Construction delays on SA's three biggest hospital projects, auditor-general says

The South Australian government's three costliest hospital projects, headlined by the $3.2 billion new Women's and Children's Hospital, have all had "delays in starting construction", the state's auditor-general says — but the government maintains all three projects are on schedule.

The two other projects — the Flinders Medical Centre expansion and new Mount Barker Hospital — have already reported cost blowouts of $96 million and $146 million, respectively.

The blowouts take their total projected final costs to $496 million and $366 million.

Health Minister Chris Picton said the three projects "are all on track and there is no delay to their scheduled completion dates".

According to the auditor-general's annual report tabled in parliament earlier this month, SA Health underspent its investment budget by $140 million last financial year.

The largest underspend was on the new Women's and Children's Hospital (WCH), which incurred only $125 million in costs despite a $198 million budget in 2024/25.

The reason for the underspend was "delays in starting construction", the report states.

The state government has previously said that every three months of delay on the new WCH will cost taxpayers $25 million.

The ABC also reported earlier this month on a litany of concerns from those involved in the project that it could go "significantly over" its $3.2 billion budget.

The government maintains the hospital — set to have 56 more overnight beds than the current WCH — is on track for completion in 2031.

Construction works 're-timed' but on-schedule, government says

The auditor-general also reported a $41 million and $24 million underspend on the Flinders expansion and new Mount Barker Hospital, respectively.

Both results were attributed to construction delays.

Appearing before parliament's Budget and Finance committee last week, deputy auditor-general Daniel O'Donohue said the audit office has not yet done "any detailed work … around the specific causes of the delays".

"We have just summarised there the status of those projects," he said.

"We haven't done a detailed look at what has driven any of those particular things beyond what we have stated here around delays in starting construction, which may have been delays through a procurement process taking longer, I am not sure."

The government said spending on the Flinders expansion has been "adjusted for construction sequencing" — partly to minimise disruption on the existing hospital — and the project "remains on schedule and on budget".

Mr Picton said the funding changes referred to in the auditor-general's report relate "to re-timing of the schedule of construction works, none of which has created any delays to projected completion dates".

"These important hospital infrastructure projects being delivered by the Malinauskas Labor government are all on track and there is no delay to their scheduled completion dates," he said.

"You can see with your own eyes the cranes in the sky on all of those projects now.

"This is a generational investment in hospital infrastructure as part of our plans to add 600 extra beds across the system."

The Flinders upgrade, originally costed at $400 million, is being funded 50/50 between the state and federal governments.

The project includes a new 98-bed, seven-level tower under construction adjacent to the existing hospital and scheduled for completion in 2028.

The new Mount Barker Hospital, originally costed at $220 million, will triple that hospital's capacity from 32 to 104 beds and is scheduled to open by the end of 2027.

Conversely, a new SA Ambulance Service headquarters in Mile End is "ahead of schedule", the auditor-general reported.

But that project also appears to have overshot its $120 million budget, with its total cost now reported at $134 million.

Major health project delays 'not unusual'

The new WCH, Flinders expansion and Mount Barker Hospital are the three biggest capital projects on SA Health's books with a combined value of more than $4 billion.

Nicholas Chileshe, an associate professor in construction and project management at the University of South Australia, said delays in starting large-scale public infrastructure projects — particularly in health — were "not unusual".

He said they often reflect the complexity of early design coordination, stakeholder consultation and procurement sequencing, rather than mismanagement or cost escalation.

"Delays during pre-construction phases can, in some cases, help to reduce long-term cost risk by allowing for refined scope definition, design optimisation, and risk allocation prior to tender," Dr Chileshe said.

"However, prolonged deferrals that extend into or disrupt the construction phase can heighten exposure to cost escalation factors — including inflation in materials and labour, market volatility, and supply chain constraints.

"These risks are particularly evident in post-COVID construction markets, where escalation rates have exceeded long-term averages."

Opposition health spokesperson Ashton Hurn said the three projects identified by the auditor-general were "essential to ease pressure on our health system, our emergency departments and hospital ramps".

"Labor regularly cites them as being part of their promise to fix ramping, but they've all been hit with construction delays on their watch," she said.

She also said Labor "have form on failing to deliver major health infrastructure projects on time and on budget", pointing to the delays and blowouts on the new Royal Adelaide Hospital, which opened in 2017.