County hospital project bleeds red ink

first_imgAs Los Angeles prepares to open the new County/USC Medical Center next spring – the largest, most expensive and complex project in county history – county officials on Tuesday lambasted project overseers for tens of millions of dollars in unanticipated cost overruns and change orders. The project to replace the downtown hospital, made famous in the opening scene of TV soap-opera drama “General Hospital,” was expected to cost $818 million when the Board of Supervisors voted in 2001 to seek bids from contractors. But Department of Public Works officials on Tuesday said the cost of the project has risen to $899 million – mostly due to rising construction costs but also due to about $100 million in change orders. The construction budget was originally put at $498 million, but that has since grown to $647 million. Board of Supervisors Chairman Zev Yaroslavsky criticized officials for not telling supervisors about the swelling budget. “For a while, the impression was that they were really holding the costs down,” Yaroslavsky said. “And now as I look at this … either the estimates were woefully underestimated, which clearly they were … or the management of the project has been a little lax, which may very well be the case. “When you get this kind of volume of change orders, it raises my eyebrows. (A total of) 300 pages of changes have taken place.” The project started in April 2003 and covers three city blocks. The 1.5 million-square-foot, 600-bed facility will replace the existing hospital built in 1932. When completed, it will include a seven-floor outpatient building, eight-story inpatient tower, five-story diagnostic and treatment building and a central energy plant. The diagnostic and treatment tower is base-isolated, meaning it can sway up to two feet in any direction, providing the ability to continue to provide emergency services in the event of a major earthquake. In recent years, project officials have gone before the supervisors to ask for additional money for the project. Gerry Hertzberg, policy director for Supervisor Gloria Molina, whose district the hospital is located in, said the supervisor has been concerned about the rising costs and created a special advisory group of experts to help keep the costs down. “She’s kept in close contact with that group to get their opinion and to make sure they are doing their jobs,” Hertzberg said. “But there is only so much you can do. While this hospital is coming in at cost increases that might pale in comparison to what UCLA has, every dollar is still a concern. “There is no rubber-stamping of these things. They have been negotiated down. We have tried to keep everyone’s feet to the fire, to keep the costs of the facility to a minimum.” But the request for an additional $18 million on Tuesday caught Yaroslavsky’s attention. Of the $18 million, about half was for what are known as “change orders” – discretionary and nondiscretionary changes in the project. But Jacob Williams, an assistant director for public works, argued the cost of the project has mostly increased because construction costs have risen in recent years. “This is the largest, most complicated project Los Angeles County has ever taken on,” Williams said. “It is enormously complicated.” Debbie Lizzari, assistant executive officer in the county’s Budget & Operations Management office, said her office compared the cost per square foot of the County/USC Medical Center project with other recent hospital projects and found its $431 per square foot cost comparable. “You can see that it’s actually a little higher than UCLA but less expensive than other projects like Huntington Memorial and Kaiser Permanente at $531 (per square foot),” Lizzari said. Still, Yaroslavsky said he is most concerned about the volume of change orders, as well as a contingency budget for construction costs that is substantially higher than the industry standard. “I’m just concerned that you are going to be coming back again (for more money),” Yaroslavsky said. “I’ve grilled (Chief Executive Officer Bill) Fujioka about this. There are a lot of change orders. “The (Walt Disney) Concert Hall project was not an easy project either. And I believe their contingency … was under 14 percent. It certainly wasn’t 22 percent.” Yaroslavsky said he didn’t have time to go through hundreds of pages of change orders to determine whether they were justified. “Were they necessary, or did the health director or his deputy decide, `I don’t like vanilla. I wanted rose for the color of my walls’ or `I didn’t like this or that’? “What were the discretionary and nondiscretionary change made along the way? I don’t have answers to that.” [email protected] (213) 974-8985160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img
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