Shard busts budget
Published: 14 May 2008 15:56 Author: David Rogers
Mace has been given more time to work up costs on plans for London's tallest building after blowing its £350 million budget by more than 10 per cent.
The firm was due to have delivered cost details on the Shard of Glass to developer Teighmore yesterday. The proposal was timed to coincide with the arrival of a delegation of investors from the Qatari banks funding the scheme, which have insisted on a £350 million fixed-price contract.
The current figure is understood to be around £400 million. Mace now has until the end of the month to get the figure down - although it is expected to be still well above the £350 million demanded.
John Doyle is being lined up for the concrete contract, which includes the basement, sub and superstructure work.
Mace is believed to have asked the firm to redraw designs for the substructure to get the cost of the concrete package down. This has come in at around Ł45 million Đ more than 20 per cent higher than Mace was expecting.
Mace declined to comment but one source said: "There are a few areas that need to be rebid and re-engineered. It is tight on budget and whether they get it on budget is a big question."
The main problem is with the basement works - because of its proximity to London Bridge railway station - and these are expected to take up to a year to complete. The source added: "The real risk is in the basement and Doyles and Mace are trying to work out how to carry this without carrying too much exposure."
Keltbray has already begun tearing down the existing building at London Bridge that will make way for the Shard and is also carrying out groundworks ahead of Stent moving in for piling work. The official completion date is still the end of 2011.
But news of the latest budget problems raises fresh fears that Teighmore, which is led by the chairman of Sellar Property Group, Irvine Sellar, will have to pay more for the 310 m high structure or risk it never getting off the ground.
Teighmore has a month to decide what to do with Mace's offer. The most likely outcome is that it asks Mace to retender some of the bigger packages such as M&E and steel. These are priced at £60 million and £28 million respectively.
Last autumn, Teighmore turned its back on Mace when it asked Laing O'Rourke to come up with proposals for the building after deciding the original route of construction management would be too expensive.
But the country's largest private contractor never actually came up with a firm bid - after being trumped by Mace which agreed to carry out the deal on a fixed-price.
Who's won what
Hotchkiss (mechanical); Phoenix (electrical); Balfour Kilpatrick (electrical)
Analysis: Will fear of risk cut down the project?
By David Rogers
Right now, it is fair to say that two questions arise with the Shard. First, is this ever going to get built?
And if it does, who will build it?
Nobody can give a definite answer to either question. It's likely that the best answers would be "probably - but we've no idea when" and "at the moment Mace, but who knows?".
There was a certain inevitability that a new method to build the Shard - beset by budgetry problems for years now - would end up costing more than the bankers would ideally like.
It is up to Mace to get the figure down to what it wants. If not, it and the developer face a terrible dilemma - pull it now or go ahead and build it knowing it could end up costing even more than they ideally want to pay.
The trouble, as ever with a project like this, is the risk. No one wants to catch a cold. Not Mace, not its subcontractors and not the banks. A state of impasse or a rethink - lopping some floors off perhaps? - is looming