Risks and hurdles expected but ‘all is on track’ for now

THE challenges facing the new Dunedin Hospital are ‘‘no better or worse than they have always been’’, project steering group chairman Pete Hodgson says.

Mr Hodgson yesterday defended progress on the construction project, after the release of a Cabinet paper that said it would go over its $1.4 billion budget and there were serious concerns whether it would be completed on time.

A second Cabinet paper released to the Otago Daily Times confirmed the project had also exceeded its budget to buy the land for the new hospital.

Despite the difficulties, Mr Hodgson said the hospital remained on track and the size, shape and estimated completion dates remained unaltered.

‘‘The public should take comfort that all is on track,’’ he said.

‘‘There will undoubtedly be multiple risks and hurdles in front of us and some of them might be big, but to date we are making steady progress.’’

The project’s final budget was not known because digital costs, which are to be apportioned between the Southern District Health Board and the Ministry of Health, were the subject of a separate business case, Mr Hodgson said.

‘‘A process known as quantitative risk analysis could not be completed in time for the August Cabinet paper because the concept design had not been finished.

‘‘That concept design is now approaching final signoff, and quantitative risk analysis began earlier this week.’’

In the Cabinet paper, Treasury highlighted its concerns about the project’s detailed business case being granted inprinciple approval — a decision Cabinet approved in September.

It said the current version of the plan lacked sufficient detail and, without the risk analysis, standard assurances about costs were missing.

Making that warning was Treasury’s job, Mr Hodgson said.

‘‘They also pointed out that building a large hospital in a small city a long way from other labour markets would mean that finding enough skilled people to construct it would be a challenge and that delays were therefore possible.’’

Hospital planners had spent two years putting together programmes to try to increase the labour pool available for the building work, he said.

‘‘It is why we have a skills hub opening soon and it is why Otago

Polytechnic are building a new trades training facility.

‘‘These sorts of initiatives won’t guarantee we will get all the labour supply issues sorted but they give us a much better chance than if we did nothing.’’

Meanwhile, a second Cabinet paper showed then health minister David Clark had to approach his colleagues earlier this year to draw down from a contingency fund to buy properties in Hanover and Cumberland Sts for the hospital’s planned ‘‘interprofessional learning centre’’.

The project had already spent its $75 million funding for land purchases, but an undisclosed contingency sum had been set aside in the 2019 Budget for design and procurement costs, Dr Clark said.

‘‘Approval for the drawdown at this stage is extraordinary and [I] do not anticipate needing to make a similar request prior to the presentation of the detailed business case.’’

The properties bought through the drawdown were earmarked for the centre, as well as for longterm expansion space for some clinical services and health research.

The amount of the drawdown was redacted from the paper, but in documents lodged by the health ministry in support of its application to demolish the former Cadbury factory, its lawyers said ‘‘approximately $84 million’’ had been spent on land acquisitions.