1.28 The FCO had instructed Michael Wilford and Partners and Whitby and Bird to stop work on the design development in May 1996. At this stage the main elements of the design had been agreed though not all the detailed design work had been done.
1.29 The FCO agreed with Arteos during the negotiations leading to the appointment of the preferred bidder that the FCO would take responsibility and pay for the design to be developed to the point where it was submitted for planning approval (Stage 4 in the design team's contract). When the preferred bidder was appointed in July 1997, there was considerable design work remaining in order to complete Stage 4. Bilfinger + Berger told us that they considered that the delays in the project timetable at this point were mainly caused by the delayed design process.
1.30 During the period July to December 1997 the design team were still contracted to the FCO, although in the FCO's view it was the supplier's responsibility to control design development to keep within the £17.1 million construction cost estimate they had included in their bid. In November 1997, the supplier asked the FCO to agree an increased construction cost estimate of £24 million. The increase in cost was partly due to changes in FCO requirements but also due to development of the design in a way that was not consistent with the supplier's bid.
1.31 The FCO refused to fund all the increased construction cost and the design was revised to remove or redesign some of the more costly elements while remaining within the output specification. The design team was given an extra two months to carry out the additional design work required which delayed the FCO reaching financial close. The supplier bears the risk that the stages of the design completed after novation do not conform to the FCO's output specification.