The issue of wasted spending was raised after it was revealed that the government had spent more than $51 million consulting on the new Dunedin Hospital inpatient wing, but a detailed design is still almost two years away.
Te Whatu Ora Health New Zealand (HNZ) has revealed that the total cost of all consulting work on the inpatient ward as of 23 February 2023 was $51,444,302 under the Public Information Act.
The consultant’s bill includes the cost of the value management process, where a $90 million design savings was approved last December.
HNZ did not break down its spending on value management consultants, but said the cuts were the culmination of a 16-month process that began in September 2021.
Dunedin National List MP Michael Woodhouse said the sum, which includes roles from architects and engineers to project managers, seemed like a staggering sum.
Given the scope of the project, this was “probably about right”.
However, the design change raised the question of how much effort would be wasted and how much rework would be required.
Health Minister Dr Ayesha Verrall responded to a written parliamentary question from him on Monday, saying the detailed design of the inpatient building is expected to be completed in November 2024.
Given the results, the length of the value management work was “an extraordinary amount of time,” he said.
“If you don’t finalize the detailed design until more than three years after starting the value management process, construction costs and inflation will completely ruin the work you put into staying within budget.”
Another question he received an answer to was whether the contingencies included in the construction costs would be enough to cover this, with an estimated 85% chance for March 2021.
Dr. Verrall refused to give odds, although he was advised that there were plenty of contingencies.
The value management process, which HNZ describes as ‘a normal part of the design phase’, was carried out by the design team and consultants.
Selected through an open bidding process, the design team was named Beca, supported by Warren and Mahoney, Holmes Consulting, Project Manager RCP and Quantity Surveyor RLB.
HNZ declined to provide a breakdown of the savings, and a briefing provided to Dr Verrall for the sign-off said these would be available on its website soon.
Changes, including reductions in beds, scanners, non-clinical space, and staff-focused pavilion buildings, were approved in December to address a $200 million shortfall in the project budget. Financing.
HNZ did not respond to a request for comment.
https://www.odt.co.nz/news/dunedin/bill-consultants-tops-51m Consultants billed over $51 million