SOLO COMMERCIAL PROPERTY ISSUE 05 • 2017 • FGOULD.COM
Distribution & fulfilment– page 6
Modular Construction – page 8
Offices and Wellbeing – page 10
Brunel Place, Slough – page 12
ISSUE 05
CONTENTS 3 Meet the Team: Andrew Prickett 4 Garden villages to bloom 6 Roar to the door: distribution & fulfilment facilities 8 Residential innovation: modular construction 10 Health & wellbeing in the built environment 12 Brunel Place, Slough
WELCOME
I’m delighted to present another edition of our UK commercial property publication, Solo.
As part of our business’s strategic focus, we continue to grow our commercial property team and it’s my pleasure to introduce Andrew Prickett, our recently appointed Director and UK Head of Residential. You can meet Andrew on page 3 and find out why he’s passionate about the residential sector. On page 4, we offer a review of the government’s recently announced reforms to the planning system, to create 14 new garden villages across England. Neil Brierley looks at the proposals to
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deliver up to 48,000 new homes and the impact on local economies and on the industry as a whole. Our retail experiences have been transformed by the upsurge in online shopping, and this poses challenges for retailer distribution and fulfilment. Page 6 takes a look at the issues, exploring what clients need and how they can get best value. Of topical interest is our article on page 8, which examines the growing use of modular construction in the residential sector. Aimed at meeting demands for speed of delivery and improvement in quality, these innovations are changing the way we build, and should help to produce the desperately-needed volume of homes highlighted in the government’s recent white paper on housing. On page 10, Marietta Chatzinota of our sustainability team considers the importance of occupier wellbeing, and the way in which this affects
productivity and performance. The industry is beginning to address these issues and Faithful+Gould is collaborating on some interesting innovations that will add value for developers, landlords and tenants. Finally, our back cover showcases a current project which is making a huge contribution to the regeneration of Slough town centre. 2 Brunel Place is part of the flagship commercial quarter created to align with the arrival of the new Elizabeth line. I do hope that you’ll find something of interest in this edition and my team and I would be pleased to discuss any of the topics with you.
MARK STEVENS 020 7121 2984 mark.h.stevens @fgould.com
MEET THE TEAM
Andrew Prickett Andrew has recently joined us as UK Head of Residential
What’s your professional background?
I’m a quantity surveyor and I’ve had just two employers: Faithful+Gould for four years after graduating, and EC Harris, who became Arcadis, from 2003 until 2016. I’ve now come full circle and I’m delighted to have this new challenge at Faithful+Gould. We have a great track record and work on leading projects, so it’s exciting and satisfying.
What attracted you to the residential sector?
It’s about place-making. I want to create environments that add to quality of life, playing a part in people’s aspirations to own or rent a quality property. It’s also a reasonably safe bet that we’ll always need to build or adapt homes, so a good career choice.
Career highlight?
A fully modular residential project in the London Borough of Hammersmith and Fulham, with components built in Nottingham. The UK needs to embrace off-site construction – read about this on page 8. High-profile student accommodation has also been a highlight, most recently 1400 beds at the University of Salford. It’s great to create a new community, a home away from home, where students take responsibility, look after it and enjoy it.
What changes are we seeing in the sector?
The balance between tenure types is a big change. We’re moving closer to a more European model of long-term renting, with demand for good-quality rental products. We’re seeing institutional funds invest in large developments, and hotel-type services becoming part of the high-quality rental package.
So what could happen next?
The UK isn’t building sufficient new homes and there continues to be a widening gap around affordability. There has to be a response to the affordability issue, whether that’s people’s ability to buy, or developers’ ability to create quality affordable rentals. With Milton Keynes now 50 years old, there’s the next generation of new cities and garden villages to consider – take a look at our article on page 4.
What’s your main focus over the next year?
The private rented sector (PRS), both commercial development and student accommodation. The biggest opportunities in the market lie here, our skillset is an excellent fit, and I believe we can respond very strongly.
Have you a longer-term focus?
This is a time of uncertainty, but I think the market will increasingly respond to the call for much-needed later living
and extra-care accommodation. Our skills make a difference here, ensuring that developers and occupiers get the very best value, so we expect to contribute more to this market segment.
Your next career challenge?
I’ve joined Faithful+Gould to help build a business that is sustainable in the residential sector. I’m encouraging in-house collaboration, to make best use of an excellent team, ensuring that clients get the best resource for their projects.
Life outside work?
We have two pre-school daughters and family life is busy. I like to get the kids away from the digital world and into the real world, so we do sporty things and have lots of days out. We’re very sociable and I’m a keen golfer too.
What’s your own home like?
A traditional detached house in a leafy Nottinghamshire suburb, which suits us well – but one day I’d love to design and build a new family home. I’d focus on the quality of the property rather than the size, and hopefully something that makes an architectural statement. We’d be unlikely to relocate far though, as we have everything we need locally, including our children’s grandparents.
How’s your work-life balance?
For me, a healthy work-life balance means thinking carefully about where you live and work. I wanted to work for a business that wasn’t London-centric, so I’m leading a national sector from Nottingham – and that feels refreshingly healthy! This is a great location for travelling around the UK and supporting our regional offices, which is important. I think it’s great that employers now give more thought to work-life balance and also to the working environment – check out our office wellbeing article on page 10.
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Plans for a wave of garden villages creating tens of thousands of new homes in England have been given the go-ahead
Garden villages to
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he government has confirmed the location of 14 garden villages across England. The January 2017 announcement also heralded three new garden towns, in addition to the proposals for seven already tabled. The difference between a garden village and a garden town is simply a matter of scale. A garden village is a development of between 1,500 and 10,000 homes; a garden town is more than 10,000 homes. Taking the lower band values for all of the proposed schemes, a minimum of 121,000 new homes will be built – ambitious plans indeed. The concept of garden villages is not new. Ebenezer Howard’s 1898 book, To-morrow: A Peaceful Path to Real Reform, outlined his vision for attractive, healthy and co-operative new communities. The government’s announcement, and the media coverage, have focused on the number of new homes, but, in line with Howard’s original plan, the homes are
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actually a small part of what will ultimately make a successful garden village Since the announcement, the industry has voiced widespread challenge and comment. There has been strong suggestion that the garden villages are not correctly sited. Planning consultants Turley stated that only one proposed village is in a local authority ranked in the top ten per cent in terms of growth prospects between now and 2039. The Campaign to Protect Rural England (CPRE), while broadly supporting the proposals, has expressed concerns about some of the sites. Most notably, a garden town on green belt land on the EssexHertfordshire border would swallow the hamlets of Gilston and Eastwick. CPRE says that, unless carefully considered, some of the developments could fundamentally affect the well-established rural character of many parts of the UK. Community engagement is critical and early dialogue is needed with local communities in all proposed locations to
inform and shape the emerging plans. Funding will inevitably be a challenge. While the government has announced a number of potential funding streams, many have a deadline for delivery by 2020 – a tall order. Government’s role must surely be to provide seed capital to pump-prime many of the developments, and to unlock private sector investment. The model of delivery is not specified. There are many forms that this could take such as joint venture companies or, for particularly complex proposals, a statutory development corporation. However, if the developments are to be
“A garden village is a development of between 1,500 and 10,000 homes; a garden town is more than 10,000 homes”
Green principles
optimally coordinated and address the garden city and village design principles in full, there may be merit in the formation of a dedicated delivery vehicle for each development. Each garden village delivery team would then commit to the sharing of best practice and lessons learned, at all stages of the process. The government has pledged to legislate to update the New Towns Act 1981 to ensure that there is a fitfor-purpose vehicle for the delivery of new garden villages. The provision of good-quality civic amenities, new schools and associated employment opportunities are certainly exciting prospects. Local authority negotiation on appropriate S106 contributions should help ensure delivery of the local infrastructure needed to create vibrant and viable communities. There are also significant opportunities for the construction market. Delivery should involve not only the large-scale, volume housebuilders and main contractors, but SMEs and local businesses. This is vital
for the longer-term sustainability of local economies, but it puts pressure on the labour markets in the areas concerned, at a time of construction skills shortage. Provision of apprenticeships should be a key focus during the selection of construction partners, leaving a legacy of the next generation of local tradespeople. The government’s commitment to garden villages is commendable, and certainly a great step towards addressing our housing shortage. The provision for a proportion of starter homes is also encouraging, given the inaccessibility of home ownership to young people. It’s now time for action and for the industry to rise to the challenge and ensure that these developments deliver real benefits to the communities in which they sit, during and after their construction. For more information, contact Neil Brierley at: 02920 35 8087 neil.brierley@fgould.com
The Town and Country Planning Association (TCPA) has identified the key tenets of garden city and village design, expressing them in a 21st-century context: A garden city is a holistically planned new settlement that enhances the natural environment and offers high-quality affordable housing and locally accessible work in beautiful, healthy and sociable communities. The garden city principles are an indivisible and interlocking framework for their delivery, and include: • Land value capture for the benefit of the community. • Strong vision, leadership and community engagement. • Community ownership of land and long-term stewardship of assets. • Mixed-tenure homes and housing types that are genuinely affordable. • A wide range of local jobs in the garden city within easy commuting distance of homes. • Beautifully and imaginatively designed homes with gardens, combining the best of town and country to create healthy communities, including opportunities to grow food. • Development that enhances the natural environment, providing a comprehensive green infrastructure network and net biodiversity gains and using zero-carbon and energypositive technology to ensure climate resilience. • Strong cultural, recreational and shopping facilities in walkable, vibrant, sociable neighbourhoods. • Integrated and accessible transport systems, with walking, cycling and public transport designed to be the most attractive forms of local transport.
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ROAR TO THE DOOR
Retailers seek cost-effective distribution and fulfilment centres as a seamless part of an agile logistics network
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he changing consumer experience is driving the need for a slicker retail supply chain. As omnichannel operations have become the norm, and customer expectations of next-day and same-day delivery are continually raised, the challenge for retailers is to optimise their distribution and fulfilment processes. These facilities have become more complex in recent years. The speculative and simple cookie-cutter shed is largely a thing of the past, replaced by increasingly sophisticated and technology-dependent distribution and fulfilment centres. Scale is entirely different. Out-of-town units of 350-450,000 sq ft were once considered large, whereas one million sq ft plus is now standard for many clients. Additionally, there are smaller supporting facilities appearing close to population hotspots. These urban locations closer to the point of consumption are a growing part of the supply chain, with some highprofile companies trialling drone deliveries to complete the final deployment of products to the customer. A more strategic role has emerged for distribution and fulfilment facilities. Rather than being treated as cost centres, they’ve become a more important component of the supply chain infrastructure, with competitive advantage
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“Most of these new requirements are data driven, as part of the rise in connected technologies throughout the manufacturing and distribution value chain�
potential. Expectations of the buildings themselves are changing. They’re now frequently expected to accommodate a shorter, faster supply chain by supporting shortened product life cycles, and to move products as quickly as possible. Today’s facilities may offer critical supply chain competencies such as omnichannel capabilities, reverse logistics, return handling, and value-added services ranging from product assembly to product labelling, repacking, and repair. In addition, they’re often expected to store a broader range of products with specific requirements in terms of dimensions, temperature, fragility, and safety obligations1. Most of these new requirements are data driven, as part of the rise in connected technologies throughout the manufacturing and distribution value chain. Industry 4.0, where machines are optimised with internet connectivity, allowing a system that can make decisions on its own, is furthering the idea of ‘smart warehouses’. The above factors have brought about
changes in client requirements. The cultural shift towards the distribution and fulfilment centre as a strategic asset, together with the growth in individual specification, has led to fewer speculative developments. Some 70 per cent of projects in this sector are now occupier-led, where once it was 30 per cent. In some cases, the retailer occupier, or third-party logistics provider, will identify the land (inevitably brownfield) and in most cases will know exactly what they need from the facility. Clients are typically dealing with a wide variety of challenges, from planning restrictions and design/construction/ fit-out issues, to roof drainage problems, complex fire regulations and Secured by Design requirements. The interface with vehicle provision and movements is also a major factor in the operation. Considerations include loading dock spaces, weighbridges, and associated access issues. We might expect to see more attention paid to sustainability of distribution and fulfilment centres in the future. To date, there has been less integration of issues
such as energy efficiency into the design and delivery of these buildings. Cost and speed to market tend to be the priorities. However, larger retailers are likely to include logistics and distribution in their corporate social responsibility policies, and this is influencing the sector. The supply chain has of necessity become more specialist and the market is constrained by a lack of players, affecting costs. Only a handful of ground engineering contractors have the necessary capability, and façade sizes restrict the choice of cladding contractors. New entrants to the supply chain are needed, but it’s likely to take some time before these emerge. Procurement is invariably via design & build, either single-stage or two-stage. Currently, clients may be hard-pressed to find contractors who are enthusiastic about single-stage, as market buoyancy allows them to be more selective in their choice of projects to tender. On the plus side, two-stage maximises earlier use of contractor intelligence. The Faithful+Gould team often manages client expectations around these issues, supporting the development of clear design briefs, and helping clients meet their procurement risk and value objectives. We have a detailed understanding of the way in which buildings, services and infrastructure work together to facilitate efficient distribution and fulfilment operations. We appreciate the critical role these facilities play in our clients’ overall strategy and the complex, inter-dependent issues that can arise. We’re therefore ideally placed to assist clients in first assessing development options and then supporting design, construction and commissioning phases. We also have significant expertise in the procurement and management of associated automation equipment, on projects in the UK and Europe. For more information, contact Neil Walker at: 0115 957 483 neil.walker@fgould.com 2016, Industry 4.0 and distribution centres, Deloitte Inc.
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Resid ntial INNOVATION
Will modular construction transform the broken housing market?
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n February 2017 the government issued a white paper1 that acknowledges the housing market is “broken”, admitting we need to build as many as 275,000 homes a year compared with the 190,000 built last year. The white paper outlines four steps for achieving this greater volume: 1. p lanning for the right homes in the right places (principally by using local and neighbourhood plan policies) 2. b uilding homes faster (mainly by better linking infrastructure with housing development, more efficient development management and addressing skills shortages) 3. d iversifying the housing market (focusing on increasing the numbers of small and medium-size builders, promoting more forms of tenure and encouraging ‘modern methods of construction’) 4. h elping people now (by helping meet all of the population’s diverse housing needs). The second and third items on the above list are in alignment with the industry’s increasing use of modern methods, notably off-site modular construction, and it will be interesting to see how this plays out. There has already been an upswing
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in UK off-site construction over the past year. Residential is by no means the sole beneficiary, but the sector is well ahead of commercial, for example, with new residential manufacturing facilities set to disrupt a previously limited supply chain. Swan Housing Association has opened its new manufacturing facility in Basildon, Manchester developer Urban Splash has launched its customisable factory-built HoUSe product, and Laing O’Rourke has invested in a manufacturing facility in Nottinghamshire. Insurance fund L&G is building the biggest off-site factory in Europe to supply homes for its private rented housing development pipeline. The principle is well-documented, focusing on moving from a construction to a manufacturing approach, using production-line techniques. A range of different technologies are used, in which a proportion of the construction is completed
“If 20 per cent of new-builds were modular in five years’ time, we’d see a real step change in the market”
under controlled plant conditions and then transported to site. At the bottom end, this refers to the fabrication of components such as door sets or chimneys, or the use of open panels – most commonly made from timber – which are finished and sealed on site. Next on the scale are closed panel systems, where wood, steel or concrete panels arrive finished and plastered, pre-cast concrete elements, and pods, typically used for bathrooms. At the technology’s maximum potential, full volumetric construction results in completed buildings transported to site. Traditionally, modular providers have focused on utility design elements of schools, hospitals and hotels. However, the mainstream residential market is now making more use of the methodology, notably at component level. It won’t be long before fully modular schemes take a proportion of the market – if 20 per cent of new-builds were modular in five years’ time, we’d see a real step change in the market. The construction skills shortage will benefit, as at the production end, offsite utilises a less specialised skill-set. A workforce equipped to handle modular offsite production and installation will require less specialist training and will enable the
industry to better utilise its trained skillsets. Recruitment may also be easier, due to the cleaner, safer and predictable work environment. The concept hasn’t always found favour with investors, insurers and mortgage lenders, but this seems likely to change in line with the improved product offering, and its associated quality/efficiency benefits. Institutional investment into the market is growing, with investors such as pension schemes increasingly regarding housing as an appropriate investment. And insurance giant L&G has certainly taken a lead, with its pioneering manufacturing plans. The industry will undoubtedly need some culture change in order to maximise the opportunities. Some funders remain unconvinced about off-site construction, with resistance often focused on developers being less able to transfer construction risk by tying contractors down to a fixed price contract. Other challenges include the relative newness of the products coming to market, alongside the lack of availability of manufacturing facilities and of trained labour. Is modular cheaper? The quick answer is no, not right now. We’re at the beginning of the product lifecycle and we’re not going to see economies of scale for
some time. The costs are potentially more predictable and more accurate, and there will increasingly be cost benefits to build efficiencies and non-productive time. Whole life costs can be cheaper – or better overall value. But it’s not generally the costs that are driving the modular initiative. It’s the other benefits, as outlined above. Currently, we’re finding it’s cost-neutral. Clients will need advice on their cashflow profiles. There is more activity earlier in the construction cycle than with traditional methods, so modular requires a greater upfront spend. Design certainty at an earlier stage is another element of culture change – modular offers less ability
to make changes once production begins. The methodology lends itself to tightly specified, often branded, products, and that’s where we’re seeing the most recent spike in uptake. At Faithful+Gould, we recognise the benefits of modular and we’re already supporting clients, historically with student accommodation but increasingly with mainstream residential. This is an exciting time; let’s hope the industry grasps the nettle. For more information, contact Andrew Prickett at: 01159 574 807 andrew.prickett@fgould.com
The many advantages of modular construction Modular offers some key strengths: • shorter time on site • more labour efficient • more consistent quality • reduction of defects on site • more efficient materials sourcing/logistics • waste reduction and other environmental advantages • improved site health & safety
• eventual cost advantages through reduced programme and repeated design • more accurate costing • aligns with BIM and facilities management objectives • shift-working can increase factory production to cope with demand peaks • regulations compliance is more straightforward.
2017, Fixing our broken housing market, Department for Communities & Local Government.
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Health and wellbeing Employers, as well as the real estate industry, are looking at how the built environment affects human health and wellbeing
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taff health, wellbeing and productivity is becoming an important focus for forwardthinking employers. It makes good commercial sense. Staff costs, including salaries and benefits, typically account for about 90 per cent of a business’s operating costs1. It follows that anything that affects staff ability to be productive, innovative and creative should be a major concern for any organisation – and the building and workspace design have significant impact. For developers, owners and building managers, there is competitive advantage in embedding wellbeing considerations into the design and operational plans for a building. The end building is then better suited to its users’ needs and can make the best contribution to their health, wellbeing and performance. Even speculative developments can make marketable wellbeing improvements in the base-build: outdoor areas, cycle storage and cyclist showers, for example. Fit-out, however, offers the greatest opportunities when it comes to wellbeing. Inspiring and engaging environments begin with creating workspace that
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66%
Drop in performance when exposed to distracting noise
6%
Reduction in performance due to poor temperature control
6.5%
Reduction in sick leave through improved views and daylighting
46 mins 11-16% More sleep at night on average for office workers with windows
distracting noise, designing for an active workforce, and offering a variety of amenities. Knowing how their workspace performs in real time is becoming increasingly important to employees, and some companies introduce apps and wearables to allow access to building performance data (e.g. air quality and temperature levels) and manage day-today space allocation. Despite the evidenced effects on the workforce, wellbeing is not yet a major influence on the mainstream real estate sector, nor is it playing a sufficient part in design, finance and leasing decisions. However, there is progress, and certainly at Faithful+Gould we find more and more clients want to incorporate wellbeing, and we are frequently asked to include it in project bids. The move towards the mainstream agenda is also demonstrated by the emergence of new accreditation standards, such as the WELL Building Standard, from the International WELL Building Institute. We’re also seeing the adaptation of industry best practice and sustainability accreditation to accommodate wellbeing elements. Projects can now benefit from the formal alignment of BREEAM and the WELL Building Standard. Specific credits use documentation recognised by both accreditations, saving time and costs when project teams are pursuing both standards. Other influential industry bodies are on the case too. The British Council for Offices (BCO) has set up its Environment, Social & Governance Group to address aspects of environmental sustainability that affect and influence office development, design and occupation. This year, the group’s specialist theme is wellbeing, and formal guidance, including monetised
improves business performance. The resulting mix of spaces will be different for each organisation, and will ideally follow a series of detailed assessments of the business vision, the way in which space is used, the range of work styles, their frequency of use, the infrastructure available and its constraints. As well as the organisation of the space itself, wellbeing includes a focus on improved indoor air quality, thermal comfort, daylight and electric lighting quality, engagement with nature, limiting
Improved productivity and cognitive function through improved air quality
benefits, will be published following research into the business case. In spite of these encouraging moves, many landlords and tenants find they lack the infrastructure to prioritise and organise wellbeing initiatives into a practical brief. Consequently, we have worked with Atkins on the development of the Atkins Wellbriefing™ interactive stakeholder engagement tool. The tool enables clients and building users to prioritise aspects of the built environment that are most important to their health and wellbeing, through a digital platform. It captures these priorities as hard data that can be translated into a building brief and specification, removing the guesswork of what people might need from a building. This enables better decisions about investment. Our next step is to develop a methodology for post-occupancy evaluation (POE) as part of Wellbriefing™. Traditionally POE has focused on building performance (ie. energy efficiency of systems), but our new tool, currently in development, will consider the people angle, capturing lessons learned on health and wellbeing initiatives, one year after occupancy. In addition to the above wellbeing initiatives, our sustainability and carbon management team frequently contributes at policy level, changing industry practice by advising government and professional bodies, authoring reports and guides. We are also working directly with many commercial property clients, to find sustainable solutions to their wider built environment challenges. For more information, contact Marietta Chatzinota at: 02032 148 814 marietta.chatzinota@fgould.com
World Green Building Council (WGBC). Infographic source: Health, wellbeing and productivity in offices, WGBC.
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2 BRUNEL PLACE, SLOUGH MARK STEVENS
020 7121 2984 mark.h.stevens@fgould.com
ANDREW PRICKETT
01159 574 807 andrew.prickett@fgould.com
A negotiated single-stage contract gave earlier cost certainty on U+I’s exciting new development
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ransport links and infrastructure expansions play a key part in property development, and Crossrail’s high-speed service is no exception. The Elizabeth Line will rejuvenate travel around the capital, through Greater London and into the Home Counties. Slough will be just over half an hour from central London, and the prospect of improved connectivity is attracting higher levels of investment to this part of Berkshire. The £450m Heart of Slough Regeneration Project, a largescale urban development plan, was created to capitalise on the town’s strengths in the light of these new opportunities. Brunel Place provides the regeneration project with a flagship commercial quarter. The development transforms the 2.5-acre site adjacent to the train station, which will welcome the Elizabeth Line in 2019, the bus station (which fans of the BBC2 comedy The Office may remember from the opening credits!) and the recently rejuvenated high street. There are three buildings proposed for the formerly derelict site, all designed by Sheppard Robson, and their composition aims to complement the distant views towards the listed St Ethelbert’s Church. The resulting 30,000m2 of office and retail
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units will be arranged around new public realm spaces. 2 Brunel Place is the first element of the development. The building will provide 15,800m2 of high-quality workspace, on eight floors, with retail units at ground level and basement car parking. The main façade along the Bath Road is predominantly glazed, opening up views towards Windsor Great Park. The building is targeting an ‘Excellent’ BREEAM rating. Faithful+Gould is appointed by U+I as cost managers, employer’s agent, principal designer and client CDM advisor, and we are currently working on the first of three phases on the site. Our role has included the procurement of the project with a negotiated singlestage contract. This brings advantages: it enables commercial pressure to secure the price the client can afford, and encourages a broadly-completed design ahead of contractor appointment. The uncertainty of the two-stage route is avoided, as is the associated problem of agreeing a cost plan during the second stage. Single-stage is currently less usual, but this route has achieved earlier cost certainty for U+I – a priority in an uncertain market. For more information, contact Guy Solway at: 020 7121 2014 guy.solway@fgould.com
MATTHEW GOODWIN
020 3214 8926 matthew.goodwin@fgould.com
NEIL BRIERLEY
02920 35 8087 neil.brierley@fgould.com
NEIL WALKER
0115 957 483 neil.walker@fgould.com
NIGEL HINKS
0121 483 6301 nigel.hinks@fgould.com
PAUL SHERRY
0131 221 5659 paul.sherry@fgould.com