UPDATED January 15 2018, 16:39 MT –– The collapse of global construction and facilities firm Carillion will not delay construction of Yellowknife’s new Stanton Hospital, according to the Government of the Northwest Territories.
Boreal Health Partnership, a consortium led by Carillion Canada, won the contract to build and maintain the hospital – which replaces a hospital of the same name – in 2015.
However, Carillion Canada is a wholly-owned subsidiary of British parent company Carillion plc, which has entered liquidation – casting doubt over the future of its worldwide operations and prompting governments in some countries to step in with financial assistance.
Around 6,000 people in Canada are employed by Carillion. Building the new hospital in Yellowknife represented a $350 million initial contract for the company and its consortium partners, followed by $18 million annual payments for three decades.
The territorial government moved to reassure residents regarding the hospital project on Monday. In statements, the territory said that as Carillion’s responsibilities within the consortium do not involve construction, and Carillion’s 50 percent equity share in the project is secured by a bank letter of credit, construction and financing of the project would be unaffected.
One potential problem is the awarding to Carillion of a 30-year contract to maintain the facility once it is operational – but the territorial government said that was for Boreal Health Partnership to resolve if Carillion proved unable to fulfil that contract.
“While some may be of the view that there is some risk that Carillion Canada (as service provider) and/or Carillion plc (as its guarantor) will become unable or unwilling to perform the service period operations and maintenance obligations due to Boreal Health Partnership, the fact is, Boreal Health Partnership remains obligated to GNWT to perform the operations and maintenance obligations, whether or not their subcontractor Carillion provides such services,” read a statement issued on Monday afternoon.
“GNWT has not directly retained Carillion to do so and Boreal Health Partnership must solve the problem if they lose their service provider subcontractor.”
In an earlier statement, the territory said there would be “no impact on construction currently underway and the GNWT is working with the partnership, including Carillion Canada, to ensure that First Patient Day of the new Stanton Territorial Hospital remains on schedule for mid-2019.”
On Facebook, Yellowknife MLA Kieron Testart said territorial government officials would meet project managers on Tuesday “to assess what this means for the hospital project.”
In tweets posted on Monday, Carillion Canada said all companies in the Carillion group would “continue to operate as normal” and directed enquiries to accountancy firm PwC, which is handling the group’s liquidation.
Other companies in the Boreal Health Partnership consortium may be able to take on Carillion’s staff if the company’s Canadian arm is unable to continue operating.
Those companies include investors HOCHTIEF PPP Solutions North America Inc and Bird Capital Limited, and building firms Bird Design Build Construction Inc and Clark Builders.
A territorial government website states the construction project is now 60 percent complete with the building scheduled to begin accepting patients in spring 2019.