Work finally set to re-start on Royal Liverpool Hospital

Property group Laing O’Rourke is expected to re-start work on the £335m Royal Liverpool Hospital next month.

The building giant has been appointed as management contractor on the project, the NHS trust has confirmed, after failed construction firm Carillion collapsed with debts of £1.5bn at the start of the year.

Work came to a standstill in February, a month after Carillion filed for voluntary liquidation.

In September the Royal Liverpool and Broadgreen University Hospitals NHS Trust announced a deal had been agreed for work to re-start at the building, which has been dubbed ‘a monument to greed’.

The trust said the board of directors had agreed that issues could not be resolved within the existing PFI agreement and that the deal “should be terminated after the 30 September long-stop date”.

A statement said: “Subject to detailed government approvals, and legal agreements being finalised, we intend to have a managed termination process after 30 September, by which the benefit of the analyses and pre-works discussions by the lenders will be transferred to the Trust.

“This will see The Hospital Company (Liverpool) hand over its contracts for construction, supply chain and facilities management, to the Trust, over the course of the next few months.

“This is now the fastest way in which we can see construction on the new Royal restarted and means we have outlined a process for doing so. This is really positive news for our staff, patients and the people of Liverpool.

“We now have a solution and can work on moving forward.”

Today the trust said it hoped the project could recommence as early as next month, and is aiming for completion by 2020.

Construction News reported that Laing O’Rourke’s appointment is a result of a deal being struck between the trust and the project’s lenders to terminate the original contract.

This agreement will see the lenders receive a £42m termination fee, plus the rest of the funding held by PFI delivery body – the Hospital Company – at the time of its winding-up.

The trust explained that this figure covered the PFI unitary payments that the Hospital Company will no longer receive, minus the cost of the remaining construction work and the projected cost of maintaining the hospital, both of which will now be covered by the trust.

However, it added that, when calculated in combination with earlier payments made by the trust, the total cost to the public sector of the new hospital will be lower than envisaged when the original 2013 agreement was signed.

It was also confirmed that the £42m figure would be covered by the Department of Health and Social Care.

Trust chief executive Aidan Kehoe said: “Our priority now is for Laing O’Rourke to get work restarted as soon as possible. We hope to be able to continue working with the existing subcontractors so that work can be completed quickly.

Laing O’Rourke is currently delivering the Clatterbridge Cancer Centre next to the new Royal Liverpool Hospital.

A team from Addleshaw Goddard, led by partner Jacqui Langley-White, advised the Royal Liverpool and Broadgreen University Hospitals NHS Trust.