The BBC’s White City development: 
the second phase of the building project 
NAO review presented to the BBC Governors’ Audit Committee, 
May 2005, by the Comptroller and Auditor General, and a response 
to the review from the BBC 


At the request of the Governors’ Audit 
Committee, the second stage of the 
BBC’s White City development has been 
subject to a value for money study by the 
National Audit Office (NAO) to assess 
whether it has achieved best value for 
licence fee payers This study is part of 
a programme of studies assessing value 
for money across the BBC. 
The NAO reviewed the White City 2 
development to determine whether the 
strategy used to deliver and operate it 
supported the BBC’s aims to modernise 
its property portfolio.The study also 
considered what lessons could be drawn 
from White City 2 to improve the delivery 
of benefits for future property projects. 
The BBC’s property strategy aims to 
upgrade or replace ageing buildings to 
ensure that accommodation is flexible, 
suited to technological change, welcoming 
to audiences and attractive to staff.The 
new buildings at White City 2 are helping 
the BBC to achieve important aspects of 
that property strategy. 
The Board of Governors welcomes the 
report’s findings and thanks the NAO for 
undertaking the study. 
Governors welcome the acknowledgement 
that there have been positive outcomes 
from the White City 2 development.The 
delivery of the White City 2 buildings, 
on or before time and on budget, 
illustrates that the BBC’s property 
development partnership can successfully 
deliver a major construction project. 
The Board of Governors recognises that 
there are some recommendations for 
White City 2 and future property projects 
to follow up.The attached management 
response has been considered by the 
Board and we have approved the 
proposed actions. As indicated, some of 
these have been followed up already. 
Governors will keep the issues raised and 
the lessons for future projects under 
review, and will continue to oversee BBC 
management’s performance in this area. 
Subsequent to this review and a review 
of the Land Securities Trillium (LST) 
partnership by Ernst & Young, the BBC has 
agreed with LST to revise the partnership 
arrangements.This revised arrangement 
has also been reviewed by Ernst & Young, 
which agrees that it will allow the BBC to 
benefit from the opportunity to re-tender 
its facilities management provision. 
Board of Governors 
June 2005 
The BBC’s White City development: 
the second phase of the building project 
BBC response to the National Audit Office Value for Money study

The BBC is proud of the new buildings 
at White City, which have received wide 
acclaim both internally from BBC staff and 
externally.The development has also been 
awarded an ‘excellent’ rating for its 
environmental performance using the British 
Research Establishment’s Environmental 
Assessment Method (BREEAM 1998). In 
addition, the design has been shortlisted 
for a RIBA Award. 
The NAO has recognised the BBC’s 
achievements to date but has also 
identified a number of recommendations 
for both the White City development 
and future property projects. 
The BBC welcomes recognition by the 
NAO that: 
•The construction and basic fit-out 
of White City 2 was delivered 
within the budget approved by the 
BBC Governors. 
•Two of the three buildings were delivered 
on time in October 2003, and the third 
was available for occupation three 
months ahead of schedule. 
•The new buildings at White City are 
helping the BBC to achieve important 
aspects of its property strategy. 
•The buildings meet or exceed the 
needs of most users evidenced by 
external research. 
•Building construction costs were 5.4% 
higher than comparable benchmark 
buildings, but the cost difference was 
primarily due to specification 
enhancements which improved the 
future flexibility of the building. 
Responding to the 
recommendations 
and conclusions 
The NAO has made some valuable 
observations and recommendations within 
the report which the BBC is addressing. 
Specifically: 
1. The BBC should set out how and when it 
intends to use the accommodation 
available at White City 2, and how this 
represents the best use of resources. 
As noted by the NAO, the White City 
development is part of a broader 
property rationalisation strategy across 
London, and the timing of the moves 
into the new buildings had to take 
account of changes in the rest of the 
estate as well as the BBC’s operational 
requirements. A significant proportion 
of the White City development is 
(by July) already occupied and the free 
space is now only 4.3% of the total 
space, against an industry benchmark 
of 5%. 
2. The BBC should closely monitor facilities 
management costs to ensure that they 
remain within the limits approved before 
the deal was signed. 
The BBC has made substantial savings 
on its facilities management costs and is 
currently in the process of re-tendering 
the facilities management elements of 
the property partnership deal with the 
aim of improving quality of service and 
reducing costs further. 
In addition, for future projects, the NAO 
has identified where lessons could be 
learned on managing new building projects 
and risks to value for money.These have 
been categorised by the NAO into the 
following headings: appraisal, design, 
occupation plans and contract management, 
which are addressed in turn below. 
Appraisal 
3. It is important to keep sight of the fact 
that accounting treatment is not a 
factor in the value for money of 
investment proposals. 
The BBC has a restricted borrowing 
limit under its Charter of £200million 
which is intended to cover short-term 
working capital requirements rather 
than long-term structural funding.The 
BBC recognises that accounting 
treatment should not be a factor in 
the value for money decision but is 
necessarily a precondition within which 
value for money must be optimised. 
4. Decisions on competing bids should 
not be influenced by a benefit-sharing 
provision if it is unlikely that the benefit 
will ever be realised. 
The financial aspect of investment 
appraisal will always make value for 
money its main objective. Although 
benefit sharing was seen as a possible 
upside, the decision to appoint Insight 
was not dependent upon it. In the 
future, the BBC will ensure that 
potential benefits which are less 
probable are not given undue 
prominence in the business case. 
5. The BBC should estimate whole-life costs 
when appraising procurement options and 
these should be presented to Governors 
at the point of approval. 
6. During the procurement process, the BBC 
should establish the cost associated 
with changes to its accommodation 
requirements. 
In principle these are agreed, but in a 
fast-changing organisation it is not 
possible to accurately predict, over the 
whole life of a building, all the possible 
staff moves and associated costs, and it 
would be a mistake to build a business 
case which depended on that. 
Design 
7. The BBC should ensure that design 
decisions are based on an analysis of 
costs and benefits. 
We agree and will continue to operate 
on this basis.The specific case of 
locating the energy plant in a separate 
The BBC’s White City development: 
the second phase of the building project 
BBC management response

building was not the cheapest option 
but was done for security and 
other reasons. 
8. The BBC should ensure that it involves 
contractors and suppliers in the design 
process at an early stage. 
The BBC believes that its approach 
of keeping close control of the early 
process of conceptual design of its 
buildings is the right one for an 
organisation which has a cultural role 
to play.This is believed to have resulted 
in an outstanding success at White City 
and is the approach being used on 
other major building projects.The 
involvement of contractors and service 
providers does occur before a business 
case is finalised, but only after the BBC 
has settled upon the right vision for 
the building. 
9. Involving users in workplace design can 
help to ensure that new buildings meet 
their needs. 
The BBC’s does involve users in the 
design of their workplace, a practice 
which will be continued and developed 
on other major projects. 
10. The BBC should use the results of its 
post-occupancy surveys at White City to 
inform future construction projects. 
The findings of the two main postoccupancy 
surveys, as well as the 
output from the Design Quality 
Indicator (DQI) process outlined in 
the report, have already been 
summarised and presented to a variety 
of interest groups within the BBC and, 
in particular, to those involved in other 
major projects. 
Occupation plans 
11. The BBC should identify specific occupiers 
of new buildings (and their fit-out 
requirements) as early as possible. 
The identification of specific occupiers 
was a priority at White City and will 
continue to be a priority for future 
projects, but it must ultimately be 
subject to the operational needs of the 
BBC’s business which is subject to rapid 
and not always predictable change. 
12. Where the BBC commissions a building 
with the aim of subletting it to one of its 
commercial subsidiaries, it should obtain 
a firm commitment from the subsidiary 
in advance. 
Although there was an understanding 
in place at the time of the 
development, the BBC accepts that 
in this instance the extent of the 
commitment was not sufficiently 
contracted. Nevertheless, at the time, 
the subsidiary was wholly owned, and 
in the end, could be directed to ensure 
it bore the whole cost of the 
accommodation.The commitment is 
now fully contracted, ready for that 
company’s imminent sale. 
Contract management: 
13. Performance-related payment systems for 
facilities management should effectively 
prioritise the work of suppliers. 
This is agreed and will be implemented 
with new contractors during the 
re-tendering of facilities management 
services contracts currently under way. 
14. The lessons learned from implementing 
the contract variations process used at 
White City 2 should be applied to future 
property projects. 
The NAO has identified ways in which 
the system could be simpler and 
these will be implemented on future 
projects through a simplified change 
order process.


The BBC’s White City development: 
The second phase of the building project 
REVIEW BY THE COMPTROLLER AND AUDITOR GENERAL 
PRESENTED TO THE BBC GOVERNORS’ AUDIT COMMITTEE | 27 May 2005 

This report has been prepared under 
Clause 10 B of the amendment to the 
A greement bet w een the S ecretary of S tate 
for Culture , Media and S port and the BBC 
dated 4 D ecember 2003. 
John Bourn 
Comptroller and Auditor General 
National Audit Office 
The N ational A udit O f fi ce 
study team consisted of: 
K eith H a w k s w ell, K eith D avis , 
R ichard G auld, G areth Tuc k , Colin 
R atcliffe andWilliam H eminsley 
A link to this report can be found 
on the N ational A udit O f fi ce w ebsite 
at www. nao . org . u k 
F or furth er information a b out th e 
National Audit Office plea s e contact : 
N ational A udit O f fi ce 
P ress O f fi ce 
1 57- 1 97 Buc k ingham P alace R oad 
V ictoria 
L ondon 
S W 1 W 9 S P 
Tel: 020 7798 7 400 
E mail: enq uiries @ nao . gsi . gov . u k 
© N ational A udit O f fi ce 2005 
CONTENTS 
MAIN FINDINGS 1 
RECOMMENDATIONS 4 
The main features of theWhite City 2 7 
development 
The new buildings at White City 2 were delivered 10 
on time and w ithin budget , and achieve important 
aspects of the BBC’s property strategy 
The BBC paid more in development costs 12 
compared to alternative deals , but obtained 
w ider benefi ts 
The reduction in construction costs anticipated 14 
by the BBC did not materialise 
The BBC paid for some re q uirements as an 1 5 
additional lump sum rather than spreading 
the cost through the unitary charge 
The price paid for facilities management at 1 6 
White City 2 is similar to the price paid in 
comparable buildings 

The BBC is not currently usingWhite City’s 1 6 
full potential 
The current rental value is less than the 1 7 
unitary charge, but this situation may change 
in the longer term 
The BBC is negotiating w ith L and S ecurities 1 8 
Trillium to signifi cantly change the structure of 
the deal so that it can share in re fi nancing benefi ts 
A PPENDICES 
1 Chronology 1 9 
2 Methodology 20 
3 Main fi ndings from D avis L angdon’s w or k 21 
P hotographs courtesy of the BBC 

MAIN FINDINGS 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 
I ntroduction 
1 This review look s at the value for money the BBC is 
getting from a new property development in West L ondon. 
The development comprises three new buildings 1 k now n 
collectively as White City 2 which w ere built nex t to an 
e x isting BBC building k now n as White City 1. 
2 White City 2 is one of a number of building projects 
commissioned by the BBC during the last five years. These 
projects are part of the BBC’s property strategy aimed at 
upgrading or replacing ageing buildings w hich the BBC 
considers are inflex ible, ill suited to technological change, 
un w elcoming to audiences and unattractive to staff. 
3 The new development at White City 2 is central to 
the BBC’s plans to consolidate its L ondon estate into three 
main sites . The other tw o sites are Broadcasting H ouse in 
Central L ondon and Television Centre in West L ondon, 
andWhite City 2 has been used to accommodate staff 
vacating these sites to allow them to be redeveloped. 
I n the longer term , the BBC intends to useWhite City 2 
to enable it to dispose of other buildings . 
4 The BBC entered a partnership w ith L and S ecurities 
Trillium called the I nsight P roperty P artnership to finance , 
develop and operateWhite City 2. The 30 year deal w ith 
L and S ecurities Trillium also covers facilities management 
and maintenance services at 4 8 other locations in L ondon 
and S cotland. The BBC e x cluded facilities management in 
the rest of E ngland, Wales and N orthern I reland from the 
deal as it had not finalised its plans for these areas w hen it 
sought a commercial partner to developWhite City 2. 
5 The BBC pays the I nsight P roperty P artnership a 
unitary charge of £ 31 million a year for White City 2. The 
total present cost of these payments over the life of the 
contract is £ 2 97 .3 million ( discounted to O ctober 2001 ) . 2 
The deal does not include furniture , enhancements to the 
original fit - out, technical fit out or staff relocation, w hich 
have so far added £ 6 0. 9 million to the present cost to give 
a total of £ 3 58.2 million. 
6 The fieldw or k for this review was completed in 
March 2005 . 
1 The new development also includes tw o perimeter buildings for third party use , but these buildings and the cost of constructing them are outside the agreed 
scope of this report. 
2 The ‘ present cost’ e x presses a flow of current and future payments in terms of an e q uivalent lump sum paid at a particular point in time based on a specific 
interest or ‘ discount rate’ . The calculation of the present cost depends on the discount rate used – the rate used by the BBC w as 8 . 65 per cent . 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 2 
P rocurement 
7 The BBC identified a partner to finance , develop and 
operateWhite City 2 through a competitive tender . The 
BBC selected L and S ecurities Trillium’s bid ( w hich w as 
submitted under the name ‘I nsight’) from a shortlist of five . 
A lthough I nsight’s charge for the construction element w as 
£ 31 million ( 1 7 per cent ) higher than the best alternative 
bid identified by the BBC, it w as £ 1 7 million ( 2. 5 per cent ) 
low er for the deal as a w hole. 
8 The BBC’s decision to select I nsight’s bid w as 
influenced by the inclusion of various benefit sharing 
provisions . The w ay the original contract w as dra w n up 
meant that one of the provisions ( on refinancing) w as 
never lik ely to yield any benefit to the BBC. H o w ever , as 
this report w as being completed in March 2005 , the BBC 
had reached agreement w ith L and S ecurities Trillium to 
change the structure of the deal so that it could obtain 
refinancing benefits. 
9 The BBC’s decision about the preferred procurement 
route w as influenced by the impact of the alternatives 
on its Balance S heet . I t considered this to be important 
because the R oyal Charter imposes a £ 200 million 
borro w ing limit on the BBC w hich it w ould not be able to 
remain w ithin if it financedWhite City 2 through a loan . 
The D epartment for Culture , Media and S port re q uested 
advance confirmation from the BBC that the accounting 
treatment of the proposed deal w ould not result in the 
borro w ing limit being e x ceeded. BBC borro w ing impacts 
on the public sector borro w ing re q uirement . The BBC 
obtained formal advice on the accounting treatment of the 
proposed deal from its auditors K P MG LLP. Based on the 
draft documentation and deal pricing K P MG LLP advised, 
prior to the contract being signed that , under U nited 
K ingdom G enerally A ccepted A ccounting P rinciples , the 
deal w ould not give rise to significant liabilities on the 
BBC’s Balance S heet . This treatment w as subse q uently 
confirmed by K P MG LLP during its audit of the BBC’s year 
end financial statements. 
A chievements 
1 0 The construction and basic fit out ofWhite City 2 
w as delivered w ithin the budget approved by the BBC’s 
G overnors. T w o of the three buildings at White City 2 
w ere delivered on time in O ctober 2003, and the last w as 
available for occupation in J anuary 2004, three months 
ahead of schedule. The new buildings at White City 2 
are helping the BBC to achieve important aspects of its 
property strategy . 
11 The buildings have been designed to be adaptable 
to new technology and different w or k styles . O ne of the 
t w o main buildings ( the Broadcast Centre ) w as designed 
to support 24 hour w or k ing and includes a specialised 
building services installation to accommodate the 
technical re q uirements of broadcasting operations . The 
second building ( the Media Centre ) is an office building 
w hich has been designed to be adaptable to different w or k 
styles and functions including studio production. A lthough 
not all aspects of the high specification in the Media 
Centre are needed by the present occupants, it offers 
flex ibility for future changes in use . 
12 R esearch carried out by the construction and 
property consultancy D avis L angdon on behalf of the 
N ational A udit O ffice show s that the buildings meet or 
e x ceed the needs of most participants. A high proportion 
of participants considered that the buildings contribute 
to w ards the efficiency of the organisation, and staff lik e 
the provision of space and natural light . These findings 
are consistent w ith post occupancy surveys carried out 
by the BBC. These surveys indicate that a high proportion 
of staff w ere consulted about the interior design of the 
buildings and that overall, they are satisfied w ith their new 
w or k environment . Q ualitative feedback from the surveys 
suggests that many staff feel their w or k space has improved 
since moving toWhite City 2. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 3 
13 The development has been a w arded an ‘ e x cellent’ 
rating for its environmental performance using the 
Building R esearch E stablishment’s E nvironmental 
A ssessment Method ( B R EEAM 1 998) . A total of 220 office 
buildings passed the B R EEAM 1 998 assessment , and the 
BBC’s Broadcast Centre , Media Centre and E nergy Centre 
w ere among the 2 6 per cent of buildings a w arded an 
‘ e x cellent’ rating. 
V alue for money 
14 The D avis L angdon research show s that the building 
only 3 construction costs at White City 2 were 5 .4 per cent 
higher than benchmar k costs for a range of commercial 
office buildings located in the City of L ondon or City 
of L ondon fringe. This difference is due primarily to the 
design specification including mechanical and electronic 
infrastructure designed to improve the future flex ibility of 
the building. 
15 D avis L angdon’s benchmar k ing of the cost of 
facilities management indicates that White City 2 is similar 
to comparable buildings . H o w ever , the BBC anticipated 
greater savings in facilities management across the 
4 9 locations covered by the I nsight deal , and it is 
seek ing to renegotiate the contract to achieve this . 
The BBC is broadly satisfied w ith the standard of the 
facilities management service provided. D eductions of 
£ 32,476 w ere made in 2004 from the unitary charge in 
relation toWhite City ( w hich w as less than 1 per cent 
of the annual charge for facilities management ) as a 
result of performance not meeting agreed standards . 
The performance reporting system w as suspended in 
A pril 2004 for four months after the BBC and L and 
S ecurities Trillium concluded that it did not effectively 
prioritise the w or k of facilities management suppliers. The 
system has been reinstated for some services , but others 
w ill remain suspended until improvements to the reporting 
system are made. 
16 The BBC has achieved efficient use of space on 
individual office floors in terms of the balance bet w een 
useable and non- useable space . H o w ever , the site as a 
w hole is slightly below typical efficiency levels . This is 
mainly due to the e x tensive basement car par k ing and 
large re q uirements for main and standby plant space , 
some of w hich is currently operating below full capacity, 
though it is available to support any future e x pansion. 
1 7 P art of the BBC’s property strategy is to develop 
buildings w hich are mar k etable, so it can readily 
dispose of premises or space w hich becomes surplus to 
re q uirements. The BBC’s intention for White City 2 was 
that it w ould be for the sole use of the BBC during the 
30 year term of the deal and other low er specification 
buildings w hich do not meet BBC re q uirements and 
standards w ould be vacated rather than letting space to 
third party occupiers. H o w ever , the BBC now plans to 
reduce staff numbers by 3, 78 0 over three years and move 
some functions out of L ondon as part of a restructuring 
strategy announced by the BBC’s D irector G eneral in 
D ecember 2004. I t intends to channel the savings into 
frontline production functions and to recruit additional 
staff to support this . A lthough the BBC has not yet 
completed its assessment of the effect of these plans on its 
estate , the BBC is confident that the new buildings w ill be 
fully occupied and it plans to dispose of other properties 
in L ondon and move staff toWhite City. I n the event that 
space at White City 2 became surplus to re q uirements at 
any point during the 30 year life of the deal , it could be 
sublet to third parties . 
1 8 A rental valuation of the Media Centre suggests that 
if the BBC w ere to rent out surplus space to a third party, 
the rent received w ould currently be 42 per cent low er 
than the unitary charge paid by the BBC. This shortfall is 
lik ely to reduce , and may reverse , in the longer term since 
the development component of the unitary charge is fix ed 
for the duration of the deal w hereas rental income is lik ely 
to increase . 
3 Building only costs e x clude demolitions , site preparation, e x ternal w or k s , and drainage, w hich are highly site specific , and w hich are difficult to compare on 
a lik e - for - lik e basis . 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 4 
O nWhite City 2 
We identified tw o main areas w here the BBC needs 
to ta k e action to ma x imise the benefits from the 
White City 2 development . 
a T he BBC should set out how a nd when it intends 
to use the a ccommoda tion a v a ila ble a t W hite 
C it y 2, a nd how this represents the best use of 
its resources. A year after all the new buildings 
w ere ready for occupation, 22 per cent of the office 
space remained empty, although this had dropped 
to 1 5 per cent by March 2005 . The BBC should 
ensure it gets as much value from the relatively 
high specification at White City 2 by using it to 
accommodate staff re q uiring a higher specification. 
b T he BBC should closely monitor f a cilities 
m a n a gement costs to ensure th a t they rema in 
within the limits a pproved before the dea l w a s 
signed. I nsight’s bid w as only 2. 5 per cent low er for 
the deal as a w hole than the best alternate option 
identified by the BBC. This w as due primarily to 
low er facilities management charges . 
O n future projects 
We identified a number of lessons on managing new 
building projects and ris k s to value for money w hich the 
BBC should carry for w ard into future projects. 
A ppraisal 
c I t is importa nt to keep sight of the f a ct th a t 
a ccounting tre a tment is not a f a ctor in the v a lue for 
money of investment propos a ls. To avoid e x ceeding 
the £ 200 million borro w ing limit set by the R oyal 
Charter , the BBC needed to identify options for 
White City 2 which w ould not appear on its balance 
sheet . The BBC recognises that accounting treatment 
is not , in itself, an indicator of value for money . 
d D ecisions on competing bids should not be 
influenced b y a benefit sh a ring provision if it is 
unlikely th a t the benefit will ever be re a lised. 
The BBC’s decision to select the I nsight bid w as 
influenced, although not decided by , the inclusion 
of a provision to share in refinancing benefits. 
H o w ever , the w ay the contract w as dra w n up means 
that it w as unlik ely that the BBC w ould ever benefit 
from this provision. 
e T he BBC should estima te whole life costs when 
a ppr a ising procurement options a nd these should 
be presented to the G overnors a t the point of 
a pprov a l.Whole life costs should include furniture , 
fit out and staff moves as w ell as construction, 
facilities management and maintenance costs. 
RECOMMENDATIONS 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE OF THE BUILDING PROJECT 5 
f D uring the procurement process the BBC should 
esta blish the cost a ssocia ted with cha nges to its 
a ccommoda tion requirements. 
p The BBC should establish w hether it could 
recover unitary charge payments through future 
subletting income if it needed to vacate space . 
A professional valuer could be commissioned 
at an early stage to offer advice . 
p When considering procurement options the 
BBC should conduct scenario analysis to 
establish w hich option w ould be least costly 
to un w ind. 
D esign 
g T he BBC should ensure tha t design decisions a re 
ba sed on a n a na ly sis of costs a nd benefits. The 
BBC did not compare the cost of housing plant 
and machinery in a separate building at White City 
2 with locating it all in the tw o main buildings. 
H o w ever , it decided that operational , security, 
flex ibility and resilience advantages justified having 
a separate building. 
h T he BBC should ensure tha t it involves contra ctors 
a nd suppliers in the design process a t a n ea rly 
sta ge. Current good practice w ithin central 
government for procuring new buildings is to 
integrate the design and construction. Although 
the BBC separated the design and the construction 
at White City 2 to avoid delays, it believes that 
separating them can lead to better buildings as 
a result of greater client control over the design. 
H o w ever , the BBC needs to ensure it involves 
contractors and facilities providers at an early 
stage to identify opportunities for improvements 
and efficiencies. 
i Involving users in workspa ce design ca n help to 
ensure tha t newbuildings meet their needs. A high 
proportion of staff w ere consulted about the fit out of 
White City 2. This w as a response to a consultation 
e x ercise carried out by the BBC in advance of the 
White City 2 project w hich show ed that staff w anted 
an opportunity to influence the design of their 
w or k space . The BBC’s post occupancy evaluation 
indicates that the record of staff involvement w as 
very positive , and it should consider adopting a 
similar approach for future property projects. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 6 
j T he BBC should use the results of its post occup a nc y 
surve y s a t W hite C it y to inform future construction 
pro j ects. The BBC has follow ed good practice in 
carrying out user surveys and w or k shops as part 
of its post occupancy evaluation ofWhite City 2. 
This has provided valuable information about users’ 
e x periences w hich the BBC could use to further 
improve the design and operation of future buildings . 
O ccupation plans 
k T he BBC should identify specific occupiers of new 
buildings ( a nd their fit - out re q uirements) a s e a rl y 
a s possible. This w ill help to ensure that fit - out needs 
are identified in sufficient time to provide the option 
of using a competitive procurement process. 
l W here the BBC commissions a building with 
the a im of subletting it to one of its commerci a l 
subsidia ries, it should obt a in a firmcommitment 
from the subsidia r y in a dv a nce. This w ill reduce 
the ris k that the BBC ends up spending licence fee 
income on accommodation w hich w as not intended 
to be used for licence fee funded activities . 
Contract management 
m P erform a nce rela ted p ay ment sy stems for f a cilities 
m a n a gement should effectively prioritise the work 
of suppliers. The BBC and L and S ecurities Trillium 
agreed to suspend the performance management 
system for four months after concluding that it 
did not effectively prioritise facilities management 
services . The system has been largely reinstated but 
for some services it is still suspended. 
n T he lessons lea rned from implementing the 
contra ct va ri a tions process used a t W hite C it y 2 
should be a pplied to future property pro j ects. 
TheWhite City 2 project team considered that the 
contract variations process w as time consuming 
and overly complicated. The BBC recognises that a 
simpler system w ould have been desirable, and it 
should carry for w ard this lesson into the design of 
variations processes in future projects. F or e x ample, 
it could reduce the number of authorising signatories 
and introduce a cash limit below which variation 
re q uests can be fast- track ed. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 7 
The main features of theWhite City 2 
development 
1 9 White City 2 is one of a number of building projects 
commissioned by the BBC during the last five years. I t 
comprises three new buildings at a site in West L ondon 
w here the BBC already o w ned an office building ( k now n 
as White City 1 ) and 3. 8 hectares of undeveloped land 
w hich it purchased in 1 985. The new development is part 
of the BBC’s w ider property strategy aimed at upgrading or 
replacing ageing buildings w hich the BBC considers are 
inflex ible, ill suited to technological change, un w elcoming 
to audiences and unattractive to staff. 
2 0 The new development at White City 2 is central to 
the BBC’s plans to consolidate its L ondon estate into three 
main sites . The other tw o sites are Broadcasting H ouse in 
Central L ondon and Television Centre in West L ondon, 
andWhite City 2 has been used initially to accommodate 
staff vacating these tw o sites to allow them to be 
redeveloped. I n the longer term , the BBC intends to use 
White City 2 to accommodate staff moving out of other 
buildings w hich it plans to dispose of ( F i g ure 1 o v erleaf ) . 
21 White City 2 was financed, developed and is 
operated by the I nsight P roperty P artnership under a 
30 year deal w hich also covers facilities management 
and maintenance services at 4 8 other BBC sites in 
L ondon and S cotland. 4 The BBC e x cluded facilities 
management in the rest of E ngland, Wales and N orthern 
I reland from the deal as it had not defined its plans for 
these areas w hen it sought a commercial partner to 
developWhite City 2. The contract includes plans for a 
further development at White City ( White City 3 ) , but the 
BBC has not yet confirmed the timing of this nex t phase . 
22 The partners in the I nsight P roperty P artnership are 
L and S ecurities Trillium ( Media S ervices ) L imited and BBC 
P roperty I nvestment L imited, w hich is a subsidiary of the 
BBC. The BBC set up a subsidiary to hold its interest in 
the partnership to help ring- fence theWhite City freehold 
w hich w as subse q uently transferred to the P artnership and 
to save on S tamp D uty. 
23 The I nsight P roperty P artnership transferred 
responsibility for financing and constructing the new 
buildings at White City to a second partnership ( theWhite 
City D evelopment P artnership) in w hich the BBC also 
holds a sta k e . TheWhite City D evelopment P artnership 
took over the construction ofWhite City 2 in S eptember 
2001. L and S ecurities Trillium paid the BBC £ 1 7 million for 
White City 2 development costs incurred by the BBC prior 
to the contract . A t the end of the contract , the BBC has the 
option to rent or buy back the buildings at mar k et rates . 
The organisational structure is set out in F i g ure 2 o v erleaf . 
4 The BBC has a further 4 57 properties in the rest of E ngland, Wales and N orthern I reland w hich are managed separately through a combination of in- house 
and outsourced arrangements. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 8 
BBC London Premises 2000 (location and size in square feet) 
BBC London Premises 2008 (location and size in square feet) 
Source: BBC 
The BBC’s plans to rationalise its London estate 1 
White City 
401,000 
Television Centre 
1,160,000 
Hippodrome 
34,000 
Grafton House 21,000 
Television Centre 1.2m sq ft 
Other W. London 1.0m sq ft 
Central London 1.2m sq ft 
Yalding House 29,000 
Western House 43,000 
Brock House 29,000 
16 Langham Street 37,000 
Egton House 22,000 
Henry Wood House 89,000 
Bush House 435,000 
(50,000 sublet) 
Millbank 
Maida Vale 
70,000 
Woodlands 
320,000 
Broadcasting 
House 
64,000 
Marylebone 
High Street 
55,000
Centre House 
103,000 
Union Threshold 
House 
41,000 
Television Centre 
1,000,000
White City 
401,000 
White City 2 
550,000 
Television Centre 1.0m sq ft 
Other W. London 1.3m sq ft 
Central London 0.8m sq ft 
Overall reductions 9%
Western House 43,000 
Brock House 29,000 
New Egton House 160,000 
Henry Wood House 89,000 
Millbank 
Woodlands 
320,000 
Broadcasting 
House 
464,000 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 9 
24 The BBC pays the I nsight P roperty P artnership 
£ 30. 9 million a year for White City 2, giving a total present 
cost as at O ctober 2001 of £ 2 97 .3 million over the life of 
the contract . This covers development , maintenance and 
facilities management , but does not include furniture , 
enhancements to the original fit out, technical fit out and 
moving staff toWhite City 2 which have so far added a 
further £ 6 0. 9 million to the present cost ( F i g ure 3 ) . 
3 Total present cost of White City 2 as at 
October 2001 
C ost 
(£ millions) P ayment method 
Development 208.11 Part of unitary charge 
Facilities management 82.8 Part of unitary charge 
Lifecycle 6.4 Part of unitary charge 
Furniture & staff moves 15.6 Lump sum payment 
Fit-out enhancements 5.0 Lump sum payment 
Technical fit-out 40.3 Lump sum payment 
T otal 358.2 
Source: BBC 
NOTE 
1 This is a net amount based on a unitary charge for the development 
of £229 million as at October 2001, less capital account payments 
and deductions from the unitary charge for the estimated value of 
White City 2 at the end of the contract. 
2 The structure of the Insight Property Partnership and its suppliers 
Source: National Audit Office 
L and S e curities T r illiu m 
BBC ttransfers 
White City 2/3 
freehold 
BBC pays monthly 
unitary charge to 
partnership 
LST provides 
finance (with 
guarantee for 
construction of 
White City 2) 
BBC P r o p e r ty 
I n v estment L imited 
L and S e curities T r illiu m 
( M edia S e rvi c es) L imited 
T he I nsi g ht P r o p e r ty P a r tner ship 
p Owns freehold of the White City site and existing building 
p Responsible for building White City 2 and operating 65 BBC properties 
Subcontracts 
with service 
partners 
Subcontracts to build 
White City 2 
Partnership 
Agreement 
Subcontracts to build White City 2 
T he W hite C ity D e v elop ment P a r tner ship 
(Owns Freehold of the new buildings) 
BBC P r o p e r ty L imited 
Receives 1% share of revenue 
L and S e curities T r illiu m 
( M edia S e rvi c es) L imited 
Receives 99% share of revenue 
Partnership 
Agreement 
BBC 
T hir d p a r ty s upplier s 
B o v is L end L ease 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE OF THE BUILDING PROJECT 10 
The new buildings at White City 2 
were delivered on time and within 
budget, and achieve important 
aspects of the BBC’s property strategy 
25 Two of the three buildings were delivered on time in 
October 2003 and the third was ready for occupation in 
January 2004, three months ahead of schedule (Figure 4). 
The construction and basic fit-out was completed within 
the budget approved by the Governors before the deal 
was signed. 
26 White City 2 has helped the BBC to upgrade other 
parts of its estate, by providing space for staff vacating 
Broadcasting House in Central London and Television 
Centre in West London. This has allowed these buildings 
to be redeveloped as part of the BBC’s wider property 
strategy, and the BBC is in the process of vacating and 
disposing of other properties. 
4 The delivery and use of the White City 2 buildings 
Source: BBC 
Building 
Media 
Centre 
Broadcast 
Centre 
Energy 
Centre 
Target 
available 
date 
April 
2004 
October 
2003 
October 
2003 
Actual 
available 
date 
January 
2004 1 
October 
2003 
October 
2003 
Useable 
space 
22,000 
27,000 
1,500 
Number of staff 
designed to 
accommodate 
Up to 2,000 
Up to 1,950 
Up to 150 
Intended use 
Office space, 
basement car parking, 
storage and plant 
rooms, and some 
retail units. 
Office and 
technical space to 
accommodate BBC 
Broadcast Ltd and its 
commercial clients; 
also space for plant 
and machinery 
House central service 
plant for the entire 
White City site and 
provide additional 
office space. 
Use as at January 2005 
Used as office space to house 
staff from other London sites; 
includes car parking and 
retail outlets. 
Less space was needed for 
the Broadcasting function than 
originally envisaged, so a 
quarter of the office space is 
currently unused. 
Houses central plant and office 
space. Around 20 per cent of 
space for plant and machinery 
and all the office space is 
currently not being used. 
NOTES 
1 Formal handover occurred in April 2004. 
Two additional buildings were also constructed around the site perimeter with the aim of leasing them to third parties. These were outside the agreed scope of 
this report. 
White City 2 White City site plan 
A40 Westway 
White City 1 
Media 
Centre 
Broadcast 
Centre Energy 
Centre 
Perimeter Building
s 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 11 
2 7 The e x tent to w hich theWhite City development 
is meeting the first four principles of the BBC’s property 
strategy ( F i g ure 5 ) is covered in paragraphs 2 8 to 31. The 
cost effectiveness of the development is considered in the 
remainder of the report. 
2 8 The buildings have been designed to be adaptable to 
new technology and different w or k styles . The capacity of 
the floors to w ithstand heavy loads is significantly higher 
than in typical office buildings and space under the floors 
is substantially deeper to provide room for additional 
cabling, increased pow er distribution and cooling. The 
BBC anticipates that technological advances w ill lead 
to increased demand for these features . The enhanced 
specification of the office space in the Media Centre 
means that it could allow a significant change in use , such 
as accommodating presentation and audio studios . 
2 9 R esearch into the design q uality ofWhite City 
2 carried out for the N ational A udit O ffice by the 
construction and property consultancy D avis L angdon 
( see A ppendix 3 ) show s that the buildings meet or e x ceed 
the needs of most participants. I n particular staff lik e the 
provision of space and natural light . A high proportion 
of participants considered that the buildings contribute 
to w ards the efficiency of the organisation. These findings 
are consistent w ith post occupancy surveys carried out by 
the BBC w hich show that staff are generally satisfied w ith 
their new wor k environment . A high proportion of staff 
w ere consulted about the interior design of the buildings 
and q ualitative feedback from the surveys suggests that 
many staff feel their w or k space has improved since 
moving toWhite City 2. The BBC e x pected that some of its 
staff w ould be un w illing to move from central L ondon to 
the new site but staff turnover did not increase among the 
divisions that moved toWhite City bet w een O ctober 2003 
and J une 2004. 
3 0 The BBC has sought to ma k e a positive contribution 
to the community at White City, for e x ample, by holding 
events in the grounds ofWhite City 2 such as live music , 
mar k ets and show ing sport on giant television screens . 
The development has w on a number of a w ards including 
a ‘ 2003 F estive F ive Aw ard’ from the Commission for 
A rchitecture and the Built E nvironment . These are a w arded 
annually to five public sector organisations w hose for w ard 
think ing and motivation has led to better buildings and 
public spaces . 
31 TheWhite City 2 design has also been assessed 
using the Building R esearch E stablishment’s E nvironmental 
A ssessment Method ( B R EEAM 1 998) , 5 w hich provides 
a measure of good practice in environmental design 
and management . The assessment process considers 
the environmental impact of buildings in several areas 
including energy use , health and w ell being, pollution, 
land use , site ecological value , materials , management , 
transport and w ater consumption. A total of 220 office 
buildings passed the B R EEAM 1 998 assessment , and the 
BBC’s Broadcast Centre , Media Centre and E nergy Centre 
w ere among the 2 6 per cent of buildings a w arded an 
‘ e x cellent’ rating. 
5 The BBC’ s property strategy is based on 
five principles 
F lex i b ility 
T e c hnolog y 
T alent 
A u dienc e 
C ost 
Property should be adaptable to meet the varying 
needs of future occupiers. 
Buildings should be able to cope with 
technological changes without expensive 
reconstruction. 
Accommodation should help to attract and 
retain talent. 
Buildings should make a positive contribution to 
their surroundings promoting BBC activity to the 
licence fee payer. 
Spending should be j ustified in the context of the 
BBC’ s overall business strategy. 
Source: BBC 
5 B R EEAM 1 998 w as launched in S eptember 1 998. N e w versions w ere released in 2002, 2003 and 2004. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 2 
The BBC paid more in development 
costs compared to alternative deals , 
but obtained w ider benefits 
32 The recommended approach for central government 
departments w hen procuring new buildings is to appoint 
an integrated design and construction team rather than 
using traditional approaches w here individual elements 
are separately and competitively tendered. The BBC 
separately commissioned a team of architects, structural 
engineers and other consultants to produce and cost a 
design and obtain planning approval for White City 2. 
This approach reduced the scope for I nsight to influence 
the initial design. The BBC decided that it w as necessary 
to move ahead w ith the design before it had selected a 
partner to build and operateWhite City 2 to avoid delays 
and the associated costs ( including the need to e x tend 
leases on other properties if the completion ofWhite City 
2 was delayed) . E ven so , it considers that this approach 
can lead to better buildings as it allow s greater client 
control over the design. The BBC also believes that , as a 
cultural institution, it has a responsibility to foster high 
q uality design and architecture . 
33 The design team w as headed by the architects 
A llies and Morrison. The BBC also contracted H eery 
I nternational ( w hich provides design and construction 
management services ) to manage preparatory site 
e x cavations and building w or k . A lthough the BBC 
initially took on responsibility for the design and planning 
permission, the contracts w ith the design team ( and hence 
the design ris k ) w ere subse q uently transferred to the 
I nsight P roperty P artnership. The cost of transferring that 
ris k w as incorporated into the unitary charge. 
34 I n A pril 2000, the BBC launched the competition 
w hich led to the appointment of L and S ecurities Trillium 
( w hich submitted its bid under the name ‘I nsight’) to 
finance , develop and operateWhite City 2 and provide 
property services for 4 9 BBC locations in L ondon and 
S cotland. F ive bids w ere short listed and tw o final bidders 
w ere selected - I nsight and F oresite . The present cost 
of I nsight’s charge for constructingWhite City 2 was 
£ 31 million higher than F oresite’s, but I nsight offered a 
low er price for property services across the BBC’s L ondon 
and S cottish estate ( F i g ure 6 ) . The BBC regarded the deal 
as a w hole, rather than the construction element alone, 
as the k ey factor in selecting a partner . 
35 The BBC also took into account other differences 
bet w een the tw o bids including the accounting treatment 
( F i g ure 7 ) . The BBC treated the impact of the bids on 
its Balance S heet as an important issue because under 
its R oyal Charter it has a £ 200 million borro w ing limit 
( BBC borro w ing impacts on the public sector borro w ing 
re q uirement ) . D uring the bid evaluation phase the BBC 
sought advice from its auditors, K P MG LLP, on the lik ely 
accounting treatment of the bids . K P MG LLP advised that 
both bids had the potential to be treated as off Balance 
S heet under U nited K ingdom G enerally A ccepted 
A ccounting P rinciples . 
6 Present cost of the unitary charge in the best and 
final offers at March 2001 
B idder s 
Foresite 
Insight 
Difference 
C onstruc tion c ha rg e 
( W hite C ity 2 ) 
£ millions 
179 
210 
31 
Source: BBC 
C onstruc tion and o p e r ating 
c ha rg e (4 9 loc ations 
inc l u ding W hite C ity 2 ) 
£ millions 
686 
669 
17 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 3 
7 The factors the BBC identified as affecting the choice of preferred bidder 
Source: BBC and National Audit Office 
F a c to r 
Cost for the deal 
as a whole 
Price certainty 
Return 
Accounting treatment 
Savings sharing 
I nsi g ht 
£669 million. 
The development charge for 
White City 2 in Insight ’ s bid 
was a maximum price. 
The bid included a provision 
to restrict the return to 
shareholders to a maximum 
of 30 per cent. 
The BBC did not want the 
obligation to pay a unitary 
charge for 30 years to 
appear as a liability on 
its Balance Sheet. It also 
did not want any losses 
incurred by the partnership 
to impact on its profit and 
loss account. The BBC’ s 
auditors ( K PMG LLP) advised 
the BBC that Insight ’ s bid 
had the potential, with some 
development, to meet 
these criteria. 
The BBC concluded that 
Insight ’ s pricing model 
offered more scope to 
share in: 
p facilities management 
efficiency savings 
p any refinancing benefits 
F o r esite 
£686 million. 
The BBC was concerned 
that Foresite ’ s development 
charge could rise with further 
due diligence. 
Foresite ’ s return was based 
on a formula that did not 
remove all funding risk from 
the BBC. 
K PMG LLP advised that 
more significant changes 
to Foresite ’ s bid would 
be needed if it were to 
be treated as off Balance 
Sheet. It also advised that 
if the partnership suffered 
losses, these could appear 
in the BBC’ s profit and 
loss account. 
The BBC considered that 
Foresite ’ s model permitted 
greater savings in lifecycle 
costs, but the overall share 
of potential savings was 
less than in Insight ’ s 
pricing model. 
C omment 
The BBC contracted the investment bank 
N M Rothschild and Sons Limited to assist the 
BBC in its evaluation of the commercial and 
financial principles and output of the financial 
models; the cost advisors Hanscomb Limited 
advised the BBC on construction capital costs. 
The BBC considered that Insight ’ s bid 
offered greater price certainty, although it 
did not specify the extent to which Foresite ’ s 
development charge could increase. 
The BBC do not know what the return to 
shareholders is so this provision has not 
been used. 
The Department for Culture, Media and 
Sport required the BBC to supply them with a 
formal sign off on the accounting treatment. 
K PMG LLP examined the draft documentation 
and expected deal pricing and advised the 
BBC that the lease between the BBC and the 
Insight partnership would be an operating 
lease and therefore off Balance Sheet. This 
was subsequently confirmed by K PMG LLP 
during its audit of the BBC’ s year end financial 
statements. The Department for Culture, 
Media and Sport approved the deal in 
August 2001. 
When the BBC chose the Insight bid they 
anticipated that the partnership with Land 
Securities Trillium would allow them to share in 
refinancing benefits. The contract does include 
a benefit share mechanism but this was never 
likely to yield refinancing benefits. The White 
City Development Partnership is financed by a 
Land Securities Trillium subsidiary. The benefit 
share mechanism would only be applied if 
the partnership obtained finance from a non 
Land Securities Trillium group company. The 
contract did not require or incentivise Land 
Securities Trillium to do this. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 4 
36 I nsight w as selected as the preferred bidder in 
March 2001. The BBC compared I nsight’s bid w ith the 
cost of developingWhite City 2 under an alternative ‘ selfdelivery’ 
approach w hich w ould be financed by selling 
and leasing back the e x isting building at White City 
and entering an advance purchase agreement for the 
new buildings . 
3 7 The BBC’s comparison of I nsight’s bid w ith the selfdelivery 
option show ed the present cost of construction 
using self- delivery w ould be £ 1 9 1 million, w hich w as 
£ 1 9 million less than I nsight’s price . The BBC concluded 
that I nsight’s estimate of construction costs w as high and 
lik ely to fall. The BBC’s comparison of costs for the w ider 
deal covering 4 9 locations ( F i g ure 8 ) show ed: 
p The most lik ely cost of managing the BBC’s L ondon 
and S cottish estate under the self- delivery option 
w as £ 796 million, w hich w as 1 9 per cent more than 
I nsight’s price . 
p The self- delivery option w as much more sensitive 
to changes in assumptions about costs. I nsight’s bid 
w as based on a ‘ not to e x ceed’ price that should 
only increase if the BBC re q uested any variations 
or amendments. U nder the self- delivery option, 
the BBC w ould bear any price increases and it 
estimated that the cost could potentially increase to 
a ma x imum of £ 1,423 million. 
I n addition, funding ris k for the construction ofWhite 
City 2 in I nsight’s bid w as guaranteed by L and S ecurities 
Trillium . The self- delivery option carried greater funding 
ris k as raising finance through a sale and leaseback and 
some form of agreement to purchaseWhite City 2 had not 
been formally mar k et tested. 
The reduction in construction costs 
anticipated by the BBC did not 
materialise 
3 8 The BBC G overnors approved I nsight’s bid in 
J une 2001, w ith aWhite City 2 development price of 
£ 210 million in present value terms . This present value 
calculation w as based on a ‘ not to e x ceed’ construction 
cash cost of £ 242.2 million. The G overnors w ere advised 
that I nsight’s price for construction w as high and w as 
lik ely to fall. The BBC therefore included provisions in the 
contract to share in any savings in construction costs. 
3 9 When the contract w as signed in S eptember 2001 
the not to e x ceed cash cost w as set at £ 21 7 million, 
£ 2 5 million less than the not to e x ceed cash cost w hen 
the deal w as approved by the G overnors. H o w ever , 
this w as subject to the finalisation of provisional sums , 
variations and the appointment of Bovis L end L ease to 
carry out the main construction w or k . The final cost after 
variations and the agreement of provisional sums w as 
£ 242.4 million ( F i g ure 9 ) . 
4 0 The BBC introduced just under 300 variations after 
the deal w as signed, most of w hich w ere to finalise the 
detailed design and provisional sums rather than involving 
significant changes to the agreed design. TheWhite City 
2 project team considered that the variations process w as 
time consuming and overly complicated, but it did not 
result in any delays in completing the buildings . The BBC 
used G leeds , w ho w ere appointed by L and S ecurities 
Trillium ( Media S ervices ) L imited on behalf of theWhite 
City D evelopment P artnership, to advise on the cost of 
variations after the contract w as signed. F i g ure 1 0 gives a 
brea k dow n of the final not to e x ceed price . 
8 The BBC’ s comparison of minimum, maximum and 
most likely costs under the Insight and self-delivery 
options for the whole deal (as at June 2001) 
I nsi g ht BBC S elf D eliv e r y 
£ millions £millions 
Most likely 669 796 
Maximum 669 1,423 
Minimum 574 522 
Source: BBC 
9 Changes in the not to exceed cash price 
Source: BBC 
£ millions 
G overnors approval (June 2001) 242.2 
Contract was signed (September 2001) 217.0 
Final price (July 2002) 242.4 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 5 
The BBC paid for some re q uirements 
as an additional lump sum rather 
than spreading the cost through the 
unitary charge 
41 When the G overnors approved I nsight’s bid in 
J une 2001 they w ere not provided w ith an estimate of 
the total fit - out, furniture and migration costs associated 
w ithWhite City 2. The price charged by L and S ecurities 
Trillium to build and operateWhite City 2 included the 
fit - out of generic office space and the Broadcast Centre . 
H o w ever , it did not cover furniture , the cost of moving 
staff into the new buildings , the technical fit - out or any 
enhancements to the generic office fit - out, w hich w ere 
approved through the submission of separate business 
cases . S o far these additional elements have added 
£ 7 1.4 million ( e q uivalent to a present cost of 
£ 6 0. 9 million as at O ctober 2001 ) to the cost of 
completing and occupyingWhite City 2 ( F i g ure 11) . 
There w ill be further costs associated w ith the fit - out of 
space that is currently unoccupied such as the office space 
in the E nergy Centre and the fourth and fifth floors of the 
Broadcast Centre . 
42 The contract w ith I nsight had an option to add 
furniture into the unitary charge. H o w ever the BBC 
decided to pay L and S ecurities Trillium a lump sum 
for furniture and staff moves as the necessary funds 
w ere available w ithin the BBC. The total cost follow ing 
competitive tender w as £ 1 9 .2 million, of w hich 
£ 3. 9 million w as for design and management fees . 
43 The BBC also paid Bovis L end L ease a further 
£ 5 .2 million for enhancements to the office space w hich 
w as initially fitted out before specific occupiers w ere 
identified. I n J une 2003, the BBC identified w ho w ould 
occupy the office space , and some of the occupants had 
re q uirements over and above the generic office fit - out, 
such as for a Board room and supporting facilities and 
for three cellular offices . The BBC considered that it 
could have obtained low er prices if it had gone through 
a competitive process. H o w ever , the BBC decided to use 
the incumbent contractors to protect e x isting w arranties 
and because a competitive process ris k ed delaying 
the completion of the buildings and increasing costs. 
There are also cost and programme ris k s associated w ith 
bringing a different contractor onto site before completion, 
such as increased ris k of disputes over responsibility for 
any delays. H o w ever , the ris k of delays and cost increases 
might have been avoided if detailed re q uirements had 
been identified earlier . 
10 The contract with Bovis Lend Lease and professional 
fees accounted for most of the development cost 
Source: BBC 
£ millions 
Fixed lump sum contract with Bovis Lend Lease 211.6 
Fees 20.7 
Enabling and section 106 works 1 3.9 
Insurance 2.1 
Other 4.1 
T otal 2 4 2. 4 
NOTE 
1 The BBC agreed to pay £1.6 million for improvements to the local 
infrastructure as a result of a planning agreement made under Section 
106 of the Town and Country Planning Act 1990. 
11 Additional cash costs not included in the 
unitary charge 
Source: BBC 
£ millions 
Furniture and staff moves 19.2 
Enhanced fit-out 5.2 
Technical fit-out 46.8 
Additional site accommodation 0.2 
T otal 7 1 . 4 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 6 
The price paid for facilities 
management at White City 2 
is similar to the price paid in 
comparable buildings 
44 The N ational A udit O ffice commissioned consultants 
D avis L angdon to benchmar k the price paid for facilities 
management at White City 2 with other private and public 
sector buildings . This show s that costs at White City 2 
are slightly low er than the benchmar k . N evertheless 
the BBC is hoping to achieve further savings over the 
life of the deal w ith I nsight , and the contract includes 
a provision for the BBC to share in savings achieved in 
delivering facilities management across the L ondon and 
S cottish estate ( includingWhite City 2 ) . A lthough the BBC 
hoped this provision w ould yield greater savings than 
those achieved to date , it did not assume any additional 
savings in the estimated net present cost of facilities 
management over the life of the deal w hen it signed the 
contract . The BBC has engaged D eloitte & Touche to assist 
it in review ing the contractual relationship to identify 
opportunities to improve the effectiveness and efficiency 
of service delivery. 
45 The BBC is broadly satisfied w ith the standard of 
facilities management services provided. £ 32,476 w as 
deducted from the unitary charge in 2004 in relation 
toWhite City as a result of performance not meeting 
agreed standards . This w as less than 1 per cent of the 
facilities management charge. The performance reporting 
system w as suspended in A pril 2004 for four months 
after the BBC and L and S ecurities Trillium concluded that 
it did not effectively prioritise the w or k of the facilities 
management suppliers. The system has been reinstated for 
some services , but for others w ill remain suspended until 
improvements are made. 
The BBC is not currently using 
White City’s full potential 
46 Benchmar k ing underta k en for the N ational A udit 
O ffice by D avis L angdon show s that the capital cost of 
White City 2 was 5 .4 per cent higher than the average 
for a range of other commercial office buildings in 
the City of L ondon or the City of L ondon fringe. This 
is largely due to higher design specifications w hich 
are associated w ith broadcasting such as diverse 
pow er supply , standby pow er , and cooling facilities . 
The buildings at White City 2 also have a relatively 
high structural strength to accommodate heavy studio 
production e q uipment . This higher specification provides 
the flex ibility to accommodate a range of different uses , 
but one of the buildings - the Media Centre - is currently 
occupied mainly by office staff w ho do not need the high 
specification provided. 
4 7 The N ational A udit O ffice’s consultants also 
e x amined w hether theWhite City 2 buildings had been 
designed to ma k e the best use of space . They found that 
a low er proportion of the buildings could be used as 
office space than in typical office buildings due to the 
very e x tensive basement areas and large plant spaces . 
H o w ever , efficiency ratios w ithin individual office floors 
compare favourably w ith benchmar k data . 
4 8 TheWhite City 2 development includes an E nergy 
Centre w hich w as designed to house plant to service the 
entireWhite City site ( White City 1,White City 2 and a 
further White City 3 development w hich has not been 
built yet ) . H o w ever , it is currently only servicing the Media 
Centre and the Broadcast Centre , and although the BBC is 
still planning to developWhite City 3, the timing of this is 
uncertain. The BBC did not compare the cost of housing 
plant in a separate energy centre w ith locating it all in 
the Media Centre and the Broadcast Centre . H o w ever , it 
decided that operational benefits and improved security, 
flex ibility and resilience justified this approach . 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 1 7 
4 9 The E nergy Centre w as originally intended to include 
a combined heat and pow er installation to provide 
heat and pow er for White City, but this w as removed 
from the specification to reduce costs. The space in the 
E nergy Centre w here the installation w as to be located, 
accounting for 20 per cent of the total floor area , is 
currently unused. The BBC left space for the installation to 
give them the option of introducing a combined heat and 
pow er plant in the future . 
5 0 S ome of the space at White City 2 has remained 
unused because of changes in the BBC’s accommodation 
plans . By the end of J anuary 2005 the BBC had paid 
just under £ 6 million in unitary charge for unoccupied 
office space across the w hole site ( F i g ure 12 ) . The BBC 
has made ad hoc use of some of the space in the Media 
Centre to hold events such as staff forums and w or k shops , 
but avoided using the unoccupied space in the Broadcast 
Centre for any purpose so that it could claim a rates rebate 
of £ 4 75 ,000. 
51 The average amount of space allocated to each 
member of staff at White City is comparable to other media 
organisations . This indicates that the areas of the buildings 
that have been filled have been occupied efficiently . 
The current rental value is less than 
the unitary charge, but this situation 
may change in the longer term 
52 P art of the BBC’s property strategy is to develop 
buildings w hich are mar k etable, and the design briefs for 
White City 2 included the need for flex ibility to dispose of 
premises or space w hich becomes surplus to re q uirements. 
53 The intention for the Media Centre w as that it 
w ould be for the sole use of the BBC during the 30 year 
term of the deal and the BBC w ould aim to close other 
low er q uality buildings rather than letting space in the 
Media Centre to third party occupiers. H o w ever , since 
completingWhite City 2, the BBC has developed plans to 
reduce staff numbers by 3, 78 0 over three years and move 
some functions out of L ondon as part of a restructuring 
strategy announced by the BBC’s D irector G eneral in 
D ecember 2004. The BBC intends to channel savings 
into frontline production functions and also to recruit 
additional staff to support this . A lthough the BBC has not 
yet completed its assessment of the effect of these plans on 
its estate , the BBC is confident that the new buildings w ill 
be fully occupied as it plans to dispose of other properties 
in L ondon and move staff toWhite City. N evertheless, the 
restructuring highlights how accommodation re q uirements 
can change. I n the event that space at White City 2 
became surplus to re q uirements at any point during the 
30 year life of the deal , it could be sublet to third parties . 
1 2 Unused office space at White City 2 as at 31 January 2005 
Source: BBC 
A mou nt o f the u nita r y c ha rg e p aid 
f o r unoccup ied s p a c e (£ millions) 
4.1 
0.9 
0.9 
% o ffi c e s p a c e not o ccup ied 
b y 3 1 J an 2005 
26 
13 
100 
D ate a v aila b le 
f o r o ccup ation 
October 2003 
April 2004 
October 2003 
Broadcast Centre 
Media Centre 
Energy Centre 
NOTE 
Across the site as a whole, 22 per cent of office space was not occupied at 31 January 2005. By March 2005, this had reduced to 15 per cent. 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE OF THE BUILDING PROJECT 1 8 
54 The BBC is currently paying £ 3 8 . 8 0 a sq uare foot 
through the unitary charge for the development cost of the 
Media Centre . F ollow ing discussions w ith the N ational 
Audit O ffice , the BBC commissioned L ambert S mith 
H ampton to assess the rental value and mar k etability 
of the office space in the Media Centre . L ambert S mith 
H ampton concluded that an appropriate rental value 
w ould be £ 22. 5 0 a sq uare foot ( e x cluding facilities 
management ) assuming an 1 8 month rent free period and 
a 10 year lease w ith an up w ard only rent review after five 
years. 6 ( F i g ure 13 ) . 
55 Comparing L ambert S mith H ampton’s valuation w ith 
the unitary charge indicates that the BBC w ould not be able 
to recover the unitary charge if it rented out any part of the 
Media Centre w ithin the nex t few years. L ambert S mith 
H ampton consider that it w ould be virtually impossible 
to find an occupier for the w hole building unless it w as a 
company directly allied to the BBC as White City w ould 
be regarded as a fringe location for most organisations 
re q uiring office space . H o w ever , w hile the development 
component of the unitary charge is fix ed for 30 years, rental 
income w ould most lik ely increase w ith inflation. L ambert 
S mith H ampton suggest that proposals for an unrelated 
development to the east ofWhite City 2 could increase 
rental values in the area in the medium term . 
56 O ne of theWhite City buildings, the Broadcast 
Centre , w as built specifically for long term occupation by 
the BBC’s Broadcast division. The BBC originally planned 
to allocate the entire building to Broadcast. D uring the 
construction, the Broadcast division w as incorporated 
as a commercial subsidiary ( BBC Broadcast L imited) , 
after w hich it only needed three of the five floors in the 
Broadcast Centre . This left tw o vacant floors. The BBC pays 
the unitary charge, w hich is £ 42. 9 2 a sq uare foot for the 
development cost of the Broadcast Centre , and receives 
rental income from BBC Broadcast L imited of £ 2 5 .32 
a sq uare foot (F igure 13 ) . Based on assumptions about 
rental inflation ( including the impact of future property 
developments in theWhite City area on rental values) , the 
BBC e x pects to recover its costs over the life of the lease . 
The BBC is negotiating w ith 
L and S ecurities Trillium to 
significantly change the structure 
of the deal so that it can share in 
refinancing benefits 
5 7 The BBC hoped that the partnership w ith L and 
S ecurities Trillium w ould allow it to share in refinancing 
benefits. H o w ever the w ay in w hich the deal w as financed 
and the terms of the contract meant that benefit sharing w as 
e x tremely unlik ely (F igure 7 ) . H o w ever as this report w as 
being finalised in March 2005 , the BBC and L and S ecurities 
Trillium agreed to change the structure of the deal so the 
BBC could achieve refinancing benefits. As part of this 
agreement , the BBC w ould buy the freehold of the land and 
buildings at White City from L and S ecurities Trillium . 
13 Comparison of current rentals with the unitary 
charge per square foot* 
M edia C entre Broadcast C entre 
£ £ 
Current rentals 22.50 1 25.322 
Fixed unitary charge 38.80 2 42.92 2 
Source s: 1 Current rental v alue su pplied by L a mb ert Smith Ha mpton 
2 BBC. 
NOTE 
* This is the cost for the buildings only and does not include 
facilities management. 
6 The rental value assumes a service charge of bet w een £ 7 and £ 8 per sq uare foot . 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE OF THE BUILDING PROJECT 1 9 
E vent Date 
BBC buys F reehold for undeveloped land at White City 1 985 
N e w office building completed ( White City 1 ) 1 990 
O J E C notice issued seek ing commercial partner April 2000 
F ive bidders long listed J uly 2000 
BBC appoints Allies and Morrison to designWhite City 2 August 2000 
I nsight and F oresite short listed O ctober 2000 
BBC appoints H eery I nternational to start initial preparation of theWhite City 2 site D ecember 2000 
I nsight appointed as preferred bidder March 2001 
Contract signed S eptember 2001 
P artnership goes live N ovember 2001 
Source: BBC 
A PPENDIX 1 
Chronology 
appendix one 

appendix tw o 
A PPENDIX 2 
M ethodology 
S cope 
1 The objective of this study w as to assess w hether 
theWhite City 2 project is supporting the BBC’s aims 
to modernise its property portfolio at best value and to 
consider w hat lessons can be dra w n fromWhite City 2 to 
improve the delivery of benefits for future property projects. 
M ethods 
D ocumentary review and analysis 
2 We review ed relevant documentation held by 
the BBC including strategy documents, board minutes , 
contracts and partnership agreements underpinning the 
White City 2 deal , performance statistics , and consultant’s 
reports including a post occupancy review of the Media 
Centre and Broadcast Centre . We also e x tracted data from 
the financial model w hich is used to calculate the unitary 
charge for White City 2. 
I nterview s 
3 We interview ed senior staff w ithin the BBC’s property 
team to discuss the construction and operation ofWhite 
City 2. We met staff from the BBC finance team to e x plore 
the financial aspects of the agreement w ith L and S ecurities 
Trillium . We also interview ed a representative from 
L and S ecurities Trillium to obtain its perspective on the 
development and the on- going partnership w ith the BBC. 
D esign Q uality I ndicator w or k shops 
4 We commissioned property consultants D avis 
L angdon to facilitate a series of D esign Q uality I ndicator 
w or k shops . The D esign Q uality I ndicator is a method 
developed by the Construction I ndustry Council for 
assessing the functionality, build q uality and impact of a 
building. A variety of sta k eholders w ere involved in the 
assessment process including the designers, the project 
team , the facilities managers, L and S ecurities Trillium 
and the occupants of the building. The w or k shops 
included a q uestionnaire and discussion. P articipants 
w ho w ere unable to attend the w or k shops completed 
an on- line q uestionnaire . 
Benchmar k ing 
5 The N ational A udit O ffice as k ed D avis L angdon to 
benchmar k White City 2 against other developments. 
F a cilities m a n a gement 
D avis L angdon compared facilities management 
costs at White City w ith a sample of 2 7 commercial 
properties in L ondon. The benchmar k data w as provided 
by the O ccupiers P roperty D ataban k w hich supplies 
management information to property occupiers and their 
advisors. D avis L angdon also compared costs against a 
smaller sample of private and public sector facilities ta k en 
from its o w n project data . 
C onstruction 
White City 2 construction costs w ere benchmar k ed 
against a sample of 7 office developments ta k en from 
D avis L angdon’s current portfolio. 
S p a ce efficienc y 
D avis L angdon benchmar k ed the w all:floor ratio 
( q uantity of facade re q uired to enclose a unit of floor ) 
and net:gross ratio ( useable space in a building e x pressed 
as a proportion of the total floor area of the building) to 
establish w hether the buildings have been designed to 
ma k e the best use of space . They also commented on 
the occupancy ratio ( amount of space allocated to each 
member of staff) . 
R ental valuation 
6 F ollow ing discussions w ith the N ational A udit O ffice 
the BBC commissioned property consultants L ambert 
S mith H ampton to carry out a mar k et rental valuation of 
the Media Centre . This w as done to establish how much 
rental income the BBC could e x pect to receive if office 
space at White City 2 became surplus to re q uirements. 
THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 20 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 2 1 
A PPENDIX 3 
M ain findings from D avis L angdon’s w or k 
1 The N ational A udit O ffice commissioned property 
consultants D avis L angdon to assist us w ith our review of 
White City 2. They facilitated a series of D esign Q uality 
I ndicator w or k shops and carried out a benchmar k ing 
e x ercise . Their main findings are set out below. 
D esign Q uality I ndicator w or k shops 
2 D avis L angdon concluded that participants are 
generally satisfied w ith the tw o buildings . A high 
proportion of participants agreed that the buildings meet 
their needs and that the development contributes to w ards 
the efficiency of the organisation. I n particular staff lik e 
the provision of space and natural light . 
3 S ome concerns w ere raised. Many participants 
are unhappy w ith the temperature of the buildings and 
consider that the level of personal control over their 
environment is insufficient . They also feel that there are 
insufficient car par k ing spaces . 
4 P articipants w ere as k ed to respond to a series of 
positive statements about their building. E ach statement 
w as ran k ed on a scale of 1 ( representing strong 
disagreement ) to 6 ( representing strong agreement ) . 
S cores of 4 or above indicate that a participant is satisfied 
w ith a particular aspect of the building. O n average 
participants allocated scores greater than 4 for each 
q uality criteria ( F i g ure 14) 
Design Quality Indicator results 14 
0 
1 
2 
3 
4 
5 
6 
Character and innovation 
Form and materials 
Internal 
environment 
Urban and 
social 
integration 
Performance 
Engineering 
Construction 
Use 
Access 
Space 
0 
1 
2 
3 
4 
5 
6 
Character and innovation 
Form and materials 
Internal 
environment 
Urban and 
social 
integration 
Performance 
Engineering 
Construction 
Use 
Access 
Space 
Source: Davis Langdon 
Broadcast Centre Media Centre 
appendix three 

5 These findings are compatible w ith the post 
occupancy review of the Media Centre and Broadcast 
Centre w hich w as commissioned by the BBC. A high 
proportion of participants ( 87 per cent from the Media 
Centre and 8 4 per cent from the Broadcast Centre ) are 
satisfied w ith their w or k environment . Most staff w ere 
consulted about the interior design of the buildings and 
q ualitative feedback from the survey suggests that many 
staff feel their w or k space has improved since moving to 
White City 2. The survey measured the e x tent to w hich 
users’ e x pectations had been met . S eventy four per cent of 
participants stated that the Media Centre met or e x ceeded 
their e x pectations overall compared w ith 69 per cent in 
the Broadcast Centre ( F i g ure 15) 
Benchmar k ing 
F acilities management 
6 Benchmar k ing indicates that facilities management 
costs associated w ith theWhite City 2 are slightly low er 
than costs incurred by comparable public and private 
sector organisations . 
7 Building engineering services ( w hich cover 
mechanical and electrical facilities ) drive costs up , but 
these additional costs are offset by low er costs else w here . 
Building fabric costs ( w hich cover internal and e x ternal 
maintenance , and minor improvements) are particularly 
low ( F i g ure 16 ). 
Construction costs 
8 D avis L angdon found that the building only 
construction cost ofWhite City 2 was 5 .4 per cent 
higher than the average cost of comparable projects. 
This difference is largely e x plained by the enhanced 
technical specification of the development ( in particular 
mechanical and electrical services ) . Costs of other 
elements of construction w or k including the frame and 
upper floors, e x ternal w alls and internal subdivisions are 
significantly below benchmar k ( F i g ure 1 7 ) . 
S pace efficiency 
9 D avis L angdon found that the overall development 
falls below typical space efficiency ratios due to 
e x tensive basement car par k ing and large areas set aside 
for plant ( F i g ure 1 8 ) . H o w ever , office floor efficiency 
ratios compare favourably w ith benchmar k data . They 
concluded that if the space set aside for plant and par k ing 
is used effectively , the low overall efficiency does not 
represent poor value . 
appendix three 
THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 22 
1 5 BBC post occupancy survey results – 
user expectations 
M edia Br oad c ast 
C ent r e (% ) C ent r e (% ) 
Accommodation exceeds 15 14.5 
expectations overall 
Accommodation is generally 59 54 
on target 
Accommodation falls short in ways 26 31.5 
that make a difference overall 
Source: BBC 

THE BBC’S WHITE CITY DEVELOPMENT: THE SECOND PHASE O F THE BUILDING PRO J ECT 2 3 
£/m2 Net Internal Area 
Cost Centre 
Source: Davis Langdon 
10 
15
0 
5 
20 
25 
30 
35 
Building 
Engineering 
Services 
Building 
Fabric 
Cleaning Landscaping Mail and 
Porterage 
Reception Security 
and access 
Management 
and other 
costs 
White City 2 
Occupiers Property 
Databank median 
Facilities management costs at White City 2 compared to similar organisations 16 
appendix three 
1 7 Construction costs at White City compared to 
similar pro j ects 
C ost C ent r e P e rc enta g e a b o v e or ( b elow ) 
a v e r a g e b enc hma r k 
Substructure 6.9 
Frame and upper floors (24.9) 
External walls (34.0) 
Internal walls and doors (6.1) 
Mechanical and electrical 124.7 
Bu ilding only c ost1 5.4 
NOTE 
1 Total construction cost at White City 2 was 12.7% above benchmark 
but building only cost offers a more meaningful comparison since it 
excludes demolitions, site preparation, external works, and drainage, 
which are highly site specific, and which are difficult to compare on a 
like-for-like basis. 
Source: D a v i s L an g don 
1 8 White City space efficiency ratios 
R atio W hite C ity 2 A v e r a g e 
b enc hma r k 
Wall: Floor 1 0.39 0.38 
Net :G ross2 - 0.56 0.70 
whole building 
(including basement) 
Net :G ross - above 0.72 0.76 
ground only 
NOTES 
1 The wall: floor ratio represents the quantity of facade required to 
enclose the floor. Lower ratios tend to indicate efficiency. 
2 The net : gross ratio compares the usable space in a building with the 
total floor area of the building. Higher ratios tend to indicate efficiency. 
Source: D a v i s L an g don 



British Broadcasting Corporation 
Broadcasting House 
London W1A 1AA 
This report is available online at 
bbcgovernors.co.uk