A new report out by Manchester City Council is calling on councillors to release a further £25.2m for the Manchester Arts Centre build which has been dogged by problems and lots of cost overruns. The Centre is due to be opened in summer 2023.
If Councillors approve the increase this will see a total capital budget for The Factory’s construction rise to £210.8m – an whopping increase of £99.2m, or 89% on the original budget. In order to fund the latest cost increase the Council will need to borrow a further £15.2m and draw down on their capital scheme inflation budget (£10m)
The report also mentions that Manchester City Council should underwrite occupier Factory International’s £7.8m increase in the cost of fixtures, furniture and fittings, whilst also noting that the venue would not be able to operate without the necessary equipment being in place. The councils executive and governance committees will vote on the cost increase tomorrow – 19th October.
Rising costs were cited as being partially due to inflation, noting: “The external environment has remained and continues to be extremely challenging, particularly with the conflict in Ukraine which has disrupted the supply chain and contributed to unprecedented levels of inflation. The shortages in the labour market have also had an impact.”
The authority said that material prices “continue to increase month on month” and that “COVID-19 restrictions have remained for the construction industry throughout the whole period, which has continued to impact on productivity”.
It was also cited that the chancellors mini-budget last week was also “likely to increase costs further with inflationary pressure on rising costs of finance.”
The report also highlighted “the complexity of the project and the challenges of design co-ordination on the steel structure have also continued to impact on cost”, adding that the largest issue was “changes required to accommodate the final requirements for the mechanical, electrical and plumbing engineering (MEP) work package, where further work has been required to ensure that the structure and acoustic treatments are aligned to the MEP installations”.
Mention was made that the Architect firm Ryder was brought in to tackle the spiralling costs in 2020 and the detailed design work had now been completed. A total of £50.3m of construction works had also been paid for and a further £58.8m had been procured by way of a lump sum.
But the report went on to say a further £16.3m of spending was based on “provisional sums” with at least £3.3m of work yet to be procured.
It is believed that the council will be able “to recover a significant proportion of the borrowing costs from naming rights income” – with a fundraising and commercial sponsorship target of £24.17m.
£106.5m of the funding of The Factory was given by the government, who will also benefit from a £9m per year grant from Arts Council England. Apparently on record this is the largest amount of government arts funding to a single scheme since Tate Modern.
The Factory will be marketed as “a global destination for arts, music and culture, commissioning and presenting a year-round programme by leading artists from across the world”. It will be run by the team behind the world-famous Manchester International Festival.
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