Children’s hospital behind schedule and may not open until 2024, PAC hears
Contractor ‘underperforming’ and claims for additional costs have hit about €300m
The new national children’s hospital (NCH) is behind schedule and there have been suggestions that it may not open until 2024.
That’s almost two years after the original target for construction to be finished.
The Public Accounts Committee (PAC) has been updated on delays to the project and has also heard that contractor claims for additional costs have hit about €300 million.
The NCH has been beset with delays – some due to the Covid-19 pandemic – and there has been controversy over the construction costs which are set to top €1.4 billion.
The final sum to be spent on the hospital – including its fit-out – is expected to be more than €1.7 billion though there are concerns that it will be higher.
The original contracted target for the completion of the construction of the main hospital on the St James’s complex was August 2022.
This has been pushed back to October 2022 because of the Government-mandated shutdown of construction during the first Covid-19 lockdown.
He confirmed to Sinn Féin TD Imelda Munster that there is a further nine-month service activation period after the construction is finished before the hospital can be opened.
Ms Munster asked “Are we talking realistically . . . about the national children’s hospital not being open until 2024 at the earliest?”
Mr Gunning replied: “Well certainly when you add up all those delays together that’s the obvious conclusion” and added: “I would however say we are analysing the detail of the programme”.
He said the NPHDB “will be in a position to give a more definitive answer than I can give you today in the not too distant future”.
Ms Munster referred to reports that the project could cost €2 billion and asked about claims for additional costs made by the contractor Bam Ireland.
Mr Gunning said: “The current number is there are more than 700 claims and the amount associated with those claims is in excess of €300 million.”
Ms Munster said: “My goodness that really is shocking.”
Mr Gunning said a disputes process is laid out in the contract and “many of these claims are at various stages in the process”.
He said the NPHDB puts in a “strong and very robust defence of each and every claim”.
The PAC was told that an analysis of the project being carried out by the NPHDB and Department of Health will be finished within weeks.
During the meeting Mr Gunning repeatedly said he was not able to offer an estimate on costs until the review was completed.
Ms Munster said the PAC had been given no definitive timeline for completion or the costs, and claimed that a “complete hames” had been made of the NCH project and the management of it has been “an absolute shambles”.
“People would be justified in thinking that the new Children’s Hospital, as feared, is going to be the most expensive children’s hospital in the world because you’ve done absolutely nothing today to allay those fears,” she said.
Fianna Fáil TD Marc MacSharry asked about legal costs and was told that they have come to more than €1.2 million since 2018, not including the cost of a High Court case.
Mr Gunning said that an implementation plan, drawn up after a PWC report into the project, had estimated legal and claim defence costs of between around €18 million to €19 million until 2022.
“We get claims and have no other option but to defend these claims. If however, the contractor decides not to pursue the claims in the same way that they’re pursuing them then we would not be incurring the legal fees,” he said. “But at the moment these are essential necessary costs we’re incurring.”
Social Democrats TD Catherine Murphy asked about the delay to the project and if there was the potential for a counter-claim by the NPHDB for non-adherence to the delivery date in the contract.
Mr Gunning said there is a mechanism in the contract for penalties to apply after a certain period of time has elapsed from the contractual completion date.
He said: “We will be seeking to apply those through the contract.”
He said counterclaims on other matters also arise and that the NPHDB has issued some already to recover costs.
Ms Murphy asked the monetary value of the counterclaims and Mr Gunning said he didn’t want to cover that at the moment but could send that information on “at another time”.
The PAC heard a claim that main contractor Bam Ireland is “underperforming”.
Mr Gunning said the NPHDB tracks progress and performance on a weekly and monthly basis, and is engaging with the contractor to make up lost time.
He added the contractor is obliged to provide the NPHDB with a compliant programme of works that sets out its approach to delivering the new hospital in accordance with the contract.
“However, since the agreement of the programme as part of the Phase B Instruction, the programme updates provided by the contractor have not been compliant with the contract.
“As a result, we are currently withholding 15 per cent of monthly certified payments until such time as a compliant programme is submitted,” Mr Gunning told the committee.
Mr Gunning said the figure approved by the Government for the project was €1.433 billion but there are a number of items not included in this as “there was no price certainly for them .”
These include construction inflation, statutory changes, and any change in scope resulting in healthcare policy changes.
He told the committee that Bam can recover the cost of construction inflation in excess of 4 per cent.
Such payments from August to December 2019 came to €1.6 million and this was paid last July.
Mr Gunning said expenditure on the design and build of the hospital was €199,622,000 as of December 2019. He said this was against budgeted spend of €262 million approximately.
Mr Gunning claimed the underspend in 2019 “is due to the fact that the main contractor did not advance the construction of the build against the planned original programme”.
He also alleged: “This lack of advancement is primarily due to under-resourcing of the project by the main contractor – a situation that has been in place since the beginning and which continues today.”
The Irish Times has sought comment from Bam Ireland.