The question of wasteful spending has been raised after it emerged the Government has spent more than $51 million on consultancy for the new Dunedin hospital inpatient building - and the detailed design is still almost two years away.
Te Whatu Ora Health New Zealand (HNZ) revealed under the Official Information Act the total cost for all consultancy work on the inpatient building as at February 23, 2023, was $51,444,302.
The bill for consultants will include the cost of a value-management process that resulted in the approval of a $90 million design cutback last December.
HNZ did not provide a breakdown of the spend on value-management consultants, but said the cuts were the culmination of a 16-month process that started in September 2021.
Dunedin National list MP Michael Woodhouse said the total figure, which includes roles from architects and engineers to project managers, seemed like an extraordinary amount of money.
This was "probably about right" given the scope of the project.
However, it raised the question of how much effort had now gone to waste as a consequence of the design changes, and how much of it would have to be reworked.
Health Minister Dr Ayesha Verrall responded to a written parliamentary question from him on Monday, saying the inpatient building detailed design was due for completion in November 2024.
The length of the value-management work was "an extraordinary amount of time" given the result, he said.
"If they’re not going to complete detailed design until more than three years after they started the value-management process, construction costs and inflation is going to render the work they’ve done to stay within budget completely redundant."
Whether a March 2021 estimate of 85% likelihood the contingency included in construction costs would be enough to cover this was another question to which he received a response.
The value-management process, described by HNZ as "a normal part of the design phase", was undertaken by the design team and consultants.
The design team, selected through an open tender process, was named as Warren and Mahoney, Holmes Consulting, Beca supported by Project Managers RCP and Quantity Surveyors RLB.
HNZ declined to provide a breakdown on savings, and the briefing provided to Dr Verrall for sign-off, stating these would soon be available on its website.
The changes - which include a reduction in beds, scanners and non-clinical spaces, as well as the staff-focused pavilion building - were approved in December in order to address a $200 million project budget blowout, along with an additional $110 million in Government funding.
HNZ delivery of infrastructure and investment group director Monique Fouwler said the consultancy spend was normal and budgeted.
‘‘Consultancy fees on large projects generally account for 15-17% of the total project costs,’’ she said.
Although the design would be complete in late 2024, it was being delivered in stages in order to commence construction early next year.
Approximately 80% of the existing design would be be reused.
