Hospital contractor fires back at province

Notice of default ‘rife with errors and misstatements,’ firm says

The Calgary-based construction firm slammed by the Alberta government for delays on construction of the $763-million Grande Prairie hospital said the province is shooting the messenger and was well aware of project details.

The government’s stance, which led to a notice of default Monday, is “rife with errors and misstatements,” said a news release sent by Graham Construction and Engineering late Wednesday.

The company has dealt with continual design changes, scope increases and delays outside of its control since the contract was inked in 2011, the release said.

On Monday, Infrastructure Minister Sandra Jansen spelled out an Aug. 22 deadline for the firm to submit a plan to get the hospital project back on track, or risk terminating the contract.

“This is a very unusual move that we’ve had to take,” she told reporters Thursday, adding the tone of Graham Construction’s response is unfortunate.

The firm, working toward a completion date in early 2019, asked the province for $120 million extra “without any documentation explaining the request,” Jansen said.

That’s on top of the $510-million contract that makes up the bulk of the project cost.

But Graham Construction denied that, arguing it advised the government in late 2016 that the cost of the design was $583 million.

“It is false Graham requested an additional $120 million to add to the budget,” the release said.

“Monthly update reports were provided to Alberta Infrastructure (AI) since the start which included cost and schedule updates and repeatedly alerted AI of a forecasted $70 million to $85 million shortfall.”

Recently the company provided the province, at its request, with a projected cost to complete the hospital that included a contingency amount of $35 million, the release said.

“Recent actions are a regrettable example of ‘shooting the messenger,’ ” it added.

But Jansen argued that, when Graham Construction and the province finalized the contract in 2016, both parties agreed the budget was fair.

The contract hasn’t changed, she said.

“If they didn’t believe that amount of money was accurate, I would question why they would agree to sign the revised contract,” Jansen said.

In the last two years, the project has been subject to more than 600 change orders and more than 400 design clarifications, said Graham Construction.

“Many changes required demolition of completed work to accommodate the new scope, affecting project cost and schedule,” said the company news release.

It’s yet another point of contention.

The volume of change orders isn’t out of line with other projects of the same magnitude, Jansen said Thursday.

“Change orders always happen on job sites.”

The ministry of infrastructure provided the example of reconstructing walls for a stress test lab that needed to be lined with lead.

The change cost $168,000 to meet new radiation safety standards set out in 2017. But it didn’t increase the overall project price tag because the budget included a fund for change orders, said the ministry.

Jansen also said the province has worked closely with the construction manager, but Graham Construction paints a different picture.

The executive team has sought to meet with senior staff at Alberta Infrastructure and the minister’s office, but meetings were cancelled on their end, the news release said.

“There have been a lot of meetings back and forth,” Jansen said.

The company said it won’t comment further on the issue, but will meet its contractual obligations during the dispute resolution process.

The original contract for the hospital dates back to 2011 and was signed under the former Progressive Conservative government, with completion slated for 2015.

The price tag has increased over the last several years to the current $763-million bottom line from $319 million.

The new hospital was first announced in 2007 by then-premier Ed Stelmach and has faced a series of hurdles, including construction deferrals and design changes.

The United Conservative Party wouldn’t comment Thursday on the latest developments, citing lack of information about the contract details.

“Provisions exist in contracts for events where a contractor is not meeting agreed upon terms,” caucus spokesperson Annie Dormuth said Monday in a written statement.