Delays in the release of $24.38 million promised capital works funding from the Ministry of Health are expected to cost the cash-strapped Southern District Health Board extra money.
One of the reasons for the hold-up appears to be that the board has not completed all the design work on the project, but board staff say they cannot afford to engage the relevant architects and electrical engineers.
Board facilities and site development manager Warren Taylor described the situation as a "chicken-and-egg scenario".
As well as the possible extra cost, the 16-project redevelopment of Wakari and Dunedin Hospitals will take six months longer, now expected to finish in December 2013.
Last June, on a visit to Dunedin, Health Minister Tony Ryall announced $24.38 million for the first part of the board's master site project for Wakari and Dunedin Hospitals, which is designed to upgrade substandard facilities and make the most of the available space.
Board statements last year showed that its understanding was that once its district annual plan was signed off by the minister in November, the money would be released.
Since the end of September, the board has had contractors ready to proceed with one of the major works, the $3.6 million relocation of Dunedin Hospital's acute mental health ward 1A to Wakari Hospital.
Mr Taylor said it was hoped approval would be forthcoming soon and that the prices would have held in the meantime.
If there was too much delay and prices rose, there was a possibility this could also cause time delays because it could involve revisiting the tendering process.
There was also a risk contractors' availability could change.
Mr Taylor said he was aware there had been some high-level discussions on the issue recently and he was "very hopeful" the situation would be resolved soon.
If the work began next month, it would be completed by September.
Estimates of anticipated increased costs have not been spelled out by the board, but they are also expected to apply to the Wakari Hospital lift upgrading and the redevelopment of the Wakari Hospital conference rooms.
Asked for comment, Mr Ryall issued a statement saying he had been advised the design work for the neonatal intensive care unit was yet to be received.
"Southern DHB knows this is important to the Government. The other funding approvals are working their way through the system - I expect to receive the paperwork and sign them off soon. The money is there, and safe, and we're making sure the money is well spent."
Mr Taylor said the planning for the project had been revised so that "if we get the green light now", the outstanding preliminary design work could be finished by the end of the year.
Board chairman Joe Butterfield said he was not aware of why the matter was taking so long, but at this stage he could not express concern, as he was getting responses from the ministry which recognised the project had been "hanging round" for a while.
Since the original costings of the project would have been done two or three years ago, there would be some escalations, but from what he knew of them they were not excessive.
He said he would be working to see the work started as quickly as possible - "it's got to happen".
Further questions to Mr Ryall's office from the Otago Daily Times including asking why the money for the acute mental health ward project could not be released now and whether common sense was being used in the process have not yet been answered.
While many of the projects in the redevelopment involve what has been described as Rubik's cube movements where co-ordination of the various projects is crucial, the mental health ward shift is not in that category.
The neonatal intensive care unit is expected to be the last and most expensive project in the redevelopment, at an estimated $6.6 million.
Projects expected to be completed this year are the relocation of the acute mental health ward, improvements to Wakari Hospital car parking and upgrading Wakari Hospital lifts.
Work which should be completed next year includes shifting the Dunedin Hospital cafeteria to what is now a pebble garden, making a staff-only cafeteria at Wakari Hospital, shifting Dunedin corporate offices to Wakari, and upgrading Dunedin Hospital switchboard and generators.
In 2013, the neonatal intensive care unit will be redeveloped and relocated on the first floor at Dunedin Hospital, along with the paediatric ward.
