After throwing out Will Alsop's winning scheme, Liverpool is set to tender for replacement in September

Regeneration agency Liverpool Vision, which this week made the shock decision to throw out Will Alsop's designs for the Fourth Grace development over cost fears, will start the hunt for a new architect and developer by September.

The funders behind the project – Liverpool council, the North West Development Agency and Museums Liverpool – are understood to be concerned that the scheme will lose its £37m European Objective One funding for the Fourth Grace if the project is further delayed.

A spokesperson for Liverpool Vision said that the team would look for an architect and a commercial developer who could follow architect EDAW’s existing masterplan for the scheme's Pier Head site, south of the Port of Liverpool.

The new design could incorporate museums or theatres.

He said: “By September we will have a clear brief for the site. The partners will consult on the procurement route and it could be a straight tendering process for a developer and architect.”

Liverpool Vision suddenly scrapped Alsop's third design for the Fourth Grace on Monday because of fears that costs were becoming too great.

It made the decision at a meeting to discuss Alsop's latest redesign, which it estimates will increase project costs from £228m to £324m.

In a statement, Liverpool Vision said: “The public sector partners no longer believe the revised scheme to be deliverable and the additional risks associated with its continued progress have become unacceptably high.”

The risks associated with [Will Alsop's] scheme became unacceptably high

Liverpool Vision statement

Alsop himself was “incredulous” that his design had been shelved. He said: “The first I heard about this was a rumour that the council was to put out a press release. I think we have a good design that is entirely viable.” He added that he believed the project could be delivered without any additional public funds.

Alsop refused to reveal his next move but said: “This is not the end”.

Alsop’s original design had to be revised to include more residential space in order to secure vital private sector backing. He tried three ways to make the scheme work. The first involved towers as high as 120 m, while the second would have resulted in shorter, fatter towers. Both drew criticism for obstructing views.

The final design tried to fit 200 apartments in four “pavilions” jutting out of the dock. Liverpool Vision said the design was too “challenging”.

It said: “The final iteration overcame the height and volume problems but there was a conservation issue. The scheme no longer had the qualities of the original design – it was too big.”

All parties denied that the scrapping of Alsop's distinctive scheme would have a bearing on Liverpool's 2008 Capital of Culture status.

Bryan Gray, the chairman of the NWDA, said no cash would be diverted from the scheme, despite the agency having run out of this year’s funds.