During a Scrutiny hearing, Senator Lyndon Farnham, who has political responsibility for the project, said that the ‘target cost’ for the new facility at Overdale was £604m but keeping the cost below the overall budget total would be ‘challenging’.
The minister was asked by Deputy David Johnson, during the sitting with the Future Hospital Review Panel, whether he was confident that the planned development was ‘the most realistic and cost-effective hospital solution’ for Jersey.
Senator Farnham said the project had been developed with the aim of providing the ‘best clinical solutions and adjacencies’. He added that he was concerned expected increases in inflation could drive the hospital project cost upwards.
‘If you look in the outline business case the cost of the hospital baseline is £604m and then additions to that [for unforeseen and other costs] take it up to £804m.
‘We hope we don’t utilise all of that, of course, but it would be right to highlight the impact on the cost of goods and services on the back of Brexit and the pandemic and the inflationary pressures that are coming our way.
‘This is one of the reasons why we need to push on with the development, so we don’t get too badly impacted by any risk from those issues. We’d be much more content if we didn’t eat into the optimism bias and the contingencies [costs], or did so as little as possible.
‘That is the very firm instruction or request from the oversight group to the project team to manage the costs very carefully,’ he said.
Deputy Johnson asked whether the minister was ‘assured’ that the maximum projected cost of £804m would not be exceeded.
Senator Farnham said that the project cost had been capped at this level and would need political approval to be increased.
‘We’ve been absolutely clear that we would not support any increase in those costs as an oversight group. That’s a strict instructional message.
‘If, due to any unforeseen circumstances, that figure were to be exceeded then it would have to go to the States Assembly. But there’s certainly, I think, very little appetite for that,’ he said.
Chairwoman of the panel Senator Kristina Moore asked what the target cost for the new hospital was.
Senator Farnham said that £604m was the target but it was likely more money would be needed.
‘There is almost certainly going to be a requirement of contingency and optimism bias.
‘To be clear, our red line is £804.5m. That’s what we’re prepared to support up to that.
‘We very much hope we can come in below that, if at all possible, but that is going to be challenging,’ he said.
