Contractor loses arbitration over landmark City office development, but O'Rourke sale will not be affected.
Laing has lost a crucial part of its arbitration over the No 1 Poultry office development in the City of London, which looks likely to leave it £10m out of pocket.

The judgment will not affect the sale of the group's construction arm to O'Rourke, which is expected to be finalised next month.

Sources close to Laing claim that this and other potential losses from the £33m scheme had been accounted for in previously declared write-offs.

No 1 Poultry is one of three large loss-making Laing contracts. The two others are the Cardiff Millennium Stadium and the National Physical Laboratory in Teddington.

The Poultry arbitration ruling, which came out his week, decided against Laing over the time element of the landmark office scheme.

The scheme, completed in 1998, was 80 weeks late. This led to costs rising from the guaranteed maximum price of £33m to about £45m.

This judgment comes after a preparatory judgment over variation to the design-and-build contract.

It’d be ridiculous to incur more costs. I think they’ll settle in a few weeks

A source close to the dispute

Sources close to the case said they expected Laing and Alstadtbau, the developer for No 1 Poultry, to settle over the third part of the arbitration, which covers minor outstanding disputes. This is due to be heard in the autumn of this year.

One source said: "It'd be ridiculous for them to incur more costs on this. I think they'll settle in the next few weeks."

Laing won the scheme, designed by Sir James Stirling and Michael Wilford and Partners, in 1994. It occupies a site next to the Bank of England.

  • Ray O'Rourke, chairman of O'Rourke, is understood to have persuaded important Laing clients to continue their relationship with the contractor when he gains control next month.

    The clients include Whitbread, BAA and Manchester council, which is overseeing the £90m Commonwealth stadium.

    Sources close to the deal claim that O'Rourke has allayed any fears over the concrete subcontractor taking over the construction arm.