The state-owned company Valsts nekustamie īpašumi (State Real Estate, VNĪ) could sign a contract with the builder of the A2 building of the Pauls Stradins Clinical University Hospital (PSKUS) in February at the earliest. The contract amount is expected to be at least EUR 100 million – almost twice as high as originally planned in 2020, according to the Latvian Television programme “De Facto” aired on February 1st.
Six years have passed since the second phase of construction work began on the PSKUS A building. Almost three years have also passed since the initial promise to complete this construction work. However, nothing went according to plan.
In 2024, Stradiņš Hospital unilaterally terminated its contract with the then-contractor, Velve, because, as the hospital pointed out, it did not meet the deadlines and significant defects were found in the building, including mould in areas where operating rooms were to be installed.
Before the search for a builder to complete this building began at the end of last year, VNĪ took over the management of the hospital construction project. As a result, Stradiņš Hospital remained the recipient of funding, while VNĪ became the project manager.
The tender for the construction of Building A2 was announced at the end of last year. The day before Christmas, the previous builder, the company Velve, filed a complaint about the tender. In Velve’s opinion, the client was unclear about what exactly needed to be built and how much. In Velve’s opinion, this created disproportionately broad possibilities for interpretation, which in turn created disproportionately high risks of favouritism.
The Procurement Monitoring Bureau (IUB) evaluated this complaint and concluded that VNĪ may continue with the procurement. The IUB announced its decision on January 8th.
This means that Velve has until February 8th to appeal the IUB’s decision in the Administrative District Court, as well as to request interim protection, which in this case would be a prohibition on concluding the procurement contract.
Three bidders have currently applied for the construction contract for the hospital’s A2 building. Currently, the cheapest offer has been submitted by the supplier association NSHC Group. This association includes Hanza Construction Group, which is also part of the supplier group that won the tender for the construction of the Vanšu Bridge in December. The other company in the supplier consortium is Baltic Construction Company. NSHC Group’s bid is to complete the construction of Stradiņš Hospital’s A2 building for €101.55 million excluding VAT.
While the initial budget for all construction work was €88 million, at least €100 million is now needed just to complete the project. And that’s despite the fact that the building’s facade and most of the engineering communications have already been constructed. Apart from the pandemic, Russia’s war in Ukraine, and inflation, the price would have risen due to risk.
“If you, as a builder, take over a project that was previously built by another contractor, then, of course, you will factor in additional risks, because you may also have to take on a guarantee for the entire amount,” says Jeļena Gavrilova, a member of the VNĪ board.
A total of approximately €62 million has been spent on construction so far. According to Stradiņš Hospital, €55 million of this has been paid to the company Velve, while €7 million has been invested in urgent repairwork. This leads to the conclusion that, provided everything continues to go smoothly, the construction of the hospital’s A2 building will have cost more than €163 million.
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