Laing O’Rourke is the frontrunner to deliver an £850m Edinburgh regeneration project.
The contractor has entered into an agreement with developer TH Real Estate over the St James mixed-use scheme which could pave the way for it being named main contractor next year.
Laing O’Rourke is already working on a consultancy basis on the project, which will include the construction of a 20,000 sq ft infill building that will allow anchor tenant John Lewis to continue trading while work is carried out.
TH Real Estate development director Martin Perry said his company has entered into a further engagement agreement with the contractor to help TH Real Estate understand the logistics and associated construction risks on the project.
“Effectively Laing O’Rourke is working under a pre-services construction agreement, so a consultancy agreement, with a small amount of construction,” he said.
Mr Perry said it was likely the firm would go on to become the main contractor on the mixed-use development, which will cover a total of 1.7m sq ft.
“There are no obligations [to select Laing O’Rourke] but my anticipation is that unless they do something wrong there should be no reason why it shouldn’t move forward,” he said.
St James will include up to 850,000 sq ft of retail space, a hotel and 250 residential units.
Mr Perry said: “The issue that we have with St James is that the construction is very large and there are very few contractors who can operate at that scale.
“We didn’t exactly have a very long list of people to deal with and we had some who already had substantial commitments in Scotland.”
He added: “It’s not a conventional approach but it’s not easy to have a conventional approach at that scale, unfortunately.”
The development director added that it was much more difficult to get a project of this scale to site.
“The time we get to the position [of confirming the main contractor] we’ve probably spent two-and-a-half years of just looking at construction and procurement before you select the contractor to then spend four years building it.
“It’s an enormous amount of understanding and logistics to try to bottom out risk and price for everybody.
“We’re all trying at the current time to keep all our risks down to a low level, but that’s good for us and good for the contractors and the consultants because nobody wants to catch a cold on a project of this scale because it can take whole businesses down.”
Laing O’Rourke has been contacted for comment.