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Stalled Royal Liverpool Hospital could restart in weeks after £42m rescue

Royal Liverpool University Hospital by HKS and NBBJ

Work could restart within weeks on HKS and NBBJ’s Royal Liverpool Hospital project after the appointment of a new contractor to finish the job

The scheme was left in limbo when Carillion collapsed at the start of this year, but now Royal Liverpool and Broadgreen University Hospitals Trust said Laing O’Rourke could begin on site in November. A deal has been struck with the project’s original funders to cancel the existing PFI contract.

The Trust will oversee the remaining construction work itself while taxpayers will pay the termination fee to the lender consortium of the European Investment Bank and Legal & General pensions fund – as well covering the cost of the remaining work.

An estimated 18 months’ work remain on the project, which will provide 646 bedrooms across 23 wards as well as 18 operating theatres, a large emergency department and a clinical research facility.

HKS and NBBJ won the design deal for the scheme in 2013. The project was initially scheduled to complete in 2017 but this was pushed back to spring 2018 and no progress has been made on site since Carillion went into liquidation in January. 

It emerged last month that a report by structural engineer Arup had identified a need for improvements to the structure and to cladding installed by Carillion. The AJ reported then that the Trust could seek government cash to finish the scheme if it could not secure a deal with the funding consortium by the end of September.

Health minister Steve Barclay confirmed in late September that the government would fund the remainder of the scheme.

Now the cost of that decision is becoming clearer, with news that the PFI termination payment of £42 million – as well as funding for Laing O’Rourke to complete the project – will come from the Department of Health and Social Care through Public Dividend Capital funding.

Trust chief executive Aidan Kehoe insisted the agreement provided ’significant savings to the public sector’ and represented ’good value for money for the taxpayer’.

He added: ‘All parties have worked extremely hard to resolve the issues caused by the collapse of Carillion. The lenders in particular have shown considerable goodwill in reaching this agreement.

’Our priority now is for Laing O’Rourke to get work restarted as soon as possible. We hope to be able to continue working with the existing subcontractors so that work can be completed quickly.’

Laing O’Rourke director Paul McNerney added: ’Laing O’Rourke is delivering the Clatterbridge Cancer Centre next door to the new Royal and had been working closely with the team there already. The business now looks forward to partnering with the Trust directly to restart this important works for the local community.’

HKS said it expected to resume work on the project, alongside NBBJ, which was also contacted for comment. 


Readers' comments (3)

  • A £42m charge to cancel the original PFI contract?
    I could have sworn that one of the arguments in favour of PFI contracts was that the client was paying for the PFI consortium to shoulder the risk, including that of default by the consortium.
    Weren't Carillion and the lenders part of the same consortium? Is this a case of 'heads I win, tails you lose'?
    This could give 'considerable goodwill from the lenders' a whole new meaning.
    And - another elephant in the room? - what exactly did Arup discover in identifying the need for 'improvements to the structure'?

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  • joseph b fitzgerald

    Sadly PFI was Labour policy what does Corbiyn have to say about that now ?

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  • The implications of the need for 'improvements to the structure' have today made the BBC news headlines.
    I wonder if any more of Carillion's work wouldn't bear structural analysis?

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