Children’s hospital: The meetings, the memos and the Minister - who knew what when?
Timeline: Project had an overrun of €61m five months after getting the green light
Work continues at the site of the new national children’s hospital at St James’s Hospital in Dublin. Photograph: Brian Lawless/PA Wire
Just after lunch on Wednesday, June 20th, last year, the project director of the new national children’s hospital arrived at the Department of Health’s former headquarters at Hawkins House to deliver some concerning news.
John Pollock told four of the most senior health service chiefs, from both the Department of Health and the HSE, that the new national children’s hospital – one of the Government’s main capital projects – was facing “cost challenges and pressures”.
He said there had been an unanticipated and continuing rise in construction inflation which was at that stage hitting 9 per cent. He also said there were new costs from “gaps” arising from a partial design of the hospital in 2016. There were delays that added four months to the building timeframe, he said, and there was also “seeming resistance” on the part of contractors to engage meaningfully and helpfully to secure greater value from the engineering process.
The four health service officials in the room were Jim Breslin, the secretary general of the Department of Health, John Connaghan, the then director general of the HSE, Tracey Conroy, assistant secretary in the Department of Health, and Dean Sullivan, the deputy director general for strategy at the HSE.
Together they made up the Children’s Hospital Project and Programme Board, which had been established by the Government to ensure that the project was delivered against agreed parameters in relation to timeline, scope and funding. The official minutes of the meeting say that on foot of Pollock’s warning there was “a lengthy discussion” on the cost increases and how they could be offset. However, almost from the time of the Cabinet decision to give it the go-ahead, the children’s hospital project had faced financial pressures.
The children’s hospital project had a troubled history, but in April 2017 the Cabinet had given the green light for it to proceed at a site at St James’s Hospital in Dublin with a budget of €983 million.
By September 2017 the project was looking at an overrun of about €61 million, including about €20 million for new fire safety systems.
In October 2017 a separate lower-level oversight body – known as the steering group – for the project discussed options for reducing this funding deficit, including scaling back the hospital or reallocating money from other health developments.
In December, the Children’s Hospital Project and Programme Board reviewed and rejected a “backstop” plan to generate savings of €61 million. However, it also discussed seeking to make more modest savings by scaling back some parts of the hospital not directly linked to patient care or not needed right from its opening day.
Documents drawn up by the steering group in the early part of 2018 also suggest there were growing concerns about costs.
In March, Pollock told the group that pricing agreements with contractors were “unsatisfactory”.
Then on April 23rd, he said there were “pricing discrepancies” between quantity surveyors and the contractors. These discrepancies were to go to an independent adjudicator.
While top level health service officials were told in June that there were growing concerns about the cost of the new hospital, Minister for Heath Simon Harris was not informed.
The Minister said it was only at the end of August that he received details on the issue.
A spokeswoman for the Minister told The Irish Times an August 27th note “set out a possible increase in the construction budget but advised that there was still work to be done and a process to be concluded to reach a final figure”.
On Wednesday, September 19th, members of the Children’s Hospital Project and Programme Board held detailed discussions about the costs and raised concerns that construction costs were “trending very significantly over budget”.
According to the minutes of this meeting, for the first time the enormous scale of the potential overrun began to become clear. The board was told that the building costs were €191 million above the level notified to Cabinet just in excess of 18 months earlier.
The minutes say Pollock “outlined the factors that are contributing to the significant emerging increase in cost over budget – €100 million arising from programme alignment (€20 million), underachievement of value engineering savings (€45 million), additional fire sprinklers (€35 million). In addition, scope change, design development and gaps/omissions identified in design are estimated at a further €91 million. €20 million of this has been adjudicated on by the independent expert.”
“There was a discussion in relation to the overall responsibility of National Paediatric Hospital Development Board (NPHDB) to control project scope and design changes eg authorising changes arising through user engagement,” according to the minutes.
“JP (John Pollock) reported that NPHDB is currently interrogating the design team’s report and are not in full agreement with all changes in scope made by the design team (approx €2.5 million of scope change has been formally agreed by NPHDB).
“Some cost creep arises from issues such as changes to doors/materials/partitions/socket requirements and M&E [mechanical and electrical] items missed in the bill of quantities. JB (Jim Breslin) emphasised that NPHDB needs to consider mitigation to bring the project back within cost parameters.”
And Mr Pollock also said the main contractor had submitted additional cost claims for a further €200 million.
A spokeswoman for the Minister said the final position was not made known to any member of Government until November 9th.
However, while the final cost estimates may not have been known until November, there were indicative figures available several weeks earlier.