Bam tells analysts no uncontrolled cost overrun at children’s hospital

Senior executives at Bam’s Dutch parent company have forcefully rejected claims that costs at the national children’s hospital project are running out of control.

The company’s leadership has acknowledged a “perceived” overrun has led to “turmoil in the political arena”.

The remarks were made in a conference call by senior executives at Dutch construction firm Royal Bam, the parent company of the Irish contractor involved in the children’s hospital project.

The call was held this week to allow financial analysts question Royal Bam’s leadership on the company’s earnings. A transcript of the call shows one analyst asked about “rumours about the children’s hospital in Dublin, that project is sizing up to be larger than initially anticipated”.

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Frans Den Houter, chief financial officer with Royal Bam, insisted the controversy was political and costs at the project were under control. “We took in new children’s hospital, it is under execution and, recently, there is a lot of publicity because there is in the market, in the political arena, the perception that [there] is an uncontrolled cost overrun. From our perspective, it’s definitely not,” he said.

Escalating costs

The cost of building the hospital has escalated from €983 million last year to €1.43 billion, prompting massive political controversy and an unsuccessful Sinn Féin motion of no confidence in Minister for Health Simon Harris.

Later in the call, an executive reiterated that “there is some turmoil in the political arena, because there is a perceived overrun . . . our processes are solid and the project is in execution”. Asked later in the call about whether issues relating to costs at the hospital project would “be the responsibility of Bam”, Mr Den Houter said “as we see it, no”.

Robertus van Wingerden, of Royal Bam, added: “We are absolutely confident we’re okay there.”

A HSE report carried out last autumn at the request of the Department of Health found the cost overrun on the national children’s hospital would have occurred even if a contractor other than Bam had been selected. The report found the escalating price tag for the hospital was being driven by inflation and changes to the amount of materials needed for the project.

Bam’s bid for the hospital project was €178 million lower than the next highest bid received, from contractor John Sisk. Two other bids were even higher.

War of words

The company was drawn into a war of words last week after Taoiseach Leo Varadkar told the Dáil that he was concerned that contractors had been “lowballing” the State on some projects. Mr Varadkar told that Dáil that “there are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State”.

The comments prompted a letter from Bam, which asked Mr Varadkar to clarify that he was not referring to the company in his remarks. When the Taoiseach failed to respond publicly, Bam issued a statement saying it would step down from constructing the hospital if the development board wanted it to do so. However, such a move would spark even further delays and likely significant costs to the State.

On Saturday, Minister for Health Simon Harris said that he wanted all parties to continue work on the project.