Treasurer not ready to 'put up white flag' on troubled hospital's $3.2b budget

The construction of a new hospital, originally budgeted at $3.2 billion, is facing predictions of a cost blowout.

SA government ministers say the budget allocated to the project is under pressure.

Lendlease is expected to provide a final price by the end of the year.

SA Treasurer Tom Koutsantonis says he is "not going to surrender or put up the white flag just yet" on the budget for the new Women's and Children's Hospital, after renewed warnings about cost overruns on the $3.2 billion health project.

It has now been four years since the Malinauskas government revealed it would shift the new hospital build to the Thebarton Police Barracks site on Port Road, scrapping the former Marshall Liberal government's plan to build it on a smaller parcel of land immediately west of the Royal Adelaide Hospital.

The project was allocated $3.2 billion and scheduled for completion in 2031.

Following persistent speculation about a major cost blowout, the project's managing contractor Lendlease is set to give the state government a final price for the hospital build by the "end of this year, or some time around the start of next year", according to Health Minister Blair Boyer.

"Once we've got it, then the government then has to make a decision on whether we increase that $3.2 billion budget," Mr Boyer told 891 ABC Adelaide.

The project's schematic design — a detailed, room-by-room outline of the new hospital — was completed "in the last couple of weeks", the health minister said.

Asked if he could say $3.2 billion is "achievable", Mr Boyer said: "No I can't."

"It is absolutely a build that is under a lot of pressure, it is under pressure like other hospital builds right around the world," he said.

Those pressures were underscored by an auditor-general report tabled in parliament on Tuesday that highlighted a 3.2 per cent increase in non-residential building construction costs in SA over the last year.

"Some key project elements remain unresolved," the auditor-general said of the new hospital, "including the budget impacts of the final schematic design and the appointment of a major construction contractor."

"Until these matters are finalised, the full cost of delivering the project remains uncertain, increasing the risk that the current budget may not be sufficient."

Mr Koutsantonis said he also had concerns about the Women's and Children's budget.

But the treasurer pushed back against speculation the cost could escalate to $5 billion, saying: "No-one's ever said that number to me."

"My message to Lendlease, my message to all the contractors here is the government is sticking to its guns, we want this project delivered," he said.

"Now I understand it's under pressure, I understand there's been escalation, but I am not going to surrender or put up the white flag just yet.

"I want this project delivered on time and on budget."

Shadow Treasurer Ben Hood said the hospital's budget was set four years ago and there was still no builder.

"It's all history repeating," he told 891 ABC Adelaide.

The new RAH was costed at $1.7 billion when it was unveiled by the Rann government in 2007, but rose to $2.4 billion by the time it opened in 2017 — a year behind schedule.