Gloucester’s flagship regeneration project, The Forum, has attracted scrutiny following revelations that nearly £40 million of the £115.1 million budget was allocated to expenses beyond construction costs. This substantial sum covered consultancy fees, land acquisition, tenant incentives, and other development-related expenditures.
Located near Station Road, The Forum features a four-star hotel, a 399-space car park, and over 106,000 square feet of office space, cementing its role as a prominent city centre landmark.
During a recent Gloucester City Council meeting, councillors reviewed a comprehensive report on the project’s financials and were keen to understand the breakdown of costs. Councillor Alastair Chambers sought clarity on whether the total project cost still aligned with the original £107 million budget. Andy Hearne, Head of Place at the council, clarified that additional funding from an abandoned levelling-up proposal for the Fleece Hotel—amounting to £8.1 million—was redirected to The Forum project as contingency, bringing the total budget to £115.1 million.
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Peter Langley-Smith, managing director of Reef, the council’s development partner, explained that aside from the £74.5 million paid for construction by contractor Kier, other significant expenses included professional fees, land purchases, tenant incentives such as rent-free periods, consultant charges, and development management fees.
A key delay and cost increase stemmed from the unexpected discovery of an exposed gas main in October 2022. This discovery resulted in a 21-week extension of the project timeline and claims amounting to approximately £7.33 million from Kier. The disagreement over risk allocation was ultimately resolved through adjudication, which favored Reef. Despite this, the final settlement increased the build cost by 6.58%, equaling roughly £4.8 million. Mr. Langley-Smith noted the increase applied on the original £73 million construction contract.
Councillors expressed concern over how such a costly issue arose within a design and build contract, which typically is intended to cover unforeseen liabilities. Mr. Langley-Smith explained that variations and claims for unforeseen events, including weather or delays, are common in complex projects and that the final settlement was significantly below Kier’s initial claims.
Further questioning addressed how the gas main’s existence was not detected earlier. Reef representatives clarified that initial surveys were conducted to the best possible standard before contract commencement, but at-risk underground conditions meant Kier was responsible for additional investigations. The dispute largely centered on whether earlier discovery could have reduced delays and costs.
Despite these financial and logistical challenges, Council Leader Jeremy Hilton praised the successful transformation brought by The Forum. He highlighted the completion of a 400-space car park equipped with electric vehicle charging points, the addition of high-tech office spaces attracting major tenants, and the opening of Gloucester’s first four-star hotel, Indigo. Hilton emphasized the project’s cross-party support and its positive impact on the city centre’s regeneration.