DEPARTMENT OF HEALTHHEALTH PORTFOLIO COMMITTEE

BRIEFING:

HOSPITAL REVITALISATION PROGRAM

Infrastructure Management

5 September 2012

TABLE OF CONTENTS

1. PURPOSE

2. INTRODUCTION

3. BERTHA GXOWA HOSPITAL

4. ZOLA/ JABULANI HOSPITAL

5. NEW NATALSPRUIT HOSPITAL

6. NEW NATALSPRUIT HOSPITAL ROAD

7. KYALAMI HOSPITAL

8. RECOVERY STRATEGY

9. CONCLUSION

2

1. Purpose

The purpose of the presentation is to brief the Health Portfolio Committee on the current status of infrastructure related projects implemented via the Hospital Revitalisation Grant.

This presentation will cover: – Commencement and completion dates;

– Over and under expenditure

– Delays and reasons

– Challenges

– Recovery strategies 3

2. Introduction

Department of Health Infrastructure Management Unit is responsible for the planning, equipment provision to new and existing facilities, upgrade and rehabilitate community health centres.

This report will however focus on the hospital revitalisation program.

4

3. Bertha Gxowa Hospital: Project Summary

• Overall project progress at 96%

• Replacement of existing hospital to support cluster.

• Beds: 300

• Level of service: District hospital

• Contractual start date: 4th October 2007

• Contract completion date: 3rd October 2010

• Practical completion: 8th July 2011

• Works completion scheduled for: August 2012

• Final completion scheduled for: November 2012

5

3. Bertha Gxowa Hospital: Financial Status

BUDGETS SPENT SECTION COST INCREASE REASONS

R489M Hospital •Extension of time•Interest charges on delayed payments•ICT budget omission•End user was not involved in the project scope thus leading to omissions.

R1.9M –YTD

R444M – ITD

6

3. Bertha Gxowa Hospital: Variation Orders

• Approved Variation Orders are briefly described below:

– Provision of 100% power back up – R3 251 750 (0.96%)

– Replacing Ethylene Oxide Autoclave with Formaldehyde Autoclave – R826 980 ( 0.24%)

– Changes to Radiology – R158 400 (0.05%)

– Changes to Main Kitchen – R65 100 (0.02%)

– Changes to kitchen finishes – R78 500 (0.02%)

– Changes to Accident & Emergency Department – R 148 000 (0.04%)

– Deposit to pay for upgrade of Municipal electrical connection – R681 030 (0.20%)

7

2. 3. Bertha Gxowa Hospital: Challenges and Solution

Challenges• Financial:

– Delayed payments– Extension of time (EOT)claim: 5 months -

R10 215 767.67• EOT 3: Not yet resolved.• Delay from practical completion to final

completion (by 3 months not yet resolved).• The hospital has not relocated yet due to

mechanical equipment that is re-tested and the results of the hot water test for Legionella – results was anticipated last week.

• Latent defects – remedial work still pending.• Changes due to legislation and quality

assurance at the end of the project is still outstanding and a RFS will be submitted before the end of the week for approval.

• Some of the provided services cannot be accommodated in the new hospital.

Solutions– Resolving the EOT claim and interest

– Completion of re-testing all mechanical equipment is in progress.

– All outstanding work post practical completion in July 2011 will be addressed as a separate project subject to the approval of budget by Provincial Treasury.

– The Legionella test – negative and the hospital is currently in the process of relocating the wards to the new building.

– Relocation of the hospital to be finalized.

8

3. Bertha Gxowa Hospital: Risks

A section of the existing hospital building and heritage building was not included in the Revitalisation Project. The hospital is likely to retain utilisation of the space and it therefore requires grant allocation.

Rough estimates indicate a need for the following:

– The renovation cost of R137 million vs. demolition and rebuild of a specified and appropriate structure, cost to be estimated.

– Provision of MOU services in close proximity of the hospital.

– Accommodating the expanded ART clinic that is still expanding

9

4. Zola/Jabulani Hospital: Project Summary

• Overall Project Progress: 93%

• Beds: 300

• Level of service: District hospital

• Contractual start date: 21st January 2009

• Contractual completion date: 21st September 2012

• Anticipated Completion date: 21st November 2012

• Sectional completion:

• Hospital

• Family Medicine clinic (Gateway clinic) fully operational from 15th September 2009

10

4. Zola/Jabulani Hospital: Financial Status

BUDGET SPENT SECTION COST INCREASE REASONS

R675M Hospital •Poor performance by the previous contract that was eventually terminated•Delays in effecting payments•New additional scope of work•Land not consolidated – land belongs to city of Johannesburg•Delayed ESKOM power and water connection•Inclement weather

R50M – YTD

R607M - ITD

11

4. Zola/Jabulani Hospital: Variation Orders

• Approved Variation Orders are the 2 operating theatres, which are in construction.

12

4. Zola/Jabulani Hospital: Challenges and Solution

Challenges– 1st, 2nd, & 3rd contract

terminated due to:

• Non-performance

• Conflict between the different stakeholders – no consensus in terms of contract & management of the project. The project is 3 years behind schedule

Solutions• 4th contract (current) commenced:

21st January 2009 – ending 21st September 2012

13

5. New Natalspruit Hospital: Project Summary

• Overall project progress: 90%

• Replacement of existing hospital.

• Beds: 771

• Level of service: regional hospital

• Contractual start date: 1/11/2006

• Contractual completion date: 31/3/2012

• Anticipated completion: 31/11/2012

14

5. New Natalspruit Hospital: Financial Status

BUDGETS SPENT SECTION COST INCREASE REASONS

R1.6B Hospital •Variation orders due to poor planning and stakeholder engagement omission;•Delays in payment of Contractor.

R59M –YTD

R1.40B – ITD

15

5. New Natalspruit Hospital: Variation OrdersVariation Orders are as follows:– Change to concrete mix– Changes to Psychiatric Ward

• Ward was not complying with Mental Health Guidelines– Changes to Adult & Paediatric ICU and day Ward

• Poor planning, flow wrong, no isolation areas, children, burns and adults mixed– Installation of additional Distribution boards– Changes to Accident, Emergency &Trauma

• To accommodate isolation, paediatrics, DOA room Etc.– Changes to Radiology

• Poor flow, spaces too small for equipment, staff patient areas not well defined– Changes to TB Ward

• No compliance with HAST guidelines– New Switch Board area

• Space not assisting visually impaired and disabled workers or providing ablution and staff rest areas that are accessible

16

5. New Natalspruit Hospital: Challenges and Solution

Challenges• Extension of Time 3: delayed

payments during 2010/2011 financial year – not approved yet, external legal opinion pending

Solutions• Acquire Extension of Time

approval

17

5. 6. New Natalspruit Hospital Road: Project Summary

• Overall Project Progress: 65%

• Upgrading of access road to the hospital

• Contract start date: 17th April 2012

• Contract completion date: 17th October 2012

18

6. New Natalspruit Hospital Road: Financial Status

ORIGINAL BUDGETS

SPENT SECTION COST INCREASE REASONS

R64M Hospital No increase in cost

R0.4M –YTD R10M submitted

R0.4M – ITD

19

5. 6. New Natalspruit Hospital Road: C & R

Challenges• Challenges:

– Challenges to register the Joint Venture at SARS was delayed and payments could not be made. This is now resolved and 4 certificates were submitted for payment.

Solutions• Solutions:

– The contractor was able to continue work although there were challenges with registering the JV with SARS

– Project is in progress and to date there were no adverse challenges to delay the project.

20

7. Kyalami Hospital: Project Summary

• Overall Project Progress 0%

• Re-opening of the existing hospital

• Planning began on 26th June 2012 to re-open the hospital as a level 1, district hospital.

• Construction planned to commence: 6th March 2013

• Planned completion: 4th July 2015

21

7. Kyalami hospital: Financial Status

ORIGINAL BUDGETS

SPENT SECTION COST INCREASE REASONS

R400M Hospital •None

R0M Equipment

R0M –YTD

R0M – ITD

22

7. Kyalami hospital: Challenges and Solution

Challenges– There was attempts to sell the

building and more recently to open the hospital as a Folateng hospital with level 1 beds for the public service.

– Vandalism and poor security is posing challenges as damages to the property are escalating.

Solutions– The DBSA is contracted as

the implementing agent for procuring and managing the professional service providers to plan and complete the project.

23

8. Recovery Strategy

As part of the Recovery Strategy the Department of Health Infrastructure Management Unit will implement the following:– Optimise the joint planning between the two departments,

namely: Department of Infrastructure Development and Department of Health

• Specifically the payment approval process; • Optimisation of the supply chain management process;• Optimise the progress monitoring; and• The quality of appointed contractors.

– Implementation of the Infrastructure Development Improvement Program (IDIP), the capacitation plan, this includes:

• Appointment of 22 technical experts which is underway. 24

9. Conclusion

It must be noted that the delivery of infrastructure projects has been slow. However, through the Infrastructure Delivery Improvement Programme (IDIP) a new Head of Infrastructure Management has been appointed and the implementation of Infrastructure Delivery Improvement Program is underway.

An Infrastructure Committee sits on a monthly basis to monitor project progress, payments and instant decision making where required.

25