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Cambridge Memorial Hospital Seeks $14 million In Claim Against Expansion Contractors

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Banks step in and take control of Cambridge Memorial Hospital's stalled $187-million expansion project

Cambridge, Ontario – Cambridge Memorial Hospital is releasing the following statement:

A Statement of Claim was issued on November 16, 2018 by Cambridge Memorial Hospital against 2423402 Ontario Inc., the “Project Co” contracted to complete the CMH Capital Redevelopment Project, and against Bondfield Construction Company, which entered into a construction contract with Project Co for the Project. In the Statement of Claim CMH claims damages in the amount of $14 million arising out of breaches of contract and delays in the completion of the Project.

The Statement of Claim has not been served and no other steps have been taken in the litigation. As a result of the receivership order issued on December 6, 2018 in relation to Project Co, the claim against Project Co has been stayed.

Given this is a legal matter, the hospital cannot comment any further on this matter.

What Seems To Be Playing Out

  • The banks have stepped in and have taken control of Cambridge Memorial Hospital's stalled $187-million expansion project.
  • A nearly completed 240,000-square-foot patient care wing, has all but been abandoned by unpaid subcontractors
  • A judge appointed BMO as the receiver to manage the affairs and business of the project's numbered company, to finish construction
  • The hospital only has to pay the project company when construction is complete, Infrastructure Ontario says.
  • CMH is the first project stalled this close to the finish line.
  • Once the existing wing under construction is finally finished, it will take two years to renovate the existing 150,000 square feet of CMH. All of this work would add about 50 new beds. It was supposed to be done by spring, now it appears it will take until 2021 at the earliest.
  • CMH getting by under the unfortunate circumstances. Their emergency department has been split over two areas of the hospital since construction began in the fall of 2014. The intensive care unit is located in the new recovery room.
 
Patrick Gaskin - Wednesday, December 12, 2018
 

Last week I sent an open letter to the community (See Gaskin letter below) about our capital redevelopment project. I stated our frustrations with on-going delays, the actions we’ve taken so far and said that on Dec. 12, we would be in a position to act. 

I am pleased to say a path to getting our project back on track is developing. The lenders had exclusive rights to act until December 11. On December 6, they took action by bringing a receivership application before the courts.  A judge has now appointed a receiver to manage the affairs and business of Project Co.  The receiver has called on the performance bond, which will ensure our hospital’s project gets completed. This also means that the options CMH could have taken on December 12 are no longer available.

Critical discussions are now underway on how the project will get done. We anticipate these will continue over the next few weeks. Rest assured, we are pressing to get work going again on the project as soon as possible.

I will get back to you and the community again when we have more news to share.

Remain positive and know this is a good day for our hospital and community. Stay tuned!
Patrick Gaskin

Patrick Gaskin Open Letter To Community November 30th

Dear Community Members And Concerned Citizens

Disappointed. Frustrating. Concerning. Unbelievable.

These are all appropriate words to describe the two-year delay of the much needed expansion of services at Cambridge Memorial Hospital. Everyone has waited long enough. Everyone deserves to know what we are doing to finish this project.

What is happening with construction on the site?

Months have passed with little construction work being done. Work slowed when subcontractors stopped coming on site. The subcontractors claimed they were not getting paid by the contractor. By September, Zurich Insurance got involved to settle their claims. Despite this intervention, there is minimal work at our site and we have not received a schedule that shows when we will get the new wing. 

What is the hospital doing about it?

Since delays have started on our project, we issued a number of ‘notices of default.’ In August, we formally started a process that gave the contractor and lenders 120 days to remedy the situation. This period ends December 11.

What happens December 12?

If no steps are taken and we do not get a satisfactory strategy to complete the work, we have every intention of exercising our rights in the project agreement. This includes making a demand on the performance bond or, if necessary, terminating the contract. By exercising our options, this project will get finished.   

Why was this contractor picked?

The hospital followed the government’s procurement process. Contractors and their project lenders were pre-qualified, and five teams were invited to submit proposals. The winning proposal received the highest score during the evaluation phase.

Will our community need to pay more?

We signed a contract in 2014 at a fixed price. Our position is that we will only pay the agreed upon amounts stated in the contract when certain milestones are met. The hospital has not yet had to pay for the construction of the new wing.

Last year, we were assured these delays would be overcome and that the entire project would be finished in 2019, just a few months behind the original schedule. As of today, we have no guaranteed completion date for the new wing, let alone a start date for the more complicated renovations of the current hospital.

This affects everyone! We cannot hire new staff and attract new physicians to expand much needed services. We cannot enhance the care we provide with the new, modern equipment that you, our generous community, have provided through the fundraising efforts.

Rest assured, we are committed to act so that this project can move forward and we will update you before the end of December on how we will proceed.

Yours sincerely,

Patrick M. Gaskin, MHA, CHE

President and CEO

About Cambridge Memorial Hospital

Cambridge Memorial Hospital is an acute care hospital offering a full complement of services including surgery, maternity, laboratory, diagnostics and emergency. It employs over 1,100 dedicated and skilled health care professionals, technicians and staff, 280 physicians and 400 volunteers providing exceptional care to the residents of Cambridge, the township of North Dumfries and the Region of Waterloo. For more information, visit www.cmh.org

 

 

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