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Grosvenor to learn from Liverpool One

The developer on a huge mixed-use scheme in Liverpool has vowed to learn lessons after the job cost it nearly £200 million more than expected.

Grosvenor was behind the £1 billion Liverpool One project - formerly known as Paradise Street - the first phase of which opened last month.

It was built by Laing O’Rourke and this week the pair said they had completed sorting out the final account for the job, which has seen Grosvenor put aside a provision for £188 million. This has been blamed on a mixture of rising build costs and the fall in the value of the development.

Grosvenor project manager Stephen Brewer said the firm would be looking to share the risk on upcoming projects in Preston, Lancashire, and Crawley, Sussex.

For the £700 million Tithebarn project in Preston, Grosvenor has brought Australian firm Lend Lease on board as a delivery partner. Mr Brewer said: “One of the lessons we learnt was that it’s good to work with a delivery partner and that is an approach we will look at for future projects.

“There are always good commercial reasons to enter into a joint venture arrangement but predominately the ability to share knowledge, experience, resources and most importantly risk with a like-minded partner.”

He said the team was hoping to be speaking with a contractor for the project mid-2009.

Mr Brewer admitted Liverpool One had been difficult - simply because of the scale of the project. He said: “There were over 40 building contracts and in my view it went as well as can be expected.

“When you are dealing with 42 acres and 40-plus contracts, there is no real model to follow anywhere.”

Neither Grosvenor or Laing O’Rourke would comment on the details of the settlement but Mr Brewer confirmed: “Negotiations have gone well. Issues have been resolved and we have agreed a final account settlement.”

A spokesman for Laing O’Rourke said: “We are pleased this development was completed successfully and handed over to the client on time and to quality and we don’t comment on matters which we believe are confidential between us and our client.”

Grosvenor wrote off £140 million on the scheme in 2006 and took a second hit a year later when it booked a second provision of £48.8 million in its 2007 annual report.