Contractor dispute and cost overruns at new Vancouver Island hospital project

Construction of the Cowichan District Hospital in Duncan, B.C., has been halted after an Indigenous contracting company said it had been denied a permit to continue work due to a provincial rule over union membership.

The dispute is another setback to the project, which was recently revealed to be behind schedule and $559 million over budget.

On Friday, a group of contracted workers blocked access to the site of the new hospital over a rule from the B.C. Infrastructure Benefits (BCIB), the Crown corporation tasked with building public infrastructure in the province.

Under BCIB rules, all skilled trades workers on site "need to be members of a union included in the Allied Infrastructure and Related Construction Council (AIRCC)," with all non-AIRCC members required to apply for membership within a month of starting work.

A sub-contractor from the Khowotzun Development Corporation (KDC) — a group of companies run by the Cowichan Tribes — says it has been refused a permit to carry on its work as a result of the rule.

Workers from Jon-co Contracting, which is part of the KDC, have blocked off access to the site. Owner and operator Jon Coleman says he and his employees should have the right to work on their territory, whether they belong to an AIRCC union or not.

"We're standing up for our rights here in the Cowichan territory, being recognized as an Aboriginal contractor in our backyard to carry on work," Coleman said. "This is our territory. We have a right to work and help build our hospital in this valley and keep it local."

Coleman added that a permit to work on the site had also been given to a non-Indigenous, non-union contractor.

"I feel especially that that permit should have came to us first," he said.

Coleman says other contractors working on the hospital have respected the work stoppage, downing tools until the dispute is resolved.

A spokesperson for the Ministry of Health confirmed the dispute was still ongoing as of Wednesday afternoon, with a BCIB spokesperson also confirming the rules mandating unionized workers were still in place.

A statement from Cowichan Tribes says representatives from the band and KDC had been meeting with stakeholders, including the Health Ministry and BCIB, on the topic of the hospital for months.

"Commitments were made to find ways to address hurdles and be more inclusive of Cowichan Tribes on a major infrastructure project taking place in our territory," said Cowichan Tribes Chief Lydia Hwitsum.

"These discussions have not resulted in any actions to meet these commitments."

A spokesperson for the Health Ministry confirmed a "peaceful demonstration" had halted work on the hospital.

"We respect everyone's right to demonstrate and are in ongoing conversation with Cowichan First Nation to discuss their concerns," they said in a statement.

"The project is in the early stages of construction and we hope issues can be respectfully resolved and we can mitigate project delays."

Cost balloons to $1.44B

In its latest financial update on Nov. 25, in which it announced a $5.7-billion operating surplus, the province said the cost of the hospital project had risen by $559 million to $1.44 billion, an increase of more than 60 per cent.

The 201-bed hospital, first announced in 2018 with an initial budget of $887 million, is planned as a replacement for the current Cowichan District Hospital.

The province said the budget is increasing "to reflect the updated post-tender budget." The projected opening date for the new hospital has been shifted to 2027 from the earlier planned date of 2026.

"We are experiencing supply chain challenges and labour shortages at projects across the capital plan, which is leading to increased costs and our changes to project delivery timelines," said Finance Minister Selina Robinson while announcing the budget surplus Nov. 25. "This is more acute on complex projects like the Cowichan Hospital."

A ministry spokesperson said that nearly 90 per cent of the increase stemmed from "changes in market conditions ... due to global inflation [and] labour shortages." Other factors include the rising costs of furniture, medical equipment, and other "owner cost increases."

The spokesperson also said the size of the planned building will increase 18 per cent to account for the Cowichan Valley's growing population.