Developer’s decision to sack contractor on Wales office could threaten long-term relationship.

Developer MEPC has sacked Laing from a £20m office contract in Cardiff bay and may reconsider its partnering arrangement with the contractor.

The £250m-a-year developer awarded Laing the two-stage, semi-negotiated tender in October. The subsequent decision to remove the contractor from the scheme, an office development at Bute Square, was taken two weeks ago, only days before work was to start on piling and putting up site huts.

Kevin Monaghan, a director of MEPC, said: “We sacked them on the Friday and have closed the door on them.”

Sources close to the project say the row blew up after Laing’s main board decided that it would not give more than five collateral warranties on the job as part of a wider strategy to reduce contingent liabilities.

Developers on projects of this type usually procure warranties for interested third parties such as the buyer, the funder and each tenant. MEPC is understood to have asked for an unlimited number.

Monaghan said: “All of our suppliers work on that basis, but in practice it is very rare that the guarantees are needed. So long as Laing maintains that position, it is impossible to do any more work with them. The way in which it has happened made us very angry and subsequently very sad. We are not going back into a relationship like that in a hurry.”

Two of MEPC’s other preferred suppliers, Costain/Skanska and Kier, will be invited to bid for the job, with an appointment made in eight weeks.

Laing chief executive Brian May refused to comment on the reasons for Laing’s departure but insisted that the company was not pulling out of the commercial market. Laing decided in October to cut turnover by one-third and to stop bidding for competitively tendered work.

Laing is also closing its Bristol office. May said: “We will complete two jobs there in the next nine months and at the moment we have no further work.”

In a separate development, GlaxoWellcome insiders said Laing is unlikely to be awarded a framework deal on the company’s Fusion programme. It is understood that the matter does not concern warranties.