Factory, July 21, P.PNW 10a
Construction is due to complete in December 2022

Factory remains ‘high risk’ due to rising materials prices 

Dan Whelan

The £186m Manchester arts venue is on budget ahead of completion in December 2022 but the city council said the project “remains high risk” due to rocketing construction costs. 

The budget

Manchester City Council will have a clearer idea of whether the project is finish on budget next March, when the remaining work packages, valued at £32m, have been awarded. 

So far, £105.7m has been spent on the 143,000 sq ft venue, located off Water Street in Allied London’s St John’s district. 

Lead contractor Laing O’Rourke is grappling with the rising cost of materials, supply chain blockages, and product and labour shortages, “as a result of Covid-19 and Brexit”, according to a report to Manchester City Council’s resources and governance scrutiny committee. 

Factory, July 21, P.PNW 7

Lead contractor Laing O’Rourke is grappling with the rising cost of materials

The prices of structural steel, concrete and timber have been giving the construction industry headaches for the last few months. The price of concrete reinforcing bars increased by 42.8% over the year, plywood by 29.8%, and structural steel by 38.1%, according to data from the Department for Business, Energy and Industrial Strategy. 

“The project remains high risk…and the current budget does not include for any acceleration or additional programme pressures,” the council report states.

Manchester City Council does not foresee any further increase to the budget, it is understood.

The Factory budget includes a £8.2m contingency allowance, which has yet to be drawn down, the council said. 

Construction update 

The steel and concrete frame is due to complete at the end of August, which will enable the internal fit out work to progress. 

The installation of the external corrugated pre-cast panels to the north and south gables of the warehouse is progressing, following some design tweaks. 

Factory, July 21, P.PNW 13

Several design tweaks were made earlier this year

Pre-cast panels are also being fitted to the theatre element of the venue, while installation of the mechanical and electrical systems is due to start once the tower structures are completed. 

Work is also taking place inside the theatre; the internal auditorium and orchestra pit are both under construction. 

A difficult journey 

The project has been beset with delays and spiralling costs over the years. Manchester City Council noted in a report in October that delays caused by the pandemic meant that the project needed an additional £45m to complete – pushing the budget to £186m in total. 

Designed by Dutch architect Rem Koolhaas’s studio OMA, The Factory is backed by Manchester City Council, which invested £20m in the scheme in 2018. 

The Government has forked out £78m in grant funding, and the National Lottery has provided £7m. 

Last December, the venue received a £21m cash injection from the Department for Culture, Media & Sport and Arts Council England, intended to help offset the challenges that have led to mounting costs and project delays.  

The Factory is intended to be a modern and innovative arts and culture hub for Manchester and will serve as a permanent home for the Manchester International Festival. 

Last November, the city council hired Flan McNamara, a former construction chief at Sellar Property Group, developer of London’s Shard tower, as a consultant to help progress the scheme.   

Factory, July 21, P.PNW

The steel and concrete frame is due to complete at the end of August

McNamara is working with Laing O’Rourke to deliver the project and help it stay within budget and on schedule.  

The council predicts the scheme to bring a £1.1bn boost to Manchester in the first decade after its completion. The intention is for The Factory and MIF to commission and present a year-round programme of ground-breaking interdisciplinary work by artists from around the world.  

The venue is anticipated to attract up to 850,000 visitors a year and host a range of performances, from music, dance, theatre, opera, visual arts, and contemporary work incorporating the latest digital technologies. 

Your Comments

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Why isn’t it fixed price or at the very least a GMP?

By Oscar

This is really important for Manchester. Levelling Up and culture. It mustn’t fall victim to short term inflation pressures.

By Anonymous

Oscar, in theses uncertain times you try and commit yourself to a GMP contract with spiralling costs as mentioned in this feature, it maybe that this is a D&B contract however, why is it the contractor always has to stump up the bill. Get real!

By CBA

What an absolute joke of a project this has turned out to be. Shocking waste of money. The building looks more horrendous each day it is ‘slowly’ built!, after about its 10th design reinvention. How much more money can they actually chuck at this. A white elephant if ever there was one

By Steve

The council were poorly prepared for this project. Their process for selecting the main contract was poor so they ended up with only one contractor interested. They allowed the main contractor to design the project to suit their self delivery model rather than a value for money solution. Their ability to challenge increased costs due to Brexit and COVID has been poor due to the resource they had on the project and now there’s suggestions of being at risk for inflation? so the contract is poor. The once favourite contractor is seeing this as a last hurrah? after not securing the Town Hall and no other large scale projects being on the radar,

By Anonymous