Fears over new hospital's budget and build

Health Minister Chris Hipkins has made a plea for people to "think twice before sharing...
Health Minister Chris Hipkins. Photo: RNZ
The new Dunedin Hospital will be over budget and there are serious doubts whether the second of its two buildings will open on time, a Cabinet paper says.

The paper, released to the Otago Daily Times under the Official Information Act, also revealed Treasury opposed the Cabinet decision in September to approve in principle the detailed business case (DBC) for the hospital.

Treasury comment on the Cabinet paper said the project’s DBC lacked sufficient detail and required significant additional work to enable a proper investment decision to be made.

"The new Dunedin Hospital is the most expensive and complex vertical health infrastructure project ever undertaken in New Zealand and it is important that sufficient work is conducted through the detailed business case phase to ensure that the project is deliverable to timetable, that risks are adequately managed, and benefits of the project are realised."

The Cabinet paper, brought by Health Minister Chris Hipkins, said the $1.4 billion budgeted for the hospital would be insufficient.

"Additional funding will be requested at the time a budget is set as part of the revised detailed business case, to be completed for Cabinet by February 2021."

Mr Hipkins said there were grave doubts whether the second of two proposed buildings in the complex, the inpatient building, could open in 2028 as intended.

"Further work is needed to ensure all risks are identified and quantified prior to contract execution given the scale, programme and interface issues associated with the contract.

"For instance, while labour initiatives such as Workforce Central will assist, it is also clear that deliverability of this major hospital in Dunedin remains a concern, in particular the scale of labour force required to deliver the inpatient building by 2028, an estimated 900-1000 workers."

Treasury said Cabinet agreement to a complete detailed business case was the standard expected of all major Crown projects, but it recognised the importance of maintaining the momentum of the project.

It recommended noting the DBC as a draft, but said even to do that was risky.

"The lack of a quantitative risk assessment and more detailed concept designs will mean that standard assurances around costings, contingencies and approaches to cost risk management are missing."

The DBC as presented also did not adequately consider the impact of Covid-19 on the project, particularly on recruitment, Treasury said.

"Whilst there is a significant effort to recruit and train local staff, it is not clear that this will be to the scale necessary to overcome any workforce shortages."

Mr Hipkins said it was critical the project proceed without delay.

Cabinet decided before the election to give in-principle approval to the DBC and released $127 million for early work.

Comments

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Of course the cabinet papers could not be released before the election....Looks like Dunedin is about to be scr*wed over by the North Islanders again. If only tax payers could direct their taxes to their region instead of the cesspools of Wellington and Auckland. Then there is plenty of funding around, it is just spent outside Otago.

And so it begins.
You all fell for cindy”s “be kind BS and let them in again.
surprise, surprise now their inability to deliver anything other than rhetoric comes to fruition.

When will you learn

Well Dah! Name any recent project the government completed on time and on budget! Go on, any project. I'm in my 40's... I'll never see this hospital finished in my lifetime. My kids are in their early 20's, they might see it but it will be significantly different then what was envisioned and financed. Why do we elect the least qualified people?

Apart from anything else, does anyone at all like the new design ? The designers must be the most boring people on our planet because I think it is deadly dull. To me, it looks like a factory but I am 65yrs so I will definitely never get to see it finished.

What a surprise. Treasury would like to spend less than $1 on the project. Cabinet know Dunedin is so safe a monkey in a red jacket would get in (and they were right) so don't need to bribe them. All in all the whole thing will be the usual shambles; badly planned, under-financed and badly built. It will leak within 2 years of it being built and won't be fit for purpose.

I've been saying this would happen as soon as the Labour vote grab announcement was done.
Now the chickens come home to roost.
Glad I don't get sucked in to the labour lies like 80 percent of Dunedin, idiots

"Cabinet decided before the election to give in-principle approval to the DBC - and released $127 million for early work." Hello, that's like 10% of the entire budget and they haven't even gotten out of the ground yet!

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