Children’s hospital board considered terminating BAM contract amid Covid-19 row

Dispute arose over company’s refusal to resume work on site after restrictions eased

The board developing the €1.7 billion National Children’s Hospital considered terminating its contract with BAM at the height of a bitter dispute over the company’s refusal to resume work on the site after Covid-19 restrictions were eased this summer.

The chief officer of the National Paediatric Hospital Development Board (NPHDB), David Gunning told the Oireachtas health committee on Wednesday that it reviewed all options available to it during the dispute "right through to the termination option".

Work on the site had halted due to a dispute centred on the costs of resuming work under Covid-19 restrictions, and only resumed following an intervention from Taoiseach Micheál Martin, who said he was “angry” about the delay.

On Wednesday, Mr Gunning told the health committee that the board’s “intention was to refer the question of termination to conciliation”, in line with agreed procedures under the deal to develop the project, but that this was dropped after the contractor agreed to return to the site.

He said that at the time BAM was “extremely reluctant” to return to work on the site, and requested additional payments.

TDs were told that there are currently more than 600 claims for extra costs at the project, for a total amount in excess of €200 million. He said some claims related to tens of millions of euros, and while there has been an effort to address them, only a “handful of these have been resolved”.

BAM ‘underperforming’

Mr Gunning could not provide revised timelines for the completion or total cost of the project to TDs, but conceded there is “no expectation” the targeted completion date of August 2022 will be met.

He added that there are “considerable cost pressures” and that “time on any project tends to impact costs, and this project will not be an exception to that particular issue”. An update on both timing and costs is due in the first quarter of 2021.

Mr Gunning told the committee that BAM “has been underperforming as regards project execution and has been extremely assertive as regards claims”, and that there was no “valid work programme” agreed for the project.

The committee also heard that some €15 million has been set aside to meet legal and other fees associated with the project, a figure that was “considerably higher” than anticipated.

In a statement issued on Wednesday, BAM said it is “fully committed” to delivering the project, and disputed several issues raised at committee. The company argued it has “not received a fully complete, co-ordinated design for the project” and that new amendments are being added to the design “all the time”. It said that it was required to notify the board whenever an event arose which might give rise to additional costs.

“Therefore it is hardly surprising that there are hundreds of notifications from BAM and its major subcontractors of potential additional costs/delays.”

Technical issues

BAM also criticised the NPHDB for its compliance with several other technical issues.

It said that the impression was given that it has no work programme, but it has “several programmes and has updated them every month”, and that each has a specified end date. It said it disagrees with the contention that work programmes are “non compliant”.

The company said: “It has not been explained what specific provisions of the contract prevent it from being included in the Covid compensation arrangements.”