Client sues design team after Costain project cost nearly doubled

Aaron Morby 3 years ago
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Developer Standard Life is suing some of its professional design team on the Newbury Parkway shopping centre and flats scheme after the cost of the project soared from around £77m to £146m.

Newbury Parkway project was completed over six years ago but a legal battle of cost overruns is rumbling on through the courts
Newbury Parkway project was completed over six years ago but a legal battle of cost overruns is rumbling on through the courts

The firm is now locked in a legal battle with its design team – Building Design Partnership, Sutton Griffin Architects, and Cundall – claiming £38m for alleged professional negligence.

Main contractor Costain completed the project back in June 2013 and concluded a final settlement agreement, whereby it agreed to assist Standard Life with any dispute against third parties relating to contract administrators instructions and confirmation of verbal instructions.

Standard Life claims that £50m of the final settlement was made up of £28m from variations to the building contract and nearly £22m from contractor’s loss and expense from delay and disruption.

Project manager Buro Four analysed in detail a sample of over 100 CVIs and CAIs for Standard Life, which represented £14.6m of the extra cost.

Of these, it assessed 49% had arisen because of a “design team issue”, 10% from a “client issue” and 41% were “unclassified”.

This analysis has been used by Standard Life to extrapolate the final claim, which has just been contested by the design firms in the high court before moving to the full case being heard.

The members of the design team, which deny allegations against them, argued that they objected to the full claim going to trial because it was based on the extrapolated £25m variations claim and loss and expense claim.

To avoid lengthy assessment of each of the CVIs and CAIs through the court, Justice Kerr has ruled that Standard Life should select which of the 3,604 individual variations and 280 delay notices it wants to submit to support a fresh claim involving a trial by samples.

BDP will be allowed to selected 80 of these variations, SGA up to 40 others and Cundall 40. Standard Life would be required to set out its case against these.

A similar sample procedure should be used for the client’s loss and expense claim, ruled Justice Kerr.

Judge Kerr accepted that the procedure to reassess the claim may delay the trial date but added: “I think the delay resulting from the current exercise is a price worth paying for enabling the case to be managed properly”

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