Addendum Investigation: The Mater Dei Hospital Project

The Auditor General, Charles Deguara, presented the Report in caption to the Speaker of the House of Representatives, Hon. Anglu Farrugia. This assignment fulfills the request dated July 2018 by the Hon. Minister for Finance Prof. Edward Scicluna wherein the National Audit Office (NAO) was to follow up its Report of May 2018 on the subject matter.

This assignment concluded that the €583 million Mater Dei Hospital (MDH) project upgraded and was, to varying degrees, a catalyst to transform Malta’s national health care systems. Nonetheless, the project was characterised by quality, cost and timeliness issues – elements which are synonymous with contract, project management and governance concerns.

As with the original Report, this Investigation had to address limitations relating to the fragmentation of documentation and the passage of time (1987 – 2008). Nonetheless, a wide spectrum of documentation was made available and consequently enabled this Office to expand on the issues raised in the May 2018 Report. To this effect, the Cabinet Office and the Foundation for Medical Services (FMS)’s input and cooperation are acknowledged.

A comparative study revealed that MDH’s design and construction costs exceeded international benchmarks related to area per bed and cost per square metre. This situation materialised also when these parameters were compared on a national level with Sir Anthony Mamo Oncology Centre (SAMOC) benchmark costs. In this regard, MDH’s costs exceeded SAMOC-based benchmarks in terms of cost per square metre by 30 per cent. Moreover, MDH’s design and construction costs constituted a surplus of €97 million when compared to SAMOC-based benchmark costs. The Report notes that, in part, the Hospital’s design contributed to MDH’s high design and construction rates – particularly as the Hospital exceeded international benchmarks related to area per bed.

Within this context, MDH’s total design and construction costs exceeded the original targeted contractual values by around five times. The project was completed 15 years from when the first agreement regarding the hospital project was signed. Changes in Government policies on the Hospital’s scope, size and design, following two successive changes of Government, also contributed to cost overruns and project delays.

While appreciating that the nature of major public projects can be susceptible to some, if not all, of the issues raised in this Report, in practice many aspects of these shortcomings could have been either minimised or avoided. Within this context, this Office reiterates the importance of planning, coordination between all stakeholders from the outset, and of critical importance, having effective control mechanisms in place. This ascertains that projects proceed along their intended path and deliver their intended impact within the budget allocation, facilitating timely corrective action, if and as required.