The body overseeing the development of the new National Children’s Hospital could be entitled to more than €40 million in liquidated damages from construction company Bam due to the delays in completing the project, politicians are to be told.
On Wednesday, the Oireachtas health committee will hear from Children’s Health Ireland (CHI) and the National Paediatric Hospital Development Board (NPHDB) relating to the €2.2 billion hospital, which has been beset by cost overruns and delays.
The hospital is due for substantial completion on April 30th, the 18th such date put forward by the contractor.
In its opening statement to politicians, the NPHDB said it has exercised “all rights and remedies” available under the contract to compel Bam to achieve substantial completion by the target date, including withholding 15 per cent of payments due on a number of occasions.
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“As the ER [Employer’s Representative] has not certified that the works have reached substantial completion on the contractual date, the NPHDB has previously issued an employer’s claim under the contract to deduct liquidated damages,” David Gunning, chief officer of the body, will set out.
“Based on BAM’s forecasted completion date of 30th April 2026, the NPHDB has estimated potential liquidated damages for the works to be €40,207,143.”
Liquidated damages refers to pre-agreed compensation payable when terms of a contract are breached. A spokesman for Bam Ireland said it “does not recognise the figure referenced in relation to potential liquidated damages”.
Gunning will tell politicians that Bam must now deliver more than 400 rooms a week in order to meet the substantial completion deadline.
As of March 20th, 3,726 of the 5,728 rooms have been offered by Bam to the design team for validation to ensure it complies with contract standards. Currently, just under half of total rooms have been deemed to be of standard, according to Gunning.
He added that the body and the ER will not accept the hospital if it is “not in compliance with statutory regulations and standards”.
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“The NPHDB and CHI have undertaken due diligence studies and considered lessons learnt from other large international and complex hospitals,” he said.
“These reviews have evidenced that unresolved compliance issues can cause operational disruptions and safety risks for patients.”
The relationship between the NPHDB and Bam has grown increasingly fractious in recent years.
In a statement, Bam said: “There is an ongoing contractual process dealing with change, extensions of time, contract administration, and the final value of the project.”
It said additional sums of more than €140 million have been deemed due to Bam through the contract’s dispute resolution process, along with time extensions of more than 300 days.
A spokesman added that it was “not accurate or constructive” to say Bam had continuously missed completion dates.
“The programme has evolved in response to instructed design changes and additional scope during the project. Each updated completion date reflects these new changes.”
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At Wednesday’s meeting, Lucy Nugent, chief executive of CHI, will tell politicians that she understands the “widespread concern” around the hospital’s opening date.
“No one wants this hospital more than the staff who are on our current sites. If you are to ask me ‘when will the new hospital open’ – my answer, from a CHI perspective, remains, when it is safe to do so and approximately seven months after we ‘receive the keys’,” her opening statement said.
Bam was contacted for comment.
