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SNC-Lavalin team files $330m lawsuit over Canadian project

4 Apr 16 A partnership of SNC-Lavallin and Innisfree has filed a CA$330m (£178m) lawsuit against the McGill University Health Centre (MUHC) and the government of Quebec in relation to a project in the Canadian province.

The partnership, McGill Healthcare Infrastructure Group (MHIG), is claiming compensation for additional costs incurred during the design and construction of the MUHC hospital centre’s Glen site as well as for present and future costs related to managing and maintaining the hospital centre’s assets.

MHIG said that the additional costs it incurred stem from the numerous instructions and changes made by the MUHC as well as the value of the additional work it requested.

“After more than two years of negotiations which have not been fruitful, MHIG now has no other choice but to turn to the courts, as the agreement provides,” said a statement.

Under its agreement with the MUHC, MHIG is responsible for financing, designing, building and maintaining the hospital complex as well as managing its assets until 30 September 2044. MHIG is entitled to compensation from the MUHC to cover costs associated with the additional work that was requested and the need to fast-track work in order to prevent any delays to the project.

MHIG said that it delivered a quality, functional complex to the MUHC in accordance with the conditions and schedule set out in the agreement.

It said that the additional costs are directly related to the numerous changes requested by the MUHC to enhance and expand the health complex above and beyond the scope of the contract, the MUHC’s inability to provide information about the facility’s layout and equipment destined to the health complex in a timely manner, and the MUHC’s misuse of the review process.

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The statement said that the changes requested by the MUHC - including adding a sterile core to the operating area and expanding the central pharmacy - meant that the facility needed to be 5,028m2 bigger than originally planned. It said that most of the many changes required were requested at a point in time in the building process that had a major negative impact on MHIG’s work and resulted in considerable amounts of incremental cost and lost time and productivity.

It added that the MUHC did not provide site layout information in a timely manner, which caused MHIG’s construction teams to proceed with their work with incomplete or incorrect information. When layout information did become available, it often meant that changes had to be made to structures that had already been built, it said. “Throughout the construction process, delays and changes on the part of the MUHC resulted in work being completed out of sequence and being subject to amendments resulting in cost and delivery deadline progress impacts,” it said.

"Several times during the Project, the MUHC did not provide equipment lists and specifications in a “When the actual equipment selected by the MUHC was finally communicated to MHIG, this necessitated expensive changes to designs and construction work to accommodate the selected equipment,” it added.

MHIG also claims that MUHC misused the review procedure. “When requesting changes to the initial plan, the MUHC should have issued change requests or change orders, as stipulated in the agreement, which would have allowed MHIG to obtain additional time and compensation,” it said. “Instead, the MUHC imposed new requirements and changes on MHIG by repeatedly misusing the review procedure to suggest that MHIG’s work was not meeting specifications (which kept evolving with the changes MUHC required to the plan). By misusing the review procedure, the MUHC required MHIG to change several aspects of the design despite the fact that the design submitted by MHIG met the requirements set out in the agreement, and this resulted in additional costs and delays which had to be made up by MHIG to meet the project deadline.”

The changes requested by the MUHC also had considerable impacts on the management and maintenance of the hospital assets, as these activities are directly affected by the size of the complex and the type and number of equipment items and systems included in the facility, said MHIG.

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