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Sat December 09 2023

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Estimators price cladding replacement at 10 times government budget

19 Apr 21 The true cost of replacing dangerous cladding is likely to be closer to £50bn than the £5bn allocated by government, according to a Midlands contractor busy pricing up jobs.

Colmore Tang has found that bringing buildings up to EWS1 compliancy costs an average of £4.65m for those over 18 metres
Colmore Tang has found that bringing buildings up to EWS1 compliancy costs an average of £4.65m for those over 18 metres

Colmore Tang Construction says that the government’s £5bn Building Safety Fund for remediation works is nowhere near enough for what is required to make every high-rise housing development EWS1 A1 compliant.

Colmore Tang Construction has priced remedial projects on more than 20 typical developments in Leeds, Liverpool, Manchester and the Midlands in the last few months. Its analysis suggests a total figure closer to £50bn, which equates to approximately a third of the annual output for the whole construction industry.

Based in the Midlands, Colmore Tang has delivered more than 3,500 high density residential units and has years of experience in whole building remediation, which includes cladding and envelope remedial works. It launched a cladding remediation arm in January 2021 in light of the ongoing crisis.

Colmore Tang has found that bringing buildings up to EWS1 compliancy costs an average of around £4.65m for buildings above 18 metres and around £2m for buildings between 11 metres and 18 metres.

The latest Building Safety Programme figures from the Ministry of Housing, Communities & Local Government (MHCLG) reveal that around 5,000 buildings over 18 metres require an EWS1 certificate and may require remedial works, while the same can be said for around 35,000 buildings whose heights are between 11 and 18 metres. According to Colmore Tang’s pricing, which reflects its first-hand and recent experience of tender processes for cladding remedial works, this would bring the total to around £25bn for buildings over 18 metres and a further £70bn for buildings between 11 and 18 metres.

Given the dearth of information generally available and taking an optimistic view, the company’s estimators have reduced the theoretical total of £95bn by around half for safe measure, arriving at almost £50bn + VAT as a realistic upper sum, they say.

There has been mounting pressure from MPs to reassess the size of the Building Safety Fund, with the House of Commons housing, communities and local government select committee recently expressing the view that the full cost of remedial works could be closer to £15bn.

Revisions from industry experts and political representatives have also put question marks over the government’s arrival at £5bn as a realistic budget, which also fails to account for the irrecoverable 20% VAT and which Colmore Tang believes will ultimately be borne by the occupiers.

 The contractor’s evidence suggests that the initial costing methodology from professionals submitting bids to the Building Safety Fund did not accurately reflect the full scope of works. Colmore Tang claims that initial bid submissions do not fully account for many logistical challenges, permits, rising costs of materials and scarcity of resources.

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Its conversations with developers throughout the UK as well as its engagement in tendering processes, have revealed that some professionals have submitted budgets that are as much as three to four times below the real cost of the works. It cites a recent example of a developer in Birmingham that submitted a bid for £3m despite the full project being closer to £10m, and claims it is a phenomenon being repeated across the country.

Some remedial works will need to be carried out within the building itself, for example, leading to significant costs associated with the temporary accommodation of residents. Commercial facilities would also need to be closed if the structural works of those premises are affected.

Another example is the formulation of Basic Asset Protection Agreements, permits for which developers must apply in the event of any construction works taking place beside Network Rail infrastructure. These can often take up to nine months to secure, carrying significant fees for those involved in the project in the meantime.

Developers could also face unlimited fines if they fail to adequately protect water courses located in and around their site and the inspection of these routes alone can add tens of thousands to the cost of a project.

 Steve Underwood, chief operating officer of Colmore Tang, said: “The bottom line is that the true cost of remedial works has been severely underestimated and meaningful progress won’t be made until politicians and industry professionals develop a clearer understanding of funding and logistical challenges at hand here.

“Our estimates are not plucked out of thin air but are based upon real life scenarios which we see day in, day out. There’s a stark difference between costing a project and actually executing it, which largely explains this discrepancy. We’re seeing developers and surveyors quoting budgets that are nowhere near where they should be and we’re sleep walking into a scenario in which that only becomes apparent half way through the remedial works. That’s bad news for everyone.

“Suggestions that by simply re-tendering schemes we can reduce costs to original figures are patently unrealistic and quite frankly, dangerous. The race to the bottom approach to costing produced the poor workmanship, material standards and quality control which led to the cladding crisis in the first place and we are in danger of things spiralling out of control if we don’t buck up our ideas. That needs to be driven by contractors, developers and surveyors and supported by a government prepared to dip into its pockets.”

He continued: “Another of the government’s urgent priorities will be to address the insurance dilemma, which has gone under the radar despite it being one of the most onerous stumbling blocks in this crisis. Suggestions that a building may be made safe by the incorporation of additional fire barriers to a B1 standard is all well and good and may be significantly cheaper, but as things stand any designers, fire engineers, insurers or contractors worth their salt wouldn’t risk this approach. They’re inevitably and understandably unwilling to carry that risk. Indeed, it is almost impossible to procure professional indemnity insurance at commercial realistic rates. As a consequence we could be in a position where the country will be flooded with uninsurable buildings.”

He concluded: “Whilst ensuring that the essential cladding repairs are undertaken, cognisance must be given to the other elephants in the room, namely maintenance of life safety systems and the remediation of internal fire compartmentation. It is noteworthy that these matters have been addressed under the provisions of the Act but do not appear to be part of the fund.”

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