Just one builder interested in new Mills Memorial Hospital project in Terrace

Officials say budget is not at risk

Concept drawing of a new Mills Memorial Hospital on current hospital grounds. (Contributed Image)

Assurances are being given that neither the budget nor the planned size of the new Mills Memorial Hospital will be affected despite only one company being interested in the project.

That company, not yet identified, was the only one to submit its qualifications for the $450 million project when provincial and Northern Health officials began looking for a contractor last fall.

Instead of an expected shortlist of qualified companies who would then submit competitive bids, those officials are now negotiating terms under what’s called a modified request for proposals leading to an anticipated construction contract with that company.

“An RFP [request for proposal] will be issued that requires the proponent to submit a series of proposals to demonstrate how it will substantially meet the project’s technical and affordability requirements,” says Andrea Palmer, one of the Northern Health authority’s officials assigned to the project. “The proposals will be subject to the evaluation process established within the RFP.”

She termed talks with the one proponent “a variation of the typical design-build competitive selection process which can be used in instances where there is one proponent in a busy market where multiple opportunities are available to construction firms.”

Palmer also says the modified request for proposal process now underway is being “conducted with rigour and care.”

Those negotiations are to ensure there’s “significant oversight” from provincial officials leading toward a successful conclusion leading to construction, she added.

Under a schedule set out last summer, companies interested in the project were required to submit their qualifications for consideration last fall with a shortlist to be announced in November.

That was to be followed by ‘collaborative meetings’ with a final draft design-build agreement ready by April this year, a successful proponent being chosen in August and construction starting in fall leading to an anticipated opening in 2024.

Palmer says officials are happy with the progress being made with the one proponent and that neither the budget, project timeline or size of the new 284,500-square-feet hospital, has changed.

“Once complete, the hospital will be a centre for trauma services, orthopedic surgeries, pathology, radiology, clinical support and pharmacy services as well as a training site for medical students in the Northern Medical Program,” she says.

From the current 45 beds, the new Mills will have 78 beds, four operating rooms, three diagnostic imaging rooms and 20 treatment spaces in its emergency room. Within the bed count, the number of beds in the regional psychiatric unit will be increased from 10 beds to 20.

The new Mills will be built just north of the existing hospital, which will require the demolition of the current Seven Sisters mental health facility. That facility will be rebuilt at the same location with 25 beds, five more than the 20 beds in the current building.

This is to cost $18 million and is part of the overall Mills Memorial construction budget.

The current Mills will be demolished once the new one is occupied, a process that will most likely take two years to complete. Plans also include a 300-vehicle parking lot to be built where the current Mills now sits.

Officials from two construction associations were not particularly surprised only one company is now in the running for the Mills project.

“There’s a lot of work in the industry and contractors are able to be selective about which projects they bid on. Often contractors will choose not to bid due to onerous contract conditions that in their view introduce too much risk to the project,” says Northern Regional Constructional Association chief executive officer Scott Bone and B.C. Construction Association president Chris Atchison in a joint statement.

“We see this regularly on public projects – contractors will decide to bid on less risky private sector projects.”

They also say how a project is to be carried out can influence a contractor’s decision.

“This project in Terrace is a design-build proposal with pursuit costs of at least $1 million – that’s a great deal of upfront speculative expense for a contractor to carry,” Bone and Atchison continued.

Pursuit costs are costs incurred by a company pursuing a contract, which include legal fees, inspection costs and travel costs.

“In that situation, if your bid isn’t successful, that investment is not recouped. Other delivery methods are less risky for contractors and therefore generate more bid responses because more contractors can afford to bid.”

READ MORE: Health ministry mulling over helipad for new Mills Memorial Hospital

Provincial officials and Northern Health did note, in the request for qualifications issued last year, key issues companies should consider in contemplating pursuing the project.

Among those were “potential labour availability challenges” due to the LNG Canada project at Kitimat.

But the nearness of that project also opened the prospect of “potential construction synergies”.

Terrace Standard

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