December before full details of savings known

A concept design for the new Dunedin Hospital. Image: supplied
A concept design for the new Dunedin Hospital. Image: Supplied
Te Whatu Ora Health New Zealand (HNZ) has declined to provide a detailed breakdown of cuts to the new Dunedin hospital, citing commercial sensitivity.

The few cost estimates made public were set several months before HNZ warned the Government these would not
create the savings predicted and more changes were needed.

Savings are estimated at $90 million, but this will not be known with confidence until December, a year after the Government announced the cuts, as reported by the Otago Daily Times last week.

A plan supported by former health minister Andrew Little and Finance Minister Grant Robertson in March 2022 contained a basic breakdown of how savings would be achieved.

Third-party funding for the interprofessional learning centre would save $17 million, while "facade value engineering" would save $15 million and $10 million would be saved on the budget for major medical equipment.

The biggest change, at about $49 million, was the removal of the pavilion building and one link bridge.

It was estimated these changes would push the inpatient build back by less than three months, although this has since expanded to nearly a year.

HNZ’s share of the interprofessional learning centre remains within the project budget after the $17 million cut was approved by mistake, although third-party funding is still being sought.

Ministers were alarmed in September following a HNZ document informing them the plan "would not yield the savings envisaged" and additional changes were needed.

A report by project management company RCP last September estimated $117 million would be saved, but consultancy fees and escalation costs were subtracted from this to make the saving $90 million.

"Actual savings achieved will not be confidently known until the design is redeveloped through the preliminary design and developed design phases which are forecast to extend out to December 2023."

Using $9.8 million of contingency funding was also recommended.

Last month the Government reinstated $10 million to the $1.68 billion project, including the cost of a third MRI scanner and collaborative workspace that would otherwise have been shelled.

HNZ last week declined to provide a more extensive breakdown of the $90 million to the Otago Daily Times, citing commercial sensitivity.

Director of delivery Monique Fowler said the current estimate had been based on the current design level.

"As the design moves through the design phases and is refined, a better estimation of cost savings will be achieved," she said.


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