Graham Construction releases statement re: Grande Prairie Regional Hospital

By ReNew Canada 02:58PM August 02, 2018



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Graham Construction has released the following statement in response to the Notice of Default issued by the Government of Alberta in regards to the Grande Prairie Regional Hospital project. Here is the statement in full:

“Graham Construction prides itself on its values of commitment, integrity and reliability and seeks to exemplify these values on each project it undertakes, including the Grande Prairie Hospital. The owner’s recent release of a notice alleging default is unfortunately rife with errors and misstatements, and while Graham has and will continue to meet its contractual obligations while it works under the dispute resolution process, the notification necessitates a response.

Since the onset of the project in 2011, there have been continual design changes, scope increases and numerous delays outside of Graham’s control. While work on the project is progressing, the following facts provide important context to this matter:

  • Without minimizing Graham’s full scope of responsibilities, Graham’s primary contract obligations are for estimating the cost of the work, construction planning, execution and providing schedule and cost forecast updates based on the design and directives given by Alberta Infrastructure (A.I.).
  • Graham has advised A.I. for years that the project cost, as designed, has exceeded A.I.’s budget.
  • A.I. has the sole responsibility to direct and control the design to fit their budget. In late 2016, Graham, as Construction Manager, repeatedly advised A.I. the budget of $510 million remained insufficient to construct their evolving design. Graham’s estimated cost of the design at the time was $583 million. In that light, A.I.’s recent actions are a regrettable example of “shooting the messenger.”
  • There have been significant and ongoing design changes and clarifications. Since A.I.’s last budget update, less than two years ago, the project has experienced over 600 change orders and over 400 design clarifications; 63 approved design changes and 34 new scope clarifications in June 2018 alone. Many changes required demolition of completed work to accommodate the new scope, affecting project cost and schedule.
  • A.I. refuses to accept Graham’s cost forecasts or recognize schedule impacts and have further indicated they will not pay the actual costs of the work which is contrary to the contract. Until the scope changes stop, and sufficient budget is provided, no construction manager can properly establish a final cost or properly plan and complete the project.
  • Graham has previously placed A.I. on notice for a number of reasons and has invoked the dispute resolution process to resolve the issues, in accordance with the contract.
  • Graham strongly believes A.I.’s present course of action will not improve the project outcome. A.I. needs to address the real issues, including design management, budget alignment and the responsibilities and obligations that rest with A.I. under its contract. Graham will vigorously defend its position and reputation.
  • It is false Graham requested an additional $120 million to add to the budget. Monthly update reports were provided to A.I since the start which included cost and schedule updates and repeatedly alerted A.I. of a forecasted $70-$85 million shortfall. Recently, at the request of A.I., Graham provided a projected cost to complete the project based on current approved design, including an additional contingency amount of $35 million for significant unknown information requiring input from A.I.
  • Contrary to the Minister’s reported statement: “We have worked closely with the construction manager to resolve the issues…” since March of this year, Graham’s Executive Team has sought and made themselves available to meet with senior members of A.I. and the Minister’s office, but all meetings were cancelled by A.I. and follow-up requests for meetings have not been responded to by A.I.
  • Graham remains open to meet with A.I. at any time, in hopes of resolving the issues and avoiding further costs and damage to the project.
  • Graham will be making no further public comment on these issues and will continue to deal directly with A.I. in compliance with the contract.”

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