The risk that can best be solved using quantitative risk tool is flooding and injuries in the
workplace. Monte Carlo is one of the best quantitative tools for dealing with risks in project
management (Taggart, 2016). The tool will be useful in identifying the likelihood as well as the
consequences resulting from floods and injuries of employees so that necessary precautions can

be taken. Monte Carlo considers the risk attitude to identify the consequences a risk has on the
overall operation of an organization.
(VI) Risk Attitude
Risk attitude has a great impact and influences the results of an organization and they include
the following;
 The consequence of Multiplex’s low bid leading to losses and numerous disagreements
with the subcontractors.
 Late completion of the stadium with losses being incurred due to the failure of risk
sharing.
 Negative impacts arising from feedback loops which worsens a situation. This occurred
especially due to the focus of Multiplex on time and cost savings and recovery.
(VII) RISK REGISTER
Risk Cause Impact Likel
ihoo
d
Cons
eque
nce
Score Mitigation Strategies Likelihoo
d
Consequ
ence
Revised
Risk
Score
Injuries
while on
site
Poor
safety
systems
Death and
delays
2 5 High Onsite induction and
training employees on
safety measures
1 2 Low
Damages
and theft
of
equipment
Inadequat
e security
measures,
minimal
maintenan
ce
Cost of
replaceme
nt, delays
3 5 High CCTV cameras
installation, security
guards
2 2 Modera
te

Disagreem
ents with
subcontrac
tors
Poor
tendering
process
Delays
and
unreliabili
ty
3 5 High Making clear
contractual agreement,
revising payment plan
2 3 Low
Flooding Spillage
from
nearby
rivers,
rain
Equipmen
t damage
2 4 High Flood walls and proper
roofing
1 1 Low
PART 2: PROCUREMENT
(i) PROCUREMENT STRATEGY
There is a need for Multiplex to source reliable suppliers who can provide timely and
quality materials to necessitate the completion of Wembley Stadium. This calls for
considerable investment to enhance the development of full construction of the stadium.
There is a need for a proper procurement and contract strategy which will ensure the
protection of investments made which will, in turn, lead to the achievement of money value
for Multiplex as well as other stakeholders who will be using the facilities (Knudsen, 2013).
Many firms in procuring for the services face problems in determining the methods to use in
procuring for the services and materials required. The strategy used in procurement should be
properly assessed and analyzed to ensure specifications are met (Tadelis and Bajari, 2016).
a. Procurement Strategy Plan
The strategy will be looking at improving long term relationship with the client
organization as well as the subcontractors and other stakeholders. The objectives of the
strategy include the following;

a) Multiplex will act as a business partner to enhance understanding of the sub-contractors
as well as the client organization. this is by ensuring the requirements of the Wembley
Stadium clients are met through the promotion of the role of intellectual customer and
improving primary engagement.
b) Contributing to the creation of a good picture in the role of procurement in Multiplex by
ensuring business unit relationship improvement and satisfaction levels where value for
money is created.
c) Ensuring suppliers meet the requirements of the needs that arise on a daily basis through
the improvement of market aptitude.
Action Statement
The manager in the procurement department who is obliged with contact processes will
assist the unit where he/she will be operating to:
a) Ensure the needs required for purchasing are fully met. He/she will cooperate with other
units of the business and help them in determining their needs in future to enable earlier
preparation. Also, identification of future threats and challenges they might face in the future
and what is needed to be prioritized will be crucial for these units in terms of planning. The
manager’s role will be to provide relevant advice to the units.
b) Ensuring critical activities in procurement are well understood and expertise is
approached to provide informed information to be used in decision making.

c) Conduct positioning of suppliers with an aim to find main suppliers where the mutual
relationship will be boosted with the main suppliers through the adoption of supplier
relationship management program.
b. Management of Procurement Risks
In order to reduce the risks associated with equipment and material procurement,
Multiplex will select members of the staff who will act as buyers were special training and
developmental programs will be provided to these staffs. This will provide Multiplex with a
skilled workforce with procurement skills and they will enhance reduction of risks that might
be encountered in the process of procuring materials and equipment for Wembley Stadium
construction (Neef, 2014).
For Multiplex to attain the value for money as well as satisfy their client organization for
whom they are responsible to set up a stadium for, value for money needs to be maximized in
terms of the spending rate including the prices, quality, management of risks, and the
outcome achieved. This will also include the saving plans while conducting procurement
processes which will continuously keep on increasing in order to achieve greater returns on
investment (Stanford, 2018).
(ii) TENDERING PROCESS
1 Invitation to tender
Multiplex will advertise the tender using various platforms such as newspapers,
televisions, radios and social media platforms in order to attract the attention of the public.
From this, the interested parties will write in response to the advertisement to apply for the
tender (Presutti Jr, 2013). An interview will be conducted in the initial step in order to

shortlist the likely suppliers who are capable of supplying the company with its requirements.
With the shortlists made, the suppliers will be invited to tender so that the best and the lowest
bidder can be selected. A letter inviting the supplier to tender will be addressed to that
supplier indicating the type of tender, the terms of the contract among others (Domberger et
al, 2016).
2 Clarification
To ensure wrong tenders are not issues, interviews are also useful in order to gain
clarification. This will also give the client insight into the likely problems and challenges
which might be experienced in the project as it is outlined in the document with the tender
(Carpineti et al, 2014). The information exchange between suppliers and the client
organization in the process of the tender will be useful as it will provide clarification which
will be used in making amendments of the documentation of tender.
3 Submission
All those invited to apply the tender will upon completion of all the necessary
requirements submit their proposals which will contain the prices they are willing to supply
the materials. At this point, the company has to consider the capabilities of various suppliers
in order to identify reliable suppliers who will ensure a continuous supply of materials. The
prices need to be considered in order to ensure that the lowest bidder is selected while at the
same time quality consideration is being made. Once the supplier is selected, the tender
settlement meeting is conducted to enter so as to facilitate negotiations (Matthews et al,
2016).
4 Signing the contract and executing the project

Once everything has been clarified and settlement for a preferred supplier is made, the
agreement is signed where each party agrees to abide by the contract requirements (Erridge
and Greer, 2015). At this point, each party makes its expectations clear in order to ensure that
at the end of the contract, each party will be satisfied with the interaction. This means that
every party should benefit from the contract where the mutual relationship will be created.
Once the agreement signing and acceptance is finally done, the project can be executed.
(Bentley, 2017).
(iii) PERFORMANCE METRICS
Theme Action Timescales Success Measures
High quality and
efficient sourcing
a) Reviewing the terms and
conditions of the contract
to ensure they are updated
to abide by the legal
framework
b) Inspecting the materials
delivered to ensure they
meet requested
specifications
Monthly checks
Feedback from the
clients after
completion of the
project
Ongoing
Customer satisfaction
Time taken in completion of
the project
Compliance with
regulations
Cost a) Reviewing the costs of
the project to completion
b) Cost of training the
workforce
Monthly checks
Ongoing
Avoidance of cost overrun
due to overspending
Acquisition of quality
materials at minimum cost
Partnership and
collaboration
a) Continuous improvement
of the existing
relationship among
suppliers and
stakeholders
b) Sustainable provision of
procurement services to
prevailing customers and
new customers using an
advanced commercial
style
Ongoing
Conducting monthly
meetings
Return on investment
Implementation of delivery
course of action

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Appendices
A. RISK MATRIX
Type of Risk Possible Impact Possibility Responsibility Prevention Analysis of
Risks
Not complying
with criteria
provided and
design standards
Delays and
damages leading
to extra costs
and fines
Low Subcontractors Continuous contract with the
contractor, conducting an
audit with an independent
party, insurance cover
N/A
Ability to achieve
the requirements
of design goals;
underperformanc
e
Additional costs,
delays, and
contract
cancellation
Low Subcontractor/
Multiplex
Continuous contract with
contractor, management plan
for quality
Using
different
process length
analysis

Hostile weather Delay in
construction
Medium Multiplex/
subcontractors
Continuous contract with the
contractor
Examining
various
construction
durations,
prices and
their impacts
Maintaining
quality and
ensuring
necessary
materials and
labor are
available
Additional costs
and delays
Medium Subcontractors Continuous contract with
contractor
Examining
various
construction
durations,
prices and
their impacts
Poor or
inadequate care
of the structure
Reduced level of
service leading
to closure
Low Multiplex Coming up with
maintenance plan
Analysis of
different
maintenance
costs
Death of
employees,
injuries among
others
Compensating
the affected
individuals
Low Multiplex Insurance N/A
Acquisition costs
of subcontractors
Cost increment Medium Multiplex Continuous contract with the
contractor, managing quality
following well-articulated
procedures
N/A