An artist's impression of a Waikato DHB office block where renovation costs have doubled to more than $14 million in one year, and now require Ministry of Health approval. Photo/Supplied
An artist's impression of a Waikato DHB office block where renovation costs have doubled to more than $14 million in one year, and now require Ministry of Health approval. Photo/Supplied
Costs for a building renovation to house 700 district health board staff have blown out to double the original price, in one year.
The $7.7 million refurbishment of Hamilton's KPMG building by the cash-strapped Waikato DHB was approved by the board behind closed doors in May last year.
However, the board was told in July this year the cost had ballooned to $14.7 million, because of extra work being done to the building which takes up part of a city block.
The updated figure, presented to the board in public excluded but seen by the Herald, now needs Ministry of Health sign-off because it has exceeded $10m.
A member of the Capital Investment Committee (CIC) which has authority to approve the taxpayer-funded work is the board's deputy chairwoman, Sally Webb.
Webb said she had declared a conflict of interest in the matter.
Ministry of Health director of critical projects Michael Hundleby confirmed the building upgrade, part of which is under way, now requires approval from the Capital Investment Committee.
"The Waikato DHB has submitted a business case for CIC consideration. This has not yet been considered by the CIC."
When the Herald asked the DHB the reason for the cost blowout a spokeswoman said the questions would be treated as an Official Information Act request, allowing the DHB 20 working days to respond.
It previously would not give costs citing "commercial sensitivity" because the DHB was going through a "procurement process".
Part of the outside of the old Farmers building in Hamilton, being remodelled by the landlord. The escalating cost of the inside refurbishment is being paid for by taxpayers. Photo/Natalie Akoorie
However, board chairman Bob Simcock said Sunday the specification for which parts of the organisation would move into the building had changed and the building required further work to cater for those groups.
"It's as simple as that. As the organisation has looked more closely at who can benefit from moving into those offices it's meant that more work has got to be done."
Simcock said the increased costs and required approval would not stall the project but could affect the final result.
"The work that's going on at the moment is the landlord rehabilitating his building and we will be moving in there. What work gets done will depend on the capital committee nationally."
The landlord of the building, previously tenanted by Farmers, would complete a base building refurbishment encompassing the building fabric, exterior, glass curtain walls, seismic upgrade and building services.
Once the tenancy is handed over Waikato DHB would complete hard and soft fit-out works including partitioning, specialist infrastructure, specific electrical, information services, furniture, fittings and equipment.
In April the DHB announced it was consolidating services from nine locations across the central business district into the refurbished offices.
The offices will house Population Health, some mental health services, Community Nursing, the Diabetes Service, Disability Support Link, information services, and administrative staff.
Around 700 staff would move into the offices in the first quarter of 2018 while some staff were already working from the ninth floor of the KPMG Tower on the same site.
The DHB was also consulting with the Hamilton City Council to make the public footpaths outside the offices smokefree.
DHB executive director of facilities and business Chris Cardwell said moving staff from the hospital campus to the CBD would take pressure off the hospital site and free up more space to use for clinical work.
However, sources say frontline staff such as doctors and nurses felt the relocation would remove senior managers further from the crippling pressure of stretched resources.
Hamilton-based Labour MP Sue Moroney said the blowout was another example of DHB leaders not doing due diligence.
"The New Zealand and Waikato taxpayers deserve better than that. If the cost has doubled in a year that would suggest to me not enough work was done initially on what the true costs were," Moroney said.
"And this is now on the back of a DHB that's got significant question marks over the spending of its CEO, and its investment into SmartHealth.
