LLDC says the cost of the new East London cultural quarter is more than advisers predicted and has not ruled out further increases to the budget.
The cost of the planned new cultural quarter in London’s Olympic Park has risen to £32m in excess of its £480m budget, the London Legacy Development Corporation (LLDC) has admitted.
The figure applies to the cost of the Stratford Waterfront development, which will include a new Victoria and Albert (V&A) Museum as well as new venues for Sadler’s Wells, the London College of Fashion and the BBC. East Bank will also include a new campus for University College, London (UCL) – funded by the university – and a separate collections and research centre for the V&A. The total budget for all three East Bank sites originally announced was £1.1bn.
Gerry Murphy, LLDC’s Director of Finance and Corporate Services, told the London Assembly’s Budget and Performance Committee that the increased budget was largely due to extra construction costs. The Greater London Authority (GLA) will need to cover £25m of the excess, a 5% increase to its liability. LLDC is proposing that the remaining cost is met by project partners.
The stated overspend has increased significantly since September, when LLDC’s CEO Lyn Garner told Assembly Members that the project was running at about 3% (£14m) over budget.
Asked about the possibility of further overspend, Murphy said the project was “not without risks” and that the latest figure was the “best estimate at the moment”. She said there would be more certainty about the cost after the first quarter of 2020, when much more of the project’s procurement will be completed.
She said the cost of construction packages had been “more than what our advisers…told us they should be and that is largely reflected in the overspend”.
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Lessons from Crossrail?
Referring to London’s beleaguered Crossrail railway line project, which has been delayed for several years and is billions of pounds over budget, Assembly Member Caroline Pidgeon asked what LLDC was doing to understand and manage the project risks.
“I know it’s on a very different scale but you look at Crossrail,” said Pidgeon. “They weren’t understanding the risks they were managing and the cumulative impact of them. How are you ensuring that your officers and your board understand the risks and therefore that you’re taking appropriate action at the right time?”
LLDC Chief Executive Lyn Garner told the Committee that she and Murphy had a range of regular meetings involving its assurers, the construction management company Mace, and project partners, in order to identify any early indications of problems. “Gerry and I are all over every detail of this project,” she said.
Pidgeon said: “at some point you may want to reflect on whether you have enough oversight…there are lots of things people can learn from Crossrail”.
2022 opening planned
The Stratford Waterfront venues are not expected to open for several years. Garner said that the London College of Fashion building was set to open in autumn 2022, and has previously told the Assembly that the other buildings do not have target opening dates.
However, Garner said that the project partners were already carrying out work with the local community. Sadler’s Wells has been running curriculum-related activity in nine local (Stratford?) primary schools and plans to extend the work to more schools in 2020. An annual free summer school is now attended by hundreds of children, and four young people have travelled to the US with the help of the Smithsonian Institution – which is involved with the new V&A museum – to participate in an arts and culture “boot camp”.
LLDC is also responsible for a range of other venues in the Olympic Park including the London Stadium, the London Aquatics Centre, and several new residential developments. Garner said that its aim is to generate a £200m return every year for London by 2030 through increased council tax and business rates revenue.
She said: “We are building a whole new part of London in Stratford from scratch.”