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No scope changes for Tauranga Hospital

No scope changes for Tauranga Hospital

There will be no changes in service delivery, building scope or any reduction in bed numbers as a result of a budget overrun of around $28m for the upgrade of Tauranga Hospital.

Bay of Plenty District Health Board CEO Phil Cammish says the budget increases are the result of escalation, higher building costs, increasing fire and building code compliance costs and resource constraints in the market. In the original business case – which sets out the DHB’s funding requirements - the best estimate was 3.5 per cent for escalation. The estimate is now 10 per cent a year or 30 per cent over the life of the project.

These factors have resulted in the budget for Project LEO – the hospital’s refurbishment and construction programme – increasing from $110m to $138m. Initial estimates indicated the budget had swollen to $155m, but Mr Cammish says as a result of trimming back some items and firming up estimates made in the business case, the increase has been cut back to $28m.

Budget changes include reducing the $10m estimate originally provided for a system which allows the electronic storage of x-rays to a more accurate figure of $4m. This reduction was partially due to some of the costs being met by the organisation’s equipment renewal policy. Scrapping plans to expand existing floor platforms meant the DHB was able to further trim the budget.

“We believe the project now sits in the $135-$138m range,” Mr Cammish says. “We are not locked down to a final number, but it is within that range.”

The DHB will ask the government for more funding to cover this shortfall and plans to signal its intentions by presenting a paper to the national capital committee, which meets on April 21. Mr Cammish says the original scope of the project, which was set out in the business case approved by the government in July 2004, continues to be appropriate for meeting the service needs of the Tauranga population.

“We can’t control building cost inflation or compliance costs, which are factors beyond our control. We believe we have a very strong case that funding should be made available to meet this gap.”

Mr Cammish emphasised that cutting the scope of Project LEO is not an option.

“We will not lose any services, any beds or any clinic space. There will be no reduction of the scope or the capacity of the facilities planned in the new hospital. What we have to do is find funding for the gap between what is going to be a project costing around $138m and the funding we have currently received.”


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