NEC contracts were used to facilitate fast-track delivery of US$500 million (£400 million) of new and upgraded venues and facilities for the Lima 2019 XVIII Pan American and Parapan American Games venues in Lima, Peru.
The Peruvian government appointed the UK Department for International Trade (DIT) as its delivery partner for the games in April 2017. In turn, DIT engaged Arup, Mace and 4global as the UK delivery team to provide advice, assurance and support to the government’s special project office, PEJP Lima 2019, in the areas of design, technical, procurement and delivery assurance for infrastructure.
The UK delivery team was also tasked with providing a programme management office for the programme and expertise on games operations. DIT was appointed as the procurement agent to procure independently £400 million of critical legacy venue infrastructure.
A key part of DIT’s successful bid was a focus on the success and enduring legacy of the London 2012 venue and infrastructure delivery programme. PEJP Lima 2019 was particularly interested in the UK’s ability to bring a blend of learning, capability and best practice to support the challenging delivery programme.
NEC-based delivery strategy
Mace was tasked in the early stages with developing a procurement and delivery strategy for the critical legacy infrastructure and, crucially, recovering an 18-month programme delay. During the market engagement, appraisal and strategy phase, the benefits of the NEC contracting philosophy became very apparent, which led to the NEC contract suite being proposed as the most appropriate contracting strategy to procure the works.
The successful track record of NEC in delivering major infrastructure and venues, as well as its focus on best-practice project management and positive behaviours, struck a chord with both Lima 2019 and the contracting market. It was seen as an exciting and refreshing approach to deliver publicly funded projects in a challenging environment with a poor track record of public infrastructure delivery.
The critical Lima 2019 venue infrastructure contracts were awarded using the NEC3 Engineering and Construction Contract (ECC) Option F (management contract). The leading contractors included Besco−Besalco, Cosapi, Sacyr−Saceem and OHL−JEE, which were given a brief to deliver world-class legacy venues and sports facilities that were compliant to international venue standards, sustainable, within the masterplan budget, and within record delivery times.
Major venue clusters at Videna, Villa María del Trinufo and Callao, plus an Athletes’ Village and sports centre at Villa El Salvador, were all successfully delivered on time and to budget, integrated with the games overlay and operations in advance of the opening ceremony in July 2019. Works included the construction of 1,096 apartments at the Athlete’s Village, a new 15,000 seat athletics stadium, new open-air multi-use stadia for 6,400 spectators, two new aquatics centres, two new 5,000 seat indoor multi-purpose venues, and various upgrades to existing venues – a total of 19 separate projects in just 20 months.
Almost 650,000 tickets were sold across the Lima 2019 Pan American and Para Pan American games, which is a record number of ticket sales in 18 editions of the games.
New procurement approach
Mace project director Frank Randles says the NEC-based delivery strategy resulted in a refreshed and revitalised procurement approach for Peru, providing a unique blend of established practice and innovation to overcome historic barriers to success.
‘When we were first appointed to the project, it quickly became clear that the Peruvian procurement approach would not achieve the necessary requirements for an international sporting event in the timescales available. We needed to be innovative to meet the needs of the project while addressing historic issues around lack of transparency in the Peruvian public sector, ensuring international best practice and leveraging the capabilities of the Peruvian market.’
He says the delivery team carried out a detailed preliminary assessment of what was a complex situation, considering factors such as the status of the project and how the market normally responded to public sector tenders, as well as potential risks, opportunities and priorities associated with change.
‘Following that process, we established an ECC Option F approach as the new form of contract on the project. The clarity provided by ECC Option F set the precedent for a simple and effective delivery strategy. This took control of the risk, brought the best contractors the market could offer on board as early as possible, built collaborative project teams, leveraging their local knowledge and enabling innovation, focused the contractors on delivery and best-practice project-management processes, and incentivised the contractors for performance, avoiding confrontation and dispute.’
Randles says, given the NEC suite was tried and tested across the globe, the team was confident there would be an option that suited the needs of Lima 2019 and aligned with the existing delivery strategy. ‘Even so it was the decision to think outside the box and craft an approach that facilitated such a profound change. The contracts were adapted to the works, rather than the other way around, which was a totally new concept in Peru. This made things more tangible for the supply chain and kept programme disruption to an absolute minimum. For instance, each of the five main procurements were delivered to 12-week procurement programmes.’
He says that tangibility had a significant impact, boosting confidence in the sector and driving a competitive procurement process. ‘We achieved an average of 15 compliant bidders per contract compared to just 1.6 in normal Peruvian public-sector tenders. The turnaround in Lima has been phenomenal, with the construction industry rising to the challenge.’
According to Randles, the NEC contracting approach facilitated a procurement process that was fast, simple, adaptable, collaborative and delivery focused. ‘Through early contractor involvement and enhanced transparency, NEC built trust across the supply chain. It also encouraged contractor innovation, while facilitating a shift away from the overly prescriptive regime that was in place previously.’
He says the contracts have also left a long-term legacy of good procurement practice. ‘The NEC contracting approach at Lima 2019 has genuinely helped to transform the construction industry in Peru. It has leveraged positive behaviours across the Peruvian public sector, and there is now real confidence that a US$160 billion infrastructure gap in Peru can be closed.’
Benefits of Using NEC
- NEC suite is tried and tested across the world, including successful delivery of London 2012 venues and infrastructure.
- Clarity provided by ECC Option F on Lima 2019 took control of risk, made contracts more attractive to market, facilitated early contractor involvement, encouraged collaboration, focused contractors on delivery, incentivised performance and avoided disputes.
- NEC transparency has built trust across the Peruvian supply chain, levering positive behaviours and encouraging contractor innovation.