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Construction firm responsible for overdue, over-budget Grande Prairie hospital issued notice of default

Construction firm responsible for overdue, over-budget Alberta hospital issued notice of default
WATCH ABOVE: A notice of default has been issued to the contractor responsible for the construction of the Grande Prairie Regional Hospital. Vinesh Pratap explains.

A notice of default has been issued to the contractor responsible for the construction of the Grande Prairie Regional Hospital, months after it was set to open.

The Alberta government said Monday that Graham Construction and Engineering is in default of its contract to finish the hospital, and the management firm has been given 15 days to present a plan to put construction back on track.

If Graham Construction fails to do this, then the firm will be terminated, the government said in a news release.

“This is a very serious step and not something we are doing lightly,” Infrastructure Minister Sandra Jansen said.

“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.”

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The partially-completed Grande Prairie Regional Hospital.
The partially-completed Grande Prairie Regional Hospital. Contributed/Kohl Harris
The partially-completed Grande Prairie Regional Hospital.
The partially-completed Grande Prairie Regional Hospital. Contributed/Kohl Harris
The partially-completed Grande Prairie Regional Hospital.
The partially-completed Grande Prairie Regional Hospital. Contributed/Kohl Harris

The hospital contract was awarded to Graham Construction in July 2011 under the former Progressive Conservative government and construction was underway in 2014.

Since then, the project has been plagued with delays, and in November 2015, was already $89 million over budget. The delays and soaring costs were attributed to poor planning ahead of site preparation and higher than estimated costs for electrical and drywall work.

On top of the delay, Jansen said Graham Construction asked earlier this month for an extra $120 million on top of its existing $510-million contract.

“Our frustration is at this point that we don’t feel that we’ve been provided timely or accurate reporting, and we don’t feel that the contractual obligations … were met,” Jansen told reporters Monday on a conference call.

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“Considering the extra ask for money and the fact that we’re not confident that the construction is going to be done when [we] expected it to be done, we’re in a position now where we feel that we have to issue the notice of default.”

Graham Construction did not immediately return calls asking for comment, but responded on Wednesday.

The company said that since March, the Graham team has made themselves available to meet with Alberta Infrastructure and the minister’s office, but the former cancelled all meetings.

“Graham remains open to meet with [Alberta Infrastructure] at any time, in hopes of resolving the issues and avoiding further costs and damage to the project,” the statement said.

Graham said it has repeatedly warned the province that the hospital can’t be done under the current budget given the design changes.

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“Until the scope changes stop, and sufficient budget is provided, no construction manager can properly establish a final cost or properly plan and complete the project,” said Graham.

Since the project started in 2011, there have been hundreds of “continual design changes, scope increases and numerous delays outside of Graham’s control,” the company said.

READ MORE: New Grande Prairie hospital behind schedule, over budget

Jansen did not get into details of the $120-million add-on, but said “we don’t believe they have provided sound reasons for their request.”

The hospital, when completed, will provide space for everything from acute care to cancer treatment, obstetrics, MRI services and surgery to patients in northwestern Alberta.

“Our responsibility is to the people of Grande Prairie and area who deserve a new and modern hospital,” Jansen said. “They’ve waited a long time for this hospital to be completed and we must take appropriate action to make sure it gets built.”

Graham Construction was also behind the construction of Calgary’s Peace Bridge, which was also plagued by delays and cost overruns.

The Peace Bridge crosses the Bow River with downtown Calgary, Alberta visible behind on July 27, 2014.
The Peace Bridge crosses the Bow River with downtown Calgary, Alberta visible behind on July 27, 2014. THE CANADIAN PRESS IMAGES/Larry MacDougal

The initial cost of the hospital project was $250 million, less than a third of the current price tag.

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Jansen said the province had been concerned with delays in construction for quite awhile. She said that provincial officials and Graham Construction agreed in 2016 to get the project done by 2018.

Even then, Alberta Health Services said in a summer update on construction that work would not be done until 2019. Clean up and other prep work would still need to be completed after that, before patients could be admitted.

Alberta Health Services said the shell and roof of the hospital had been completed, along with insulation and windows. It said construction on the inside — including framing, drywalling, piping and electrical — was about 70 per cent done.

The parkade work was also underway, with pilings in place and pre-cast panels up to the third floor.

— With files from The Canadian Press