Elias: Don’t blame us for cost overruns

NHIC is accepting no responsibility for the massive cost overruns  that it expects will inevitably be incurred on the construction of the Scarborough Hospital Development Project, NH boss Emile Elias said yesterday. Speaking in an interview with Sunday Newsday last week, Elias stated that his company had been raising red flags over the past 14 months about the number of variations that have been instructed by the consultant engineer, Stantec. These  “large number of variations” have impacted significantly on both the current contract value and the date of completion, Elias said. The original date of completion was April 2005. But Elias stated that there was still a considerable amount of work to do. Therefore, it is not expected to be completed by that time.

Elias stated that under the contract, NHIC was compelled to obey the consultant engineer. Failure to do so would lead to the dismissal of the contractor (NHIC), under the terms of the contract. Elias  indicated that he signalled his concerns about the variations and the cost overruns that would ensue to a Stantec official, in a letter dated November 12, 2003, “to which I  never had the courtesy of a reply.” The letter pointed out that the original contract sum (excluding VAT) was TT $118,185,069.15. It further explained that total additions to date, (November 12, 2003) (excluding VAT) amounted to $20.6 million. This brought the new contract amount to $138,824,500 (excluding VAT), the letter said. Elias could not say last week what the final cost would be because, he said, since the date of his letter, several other variations have been issued by the said consultant, which will again have implications for budget and time of completion. “It is all a moving target because the design is being altered even today,” he said.

He cited  for example, the fact that this week alone there had been four instructions for variations — “changes in plumbing, changes in the foundation to a retaining wall, changes in a mortuary drain and changes in the structures to the penthouse to the mortuary.” All these instructions for variations  are issued in writing and form part of the official record,  he said. According to his November 12, 2003 letter Elias stated: “We again express our concern at the apparently ad hoc and unplanned manner in which instructions and major design changes involving substantial additional cost and/or delay are being issued.” “We refer to your latest instruction to raise the levels of the road in the area of RW 14 by approximately one metre. This is after you varied previous instructions that required us to reduce the levels of this area, which was done! Having expended the client’s money in reducing levels, we must now spend even more money (of the client’s money) raising those levels. The perimeter road has been the subject of more than ten variations, at various times, to the levels and alignment,” the letter stated.

Elias further said: “We are especially concerned at the very substantial increases in the extent and design of revised foundations for some structures, the size and extent of retaining walls, additional works related to the realignment of the ring road and additional earthworks and filling generally that together have substantial time and cost implications.” Elias’ letter was copied to Nipdec, the project manager hired by the Ministry of Health to run the project. Elias  also offered unsolicited advice in respect of the seismic code, more specifically the hospital’s ability to resist earthquakes. He stated that he argued that the earthquake code three  should have been used, rather than two.  Elias said his advice has been completely rejected by both the project manager (Nipdec) and the consultant engineer, both of whom told him that it was not his business. NHIC received a letter from Stantec dated October 19, 2004 stating: “Design is outside of your contractual obligations and professional expertise.”

A letter from Nipdec dated October 26, 2004 backed this position, stating: “You have no responsibility for the design or specification.” Elias said his other concern related to the fact that the consultant engineer, Stantec, continued to ignore the cost overruns on his monthly certificates which are issued to Nipdec for payment. Stantec consistently puts  zero in the space where this question is asked “what is the value of the variation done?” It is understood that Cabinet is considering the whole issue of the Scarborough Hospital Project. Government sources said one of the options that is being considered is the replacement of Nipdec with a new project manager.