Committee says £19m payment to Costain-Skanska JV saved project millions more
A £19m payment made to end a Crossrail contract in the wake of the pandemic was a “success story” for the project, according to a Greater London Authority oversight committee.
The troubled job, which was being delivered by a Costain-Skanska joint venture (CSJV), was already 18 months behind programme when the pandemic hit.
Work on all Crossrail jobs stopped at the start of lockdown, but while most restarted 12 weeks later, it was agreed with the CSJV that this was not possible at Bond Street.
According to the report by the committee: “The state of Bond Street at that time meant that it was not possible to practise a safe stop of the construction works in response to the pandemic and then restart quickly.
“Crossrail needed to replan and re-sequence all of the work, and the contract that Crossrail had with CSJV was not appropriate.”
Crossrail decided to terminate the contract, paying CSJV £19m and completing the station on its own.
The report recommended that TfL review its procurement of Bond Street to ensure lessons are learned for major projects but said the termination of the contract was a “success story” which ultimately saved the project millions.
According to the report, continuing with the existing contractual arrangement would have cost as much as £775m, compared with the current estimated cost of £680m.
Bond Street station is now set to open in the autumn, months after the spring opening of the Elizabeth Line.
The report also said the GLA needed to learn lessons from its procurement experience on the East Bank cultural quarter at Queen Elizabeth Olympic Park, which is facing cost rises of £157m – a 33% hike on its original budget of £471m.
The flagship development includes a hub for the London College of Fashion and an east London base for the BBC – both designed by Allies & Morrison, and a Sadler’s Wells theatre and a V&A museum, both designed by O’Donnell & Tuomey. Work on the project started on the ground in 2019.
After the cultural facilities are complete, work is due to start on a 600-home Allies & Morrison housing development on the site, a stone’s throw from the Stratford City shopping centre.
The committee said that while the coronavirus pandemic had “added substantially” to the development and construction costs of East Bank, it was not the only cause of cost hikes
Committee members said the GLA should launch a review of the London Legacy Development Corporation’s delivery of the flagship project so that other mayoral development corporations – such as Old Oak and Park Royal Development Corporation – could learn lessons.
The oversight committee said LLDC had told it that the pandemic was responsible for “around 40%” of the projected £157m cost increase, with design development and integration issues accounting for some 27% and tender returns around 35%.
The committee’s report said that in order to deliver to a 2022 deadline for East Bank – subsequently pushed back to 2023 because of the pandemic, LLDC had taken the decision to go on a “managed-package strategy” route in 2018.
It said the strategy involved breaking down the construction of the four buildings on the East Bank site, which are being delivered by LLDC, into several fixed-price packages.
“The LLDC decided on a stage 4 design, a relatively developed design, for fixed-price contracts,” the report said. “The transparency of the managed-package route, where more and more of the packages are successively contracted over the course of the development, means the LLDC was able to protect the later packages from the full impact of the pandemic and the delays to the programme as a result.”
London Assembly members said the LLDC’s strategy had been based on the idea that the corporation could reduce the number of interfaces on the project – a key risk in construction – and procure around 20 packages for the entire scheme.
Earlier this week the LLDC and developer Ballymore announced a joint-venture agreement to deliver the 600 homes planned for East Bank and a further 575 Mikhail Riches-designed homes on a 2.4ha site near Pudding Mill Lane DLR station, a few hundred metres south of East Bank.
The East Bank plot earmarked for housing is currently occupied by temporary site offices.
Responding to the London Assembly report, an LLDC spokesperson said East Bank was the biggest single investment in London’s culture and higher-education infrastructure since the 1850s.
”It will shape the cultural and creative life of the city for the next century and beyond,” they said.
”We have been open and frank with assembly members about the opportunities and challenges posed by the project, particularly the impacts of Brexit on supply chain and the pandemic, and we look forward to sharing our knowledge and the lessons that can be learned.”