Alberta government issues Notice of Default for Grande Prairie hospital project

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The Grande Prairie Regional Hospital under construction (Alberta Health Services image)

The Alberta government says it has issued a Notice of Default to Graham Construction and Engineering, construction manager for the Grande Prairie Regional Hospital in the province’s northwest. The contractor has responded with a statement defending its integrity and saying the problems relate to the government’s own decisions.

The default notice issued on July 30 informs Graham that it is in default of its contract to complete the hospital. The construction management firm has 15 days to submit a plan to government identifying how they will bring the hospital project back on schedule and in accordance with the contract, or face termination, the Alberta Government news release said.

“This is a very serious step and not something we are doing lightly,” Alberta Minister of Infrastructure Sandra Jansen said in a statement. “We have worked closely with the construction manager to resolve the issues but the bottom line is simply that the hospital is not progressing as it should. Our responsibility is to the people of Grande Prairie and area who deserve a new and modern hospital. They’ve waited a long time for this hospital to be completed and we must take appropriate action to make sure it gets built.”

The provincial government awarded the hospital contract in to Graham in 2011.

Jansen said at a news conference that earlier in July, Graham had requested an additional $120 million to finish the hospital.

“It’s a lot of money,” Jansen said. “We don’t have confidence that $120 million is something that makes sense to pay out. “We don’t know what the problem is, we can’t justify that extra money.”

CBC Television reports that when the hospital was originally approved by the previous Progressive Conservative government, it had a budget of $319 million and completion date of March 2015.

Over the years, the project dragged on, increasing in cost to $763 million.

Jansen said they had hoped hospital construction would be wrapped up by the end of 2018, with patients moving in sometime in 2019. Now, she said, it is not clear when the new hospital will be fully operational.

On Aug. 1, Graham responded with a statement saying: “The (province’s) recent release of a notice alleging default is unfortunately rife with errors and misstatements.”

“While Graham has and will continue to meet its contractual obligations while it works under the dispute resolution process, the notification necessitates a response,” the contractor wrote.

Graham said since the project’s conception, the government has made continual design changes.

The company said in its statement that since late 2016, it has repeatedly advised the government the $510-million budget was insufficient for the evolving design, estimating the cost had ballooned to $583 million.

“The project has experienced over 600 change orders and over 400 design clarifications (in the past two years, with); 63 approved design changes and 34 new scope clarifications in June 2018 alone,” Graham said. “Many changes required demolition of completed work to accommodate the new scope, affecting project cost and schedule.”

Graham said it has recently provided an updated budget based on the latest design, which included an additional contingency amount of $35 million. Since March it has sought to meet with the minister and senior officials, but meeting dates have been cancelled and follow-up requests for meetings have gone unanswered.

The company said it remains open to meeting with the government to resolve the issues. It asserts that Alberta Infrastructure must take on its “responsibilities and obligations.”

In the meantime, “Graham will vigorously defend its position and reputation,” the statement said.

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