National children’s hospital: Timeline of what the records show

Minutes of national children’s hospital project steering group show concerns raised about escalating costs from August 2017

February 6th, 2019: Minister for Health Simon Harris TD has told the Oireachtas health committee that he remained unaware of the scale of emerging cost overruns on the national children’s hospital for almost a year. Video: Oireachtas TV

 

August 29th 2017: Concerns about costs in relation to the national children’s hospital were raised at a meeting of the national children’s hospital steering group, a high-level body overseeing the project.

Present at the meeting were the then deputy director general of the HSE John Connaghan and the national director of acute hospitals Liam Woods, as well as senior officials from the Department of Health.

John Pollock, the project director of the National Paediatric Hospital Development Board (NPHDB) raised “a concern regarding cost”, the minutes read.

“It was noted that there is an aligned programme issue between mechanical/electrical work and main contractor as well as fire certificate/sprinklers additional requirements – to be reported to the group on a regular basis. Guaranteed maximum price (GMP) to be agreed with BAM at the end... and will be known within the next 7-9 months.”

October 20th 2017: Further concerns were raised about overruns, and senior officials examined four possible options to mitigate the effect of potential losses. Present were Mr Connaghan, Mr Woods, the assistant secretary of finance in the Department of Health Greg Dempsey and Eilish Hardiman, the group CEO of the Children’s Hospital Group, amongst others.

Mr Pollock “confirmed there will be reasonable certainty about the size of the funding deficit by end March 2018”. He “added that the agreed guaranteed maximum price will require Government/HSE approval by early July 2018”.

Also discussed were “four possible options for addressing the capital cost funding deficit”. These included “de-scoping” of capital project – Mr Pollock noted this was already being explored “at a high level”.

Reallocating capital funding from the wider HSE Capital Plan was discussed but a senior health official “flagged difficulty due to contract constraints”.

A third option was seeking philanthropic funding and the fourth was to engage with the Department of Public Expenditure for “additional funding”.

A decision was made to seek to raise money through philanthropy.

November 22nd 2017: The steering group discussed the issue of capital funding again. The minutes show it was agreed that the issue “is beyond the scope of this forum alone”, while Mr Dempsey of the Department of Health was asked “to give consideration as to how to engage with Government on it”.

March 26th 2018: At a steering group meeting, Mr Pollock confirmed that the end of June 2018 was the “current expected timeline for guaranteed maximum price agreement with contractor. He noted that the GMP agreements with the main contractor were “currently unsatisfactory and this issue has been escalated”.

April 23rd 2018: In April, the steering group again discusses financial risks. Mr Pollock noted that the chance of getting the guaranteed maximum price by the end of June was “significantly at risk”.

He also flagged “pricing discrepancies between NPH quantity surveyors and BAM/M&E contractors”.

Mr Pollock “explained that pricing discrepancies that cannot be agreed will go to the agreed independent expert to adjudicate, which will take time”.

He also confirmed that BAM agreed that the overall programme completion date was still achievable, “provided some critical path activities in Phase B contract are brought into Phase A contract to continue work on site without delays”.

Mr Connaghan of the HSE, asked about the financial risk involved. At that meeting, Mr Pollock explained that it was “too early to estimate” but he agreed to provide clarity about the timeline and financial risk by June.

May 31st 2018: The issue continued to escalate as Mr Pollock reported “progress” in relation to the guaranteed maximum price (GMP).

“All design packages issued by QS to contractors for final measure of quantities and pricing. An independent expert will deliver binding decision on disputed construction costs. Deadline end-June will not be met for concluding GMP process.”

The minutes show that it was decided that by the end of June, the hospital structures would “have a strong sense of where we stand in overall terms for capital construction cost”.

July and August was to be used to “work through identified issues, make any changes to contract documents and firm up on GMP”.

Tracey Conroy, an assistant secretary in the Department of Health, advised the group to “go to government for decision before the 2019 estimates process, September would be better than October”.

August 27th 2018: A new estimate was provided by the contractor, the minutes show.

“The contractor submitted new estimates on the 24th of August and these now need to be reviewed. The timeline for completion of the guaranteed maximum price will be more clear during the week beginning the 3rd of September. It is likely that the final guaranteed maximum price will be significantly greater than originally anticipated.”

August 28th 2018: Minister for Health Simon Harris says he became aware on this day that there was a potential issue with cost overruns in the budget. He says that at this point, the “commercial process of negotiation” was ongoing.

November 9th 2018: The day that Mr Harris says the actual cost “crystallised”. He said: “In the month of October as this work was ongoing, my officials were engaging and seeking to engaging with the officials in the Department of Public Expenditure and Reform, as one would expect them do so. They would have been engaging and seeking to find out how they would deal with an emerging issue, telling others about the information they had.”

Finance Minister Paschal Donohoe said he became aware of the scale of the increase in November.

December 2018: The Government decides to proceed with the project at the higher price.