“Velve” and Stradiņa Hospital have agreed on an increase of 17.6 million euros for the continuation of construction works

At the same time, the company notes that, although the increase in the amount of more than 17.65 million euros does not fully cover the increase in construction costs, “Velve” has agreed to take joint responsibility in this “force majeure” situation. Thus, both parties have agreed to compensate for the risks associated with the increase in construction costs.

Ekaterina Griga, member of the board of “Velves” owner “MN Holding”, states that in the complex and changing market conditions, when implementing such a large-scale project, the builders encountered a series of indexation methodology and guideline deficiencies. Their inconsistency with the real market situation and construction costs did not allow timely coordination of the total cost of the project, and due to potential risks, “Velve” was forced to “freeze” a series of future subcontractor contracts.

In order to find a solution for the continuation of the project, “Velve” agreed with the customer that it will perform an analysis of construction price changes, based on the inflation assessment of the Ministry of Economy, as well as on the actual situation on the market.

The representatives of PSKUS informed the LETA agency that the total cost of the construction works is set at 20.671 million euros including VAT, but considering that the reserve of construction works within the scope of the contract is 4.66 million euros including VAT, the contract price is increased by 16.012 million euros including VAT.

The representatives of PSKUS explained that, in general, the costs of construction works are increased by the amount specified by “Velves” without VAT, but at the same time they indicated that the existing contract has a reserve of construction volume in the amount of 5%, or 5.346 million euros with VAT, or 4.418 million euros without VAT.

As a result, by subtracting the mentioned amount of 4.418 million euros from the mentioned amount of “Velves” 17.651 million euros, the total amount is 13.236 million euros without VAT, or the specified 16.012 million euros with VAT, by which the value of the concluded construction contract is increased

PSKUS board member Agra Ločmele states that the continuation of the construction work of the second phase of building A is critically important for the development of the hospital and offering services to patients. The continuation of the second phase of the construction work of building A will give patients the opportunity to offer treatment services in modern facilities as early as the end of 2024, as well as not to lose the financing of the European Union funds attracted so far for the development of the building.

The departments that are currently located in the historical and Soviet-era hospital buildings – the Emergency Medical Center, the Women’s and Children’s Health Clinic, the Neurology Clinic, the Oral, Facial and Maxillofacial Surgery Clinic – are especially waiting for the completion of building A, Ločmele adds.

It was previously informed that, taking into account the unforeseen circumstances of global and regional force majeure (“force majeure”) – the war started by Russia in Ukraine – as a result of which the availability of construction raw materials was significantly limited and the industry experienced an unprecedented increase in prices, including labor and energy resources positions, the construction company “Velve” together with representatives of PSKUS, since May 2022, resolved the issues of the increase in the cost of the construction of the new building of the hospital and its compensation mechanism.

Amendments to the existing contract could be approved by the parties only after the report on the financing of the increase was reviewed by the government. The Cabinet of Ministers took note of the report submitted by PSKUS and supported it on March 14 this year.

Previously, in an interview with the LETA agency, Griga said that the offer for this procurement was prepared in 2019 based on the prices and construction costs of that time, the increase in price has reached 25% or 22.6 million euros.

On the other hand, PSKUS board member Agra Ločmele informed LETA agency on January 27 that PSKUS management has reached an agreement with “Velvi” on the principles and scope of the construction of the new building, and this is a compromise from both sides, “taking into account costs, work deadlines and the hospital’s capabilities “.

The construction work of the new A2 building is lagging behind the originally planned schedule, however, it has not been interrupted and continues, the hospital said. Currently, “Velve” is performing facade and building frame covering works.

The construction company “Velve” worked with a turnover of 68.774 million euros in 2021, which is 1.5% less than in 2020, while the company’s profit decreased 5.3 times and was 373,300 euros.

The company “Velve” was registered in 1992, and the share capital of the company is 1.423 million euros, according to “Firmas.lv” information. The sole owner of the company is the company “MN Holding”. The true beneficiary of the company is Ekaterina Nikulina.

PSKUS is a multi-profile hospital that provides full-scale emergency and planned medical assistance, as well as provides pre- and post-diploma education, conducts scientific research and ensures the testing and implementation of new treatment methods and technologies in Latvia. All capital shares of the hospital belong to the state, the holder of state capital shares is the Ministry of Health.