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Report sheds light on health project overruns and delays: ‘Takes longer, costs more’

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Health officials in charge of getting massive hospital projects built have been making basic, costly mistakes for years around budgets, schedules and design.

That is according to a newly released report into three-quarters of a billion dollars worth of mental health projects.

Many of those 16 projects face cost and time overruns, four years on from the government promising to deliver them urgently to meet huge deficiencies in mental health care.

“Planning and designing new health facilities takes longer and costs more than it should,” said the report from the Infrastructure Commission report, done last December but released now.

It covers the overlap between the old 20-DHB health system’s exit and the new centralised regime’s entry, and said it contained big lessons for doing better from here on in.

Te Whatu Ora Health NZ said on its website it was now working on stronger central planning and delivery of projects.

More centralised leadership since 2021 had helped but “the way projects are being planned and delivered remains variable across the sector. There is variability in capacity and capability, management and governance”, the report said.

It provides a harsh snapshot of what has been going wrong with health investment – as opposed to underinvestment – for years, describing a slow-motion fight between hospitals to get key things built when intentions “far exceeded” funding.

“To date, investment in health infrastructure has almost entirely been driven by DHBs (…bottom-up). Prioritisation … has largely been based on a first-in, best-dressed

approach,” it said.

The absence of any long-term national investment strategy meant hospitals had not known what projects would win funding, so skimped on planning because it cost a lot.

“This placed a heavy burden on DHB resource with no certainty of a successful outcomes. Many business cases were not well supported by robust planning.”

A worrying example was at Capital and Coast’s mental health project, where “design was largely completed in isolation from the users with a lack of consultation”.

“There is always a risk with this approach that the facility is not fit for purpose once constructed.”

Even so, cutting corners did not translate into speed: The time taken from business case to completion was anywhere between three to 12 years, it said. Covid had made delays worse, and these pushed up costs.

The mental health project total that was $722m a year ago has risen now to $830m – and ministerial briefings indicate only $90m of that has been spent so far.

Ironically, government attempts to bring in nationalised asset plans and management have themselves hit delays; instead of delivering them last year, as ministers had promised, these now were not due till next year at the earliest.

The newly released report provides extra details on top of a ministerial briefing into it, that RNZ reported on in March, identifying several basic failings demonstrated by one or other of the mental health projects:

  • Project schedules and budgets lacked detail, room to move, and were too optimistic – many showed “optimism bias” including West Coast and Taranaki projects
  • Managers did not understand how to get projects, or changes to them, approved – “Capital and Coast were unsure exactly who was required to be engaged.”
  • Lack of planning sometimes meant even a project’s location had to be shifted – such as at Waikato, Hutt Valley and Lakes hospitals
  • Lack of coordination: Sometimes a hospital’s own facilities managers were left out of things, such as happened at Counties Manukau. This could mean “a fit-for-purpose outcome is hard to achieve.”
  • Lack of standardisation, as projects did not draw on past experiences – “A quantity surveying firm … noted that anti-ligature components were separately investigated for each project.”
  • Lack of expertise, though it varied a lot. When clinicians got involved in planning, it could be good, but not if it was added on to their fulltime jobs, it said.
  • Possibly putting too much business the way of too few – “a small number of consultants [had] been engaged on a large number of the projects.”

Whakatāne has gone from a $15m budget based on “a low level of information” to a $50m one.

The Whakatāne, Tauranga, Lakes and Hutt projects have recently been taken over by Te Whatu Ora’s central planning arm, the Infrastructure and Investment Group.

The government had called the review a “deep dive”. But the report itself said it was not that deep as it did not have time – and did not, for example, interview any contractors.

Te Whatu Ora has faced a lot of criticism for not giving the public enough information, ever since local representation on DHBs and publicly open DHB meetings were done away with a year ago.

However, in this case, even its own official reviewers struggled to find out about costs, schedules and plans.

“We were not supplied with a clear programme for review and so are unsure how the team intend to deliver the project,” it said about a $130m project at Hillmorton in Christchurch.

Taranaki seemed to have come up with a schedule on the spot after being asked by the review, it said.

“We understand that Te Whatu Ora can sign the contract if the offer is within budget. We are not aware who can sign the contract if it is over budget,” was another comment.

And “we have had very little information to review with respect to the budget, and so it is very hard to provide any insight”, it said about Lakes’ $33m project in Rotorua.

In response to the review’s recommendations, Te Whatu Ora had said it was working on:

  • Strengthening business cases, with a new framework
  • Building expertise in budgeting and cost estimation
  • Standardising things – the report listed design, contracts, schedules and contingency funding all needing standardising
  • Increasing project delivery resources

“All the work being undertaken in relation to business case standardisation, planning, facility design guidance, project delivery frameworks, governance and the like will reduce the need to have lengthy and significant stakeholder engagement,” the report quoted Te Whatu Ora saying.

Source: RNZ

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Police say person who fired gun at officers still at large

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Police say a person who fired a gun at officers in Napier is still at large.

Eastern District Commander Superintendent Joel Lamb said Police tried to stop a vehicle in the Pirimai Area at about 10pm on Tuesday.

He said someone in the back seat pointed what was presumed to be a firearm at officers pursuing the vehicle.

“Staff have then heard two distinct gunshots as the firearm was discharged.

“Fortunately, neither of our officers were injured, and the patrol vehicle did not sustain any damage.”

He said hours later, the vehicle was seen travelling north on the Waikato Expressway towards Auckland.

Police seized the vehicle at an address in Manurewa, but they had not found the alleged offender.

Lamb said people who lived at the Manurewa address were engaging with Police.

He said Eastern District and Counties Manukau Police were making enquiries.

“Presenting a firearm at a Police officer is a serious escalation that puts our staff and the wider community at risk. This behaviour is entirely unacceptable.

“We are taking this incident extremely seriously and will be pursuing all lines of enquiry to locate the offender and hold them accountable.”

Police asked anyone who witnessed the incident to contact Police on 105 or online using the reference number 261111/3764.

Information could also be provided anonymously via Crime Stoppers on 0800 555 111.

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New Zealand sides named for RLWC finals

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The players tasked with ending Australia’s Rugby League World Cup dominance have been named.

The Kiwis and Kiwi Ferns have announced their squads for this Sunday’s World Cup finals in Brisbane.

Both sides are chasing their first titles since 2008, and both are looking to end their opponents run of three crowns in a row.

“Our Kiwi Ferns have been so dominant in years gone by, and we want to bring dominance back to this jersey, so I think it will be a case of who wants it more,” said co-captain Georgia Hale of the impending clash.

The Kiwis get a major boost for the final as they welcome back Ronaldo Mulitalo after he served a one-match ban for a high tackle against Fiji Bati.

Mulitalo replaces Charnze Nicoll-Klokstad, who moves to the six-man bench, which again includes utility Te Maire Martin, middle forwards Naufahu Whyte, Erin Clark and Xavier Willison plus fullback Keano Kini.

Loose forward Joseph Tapine will make his 30th Test appearance in a familiar pack again, including second-rowers Isaiah Papali’i and Briton Nikora, and props James Fisher-Harris and Moses Leota.

Winger Jamayne Isaako is on the cusp of claiming the New Zealand record for most Test points.

His five goals against Tonga lifted his career points tally to 225 – level with Shaun Johnson – while centre Casey McLean goes into the final with 16 tries in just eight Tests.

Fisher-Harris will again captain the team.

Fullback Ponga said the goal of the group was clear.

“We have high expectations around what we want to achieve, and obviously winning a world Cup is one of them.”

Meanwhile, Ricky Henry has selected a settled side to take on the Jillaroos, led by their lethal centre combination of Stacey Waaka and Mele Hufanga.

Veteran Apii Nicholls takes the number one jersey, Leianne Tufuga and Mackenzie Wiki on the wings.

Henry has stuck with his halves pairing of Chantay Kiria-Ratu and Raecene McGregor with Alexis Tauaneai, Georgia Hale and Otesa Pule up front.

Rounding out the starting pack is Shaniece Monschau, Kaiyah Atai, and Angelina Teakaraanga-Katoa.

“We have been building well throughout the tournament; we understand the Jillaroos side, and will give it our all to make New Zealand proud this weekend,” said Henry.

RLWC Finals:

Kiwi Ferns vs Jillaroos- 6.10pm

Kiwis vs Kangaroos – 9.35pm

Sunday November 15

Suncorp Stadium, Brisbane

Live blog updates on RNZ

Kiwi Ferns:

1. Apii Nicholls 2. Leianne Tufuga 3. Mele Hufanga 4. Stacey Waaka 5. Mackenzie Wiki 6. Chantay Kiria-Ratu 7. Raecene McGregor 8. Alexis Tauaneai 9. Georgia Hale 10. Otesa Pule 11. Shaniece Monschau 12. Kaiyah Atai 13. Angelina Teakaraanga-Katoa.

Interchange: 14. Ashleigh Quinlan 15. Annessa Biddle 16. Shannon Mato 17. Ivana Lauitiiti.

Reserves: 18. Brooke Anderson 19. Zahara Temara 20. Brianna Clark 21. Abigail Roache 22. Tenika Willison.

Kiwis:

1. Kalyn Ponga, 2. Jamayne Isaako, 3. Dane Gagai, 4. Casey McLean, 5. Ronaldo Mulitalo, 6. Kodi Nikorima, 7. Jahrome Hughes, 8. James Fisher-Harris (c), 9. Jeremy Marshall-King, 10. Moses Leota, 11. Isaiah Papali’i, 12. Briton Nikora, 13. Joseph Tapine (v/c).

Interchange: 14. Te Maire Martin, 15. Naufahu Whyte, 16. Erin Clark, 17. Xavier Willison.

Reserves: 18. Keano Kini, 19. Phoenix Crossland, 20. Charnze Nicoll-Klokstad, 21. Scott Sorensen, 22. Leo Thompson.

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Opportunities to mitigate multi-million-dollar RNZ budget blowout likely missed – experts

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Multiple opportunities to identify and mitigate a multi-million-dollar budget blowout at RNZ appear have been missed, according to the former executive director at Audit New Zealand.

The public broadcaster on Monday revealed a near $12 million shock financial loss after a litany of financial blunders, which will now lead to sweeping job cuts.

The $11.8m loss is more than 25 times the $470,000 RNZ had expected to lose over the year to June.

CEO Paul Thompson took responsibility for the result, and said internal reports gave an inaccurate picture of the finances, meaning the scale of the loss only became clear in October.

RNZ’s former chief financial officer Hilary Parker resigned unexpectedly in early October.

The board said it would commission an independent review into what went wrong.

Independent contractor Stephen Walker, who left the Audit Office earlier this year, said the size of the loss was surprising, as was the length of time it took to identify it – months after the financial year ended.

Stephen Walker.
Independent contractor Stephen Walker is a former executive director at Audit New Zealand.

Supplied / OAG

“Probably more of a concern is that they had seemingly been unaware that they were running up a significant deficit until they were in the preparation stage of their annual report in October.”

Walker said public entities typically produced monthly financial reports.

An interim audit also took place before the end of the financial year, he said, but if the organisation hadn’t identified significant losses at that stage, the auditor could also be in the dark.

“It seems that there’s a real weakness in forecasting and budgeting that’s occurred here and that the monthly accounts, when they’re produced, either haven’t identified these significant variances against budget or the magnitude of them really hasn’t come to light until right towards the end of the financial year,” Walker said.

“And really at that point, there’s no opportunity for the chief executive, the leadership team to take, and the board to take, any corrective action because the year has effectively been completed.”

Walker said the “significant miss” was difficult to account for given it was more than 10 percent of RNZ’s total funding.

He said based on RNZ’s annual report, financial complexity didn’t appear to be a factor.

“This $11.8m loss isn’t made up of one particular item … it seems to have been contributed to by a number of separate expense lines running over budget. So I don’t think it’s necessarily to do with complexity.”

Among the errors, RNZ wrongly counted $2m from land sales as income in its budget. Staff costs also came in $3.2m over budget, including $1.4m in redundancy payments.

Professor at Auckland University’s business school Norman Wong said based on media reports the issues identified were “significant and troubling”.

Norman Wong.
Norman Wong.

Supplied / University of Auckland

“But recognising the sale of land as income in their budget is a basic error that one would have expected to have been caught and corrected well before it got to this point.”

With funding reductions at RNZ over the past two years, Walker expected greater scrutiny of financial results.

“Virtually every public entity has had their annual budget reduced. And so you would expect … the leadership team on a monthly basis and board – I’m not sure how frequently the board will consider the information – but you would expect them to be interrogating the results on a regular basis throughout the year,” he said.

Walker said initiating an independent review was the correct course of action and that he’d want to understand what information the leadership team and the board were regularly receiving.

He said he’d “love to say” surprising financial results were rare, but conceded they occured on a semi-frequent basis during his time leading the Audit Office.

“The benefit of independent scrutiny by the Audit Office – and the auditors providing that support to the Auditor General – [is] that the reporting is fairly presented at the end of the year, whether it’s good, bad or ugly.”

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