Capital Projects – Yukon Hospital Corporation

Audited Entities

• Yukon Hospital Corporation (YHC)

• Department of Health and Social Services (HSS)

Audit Scope and Objectives

The audit objectives were:

• to determine whether the Yukon Hospital Corporation, in collaboration with the Department of Health and Social Services, adequately planned for building the Watson Lake and Dawson City Hospitals;
• to determine whether the Yukon Hospital Corporation adequately planned for building the Crocus Ridge Residence; and
• to determine whether the Yukon Hospital Corporation adequately managed the building of the three projects.

Audit Criteria

• YHC and HSS conducted an analysis of the health care needs of the communities and evaluated options on how to meet those needs most cost-effectively, including assessing how new services/programs would be integrated with existing ones.

• YHC and HSS identified the requirement for these capital projects in their strategic and capital planning and explained how the projects would help them meet their respective mandates.

• YHC and HSS collaborated with each other in determining the hospital facilities necessary to meet the needs of Yukon residents.
• YHC and HSS conducted a risk analysis for the decisions to build the Watson Lake and Dawson City hospitals.
• YHC and HSS incorporated mitigation strategies for identified risks.
• YHC identified a need for the Crocus Ridge Residence project and evaluated options on how to meet the need most cost-effectively.
• YHC identified the requirement for the Crocus Ridge Residence in its strategic and capital planning and explained how the project would help meet the Corporation’s mandate.
• YHC designed the buildings to meet the identified needs.
• YHC awarded contracts related to the projects according to relevant authorities.
• YHC developed a project management plan to oversee the work of the contractors for the design and building of the projects.
• Senior management regularly monitored the projects to determine whether they were on time, on budget, and being built to specifications.

Main Audit Findings

• The Corporation did not conduct a full assessment of the communities’ health care needs in planning and designing the hospitals. It also did not determine the incremental operating costs for the hospitals until construction was well under way. The Corporation cannot demonstrate that the hospitals, as designed, are the most cost-effective option for meeting the communities’ health care needs.
• The Corporation and the Department could not provide us with documented risk analysis to show that they had identified and assessed risks before beginning to build the hospitals. Instead, they identified and assessed risks and developed mitigation strategies for them at the same time as the Corporation was beginning to build the hospitals.
• In all three projects, most contracts were competitively tendered and most change orders were appropriately justified and managed.
• The Corporation also regularly monitored the projects, but the hospital projects will be delivered later than expected and will be over budget.
• The Crocus Ridge Residence also experienced construction delays and cost increases.

Audit Recommendations

• The Yukon Hospital Corporation, in collaboration with the Department of Health and Social Services, should conduct a health care needs assessment in the communities of Watson Lake and Dawson City. The information gathered in this exercise should then be used to ensure that the services delivered in the hospitals are designed to meet the communities’ needs in the most cost-effective way possible.
• The Yukon Hospital Corporation should document the analysis on its decisions for capital projects.
• Corporation staff involved in awarding contracts should document the Corporation’s contracting processes.
• Before beginning future capital projects, the Corporation should:
  • carry out a needs assessment, a risk assessment, and an options analysis (including how the projects will be funded);
  • collaborate with the Department of Health and Social Services to ensure that it is aware of any potential impacts on the Yukon health care system and on the funding of the Corporation by the Department;
  • establish reasonable budget and completion dates for its projects and ensure that they are adhered to; and
  • ensure that both capital and incremental operating costs are known before proceeding.

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