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Balfour Beatty’s Olympic stadium cost disputes laid bare

Balfour Beatty suspended work on the London Olympic stadium and twice came close to adjudication over spiralling project costs, a government review has revealed.

The report commissioned by the Greater London Authority revealed the contractor demanded extra cash from the London Legacy Development Committee (LLDC) on two occasions.

The first dispute related to increased costs of redeveloping the stadium’s roof in time to host matches in the 2015 Rugby World Cup.

LLDC selected Balfour Beatty for the stadium’s conversion in January 2014, with the cost estimated at the time at £154m.

However, the contractor reported that the extent of the work related to changing the roof structure was greater than initially anticipated.

It therefore submitted a claim for £203.7m – £50m above the contract price estimate of £154m.

This led the LLDC to consider withdrawing from hosting the Rugby World Cup games and look at the cost of entering adjudication with Balfour.

The LLDC eventually decided against adjudication and agreed a cost increase of £36m, driving the total cost up to £189.9m, after it was advised that total costs including adjudication could rise as high as £204m.

The details of these settlements were ironed out over a number of weeks by the mayor of London Boris Johnson, deputy mayor Victoria Borwick, chief executive of LLDC David Goldstone, and executive chairman of Balfour Beatty Steve Marshall.

A second dispute in April 2016 saw Balfour suspend work on the stadium and make a £19m claim over delays and disruption.

LLDC once again considered adjudication proceedings against Balfour, which was working to get the stadium ready for the start of West Ham United’s tenancy and its first concerts in June 2016.

Balfour’s claim related to problems with the introduction of retractable seating after the seating provider Alto went bust.

The contractor also claimed it had to accelerate hospitality fit-out works to enable their use for the summer 2015 events, as well as upgrade the power requirements to service the kitchens planned by the stadium’s operator.

Fearing any significant delay to the construction work would lead to a cancellation of the concerts and a delay to the start of West Ham’s tenancy, LLDC reached an £12.25m settlement agreement with Balfour for the second dispute.

In response to the report a spokesperson for Balfour Beatty told Construction News: “Balfour Beatty successfully completed the complex transformation of the iconic former London Olympic stadium into a multi-functional world class sporting venue in 2016. Creating over 1,700 job opportunities at peak, works included installing the world’s largest cantilever roof, halo turnstiles, concession stands and more.

“All work completed was agreed and delivered with the London Legacy Development Corporation (LLDC) with additional costs mutually agreed as a result of additional scopes of work.”

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