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Fosters faces bill of £3.6m after losing hotel case

19 October 2017

The planned hotel was never built

Foster + Partners is facing a £3.6m bill following a High Court ruling on a Heathrow hotel scheme it worked on almost a decade ago.

A claim was made against the world-renowned architectural practice by four companies owned by businessman John Dhanoa.

He commissioned Foster + Partners to design a hotel on the site of a bowling alley near Heathrow in 2007.

However, it was never built, because Dhanoa said the architect’s design would have cost £195m to build, far exceeding his budget of £70m, later increased to £100m.

The judgement handed down by the Technology & Construction Court said that Foster + Partners had failed to establish the project’s budget, and had also indicated that the scheme could be value-engineered down to the £100m budget of Dhanoa.

Mr Justice Peter Fraser said it was “blindingly obvious” that this was not possible and that “Fosters had a duty, in my judgement, positively to advise Mr Dhanoa of that fact”.

He said that the four claimants – Riva Properties Ltd, Riva Bowl LLP, Riva Bowl Ltd and Wellstone Management Ltd – were entitled to recover £3,604,694.36 from Foster + Partners.

Stephen Homer of Ashfords LLP, who acted for the claimants, said: “This case serves as a warning to designers that they cannot design in a vacuum. Cost and budget is a key constraint and should always be identified and considered when designing any project, even when the provision of cost advice is expressly excluded from the designer’s obligations.”

Foster + Partners disputed the allegations made against the practice, denied that any budget was provided by Mr Dhanoa, and denied giving value engineering advice.

Its design for the five-star hotel on Bath Road, close to Heathrow Airport, was a glass-shelled 13-storey building, six of which were below ground. It included 600 beds, a 1,200 capacity ballroom, plus leisure facilities.

A spokesperson for Foster + Partners said: “We are shocked and disappointed by the judgement. We do however take the judge’s comments seriously and are undertaking a review led by our independent directors, supported by Travers Smith, an independent law firm, to see what lessons or actions should be taken from this case.”

Comments

Very interesting development. Perhaps something for my Contract Law students to discuss.

Dr Solomon Adjei, 19 October 2017

Very interesting and agreeable that “This case serves as a warning to designers that they cannot design in a vacuum. Cost and budget is a key constraint and should always be identified and considered when designing any project, even when the provision of cost advice is expressly excluded from the designer’s obligations.”

George Liew, 20 October 2017

Its a tough world but this does send a message to client side advisers on how budgets are established and worked to

colin westpfel, 20 October 2017

A great team effort at Ashfords LLP helped secure this judgment.

Stephen Homer, 20 October 2017

This is an interesting case and a Court decision. It also hinged on common sense application doctrine in law. Projects of whatever size and Complexity should always be constraint by budget and eventual cost and not designed in vacuum. Design cost analysis concept(elemental cost analysis) has been an established phenomenon in the industry for decades, hence value Engineering should start from the design stages and throughout development and construction process and not after and client should be informed accordingly.

OLAWALE SHITTU, 24 October 2017

Where were the quantity surveyors? Surely with those fees the clients could have afforded some cost consultants.

DOMINIC KRAMER, 26 October 2017

Obviously not entirely appropriate here, but Architects are not trained as cost consultants! Presumably there were no shortage of those in this case though?

Hg, 26 October 2017

I'm uncomfortable about this. I understand the client didn't have a budget requirement in his brief for "a 500-bedroom, 5-star hotel". The judge ruled that RIBA work stages required the architects to design to the project constraints. As budget is clearly a constraint, the architects should have demanded a budget to work to. That's a tough call, but if true, it seems to me that it allows clients to set a specification attached to an unrealistic budget; and thus require the impossible from the architect.
Out of curiosity I wondered what a hotel like this might cost: in 30 seconds I plugged £4000/m², 64m² per suite, 500 suites, 25% extra for ancillary spaces into a pocket calculator = £160m plus external works. Make it a Foster scheme, and any client should be thinking of £200m.

Nick Willder, 12 March 2018

If Nick Willder only needed 30 secs to determine a budget, then anyone can as the part of the initial Strategic Brief, cost consultants or not and particularly for a Client Adviser. Fairly basic stuff and important lesson in preparing for the project and many other aspects of the Brief such as programme.

Patrick Wilson, 30 May 2018

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