Children’s hospital: top health chiefs were told in September 2018 of €400m overrun

Officials discussed how ‘construction costing is trending very significantly over budget’

A view of the construction site of The National Children’s Hospital. File photograph: Tom Honan/The Irish Times

A view of the construction site of The National Children’s Hospital. File photograph: Tom Honan/The Irish Times

 

Senior officials in the Department of Health were aware in September 2018 that the potential cost overruns at the new national children’s hospital were close to €400 million, according to the minutes of a board overseeing the project.

The Government has consistently said Ministers only became aware of a €450 million overspend in November.

Minutes from the Children’s Hospital Project and Programme Board - the highest level of the various structures put in place to oversee the hospital development - also show senior officials in the department and the HSE had lengthy discussions in June 2018 about potential overruns at the new national children’s hospital.

The Children’s Hospital Programme and Project Board,which was chaired by the secretary general ofthe Department of Health Jim Breslin and included top level officials in the department and HSE, met on a quarterly basis to oversee the development of the facility.

The minutes show growing concerns over the rising costs from early summer 2018.

At the meeting of the board in September, officials discussed how “construction costing is trending very significantly over budget - estimated to be €191 million over the construction value notified to Government in April 2017.”

Contractor

It was noted separately that “the main contractor also submitted substantial additional cost claims to National Paediatric Hospital Development Board (NPHDB) in late August - €200 million over and above that as set out above.”

At this meeting, officials discussed how a different board had responsibility.

They noted it was the “overall responsibility of the National Paediatric Hospital Development Board to control project scope and design changes.”

The Labour Party health spokesman Alan Kelly said the minutes show it was “clear that officials in the Department of Health knew about the scale of this overspend since September 2018”.

“The Minister for Health has repeated over and over again that his Department wasn’t made aware of the full cost of the overrun until November 2018, we now know that this is not the case.”

“If officials in the Department of Health knew since September 2018 and a high-ranking official in the Department of Public Expenditure sat on the National Paediatric Hospital Development board, how can it be that no Ministers were informed until November 9th, 2018?

“This does not stack up!”

“Where has the political leadership from Harris and Donohoe been? How can there have been a complete lack of oversight from these two line Ministers overseeing one of the largest capital projects being carried out by the State?”

‘Significant concern’

The minutes state that Mr Breslin “expressed significant concern about the construction cost trend.”

Mr Breslin “emphasised that the National Paediatric Hospital Development Board needs to consider mitigation to bring the project back within cost parameters.”

The minutes also show concerns with the performance of the contractor for hospital project were raised.

“NPHDB board members were briefed on the overall capital costs, including the late submittals of claim, and a decision was made to notify the main contractor that their performance to date has delayed the overall project.”

It was also discussed how “a change in behaviour of the main contractor must occur.”

Furthermore, the NPHDB “will need to provide justification for all cost components in order for Government to have sufficient confidence in the project and process,” officials said.

Also present at that meeting were the assistant secretary in the Department of Health Tracey Conroy and the then director general of the HSE John Connaghan.

Despite the issues raised about the contractor, the Government decided to go ahead with the tender.

Irish construction

At a meeting in November, officials talked about how “only two Irish construction companies have the capacity to undertake such a large project on their own, and he was of the belief that there would be little or no international interest in a retender, including because of the belief that the incumbent BAM would have an insurmountable advantage in any retendering process.”

They also discussed ways to bring down the cost, including not fitting out wards, delaying equipping parts of the hospital and phased construction.

Lengthy discussions about the cost escalations took place as early as June.

The project director of the NPHDB John Pollock “reported on capital costs challenges and pressures, unanticipated level and continuation in rise of construction inflation, costs linked to the quantification now of the cost of the “gaps” in the 2016 partial design of the hospital and programme alignment delays.”

“There was a lengthy discussion on the cost challenges, and how these might be mitigated against.”

The same senior officials, including Mr Breslin, were present at that meeting.