UCLA Hospital Mired in Delays

If all had gone according to plan, construction would have finished five months ago on a gleaming new hospital at UCLA’s Westwood campus, a state-of-the-art facility covered in 15,000 stone panels quarried in Italy.

Instead, the $677.7-million project has bogged down, with regulators faulting unapproved work on the site and contractors claiming they are owed $100 million for delays and changes.

UCLA officials now are hoping the hospital, named for former California governor and President Ronald Reagan, will be done by December so they can move in next year. But some construction crews doubt that’s possible.

Even at this late stage, hospital inspectors continue to find problems at the site. Despite UCLA’s many pledges to resolve the issues, the number of areas found out of compliance with building codes or with approved designs has actually gone up between May and last month.

“It appears to be headed the wrong way,” said Paul Coleman of the Office of Statewide Health Planning and Development, which regulates hospital construction in California. “They’re at the stage in the construction where they should have a pretty good idea of what it takes to build this building and not be struggling along.”

One subcontractor already has filed suit, claiming it is owed nearly $40 million in unpaid fees. Other subcontractors say they are keeping some workers off the job until they are paid for changes previously ordered by the university.

“This job is severely in trouble,” said one major subcontractor who spoke on the condition of anonymity.

Coleman’s office halted some work on the hospital last summer after finding that UCLA had not received proper approvals for its plans. Construction, which has been underway since fall 1999, has yet to return to the level of activity reached before the stop-work order.

UCLA officials acknowledged challenges but said they hoped to resolve them quickly and amicably. “We need to get this project finished in a timely fashion,” said Peter Blackman, UCLA’s administrative vice chancellor. “That’s my No. 1 objective at the moment.”

Officials say they are working to reduce the number of areas out of compliance and to increase the number of workers to more swiftly finish the project.

Currently, UCLA estimates that 310 workers are on the construction site, down hundreds from its peak. Officials want that number to grow to 500 by April or May, a key step if the project is to be completed this year.

UCLA is building the new hospital because its existing medical center was damaged in the 1994 Northridge earthquake and does not comply with seismic safety mandates. Most of the construction funds come from the Federal Emergency Management Agency. The current hospital will be used for offices once the new one is occupied.

The university is also replacing its Santa Monica hospital with an earthquake-safe structure.

Blackman said he has seen no justification to suggest that the cost of the project would increase by $100 million, as some subcontractors have suggested. To date, the university has paid $55 million in change orders and it is processing $5 million more.

Blackman said the UC regents set aside a contingency fund of $40 million in January 2004 to cover cost overruns for the Westwood and Santa Monica hospitals, and the university has yet to tap it.

UCLA faces other financial issues in addition to the new hospitals. The healthcare system plans to cut as many as 400 full-time positions by this summer to cut costs and improve its bottom line. The vast majority will be cut through attrition, retirements and transfers. Sixty-four employees were laid off last week.

Blackman said it was premature to assign blame for the delays. But many construction firms are doing just that.

The plumbing and ventilation subcontractor, University Marelich/Limbach, filed suit against general contractor Tutor-Saliba-Perini in December, saying the project plans and specifications were “inadequate, incomplete, inaccurate and uncoordinated.” That forced the firm to perform unanticipated work, the lawsuit alleges.

Randy Hight, project manager for University Marelich/Limbach, said UCLA has been slow to pay for work it ordered or the extra time his teams have had to remain on the job past its scheduled completion. “The university is making all of us try to finance this extension,” he said. “They’re going to drive some of the people out of business.”

At a meeting with a reporter last week, Hight pulled out spreadsheets itemizing $58.5 million that he said UCLA owes him. Some items date back two years.

In response to the suit, Tutor-Saliba-Perini countersued the UC regents, saying the university was responsible for any financial damages.

Ronald Tutor, president of his namesake firm, said his team is working to get the job done. Outstanding money issues typically are resolved after a construction project is completed, he said. Because of the size of the UCLA job, though, some contractors have said they can’t afford to shoulder the burden any longer.

“There’s been a lot of changes that have been made by the university -- equipment changes and the like -- that have impacted the hospital and the budget,” Tutor said. “They were, by their own admission, later than they should have been, which caused no end to troubles and delays.”

Those delays created a domino effect, slowing designs and construction on operating rooms and radiology suites, said Ed Noble, project director for Helix Electric, a subcontractor.

“They made some decisions that are probably the right ones in the end,” but they required adding “complex technical systems into a building that’s already 90% built,” Noble said.

Blackman acknowledged that it took longer than expected to select the most up-to-date equipment for the hospital.

“Our point of view from Day One was that it has to be done right, and it has to be done in a way that it has the most contemporary technology so the doctors can do their jobs,” Blackman said.

Another major complaint among subcontractors is that they won’t be paid for delays until after the project is done. In its contract, the university agreed to pay Tutor-Saliba-Perini $25,000 per day for delays the university contributed to. The subcontractors, however, say their actual cost of keeping the project going each day is more than $112,000, and they wonder if they will ever see that money.

In November, four major subcontractors wrote what has been dubbed the “revolt letter,” threatening to stop accepting any changes on the project without a guarantee of payment.

“Nothing has been forthcoming except the expectation that we continue to perform and absorb colossal costs on a job that is diametrically different than what it was supposed to be,” the letter said. “This cannot continue.”

As a result, the university pledged to process change orders as quickly as possible so the subcontractors could be paid.

Noble was optimistic that all sides would resolve their differences. “While I won’t tell you I have every dime that I need, I am proceeding in good faith that the university is true to their word,” he said.