Pair attempting to reach agreement on final bill at huge redevelopment of west London site
Laing O’Rourke and its client on the £600m scheme to redevelop the Olympia exhibition venue are understood to be attempting to broker a deal over how much the final bill for a series of design changes on the job will be.
O’Rourke signed the deal in May 2021 after pipping Mace to the work which has a development value of £1.3bn.
Among the plans for the west London site are a 1,575-seat theatre, a near 4,500 capacity live music venue, 550,000 sq ft of offices, dozens of new bars and restaurants, four exhibition halls capable of holding 26,000 visitors and two new hotels with a combined room number of 350.
But Building has been told that following a series of design changes, the scale of which is in dispute, O’Rourke now believes it is owed a significant amount on the project by its client Olympus Property Holdings, which is led by Yoo Capital and Deutsche Finance International.
Sources have told Building the changes have caused delays and increased costs with both sides as yet unable to come to an agreement on by how much.
The scheme was given planning in October 2019 but in August 2021 Olympus applied to Hammersmith & Fulham Council to make a series of changes to the agreed design which, according to a cover letter penned by planning consultant Gerald Eve, “are driven by the need to accommodate the requirements of the future occupiers and the technical demands of the development, which have been further progressed this year [2021]”.
The original plan, lodged in October 2018, had 601 documents associated with it, while those lodged in August 2021, three months after O’Rourke signed its deal, were submitted with 407 documents attached.
Building understands Olympus views the amount of documents sent in two summers ago as duplication caused by planning red tape and is believed to view the changes as only minor.
In the August 2021 documents, changes are listed to several buildings including a “minor amendment to the internal layout for the music venue”, internal layout changes from the basement to level 4 of the Central exhibition hall, changes to one of the hotels and “alterations to layouts of all floors in line with updated office and theatre design” for G-Gate, the new theatre building which is the equivalent of a 12-storey building and is being built on a disused plot previously used as a car park.
Public realm is also being altered with an increase in area for retail and include putting in access stairs to the National exhibition venue for use as a roof terrace.
In a statement, Laing O’Rourke said: “The UK market has been reshaped by 18 months of upheaval, which has caused significant cost pressures, rising inflation and increased cost of capital. Reaching agreement on managing the impacts of these issues, and items such as design changes, takes time on any major project.
“On the large and complex Olympia redevelopment, we and our supply chain partners are committed to working together with the client to manage any issues as they arise. We are looking forward to completing this iconic project and its opening to the public in 2025.”
In a statement, a spokesperson for the Olympia development said: “The Olympia team is proud to be working with over 95 talented firms and major anchors to deliver this iconic £1.3bn transformation. Laing O’Rourke became a valued member of our team in 2019 under a PCSA and became our main contractor in 2021, under a pre-agreed lump sum fixed price design and build contract, which regulates the complexities and external factors inherent in a scheme of this size and nature, such as inflation.
“We remain committed to working with Laing O’Rourke and are well positioned with our investors and the support of our professional teams to manage issues as they arise. We look forward to the scheme opening in 2025.”
The job has been drawn up by Heatherwick Studio and SPPARC while others working on the scheme include QS Gardiner & Theobald.
Marylebone-based Yoo Capital’s other schemes in London include the revamp of Shepherd’s Bush Market and the Saville Theatre scheme, currently an Odeon cinema, on Shaftesbury Avenue.
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