The total design and construction costs for Mater Dei Hospital exceeded the original targeted values by around five times, the Auditor General has concluded. 

Originally budgeted at €98.1 million, the total design and construction costs of the hospital ended up costing €487.7 million. Total costs including land, medical equipment, furniture and other items amounted to €583 million.  

In a report handed to the Speaker on Wednesday, Auditor General Charles Deguara concluded that while the Mater Dei project was upgraded and “was, to varying degrees, a catalyst to transform Malta’s national health care systems”, it was nonetheless characterised by quality, cost and timeliness issues.

Such issues, the NAO office noted, are elements that are synonymous with contract, project management and governance concerns.

The report into the hospital’s cost was requested by Finance Minister Edward Scicluna in July 2018 and was to serve as a follow up to a similar one published earlier that year. 

A comparative study carried out by the NAO as part of its fact-finding efforts also revealed that Mater Dei’s design and construction costs exceeded international benchmarks related to area per bed and cost per square metre. 

“This situation materialised also when these parameters were compared on a national level with Sir Anthony Mamo Oncology Centre (SAMOC) benchmark costs. In this regard, MDH’s costs exceeded SAMOC-based benchmarks in terms of cost per square metre by 30%. 

“Moreover, MDH’s design and construction costs constituted a surplus of €97 million when compared to SAMOC-based benchmark costs,” the Auditor General said. 

Graph: National Audit Office

The report also notes that the hospital’s design contributed to the high design and construction rates, particularly as the hospital exceeded international benchmarks related to area per bed.

The hospital’s total design and construction costs exceeded the original targeted contractual values by around five times, the Auditor General said. He also pointed out the project was completed 15 years from when the first agreement was signed. 

“Changes in government policies on the hospital’s scope, size and design, following two successive changes of government, also contributed to cost overruns and project delays.”

While it was expected that major public projects might be susceptible to “some, if not all, the issues” raised in the report, the NAO said that in practice many of the shortcomings could have been “either minimised or avoided". 

It was therefore important that projects of such magnitude involve planning, coordination between all stakeholders and have effective control mechanisms in place.

“This ascertains that projects proceed along their intended path and deliver their intended impact within the budget allocation, facilitating timely corrective action, if and as required.”

Mater Dei opened its doors in 2007 amid controversy over delays in its completion.

In a statement, the Labour Party said the NAO report "confirms the accountability and governance failures during the Nationalist Party's time in government" and meant the PN, now in Opposition, could not credibly discuss those issues now. 

PL statement

In a statement, the Labour Party said the investigation confirmed the failure in governance and accountability under the Nationalist government.

It showed yet again that the PN had no credibility to speak about the country's health sector. This government's good financial management had addressed many shortcomings which had not been tackled for years, it said.