Bovis dismays NHS Trust with £70m bid cost increase

Costs are about to soar on the privately financed £300m Manchester Children's Hospital project, with preferred bidder Catalyst demanding an additional £70m to deliver the city's flagship scheme.

The consortium, which includes Bovis Lend Lease and Sodexho, was chosen as preferred bidder in August last year with a best and final offer price of £300m.

The scheme is the largest PFI project outside of London, with a complex brief to bring together five hospitals on one central site.

Now Catalyst is asking for an additional £70m to cover the cost of design changes and the construction of two additional departments.

The variations, requested by the Central Manchester and Manchester Children's University Hospitals NHS Trust, are required to meet new NHS consumerism regulations and compliance on statutory changes such as the space around hospital beds and the width of hospital corridors.

Sources close to the Trust say the variations had been calculated at between £20m and £30m. Now the Trust is reviewing Catalyst's estimate. Trust project director Helen Jackson told CJ: "I can't say I am happy with the increase but we are still working through Catalyst's figures and assessing their validity against the new requirements."

One source commented: "These variations did not come out of the blue. They should have been factored into Catalyst's BAFO. To be out by around £50m would suggest Catalyst's original bid was far too optimistic."

A Catalyst spokesman said he was unable to comment on the size or cost of the design changes, but added: "At the time of the BAFO we were aware of the likely variations and the Trust told us of its possible intention to increase the size of the hospital after a preferred bidder was appointed."

One PFI adviser said it was not uncommon for the price of PFI hospital projects to shoot up in the final stages as more detailed prices were worked out.

"I would be very surprised if any consortium would take advantage of its preferred bidder status to overprice any additional design changes," he added. "This is a very cliquey industry with not many players in it. You might get away with it once, but you wouldn't get on another tender list," he said.