The Factory Allied London
Laing O'Rourke is building the scheme

The Factory costs spiral £45m on Covid

Dan Whelan

Billed as “one of most ambitious arts spaces in the world”, the 143,000 sq ft venue requires additional cash to complete, prompting Manchester City Council to hike the budget to £186m due to the “significant impacts of the coronavirus challenge”. 

The Factory’s estimated completion date was 2019 when the concept was first announced in 2014. But the council said it now expects the project to complete in December 2022 due to disruption to the construction timeframe. 

“As with all construction projects, Covid-19 has had a profound impact on the cost and programme. This is the biggest single reason for the budget increase,” the council said in a statement on Monday. 

The council cannot afford to increase its own contribution to the scheme, which stands at around £50m, so the additional £45m will instead be sought from the Government and through fundraising by The Factory Trust, the project’s fundraising vehicle. 

Around a quarter (£10m) of the requisite £45m has been earmarked as contingency funding to “reflect the levels of uncertainty across the construction industry” and ultimately may not be required, the council added. 

Designed by design studio Office for Metropolitan Architecture, founded by Dutch architect Rem Koolhaas, The Factory is being built by contractor Laing O’Rourke and has already benefitted from a £78m Government grant and a further £7m of National Lottery funding. In 2018, the city council earmarked a further £20m for the project as costs began to escalate. 

At the time, demolition and preparatory works had commenced to build what is intended to be one of the largest purpose-built cultural buildings in the world. Once complete, the council says, The Factory will deliver a £1.1bn boost to Manchester’s economy over a decade, attracting up to 850,000 visitors a year and creating 1,500 jobs. 

The venue will provide a permanent home for Manchester International Festival. It is a key part of the St John’s mixed-use neighbourhood, which is largely being brought forward by developer Allied London under its Enterprise City brand. 

Sir Richard Leese, leader of Manchester City Council, said: “Delivering something asgame-changing as The Factory is always going to involve some unforeseen challenges, and the global Covid-19 pandemic is pretty monumental.  

“The serious financial consequences of the crisis mean the council is not in a position to commit further funding to this project but, as is the Manchester way, we will be resourceful and find other ways to ensure we create something special. 

“This is a project that will have enormous benefits for the city and its people. It’s precisely because of these difficult times that it is more important than ever that we deliver it.” 

 

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The council really need to scrutinise these costs because with the slowdown in the construction industry generally, labour will be more plentiful and as a result not as expensive which should significantly mitigate against the increased costs caused by an extended programme.

By QS watch

Is this more government funding for the most funded city in the UK?

By Not more funding!

I’m sure the money they make off selling their land at eastlands for another new arena could help pay for this…?

By sceptic

If it hadn’t already increased in cost prior to Covid then it might be believed but I fear Covid is probably an easy excuse to cover someone else’s failure to properly cost. Most of the additional cost of brexit will probably be relabelled due to covid

By Anonymous

Given the current funding crisis in the arts, never could it be more apparent that this token gift from George Osborne will leech vital blood from existing organisations.

By Mike

A lot of unanswered questions – Seems a bit odd to blame Covid.
Is every other project currently on site also over budget by 50+%?

Is the £45m cost really the cost of closing the site for 2 weeks because of Covid? £22.5m a week?

Did they not take out adequate insurance?
Shouldn’t somebody at the council’s job be on the in if this is the case?

By Brian

Sure the government will bail them out.

By Victor the predictor

Did they under budget this and then rely on funding from the government, I seem to recall something similar before, I may be wrong?

By Citizens for Concern

We are, once again, back to the same old question of responsibility and accountability. Those 45 million pounds will not disappear as ‘extra costs’.

By James Yates

After reading or rather enduring the tsunami of numbers,,,, my senses have returned. This is now a mismanaged, partially funded project. A sponsor deal?. Not dissimilar to the Arena at Eastlands ~ CooP Live, with their corporate blue lighting the NEast city sky. Maybe,,,, AuDi~~ performance. Maybe I look into © on that. The CooP deal was worth £100M BTW. It will get completed I’m sure. No real drama rather, just another twist in the story.

By Robert Fuller

@Sceptic…how do you know they are selling off the land at Eastlands. I doubt that is the case. A long lease at a premium or rent is more likely. The Council will very rarely sell their Freehold for a commercial project.

By Steve

Great project which will be around in a 100 years time and nobody will know or care that costs overran the originally budget. This will be a real asset for Manchester and worth every penny in the long run.

By Anonymous

Other creative/arts organisations in the city are on a knife-edge but MIF and Factory get a complete free pass? These costs need to be more transparent as the site was closed for a few weeks??!

By CityCentre

I usually really enjoy reading PNW daily news and have never previously commented. However this article has enraged me. COVID – I don’t think so. Whilst I don’t doubt that the scheme will have a positive impact, I sincerely hope that the ARTS Council don’t throw more money at what is clearly mismanagement. Money that could be used effectively elsewhere where there has been no investment in arts infrastructure in decades. Levelling up isn’t just a N-S debate but needs to be a Manchester v rest of the region.

By anonymous

I laughed when I saw the QS comments…. I am sure they comfortably wrote their message whist working from home. However construction (in some instances) hasn’t stopped throughout covid, although the staff numbers have generally reduced, supplier costs have increased, and the utilisation of staff has been greatly affected to implement the correct H&S measures (social distancing/one way systems etc). The market isn’t flooded with cheap labour, and I would argue that construction are doing their level best to keep the economy going whist the city centre offices are empty and most people are working remotely.
PS, I am working on a different project that went from 1000 operatives on site, to 400 at Covid peak, and we then went back up to circa 800. The terminal float in the programme has now been eaten up at the contractors cost (not the clients).

By Construction isnt to blame.

Are we surprised?

By Observer

Overstating the qualities of Manchester building again. Dumbed down from the original concept and probably twice the price. Our city leaders need to get out and about.

By Steve

Piccadilly gardens,the shame of Manchester gets 2mil,the factory gets 186mil.

By jack

I really hope the Factory comes off as hoped. Manchester city centre really needs this so there is more on offer than just the commute and an after work drink. How did Bill Bryson once describe the city centre?…. It wasn’t exactly a glowing opinion.

By Anonymous

This is absolutely crazy.

By Junior

Budget of £186m and size of 143,000 sq ft = £1,301 per sq ft. Grade A office space might be £200 per sq ft to build. The £45m overspend is £315 per sq ft. Seems quite expensive to me. Am I missing something?

By Surprised

3 years late probably equates to £15-£20 million of the overspend just for on-site preliminaries never mind subcontractor preliminaries..3 years late suggests a couple of things.. 1) initial programme was massively incorrect 2) The design was miles behind 3) they started on site too soon to appease some political pressure..I suspect all 3 are at play. OMI, the architect, are a signature architect so this would be a big factor in the delay. We cannot get away from the fact that it is another LOR and MCC job which is late and over budget..someone needs to look into the relationship between MCC and LOR and how these jobs are procured and the fact that LOR get to use their internal companies to deliver the large packages of work..it’s frankly a disgrace..

By Concerned Manchester resident

Expensive, but the best things are. Will be an incredible asset to the city center and the North West as a whole when it is completed. And completed it will be.

By Ryback

I can’t believe that Mr Leese can honestly claim that the cost overrun is solely down to COVID. Every large infrastructure project overruns. Another case of oversold under-delivered and to everyone else’s cost. Any modelling on the reduced visitor numbers likely, even in the event of a vaccine, general economic decline…..yep probably stretches the grey-matter of those council officials a little bit too far!

By Really