Pearce facing losses on Brum ProCure 21 project

Pearce Group is facing substantial losses on a ProCure 21 contract in Birmingham for the Royal Orthopaedic Hospital (ROH) NHS Trust. The news comes after Pearce’s subsidiary Medicor pulled out of the ProCure 21 programme last week.

The £11m contract to build a new treatment centre was due to open in spring this year, but was delayed by late delivery of the building’s modularised pods and subsequent problems with the centre’s water treatment facilities.

The delays mean costs on the project have soared above and beyond the contract’s guaranteed maximum price (GMP).

To add to Pearce’s woes, the Trust has instructed its lawyers to look into "the predicted level of compensation" it can claim from the company for the cost of the delay.

One source close to the project said: "Pearce is pouring money into this contract. It has gone way above the GMP. The Trust dithered around choosing the modularised units, which delayed the job until July. Then when they finally arrived, there was cross-contamination of the water system, which had happened during manufacture. The Trust is now looking for compensation for the delay from Pearce. It is bad luck, since it is not directly to blame for these delays."

Pearce business development director Andrew Dale-Harris said costs on the treatment centre had exceeded the contract’s GMP, but insisted these are not significant. He cited "an enormous amount of change during the job" as one reason for the delay to the programme.

He was not aware that the Trust "had resorted to lawyers". "We have a good relationship with the Trust and I would be very surprised if the contract is not closed amicably," he added.

In a statement, the Trust’s chief executive Christine Miles said: "The Trust is not incurring any financial penalties related to the capital charging of the development as a result of this delay."

A ProCure 21 contractor commented: "This must have been the last straw for Pearce, especially as Medicor was not winning any work in the national programme."

Dale-Harris denied Medicor’s problems at ROH had influenced its decision to pull out of the ProCure 21 programme. He also insisted that problems on the ROH contract had not undermined the group’s profit.

• Medicor’s £11.3m contract at the Birmingham Children’s Hospital may be novated to one of the 11 remaining principal supply chain contractors (PSCPs) in the ProCure 21 framework. Dale-Harris told CJ: "It is early days on the contract. The piling is going into the ground, so if the Trust wants to novate, this would be an ideal time."