Gloucester’s £115.1 million The Forum project, a flagship city centre development featuring a four-star hotel, a 399-space car park, and over 106,000 square feet of office space, has come under scrutiny for the allocation of nearly £40 million spent outside direct construction costs.
At a recent Gloucester City Council meeting, councillors reviewed a report detailing the project’s finances and raised questions about the breakdown of expenses. Initially budgeted at £107 million, the total cost rose to £115.1 million after an additional £8.1 million levelling up fund was allocated as contingency from the abandoned Fleece Hotel project.
Councillor Alastair Chambers inquired about the nearly £40-45 million difference beyond the £74.5 million build costs charged by main contractor Kier. Peter Langley-Smith, managing director of the council’s development partner Reef, clarified that these funds covered professional fees, land acquisition, tenant incentives such as rent-free periods, consultant fees, and various development management charges. These costs are common in large regeneration projects where non-construction factors influence overall expenditure.
A significant delay and cost increase resulted from the unexpected discovery of an exposed gas main in October 2022. This unexpected hazard caused a nearly 21-week delay and led to claims totaling around £7.33 million. Although adjudication largely favored Reef regarding risk responsibilities, the final settlement still represented a 6.58% increase on the initial build cost, approximately £4.8 million.
Councillor Chambers pressed on how such costs arose in a design and build contract, where contractors typically assume risk for site conditions and design. Langley-Smith explained that variations during construction—including client-requested changes, unforeseen weather conditions, and unforeseen ground issues—are common. The final commercial settlement was a negotiated figure significantly below Kier’s original claims, reflecting a balanced resolution.
Questions also arose about how the gas main went undiscovered despite initial site surveys. Langley-Smith stated that surveys were conducted as comprehensively as possible before construction commenced. Under the contract, Kier was responsible for further investigations, and the gas main was only identified during their process. The risk of unknown underground assets like this was acknowledged but could not have been fully mitigated.
Council Leader Jeremy Hilton praised the project’s successful completion, highlighting the substantial positive impact on the King’s Quarter area. He noted The Forum’s new car park with EV charging, green wall, high-tech office tenants, and the opening of Gloucester’s first four-star hotel, Hotel Indigo, which is reportedly performing well.
Despite surprises and additional expenses, The Forum project stands as a transformative development for Gloucester, combining modern facilities with a legacy of regeneration supported across political lines.