Poor governance around NSW Health’s $15 billion infrastructure program has resulted in delays and cost blowouts, an audit has found.

Auditor General Margaret Crawford says NSW health has embarked on a major expansion of health infrastructure without properly assessing the state’s future health requirements.

She says the infrastructure program is being driven by local priorities rather than a broad perspective, and has questioned decision-making processes between  Health Infrastructure and the health ministry.

Ms Crawford says NSW Health needs to lift its game around project governance and management to ensure its capital projects offer proper value for money.

“Project delays and budget overruns on some major projects indicate that Health Infrastructure’s project governance, risk assessment and management systems could be improved,” she said.

The NSW government has committed to building or upgrading some 90 hospitals and health services in the state’s biggest every health capital works investment.

However the report says infrastructure projects of such scale and complexity carry inherent risks, including cost escalations and unintended delays.

Hospital developments

The audit examined three major hospital developments worth more than $1.2 million, including the Hornsby Ku-ring-gai Hospital redevelopment, the Blacktown Mt Druitt Hospital expansion and redevelopment of Dubbo Health Service.

“Almost all these projects experienced delivery challenges which impacted achievement of their original objectives and intended benefits,” Ms Crawford says.

“In some projects the impacts were significant and resulted in substantial delays, unforeseen costs, and diversion of resources from other priority areas.”

She says the Hornsby project, for example ended up costing about $42.5 million more than it should have, with a 14 month delay. Blacktown and Dubbo also experiences lengthy delays, with costs for Dubbo blowing out by $13.5 million.

Key findings:

• NSW Health’s procedures for prioritising investments didn’t balance Local Health District priorities against the long-term needs of the wider health system
• Strategic asset planning documents didn’t transparently show the basis for prioritising investments
• Business cases were developed without appraisal of all health service delivery options
• Decision making roles between Health Infrastructure and the ministry were unclear
• Forecasts in clinical service plans weren’t properly tested

NSW Health has accepted all of the auditor’s recommendations except reporting annually on all new major works worth more than $5 million, which is says would duplicate existing processes.