The costs of a landmark Lendlease project in Manchester have spiralled by nearly £100m amid “hyperinflation”, dozens of subcontractor claims and unexpected nesting pigeons.
Lendlease’s mammoth restoration of the Grade II* listed Manchester Town Hall was originally due to complete by June this year.
In a report this month, Manchester City Council officers said costs had risen by £99.8m since work began, after contractors made unexpected discoveries in the 150 year-old building which have stalled the programme.
The contractor is currently forecasting project completion in July 2026, after it intends to have sold its UK construction division.
Staff first flagged problems with the programme in July 2023, warning that costs had risen by £74.8m.
Since then, “there has not been a single week passed without a discovery event that has cost and time implications”, wrote Marshall.
The council said it had to ask for 41 design changes to the roof guttering over the past year, which slowed progress, “in some cases leaving contractors standing down”.
The discovery of nesting pigeons in the roof caused another surprise, delaying roof works by three months and increasing costs by £5m.
This has resulted in about £1m to £1.5m of extra costs for each month of delay, due to supply chain claims for standing time and unproductive working, Marshall wrote.
Costs has now rocketed by an additional £25m since the council’s first report, including £11m in inflation and £7m in design changes. The total cost overrun now stands at £99.8m.
Of that figure, £24m relates to difficulties procuring subcontractors with the right heritage skills and capacity to take on such a large project. Several contractors declined to tender for works, or returned “excessively high” tenders, Marshall wrote.
The council has also replaced parts of the project team where it deemed they “were not performing to the required standard”, the report revealed.
The council has received seven claims for delay from Lendlease and 80 from various subcontractors. The council said it was “confident of significantly driving down the potential exposure to these claims”.
At a meeting considering the report, the executive voted to approve an additional £76m to continue the project.
The council originally set aside £305.2m for the project when work started in 2020, and has already increased the budget in October last year to £353.8m. The additional £76m would bring Manchester’s project budget to £429.8m.
The multi-year project to restore the town hall, first built in 1887, and surrounding Albert Square is the “largest heritage project in the UK in living memory”, Marshall wrote. The project features more than 130 work packages and 22,000 activities within the construction programme.
Construction News visited the site in March 2023, as scaffolding contractor Lyndon SGB was installing more than 200 scaffold structures with a combined weight of 3,700 tonnes.
Contracts manager Craig Parry described the job as “the biggest scaffolding project in the UK that I’m aware of”.
About three quarters of work is now complete. Lendlease will provide its next update in March 2025, when it expects to have more certainty on the risks.
