Construction on the £425m PFI Royal Liverpool Hospital will now not begin until 2014 at the earliest, while completion has been set back by at least six months.
H&V News’ sister title Construction News has reported that the fresh delay means the start date for the project has now been delayed by two years in total.
The Department of Health confirmed that Carillion and Horizon – made up of Interserve, John Laing and FCC – are being asked to make final bids for the £280m construction contract by the end of this week, after both the Treasury and Department of Health cleared the business case for the project.
A preferred bidder is expected to be announced “in the next few weeks”.
However, once that happens, the trust still needs to carry out a funding competition, win final planning approvals and get through a judicial review period.
Work was originally hoped to start in early 2012 and be completed in 2016. By December last year the start date had become July 2013 at the earliest, with completion still expected for the end of 2016.
A Royal Liverpool and Broadgreen University Hospitals NHS Trust spokesperson confirmed to Construction News today that financial close is now expected in early 2014, with work on site expected to start “very shortly, after contracts are signed”. The construction phase will create 750 jobs and apprenticeships.
Completion will now not happen until mid-2017, the trust confirmed.
The spokesperson rejected suggestions that the implementation of elements of private finance 2, first revealed by Construction News in February, had led to a delay.
“It is common practice for final bids to be submitted after the draft appointment business case has been approved by the DoH/Treasury,” she said.
“We expect to start construction early in 2014, though this is not because of any ‘hurdles’; it’s just how long the process takes. For example, the planning approval and the expiry of the judicial review period alone takes us to December.”
Once the preferred bidder is selected and formally confirmed by the DoH and the Treasury, the trust and the bidder will run a competition to select a funder for the project.
After a funder is selected, there will be due diligence on the scheme and the trust will present a Confirming Business Case to the DoH and the Treasury.
Only once that has been approved will the Trust proceed to signing the deal.
A DoH spokesperson said: “The trust expects to receive final bids at the end of this week; they will then evaluate and select their preferred bidder.
“After selecting the preferred bidder, they will finalise the detailed points and move towards contract signature.”
The Royal Liverpool project first went out to market in April 2010.
At the time, it said up to £280m and 89,000 sq m of the project would be funded by PFI, while the Treasury Infrastructure Finance Unit would potentially also provide debt finance if private funding could not be secured on acceptable terms.
The scheme was first delayed by a legal challenge from campaigners and has also witnessed a year-long government PFI review.
The DoH had approved the trust’s business plan in February and passed it to Treasury, which is understood to have cleared it almost a fortnight ago.
A trust spokesperson said: “We will give full details about the funding structure/package at the same time as we announce the preferred bidder that we are minded to appoint.
“However, the cost of construction is circa £280m with the facility circa 90,000 sqm. The trust will make a capital contribution. We expect that the annual unitary payment to our bidder will represent about 6 per cent of our annual turnover.”
Trust chief executive Aidan Kehoe said he was delighted they were now “just weeks away” from unveiling the design for the new hospital, while also moving a step closer to the creation of the Liverpool BioCampus, “which has the potential to transform the city”.
KPMG health director Matthew Custance said: “Given the Cabinet Office’s ongoing rhetoric about reducing procurement times and the apparent commitment of the government to cutting red tape, it’s very disappointing that so much of the PFI programme, as well as other important health procurement activity, is mired in delays in securing Treasury and Cabinet Office approval.
“In an environment of multiple consecutive approval processes, we have seen delays multiply as well as repeated referrals of schemes to [health regulator] Monitor for re-evaluation, while trusts’ and bidders’ transaction costs mount.”
Vinci and Sir Robert McAlpine win £8m car park job at Royal Liverpool
A Vinci Construction and Sir Robert McAlpine team has won an £8m multi-storey car park job at the Royal Liverpool University Hospital ahead of its proposed £425m redevelopment.
The Royal Liverpool and Broadgreen University Hospitals NHS Trust has awarded the IHP joint venture the design-and-build contract.
The scheme was awarded under the ProCure21+ framework and will be completed in February 2014.
The car park will provide 700 spaces for staff, freeing up existing areas of surface car parking for the construction of the new hospital. The ground floor level will provide accessible car parking spaces and storage and shower facilities for cyclists.
Vinci Construction UK regional director of Building Division – North Mark Thomas said: “The new car park will provide a secure and well-lit parking facility for staff, ideally located at the proposed entrance for the new hospital. We are delighted to have been appointed on this scheme.”