The man in charge of getting the Midland Metropolitan Hospital finished has told CN he wants up to five bidders competing for the £300m-plus contract to complete the job.
Sandwell and West Birmingham NHS Trust chief executive Toby Lewis spoke to CN following yesterday’s announcement that the government would directly fund completion of the former Carillion project.
Procurement for a contractor to finish the hospital is due to start in November, with an appointment expected to be made in the first half of 2019.
“That will take as long as it takes,” Mr Lewis said. “But we’re optimistic of having a contractor in place and on site before we go into next summer.”
With the number of firms able to take on a project of this size and complexity limited, Mr Lewis said he would be happy to have “three to five” contractors bidding for the job, with consortium bids also being considered.
Completion costs of £300m-£319m have been suggested by the Department of Health and by a contractor that provided a quote, and Mr Lewis confirmed the trust had budgeted around these values.
He said: “In the end the market will decide in the bidding what it thinks the job can be done for, and we’re clear we have a commitment to over £300m of investment to get Midland Met in place by 2022.”
However, Mr Lewis acknowledged that any contractor taking on the job at this stage faced unknowns and potential risks.
To mitigate these, Mr Lewis said the trust was securing warranties for work by the previous subcontractors and will engage with the bidders to manage “residual and latent risk”.
“The heart of this is getting a construction partner so we can sensibly manage the construction risk together,” Mr Lewis said.
It is also hoped that an interim contractor, which is expected to be appointed next month, will be able to provide extra information about potential risks on the project after it carries out remedial and enabling works on the site.
While the decision to pursue direct procurement rather than another PF2 model meant there would be less certainty around cost for the trust, Mr Lewis said he was “expecting to get as much fixity” as possible over the price.
In addition to the bid price, Mr Lewis said the trust would look closely at bidders’ underlying strength.
“What will be important is the balance sheet position and risk apportionment,” Mr Lewis said.
He added: “We’re looking for people to have the liquidity to sustain the duration of the job.
“We’ll be relying heavily on advice from the Cabinet Office in assessing the balance sheet position of the contractor in this process.”
Mr Lewis said the trust and its partners in central government had all been frustrated that it had taken “eight months and one day” since the collapse of Carillion to get the scheme moving again.
“We’re all frustrated, we would have liked to have done things quicker, but we’re in a good place now,” he said.
“We’ve got certainty, we’ve got clarity and we’re moving forward.”