The saga of the Yukon's new hospitals continues.

The siding on the new Dawson City hospital will have to be replaced because the specially designed product has begun falling off.

The cement product had been chosen because it met the requirements of Dawson's heritage advisory committee and is non-combustible, Val Pike, a spokesperson for the Yukon Hospital Corp., said today.

"Once we started putting the siding on the building, it was discovered that the product wasn't suitable for the fluctuations in climate in Dawson and the product started to fall off once it was installed,” Pike told the Star.

The product is now being removed. The corporation, in collaboration with the heritage advisory committee, is looking at replacement options.

Pike said the corporation hopes to have the new product installed in the next month, and it shouldn't impact the opening of the hospital in the fall.

The corporation doesn't know at this point how much the debacle will cost; officials are looking into what may be covered under the product warranty, Pike said.

The new hospitals in Dawson and Watson Lake have been the subject of continued controversy since a scathing report by the Auditor General highlighted shoddy planning that resulted in cost overruns and delays.

The Dawson hospital was originally set to cost $26.5 million, an estimate that has since risen to $31.8 million now, including equipment and interest costs.

The hospital was originally scheduled to open in the fall of 2012. It is now expected to open in the fall of 2013.

Sandy Silver, the Liberal MLA for the Klondike, said today he'd been hearing rumours about issues with the siding for some time.

"From the beginning, the two hospital projects were politically motivated,” he said.

"When you have something politically motivated to start, you're not going to have proper planning through a needs assessment.

"We know this as well through that Auditor General of Canada's report,” Silver said.

"Now, unfortunately, what we're seeing is proof of this.

"It just doesn't make any sense that a properly planned project would have a siding type that A) doesn't fit the climate or maybe B) fit the heritage bylaws,” he said.

These issues will continue to come up, he predicted, and it's because politicians were permitted to make decisions on a political whim.

"Hopefully, moving forward, we can now focus in on a community needs assessment and actually get a hospital that fits our community, which would be great.

"But also, I hope we learn our lesson here for those larger projects.”