As the Grenfell Inquiry progressed last week, the focus on value engineering intensified, with witnesses from main contractor Rydon scrutinised over the crucial decisions made about the cladding used on the west London tower block.
During the third week of evidence since proceedings restarted on 7 July, Simon Lawrence, formerly Rydon’s contracts manager, was questioned about the process that eventually resulted in the decision to switch from zinc cladding panels to aluminium composite material (ACM) panels on the 24-storey block.
Phase one of the inquiry concluded that Grenfell Tower’s ACM cladding was the “primary cause” of fire spread up the block and did not comply with building regulations.
The inquiry heard last week (beginning 20 July) that in the build-up to the contract being signed, the block’s landlord, the Kensington and Chelsea Tenant Management Organisation (KCTMO) had been trying to cut £800,000 from the project’s costs and had asked Rydon to find savings.
In March 2014, the Sussex-headquartered contractor told KCTMO it could save £293,368 by switching from the originally specified zinc cladding to the plastic-filled aluminium ACM panels, evidence to the inquiry showed.
However, documents show that just days earlier in March 2014, cladding sub-contractor Harley Facades had estimated the savings would be £419,627.
Mr Lawrence, who was involved in the project between June 2014 and October 2015, was asked about the £126,259 difference by Richard Millett QC, counsel for the inquiry: “Can you account for the fact that in each case, the saving presented to the TMO… was for much less than the saving Harley were presenting to you?”
Mr Lawrence replied: “I would suggest by that – although not my area of expertise – that Rydon took some of the savings for themselves.”
He assumed, he added, the money “went against risk or additional profit”.
However, it also emerged that Rydon had underestimated its own internal costs due to an employee error.
In a March 2014 internal email, Kate Bachellier, a cost estimator for Rydon, said that she had discovered the mistake made by another member of staff, which she said meant they would need to "work a little bit harder" to find some value engineering savings.
Mr Millett asked Mr Lawrence: “Was the plan at Rydon to keep the TMO in the dark about the real extent of savings which could be made by the ACM switch and then pocket the difference to make up the shortfall made by [the employee’s estimating] error?”
He replied: “That could be the reason for it.”
The inquiry heard that Rydon met with KCTMO representatives on 18 March 2014 to discuss ways to reduce the original tender price by £800,000 – on top of the £212,000 “tender error”.
“That gives you £1.012m as a deficit before you even start, doesn’t it?" Mr Millett said.
He added: "You are underwater. You have got to find over £1m of value engineering in order both to satisfy your client and to maintain your profit level… That’s a bit of a challenge, or would have been a bit of a challenge… no?”
After being shown internal emails discussing pricing, Mr Lawrence said: “There was definitely VE [value engineering] related to the cladding.”
In evidence the following day, attention turned to the later process of choosing the cladding system.
Mr Lawrence was pressed on a line in an email sent on 6 May 2014 in which he talked of putting forward “our case that ACM is not an inferior product to zinc”.
Asked by Mr Millett to explain this, Mr Lawrence replied: “Zinc is seen to be a fairly luxurious material, so we could understand why the planners and why the architect in particular wished to use the… I wouldn’t say top-of-the-range, but wished to use the luxurious material.”
“[The] TMO obviously had budget constraints and needed to achieve the savings, so the intention was we needed to make a case for everybody that ACM wasn’t a cheap throwaway material in comparison to zinc. So in my understanding it’s relating to durability.”
Questions were also raised about what Mr Lawrence had told KCTMO’s head of capital investment, David Gibson, concerning the fire risk from the way the cladding would be installed.
In written evidence submitted to the inquiry, Mr Gibson said he became aware there was a plan to fit the insulation first and the rainscreen cladding later.
He said this “raised concerns”, as he had read a report on the 2009 Lakanal House fire that suggested a gap between the insulation and the rainscreen had “created a chimney flue effect which contributed to fire spread”.
Mr Gibson also claimed that at a meeting to discuss the project, Mr Lawrence “assured us that this would create no problem because the materials used were completely inert and would not burn at all”.
However, Mr Lawrence denied that he had given such an assurance. “I don’t agree with the statement at all,” he told Mr Millett.
It also emerged that Mr Lawrence had received an email from Claire Williams, project manager at KCTMO, in which she asked for “clarification on the fire retardance of the new cladding”, as she had just had what she referred to as a “Lakanal moment”. However, there was “no record of any response” from Mr Lawrence, Mr Millett said.
Earlier in the week, Mr Lawrence acknowledged that a key fire safety document relating to the refurbishment was overlooked due to the “sheer amount of information” involved in the project.
The inquiry was told that under National Building Specifications, a copy of the standard for systemised building envelopes must be kept on-site. The building envelope should not be “composed of materials which readily support combustion, add significantly to the fire load, and/or give off toxic fumes”, the document says.
Under cross-examination, Mr Lawrence said: “We wouldn’t have had a copy on-site. It obviously wasn’t picked up in all the documents we had to go through… it obviously wasn’t noticed."
Mr Lawrence said he didn’t recall having the document on previous projects as he had “not seen it before”.
Responsibility for checking sub-contractors
The question of who was responsible for checking sub-contractors were complying with building regulations also came into focus.
Mr Millett questioned, who, for example, would check that sub-contractor Harley Facades was complying with Approved Document B.
Mr Lawrence said: “Myself and the site team would ensure that the information was given to the other third parties that could check that compliance.”
He admitted, though, that Rydon “relied on other people” to check their subcontractors had complied with their obligations.
He added: “We would supervise them by making sure that they carried their work out in programme and quality but we wouldn’t be able to check to the technical detail.”
No advisor and no familiarity with the materials
Mr Lawrence also faced questions about Rydon’s decision not to retain fire engineer Exova as an advisor to the refurbishment of Grenfell Tower.
Despite Mr Lawrence promising to contact Exova “with a view to use them going forward”, according to email evidence, the firm was dropped by Rydon.
Mr Lawrence told the inquiry: “Rydon didn’t typically engage fire consultants in my experience and we did regard it as building control’s responsibility to raise concerns.”
The inquiry also heard from Simon Connor, who was project manager on the scheme from May 2014 until August 2015.
The scheme was Mr Connor’s first as project manager where cladding was involved. He admitted to the inquiry he wasn’t aware whether the materials being used were commonly used and didn’t think about it as he wasn’t “qualified to do that”.
Mr Millett said: “Can we take it from that that you never asked any questions or familiarised yourself with the detailed properties of, for example, aluminium composite rainscreen cladding?”
Mr Connor replied: “No”.
Mr Millett added: “Is this right: that at no stage of your career actually, before the Grenfell Tower fire, did you think: ‘I wonder what this material is’?”
Mr Connor replied: “Honestly, no.”
Earlier during his oral evidence, Mr Connor said that when he joined the project the “materials had already been chosen”.
The inquiry continues.
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