Hospital might break ties with builder over delays and errors

Pauls Stradiņš Clinical University Hospital (PSKUS) could terminate the contract with LLC Velve to build the new A2 hospital building because the company delays construction work and has no evidence that they can finish it, PSKUS announced on January 22.

At the end of last year, as a result of delays of LLC Velve, the unabsorbed amount of European fund funding in the hospital was EUR 26 million.

PSKUS has indicated that contrary to the promises made by the builders in December 2023, the construction works of Velve did not take place at the appropriate capacity. Repeated tests show problems with mold in the basement have not been fixed by the builder, with delays in deadlines continuing to affect hospital work.

Velve does not fulfill its obligations under the construction contract – does not ensure the capacity of resources necessary for the performance of construction work, continues to significantly delay the deadlines for the execution of planned construction work, and the progress of works at the site is very slow, which does not provide the hospital as a commissioning party with certainty regarding the capacity of the construction work to complete construction work within the agreed periods, the PSKUS noted, citing as an example that the average number of workers at the site from September 2023 to January 2024 according to entries in the electronic accounting system did not exceed an average of 100 workers, which is insufficient for active progress of construction works.

Similarly, the situation with the mold found in the basement has still not been resolved,and repeated penetration of water into the building has been detected due to high volumes of melting snow, uninsulated cracks, and temperature variations, which increases the risk of mold and possible material damage. Work on rectification of defects is delayed; in areas where defects have already been rectified, a recurrent risk of defects has been identified as condensation and inadequate room temperature are detected on the structures.

Following international practice, the presence of mold is, in principle, unacceptable for healthcare, so the basement of the building should be dismantled, cleaning and treatment of premises should be carried out, and the basement should be reconstructed.

As part of an in-depth investigation, it has also been found that Velve significantly impedes cash flow execution, as a result of which there is a risk of non-utilization of funds granted by the European Regional Development Fund (ERDF), the PSKUS noted.

In view of the above, the management of the hospital is considering terminating the contractual relationship with LLC Velve and completing the construction project after the termination of the contract.

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