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ICE’s new office refurb project faces £305K unforeseen cost

Discovery of voids under the basement slab at the ICE’s new 8 Storey’s Gate (8SG) offices has forced the Institution to spend an extra £200,000 on unplanned remedial works.

A structural survey carried out ahead of the £5.17M project to refurbish the new office in Westminster failed to identify the voids, which have now to be filled with up to 5t of foam grout.

10 week delay

Chief operating officer Andrew Ruffles told ICE Council last week that the extra work will take 10 weeks to complete on top of the existing 10 week delay caused by a subcontractor filing for insolvency earlier in the year.

As a result the moving in date has now shifted from February 2012 to the end of May and will see the ICE also having to pay an estimated £105,000 due to extended rental and operational costs.

However, Ruffles assured Council that he was “confident that we have control of the project” and that the additional costs would be met by the overall project contingency fund.

“There will be substantial extra costs but these will be within the contingency,” he said, pointing out that the voids did not affect the building’s integrity. “We see the current estimate as a worst case scenario and provided that there are no more unforeseen circumstances we will complete the project to the original £5.17M budget.”

Foam grout

The ICE’s summary statement to Council said that an independent structural engineer had advised it to fill the void with foam grout. The additional cost of this work is expected to be £190,000 plus another £10,000 in consultant’s fees.

Ruffles added that they had deliberately overestimated the amount of foam grout deemed necessary by consultant Gardiner & Theobald so as to avoid any additional cost overruns.

To date he reported that 1.8t of grout had been placed and said that this was as per the schedule.

The project previously suffered a 10 week delay when mechanical and electrical sub contractor JRE filed for insolvency in the summer. JRE went into voluntary liquidation and had to be replaced, delaying work by 10 weeks.

Work is now scheduled for completion by the end of May 2012.

However, Council heard that this new move date pushed the project towards the London 2012 Olympics schedule.

Traffic restrictions

Any additional delay would impact moving in plans as there will be heavy traffic restrictions in place across Westminster during the whole of July.

Ruffles also explained that as the original move-in date for 8SG was scheduled for February 2012 the ICE will have to continue to pay £35,000 a month to cover rent at Marsh Wall in East London and offices in the IMechE building in Westminster, which are being used to house staff awaiting the refurbishment of 8SG, and project resources costs. This cost, he confirmed, would have to be taken from the ICE’s operating budget rather than the project capital funds.

Other risks identified to Council included the impact of noise on Thomas Telford’s catering and event business at One Great George Street, which neighbours the works at 8SG. Complaints had been received from clients using the nearby ICE headquarters for work and events and the potential financial cost of refunding unhappy clients has been estimated to be £10,000.

IT overspend

In addition, a £5,000 possible overspend on IT has also been identified in the project capital contingency, said Ruffles.

ICE vice president Bill Hewlett asked Ruffles if the NEC contract, which was being used on the project “was holding up” to the stresses of the setbacks.

Ruffles said that an NEC “health check” of the contract was undertaken eight weeks ago and the contract was found to be sound.

He pointed out that while there was unlikely to be any recourse from the insurance covenant taken out at purchase of the building, steps were being taken to find out if there was any potential action that could be taken against the structural engineers that carried out the original building survey.

“Many of the problems are the contractor’s responsibility but the ICE is likely to have to bear the cost of the extra work,” he told Council.

8 Storey’s Gate

8SG stands 100m away from the ICE’s headquarters at One Great George Street (OGGS). Fully owned by the ICE, 8SG was paid for by the sale of the ICE’s Heron Quay offices in 2009. Currently the building is undergoing a complete refurbishment, with construction costs estimated at £3.15M.

With professional fees, VAT, IT, furniture and contingency added, the total bill for refurbishing the building comes to £5.17M, as approved by Council in March 2010.

These costs will be met partly by a mortgage, the repayments of which will be met by the rent paid by Thomas Telford (TTL) for the new office space, and partly by the transference of funds from other investments. Last year, former ICE president Paul Jowitt was keen to dispel fears that the building would be paid for with members’ money.

“In the short term, TTL will cover the loan required for the refurbishment of 8SG in lieu of rent,” he said.

“Thereafter, TTL will pay the ICE for the rental of its use of 8SG, just as it did previously for the use of Heron Quay. No subscription income will be required to pay for this refurbishment.”

It is envisaged that staff will move out of OGGS and the ICE’s rented space at the Institution of Mechanical Engineers and Marsh Wall into their new home, with the vacated space at OGGS being used, Jowitt said, to “expand services for members.”

Readers' comments (4)

  • It's unfortunate that t he principal body for civil engineers finds itself on the wrong end of what appears as due diligence, contract and site investigation problems on its own flagship project.

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  • As I recall at the time of the original transactions when members sought to find out the selling price for Heron Quay and the purchase price for 8 Storeys Gate this information was withheld on the grounds of 'confidentiality'.

    As a member living in Scotland I felt a little superior as I knew that this could not have been the case here as all transactions are recorded in the Registers of Sasines which are open to public inspection. All I would have to have done was to go to the Registers of Scotland Office in George Square Glasgow and slap down my £12.

    Apparently the same applies in England and it irks me a little to have found out recently that the equivalent charge for a similar search at the local office of HM Land Registry in England is only £10.

    Maybe therefore we can learn through NCE the full costs of this move and who actually willl be bearing them.

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    Another poor article for a professional journal.

    Are we really being told that 5 tonnes of foamed cement grout to fill the voids will cost £190,000, plus £10,000 fees and take ten weeks to install? What was the contingency in the budget and how much is left, if any, after these "unexpected" costs?

    An extension of Time from February to the end of May is at least 13 weeks, not 10 weeks.

    I assume, unless the M & E contractor was nominated, or directly employed, by ICE, that he was a subcontractor to the main contractor and therefore the cost of any resulting delays from the bankruptcy (such as extended rent paid at the temporary premises] should be recoverable from the main contractor.

    I fully agree with Harry Valentine that members should have been given the selling price for Heron Quay and the purchase price of 8SG. ICE is a membership organisation not a private, for profit, company!

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  • Settle down.

    "In April 2009 ICE acquired offices at 8 Storey’s Gate for £7.75m. This purchase was made using proceeds (£8.5m in total) from the sale of our Heron Quay office"

    ICE is a membership organisation and members should read the annual financial report that is published annually and reports the financials of the ICE.

    Curiously, the 2010 report states

    "The sale of our long leasehold interest at Heron Quay in 2009
    resulted in the exceptional surplus of £6.0m for Thomas Telford
    Holdings Ltd, as reported last year. All of the proceeds were
    used to acquire new freehold premises at Storey’s Gate"

    I'll let you plough into the details of that if you're really keen.

    The £5.2 million (2009 report) redevelopment project is paid for by a loan that is being serviced by Thomas Telford Ltd rent, I have been led to believe in conversation, and will have a net cost of £0.

    Direct any further questions to

    P.S. I'm not on the ICE Council or an ICE employee (nor have I ever been), what I know is all in the public domain.

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