Cost of Laing O’Rourke’s Manchester arts centre spirals

But the project has been dogged by problems and cost overruns – and now a new report by Manchester City Council’s deputy chief executive and city treasurer Carol Culley is calling on councillors to release a further £25.2m for the project ahead of its summer 2023 opening.

If approved, this will see the total capital budget for The Factory’s construction hit £210.8m – an increase of £99.2m, or 89 per cent, on the original budget, according to Construction News’ sister title Architects’ Journal.

The latest cost increase would be funded through borrowing (£15.2m) and the council’s capital scheme inflation budget (£10m).

The paper also says Manchester City Council should underwrite occupier Factory International’s £7.8m increase in the cost of furniture, fixtures and fittings, noting that “the venue will not be able to operate without this investment to enable the equipment to be in place”.

The council’s resources and governance committee and executive committee will review the cost increases on 11 October and vote on it on 19 October.

The council report said the rising costs were partially due to inflation, noting: “The external environment has remained and continues to be extremely challenging, particularly with the conflict in Ukraine which has disrupted the supply chain and contributed to unprecedented levels of inflation. The shortages in the labour market have also had an impact.”

The authority said that material prices “continue to increase month on month” and that “COVID-19 restrictions have remained for the construction industry throughout the whole period, which has continued to impact on productivity”.

It also said the chancellor’s mini-budget last week was “likely to increase costs further with inflationary pressure and rising costs of finance”.

But the report acknowledged “the complexity of the project and the challenges of design co-ordination on the steel structure have also continued to impact on cost”, adding that the largest issue was “changes required to accommodate the final requirements for the mechanical, electrical and plumbing engineering (MEP) work package, where further work has been required to ensure that the structure and acoustic treatments are aligned to the MEP installations”.

As well, it said that detailed design work, including by architect firm Ryder, which was drafted in to tackle spiralling costs in 2020, had now been completed. It also noted a total of £50.3m of construction work had been paid and a further £58.8m had been procured at a lump sum.

But it said a further £16.3m of spending was based on “provisional sums” with at least £3.3m of work yet to be procured.

The latest report said that the council would be able “to recover a significant proportion of the borrowing costs from naming rights income” – with a fundraising and commercial sponsorship target of £24.17m.

The government has contributed £106.5m to the funding of The Factory, which will also benefit from a £9m per year grant from Arts Council England. This is the largest amount of government arts funding to a single scheme since Tate Modern, which opened in 2000.

The Factory is being billed as “a global destination for arts, music and culture, commissioning and presenting a year-round programme by leading artists from across the world”. It will be run by the team behind the world-famous Manchester International Festival.

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