Fiona Stanley Hospital Project

Audited Entities

• Western Australia Health (WA Health)
• Department of Treasury and Finance (DTF)

Audit Scope and Objectives

The audit examined the planning and management of the Fiona Stanley Hospital project including planning, development of the business case and the procurement strategy, and project management between March 2004 and April 2010.

The audit focused on three main lines of inquiry:

• What is the current status of the Fiona Stanley Hospital (FSH) project against original scope, cost and time estimates?
• Has the FSH project been effectively planned and managed?
• Have significant project risks been identified and are there arrangements in place to manage them?

Audit Criteria

• Not publicly available

Main Audit Findings

• The estimated capital costs of the FSH stand at $1.76 billion compared with an original estimate of $420 million, and the opening date is between three and a half and four years later than originally planned. In common with other capital projects, the original estimates were unrealistic and were not based on a good understanding of what this major project would involve. Better definition of the requirements of the hospital has resulted in scope changes which have increased forecast costs, and delayed the opening.
• The planning phase for FSH was neither efficient nor effective. Attempts to fast track project planning to meet unrealistic deadlines caused delays and risks. The project business case and other key planning documents had significant gaps, which required additional time and resources to fix.
• Oversight was hampered by a lack of full and timely information. This delayed final project approval, and the start of subsequent phases. The additional scrutiny did, however, have the benefit of producing a more realistic scope, budget and timeline for the project, which have so far proved robust. Project management and governance frameworks are defined and agreed, and the awarding of the stage two construction contract will transfer the responsibility for finalising the design and construction to the contractor and provide more certainty about costs.
• Significant risks remain on the project. While these risks have been identified, the strategies to manage them are not all well advanced. Particular attention needs to be paid to transition and workforce planning, and the delivery of key information and communication technology systems. Without effective management of these risks FSH may be further delayed, cost more and may not deliver all the planned services to patients when it opens.

Selected Audit Recommendations

• WA Health should ensure that all future health infrastructure projects conform to the Strategic Asset Management framework so that projects:
  • are supported by a robust business case that incorporates identified health needs and whole of life costs;
  • have budgets and timelines that are based on sound planning and a clearly defined scope; and
  • are planned in a structured and orderly way to minimise risk to the State.
• The Department of Treasury and Finance should reinforce the Strategic Asset Management framework with more rigorous staged project approval processes, and only recommend funding for those projects that demonstrate realistic budgets and timelines supported by sound planning.
• WA Health and DTF should ensure robust financial and project management systems are implemented on the FSH project and are in place for all government capital projects.
• WA Health and DTF, once the stage two contract has been awarded, should ensure the time, construction and through life cost impact of any changes to the design or project brief are fully assessed before being approved.

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