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The Architect and the Budget

10 Apr 2018

Will an architect be in breach of his duty of care if his design fails to takes into account the client’s budget?  This point was considered by the Technology and Construction Court (TCC) in the case of Riva Properties Limited v Foster + Partners (2017 EWHC 2574).

Facts

Riva Properties Limited (Riva) engaged Foster + Partners Limited (Foster) in 2007 to design a 5 star hotel near Heathrow Airport. Fosters’ Appointment did not include a budget figure but Riva claimed to have mentioned a figure of £70m to Foster at the beginning of the scheme. Foster produced a design that was costed at a sum of £195m which was too pricey for Riva. To overcome his financial concerns, Foster assured Riva that the project could be “value engineered” down to a budget figure of £100m. Acting upon that assurance, Riva proceeded with the scheme.

In the event, the project was ultimately deemed to be unachievable as Riva was unable to obtain funding for the hotel. However, Riva also discovered that the project could not possibly have been achieved for Foster’s figure of £100m. Riva lodged a claim against Foster which included repayment of his professional fees. Foster denied that it had ever been informed of a budget for the project and contended there was no case to answer.

Decision

The Court found that Foster was, in fact, aware of the initial budget figure, but even if he had not been told the figure, he should have made the relevant enquiries to find out what the budget was at an early stage. This was the only way in which all the key requirements of the project could be identified.

The Architect and the Budget

The Court further held that Foster had acted negligently when he advised that the project could be reduced in value from £195m to £100m to bring it within Riva’s budget. Given that Foster knew that Riva expected the cost reduction to be achieved by value engineering, Foster was under an obligation to advise and warn Riva that it was impossible to match the proposed scheme with the allocated budget.

As a result, Foster was ordered to repay professional fees charged of £3.6m.

Key points to consider

The Court’s decision makes it clear that an architect must undertake its design work in accordance with the client’s brief. Cost and budget is a key constraint and should always be identified and considered when designing a project, even if the architect is not expressly required to provide cost advice.

Although the facts relate solely to the provision of architectural services, the case serves as a sharp reminder to all construction professionals of the importance of performing professional services by reference to the client’s objectives and budget requirements. Where a budget has been set, a frequent review of the viability of the scheme against the budget should be carried out.  As Foster found out to his cost, failure to do so can painfully hit the pocket!

For more information on any of the above or, how we can help your business, please contact Graham Sutton or, call 0191 232 8345.