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Pete Hodgson

Cabinet is deciding where to build the estimated $1.6 billion replacement for Dunedin's crumbling hospital, and is considering a site recommended by the Southern Partnership Group - the committee steering the rebuild.

SPG chairman Pete Hodgson had hoped to announce the site within the next few days, but what he called an "irritating" delay meant the site would now be revealed later this month.

"The concerns are in the business planning process and are unrelated to the site," Mr Hodgson said.

"It is not going to cause a delay in the hospital project itself."

Mr Hodgson has previously said the proposed location of the new hospital would be on flat land north of the Octagon and south of the old hospital.

He has also suggested the hospital might be built on multiple plots of land and linked by bridges over streets.

In an Otago Daily Times poll a fortnight ago, 62% of voters selected the block which was formerly home to the Cadbury factory was their preferred location for the new hospital.

The SPG is now finalising a detailed business case for the new hospital.

The local advisory group helping with infrastructure issues concerning the rebuild is scheduled to meet next week.

At its last meeting, it was considering a proposal for the new hospital to be heated with renewable energy, and for it to be part of a larger district energy scheme involving the University of Otago and other users.