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Graham Construction disputes government’s take on Grande Prairie hospital problems

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

The Alberta government terminated the services of Graham Construction Monday and is now looking for a new builder for the Grande Prairie Regional Hospital project, the infrastructure department said.

However, the company said it wasn’t fired — it quit.

The province’s perspective

On July 30, a notice of default was issued to the contractor responsible for the new build, months after it was set to open.

Graham Construction and Engineering was given 15 days to present a plan to put construction back on track. If the company couldn’t do that, it would be off the job, the government said.

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

The province said Graham Construction submitted a mitigation strategy on Aug. 17 but “after thorough review, the plan did not provide the certainty that was needed in terms of timeline and budget to complete the project.”

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On Monday, the province said Alberta Infrastructure will issue an invitational request for proposal (RFP) for a new project construction manager, who is expected to be hired by late October.

“This was not a decision that was made easily,” Infrastructure Minister Sandra Jansen said in a news release.

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“I have been clear that this project is a government priority and that’s why we are taking action to construct this hospital as quickly as possible. The actions taken today will provide greater certainty around the completion of the new hospital.”

Graham responds

Late Monday night, Graham Construction issued a statement to Global News in which it said it was “deeply disappointed” by the government’s actions and that the province omitted “a key fact.”

The company said the letter it sent to Alberta Infrastructure on Aug. 17 served as notice that it was terminating the contract, not the other way around.

“This was the culmination of Graham’s continued advice to [Alberta] Infrastructure that the project was underfunded to build the project as designed by Alberta Infrastructure’s designer,” Graham Construction’s statement said. “We also had conversations with the Government of Alberta, as recently as last week, in which we believed we were moving towards a solution for Grande Prairie.

“Due to the importance of the project to the people of Grande Prairie, Graham was prepared to engage in a conciliatory process to ‘reboot’ the project and to re-energize and realign the project team, with the central purpose of seeing to the health centre’s completion. This included our offer to bring in a third-party mediator.”

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Graham Construction said the government put the company in an “untenable” position.

“Graham was hired as the cost-reimbursable construction manager of the Grande Prairie Regional Hospital and was confronted with a number of significant issues, including multiple design delays on an underfunded project,” the company said.

“Alberta Infrastructure made it clear it was not prepared to stand by its obligations under its contract with Graham Construction.”

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The government said construction activity on the site will be temporarily suspended until the new construction manager is hired. Construction activity is expected to resume as soon as possible after that, likely in November, the province said.

Grande Prairie Regional Hospital.
Artist rendering of the Grande Prairie Regional Hospital. Credit: Alberta Government

History of problems

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

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Since then, the project has been plagued with delays, and in November 2015, was already $89 million over budget — in part, due to higher than estimated costs for electrical and drywall work.

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

In August, the company said the Graham team had made itself available to meet with Alberta Infrastructure and the minister’s office since March, 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 repeatedly warned the province that the hospital couldn’t be done under the current budget, given the design changes.

READ MORE: Alberta premier says money diverted from police college to new hospital

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

— With files from Global’sand The Canadian Press