Questions raised over the Forum’s costs
As Gloucester City Council's leadership team trumpeted The Forum regeneration project this week, it came under scrutiny from councillors asking why £40m of that total wasn't even on construct costs.
Questions have been raised over the costs associated with delivering Gloucester’s £115.1m The Forum project as around £40m of the money spent did not go on construction.
The prominent city centre landmark off Station Road houses a four-star hotel, a 399-space car park and more than 106,000 square feet of office space.
A report reflecting on the major regeneration project was scrutinised by councillors at Gloucester City Council earlier this week, with bosses quizzed over the costs of the project.
Councillor Alastair Chambers (I, Matson, Robinswood and White City) asked whether the total value of the project was still £107m as was originally budgeted for.
Andy Hearne, the head of place at Gloucester City Council, explained that was the original figure approved by the cabinet.
But subsequently £8.1m from levelling up funding from the ill-fated Fleece Hotel project went into the overall development project as a contingency as none had been set for it.
“In totality, the entire development cost budget was £115.1m,” he said.
Cllr Chambers thanked officers for “being so open and honest with the data” and went on to ask more about the costs of the project.
“The Kier build costs were £74.5m,” he said. “Where did the other £40-£45m come from?”
Peter Langley-Smith, managing director of the council’s development partners Reef, said there were other costs including professional fees, land acquisition, tenant incentives, rent free costs, consultant costs, development management advisers fees and development management advisers fees.
“Fundamentally speaking professional fees, associated costs with development, fit out contributions, capital contributions to occupiers, those sort of things,” he said.
The main delays to the major King’s Quarter regeneration project were borne out of the discovery in October 2022 of an exposed gas main, according to the Forum Reflection report.
This discovery led to an extension of time request and loss and expense claim for just under 21 weeks and £7.33m respectively.
This was received in February 2023 and owing to a disagreement as to the apportionment of risk in respect of the gas main discovery, the issue was referred to adjudication, the outcome of which was substantially in Reef’s favour.
However, the final account figure represents a 6.58 per cent increase of the build cost which is equates to around £4.8m.
Cllr Chambers asked what that £4.8m was spent on.
Langley-Smith said: “The total settlement you are referring to is the final commercial settlement with Kier. Which was trying to effectively wrap up all of the variations, all of the changes, all of the valuations, engineering, all of the extensions into one final commercial settlement.
“And that was the commercial settlement that we reached.
“It is worth highlighting that the claim that Kier were proposing in terms of the final settlement figure was in a magnitude of multiples to what we actually settled at.
“So while it was an increase. There are always a number of items that are effectively for commercial debate with the contractor.
“And we still stand by the fact it was a sound recommendation to settle at those levels.”
By Carmelo Garcia, local democracy reporter for Gloucestershire. carmelo.garcia@reachplc.com
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