The mammoth project to replace bolts on the Cheesegrater skyscraper in the City of London is now expected to cost steel firm Severfield £6M, it has emerged.
The company revealed the estimated cost of remedial work on the long-completed Leadenhall Building in its annual report today. It said the cost was being treated as a non-underlying item.
NCE reported in January that a third bolt had broken on the building – dubbed the Cheesegrater – but had been captured by precautionary tethering put in place in November.
Severfield said in its report today: “This programme is being undertaken in conjunction with British Land, Laing O’Rourke and Arup and is likely to continue until the end of the calendar year.
“The liability of the group and the other parties for the programme costs has not yet been determined and, therefore, the charge represents certain costs incurred at year-end, together with management’s best estimate of the remaining cost to the group.”
Chief executive Ian Lawson told NCE that the parties involved in the works had put disputes over responsibility to one side to focus on getting the remedial works done.
“We have worked professionally and sensitively,” he said. “No-one has agreed liability but we are getting on and sorting [the problem with the bolts] out.
“We have not become entrenched, we are in discussions over liability and that is likely to go on for many years.”
The team is replacing a number of bolts on the building that are deemed to be susceptible to hydrogen embrittlement.
Lawson said the work is progressing according to timetable and is due to be completed by the end of this year.
Severfield’s revenue fell by 13% to £201.5M in the 12 months to 31 March 2015.
However, it made a pretax profit of £0.1M, after recording a loss of £2.6M the previous year.
The firm said market conditions in the UK had improved over the last few months, with the pipeline of opportunities growing “particularly in the infrastructure and commercial office building sectors”.
Lawson told NCE there were attractive commercial, retail and leisure projects coming up, particularly in London, as well as nationwide opportunities for Network Rail and Highways England.
Lawson said in the annual report: “We are very pleased with the continued good progress made across the business, both in the UK and India, operationally and financially.
“Margin improvement is being sustained, we have a very solid order book and pipeline and we are particularly pleased that we have recommended the reintroduction of a final dividend.
“Our cash flows and balance sheet remain strong. Furthermore, our continued investment in our equipment, brand, market position and our people means that we have the skills and capacity to sustain momentum and fulfil demand, securing key projects in growth sectors as the UK, and Indian, infrastructure markets continue to develop.
“The group is well placed for the future and the board is confident that we will be able to maintain improved shareholder returns.”