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03/09/2008
Altnagelvin Facility £3.8m Over Budget, Says Audit Office
Costs for a new Derry hospital facility soared by almost £4m due to delays associated with the appointment of a private developer, it has been revealed.
The pharmacy centre, at Altnagelvin hospital, was expected to cost around £21.5m, but due to the time taken to select a preferred bidder, the value of the scheme rose to almost £25.3m, according to the Audit Office.
Design changes to the original laboratory and pharmacy centre was also attributed to the additional costing, allocated through a Private Finance Initiative, auditors have said.
As part of the initiative the Western Health Trust has agreed to pay-off the scheme, which opened last year, with annual instalments of £1.64m, for the next 25 years.
However, this mandate is 21% higher than the annual unitary charge quoted when the bidder was appointed in 2004.
A part of this annual charge the contractor will maintain the facility.
An expression of interest, for the project, was advertised by health service officials in May 2000, following the appointment of the management and design co-ordinators the previous year.
Despite this, it took almost four years for a contractor to be selected. In addition, it was another year before the tender was agreed and signed off.
The original capital cost invested by the private developer was around £15.2m this grew to over £18m.
Financial advice and legal fees paid out during the six years leading to 2005 more than doubled, according to auditors.
Estimated costs were £95,000, but the actual amount paid was £280,000.
However, the auditors suggested this particular amount was relatively low contrasted with other PFI projects.
In the Audit Office report, Comptroller and Auditor General John Dowdall said: "Our examination of the full business case prepared in February 2004 with the revisited business case submitted in February 2005 indicates that there were significant increases in costs that resulted in increases in estimated unitary charges,
"These increases were due to changes in exemplar design, following negotiations with the preferred bidder, and delays in procurement."
The report also expressed some concerns over the management of staffing costs during the procurement process.
Altnagelvin Hospital is currently undergoing a £250m redevelopment project, kick-started by the up-grade of the pharmacy centre.
A further £3.1m is to be invested by the Health Department to provide specialised equipment in the new laboratories.
Despite increased costs, the Audit Office has said the health facility is now better equipped to fulfil the needs of North West patients.
(PR/JM)
The pharmacy centre, at Altnagelvin hospital, was expected to cost around £21.5m, but due to the time taken to select a preferred bidder, the value of the scheme rose to almost £25.3m, according to the Audit Office.
Design changes to the original laboratory and pharmacy centre was also attributed to the additional costing, allocated through a Private Finance Initiative, auditors have said.
As part of the initiative the Western Health Trust has agreed to pay-off the scheme, which opened last year, with annual instalments of £1.64m, for the next 25 years.
However, this mandate is 21% higher than the annual unitary charge quoted when the bidder was appointed in 2004.
A part of this annual charge the contractor will maintain the facility.
An expression of interest, for the project, was advertised by health service officials in May 2000, following the appointment of the management and design co-ordinators the previous year.
Despite this, it took almost four years for a contractor to be selected. In addition, it was another year before the tender was agreed and signed off.
The original capital cost invested by the private developer was around £15.2m this grew to over £18m.
Financial advice and legal fees paid out during the six years leading to 2005 more than doubled, according to auditors.
Estimated costs were £95,000, but the actual amount paid was £280,000.
However, the auditors suggested this particular amount was relatively low contrasted with other PFI projects.
In the Audit Office report, Comptroller and Auditor General John Dowdall said: "Our examination of the full business case prepared in February 2004 with the revisited business case submitted in February 2005 indicates that there were significant increases in costs that resulted in increases in estimated unitary charges,
"These increases were due to changes in exemplar design, following negotiations with the preferred bidder, and delays in procurement."
The report also expressed some concerns over the management of staffing costs during the procurement process.
Altnagelvin Hospital is currently undergoing a £250m redevelopment project, kick-started by the up-grade of the pharmacy centre.
A further £3.1m is to be invested by the Health Department to provide specialised equipment in the new laboratories.
Despite increased costs, the Audit Office has said the health facility is now better equipped to fulfil the needs of North West patients.
(PR/JM)
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