COLLAPSE The project of new Royal Adelaide Hospital (nRAH) is the one of the largest project undertaken the state till today using Public-Private Partnership (PPP) arrangements in between state and SA Health Partnership Pty Ltd (Project Co)which was contracted in 2011. The new RAH is being developed on the rail yard situated at the edge of Port Road and, North Terrace inside the Adelaide CBD. The site contains roughly 100 000 square meters, situated in closeness to the recreation centre terrains and the River Torrens with three vehicle get to access points. Besides the size, complexity and the resources and main aim was to provide enhanced and sustainable health care services plus outcomes to the public of South Australia such as aging population, chronic diseases and shortage of international health workforce, which means it require a strong and effective management along with review are ongoing during the whole life cycle. This project was the part of 2007-16 South Australia Heath Care Plan by focusing on 2004 Generational Health review. The total budget was $ 2.3 billion with the state share of only $ 0.45 billion. The main objectives of nRAH was to change the culture of health system and adopt new organizational values , promoting health care deliveries which also improves the education and training, providing effective care to people by using technology which reduces the state population travel and to meet current and future requirement in the field of heath care. The many concerns of risk in procurement are, project delays , cost pressures failure to meet the PPP contractual requirements, industrial disputes, inadequate delivery of health ICT systems, uncoordinated relocation to the new RAH site adversely affecting the safe transition of services and patients, insufficient training of staff, inadequate delivery of the intended benefits and outcomes, inadequate delivery of a sustainable model of care, misalignment with changes to the State’s health care policy and strategic direction. e.g. project modification are not decided in the start of the project which increases the possible risks and was settled with Project co in September 2015. Government of South Australia, Auditor General’s Department. (2015) Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015). The new Royal Adelaide Hospital is to be built, maintained, and financed with a public, private, partnership (PPP) agreement of 35 years between the state and SA Health Partnership Pvt Ltd (Project Co). The RAH modern, developed and adequate facility for the South Australia is the largest infrastructure project with approximately $2.3 billion investment. However, the project is progressing through a critical phase as the interruption in deliver, design, budgeting, pocurement and many other internal and external factors. “What are the features of the project will develop the medical infrastructure of South Australia?” The RAH (Royal Adelaide Hospital) project, once finished, will bring to citizens of Adelaide and people of South Australia one of the most modern, developed and adequate medical facilities in Australia. • providing 800 beds, comprising 700 multi-day beds and 100 same-day beds • standardised single inpatient rooms with individual suites • 40 technical suites (operating theatres, intervention suites and procedural rooms) • the use of leading technology to ensure that supplies are easily and efficiently transported throughout the hospital using automated guided vehicles • biomedical equipment and other clinical equipment which are electronically tagged. “The question comes up: What went wrong in the infrastructure of giant RAH project to strikes by massive collapses?” Numerous risks have been documented by the auditor general’s report with recommendations to be implemented to reduce the risk of exposure and to follow better project management practice. The RAH project looks good on the papers but, the whole RAH was plagued with diverse range of failures be that systematic, financial, authoritative, leadership changes or any other which can be thought off. RAH was inherently a high-risk project in term of its scale, cost, complexities and resource allocation. It is not only procurement and contractual issue for the project failure; it’s also considered environmental, budget and financial, allocation resources and bad governance and lack of reporting. Reviewing the contract arrangements there were number of risk factors documented by Auditor General Report with recommendations 2014-2015 such as: • There was a need to improve the Project governance, assurance and reporting arrangements. • Not all forecasts were adequately documented • Consequences and status of strategic risk and strategic implementations. • Lack of transparency and understanding under contract management framework. • Procurement issue: for hiring appropriate staff. • Timing and cost of project modifications were not adequately estimated. • Inadequate delivery of health equipment’s and delay in ICT system. • Insufficient training of staff RAH project has been regularly audited by internal and external auditing organisations and bodies and yet somehow recommendations from those audits have been found not to be timely actioned and rectified. The approach of the procurement department of RAH was in contradiction of the rule book (“Government of South Australia, State Procurement Board. (2014). Procurement Authority and Accreditation. Accreditation - Better Best Practice Handbooks”), In Contrast, the procurement specialists within the project could then have sourced experienced project managers/leaders globally, from markets where such a large project may have already taken place and they could follow the instruction given by the auditor timely to avoid the failure. This could have helped to provide much stronger Risk Management Plan, which would hopefully have shown that contingency reserves (both for resources, schedule and budget). Reference: Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30June 2012. (2015). Government of South Australia, State Procurement Board. (2014). Procurement Authority and Accreditation. Accreditation - Better Best Practice Handbooks Pg.11 Sollish, F., & Semanik, J. (2012). The Procurement and Supply Manager’s DeskReference. Upper Saddle River, NJ: Wiley. The case study is centered around the poor planning, building and construction of the new royal Adelaide hospital. In building the new royal Adelaide hospital, there were two parties involved; the private firm and the Adelaide state government. the AAdelaide government had a public private partnership with a private firm known as project co where they procured the services of project co in the design and construction of the new royal Adelaide hospital. the hospital was scheduled to open April 2016 but due to poor planning and poor design in the project charter, there were several delays in the construction leading to a reopen date which is scheduled for mid 2107. in the public private partnership, the skills and asset of each sector are shared in delivering a service for the use of the general public. in addition to sharing of the resources, each party shares the risk and reward potential in the delivery of the service. The public (Adelaide state government) will be responsible for providing clinical services which include medical staffs, cleaners e.t.c and also will be providing the medical equipments required by the hospital. The private sector will provide services required for the design, construction and maintenance of the building. The objectives of the public sector (the Adelaide state government) are: 1. provide sustainable and responsive medical system 2. create more jobs in the health sector 3. provide extensive range of medical and clinical services the objectives of the private sector was long-term financial benefit and gaining more contracts with the government Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30June 2012. (2015). The case of study is the Public Private Partnership (PPP) arrangement between the State and the SA Health Partnership Pty Ltd (project co), the main goal was built the new Royal Adelaide Hospital (new RAH), the contract was close in June 2011 including the capital cost for design and construction by Project Co of $1.85 billion (nominal). The original date to finish the project was April 2016, but the construction of the hospital have being plagued by delays due to legal action with builders, faults with the building and the need to remediate soil at the site. The new RAH project is a high risk project in terms of its scope, complexity, cost, and the impact to the community of South Australia. The new RAH forms part of a reform program being developed from the State, as a result of a review of the basic needs for the South Australia population for the future. In this high risk project was very important maintain robust governance arrangements and effective management, but due to the delays and problems faced during the construction, one outcome is that risk management process was not effective and efficient and the decision-making systems and processes was not robust enough to keep the risk in control during the whole project lifecycle. Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30June 2012. (2015). News: http://www.adelaidenow.com.au/news/south-australia/new-royal-adelaide-hospital-move-will-be-a-trainwreck-without-better-planning-doctors-warn/news-story/c555a9137335f0ad24249bee38be1126 Overview: RAH is the social infrastructure project ever undertaken by the state. RAH is built, maintained, financed and provided with non-medical services & equipment using Private Public Partnership agreement. 35 years contract between State & SA Health Partnership Pty Ltd (Project company) Total Budget was $ 2.3 Billion. Project Features: 800 beds comprising 700 multi day beds and 100 same day beds. 40 technical suites (operating theaters, intervention suites & procedural rooms) Used leading cutting edge technology to ensure that supplies are easily & efficiently transported throughout the hospital. Overall project cost was increased and the major reason behind this was the cost associated with the transition of services from the existing RAH to the new facility & the increase of the ICT budget. Challenges: New RAH has significant complexities & risks ahead as construction is completed. Preparing a refreshed business case. Completion date, Reviewing the impact, including the risk assessment etc. Design modifications. Assuring there are clear communication & decision lines. Project Objectives: RAH promoting innovation in health care delivery, education & training through a new hospital. Embraces national and international design to encourage research and innovative practice, education and training. Appropriate for 2016 and for the next 70 years. Capable of post-disaster capability. Provide viable and reactive medical system. Create more opportunities in health sector. Reference: Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30June 2012. (2015). A high scale project like the new Royal Adelaide Hospital could have a lot of risks in many aspects as it requires that all team pays attention to every detail on it. Once the audit finished, many opportunities of improvement were found and communicated in order to learn of failures and successes. It is evident that one of the biggest issues carried out by Project Co was the lack of accurate reports along the life of the project. As we know, it is crucial to follow up the report using different KPI´s, histograms and graphics, etc in order to keep control of deliverables, activities, tasks and any other aspect that could be measured. In accordance with the report provided, there was a commitment of delivering a report of the procurement program in a specified basis but this request was not accomplished so there was a negative chain reaction as consequence. Previously, there was a triggering issue that had to be taken into account and then take action to solve it. Indeed, there was a lack of contract management framework and contract management plans for the clinical equipment program (Government of South Australia, 2015) so it means that without clear policies of hiring and contracts it was very feasible that things become complicated. Many other issues took part of this on-going project. However, just wanted to share a bit of what is spinning around mi mind. Reference Government of South Australia, Auditor General’s Department. (2015) Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015). To define New Royal Adelaide Hospital is a complex project, cost, the resources allocated and its importance in providing enhanced and sustainable health care services and outcomes to the public of South Australia. During the whole cycle, the project has focused on revisions and changes established by the State to allow them to be delivered on time, within the budget and with the expected benefits obtained. This includes project management, management and reporting, on: • project governance and organizational structure. • assurance processes. • Business Planning. • risk management. • budgetary and financial management. • administration and management of contracts. • acquisition. The objective of SA Health is to work to comply on the required dates. However, this requires a number of contingency actions from the original plans due to emerging risks. Therefore, SA Health took the initiative to build an effective Strategic Acquisition Plan for the acquisition of furniture, accessories and equipment financed by the state for the new RAH. This plan will provide a status update that will cover the procurement process. In my opinion, it is essential to develop and implement a strategic procurement plan to ensure a consistent approach to the acquisition of ICT services, to improve transparency and to help ensure the efficient and effective use of resources as there are always a number of areas in Which required improvements in procurement arrangements. In conclusion, the positive results that RA intends to generate is linked to its Project Contract which establishes important contractual obligations that oblige the project manager to fulfill numerous tasks and contractual commitments within specific deadlines. Delays in the project as we all know expose you to significant financial situations, which adds extra costs and total loss of your credibility. REFERENCES • Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30June 2012. (2015). • Kim Heldman, 2009. PMP Project Management Professional Exam Study Guide Fith Edition,by Wiley Publishing, Inc., Indianapolis, Indiana
. • Robert K. Wysocki, PHD, Effective Project Management, 2014 by John Wiley & Sons, Inc., Indianapolis, Indiana Based on the Auditor General of the Government of South Australia Report (2015), the new Royal Adelaide Hospital (new RAH) was considered the largest social infrastructure State’s project, it was developed to be an outcome to the public of South Australia as a response to the reform program that has been developed to ensure that the State has a responsive and sustainable health system for the future. It is located at the corner of Port Road and North Terrace within the Adelaide CBD. The project was developed to replace the existing RAH, adding more technology and modern facilities to embrace the cultural and technological environment to stimulate research and improving the health care services provided to the community. The contractual project was closed in June 2011 and it is expected, after some delays and re-estimations, to be delivered in September 2017 (contractual Commercial Acceptance). Under the Public Private Partnership (PPP), arrangement between the State and the SA Health Partnership Pty Ltd (Finance Co and Project Co), the project has been built, maintained, financed and provided with non-medical services and equipment, through sharing interests. The SA Health was constituted as an administrative unit under the Public-Sector Act 2009 and nominated by the State as the organization responsible for delivering the hospital services and functions. Thus, the new RAH project has The Project Co responsible for approximately 81,60% of the budget ($1.85 billions for design and construction costs) and the State for around 18,40% ($417 million). The Project Co is also responsible for managing the subcontractors: Information and Communications Technology – ICT services through the Hewlett-Packard Pty Ltd; Facility Management – FM services through the Spotless Facility Services Pty Ltd; and Design and Construction – D&C services through the HYLC Joint Venture incorporating Hansen Yuncken Pty Ltd and Leighton Contractors Pty Ltd. The Royal Adelaide Hospital (RAH) is a world class health care facility meant to be the most technologically advanced in Australia; built thanks to a 35 years agreement within the framework of a Public – Private Partnership between the South Australia State and S.A Health Partnership PTY LTDA (Project Co), and supposed to be fully delivered by the second half of the 2016 (GSA, 2015). The RAH is currently the most important and largest social infrastructure project done by the state so far; designed sustainable and responsive for the future demands of the State and its population. It involved around 1.800 construction workers, 3 Million man/hours, 14 months of design involving around 200 people from different organizations, more than $1,85 Billions of US dollars and 13 hectares with the possibility of further expansion. In general, the overall status of the project shows an important lack of planning the project and defining governance of its parties, as well as, poor definition of information, communication, reporting and controlling processes and systems, but despite this issues, both parties involved in the project showed determination to improve and adapt the processes to the risks and issues that came up on the project, be flexible and try to adapt to the project flow to reduce delays and negative impacts on it. • Government of South Australia (GSA), Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015). In regards the case study I would like write about the case study introduction first, this case study is about the Royal Adelaide hospital project and the poor planning, maintenance, and building of the hospital. It was the biggest project of the state on the basis of Public & Private Partnership agreement between the state and the SA Health Partnership Pvt Ltd (Project Co). The total budget was $2.3 billion for this project. There’s definitely an element of surprise that such a large scale project was mishandled in so many ways. I will start with the positive outcomes the project was aiming to produce before highlighting how badly they have failed in achieving them. • Improved facilities, including electronically tagged equipment • The use of new leading technology to facilitate better movement of supplies throughout the hospital by using automated guided vehicles • An aim of reusing 25% of the equipment from the old RAH (which they haven't done; farewell a further $10 mil) • Reformed sustainable health care services and outcomes to the public of SA According to my studies in project management, there are a few crucial aspects for a project to succeed. First and foremost, before even procuring any outside contractors, as per PMI's PMBOK, there must be an objective driven scope, and it must be "progressively elaborated throughout the project life cycle" (p8, PMI, 2013). From the history of its inception in 2007, through its mismanagement right up until 2015 although there is a clear goal the details and specifics of the scope are lacking, and as the project itself the parameters of the scope did not evolve with it. It is not therefore surprising that the contract exacted with Project Co was lacking several key components. Another issue was that the contract not containing clear parameters comes from the distinct lack of leadership and a poorly put together governance framework; it was only upon strongly advised recommendations by independent consultants that the project was awarded significant leadership appointments such as an experienced Program Director and an ICT Program Director (McMahon et al, 2015). Now about the PPP, it is quite surprising given the level of detail covered for the ongoing management of the RAH throughout the 30 years, that the expenditure attached to transitioning from the old RAH to the new was not captured by either legal party (as it was noted the contracts and subsequent deeds were all carried out and confirmed by either legal party. Similarly, as the location was finalized, it would be expected that a standard site inspection would be carried out, which in an ideal world would have uncovered the contamination issues that Project Co discovered as they were working prior to commencement. This ideally would then have resulted in a scope adjustment, and maybe the SA public wouldn't feel so let down by the failure to achieve the initially epically inaccurate technical completion date. In summary we can say that: • The state simply failed to do their groundwork, recognise the Agile nature of their project and adjust the scope + procurement contracts accordingly, and therefore gave Project Co inaccurate brief/specifications. • There was a distinct lack of risk management • Lack of leadership and project governance was a huge issue • As per the Government of SA's Procurement Better Practice Handbook, they certainly did not act as an "informed purchaser" (p13, Government of SA, 2014), as their ability to contract manages the situation was completely lacking. References Project Management Institute. (2013a). A guide to the project management body of knowledge (PMBOK guide) (5th ed.). NewtownSquare, PA: Author. Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015). Government of South Australia, State Procurement Board. (2014). Procurement Authority and Accreditation. Accreditation - Better Best Practice Handbooks. Briefly, overviewing the case study, New Royal Adelaide Hospital was designed, constructed, operated and maintained through Public Private Partnership (PPP) agreement for the tenure of 35 years between (the client) SA Health and Project Co (the contractor). In addition, over the investment of $2.3 billion, it is considered as a largest sustainable Health Care infra-structure development project (Government of South Australia, Auditor General’s Department, 2015). However, what surprizes is that, while being most complex project in terms of size, scale, scope, cost and resource distribution, even if superficially it was kept in good books in terms of Project Management, it faced various issues relating to procurement, governance, contracts, financing, budgeting, reporting, risk management, contingency management, administration etc. To cast a glimpse on positive outcomes of case study, the auditor general’s report documents plentiful issues and after critically evaluating emerging crucial risks, it states solutions to addressed issues which were incorporated by State department i.e. SA Health and Project Management practices were improved time to time. Some Procurement issues that I synthesized out of Supplementary Report for the year ended 30 June 2015 (Government of South Australia, Auditor General’s Department ,2015) are as follows: Firstly, they simply went into financial creep because they did not ensure robust monitoring and reporting of whole cycle costs. i.e. design and construction costs, clinical equipment and ICT program works. (Government of South Australia, Auditor General’s Department, 2015). Secondly, there was a serious lack of effective financial information reporting which caused significant variances between actual and forecasted expenditures. Third, most importantly, they should have timely engaged expert resources. But, astonishingly in failure to do so, their documentation on time frames, deliverables resources, assumptions and associated risks on change management was very poor. Forth, their progress for procurements lacked robust monitoring and reporting. So, what should I conclude? Did they even lack following the guidelines of Government of South Australia, State Procurement Board. (2014)? And last but not least, that only lack of leadership and role playing in procurement and contract management can create such mistakes. Out of many recommendations by different auditors and consultants i.e. Government of South Australia, Auditor General’s Department, Calcutta Group etc., it is seen that many actions and measures were not taken on timely basis. References: New Royal Adelaide Hospital Report November 2015. Retrieved from https://www.audit.sa.gov.au/Publications/Annual-reports/2015-Reports Government of South Australia, Auditor General’s Department. (2015). Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015). Focus of the review is the Supplementary Report which is retrieved from https://www.audit.sa.gov.au/LinkClick.aspx?fileticket=lKSniN7sYQk%3d&tabid=283&portalid=0&mid=959&forcedownload=true Government of South Australia, State Procurement Board. (2014). Procurement Authority and Accreditation. Accreditation - Better Best Practice Handbooks. Sollish, F., & Semanik, J. (2012). The Procurement and Supply Manager’s Desk. Reference. Upper Saddle River, NJ: Wiley. The project of the New royal Adelaide Hospital (NRAH) was the largest social infrastructure project undertake in the state of South Australia using a 45 years projects agreement throughout a (PPP) Public Private Partnership between the state and SA Health Partnership (Project Co). (Report of the Auditor-General Supplementary Report for the year ended 30 June 2015, 2015) The project has been initiated because of a health reform program undertaken by the state of South Australia with the objective to develop and ensure a sustainable health system in the state. At first the total budget for the project as of the 30 th June 2015 was of $2.3 billion which is divided into 1.8 billion of construction cost for Health Partnership and $417 million of state funded work which include transition activities for the state of South Australia. (Report of the Auditor-General Supplementary Report for the year ended 30 June 2015, 2015) The project once completed will offer : • 800 beds, composed by 700 multi days bed and 100 same days bed • 40 technical suites • The used of leading cutting edge technology Unfortunately the project management has been a failure and the project has been delayed and the overall cost of the project have increased. After being advised by external consultant the state of South Australia have enter into a deed of settlement to push back the completion date and increase the budget to complete the project. Sincerely, William Head Reference list Government of South Australia, Auditor General’s Department. (2015) Supplementary Report of the Auditor-General for the year ended 30 June 2015. (2015).