The process to replace Halifax's ailing Centennial Building will begin in the new year.

A request for proposals for the planning and design phase will go out in January, the Nova Scotia government announced Wednesday.

"The government of Nova Scotia is funding the planning and design to move forward with the first phase of major infrastructure upgrades," Health Minister Maureen MacDonald told reporters at a news conference.

The Centennial Building — part of the Queen Elizabeth II Health Sciences Centre's Victoria General site — is 44 years old and has a number of problems, including leaks and water quality issues.

The province said 210 inpatient beds would have to be transferred to other hospitals in the next few years.

The plan is to eventually demolish the Centennial Building and move services to the newer Halifax Infirmary several blocks away, which officials said was built to accommodate a four- or five-storey expansion.

"It makes sense for us to look at that site, where we have the space, we've got the footings put in," said Chris Power, the CEO of the Capital District Health Authority.

"I think the caution for us is to say how many floors it's going to be or what it's going to look like in the absence of really doing the planning."

Expansion also planned for Dartmouth General

CBC News has learned the provincial NDP government will also announce planning for an expansion at the Dartmouth General Hospital on Friday.

It's unclear what it will cost to replace the Centennial Building or when it will happen. The province said further study is needed to answer those questions and determine whether expanding the Halifax Infirmary is the right move.

A request for proposals will be issued next month and awarded within six to eight weeks. An initial planning and design report is expected in the summer, at an estimated cost of about $1 million.

Daniel O'Brien, the chair of the board of directors for the Capital District Health Authority, praised the government's prudence and noted the cost overruns that occurred during the construction of a new hospital in Truro.

Poor planning was blamed for an $81-million increase in the budget for that project.

"Hospitals are, by definition, extraordinarily expensive to the public purse and to donors," O'Brien told CBC News.

"The government wisely wishes to avoid escalation of costs and they want to nail the estimates as the best they can."

The announcement about the Centennial Building comes two days before Capital Health must submit plans to cut $32 million, or three per cent, of next year's budget to meet the government's austerity measures.