Shard builder pins down materials costs

Developers of the £2bn Shard skyscraper in central London are confident they can keep costs on budget despite soaring material prices.

The forward-purchase of major basic materials, including glass and steel, has been locked down while the main contract with Mace is close to completion.

Mace is negotiating a fixed-price contract to build the 310m tower and has been told to keep costs to around £300m.

London Bridge Quarter Project managing director Bernard Ainsworth declined to detail prices of materials already purchased, but the steel package is thought to be worth £30m alone.

He said: "The prices will emerge as contractors are appointed.

"The key so far has been forward-buying those basic materials and we are very pleased with the prices and are in the process of fixing them."

Development director Hamish McKenzie said the credit crunch was having no impact on selling space in the building, with a major lease for seven office floors already signed by Transport for London.

He said: "If you start a 13-year project like this thinking you will have a good market the whole time, then you are deluding yourself.

"We hope that as the building starts coming out of the ground next year, the property market will also."

Early indications suggest luxury apartments in the building will be snapped up fast, with six callers a week inquiring about their price - yet to be fixed.

Work on site is currently limited to careful demolition of Southwark Towers, which is dropping at a rate of one floor a week.

Piling works are expected to begin in January 2009 and be completed in September 2009, while above ground works are scheduled to start in the second quarter of next year.

Shard contractors

• Management - Mace
• Demolition - Keltbray
• Steel - Corus/CBUK
• Piling - Stent
• Facades - Scheldebouw
• Lifts - Kone