Sandwell Midland Met hospital cost set to soar by millions after Carillion collapse

The construction of the Midland Metropolitan Hospital in Smethwick has been thrown into chaos after the Wolverhampton-based company, which had been building it, went bust.

Health bosses have admitted they do not know when work on the major hospital project will restart and said there was ‘potential for significant delay’ on the scheme, which is already a year behind schedule.

Work on the Midland Met, which has risen into the skyline on Grove Lane and is around three-quarters built, stopped after Carillion went into liquidation two weeks ago, sparking a crisis for health chiefs in Sandwell.

It was due to open in summer 2019 but the collapse of Carillion has thrown its opening up in the air.

Timely solution

Toby Lewis, chief executive of the Sandwell and West Birmingham NHS Trust, which will run the Midland Met, revealed the project could now cost more than the amount bid by Carillion. It had been expected to cost around £350 million.

In a report to trust board members, Mr Lewis said: “The deeply-regrettable collapse of Carillion occasions the potential for significant delay to the opening of the new hospital.

“A series of other Carillion companies are following into liquidation, which impact both the financing model and the provision of hard facilities management services. Under the terms of our contract, Hospital Company have a responsibility for creating a timely solution to this circumstance.

The cost of the new hospital may be judged to exceed the bid made by Carillion, and contracted by the trust, and as such funding parties will need to cover this provision, which was £75m in Carillion’s accounts and may exceed that in practice.

“We need to be explicit that this does reflect remotely on the trust or public services as we have sought the same outcome and hospital from contract to now.”

Mr Lewis said he was keen for the hospital to be delivered in ‘rapid time’ but said a ‘running commentary’ and ‘blithe reassurance’ would be ‘unhelpful’.

Focused

Mr Lewis added: “Our aim must be to get the right hospital in rapid time, and we should support the present contractual model if it offers the better prospect of meeting that aim. Impacting time and cost will be the retention of key staff involved to date in the construction. Arrangements to early March are made, and in very rapid time this needs to be extended into the spring.

The trust continues to work to ensure all involved know what is required and what is being done.”

A trust spokesman added: “Our current plan remains to enforce the contract we hold with the Hospital Company. On that basis they are seeking construction estimates, a contractor and any required funding above contract. It is a matter of public record that Carillion believed that the local NHS had negotiated a price for the build that was less than Carillion would finally spend, in part influenced by their engineering delay.

“All parties, including local partners and politicians, remain focused on moving at speed to complete the project, and to restart meaningful work.

“The maintenance of the on-site core team by PwC, the official receiver, is very welcome. The issue of on-site subcontractors restarting does not arise until we have a revised and agreed construction plan.”