UIHC seeking construction audit for largest project in state history

IOWA CITY — With Board of Regents permission to start work on the first of three phases for its more than $1.5 billion patient tower, University of Iowa Health Care is seeking an outside firm to audit in real time what is expected to be the largest construction project in state history.

“The successful supplier will prepare and submit reports and executive summaries monthly during the construction to the chief audit executive of the Iowa Board of Regents,” according to a request for qualifications for a “tower development construction audit,” requiring audit reports summarizing findings and recommendations also go to the board’s executive director and senior UI and UIHC administrators.

The university issued the tower audit RFQ a week before regents cautiously agreed to allow UIHC to spend $72.5 million of its earnings and equity on several early phase projects paving the way for the future patient care tower.

In discussing that early-phase spending with regents, UIHC Associate Vice President and CEO of the clinical enterprise Brad Haws acknowledged that federal funding unknowns — including threats to the university’s hundreds of millions in Medicaid-related directed payment revenue — could upend tower plans.

“By November, hopefully we'll know more about what's happening with the federal funding and those kinds of things, then we'll have to sit down with this group and have a really honest conversation about the feasibility of the entire project and whether that still fits within our capital plans and affordability,” Haws said, vowing this early-phase work is necessary regardless of the size and scope of the project they end up pursuing.

“I don't think if we had a federal change in circumstances that we would — if we had to pause or delay — that we would look back and say that was money misspent,” he said.

The three phases of what preliminarily has been pitched as an 842,000-square-foot patient tower costing as much as $2.2 billion, with equipment costs, are expected to begin this summer and continue through 2032.

That future spending adds to the $137.2 million UIHC already has spent on aspects of the project that didn’t require board approval — like planning, pre-design services, feasibility studies, and construction cost estimating, according to board documents.

The total also doesn’t include campus construction underway to make space for the tower — like a new $17.5 million road, $75 million parking ramp, $249 million academic health sciences building, and a new water tower.

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‘Largest project ever’

Regents were cautious in approving the early tower-related spending at their recent meeting June 11 — with regent Christine Hensley underscoring how “important it is that we are able to demonstrate to the public the amount of money that’s being requested for the tower. I can’t emphasis that enough, that being the largest project ever.”

Regent Kurt Tjaden also confirmed before signing off that this early money won’t go to waste.

“If, for some reason in November we were not to proceed, what I’m hearing you saying is we would spend this $72 million regardless,” he said.

But UIHC officials the next day remained confident of the project’s future in answering questions from prospective auditors interested in responding to the RFQ.

“Does the University of Iowa anticipate any issues with receiving approval for the different phases of the project?” one questioner asked.

“No,” officials responded.

Other questions included one asking whether the audit firm will communicate directly with the construction manager — JE Dunn Construction Company — or go through a university intermediary.

“The communication will be through UI Design and Construction's construction project manager,” UI officials responded.

Prospective auditors asked whether UI has an incumbent audit firm currently providing services — to which UIHC reported using multiple firms in the past, but seeking “the best fit for this project.”

When asked about a budget for the tower’s construction audit, the university said it should not exceed $750,000.

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‘Cost verification’

For the recent construction of a $525.6 million, 469,000-square-foot orthopedic hospital in North Liberty — its first new hospital away from the main Iowa City campus — UIHC used Baker Tilly LLP of Madison to perform both a construction audit and project controls assessment.

An agreement paid Baker Tilly $352,617 through October 2025 — with a 2023 mid-construction audit report finding not just overcharges and billing variances but big-picture issues, including a misunderstanding of who was in charge.

“A significant challenge on this project is the communication between UI Design & Construction and UIHC Capital Management,” according to a 2023 Baker Tilly assessment. “The key disagreement between the two departments is who the true owner of the project is. While UIHC is the ultimate owner of the facility; the (construction manager) contract with JE Dunn is with UI D & C and not UIHC, meaning UI D & C is the primary owner of the delivery of this project.”

That assessment also found late design changes contributed to budget increases.

“In our effort to determine the root cause of the project's increased budget, our initial approach was to focus on design changes,” Baker Tilly reported. “Specifically increased square footage of the facility, added late in the project life cycle, likely contributed to budget increases.”

Breaking down its service expectations for a new patient tower construction audit, officials highlighted four key components.

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com