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The building site at the site of the new Children's Hospital.
The building site at the site of the new Children's Hospital.
Image: Sam Boal

BAM 'welcomes' legal action taken against it by board of National Children's Hospital

The dispute relates around the validity of a contract to commence Phase B of construction of the Children’s Hospital without a design.
Apr 2nd 2020, 10:15 PM 57,356 64

CONSTRUCTION COMPANY BAM has said that it welcomes the fact that legal proceedings have been issued against it by the board of the National Children’s Hospital, adding that it will lead to “proper and careful analysis, and ultimately resolution”.

The dispute centres around the requirements in the contract to have a design in place before construction, which BAM claims has still not been completed.

The National Paediatric Hospital Development Board (NPHDB) issued legal proceedings against BAM in the High Court yesterday.

BAM has been tasked with constructing the new children’s hospital, which has been dogged by controversy over where it would be built, what it would be called, and after it was revealed that costs had ballooned to double the original estimate.

The project was expected to cost €983 million in 2017; Taoiseach Leo Varadkar told the Dáil in late 2018 that it was expected to cost €1.4 billion; it’s now expected to cost €1.73 billion – although it’s been said that the total cost of the project is “highly unlikely” to come in under €2 billion. 

There had been calls to halt construction and re-tender the contract due to the massive cost overruns, but this was said to be impractical as work had already begun, and retendering could result in an even larger overrun.

In a statement in response to the legal proceedings being issued, BAM said that they were aware of legal action “seeking declaratory relief in respect of the issue of the validity of the instruction issued by the NPHDB in January 2019 for BAM to commence Phase B of the NCH project”.

The statement continued:

“This issue arises primarily due to the fact that the contract, which was signed in August 2017, required NPHDB to provide BAM with a complete fully coordinated design before the instruction would be issued.

In the event, as is recognised by the PWC Report commissioned by government to investigate the issue of cost overruns on the project, the NPHDB issued the instruction to commence Phase B despite the fact that the design was not provided as required by the contract. 

“At today’s date, the design is still not complete.”

Last year,  the Secretary General of the Department of Public Expenditure and Reform Robert Watt said that large-scale State projects include a significant budget for risks so that cost estimates are realistic and don’t overrun. 

In the future, Watt said the State will no longer “commit to projects until the design and price are clear” adding that projects should not be announced based on “guesstimates” of what they will cost.

The BAM statement said: “As the parties have been unable to agree on this issue, BAM welcomes the fact that the issue will now be subject to a proper and careful analysis, and ultimately resolution, by the courts.

“BAM agrees that it is important that these issues be resolved so that all parties can concentrate on the delivery of this vital project to the highest standard in the shortest possible period,” it concluded.

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Gráinne Ní Aodha

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