Cost blowout fears cloud $3.2b Women's and Children's Hospital

If you drive into the city on Port Road and look to your left, you can see construction workers laying the groundwork for Adelaide's new Women's and Children's Hospital.

Keep driving onto North Terrace and you'll pass Parliament House, where you'll find politicians and public servants doing the same thing.

But these foundations are entirely rhetorical; their purpose not to prepare the surface for a 10-storey hospital, but the public for a bad news story.

It's the groundwork for this project blowing its $3.2 billion budget.

A hospital under immediate pressure

It's been three years since the Malinauskas government revealed it would shift the new Women's and Children's Hospital's (WCH) project to the Thebarton Police Barracks site on Port Road.

The former Marshall government had earmarked the hospital — then costed at $1.9 billion — for a smaller, triangular parcel of land immediately west of the Royal Adelaide Hospital (RAH).

But Labor, having promised before the election to build an additional 50 beds into the project, determined that site wasn't going to cut it because it would prevent future expansion of both the RAH and the WCH.

The relocation remains one of the most consequential decisions of Premier Peter Malinauskas's first term in office.

It committed the government to hundreds of millions in extra spending this decade, sparked a fierce blowback from heritage advocates over the demolition of the state heritage barracks, and kicked off a wild goose chase around Adelaide to find a new home for the police horses (the government eventually settled on a $90 million site at Gepps Cross).

Almost immediately, the cost pressures on the now $3.2 billion hospital were apparent.

"Roughly every three months of delay costs the state $25 million for this project," Attorney-General Kyam Maher told parliament in November 2022, as the government rushed through legislation to allow the hospital build.

The premier and his ministers have been fielding questions — and softening the public up — about this project's troublesome budget ever since.

"It's not going to be easy," Mr Malinauskas said at a project announcement in April 2024.

"Anyone who has renovated a kitchen or a bathroom knows that it never goes perfectly."

Time is money

The hospital's design was only 20 per cent complete as of September, SA Health officials told a parliamentary committee last month, despite insisting the project was on track for completion in 2031.

One person familiar with the new WCH build told the ABC this week they expected the project's final cost to be "significantly over" the $3.2 billion budget.

"The engineering complexities in hospitals are enormous," the person, who the ABC has chosen not to name due to their involvement in the project, said.

The source added that the longer it takes to design and start the building, the more the hospital will cost due to the ongoing payments to design consultants and the rising cost of construction.

"The government's genuinely committed to extensive consultation, and that in itself leads to a prolongation in the design cycle."

A tricky commitment

The Malinauskas government has regularly highlighted its commitment to consult with doctors, nurses and allied health professionals on the new hospital's design, after the former Marshall government was criticised for not consulting with clinicians enough.

But it's become increasingly clear that commitment is causing problems of its own.

"Clinicians have their own ideas and thoughts about what should be expended," the premier said at another WCH announcement in November 2024.

The premier harked back to this point nine months later when he was asked about the WCH's budget again.

"There's been more consultation with experts on this project than any other I can [remember] in history, really," he said in July 2025.

"I don't mind saying … but clinicians don't always agree with each other, so trying to keep everybody on the same page isn't always easy.

"But exhaustive discussions and negotiations and consultation with clinicians on this project to make sure we get it right means there are pressures in terms of cost."

Blowouts aplenty

You don't have to look back too far either for examples of South Australian infrastructure projects blowing their budget.

The new RAH was costed at $1.7 billion when it was unveiled by the Rann government in 2007.

That had risen to $2.4 billion by the time the hospital opened in 2017 following a tumultuous 10-year consultation, design and construction process.

The new WCH has a similar nine-year schedule between project announcement (2022) and completion (2031).

More recently, the new Mount Barker Hospital — a much smaller scale health project promised by Labor in 2022 — has blown out from $220 million to $365.8 million.

Three months ago, the government revealed a similar $140 million blowout for a desalination plant on the Eyre Peninsula.

Compounding the pressure on the new WCH is that it's not the only big infrastructure project in town.

Work is well underway on the mammoth $15.4 billion South Road upgrade — once costed at $9.9 billion — and three new Glenelg tramline overpasses worth $870 million.

It's a huge amount of work for a South Australian construction industry that is much smaller than its counterparts in Victoria and New South Wales, according to Dr Chamitha Wijewickrama, a lecturer in construction management at the University of Adelaide.

"At the moment we do have multiple large scale infrastructure projects going on," she said.

"With that, we have a high demand, competition for labour, for material and also the plant and equipment.

"When there is a high demand, the prices, the cost of these resources are going up — with that ultimately there will be a cost overrun."

Thinking long-term

So how much does a cost blowout really matter?

If there was a project worth spending hundreds of millions extra on, a hospital that will care for the state's women and kids over the next 100 years is probably the one, the government could reasonably argue.

Further, the costs of building it on the cheap now could have untold consequences on the health system into the future. As British pop duo Wham! said in a 1985 hit single: "If you're going to do it, do it right."

But the government's already foreshadowed that it's capacity to fund major projects is severely limited due to its spending on the new WCH and South Road upgrade.

A significant hospital blowout would further limit the state's capacity to spend in other areas.

By how much though?

Don't expect to find out before the next election.