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The building site of the new National Children's Hospital. NPHDB
cost overruns

Some contractor claims for new children's hospital not under board's control, committee to hear

The fact some measures of the project remain uncosted is ‘laughable’ says Labour’s Alan Kelly.

SOME OF THE residual costs relating to the building of the National Children’s Hospital are not under the control of the National Paediatric Hospital Development Board, an Oireachtas committee will hear today.

Fred Barry, Chair of the NPHDB will tell the health committee today that while the approved budget for the new children’s hospital is being met, there are a number of “residual risks” which are uncosted. 

In his opening statement, Barry sets out that the government authorised the NPHDB to proceed with the main construction works late last year.

At the time, there were calls from some members of the Dáil, including current MEP Mick Wallace, to halt construction and re-tender the contract due to the massive cost overruns.

However, after the government agreed to what is called a “Guaranteed Maximum Price” (GMP) with contractor BAM it was decided to press ahead with the project. The estimated cost is currently €1.73 billion.

“The investment decision approved at the time was exclusive of residual risks as was communicated at the time of approval. These exceptions were also set out within the PwC report published in April of this year,” Barry will say.

He also pointed out that the PwC report warned that “some of these risks are under our control and some are not”. 

While the NPHDB says it is “actively managing” the costs that are under its control, they can only monitor “those that are not”. 

Giving an example of contractor claims, Barry states that these are a feature of most construction contracts, big and small, including this one.

“We are organised to ensure timely and evidenced responses to claims as they arise and are defending the public interest robustly. Contractor claims haven’t had a material impact on the GMP to date,” he says in his statement. 

Chair of the Public Accounts Committee (PAC) Sean Fleming has said he and his colleagues remain “unconvinced” that there are adequate cost controls when it comes to the new hospital. 

Fleming told that there “hasn’t been any public control or discussion” about the costs that were not contained in the original budget.

Health and PAC member Labour’s Alan Kelly said the public is being conditioned for what’s to come, stating that there is no real way to predict the final cost of the project as it stands.

“The fact that they  [NPHDB] are now trying to box off what are the costs that they’ve already spoken about versus costs that now they won’t know about until the actual project is finished is frankly laughable,” he said.

“When it comes to the taxpayer, it’s like saying basically, we know what it’s going to cost to build the house, but we don’t know about what the garage and landscape is going to cost, it is ridiculous,” said Kelly.

He said the health committee as well as the PAC is going to “tease out” issues in the days and weeks to come. 

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