A $1-billion hospital in Montreal continues to cause headaches for Canadian design-build firm SNC-Lavalin, which has filed suit to recoup hundreds of millions of dollars in added costs the company says it was forced to eat on the project.
The Canadian engineering giant and its project partner, Innisfree, have filed a $256-million lawsuit against McGill University Health Centre and the government of Quebec, arguing the firms are being unfairly forced to pick up the tab for additional work on the hospital, which opened last year. It was built under a public-private-partnership arrangement contracted by the province.
The P3 consortium says that, late in the building process, it was required to add 54,121 more sq ft to the hospital. The firms, which have the contract to maintain the hospital until 2044, also is claiming higher future costs based on a now larger hospital than originally planned. The added costs are “directly related to the numerous changes requested by [McGill] to enhance and expand the health complex above and beyond” the contract scope, the consortium said in a statement.
In their lawsuit, the firms said they were not given layout information, specifications and equipment lists in a timely fashion. As a result, construction crews demolished walls and ceilings only to have to rebuild them later and were forced to modify mechanical-electrical systems after they already had been installed.
McGill also refused to issue change orders but, instead, used the review process called for in the contract to impose “new requirements and changes … by repeatedly misusing the review procedure to suggest that the [consortium’s work] was not meeting specification,” SNC-Lavalin and Innisfree contend.
But Quebec Health Minister Gaétan Barrette told the Montreal Gazette that the amount “is way, way, way over what is justified.” The consortium says it tried to hammer out a deal on the extra costs for two years before opting to go to court. The suit threatens to cast an unfavorable light on the P3 process in Canada, as the Montreal hospital was the first major project to be undertaken by a province using that approach. Barrette has defended the process, arguing that contractors, not the taxpayers, should pick up the additional costs.
The legal battle comes as SNC-Lavalin attempts to negotiate a deal with the Canadian federal government over corruption charges against former executives on big projects around the world, including the Montreal hospital. A preliminary hearing in the case is not set until fall 2018, confirms a company spokeswoman.
Former SNC-Lavalin CEO Pierre Duhaime and two other top executives allegedly funneled $17 million in bribes to executives of the hospital that awarded the construction project. Duhaime and Yanaï Elbaz, a former top hospital manager, are set to go on trial on corruption charges in September 2017.