Posted: Monday 5th May 2014 at 0:06 am

(IMANinsight) Our understanding of the matter: Ridge Hospital Re-Construction

7509240x mg ejy4dpo00v 8405868359737 1360260228626 (IMANinsight) Our understanding of the matter: Ridge Hospital Re Construction


The controversy over the cost of re-construction of the Greater Accra Regional Hospital at Ridge, Accra (Ridge Hospital) brings to bare yet another failure of the governing authorities of this country to act in a timely manner, but rather after the fact.

This in turn has resulted in massive losses to the state in numerous judgment debt cases. Complicating the issue is also the incomplete information being circulated via various media outlets.

It is important first of all to clarify that, the construction at Ridge Hospital is not a mere refurbishment but a re-construction of a fully functional ultra-modern new and purpose built hospital (to be built on an already occupied site). The project has passed through all necessary constitutional approvals for Single Sourced Procurements which include parliamentary approvals.

The facts of the matter are that Messrs Bouygues Batiment International (BBI) proposed to re-construct Ridge Hospital into a new and ultra-modern hospital with 620 in-patient and intensive and day care beds at a cost of USD 306million.

However, the government was limited to borrowing only USD 250,000,000 at a time hence the project was to be completed in two phases. Phase 1 was estimated at a cost of USD 219million and Phase 2 at a cost of USD 88million.

The report that Ridge Hospital is being renovated to a 420 bed capacity (from its present 200 bed) at a cost of USD 306million is misleading.

Second fact is that, Single Source Procurement was used to fulfil the terms of conditions of the Financial Agreements between the Government of Ghana and Messrs BBI. Parliament approved the two credit Agreements between GoG and the USA EXIM Bank and the HSBC Bank respectively for the sums of USD 157.5million and USD 92.5million on 16th August 2012.

Conditions tied to the EXIM loan required 85% US Procurement of prime QUALITY made in USA goods and equipment. This detail is crucial because it is one reason for the substantially higher than estimated fair market prices (EFMP). Parliament agreed to these terms and at present, work at Ridge Hospital has commenced.

Thirdly, Value for Money (VFM) Assessments was carried by Crown Agents Ghana Limited (CAGL) in which the final report issued on 15th September 2013, indicated an over pricing by USD 142million. Negotiations moderated by CAGL were carried out to arrive at a compromise between GoG and Messrs BBI. Negotiations were suspended between October 4 and November 12, due to non-payment of fees to CAGL for 2013. After resumption, extensive negotiations were made, during which Messrs BBI justified its position. Crown Agents however insisted that the project could still be reduced by USD88 million.

Some justifications provided by Messrs BBI were that, in comparison with the Legon Hospital, the total 54144m2 space for the Ridge Hospital project ‘are entirely developed and fitted out and that neither ‘Shell & Core only’ areas provided for future spaces is considered under the Ridge Hospital Space programme’.

Comparisons then cannot be made by virtue of number of beds but also to the nature of the space available for the rehabilitation amongst others. Drawing parallels to Aliko Dangote’s ability to build a 1000 bed hospital at a cost of USD 12.38 million in Nigeria is not informative. So it is also with comparisons to the Legon Hospital, another 620 bed hospital estimated at a cost of USD182million. Claiming bloating of total cost on the grounds of the Tamale Teaching Hospital, a 400 bed capacity hospital constructed at a cost of USD 50 million in January 2014 is equally devoid of any constructive lesson.

Informed deductions can be made only from comparisons to the rehabilitation of the Police Hospital. The rehabilitation shares key characteristics with the Ridge Hospital in that, it is being financed internationally, and also being rehabilitated in a restrictive area similar to Ridge Hospital.

This means that, ‘the entire construction activity will be concurrent and adjacent to the operated existing facility and therefore involves significant enabling works (generator and transformer relocation, demolition of some existing installations, and construction of new temporary utilities), as well as a high strict traffic, environment and acoustical management control’.  The Police Hospital rehabilitation is priced at USD 7363/m2. This sum is higher in comparison to Ridge Hospitals USD 5637/m2 (see appendix).

Additionally, the contractor put forth additional value added features and challenges such as Leadership in Energy and Environment Design (LEED), ‘consolidation of a number of major department of the hospital in a 5-storey building and under one roof (instead of small and light single storey pavilions for different departments) which presents technically challenging structural configurations, imposed by the available narrow land and even more when designed under zone 4 seismic conditions’.

Additionally, Messrs BBI during its discussions with MoFEP, MoH and Crown Agents shared data on similar hospital constructions in terms of standards and quality, around the world which have been constructed at a cost range between USD4888/m2 and USD11708/m2. Information on ten international standard hospitals by Messrs BBI, as well as a case study to two US standard hospitals and lastly, a comparison to the Police hospital were given. (Summary of comparison in appendix). The data indicates that, Messrs BBI is rendering the re-construction of Ridge at a highly competitive rate.  

After the following justifications were provided by Messrs BBI, an agreement was reached by all the stakeholders which was formalized on 15 November 2013 to decrease the cost of the project by USD27 million. This money was to be remitted to MoH in the form of concessions offered by Messrs BBI which included a 3-year maintenance program on major items, double the number of staff housing units, BBI to shoulder additional costs in insurance, transportation of materials and equipment due to source of supply, amongst others. Altogether, the concessions were valued at USD27 million

When all the cards are laid on the table, a few things become clearer. The minority in Parliament should have been given the facts on the finality of the negotiations that revised initial claims of over valuation to what it is we have now.

To perform Retrospective amendment of these terms may be more costly, a cost that will be borne by the ordinary Ghanaian. Messrs BBI was awarded this contract by the book and there is great difficulty in seeing malfeasance as alleged by certain outlets.

Lastly, given the justifications, Ridge Hospitals Re-construction is within the range of other international hospitals of equal specifications, if not more competitive, and also more importantly is being renovated at a lesser cost in comparison to the Police Hospital. 

IMANI decided to investigate the details of this project just as we did with STX, GUMA and SNECOU housing projects on the principle of ensuring value for money analysis.  

Appendix
Table: Local and International Hospital Comparisons

Project name
Location
Contract
Selling Price (USD)
Rate per m2
Rate per bed
LEED Certification
Turn Key High Standard Medical Equipment, Instrumentation and FF&E

Design and Engineering
US procurement and Transport Implications

Conforming Selling Price (USD) in 2012
Rate per m2
Rate per bed

Greater Accra Regional Hospital at Ridge
Accra, Ghana
Design and Built
305,200,000
5,637
492,258
Yes
Yes
Yes
Yes
305,200,000
5,637
492,258

DR Horacio Oduber Hospital
Oranjestad, ARUBA
Built Only
119,823,000
4,113
473,609
No
No
No
No
170,148,660
5,840
672,524

Oncology Center
Port of Spain, Trinidad & Tobago
Built Only
57 304 000
8 245
N/A
No
No
No
Yes (US & Canada)
81 371 680
11 708
N/A

Jim Pattison Outpatient Care and Surgery Center

Surrey, Canada
PPP
131 000 000
7 158
N/A
Yes
No
Yes
No transport Implication
186 240 735
10 177
N/A

Hospital (Confiential)
Cambridge (UK)
Design & Built
207 575 000
4 735
669 597
Yes[1]
No
Yes
No transport Implication
280 226 250
6 392
903 956

Orthopedic Hospital (Confidential)
London, UK
Design & Built
86 962 000
5 062
701 306
Yes [2]
No
Yes
No transport Implication
117 398 700
6 834
946 764

Broomfield Hospital
London, UK
PPP
238 642 000
4 598
723 158
No
No
Yes
No transport Implication
378 858 494
7 300
1 148056

North Middlesex Hospital
London, UK
PPP
189 305 000
5 617
1 720 955
Yes
Yes
Yes
No transport implication
303 221 177
8 998
2756556

Metz Hospital
Metz, FRANCE
Design & Built
256 936 000
3 212
401 463
Yes
No
Yes
No transport Implication
391 262 141
4 891
611 347

Minsk Hospital
Minsk, BELARUS
Design & Built
149 069 000
4 888
552 107
Yes
No
Yes
Yes (French ECA-COFACE)
149 069 000
4 888
552 107

CAEN Hospital
Caen, FRANCE
PPP
134 835 000
3 852
390 826
Yes
No
Yes
No transport Implication
218 978 782
6 257
634 721

Florida Flagler Hospital
Florida, USA
Built Only
151 032 261
2 789
243 600
No
No
No
Yes (but no transportation)
256 754 844
4 742
414 121

Connecticut Children’s Hospital
Connecticut, USA
Built Only
208 133 153
3 844
335 699
No
No
No
Yes (but no transportation)
353826360
6 535
570 688

Police Hospital
Accra, GHANA
Design & Built
80 480 000
7 363
712 212
No
Yes
Yes
Yes (British ECA – ECGB)
86 113 600
7 879
762 067
Note
Hospitals 1-11 are constructions by Messrs BBI
Hospitals 12-13 are international comparisons (case studies)

Hospital 14 is Ghana Hospital reference with International financing

[1]BREEAM equivalent
[2]BREEAM equivalent

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