Deloitte: Palace of Westminster revival to cost billions

13 July 2015 Consultancy.uk

The Palace of Westminster needs modernisation as the ancient buildings are starting to buckle at the seams. To develop a project plan, a Deloitte-led consortium, including AECOM and HOK, were called in by the UK Government to consult and develop a number of renovations. The consortium has since investigated several options, with the longest taking 32 years and the shortest 6 years. Total costs are calculated at £3.5 to £5.7 billion. The House is expected to make a final decision on the most strategic option in spring 2016.

The Palace of Westminster was constructed in the mid-1800s, and stands at one of the most recognisable landmarks in the UK. The Palace, besides being home to the UK Parliament,stands next to Westminster Abbey, where the most notable nobility of the Royal Family have found their eternal rest. The building was built after a previous building on the site was devastated by fire in 1834. Some of the buildings in the area, including the Parliamentary Estate, Westminster Hall, built in 1099, that survived and are still in use today. The buildings are now all classed a Grade I listed building and, with Westminster Abbey and St Margaret’s Church, forms part of the Westminster World Heritage Site.

As with almost everything that exists in time, aspects of the building have had – and continue to need – maintenance, repair and modernisation. Consultancy.uk reported earlier on the trajectory set out for the estate and Deloitte’s role in leading a consortium, including AECOM and HOK, which has been to formed define the future of the heritage site. The Independent Options Appraisal (IOA) has developed a range of possible options for the future of the buildings on the site. Each of the options comes with advantages and disadvantages, including the ultimate price tag of restoration.

Palace of Westminster revival to cost billions

The IOA developed several potential solutions to the work required to get the buildings in good order for the long term. These options range from the minimum required investment in a multi-phase approach, to one that creates significant improvement for the long term sustainability of the buildings in the modern era:

  • A multi-varied approach where work is done in phases over a long period of time, around the continued use of the space – with a potential 32 year timeframe.
  • A programme where the building continues to be used in part, while certain functions are moved to a temporary location, including the House – to return on an estimated 11 year completion period.
  • The final option in terms of period sees the Palace closed down completely and renovated, with an approximately 6 year timeframe for completion.

Costing renovations
The capital expenditures for the different temporal proposals differ considerably. The longest term programme will cost up to £5.7 billion, with an expanded partial decant scheme projected to cost £4.4 billion. The full decant renovation – with significant improvements – would cost £3.9 billion.

The cost estimates for capital expenditure include: construction works and delivery, temporary accommodation, programme management, future inflation, an allowance for risk, and VAT. The IOA highlights that the numbers cited by the report are still in the early stages of feasibility preparation plans need to be firmed up.

Renovation plans

A recommendation on which of the options is most in line with the strategic needs of the location will be made by the Joint Committee in early 2016, followed by a decision by the members of both Houses in the spring of 2016. Given the scale of the project, the planning phase is likely to take a number of years, with the first broken ground expected in 2020/21.

Alex Bell, IOA lead and partner at Deloitte Real Estate, says: “Our analysis indicates that the restoration and renewal of the UK’s most famous building will be a challenging and potentially expensive exercise, but that it could also generate significant benefits to Parliament and the UK more widely. Members and peers face unenviable decisions, although recent mega-project success stories such as London 2012 and Crossrail demonstrate the UK’s capability to deliver such projects successfully.”

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