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Friday25 July 2014

Part L sends costs spiralling

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Delays in approving Barts & Royal London mean it must now comply with tough new carbon regulations

The cost of major public buildings - including the troubled Barts & the Royal London Hospital - is set to spiral following the introduction of new energy efficiency regulations.

Barts and other hospital projects that have been put on hold by the Treasury, pending a review of costs, should have started before the new Part L of the building regulations came into force. But because of the delays, they will have to comply with the tough new regulations.

The Department of Health has confirmed the hospitals will have to comply with the new legislation, and said the private sector PFI partners must meet the cost. This has sparked worries that design could suffer as budgets are squeezed.

"Already the affordability of a scheme is inhibiting good-quality design work," said a leading PFI consultant. "If you squeeze it a bit more, what are you going to lose?"

The government estimates that the new regulations will add 2% to the cost of any new building, although industry estimates place it much higher - up to 10%.

A 2% rise on the cost of the £1.2 billion Barts project would be £24 million, which the PFI contractor, Skanska, would have to meet.

Another major PFI project, Broomfield hospital, has managed to avoid the new regulations by making a nominal start on site. Project manager Ian Twydell from Mott MacDonald estimates that it could have cost £30 million otherwise, "which would have almost stopped the PFI".

Schools have also been affected by the new legislation, and some projects could have to be re-tendered.

A Department of Health spokesman said: "Business cases for PFI hospitals use the standard form PFI contract. This contract includes an obligation for the private sector to bear the risk of any foreseeable legislative changes. The changes to the building regulations were widely signalled and ODPM consulted with (for instance) the Major Contractors Group.

"The Barts scheme will comply with the building regulations and no additional costs for compliance with the upcoming changes to the regulations have been, or will be, paid by the public sector.

"Regarding future schemes, they must all comply with legislation including the building regulations."

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