Friday 22 March 2019

'Powerless board and red tape' saw costs spiral

Spurned developer claims State procurement process over children's hospital is a 'disgrace' been hit by

An artist's impression of the National Children’s Hospital
An artist's impression of the National Children’s Hospital
Maeve Sheehan

Maeve Sheehan

The property developer who offered the Government a free site for a children's hospital 15 years ago has blamed the procurement processes for the escalating costs of building the facility at St James Hospital.

Noel Smyth, a lawyer and one of Dublin's largest property investors, said the costs which are now likely to exceed €2bn were an "absolute disgrace".

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As a developer, he said he cannot "spend a pound" without "getting complete and total value". "If something moves on a chart or somebody misses a timetable or a deadline, or if somebody wants to change a design. That can open the door for people to charge you more money," he said.

"In a procurement system, you don't have the same shareholder requirement, somebody holding on to the reins."

He believed the National Children's Hospital development board had little or no real influence.

"Unfortunately, the board with respect to the people giving up their time and energy, have about as much power as a dud battery because ultimately at the end of the day, it goes back into the minister and more likely back into the civil servants," he said.

Mr Smyth's comments follow a further week of turmoil over the escalating costs of the development project. The Public Accounts Committee was told last week that the final cost was "highly unlikely" to be less than €2bn. The chairman of the National Children's Hospital Development Board, Tom Costello, resigned from his role yesterday.

Costs have risen from €983m in February 2017 to €1.433bn and currently stand at €1.73bn. The Government is spending a further €450,000 on a review of how the costs escalated.

"Before you do anything, somebody gets a bill of quantities which prices everything down, the door, the nail, the window. Every single inch of it," said Mr Smyth.

He said construction inflation has not gone "through the roof". "But what can happen is that from people involved can decide they want to move a wall, or they want to move a stairs, and that is great fun for the builder [because of the extra costs]. If someone drills into it, you will find out that inflation is probably the smallest part of the costs that have been going on here," he said.

"As I said, it will go back to one thing. When you go into procurement, who is in charge? Who says, no you are not getting that?"

The reporting lines for the children's project have been criticised at Oireachtas meetings, with members asking who was in charge. The National Children's Hospital Development Board reports to the Children's Hospital Project and Programme Steering Committee, chaired by a Health Service Executive manager, which in turn reports to the Children's Hospital Project and Programme Board, which is chaired by the Department of Health's secretary general.

It was reported last week that the Department of Public Expenditure and Reform (DPER) raised concerns nearly two years ago about governance arrangements for the development of the hospital. The Public Accounts Committee will question officials from the Department of Public Expenditure.

Smyth put together a plan to build a children's hospital on a not-for-profit basis in 2003, offering a free site to the Government on the Naas Road, with philanthropic and European Investment Bank funding. He led a consortium that offered to donate a site near Newlands Cross in Dublin and to build at cost price. Consultants including architects Scott Tallon Walker, legal firms and KPMG offered professional services at cost. The plan included co-locating a maternity hospital and included 1,000 beds coming in at a cost of €600m for the building and infrastructure, including car parks and a heli-pad. The option was turned down in favour of a site on at the Mater Hospital in the north inner city, a location the planning authorities ultimately rejected.

"The disappointment from my point of view is that there is a certain immaturity in our country still, that when people offer to do things, they ask 'what's in it for him?' People do it out of a genuine interest in helping people," he said.

"We kept it alive for a number of years after that but in the end we just got rid of it, there was no point in holding on to it," said Mr Smyth said.

He sold the site in the past two years.

Sunday Independent

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