In a TCC judgment that may have serious ramifications for Architects, Mr Justice Frazer states that there may be a ''positive duty'' imposed upon an Architect to advise on costs and budgeting, even in circumstances where costs advice has been excluded from their retainer.
Foster + Partners (F+P), the Defendant, was retained to design a revolutionary hotel near Heathrow Airport. Mr Justice Frazer found that F+P were aware of the budget for the build (originally being £70 million, but duly revised to £100 million) notwithstanding that fact the ambitious 600 bedroom hotel (with parts enclosed in a giant glass biosphere) had an estimated build cost of £195 million. Whilst planning permission was obtained, the permission lapsed as funding (understandably) was not secured. Riva (the Claimant) alleged two main breaches (amongst others), which were:
i) that F+P had failed to establish the budget (of which they were made aware); and
ii) that F+P erroneously represented that the design could be value-engineered down to fall within budget.
The claimants were awarded in excess of £3.5 million for F+P's breaches in order to compensate for losses incurred in instructing new consultants and designers to produce a new scheme. Even though budget was not an express provision of the agreement, the RIBA appointment imposed an obligation on F+P to ''identify requirements and possible constraints''. Taking this into account, in finding F+P liable, Mr Justice Frazer stated that ''a client's budget for a project is plainly a constraint (it could also be argued to be a requirement too)''. Judgment was made on the basis that it was ''blindingly obvious'' that the proposal was over budget
In a nutshell, Architects cannot ignore costs and, if they do, run the risk of having to compensate clients who then require work to be redesigned to a budget. Quite tellingly, this is the case where the contract did not expressly require costs consideration/budgets.
But in a scathing judgment, Mr Justice Fraser said: “Fosters embarked upon designing the project with no thought or consideration for the budget at all.