Sunday 13 October 2019

Some costs of National Children's Hospital 'completely misestimated'

Work continues at the site of the new National Children’s Hospital (Brian Lawless/PA)
Work continues at the site of the new National Children’s Hospital (Brian Lawless/PA)
Laura Larkin

Laura Larkin

Health Minister Simon Harris has said some costings of the National Children's Hospital plans had been "clearly completely misestimated".

Mr Harris told the Dáil that the quantities of materials necessary to build the new hospital had not been calculated correctly.

He made the comments during statements over the escalating costs at the hospital.

The estimated cost of the new hospital, on the campus of St James's Hospital in Dublin, has risen from an original estimate of €650m to more than €1.7bn.

An initial report into the massive over-run for the children’s hospital budget raised questions about the role of the design team in the escalation, the Dáil has heard.

Earlier, it emerged that a report into the runaway budget found that the design team - made up of a number of professional services firms who are responsible for the design and costings of the landmark hospital - failed to raise the alarm about the looming over-run.

A significant proportion of the €450m increase can be traced in part to issues that emerged during the design process - including some €100m due to omissions and underestimation of materials needed - was also highlighted.

A preliminary investigation by Mazars delivered last December determines that the 56pc increase in construction in costs led to the cost per square meter for the new hospital jumping from €3,600 to €5,600. 

The report examined a number of issues including the cost increases and the reporting of those increases.  Among them was that the final design added some €94m in costs to the original budget due to increases in materials needed and detail emerging on the quality of supplies needed.

Another €21m emerged due to “omissions”, while some €50m was not achieved in savings as projected.

The report also found that while there was a delay in the so-called Guaranteed Maximum Price (GMP) process - the means by which the final construction costs were reached - but this did not contribute to the cost escalation. It did however delay the true escalation emergin

Mr Harris faced further questions on the debacle and said that he did not wish to pre-empt the report into the overrun but that that report would look at issues in relation to the design team.

He said the report found things that “quite frankly did not go right in relation to the design” and the PwC report will look into that more detail, he said.

Mr Harris also moved to assure TDs that any entity or company found to have acted inappropriately would be pursued with the “full vigour” of the law.

He later admitted that the elasticity of the budget for the second phase of works on the hospital and an estimation in the quantity of materials needed to build the hospital which were “not realistic” were factors that played into the over-run.

Fianna Fáil’s Health Spokesperson Stephen Donnelly pressed the minister on why it was not brought to his attention that the project was “spiralling out of control” when it was raised “again, and again” by those involved in the project.  Concerns raised by the National Paediatric Children’s Hospital Board (NPHDB) about the capability of the lead contractor, BAM, were also raised during the latest Dáil debate on the issue.

Last September the board raised concerns that the company had “fell short of what was expected” according to minutes of  a board meeting.

Labour Party TD Alan Kelly questioned why the “serious concerns” raised at board level were not brought to the minister’s attention at that time. Mr Harris issued a fresh defense of his handling of the cost escalation and the way in which he alerted government about it, saying he fully rebuts that partial information leads to better decision making.

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