People protesting the budget cut for Dunedin Hospital. Photo: RNZ / Tess Brunton
Analysis - The Dunedin Hospital rebuild was being held up by health authorities as an example of a "lessons learned" programme for building hospitals better, in the run-up to last week's bombshell that cost blow-outs are forcing a rethink.
The project also got new governance and delivery structure arrangements in mid-2023, just 12 months before the government said it first learned how bad the blow-out was.
Documents reveal this, and show officials upbeat on making big builds run better.
"There have been significant early achievements in lifting the management of infrastructure investment and delivery," they reported internally in September last year.
"The Lessons Learned Framework was piloted on the New Dunedin Hospital project," they said a few weeks before that, to learn lessons from all major health infrastructure projects in order to foster a "culture of continuous improvement" and "save money and time".
But by last week, Finance Minister Nicola Willis told Parliament: "What we have found is a pattern of actually completely inadequate planning occurring and a reluctance to confront emerging problems."
Dunedin, like so many big infrastructure projects, has over-run the limits of accountability, visibility and feasibility within the country's infrastructure investment management systems - identified earlier this year as flawed by Treasury, which is trying, again, to improve them.
The government said the blinders were on at Dunedin.
This is despite Health NZ Te Whatu Ora's own head of infrastructure delivery, Blake Lepper, being part of Dunedin's Project Governance Group, both for that agency, and earlier in an observer role for the Infrastructure Commission.
RNZ asked Health NZ if Lepper had reported back on the cost overruns and other problems he was seeing.
Health NZ did not address that, referring instead to his observer role, while adding, "questions on the observer role are best directed to the commission".
Lepper is also a director and shareholder of a private consulting firm. Health NZ said the firm was inactive.
"As Blake Lepper Consulting never held any health contracts, there has been no need to manage any conflict of interest," it said.
The internal documents show two very different sides of Dunedin.
Held up as the "flagship for health within New Zealand as the first Greenstar digital hospital" and "the first large-scale hospital build in New Zealand in more than a decade", by September 2022, officials were urgently debating what to cut to save $100 million, upsetting "four years of careful planning".
They warned that "any scope reduction of any form is ill advised. It will increase ongoing operational costs, reduce clinical functionality, decrease the likelihood of us realising the patient flow and efficiency benefits ... and lead to higher costs in the medium- to long-term for Te Whatu Ora".
Fast forward to today, and the government's stated first option is to "revise the project specification in scope".
Back in mid-2023, officials reported internally that Dunedin's project governance "has been strengthened and extended".
Oversight would now cover not just the build itself, but how the workforce would move in, and all the data and digital elements - the "three key enablers" - as Treasury recommended.
But that $225m of data and digital has never been integrated into the now $1.88 billion budget.
And just in March 2024, Treasury said about health projects: "Overall data quality is poor ... some investments [are] missing descriptions and commentary ... some information is acknowledged to be out of date" and many lacked assessments of the risks.
This contrasts, again, with moves detailed in internal documents since July 2023 to:
- Approve the first-ever national plan for investment in health infrastructure, sent to ministers last December, to "prioritise resources to ensure investments are well understood, planned, and delivered";
- Approve a first-ever national asset management plan and strategy, to back up the investment plan;
LI] Roll out a national infrastructure operating model with standardised guidance for fire, structural and engineering design, and link this to new regional infrastructure teams.
The plans, and governance from the top of Health NZ, and the oversight by the Ministry of Health, made no discernible difference at Dunedin.
By March, Willis and Health Minister Shane Reti had agreed to additional assurance requirements at the beleaguered project.
Also, the project was being required to report to the Infrastructure and Investment Ministers Group.
By May, they had agreed to put in an extra $290m.
By last week, Willis was telling the snap debate: "One of the facts that has surprised me about it, which I can barely believe, is that the actual business case for the project was still being developed while the project was being built."
Is there more to come? The same, improved governance put in place last year at Dunedin, has also been in place at the big hospital rebuilds at Whangārei and Nelson.
