Health and Wellness: Colchester Regional Hospital Replacement
- Department of Health and Wellness
- Colchester East Hants Health Authority (CEHHA)
Audit Scope and Objectives
The audit objectives were to assess:
- whether roles and responsibilities were clearly defined, documented and communicated at the start of the project;
- the adequacy of Health’s oversight of the project;
- the adequacy of CEHHA’s oversight of the project;
- the adequacy of processes used to determine and adjust budgets for the project;
- the adequacy of processes used to manage project costs;
- the adequacy of the project management framework used for the Colchester Regional Hospital replacement project;
- whether the project procurements were in compliance with the applicable Province of Nova Scotia Procurement Policy and CEHHA procurement policies;
- whether the overall procurement strategy was appropriate; and the adequacy of the process followed to prepare RFPs and award final tenders.
- Not publicly available, but a mention is made that some of the criteria for the audit were obtained from the Project Management Body of Knowledge (PMBOK).
Main Audit Findings
- The project to replace the Colchester Regional Hospital was approved in 2005 with a budget of $104 million. This budget was not a realistic estimate of the expected costs to build the new hospital and was not sufficient to complete construction. It was based on assumptions that were unreasonable or unsupported. It did not, for instance, consider inflation over the life of the project. The current budget of $184.6 million is still not complete; it excludes several items that should be part of the overall project budget.
- The initial budget should have been considered to be only a preliminary spending approval. A schedule should have been put in place to revisit the budget regularly during construction to bring cost estimates up to date. It would then have been reasonable to expect those charged with oversight of the project to complete it within budget.
- Supporting documentation prepared by the Department of Health and Wellness for Cabinet for the first budget and for two of the three subsequent budget approvals was incomplete and contained inaccuracies. The impact of this was to hinder effective decision making.
- The new facility is over 100,000 square feet larger than the existing facility and is designed to offer more services to more people. However, there has been no analysis to determine whether additional funding will be required to operate the new facility at its intended capacity when it opens.
- While ineffective budgeting practices were significant contributors to apparent cost increases, oversight and project management weaknesses by both CEHHA and Health have contributed to project difficulties and cost overruns. Some significant decisions were made without sufficient consideration of the related costs.
- The Department should provide better guidance to the NHS on how to measure and report efficiency savings, so that the total savings reported are more strongly supported by robust data.
- The Department should improve transparency by making clear any caveats to data quality when it reports efficiency savings.
- The Department should take a more active interest in demand management and develop ways of gaining routine assurance that patients’ access to healthcare is not being inappropriately restricted.
- The Department and the NHS Commissioning Board should work with the NHS to reduce barriers to transforming services, and evaluate the impact of transformation initiatives, as they are implemented, to generate evidence about what works locally and on a larger scale.
- In developing future mechanisms for paying for healthcare, the Department, Monitor and the NHS Commissioning Board should consider how these mechanisms can be used to drive service transformation and care that is integrated around the patient.
- The Department should develop better ways of monitoring progress on service transformation.
Selected Audit Recommendations
- The Department should establish a schedule to review the preliminary budget and approve the final project totals for future capital projects.
- The Department and CEHHA should prepare a comprehensive assessment of the funding required to operate the new facility at its intended capacity and agree on the level of funding to be provided.
- The Department should put a process in place to ensure only complete and accurate information is presented to Cabinet.
- The Department should put a process in place to ensure management in charge of significant capital projects complete an adequate review and challenge of key estimates prepared by consultants.
- The Department should put a process in place to ensure design decisions are made with due consideration of the impact on costs for future construction projects.
- The Department should put a process in place to ensure decisions to seek LEED certification for construction projects are supported by an analysis of the costs. Costs should then be tracked over the life of the project.
- CEHHA should put a process in place to ensure all future change orders are compliant with their change order process.
- The department should require the completion of 30%, 60%, and 90% estimates during the design stage of future construction projects, including significant trade packages for fast track projects.
- The department should sign a contract including clear responsibilities and reporting requirements with its project manager for the Colchester Hospital replacement project.
- Treasury Board should assign responsibility for construction projects in Nova Scotia to a central organization with the necessary expertise to oversee all significant construction projects for all government departments in Nova Scotia.
- CEHHA should conduct a post-occupancy assessment after the new hospital opens to identify lessons learned for future capital projects. The results of this assessment should be shared with the Department and central government so that the lessons learned can benefit future projects.
- Following the establishment of a central body to oversee large construction projects, Treasury Board should assign responsibility for post-occupancy assessment of large construction projects to this group.