Projected costs for new facility rises almost $25 million
TRURO - Projected costs for the new regional hospital have increased yet again, by almost $25 million.
And the new price tag of almost $180 million presents a "serious challenge" for a deficit-ridden government on a project already "significantly over budget," Health Minister Maureen MacDonald says.
"It's a challenge. I recognize we have a problem and it's a serious challenge. All I can say is we'll work very, very hard to bring this project to completion and we'll do it in as cost-effective a way as we can, understanding that the situation I inherited wasn't a good situation to begin with. So it's very hard to turn such a significant problem around," MacDonald said during a telephone interview on Monday.
"We don't have an unlimited amount of money to spend on every capital project or on just one capital project. And this project, we have to get some control of it and that's what we're working to do."
When she was initially notified of the problem after taking office last summer, MacDonald said the funding shortfall stood at approximately $34 million. That figure has since been decreased to $24.6 million, which brings the projected cost of the new facility to $179.6
When the project was announced in December 2005, the price tag was set at $104 million. A little over a year later, however, the estimated cost had shot to $155 million, at which time the province upped its previous contribution of $78 million by an additional $51 million.
The extended Colchester/East Hants community, through private, corporate and municipal donations, has so far contributed $26 million.
MacDonald said it has not been determined whether the province can increase its contribution to the project but said a recent meeting was held with the chairman of the hospital foundation and District Health Authority CEO Peter MacKinnon and further requests for financial aid to the community have not been ruled out.
"Right now we're reviewing and considering what is our ability to add additional resources into this problem and what, if any ability, does the community have to come to the table with additional resources," she said.
MacKinnon said the budget shortfall is the result of tenders for the mechanical and electrical components of the project, which came in much higher than had been budgeted for.
"It's a complex process and issue," he said of the estimating that goes into the tendering process of such big-ticket items, especially in a "volatile, changing market" to which only a limited number of firms can participate.
The hospital was scheduled to open in 2011 but the funding shortfall has created delays, which in turn result in penalties being paid to the primary contractor.
"That is a question we've been trying to puzzle our way through," MacKinnon said of the now-undetermined completion date. "We won't really know the full extent of that or what the exact delay is until we have our tenders back in and contractors on board to review the schedule in detail."
MacKinnon did not want to discuss the amount of penalties the delays are expected to cost the health authority and MacDonald said she doesn't have those figures.
"It's a variable rate so it's very hard to say, 'This is the rate,'" she said.
"Penalties in the construction industry are a normal part of doing business. However, this project is significantly over budget. It was significantly over budget before I came into office and it was significantly over budget when I came into office and we have been working to get these costs under control so that at the end of the day the taxpayer of the province gets a good deal in terms of value for dollar."