Budget overrun on the first phase sees contractor canned before second stage
Interserve has been sacked from a £9m contract to develop Guildhall in York by the city’s council.
The two-stage contract has been ended after costs came in over budget on the first stage.
The council said: “The contract had two stages, with the first phase providing a detailed build specification and a target cost which if agreed would lead to the letting of the construction contract.
“The first phase has now completed and the council has reflected on the current approach to developing this complex and historic site. As a result, the construction phase will not progress and instead, the council will consider options before inviting new bids from the market.”
Neil Ferris, director of economy and place, City of York Council, said the contract had been set up to include a break point after the first stage of the contract in accordance with government procurement rules.
He said: “We recognised from the start that given the site complexity and risks around the foundation structure, there was always the chance that the estimate would be higher than anticipated.
“We structured the procurement in this way to protect York residents from potentially spiralling costs.”
Ferris said the council remained committed to the project and was planning a review of its options to reduce costs, such as revising the scale, scope or access arrangements to the site.
Other works, such as the connection of new utilities, will continue while the review takes place.
Interserve declined to comment.