Report: Substantial Losses On Hospital Contract
According to the UK’s Daily Telegraph, “substantial losses” on the Bermuda hospital contract have thrown Sir Robert McAlpine Holdings “into the red.”
The Telegraph report that, “Accounts for Sir Robert McAlpine Holdings, the umbrella company for the McAlpine family’s privately owned portfolio of construction and engineering interests, show a pre-tax loss of £37.7m for the year to October 31 2013, down from a £19.2m profit the previous year.
Directors say the “deterioration” was due to having to provide financial support to the company’s Bermuda-registered joint venture, BCM McAlpine Limited, which is part of the consortium redeveloping Bermuda’s King Edward VII Memorial Hospital.
The £176m contract has suffered “severe problems with design and performance”, say the accounts, resulting in “substantial losses” that have been covered by a £50m provision from Sir Robert McAlpine Holdings, the Telegraph reported.
Director Ian McAlpine told the Telegraph: “The performance of the Caribbean construction business has been severely impacted by the difficulties encountered on the King Edward VII redevelopment.”
Surprise?…hardly it has been long acknowledged that this project has Been a financial and engineering failure from the word go, even with the BHB holding out the collection cup this project is always been a financial failure, why did Black and Mac bail out, why doesn’t our Government know the cost of this project, and why was it allowed to be such an engineering disaster costing tens of millions more than it should, and who is Paget health services. 260million for one wing of a hospital…..great job people
Director Ian McAlpine said: “The performance of the Caribbean construction business has been severely impacted by the difficulties encountered on the King Edward VII redevelopment.”
He was being very polite but that was a warning shot!
@nuffin, just wait until the government of BDA start suffering their losses!!! This is just another of the plp pie in the sky developments that they had no clue on how we are going to pay for it!!! More money out the door, and you can bet your last $$$ that every time the OBA is forced into another cut in something, the usual plp talking heads will be screaming out loud how the OBA is anti Bermudian!!! This is going to cost all of US big time!!!!
You have no clue do you.
Because of the PLP – not a dime of the overruns will be paid for by taxpayers! That’s right – the PLP did something well!
As for Pie in the sky, how exactly do you expect to be a modern jurisdiction with substandard healthcare? The new hospital is needed!
Firstly, it’s a wing, not a hospital, secondly, read Meeeeee’s comment. Clear now?
Um. Simply put- those cost overruns will be passed on in the cost of healthcare. We will all pay.
No clue??? You are exactly why the plp stayed in power for way to long!!!! As Custard said, read meeeee’s post below over and over until you finally have a CLUE!!!!
“You have no clue do you. Because of the PLP – not a dime of the overruns will be paid for by taxpayers! That’s right – the PLP did something well!”
Let’s hope you’re right that ‘because of the PLP not a dime will be paid by taxpayers’.
Because if there is any impact to the taxpayer, that will be the PLP’s fault as well.
We will see won’t we.
Greed Killed Bermuda
I agree with upgraded facilities being needed, but let’s not spread more misinformation about where these costs are going to be laid. Some may be ok with this as it improves our medical provision, and I can live with that opinion, but not if it comes with the thinking that we will not be ultimately responsible for the over runs.
I think Mr. DeSilva needs to come forward and speak to the over runs and how he sees the agreements he signed (or lack thereof) regarding maintenace, administration and interest impacting us moving forward. I’d also like to hear the OBA’s assessment of the same.
This is not a new hospital. It is in effect a new ER, a new dialysis centre, and a huge lobby. All the aged wards at the Hospital will remain.
Don’t even look at my hospital levy !!!
At some point in the very near future, certainly before December of this year, that KEMH project will be handed over to the BHB and become the ultimate responsibility of the Government of Bermuda.
The 2010 Agreement for the Public Private Partnership was that Bermuda (BHB? Government? Maybe the Minister for Finance himself?) would then begin paying for the construction costs and for annual administration and maintenance. This paying-for process was to be spread over 30 years and McAlpine will be instrumental in determining ‘interest rates’ and admin/maintenance fees.
While we may have McAlpine over a barrel as regards our not having to fund, up front, their ‘cost over-runs’; we do not have any agreement whatsoever regarding limits on what they can or will charge for ‘administration’ and for ‘annual maintenance’. Or what they will set as rates of interest.
And remember that the signed agreement commits Bermuda for the next 30 years – until 2044.
Will McAlpine recoup that $50m? Yes, it will. Will we finally and actually pay for that over-run? You bet we will.
McAlpine has not lasted this long and built up sufficient reserved earnings enabling it to make a one-time $80m cash injection by being foolish and stupid businessmen. No, McAlpine has not.
So who, in the end will ‘take the $80m hit’? McAlpine or Bermuda?
All those who want to bet that McAlpine will take the hit, please place your bets in a brown paper bag, and deposit it Monday to Friday between 8:30am and 9:30am under Johnny Barnes’s chair on the North Roundabout.
I’ll collect all bags (bets) at 9:30am each day. I’ll pay off in thirty years.
Gentlemen and ladies…. Place your bets!
In the end Bermuda will end up with a first class facility ready to take the island into 21st century medical care. The developers will have time to recoup. Having recently looked again at the cramped dismal space in the current emergency area, I think everyone will appreciate what is coming.
Looking forward to seeing the move in September.
Where is Zane? He told us this was “on time and under budget” several times. Can he reassure us that the Bermuda taxpayer will not be landed with extra costs due to the contracts negotiated by him?
It’s called tax planning. “Real” expenses will be passed on. Most successful companies aim for paper “loss” on the mainland.
I don’t trust anyone in a suit…especially the ones asking for donations to build a new hospital wing. You may ask…why it matters? I’ll tell you why it matters…because I’m not rich and I pay my bills on time and I don’t play games with the people’s money! Making fools of Mr. and Mrs. Joe Public’s generosity!! Ex bankers and politicians sleep easy at night…dreaming of taxing Bermuda to death through their own incompetence and business greed!!!
They are losing money because the project has strict deadlines of completion that won’t be met….so financial penalties are kicking in on BCM…. the mistake was having Black and McDonald run this project…