Foster + Partners has said it is ‘shocked and disappointed’ after losing a High Court battle over an unrealised hotel scheme which would have cost its client more than double the original budget.
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Last week the UK’s largest practice was ordered to pay £3.6 million to compensate Riva Properties as a result of the ballooning budget on a proposed 600-bed, five-star hotel project near Heathrow.
Foster + Partners, which said it would review ‘what lessons should be taken’ from the case, began working on the scheme in 2007, having been formally instructed to carry out RIBA Stages A-L, equivalent to the current RIBA work stages 0-6.
The seven-storey hotel would have also featured seven subterranean floors and would have been surrounded by a glass biosphere. The scheme was approved by the London Borough of Hillingdon in 2009.
In his evidence, developer John Dhanoa, who owns Riva, said he had told Foster + Partners that the initial budget was £70 million.
However, when Fosters’ design was costed by an external company (EC Harris) in 2008, the estimated construction cost came in at £195 million.
At that point Dhanoa agreed to increase the budget to £100 million, ‘in reliance upon Fosters telling him that the project could be “value engineered” down to that figure’.
However Dhanoa could not obtain funding for the scheme, which he later discovered could not possibly be value engineered so low.
He could not build the scheme that Fosters had designed for him, and which had cost him a total of approximately £4 million in professional fees – half of that being paid to Fosters and the other half to the ‘other members of the sizeable professional team and in other fees’.
Riva Properties and three other companies involved in the project pursued the architect over the fees, loss of profits and for the money needed to find a design team which could stay on budget. The dispute eventually led to an 11-day trial.
Dhanoa claimed three key alleged breaches of the architect’s duty to exercise reasonable care and skill in their professional performance.
The first – that the practice had failed to carry out RIBA stages A and B, including not establishing a budget – meant that Riva was left with a hotel design costing more than twice its original intended budget to build.
The second breach was that Fosters had advised the developer, following the £195 million costings, that the hotel design could be value engineered to a price within the £100 million budget. The client’s expert witnesses later found it to be ‘blindingly obvious’ that this could not be done.
Lastly, the client accused Fosters of failing to warn Riva that it would not be possible to value engineer the project to meet the budget.
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