Rydon sought to “pocket” more than £100,000 of the savings made by switching to the deadly aluminium composite material (ACM) cladding on Grenfell Tower by hiding the true costs from its client, the inquiry into the fire heard today.
Simon Lawrence, former contracts manager at Rydon, was interrogated today about the cost-saving process that ultimately resulted in the decision to switch the previously planned zinc cladding panels for ACM on Grenfell Tower.
He was shown documents revealing that cladding sub-contractor Harley Facades had estimated the saving made by switching zinc for ACM at £419,627 on 14 March 2014.
But Rydon produced a separate assessment for its client – building manager Kensington and Chelsea Tenant Management Organisation (KCTMO) – just four days later, which listed this saving as £293,338.
Asked to account for this £126,259 difference, Mr Lawrence said: “I would suggest by that, although not my area of expertise, that Rydon took some of the savings for themselves.”
Mr Lawrence, who is no longer an employee, added that he believed the money “went against risk or addition to profit”.
Rydon was under particular financial pressure at this point. As well as being asked to make savings of more than £800,000 to meet KCTMO’s budget, the firm had underestimated its own costs by more than £212,000, thanks to a mistake by a member of its financial team, Frank Smith.
In an email on 11 March 2014, Kate Bachellier, a cost estimator for Rydon, described this as a “Frank-ism” and said it would mean they had to work “a little bit harder to find some [value engineering] savings”.
“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 Frank Smith’s estimating error?” asked Richard Millet, counsel for the inquiry.
“That could be the reason for it,” responded Mr Lawrence.
Earlier, the inquiry had heard that Rydon was effectively tipped off that it was going to win the bid before the tender process closed and was invited by KCTMO to start discussing further cost savings.
In its bid, Rydon had priced the job at £9.2m, while rival contractor Durkan priced it at £9.9m and Mullaley at £10.4m.
An internal Rydon email on 11 March – before the result of the tender was announced – reads: “I have spoken with Peter Maddison at KCTMO who informs me that our price… is in first place.
“Therefore subject to a small amount of value engineering, Peter should be in a position to recommend our appointment on this scheme to his board early next week.”
Rydon then held the meeting with KCTMO representatives on 18 March to discuss means to take £800,000 in cost out of the project in order to meet its budget.
This process – known as value engineering – involves switching products for cheaper alternatives without compromising quality.
“You’ve got to find over £1m of value engineering to satisfy your client and to maintain your profit margin. That would be a bit of a challenge, wouldn’t it?” Richard Millett QC asked.
“Yes,” Mr Lawrence replied. “There were items that were assessed and savings were made.”
Earlier in the day, Mr Lawrence was questioned at length about Rydon’s decision not to retain fire engineer Exova as an advisor to the project.
Exova, which had previously been advising architecture firm Studio E, had produced an “outline fire safety strategy” in October 2013 which said that the changes would have “no adverse effect” with regard to external fire spread, but that this would need to be “confirmed in a future issue of this report”.
However, as Rydon did not continue to pay Exova to advise on the project, this “future issue” was never written.
The inquiry saw meeting minutes from 4 April 2014 which record that Mr Lawrence promised to “contact [Exova] with a view to using them going forward”.
At further meetings throughout June, July, September and October, the minutes continued to record that Rydon would seek the appointment fire consultants for the project.
But away from these meetings, Mr Lawrence indicated that no fire engineer would be appointed, telling lead architect Bruce Sounes that the firm was content to rely on building control inspectors at the local authority (who signed off the work as compliant) to check for fire safety issues.
Mr Lawrence said: “Rydon didn’t typically engage fire consultants in my experience and we did regard it as building control’s responsibility to raise concerns.”
He said previous cladding jobs the firm had carried out (such as the Chalcots Estate in Camden and Ferrier Point in Newham, both of which have since required remediation work) had been done without the input of a consultant.
“Is it right that you saw building control’s role as an adequate and reliable substitute for having a specialist fire consultant in your team as a sub-contractor?” Mr Millett asked.
Mr Lawrence replied: “Not just building control, but by having a specialist sub-contractor and a design team that has knowledge of designing in accordance with the building regulations.”
Asked specifically about the report produced by Exova, Mr Lawrence said the statement regarding external fire spread had given him “comfort” that there was no fire risk from the cladding plans.
He said that he assumed it had taken into account the cladding, and that his reading of it was that “providing we complied with the building regulations… then [the plans] will not have any adverse effect”.
Mr Millett said that this could not have been a “fair and tenable” reading of the statement, which clearly said a final version of the report was required. Mr Lawrence denied this.
The inquiry continues tomorrow with further evidence from Mr Lawrence.
Week one: A vivid picture of a broken industry
After a week of damning revelations at the opening of phase two of the Grenfell Tower Inquiry, Peter Apps recaps the key points
Week two: What is the significance of the immunity application?
Sir Martin Moore-Bick has written to the attorney general requesting protection for those set to give evidence at the Grenfell Tower Inquiry. Peter Apps explains what the move means
Week three: Architects of misfortune
This week saw the lead architects for the Grenfell Tower refurbishment give evidence to the inquiry. Peter Apps runs through the key points
Week four: ‘I didn’t have any perception that it was the monster it’s become’
The architects continued to give evidence this week, outlining a lack of understanding of the fire risk posed by the cladding materials and its design. Nathaniel Barker reports
Week five: ‘No adverse effect in relation to external fire spread’
As the Grenfell Tower Inquiry returns from its long absence, Peter Apps recaps the key points from a week of important evidence from the fire consultants to the refurbishment
Week six: ‘I can’t recall any instance where I discussed the materials with building control’
Nathaniel Barker summarises what we learned from fire engineers Exova, architects Studio E and the early evidence from contractor Rydon
Week seven: ‘I do not think I have ever worked with a contractor operating with this level of nonchalance’
Two key witnesses from contractor Rydon gave evidence this week. Peter Apps recaps some of the key points from a revealing week of evidence
Week eight: ‘It haunts me that it wasn't challenged’
Four witnesses from contractor Rydon gave evidence this week. Lucie Heath recaps what we learned on the last week of evidence before the inquiry breaks for five weeks
Week nine: ‘All I can say is you will be taken out for a very nice meal very soon’
This week the inquiry heard evidence from witnesses at Harley Facades, the sub-contractor responsible for Grenfell Tower’s cladding. Peter Apps recaps the key points
Week 10: ‘As we all know, ACM will be gone rather quickly in a fire!’
As the Grenfell Tower Inquiry entered its 10th week, Jack Simpson recaps the key points from a week of important evidence from the refurbishment’s cladding contractor
Week 11: ‘Did you get the impression Grenfell Tower was a guinea pig for this insulation?’
With witnesses from the cladding subcontractor, the firm which cut the deadly panels to shape and the clerk of works which inspected the job giving evidence this was week full of revelations. Peter Apps recaps the key points
Week 12: ‘Would you accept that was a serious failing on your part?’
With the surveyor who inspected Grenfell Tower for compliance giving evidence, this was a crucial week from the inquiry. Dominic Brady and Peter Apps report
Week 13: ‘Value for money is to be regarded as the key driver for this project’
With consultants to Kensington & Chelsea Tenant Management Organisation (KCTMO) giving evidence, attention at the Grenfell Tower Inquiry turned for this first time to the actions of the TMO and the council. Peter Apps reports
Week 14: ‘Did it not occur to you at this point that your budget was simply too low?’
This week, for the first time in phase two, the inquiry heard from Kensington & Chelsea Tenant Management Organisation, the landlord that oversaw the fatal refurbishment of Grenfell Tower. Lucie Heath reports
Week 15: ‘Have you ever informed the police that you destroyed documents relevant to their investigation?’
Witnesses from the Kensington and Chelsea Tenant Management Organisation (KCTMO) gave evidence for a second week, which began with a shocking revelation about withheld and destroyed evidence. Peter Apps recaps
Week 16: ‘I conclude this was very serious evidence of professional negligence’
This week saw members of Kensington & Chelsea Tenant Management Organisation finish giving evidence, before the inquiry’s expert witnesses took the stand to make some highly critical assessments of the work they had seen before and during the refurbishment of Grenfell Tower. Jack Simpson recaps
Grenfell Tower: a timeline of the refurbishment
Following the conclusion of module one of the Grenfell Inquiry’s second phase, Peter Apps presents a timeline of the key moments during the fatal refurbishment of the west London tower block
Week 17: ‘It’s hard to make a note about this because we are not clean’
The start of the second module of the Grenfell Tower Inquiry phase two came with some huge revelations about the companies that sold the products used in the cladding system. Peter Apps reports
Week 18: ‘It was just reckless optimism wasn't it?’
As the inquiry began cross-examining witnesses for the second module of its phase two work, the picture surrounding just how Grenfell Tower ended up wrapped in such dangerous materials became a little clearer. Nathaniel Barker was keeping an eye on proceedings
Week 19: ‘And that was intentional, deliberate, dishonest?’
The Grenfell Tower Inquiry this week heard the shocking story of how the insulation manufacturer “manipulated” official testing and marketed its product “dishonestly”. Peter Apps tells the story
Week 20: ‘We were outed by a consultant who we then had to fabricate a story to’
This week the inquiry investigated the actions of Kingspan – the manufacturer of one of the insulation products used in the tower’s cladding system. Dominic Brady reports
Week 21: ‘It’s there in black and white isn't it? We see a complete absence of any consideration of life safety’
The story of insulation giant Kingspan’s testing and marketing of its combustible insulation for high rises was unpacked in minute detail this week. Peter Apps reports
Week 22: ‘All we do is lie in here’
In the third week of evidence from insulation giant Kingspan, the inquiry continued to uncover shocking details about the firm’s behaviour both before and after the Grenfell Tower fire. Lucie Heath reports
Week 23: ‘That would have come as an earthquake to you at the time, would it not?’
This week the inquiry took its deepest dive yet into the inner workings of the cladding manufacturer whose product has been blamed for the terrible spread of fire up Grenfell Tower. Nathaniel Barker reports
Week 24: ‘Do you accept that Test 5B was Arconic's deadly secret’
The president of the firm that made and sold the cladding panels installed on Grenfell Tower was asked to account for the apparent concealment of “disastrous” fire tests on the product this week. Peter Apps reports
Week 25: ‘This is quite an incredible list of omissions and missed instances, isn’t it?’
This week the Grenfell Tower Inquiry heard its first witnesses from the Building Research Establishment (BRE) - the testing house which carried out key fire tests on the Kingspan and Celotex insulation products which were later used on Grenfell Tower. Peter Apps reports.
Week 26: 'You were taking an enormous risk, weren't you?'
Week 26 at the Grenfell Tower Inquiry was a key moment in understanding how dangerous products used on the tower came to be accepted by industry professionals. Dominic Brady reports
Week 27: ‘What will happen if one building made out [of] PE core is in fire and will kill 60 to 70 persons?’
The most explosive evidence this week at the Grenfell Tower Inquiry came from those who did not attend, as the evidence which would have been presented to Arconic witnesses was displayed in their absence. Peter Apps reports
Week 28: ‘This is a serious safety matter’
This week the Grenfell Tower Inquiry zeroed in on the British Board of Agrément, the body that produced “misleading” certificates which inspired trust in both the cladding and insulation used on the tower. Lucie Heath reports
Week 29: ‘Is it true that Kingspan’s position… was to do its best to ensure that science was secretly perverted for financial gain?’
The final week in this section of the Grenfell Tower Inquiry primarily examined the attempts by insulation manufacturer Kingspan to lobby government after the fire. Peter Apps reports
How the products used in Grenfell Tower's cladding system were tested and sold
As the section of the Grenfell Tower Inquiry examining how the products used in the cladding system were tested, marketed and sold comes to a close, Peter Apps summarises what we have learned about each of the products included in the system.
Week 30: ‘There is certainly a high probability that in the event of a fire the whole building can become an inferno’
The focus of the inquiry shifted this week to the actions of the social housing providers responsible for maintaining Grenfell Tower. Pete Apps recaps what we learned.
Week 31: ‘If we cannot get out people will die’
This week saw the former residents of Grenfell Tower enter the witness box to tell of their experiences attempting to raise complaints with the council and its managing agent. Pete Apps reports.
Week 32: ‘Let's hope our luck holds and there isn't a fire’
This week saw the return of the landlord of Grenfell Tower, Kensington and Chelsea Tenant Management Organisation (KCTMO), as senior staff members attempted to explain how vital fire safety protections at the block were allowed to fall into disrepair. Lucie Heath reports.
Week 33: ‘Isn't that a serious gap in the scope of a policy meant to safeguard vulnerable people?’
A slightly disjointed week at the Grenfell Tower inquiry saw further evidence from staff at building manager Kensington and Chelsea Tenant Management Organisation (KCTMO) interspersed with the views of a cladding expert. Peter Apps reports.
Each week we send out a newsletter rounding up the key news from the Grenfell Inquiry, along with the headlines from the week
Already have an account? Click here to manage your newsletters