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Contracting process for new Regional Hospital

4 May 2005

C&C DHB reconfigures contracting process for new Regional Hospital

Capital & Coast DHB has revised its approach to contracting for the new main hospital building on its Newtown site in Wellington.

Initially the DHB intended to engage a main contractor around this time, responsible for the construction of the main hospital building and engaging sub-contractors for that job.

But C&C DHB's Project Director Liz Maddison says the Wellington construction market is experiencing an unprecedented level of demand at present.

"Contractors are in high demand, and workforce costs are at a peak, so it makes sense to hold back on the biggest parts of the contract until the market eases off. We have been aware of this escalation situation, due to the intense level of demand in the Wellington construction marketplace, since early 2004 and have been working with Government officials to help find a way through it.

"Over recent months we worked closely with a potential head contractor to assess the likely costs of proceeding in the current market. The maths have been done, and it's clear that we would be unwise to commit to a set of contractors at a time when the local construction market is so uncharacteristically "overheated', which would have pushed us beyond the scope of our available budget.

Instead the DHB has opted to split the job in two:

- The first (smaller) part of the job - excavation and piling, commencement on the structure up to the underside of the entry level slab, demolition of the old cancer building and relocation of the front entrance - will proceed this year, and the DHB will actively seek a contractor for this phase. This work will be completed by May 2006.

- The second (larger) phase is the remainder of the construction of the main building at Wellington Hospital, and the DHB will be seeking a main contractor for this late this year.

"This approach makes good business sense. Forecasts indicate that there's a good chance the current peak in demand for contractors and sub-contractors in the Wellington region will have eased by the end of this year, which should enable us to get better stretch for our dollar.

"This decision gives us breathing space, allows time for the effects of the current building boom to ease, and should allow us to complete the project with only a marginal delay to our earlier timeline," Liz Maddison said.

Construction work at Kenepuru Community Hospital in Porirua, and on the Cancer Centre and Short Stay Centre at Wellington Hospital is under separate contracts, and will not in any way be affected by the above decision.

ends

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