More money needed for New Dunedin Hospital build
Saturday, 25 May 2024
Te Whatu Ora asked the New Zealand Infrastructure Commission to withhold a paper outlining the extra funds it would need to complete the New Dunedin Hospital.
The project is “several years behind schedule and materially over budget.”
Te Whatu Ora has been asked to submit a new business case by the end of the year.
Te Whatu Ora didn’t want a paper about hiring a contractor for the New Dunedin Hospital to be released publicly.
The New Zealand Infrastructure Commission referred to the recommendation in a briefing in which it asked Te Whatu Ora to update its risk assessment and prepare a revised implementation business case for parliament.
The briefing, sent in December, was released under the Official Information Act and was a response to Te Whatu Ora’s request for an additional redacted amount of money to complete the already over budget project.
Te Whatu Ora head of infrastructure delivery Blake Lepper said the recommendation to withhold the paper was due to the need for commercial sensitivity and the fact that negotiations were ongoing.
The former Labour Government first announced funding for the Dunedin Hospital rebuild as part of the 2019 budget.
In 2023, Labour committed another $97 million to go towards the data and digital infrastructure and $10m for another MRI machine; making it a $1.68 billion infrastructure project ‒ the biggest in New Zealand, expected to be completed in 2029.
In December 2022, the project was redesigned to shave $90m off the price.
“There is a long legacy of decisions that have brought the project to the stage where it is now, several years behind schedule and materially over budget,” Infrastructure Commission chief executive Ross Copland wrote to Te Whatu Ora.
“We believe that considerably more work is required for the board to gain confidence on the likely out-turn cost of the project,” he added.
Copland acknowledged that the commission’s request for revised plans may cause further delays and could have an impact on Te Whatu Ora’s reputation in the market and perceptions of the Crown’s ability to deliver infrastructure projects.
He rejected assertions from Te Whatu Ora that the costs of the project would only be known when the project was completed.
It was essential that the Te Whatu Ora board received regular estimates and forecasts along with high-quality reporting on both schedule and cost so these could be managed to avoid further overruns, Copland said.
Lepper did not answer a question about how much the project had cost to date.
Te Whatu Ora was working on an interim implementation business case to assess risk and gain assurance as it move into the next stage of the project, he said.
Cabinet had requested that this be delivered in two parts because of the staged nature of the construction contract, Lepper said.
An interim implementation business case providing assurance over the contract and management structure to ensure successful delivery of the project will be considered by cabinet in June, with the full implementation business case due in December.
“Any decision by Cabinet for extra funding will be announced by the appropriate ministers, Lepper said.