Select Committee on Public Accounts Sixty-Third Report


  1. House officials used competitive tendering to let contracts for the construction elements of the project. Contracts with the architects and the structural engineers, whose eventual fees totalled around £20 million for the contracts concerned, however, were not let by competition (Figure 2).[18]
  2. Figure 2: Total fees for the consultants constituting the project management team




    £million at outturn prices


    Michael Hopkins and Partners



    Structural Engineer

    Ove Arup and Partners



    M&E Engineer

    Ove Arup and Partners



    Fenestration Engineer

    Ove Arup and Partners



    Construction Manager

    Laing Management Limited



    Project Manager




    Quantity Surveyor

    Gardiner and Theobald









    Source: Supplementary memorandum submitted by the Clerk of the House of Commons and Chief Executive, Ev 21

  3. In 1989, the then Department of the Environment (which had responsibility for the Parliamentary estate prior to 1992) appointed architects Michael Hopkins and Partners to undertake a feasibility study of the refurbishment of a number of buildings on the Parliamentary estate for £25,000. Michael Hopkins and Partners then produced for no fee a feasibility study for a larger development which in time was to become Portcullis House. On the basis of this study, Michael Hopkins and Partners were appointed as the architects for Portcullis House, for which they received a total fee of £14.9 million.[19]
  4. Ove Arup, the project's engineers, were employed by Michael Hopkins and Partners during the project's initial phases. During the later phases of the project, House officials appointed Ove Arup, without competition, to undertake a variety of other tasks such as the engineering of the fenestration. Fees paid to Ove Arup for the structural and fenestration engineering commissions amounted to £5.5 million.[20]

  6. Professional fees paid to the project management team (Figure 2) amounted to some £42 million. This represented around £32 million in 1992 prices, 18 per cent of the building's final cost, and 52 per cent higher than the forecast of £21 million in 1992 prices. House officials explained that this high level of fees partly resulted from the use of a construction management approach, which leads to proportionately higher professional costs but which should be offset by lower construction costs.[21]
  7. The fees of each of the members of the project team were mostly based on a percentage of the construction costs. HM Treasury advice at the time the contracts were awarded preferred fixed fees to percentage fees because the latter provided little incentive for the project team to minimise construction costs. Both the new project manager (when appointed in 1996) and the mid-term review of the project (in 1999) recommended that the Parliamentary Works Directorate should move from percentage to fixed fees. House officials negotiated this change with the project manager and the quantity surveyor. They did not, however, formally offer a fixed fee to the architects, and negotiations with the construction managers made little progress. House officials did not enter into negotiations with the supervising engineers because their work was almost complete at that stage.[22]

  9. Higher costs were also incurred because of delays in constructing Westminster Underground station, but most of these costs cannot be recouped from London Underground Limited. House officials estimated that the delays cost some £9.1 million (£6.8 million in 1992 prices), comprising £6.0 million in construction costs and £3.1 million in professional fees. The extra construction costs consisted principally of storing pre-fabricated building components, due partly to the late notification of the delay by London Underground, and increased prices resulting from the delayed placing of contracts. House officials are pursuing compensation from London Underground, but expect to receive £750,000 at most, less than ten per cent of their estimate of the actual costs incurred.[23]
  10. The limitation on compensation results from a 'liquidated damages' clause in the contract with London Underground. House officials sought legal advice on the events that could be covered by the clause, and were advised that liquidated damages could be based only on events that were reasonably foreseeable at the time of the agreement. In practice, the clause covered only the cost of renting temporary accommodation. Other costs which might have been anticipated, such as the compensation payable to suppliers for the storage of pre-fabricated materials, were not covered by the clause and therefore no compensation was due. House officials attributed this to the delay occurring at a point in the project when it would have been difficult to have foreseen additional costs. Counsel had since advised that the inclusion of a liquidated damages clause in the contract restricted the compensation due to the House to the amount originally agreed and for the reasons stated, and thus there could be no additional compensation payable.[24]

  12. Portcullis House completes a programme to increase the accommodation for Members and others working in the Palace of Westminster, and to provide an office for every Member. The completed building provides the accommodation that was specified from the outset, with minor variations. A major consultation exercise was carried out in 1990 when the design brief for Portcullis House was being drawn up. Users' views were also sought immediately after they moved into the completed building. House officials have not, however, consulted the building's occupants since the building was opened in September 2000, or reviewed what more could be done to improve occupants' working environment. Officials were assisting in a survey of the building's impact on members' work activities and attitudes, which was being undertaken by the Associate Parliamentary Group for Design and Innovation. Officials were conscious of the risk of 'survey fatigue', and thus were not keen to carry out a further survey.[25]
  13. The design of Portcullis House incorporated several innovative features, such as a natural ventilation system rather than conventional air-conditioning, intended to provide a high standard of energy efficiency. Such innovation contributed to the high capital cost of the building, and was expected to be offset by savings in running costs over the life of the building. In the 12 month period to August 2001, the first year of the building's operation, energy consumption was around four times that predicted by the project's engineers (90 kilowatt hours a year per square metre). House officials noted that consumption figures included the energy used by occupants' computers and the kitchen facilities as the building's limited number of utility meters did not provide sufficiently detailed data to allow an assessment of the building's energy efficiency. House officials were planning to provide advice to the building's occupants on, for example, how to use the blinds so as to secure the high level of energy efficiency anticipated by the building's designers. Steps had also been taken to rectify the problems that occurred with the cooling and ventilation system during the very hot weather of June 2001, which had been the subject of complaints from Members.[26]
  14. House officials noted that the high capital cost of the building was also justified by the durability of materials and the expected lower maintenance costs over the building's lifetime. For instance, the House of Commons Commission considered whether to use steel instead of aluminium-bronze for the roof, and selected the latter because there would be higher maintenance costs associated with the steel, which is less durable and requires regular re-painting. It is too early to assess whether the durability of the materials will deliver the lower maintenance costs which have been forecast.[27]


18   C&AG's Report, para 5.24; Q182 Back

19   C&AG's Report, para 5.25; Qs 61-62 Back

20   C&AG's Report, para 5.26; Q64 Back

21   C&AG's Report, para 3.23 and Figure 18; Q18 Back

22   C&AG's Report, paras 3.25-3.27; Qs 31-34 Back

23   C&AG's Report, paras 3.29-3.30, 3.32; Qs 5-7 Back

24   C&AG's Report, paras 3.29-3.31; Qs 5-7, 93 Back

25   C&AG's Report, paras 1, 4.15; Q20 Back

26   C&AG's Report, paras 4.8-4.9, 4.12 (5th bullet); Qs 111-113, 163, 168-169, 192 Back

27   C&AG's Report, paras 3.36 (2nd bullet), 4.7 (1st and 2nd bullets); Q19 Back

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