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Construction costs rise on Derwent London's Saatchi & Saatchi job

Construction costs have risen by £29m on Derwent London’s Saatchi & Saatchi office building, the client has revealed.

In a trading update today, Derwent London said construction costs on its 80 Charlotte Street project, being built by Brookfield Multiplex, had increased to £236m due to scope changes.

Explaining the increase in costs, the developer said it had revised the planning permission to allow for greater demolition of the existing buildings on the island site.

It added that the changes would “significantly” de-risk the construction process.

Derwent London is one of a number of clients in recent months to cite scope changes as a reason for an increase in construction costs.

Yesterday, Intu said the cost to build its Watford development had risen by 80 per cent since 2014 due to scope changes, with cost inflation also playing a part.

In April, Construction News revealed that Battersea Power Station Development Company had changed the scope of works on the second phase of its multi-billion-pound development to include £300m of additional work.

The company’s chief executive Rob Tincknell told Construction News the scope of works had changed “enormously”.

The additional works at Battersea have been given to phase two contractor Skanska, bringing its total works package to £1.15bn.

The increase in the total value of Skanska’s contracts includes around £30m-£50m of cost inflation, which Mr Tincknell said was in line with the developer’s expectations.

Derwent London trading update overview

  • One million sq ft of major development programme under construction
  • 400,000 sq ft due for completion by H2 2017
  • 185,400 sq ft of space let or pre-let in year to date

Derwent chief executive John Burns on Brexit: “Although uncertainty ahead of the forthcoming June referendum appears to have lowered investment activity, Derwent London continues to see little evidence of any slowdown in occupier demand for its middle market rental product.”

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