Qld govt commissions review of multibillion-dollar hospitals blowout

A review has been commissioned to salvage the state’s troubled hospital build program, which is years over time and billions over budget.

Health Minister Tim Nicholls

Queensland’s $9.7bn hospital build program is now expected to cost up to $23bn and face delays beyond 2028, prompting a government-commissioned review to salvage the troubled project.

The Courier-Mail can reveal New South Wales Infrastructure specialist Sam Sangster has been appointed to assess the program’s timeline, cost overruns, and labour shortages, and will be tasked with devising a new strategy for the ambitious hospital build.

The Hospital Capacity Expansion Program announced in June 2022 by then premier Annastacia Palaszczuk, was set to deliver 2200 additional beds through three new hospitals, a new cancer centre and 11 hospital expansions by 2028.

It was slated to cost $9.7bn over six years but is now tipped to cost between $19bn and $23bn – an increase of up to $14bn.

Mr Sangster has been given 60 days from January to investigate the logistics of the current four-year build timeline, and creating a new rollout strategy beyond 2028.

He will also consider new contract models for hospital builds, potentially removing the two-stage method, meaning builders would be engaged for the entire project under one cost.

Health Minister Tim Nicholls confirmed all 15 hospitals projects would be built.

“The program is facing a blowout of more than $6bn, and there are estimates this may double if we do nothing,” he said.

“We are going to save these projects and this step is about ensuring our government will deliver every single one of them.

“Labor had zero ability or strategy to deal with the pipeline of projects they announced. It is now our responsibility to fix their failures.”

The government earlier this month scrapped Best Industry Practice Conditions arguing it was sapping productivity and causing billions in project overruns.

Last week, the tender for the $530m Townsville University Hospital expansion was withdrawn and reissued to market after the project blew out by $480m.

Several hospitals are due for stage-two build contracts in early 2025.

Mr Sangster’s review will impact whether the government decides to reissue tenders for the remaining hospital builds as it government attempts to drawn down the $23bn estimate.

The review will also assess labour shortages affecting simultaneous construction pipelines across the state’s health, housing and energy sectors, and its ability to deliver 2032 Olympic Games infrastructure.

Queensland Major Contractors Association CEO Andrew Chapman said the current hospital program would consume all available labour resources in Queensland.

“The construction industry voiced concerns (in 2022) about the deliverability of the program – 11 builds planned at the same time was always going to over commit the sector,” he said.

Analysis by Infrastructure Partnerships Australia shows Queensland would need to grow its labour workforce by 604 per cent to deliver the hospital program on time amid a major shortage of tradies with specialist skills for hospital delivery.

IPA chief executive Adrian Dwyer said the tightly sequenced pipeline was untenable.

“It would result in a significant and swift upwards spike in labour resource requirements from 2025, only alleviating in 2028,” he said.

“Given that hospital projects are already facing scarcities across all delivery phases, this figure is untenable without course correction.”