Monday 18 March 2019

Changing Children's Hospital contractor will cost €150m and lead to 18-month delay

Building firm offers to pull out of Children's Hospital contract

Visit: Health Minister Simon Harris with Barretstown campers Kitty Burke (9) and James Byrne (14) to mark International Childhood Cancer Day. Photo: Sasko Laszarov/Photocall Ireland
Visit: Health Minister Simon Harris with Barretstown campers Kitty Burke (9) and James Byrne (14) to mark International Childhood Cancer Day. Photo: Sasko Laszarov/Photocall Ireland

Laura Larkin and Kevin Doyle

A change of contractor for the building of the National Children's Hospital would cost at least €150m and see the project delayed by another 18 months.

The main contractor for the new hospital, BAM, has offered to pull out of the contract if that is the wish of the board leading the development of the hospital.

Last night, the National Paediatric Hospital Development Board (NPHDB) remained silent on the prospect of ending the contract, saying only it is committed to delivering the hospital. However, all the indications are that the board will not look to change tack.

Opposition TDs have urged the Government to consider the offer in order to determine if the move would lead to savings for the taxpayer.

However, sources told the Irish Independent that changing direction now could add "at least €150m to the cost", aside from any potential settlement with BAM. It would also delay the project by up to 18 months.

Government sources said the Cabinet was presented with a series of options in December as a result of the cost overruns and decided to proceed.

"Nothing has changed in the interim. The information available to ministers is the same as it was in December," a source said.

Officials in the Department of Health are not interpreting BAM's willingness to step back as a "benign offer".

They believe some sort of pay-off would be required to end the contract.

A well-placed source said that BAM "are not the bulk of the problem here", noting that only €60m of the current €450m overrun is directly associated with the builder.

The €150m in additional cost would take in inflationary costs and other extra costs.

It is understood the company, in a private letter to the Taoiseach, also called for the record of the Dáil to be corrected and for him to apologise for his comments about firms who he claimed "low-balled" when bidding for State contracts. The firm has asked Mr Varadkar to clarify that he was not referring to BAM.

In a statement, CEO of BAM Ireland Theo Cullinane said the firm did not "benefit inappropriately from the tender process" and it will fully engage with PwC, which is conducting a review into how the overrun emerged.

Mr Cullinane said the firm was advising the hospital board "if it would prefer to opt out of this contract and procure the work in some other way, then BAM will co-operate with them to facilitate this option".

The firm did not respond to further queries, including if the company would waive any penalties it may be entitled to pursue if its contract for the hospital is ended.

The company also said that it will continue its commitment to the hospital, but added "the confidence of all parties is a vital requirement".

A spokesperson for Mr Varadkar said: "The Taoiseach did not reference any specific company in the Dáil.

"The Government is not satisfied with several aspects of how the new National Children's Hospital project has been delivered. There is understandable public concern about the matter. For this reason, PwC has been commissioned to carry out an independent examination. He hopes and trusts that all parties and contractors will co-operate fully with it."

The PwC report is due to be completed by March 29.

Labour TD Alan Kelly said the Government should "strongly consider" the offer and said an evaluation of pursuing that option could be done without delaying the project. Sinn Féin also said an emergency meeting with the board, the construction company and the design team should be held with no option taken off the table.

The latest turn in the scandal will see scrutiny continue to ramp up on the Government ahead of a motion of no confidence in Simon Harris, which will be debated next week.

The motion tabled by Sinn Féin will not gain enough support as Fianna Fáil has said it will abstain, branding the motion a political stunt by Mary Lou McDonald's party.

It also served to spark fresh calls in some quarters for the Government to consider moving the hospital to a greenfield site. Independent TDs, including Mattie McGrath, called for the relocation of the hospital to be reconsidered.

Irish Independent

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