QIPP, Efficiency & Savings

10.01.19

Trust sets £320m cap on finishing Birmingham hospital hit by Carillion collapse

The NHS trust behind the Midland Metropolitan Hospital hit by the collapse of Carillion last year has launched its search for a replacement contractor, and set a £320m cap on any bids to finish the hospital.

Sandwell and West Birmingham Hospitals NHS Trust has published a contract notice calling on potential contractors to register their interest in taking over the Birmingham hospital project— and pledged to share any cost-savings identified on the project.

The trust has placed a number of restrictions on the contract, namely capping the project budget at £320m, as well as requiring bidders to have a turnover of at least £534m.

The Midland Metropolitan Hospital was hit with delays and increased costs caused by the collapse of the construction giant Carillion, temporarily halting the building of the new facility.

In total, the NHS was forced to implement contingency plans at 14 hospitals to keep essential services running, and left trusts hundreds of millions out of pocket.

Now, firms have been formally invited to apply up until 6 February to complete the half-finished hospital, and three contractors will then be shortlisted and invited to tender later in the month, with a preferred bidder being selected from the trio.

The main construction work is expected to recommence in October, and the trust plans on having the project completed by the end of 2021.

Sandwell and West Birmingham Hospital Trust had previously admitted it was struggling to find a contractor to replace Carillion and warned there was still a risk of the trust being unable to find a firm prepared to take over the site.

Balfour Beatty are reporting one of the favourites for the job with the company already on the site carrying out an £10m early works contract.

Following conversations with the market, the Birmingham trust found that there was concern about the risk any new contractor would have to bear when taking on the hospital project, and today’s contract notice reveals that firms will have to take full design and construction risk.

The hospital had an original construction budget of £350m when it was first procured under a private finance initiative in 2015, with Carillion spending £205m on work by January last year which means the total cost will hit £525m if the £320 budget cap is reached.

It was previously reported by the trust that the delays to the Midlands hospital could bring the total cost into eight figures, with Carillion’s collapse also leading the cancellation of over £100m in EU funding.

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