Royal Adelaide Hospital (NRAH) Project Analysis and Recommendations

This report provides a comprehensive analysis of the New Royal Adelaide Hospital (NRAH) project, examining its numerous challenges and failures. The project, initially estimated at $1.7 billion, experienced significant cost overruns, delays, and issues related to stakeholder management, project scope versatility, and technical demands. The report details the lack of proper projections, legal actions, and the influence of unions, which contributed to the project's ballooning costs and extended completion timeline. Safety concerns regarding patient data storage and the impact of construction flaws are also discussed. Recommendations include the need for feasible plans, collaboration among stakeholders, skilled technical teams, and transparency throughout the project cycle. The report emphasizes the importance of proactive risk management, adherence to contractual obligations, and the implementation of efficient procurement processes to ensure sustainable project outcomes. The analysis highlights lessons learned from the NRAH project, offering valuable insights for future construction and infrastructure developments.

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TABLE OF CONTENTS.
Contents

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TABLE OF CONTENTS.................................................................................................2
PART 1: INTRODUCTION............................................................................................2
PART 2: LITERATURE REVIEW..................................................................................3
PART 3: RECOMMENDATION.....................................................................................6
PART 4: SUMMARY......................................................................................................7
PART 5: REFLECTION..................................................................................................8
References..........................................................................................................................10

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PART 1: INTRODUCTION
The new Royal Adelaide Project (NRAH) was meant to be one of the most iconic
buildings in Australia with state of the art features. However, it has slowly turned into Australia’s
most expensive building and caused headaches for investors, the south Australian government
and other stake holders. It has fallen far beyond its starting deadline taking that it was announced
on July 6th 2007 at a price of $ 1.7 billion. It was to be named after the SA governor Marjorie
Jackson-Nelson in order to replace the current Royal Adelaide Hospital (RAH) and build on the
railyard sites and meant to be a transformational development in the health care sector in both
infrastructure and skills. The project from the design to the name would be faced by backlash
from people linked to the project with people arguing that Rann was seeking a good governor’s
name despite his political spin. With the right people on their side able to influence the financial
aspects of the project, the liberals were able to push for a stadium at the site forcing Mr. Rann to
adopt the &535 million Adelaide oval. The liberals were also able to push for a stadium at the
site forcing Mr. Rann to adopt the &535 million Adelaide oval. The liberals pushed for
improvements into the existing RAH with new wings being added and upgrading of facilities and
patient care as well . To fund the $1.7 million project, the south Australian government would
have to hand out a million dollars a day in order to run the nRAH project. This would tip over
the South Australian government from its predicted surplus to a straight deficit and cause triple
loss of its credit rating. This was the main reason for the protest against the project being that the
existing project only costed $300,000 a day. This would see liberals and other politicians rally
towards refurbishment of the old hospital as opposed to a demolition and replacement of the
hospital entirely causing the $1.7 billion cost. This cost would double up in the event that the
construction was done through a public-private partnership causing the government to pay the
debt to a tune of $397 million annually (Varano, 2017).

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PART 2: LITERATURE REVIEW
Top Issues That Will Influence Sustainable Outcomes for The Community and
Stakeholders.
A. FEASIBLE PROJECTIONS
The lack of proper projections for the nRAH caused the nRAH to be behind
schedule and beyond the expected by $640 million more. This would influence the bed
capacity of 800 beds to be under public-private partnership making it the most expensive
building in Australian history.
B. PROJECT SCOPE VASITILITY.
The beyond optimistic assumptions contributed to a lot of changes with the direction of
the project in terms of legalities, finances and infrastructure of the project. The nRAH underwent
a series of legal action with the South Australian government due to its budget that would see the
SA government in hefty credit debts. More to that, the builders and unlawful industrial action
and anti-competitive behavior shown but the CFMEU would also contribute to the deplorable
state of construction at the nRAH. This project prompts reforms in the form and methods of
delivery of services by state based major projects. Though the project nearly saw a forfeit, the
construction would begin on February 2011 and anticipated a completion in April 2016.The
project missed deadline and that would see the project completion extended to May 2016 and
later June 2017, a year later (Dosi, 2013).
With the extension of date of completion, the project has ballooned to a cost of $2.3
billion which is almost twice is projected original estimate of $1.7 billion. This is what has
catapulted the nRAH project as the most expensive project in Australia and seventh costliest
building in the world. There were little plans made to incorporate changes into the project during
initial design stages which is a necessary measure to realizing sustainable outcomes in a project
and thus all small flaws in the design, delays experienced while trying to resolve the issues and
mistakes made during design and construction, all translated into the project delay. For just
construction cost alone, the project saw a doubling on estimated costs from $244.7 million to

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$417 million. This was due to the site modification that would cost $34.3 million to fix the
defects and remedying contamination claims that would cost an extra $69 million (Varano,
2017).
C. TECHNICAL DEMAND.
More to just flaws in construction and design, there were concerns that the rolled out
$422 million meant for the Electronic record system for patients would not be fully ready when
the Paperless hospital opens causing more problems for the project management team. After the
April 2016 delay, the government would issue a notice against the construction firm and
withhold payments of services of approximately a million dollars a day causing chaos amongst
the hospital builders. This would see the legal battles between the South Australian government
and the builders with the builders seeking a compensation of $500 million for delays. The
technicalities of delays and legalities would see a further delay of the project and there would be
a replacement of technical skills as there was a money shortage causing the construction to drag
out another year till February 2017 when the issue would be addressed. The delays in the project
was also partly due to lack of sufficient technical demand as well as inexperienced technical
demand for difficult projects such as the nRAH. This would cost the project and all stakeholders
more funds to keep the project going and the completion date was largely. Therefore, from the
events that happened during the one-year period, it’s important to ensure that issues like union
strikes are controlled and handled before they occur as the economy of a country is put at risk
due to low productivity. All stakeholders have to come together to solve a rising issue as soon as
it occurs in order to not further cause delays that would further delay a project. This was not the
case with the nRAH as the CFMEU kept on applying its complicity, bargaining pattern and
fixing prices that delayed the project further (Dosi, 2013).
SAFETY
With the RAH a lot of the paperwork was stored in the car park in the basement and most
of them also being stored off site. This raised issues over the safety of the patient(s)’ information.
This would see long queues in the hospital and would cause serious health issues for the patients
and chaos in the hospital (Erridge, 2002).

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PART 3: RECOMMENDATION
For a project with sustainable outcomes to be realized, it’s important to incorporate a
feasible plan that accounts for the entire project scope and the versatility of activities. This is
achieved through careful research, in past projects and similar projects and taking skills and
opinions from experienced experts in terms of procurement and construction. This will see a
project realize profits for the shareholders and also avoid hefty losses due to lack of proper
planning and involvement of risks like unforeseen events that would cost the project hefty losses
if not accounted for. There is also need to collaborate so as to encourage more informed decision
making and communication between the project stake holders. For a sustainable project in terms
of construction, there needs to be a skilled and experienced technical demand that is able to
handle events as they occur and even have prompt solution for unforeseen problems that may
affect the quality of the project as well as its future (Bertrand, 2012).
This means that an equipped technical team is required from construction to financial
sector to coordinate on activities and unforeseen events and handling them promptly. Its dire to
ensure that inefficient and lawful influence of unions and other related enterprises are curbed
through hefty penalties under the legislation. There is need to ensure that internal management
are able to project utilities and make continuous improvements so as to handle risk promptly and
manage contingencies (Bertrand, 2012).
Projections can only be made after a feasible analysis of all the factors influencing and
affecting the projects are considered. The project that began in 2011 February with an anticipated
completion date of 2016, would not be realized as several factors were not accounted for. The
lack of accountability of design flaws, conduction flaws and unforeseen events. This would see
delay of the project to April 2016 and also to July 2017 causing cancellation of tours that would
amount to loss in revenue for the clients. This saw the rise of the project of the project cost to
$2.3 billion an overrun of 35% from the initial cost. Its therefore important to plan for all
contingencies. It’s much more recommended to be over prepared than less prepared when it
comes to construction matters and procurement of utilities. As the old adage goes, prevention is
always better than cure (Lewis, 2014).

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There is need to provide transparency into all project cycles from beginning to end so as
to enhance monitoring of project performance through key indicators and project figures. It’s
also quite important to ensure that all codes of practice are adhered to by all stake holders to keep
a tendering process open, safe and also transparent. This makes the process an accountable one.
Lack of diligence among the stake holders during the procurement processes comprises the
ethical mannerisms expected during a project tendering and affects bureaucratism of the entire
project. Its highly important that all clauses stipulated in a contract are followed to a T as agreed
upon so as to avoid inconveniences and disruptions during the work flow of the project (Lewis,
2014).
PART 4: SUMMARY
I. PROJECT SCOPE CHANGES
The scope of the project wasn’t only in the design and construction aspects but also in the
procurement aspects. Unforeseen events like remediation costs from claims of contamination
would cost the project $69 million and modifications to the site and addressing defects in the
building would cost a further $34.3 million. More to that, the expected transition team of
February 2017 to move the current RAH to the nRAH would cost the project a further $180
thousand a day due to lack of proper planning. A project such as the nRAH is a project with vast
sectors from procurement, construction to incorporation of technical demand that facilitate a
smooth running of the project. The lack of proper planning results into hefty penalties that can
pull down the economy of the facilitators way down and affect many stake holders. This
therefore requires extensive research into similar projects and previous projects conducted by the
clients and looking onto measures taken to facilitate a smooth running of a project in financial
matters as well as construction management sectors too. This would account for remedies,
rectifications and also accountability of invoices made in time before completion of the project
(Varano, 2017).
II. SAFETY CONCERNS.

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The fact that the delay would see storage of client/patient information into the parking lot
at the basement and outside site storage facilities not only risked loss of information, but also
raised security of the information and the patient’s as well. Client confidentiality is highly
important as their personal security relies on it. Information being all over means that there is
more risk facing the patient daily. Hiring of storage companies would have been a necessary
move in the event of such delays occurring. It’s important to remember the importance of the
hospital and the relationship of the institution with the patients and how their lack of presence
would affect the future of the facility financially and socially as well. More to that, the electronic
record system would have long been set up and should be set up in the future during the
construction of the facility in order to transit the hard copy information into soft copy to avoid
issues cropping up in the new facility. Exposure of confidential information can nullify a contract
due to risks posed socially as well economically. Personal information security is a matter of
national security.
III. TECHNICAL DEMAND
It’s important to ensure that issues concerning technical skills fluency in sensitive
projects such as the nRAH. It’s necessary to curb the labor unions and other inciters using hefty
penalties under the legislation in order to avoid strikes and further delays of the projects. All
these issues can be sorted out promptly through maintaining transparency with the pubic and use
of key indicators to performance and enhancing collaborations between departments full of
experienced skilled stakeholders (Arney, 2014).
PART 5: PERSONAL REFLECTION
The nRAH was a perfect case of counting your eggs before they hatch kind of case. There
was too much unnecessary buzz about the project owing to its initial link to the governor Rann
but there was so little placed into the technicalities of the project from inception to expected
completion. There was little to poor coordination between stake holders that could be blamed on
lack of experience and also lack of transparency that would have helped in curbing some of the
issues as they occurred. The nRAH could have been blamed for biting too much than they could
chew as they not only affected the economy of Australia from the double roll over, but they also

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affected construction of future project with similarity of construction and the management. They
were also many contributors in the project who affected it badly from the legalities experienced
between the government and the builders that dragged out the progress of the project by a year
and also costed the government hefty penalties in recovery of the project and also payment of the
builders. This case is quite similar to a student’s life in the varsity.
There is always a jargon of activities that require a student’s attention and the student
needs to create a healthy balance that sees consistent growth in all sectors or phases of his or her
life. This is only enabled through a practice of high diligence, transparency and proper planning.
It’s important for the student to be well informed about the activities he or she takes up right
from their history to present and projected future situation. This enables determination of
feasibility of an activity and its importance at the same time. More to that, the student needs to be
disciplined not to bite more than he can chew by taking on only what he can handle even under
certain environment and experiencing different pressures. The classic case of placing one’s eggs
in one basket is quite risky and thus the student can’t only rely on education solely. He needs to
branch out into diverse activities that have an attraction to his passions and hobbies so as to
realize full success after the varsity period is over. It’s important to align one’s purpose to goals
that are workable and realizable overtime and this can only be done through research and
articulation of activities by involving all stakeholder. This helps one realize one’s full potential
inside and outside the varsity and influences the direction one takes in the future in terms of
career and personal choices. For all these to work swiftly and without flaws, time has to be
properly managed. There is no room for procrastination as that drags out activities of now into
the future and affects performance and potential and contributes to realization of hefty losses in
terms of grades, activities and even monetary losses.
References

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Arney, L. Y. (2014). Strategic contracting practices to improve procurement of
health commodities. Global Health: Science and Practice, 295-306.
Bertrand, R. (2012). Understanding Contract Audits: An Experimental Approach.
Journal of Practice and Theory, 15-98.
Dosi, C. M. (2013). Procurement with unforceable contract time and the law of
liquidated damages. The journal of Law, Economics & Organization, 160-186.
Erridge, A. M. (2002). Public Procurement and Supply Management Strategies .
SAGE Journals, 1-5.
Gil, R. M. (2013). Self-Enforcing Agreements and Relational Contracting:
Evidence from California Highway Procurement . The Journal of Law, Economics, and
Organization, 239-277.
Hillion, P. W. (2015). New Royal Adelaide Hospital: Australia's Largest Health
PPP. Harvard Business Review, 21.
Kapstein, B. E.-J. (2017). Reforming Defense Procurement: Lessons from France.
Cambridge University Press, 1-25.
Lewis, G. B. (2014). Moral Hazard, Incentive Contracts, and Risks: Evidence
from Procurement. The Review of Economic Studies, 1201-1228.
OECD. (2008). What are the benefits of using country systems? OECD Task
Force on Public Financial Management, 1.
Varano, J. (2017). The new Royal Adelaide Hospital: a case study in blow-outs,
red tape and union influence. Institute of Public Affairs, 2.