Steindler North Liberty campus facing $10M cost overrun

NORTH LIBERTY — Inflation, labor costs and supply chain issues have upped the total cost and expanded the construction timeline for a new Steindler North Liberty Ambulatory Surgery Center planned near where the University of Iowa is building its new hospital — which also recently saw substantial cost increases.

The State Health Facilities Council this week unanimously approved a request from Steindler to increase its total project budget from $19.2 million to $29.3 million and to extend its construction timeline a year — from November 2023 to November 2024.

“At the time of initial State Health Facilities Council approval, while (Steindler North Liberty Ambulatory Surgery Center, or NLASC for short) did anticipate inflation and did reserve associated contingency, no one in the industry anticipated the magnitude with which these factors would affect construction given U.S. and world events,” according to Steindler’s application.

Referencing the war between Russia and Ukraine — the No. 3 and No. 4 global aluminum producers — Steindler’s application noted its price escalation “is similar to what UIHC reported in their request for an extension, as well as what similar projects are reporting across the U.S. and globally.”

Health care hub

UI Health Care in August sought similar budget-hike approval from the state — which a year earlier granted it a “certificate of need” for the 300,000-square-foot hospital portion of UIHC’s new $395 million North Liberty campus.

The state approval upped the UIHC project’s total cost 33 percent to $525.6 million.

But while UIHC’s cost overrun application reported no anticipated construction delays — with completion still tracking for December 2024 — Steindler expects its project now will wrap a year later than planned, abutting its debut with the UIHC project taking shape near the Highway 965 and Forevergreen Road intersection.

The Steindler North Liberty Ambulatory Surgery Center is planned about 1.5 miles west of the UIHC site — situating that stretch of North Liberty to become a hub for health care generally and orthopedics specifically, with the Iowa City-based Steindler Orthopedic Clinic helping to develop the new 36-acre campus and UIHC orthopedics planning to relocate to UI’s North Liberty site.

Inflation implications

Apart from its cost increase and construction delays, the Steindler project isn’t changing the scope and size of its 35,880-square-foot ambulatory surgery center — involving six larger-than-usual operating rooms “to permit the use of modern orthopedic robotic surgery equipment.”

“The number of ORs, total square footage of program space, and type and quantity of services to be provided remain the same,” according to its overrun application.

The Steindler application cataloged progress on the project — including hiring Miron Construction Co. as its construction-manager-at-risk. With Miron on board and inflation concerns mounting, project officials are negotiating a $25 million “cap” on construction costs — about $10.1 million above the original $14.9 million construction budget.

Because that puts Miron on the hook for any spending over $25 million, according to the application, the construction manager has advised “not starting construction until March 2023 to limit the adverse effect on construction cost by starting construction during winter months.”

“The third factor contributing to the revised completion date is the availability of building materials,” according to the application, noting project officials “are being quoted 70 weeks for electric switchgear from the time of order.”

As a result, according to the application, “an 18-month construction period will now take nearly two years based on delaying the start of construction to spring 2023.”

Project officials outlined specific aspects of the project affected by inflation, supply chain and labor shortage issues: heating, ventilation and air-conditioning; electrical work; construction management, supervision, engineering, testing and inspection; and concrete, steel, wood and labor expenses.

“Most HVAC items are made of copper, aluminum, and steel, all of which have experienced significant inflation (some approaching 40 percent),” according to the application. “Electrical components have had similar increases.”

To date, Steindler has spent $1.1 million on the project and expects to realize its anticipated March construction start date.

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