Sandwell and West Birmingham NHS Trust commissioned Deloitte to carry out the analysis and released the findings ahead of its monthly board meeting today.
The contractor’s quote is based on the job being completed with a straightforward construction contract procured by the public sector, rather than as part of a new PF2 deal.
If a new PF2 deal was pursued, the unnamed contractor told Deloitte the construction cost would be £424m.
The difference between the two figures is largely due to the greater risk a contractor would take on under a PF2 deal.
A separate analysis by the Department of Health and Social Care estimated the cost to complete construction would be £300m, regardless of the procurement route.
These costs come on top of the £205m of work done by the hospital’s original contractor Carillion up to its collapse in January, meaning the total construction cost of the hospital could end up between £505m and £629m.
This would represent an increase on the original £350m budget of between 44 and 80 per cent.
At the trust’s board meeting later today, its chief executive will recommend that the board pursues the direct construction contract option.
Chief executive Toby Lewis said: “We will consider an executive recommendation to complete the Midland Metropolitan Hospital construction under direct contract, using public money from national sources.
“This would be in preference to procuring a new private finance vehicle.”
Since the original PF2 deal was cancelled in May, the trust and the Treasury have spoken to contractors about the possibility of setting up a new replacement PF2 deal.
However, the trust said there was “clear aversion” in the market to this option.
The trust was also concerned that the PF2 route could prompt a contractor to back out due to the risk involved before financial close is reached, which could delay the project’s completion by a further two years to 2024.
Responding to the trust’s position, Minister of State for Health Steve Barclay said: “We remain absolutely committed to getting the new hospital built as quickly as possible and are supporting the trust to achieve this whilst also ensuring that taxpayers’ money is spent appropriately.
”I, and colleagues across government, have had good engagement with the trust and I very much recognise that time is of the essence, both to ensure the building does not deteriorate and so that patients in the West Midlands are able to use the hospital as soon as possible.”
Until a new contractor is found, the trust said it was focused on protecting the site and repairing work that has been damaged by exposure.
The cost of this is estimated to be £21.5m, with the contractor element worth £13m.
A contract for this work is expected to be awarded by the end of August.
Construction work stopped on the hospital, which had been due to open in March 2019, following Carillion’s collapse in January.
Skanska had been lined up to take over the job if more capital was pumped in by the public and private funders behind the PF2 vehicle, but an agreement could not be reached and the deal was terminated.
The trust is now targeting a 2022 opening once a new contractor is appointed.
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Contractor quotes £319m to finish Carillion’s Midland Met | News – email@example.com (David Price) – 2018-08-02 05:50:00
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