News / Costs soar for Staney Hill housing as Hjaltland re-tenders project
Housing association offering £9m contract for just 32 houses
HJALTLAND Housing Association has re-tendered for its long-awaited Staney Hill housing development – at a much higher cost per property than before.
The social housing organisation is now offering a £9 million contract, excluding VAT, to construct the first 32 properties at North Loch Drive in Lerwick.
It comes after Hjaltland’s previous tender – to construct 60 properties at a cost of £9.8 million excluding VAT – failed to secure a preferred bidder.
The development will consist of three blocks of three storey, one-bedroom flats, along with external works such as paving, fencing and landscaping.
Hjaltland chief executive Bryan Leask told Shetland News in September that they would have to re-tender the contract after the costs for the first phase of housing came back higher than expected.
“We’ve tendered it, we did an estimate what the cost would be, the cost came in higher than the estimate,” he reflected at the time.
“Some of the rules around how we procure things mean we can’t accept it if it goes above a certain level above our estimate.
“We’ve just got to go through a process of re-tendering it, looking again […] at the original tenders and maybe reassess our budget.”
The first 32 one-bedroom flats being proposed would be the first phase of housing in the Staney Hill development, which is expected to host around 300 homes when finished.
Leask said in September that Covid, Brexit and the war in Ukraine had inflated costs far more than they had anticipated.
Despite this, Leask had said the association is still hoping to be on site for the housing work by the end of the 2025/26 financial year.
He said it was not so much a setback but “part of the process” – and a process that has happened before.
The housing chief added there is an issue in Shetland in relation to availability of contractors and staff.
“It’s been well publicised over the last while,” he said.
“This is probably just the reality of where we’re at now in Shetland in terms of construction workers.”
In terms of the infrastructure work at Staney Hill, Leask said this is going to plan.
“It’s just a case now of trying to get the houses on site, that’s the next step,” Leask said.
Hjaltland’s deadline for tenders on the first phase of development is 15 December 2025, with the contract advertised as being for 27 months.
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