"Every infrastructure project is facing potentially major cost escalation because of supply-chain issues, the war in Ukraine and global inflation pressures," Mr Little said.
"In the health sector, I’ve asked all project leaders to look at appropriate steps to mitigate the risk of cost escalation."
The Government has already upped the hospital project budget to $1.47 billion, partly in recognition of the ever-escalating cost of building supplies, and put aside contingency funds in this year’s Budget.
In June, Mr Little told the Otago Daily Times the Government had always known that there was going to be a "cost risk" about the hospital budget, but that the important thing was to have a hospital that met the needs of Dunedin and the Otago and Southland population.
Last month he told the newspaper that cost escalations were a fact of life, and that Health New Zealand would need to manage costs on the project.
Ever since the announcement that a new hospital would be built in Dunedin there have been battles about the size of the facility and what services would be provided within it.
Once proposed as being 93,000sq m, it was scaled down to 89,000sq m, before the final concept design for the hospital settled on 91,000sq m — a figure still considerably larger than the 70,000sq m existing Dunedin Hospital but well down on what some had envisaged might be a 125,000sq m hospital in the project’s early days.
An attempt was made in 2020 to scale the proposed new hospital back from the planned two buildings to a single structure as a cost-saving measure, which was repelled but at the cost of some square metreage from the plans.
That attempt to trim the project’s budget was inspired by cost issues due to more difficult than anticipated ground conditions.
News that the project budget was once more under scrutiny sparked concern that the size of the hospital might once again be threat, but Mr Little’s comments seem to have ruled that out.
He said he was still awaiting advice on the new Dunedin hospital project.
"I expect suggestions will be forthcoming in the next two to three months."
Hospital planners are in the middle of applying for fast-tracked resource consent to build the first of the two big buildings intended to form the heart of a health precinct. Approval has already been granted for foundations and earthworks.
The budget review may well affect what materials will be used to construct the building, especially the exteriors.
