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Treasurer Kevin Foley refuses to rule out RAH cost blowout
TREASURER Kevin Foley has refused to rule out a cost blowout on the new Royal Adelaide Hospital, and says the Opposition's $3 billion tag is a "nonsense'' figure.
He was responding to the Opposition's release of a secret briefing note from a financial intelligence firm showing the cost has blown out to almost $3 billion.
"I can be absolutely certain that the cost of the hospital proper will not be $3 billion,'' he said, adding that such a sum was "ridiculous'' and could not be right.
Mr Foley also told the media it would be weeks before the two offers tendered were scrutinised, and that there was no guarantee they would come in lower than the public sector comparator.
Mr Foley said the Government had written to the two consortia to determine whether details of the bids had been leaked, and suggested possible ways the figure might appear higher than it actually was.
He said the bidders might have included optional ``add ons'' like childcare centres to the core hospital, or they could be applying for more credit than thay actually need.
He also emphasised that the Government would not go ahead with a PPP if it became too expensive, and would built the hospital themselves instead.
"I'm not going to guarantee anything,'' he said.
Earlier today, Opposition finance spokesman Rob Lucas released a confidential briefing note from Project Finance International, which on its website claims to be the "leading source of global project finance intelligence", forecasting a major blowout in the $1.7 billion project.
Mr Lucas said the company was regarded as a leading intelligence source in the financial community and released the briefing to industry subscribers.
He said it featured "highly confidential" information about the bids tabled by the two consortia competing for the project.
"Taxpayers have the right to expect some level of financial competence in managing a $1.7 billion project," Mr Lucas said.
"The extent of leaks about a supposedly confidential bidding process should be of great concern not only to Mr Foley, but also to South Australian taxpayers."
The briefing note released by the Opposition is dated June 3 and states the project is "in for a rough ride" and the reason for the blowout was "unclear".
"The decision by the South Australian government to build the new Royal Adelaide Hospital as a PPP project is in for a rough ride, as the publicly stated capital cost of A$1.7bn has now blown out to almost A$3bn," it reads.
"The reason for the extra cost remains unclear and there is a reluctance to publicly acknowledge the new figure, which came to light following the lodging of bids by the two consortia on May 20."
The Government has argued in Parliament it is not able to access costing details contained in the bids due to probity issues.
No. This relates to the concept of upgrading the existing RAH, not the specific plan in the Libs' election manifesto.Will wrote:So somehow there would be a cost-blowout forcefield around the Libs election plan to redevelop the current RAH?
Treasurer Kevin Foley refuses to rule out global warming, nuclear war and extinction of pandas
Exactly. Not much really can be worse than the State Bank drama. But I do believe that building a new RAH is very foolish and will remain a very poor idea.Aidan wrote:What loans the state guaranteed is really a distraction issue. I asked how much they lost because everyone seems to be assuming the State Bank collapse eclipses all other financial disasters, but the actual figures seem to be elusive and when the Liberals were in power they did exaggerate the scale of the disaster for political purposes.Prince George wrote:What are you driving at, Aidan? The Bannon government's initial bailout alone was $970M - adjusted for inflation that's about $1.5B at present value. Ultimately the state was guarantor for debts that totalled about $7B and drew loans of around $3.5B, or about $5B in present value, to keep the bank solvent.Aidan wrote: But how much idea do you have? What was the net loss from the State Bank?
Remember also that the State Bank was paying dividends in the '80s.
With the forecast cost blowout, the new RAH could easily cost well over a billion dollars more than upgrading the existing one to the same standard. I'm certainly not claiming it would be worse than the State Bank collapse, but nor did ChillyPhilly. I'm merely pointing out that it could well be in the same order of magnitude.
So for example if the best available operating theatre is to be built, and the doctors' idea of that changes at the last minute, do you go with the old design and get an inferior product, or go with the new design and get the latest technology at a higher possible cost.
Everyone is often enthusiastic at the beginning of a project, and assumes that everything will go well. Too bad if the prices for something come in higher than they should, or that particular piece of equipment is delayed, causing something else to be delayed, which then costs more because it holds something else up, and the workers still get paid even if they are standing round waiting for something. 
I am not a great fan of the Marj (or whatever else passes for a name these days), myself. However, can you perhaps elaborate (read substantiate) on the charge that the entire decision to build it was based on mistakes and project optimism? A difference of opinion is one thing (after all, the Opposition had an alternative plan - but they lost), but your criticism seems a little more comprehensive than that - in outline at least.Aidan wrote:But when the entire decision to build it is based on mistakes and project optimism, someone should be held to account.
And when the treasurer is warned about likely cost blowouts but denies it, even if unintentionally, that is not honesty.
Baulderstone eyes RAH contract with Bovis Lend Lease
SARAH MARTIN
From: The Advertiser July 13, 2010 11:42AM
INCOMING Baulderstone general manager Michael Harper is confident of winning the contract for the new RAH with consortium partner Bovis Lend Lease.
Mr Harper has been heading the company's civil division and last week took over the position from Derek Hough, who has retired from full-time work.
Baulderstone is bidding to build the hospital against a consortium involving Hansen Yuncken and Leighton Holdings.
The project was initially estimated to cost about $1.7 billion, but reports have emerged that the cost is now closer to $3 billion.
Mr Harper would not be drawn on the cost of the development, but said it was a key component of $4 billion of work expected in South Australia over the next 12 months.
"We don't go into things unless we think we can win them," Mr Harper said.
"We have a great bid and a great team, so at the end of the day we put our best foot forward and hopefully that will be enough."
"It is a long-term project . . . so it represents a great opportunity for us as a steady income base workload. We are very, very keen on getting it."
Mr Harper said Baulderstone was also focused on expanding its engineering division in the state, building on its success with the $130 million Rail Car Depot relocation and the Port Adelaide Viaduct upgrade.
"That is the area where we believe there is a particular opportunity for growth, particularly in the infrastructure market and specifically in the resources sector," he said.
BHP Billiton's Olympic Dam expansion was on Baulderstone's radar, he said, and was confident the project would go ahead.
"We are very keen to get involved in the operations part of the business, but there is also a lot of infrastructure work - a new rail line, water lines, the desal plant, housing accommodation for 7000 workers, the list goes on. There are a lot of opportunities for us," he said.
The successful bidder for the Adelaide hospital is expected to be announced in October. Other major projects also in play in the SA market include the $250 million Seaford rail extension and the Adelaide Oval redevelopment
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Thanks for the link Crawf.crawf wrote:It's located in the Transport/Infrastructure section
http://www.sensational-adelaide.com/for ... ?f=9&t=891
I think it should be moved back here
Down the bottom of the page you should see Quick Mod Tools, select Move topic and hit Go.Will wrote:No wonder I did not find the existing thread. It should definately be moved to the CBD development section, because when I think of Infraestructure I think of roads, trainlines and trams.
Robots to supply drugs, food at new RAH
Greg Kelton, Tory Shepherd, The Advertiser, 10 December 2010
ROBOTS will supply drugs and food for patients in the new Royal Adelaide Hospital.
The robots will draw drugs and other medical goods from central stores, package them and then deliver them to nursing stations while also delivering meals to patients' rooms.
It will mean savings on non-essential nursing staff.
The State Government has also announced that the new hospital will also be completed five months ahead of schedule in 2015.
Each patient at the hospital will have a single room with a view over either parklands or a series of courtyards in the hospital complex and there will be roll-out couches in each room so relatives of patients can sleep over.
The new RAH will be built as a public private partnership by the SA Health Partnership consortium although full details of the final cost have not been released.
The hospital was originally proposed to cost $1.7 billion and it is understood the final cost, once it is negotiated with the preferred bidder, will not be far off this figure.
However, despite speculation in political circles the Government would decide to build the hospital itself, this option was rejected because of the potential for cost blowouts, caused by factors such as increased steel and other component costs in the coming years.
Cabinet yesterday signed off on the preferred consortium which involves Leighton Contractors, Macquarie Capital, Hansen Yuncken and Spotless to build the 800-bed hospital on the railyards site on West Tce.
Work on removing the rail lines from the site will begin next month.
Following the signing of the contract and financial closing of the deal, site works can start, with construction of the hospital beginning later next year.
The hospital had been set down for completion by 2016, but Health Minister John Hill said yesterday it was now envisaged the building would be completed by late 2015.
The contract will ensure the hospital is maintained to contemporary standards, which means that when it is handed over to the Government in 35 years, it has to be up to the health standards operating at the time of handover.
The Government made the final decision on the preferred bidder for the hospital this week after more than six months evaluating the proposals from two final bidders SA health Partnership and Torrens Health Partnership which included the Royal Bank of Scotland, Bilfinger Berger Project Investments, Lend Lease, Baulderstone/Bovis and ISS Health Services.
The SA Health Partnership consortium will now enter the final stage of negotiations with the State Government project team, with contracts expected to be signed in the first quarter of next year.
The new RAH will have:
AN EMERGENCY department capable of treating an extra 24,000 (25 per cent more) patients every year.
120 more beds, including 40 per cent more intensive-care beds, than at the RAH's current site.
40 operating theatres five more than at the current RAH and all larger at 65sqm to allow for equipment such as MRI scanners to be used during surgery.
SINGLE rooms with ensuite bathrooms for patients, providing space for treatment and rehabilitation, reducing the risk of cross-infection, and greater comfort and privacy.
ADVANCED IT systems to improve patient safety and better clinical and patient information.
Treasurer Kevin Foley said the Government would now start final negotiations with the preferred proponent on the contract for the PPP, the largest such project in Australia. Under the deal, SA Health Partnership will build, finance and maintain the new RAH and provide non-clinical support services over a 35-year period.
Plans for the hospital will soon be lodged with the Development Assessment Commission and Adelaide City Council to consider.
``Patients and staff will have a world-class hospital, located alongside the new teaching and research facilities at the SA Health and Medical Research Institute in the city's West End,'' Health Minister John Hill said.
Premier Mike Rann said the new RAH would deliver state-of-the-art 21st century health care to generations of South Australians.
``It will be Australia's most advanced hospital and the single largest infrastructure project in our state's history,'' Mr Rann said.
Mr Hill said the bidding process for the design and construction of the new hospital had been ``intense''.
``By working with the proponent, we have increased the size of the new hospital to ensure the most efficient and effective service delivery for decades to come,'' he said.
The hospital will have 172,000sqm of fully-enclosed space and also return 3ha of rail-yards to the parklands.
Doctors, nurses and other health professionals worked with the Health Department on developing a plan for the new RAH.
