Contingencies in place to deal with possible tariff impacts on Halifax Infirmary project
Work has started on the $4.5B construction project
Officials overseeing the redevelopment of the Halifax Infirmary say tariffs could have an impact on the massive project, but it's not a given the levies would drive up the overall $4.5-billion construction cost.
"The first default isn't more money," David Benoit, CEO of Build Nova Scotia, told reporters Wednesday at Province House. "The first default is how do you solve the problem."
Benoit and other officials were appearing before the legislature's public accounts committee to discuss the project and a related 2020 auditor general's report.
He told reporters that responding to issues beyond people's control, such as tariffs, would depend on what is affected. If it's steel, for example, it would mean trying to source the material from somewhere else.
In other cases, it could mean making changes to another part of the project so cost overruns in one area are offset by savings in another. Benoit said the builder, Plenary PCL Health, is motivated to find solutions because "they're on the hook for cost overruns."
John Volcko, PCL Construction's vice-president of national operations, told reporters the company learned from experience during the COVID-19 pandemic about how to account for price escalation and volatility in uncertain times.
"Within our bid, we've got certain allowances, certain contingencies to deal with unexpected things like that," he said.
The contract for the work, which will include a new emergency department, intensive care unit and 14-storey acute care tower, was finalized earlier this year. It also includes a 30-year, $2.9-billion contract to operate and maintain the site.
Since the project was announced in 2022, government officials have promised that a value-for-money study that helped guide the approach would be made public once a contract was signed. The project is being done as a public-private partnership.
Benoit said officials with Build Nova Scotia are doing a final review of the study and he expects it to be released in the coming days. But he stopped short of committing to release the initial draft of that work, which was used to inform the plan announced by Premier Tim Houston in late 2022.
Benoit said the two drafts preceding the final study were based on assumptions related to the construction project. Now that a final report is available, he questioned the usefulness of the drafts.
"What's important is what was the actual value," he said.
Housing for workers
Work is well underway at the site and Volcko said there will be up to 1,000 people involved at the peak of the project. The plan is for at least two-thirds of the workforce to come from Nova Scotia.
The company has made arrangements to house workers from outside the area by contracting the Atlantica Hotel across the street from the construction site, said Volcko. Some workers are already in the hotel and the plan is to eventually take over all 238 rooms.
Although there will be a need for even more accommodations at some point, Volcko said how much space and where has yet to be determined because it's unclear how many outside workers will be required.
"Our first objective is to employ local talent, local skilled labour," he said. "If our peak is in three years, you know we've got some time to build a workforce."
Project oversight and management
Plenary is the subject of a lawsuit in Ontario where Humber River Health alleges a hospital that opened in Toronto in 2015 has some floors that are either not level or flat or are beginning to deteriorate.
Speaking to the project in Halifax, Benoit said the provincial government has "extreme confidence" in the builder to get the job done.
One of the things working in the project's favour here is that design work was 50 per cent complete before work started, which is higher than the typical 30 per cent for similar projects, he said. Design work is now 75 per cent complete.
"We already have an increased level of confidence that we've got the right structure, the right scope, the right products, all that kind of stuff built into the contract," said Benoit.
"Now it's a matter of oversight and management to make sure that they actually deliver."
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