Essential Living has scrapped its £1bn main contractor framework and terminated its contract with Brookfield Multiplex to build one of its flagship schemes, Construction News has learned.
Essential Living said scrapping the framework would reduce cost and risk across its portfolio of London contracts.
The developer will take on a construction management role on major build-to-rent schemes in Acton, Greenwich and Swiss Cottage and will directly procure through newly created subcontractor and supplier frameworks.
The move comes as Brookfield Multiplex was taken off Essential Living’s Infinity Towers project in Canary Wharf on Friday, after costs on the job increased substantially.
Brookfield Multiplex was appointed in 2014 to deliver the 395-home Docklands scheme, which formed part of Essential Living’s framework.
A spokesman for Essential Living said: “Brookfield Multiplex has enjoyed a close working relationship with Essential Living and worked closely with us as part of the tender process for the Infinity Towers project. Brookfield was appointed the lead contractor on the Canary Wharf project having initially reached an agreement on the overall construction costs for the scheme.
“Subsequent market shifts during the last year or so have resulted in us reviewing the overall construction cost of this project including those of trade contractors who, as part of the process, have been required to take a view of possible cost increases over the next three years.”
The contractor was one of the five firms appointed to the £1bn framework in June 2014. The others were Balfour Beatty, McLaren, Vinci and Prime Construction, part of the Elliot Thomas Group.
The framework was intended to span eight years and was broken down into three lots.
Both Balfour Beatty and Brookfield Multiplex were chosen for projects over £25m in value; McLaren and Vinci were picked on projects worth between £10m and £60m; and Prime Construction was set to deliver projects under £10m.
Now, the client will directly procure work through its new subcontractor framework of around 20 businesses, the creation of which was first revealed by Construction News in November last year.
Essential Living construction director Ray Theakston said: “[Disbanding the framework] is about giving us greater control over problems and will allow us to have a more hands-on management of cost and, crucially, risk, which we are simply no longer willing to pay for using a main contractor.”
The developer has also created a brand suppliers framework and will be using a range of modern methods of construction across its forthcoming projects.
Mr Theakston said: “Design-and-build contracts have been on the rack for a while now and we are of the opinion the market has reached a tipping point.”
CN Developer Forum
Ray Theakston is among the expert speakers (see below) lined up for the Construction News Developer Forum on 9 June.
The programme will include regional project presentations and Q&A sessions with high-profile developers around procurement and work pipelines.
This year’s Forum takes place at the Bloomsbury Hotel in London on 9 June.
- Roger Madelin, head of Canada Water Development, British Land
- Victoria Hills, chief executive, Old Oak and Park Royal Development Corporation
- Bill Hughes, managing director, property, Legal & General
- Graeme Craig, commercial development director, Transport for London
- Scott Hammond, managing director, Essential Living
- Andrew Locke, development director, Native Land
- David Pringle, director, NOMA, Co-operative Group
- Phil Wade, director, First Base