Contractor to receive additional $12.8 million from UI due to disagreement over Children's Hospital project.
The University of Iowa's (UI) Stead Family Children's Hospital, a significant part of the university's large-scale construction initiative, has seen its costs escalate significantly, now exceeding $400 million. This is due to delays, budget overruns, mismanagement, litigation, and defects, the latest being a ruling in favour of contractors Cupples International Inc. and Knutson Construction for arbitration over window issues.
Chief District Court Judge Lars Anderson's decision came after the UI was found to have wrongfully blocked the American Arbitration Association from refereeing its disputes with Modern Piping in April 2016. The Iowa Court of Appeals upheld this ruling in 2019, resulting in a $21.5 million award for Modern Piping.
The UI has been ordered to pay an additional $12.8 million to Modern Piping following a dispute over delayed payments for work on Hancher Auditorium and the Stead Family Children's Hospital. The jury also found the UI guilty of causing harm to Modern Piping by obtaining an injunction, awarding $12.8 million in damages, including $21,785 in attorney fees.
The contractors who installed the defective windows have objected to any UI pushback against arbitration, citing the Modern Piping dispute. Kimberly Hunter, UI Hospitals and Clinics interim chief executive officer and chief nursing executive, stated that the construction of the children's hospital was an investment in Iowa, and they look forward to resolving the dispute with the contractors through arbitration.
The UI has not yet disclosed the amount spent on addressing the failed windows, including consulting fees, temporary fixtures, new windows, and court costs. However, the university has initiated a construction audit to assess the management and cost controls on the project, indicating ongoing scrutiny of budget adherence and project execution.
The Stead Family Children's Hospital began treating patients in February 2017, years after its original planned opening in 2015. In 2021, UIHC officials discovered damaged windows in the hospital and requested $10 to $15 million to replace them. Any windows of concern have been temporarily secured with protective film and clips and are being actively monitored by outside experts.
The larger hospital and related infrastructure project, with a preliminary cost estimate of up to $2.2 billion, includes an 842,000-square-foot patient tower. The project's target budget is $1.5 billion for the inpatient tower itself (excluding equipment), but with equipment included, the total target estimate is about $2.2 billion, making it the largest healthcare facility project in Iowa's history.
Vanessa Miller covers higher education for the publication.
[1] University of Iowa Health Care. (n.d.). Health Care Projects. Retrieved August 2, 2022, from https://uihc.uiowa.edu/health-care-projects
[2] University of Iowa Health Care. (n.d.). Health Care Projects: Frequently Asked Questions. Retrieved August 2, 2022, from https://uihc.uiowa.edu/health-care-projects/frequently-asked-questions
- Given the ongoing legal disputes and additional costs incurred due to the Stead Family Children's Hospital project, it seems clear that financing for UI's business ventures could be significantly impacted.
- The escalating expenses of UI's large-scale construction initiative, including legal fees, window replacement costs, and consulting expenses, may require a thorough review and reevaluation of the university's finance department's management and strategies in business operations.
