6.9.

3 Risks in the

Project

The Institute of International Engineering Project Management of TsinghuaUniversity has carried a study on risk assessment of sport venues for 2008Olympic Games and has identified key risks associated with the Stadiumproject especially the four main mostly critical ones.

Irrational Construction Schedule

The construction must be finished on December 31, 2006 as requestedby the BMG while the signing of the Concession Agreement was onAugust 9, 2003, there were only about 3 years left for construction.However, as the Stadium s technology standard is very high and thefunction is very complex, it took the contractor a lot of time in construc-tion planning. What s more, the canceling of the retractable roofcaused construction delay for about half a year as the design drawingscan tbe provided in time. The remaining construction schedule is verypressing.

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Cost Overrun
The 3D steel frame system of the Stadium is very complex and there isno similar project in China especially that many parts must be incisedand weld for two or three times. The inflated ETFE cushions installed tothe proposed scale is quite innovative as building materials with fewpast experiences. Together with the nest-like steel structure, thesecaused potential fabrication, installation and maintenance problems.All these lead to a huge cost overrun which deteriorated the projectbalance sheet. And the risk can t be solved now.

Small Market
The concepts and themes for the National Stadium s design and con-struction will make it the most pre-eminent large-scale sport and per-formance facility in China. As such, it has integrated the most

world-advanced high technology features as well as environment friendlyoperation processes. However, the biggest competitor of the NationalStadium, i.e. the Workers Stadium, will continue to enjoy certain advan-tages including lower operation costs and charges due to its investmenthaving already been amortized. The National Stadium must create itsown image and brand identity to capture the interest of future costu-mers and establish customer loyalty. To this end, it must create its owncultural and humane atmosphere and attract the best domestic andinternational sports events and performing arts agencies. Excellent ser-vices and advanced management techniques will be essential in at-tracting those agencies and the public.Nevertheless, the National Stadium s market is still small scale. Only non-commercial government-run large-scale events and private enterpriseslarge-scale events will take place in the National Stadium. In order tobuild the image of the National Stadium nationwide and worldwide,these events must be widely broadcasted. There will be only 16 bigevents per year as forecast. So, if the market is smaller than forecast,there will be a large budget deficits for the Project Company.

Lack of Operation Experience

The performances held in the National Stadium will make the venue anew window of China to the rest of the world. The performances will in-clude large-scale shows displaying Chinese culture as well as solo andgroup concerts by performers both from home and abroad. As to its fu-ture clients, the Project Company will establish relationships with sportsfederations, whether national, regional or international. Specific atten-tion will also be given to establishing relationships with relevant government agencies such as the State Sports Administration, the Ministry of