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ICE move to 8 Storey’s Gate on hold after contractor goes bust

The ICE was last week forced to abandon plans to move staff into its new 8 Storey’s Gate offices in June, after main contractor Killby & Gayford went into administration.

The move will now be delayed until September, after the 2012 London Olympic Games, when the £5.17M project to refurbish the Grade II listed office adjacent to the existing ICE headquarters at One Great George Street will be completed.

ICE director general Nick Baveystock confirmed that it had put together a contingency plan for staff accommodation until September and said that its project manager Gardiner &

Theobald had been on site and would soon be able to advise on the best way to complete
the contract.

“Our primary focus remains to get the project to completion as quickly as possible, without compromising quality and cost,” he said.

Six weeks behind schedule

Killby & Gayford was already running six weeks behind schedule due to a number of problems on the job. These included the electrical and mechanical subcontractor going into voluntary liquidation in 2011 and the discovery of voids beneath the floor slab.

These voids had to be filled with 5t of grout at a cost of £200,000 and added two months to the programme, pushing handover from February back to May.

A paper to ICE Council earlier this month said the contractor had expected to hand over the building just one day before the first planned move weekend of 26/27 May - a revised programme that the ICE had not accepted due to the tight timescales of moving before the ­Olympics shutdown in July (NCE 19 April).

However, deteriorating market conditions in the building sector forced the business into administration last week (see box).

Victorian beginnings

Killby & Gayford went into administration last week after almost 152 years in business. The £100M turnover company was based in London and specialised in refurbishing offices, schools and historic buildings.

It also undertook new build projects, and had built up a specialist business installing ATM cash machines and security products for banks. The firm was bought out by its management in 2007, backed by private equity, and subsequently expanded from its traditional London base by opening new offices in Leeds and Cambridge. It also had its own joinery business, based in Billericay, Essex.
Administrator BDO confirmed that the company ceased to trade on 18 April, and most of the 255 staff have been made redundant.

 

This prompted an immediate halt to all work on 8 Storey’s Gate making it unclear exactly when the project will be completed.

The ICE said that, with help from Gardiner & Theobald, it hoped to have “a reasonable ­estimate of programme to completion within a month”.

However, it pointed out that, to give some certainty to all involved, the decision had been taken not to move until September, after the Olympics, at the earliest.

“We have a contingency plan and now that we have contractual clarity we can proceed with it, setting clear deadlines and realistic timescales to get the job done,” said Baveystock.

“We will be able to gain a better idea of time and cost impact of the delay over the coming weeks.”

The paper presented to Council was drawn up before Killby & Gayford’s collapse.

It explained that despite earlier setbacks, the project was on track for completion within its £5.17M budget.

The paper highlighted additional construction costs of £175,000 and a VAT charge of £130,000 more than anticipated.

The ICE explained that its tax advisors had originally highlighted a potential opportunity to increase its VAT reclaim given the commercial use of the building by ICE commercial arm Thomas Telford.

However, after detailed calculations based on the actual building usage, it had since been advised to retain its existing agreement to reclaim 75% of VAT, hence the £130,000 increase.

Savings in the cost of furniture and equipment, the paper said, had enabled the budget to be met without eating further into the £200,000 remaining in the contingency fund which started at £432,000.

However, additional costs will now be incurred to extend temporary office leases at Marsh Wall and the Institution of Mechanical Engineers, which are due to terminate in June.

No figure has been estimated for this cost as yet, but when the move date was pushed back in November from February to the end of May, the ICE budgeted £105,000 for the extended rental and operational costs.

The ICE said it was currently in discussions about these leases adding that if it was not possible to extend them, alternative accommodation for staff would be found, possibly at the ICE’s One Great George Street headquarters, for this interim period.

Readers' comments (1)

  • Due to the very nature of contracting firms tend to thier play cards very close to their chests and have always keep their heads up high even when they are sinking. The sooner attutudes change and firms be upfront and transparent about all issues the better chance of getting through inevitable storms that occur during the lifecycle of a project and at worse it at least minimises collateral damage to other stakeholders involved when things go very wrong.

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