‘Highly unlikely’ children’s hospital will come in under €2bn – PAC hears

Alan Kelly says public confidence in how large projects are managed is ‘lost’

Artist’s impressions of proposed new National Children’s Hospital at St James Hospital campus.

Artist’s impressions of proposed new National Children’s Hospital at St James Hospital campus.

 

It is “highly unlikely” that the cost of the National Children’s Hospital will come in at under €2bn, the Public Accounts Committee heard Thursday morning.

The Government is now carrying out a study of potential further cost increases to the project, which it was estimated would cost € 983m in 2017, a figure which has now risen to a total of €1.733bn.

Labour TD Alan Kelly asked the secretary general of the Department of Health Jim Breslin if he could now guarantee that the cost would not breach the €2bn mark.

Mr Breslin said a study was now under way to examine extra costs.

“The only variations on the guaranteed maximum price are the exclusions from the contract and we have been asked by Government to do a scenario sensitivity analysis on the impact of those,” Mr Breslin said.

“That is not complete but it does include inflation above 4 per cent from July of 2019. I don’t think it takes us into that into that type of space but we will complete that and bring it to Government,” he said.

Mr Kelly said he noted that “you can’t guarantee us that it will come in under €2bn, that you are now doing an exercise to see how much cost creep there will be again. There have been so many surprises. I expect that it is highly unlikely that it will come in under €2bn.”

“To the public watching, to have confidence in how we administer large projects like this, it is lost, it is gone,” Mr Kelly said.

Mr Breslin said the Department of Health would be “fully open” about potential extra costs once they have estimated them.

John Pollock, project director of the national paediatric hospital development board, told the committee that the February 2014 figure of €800m for the project was an “early stage cost estimate prior to appointment of a design team in August 2014, using floor areas from the outline design brief and using 2013 construction rates which it is estimated will have virtually doubled by 2022 following a decade of construction tender inflation.”

After this, a figure of €983m was arrived at in February 2017. At this stage the “actual quantity of materials” which were needed was confirmed before the cost again rose to €1.433bn in 2018.

Mr Pollock said the board was “deeply disappointed that costs have increased so significantly and acknowledge the challenges these pose.”

Mr Breslin said he takes the situation “extremely seriously and regrets the very significant increase in public funds.”

The Government decided last December to proceed with the second phase of the project - the construction of the hospital - in the face of the major escalation of cost as this was judged to be “the least-worst option for the delivery of this priority project”.

An independent review into the runaway cost of the new national children’s hospital has been commissioned which will itself cost €450,000.

The review by consultants PWC began in January and will be completed by March.

Consultants will look at the factors that contributed to the escalation in cost of the project at St James’s Hospital.

An independent review into the runaway cost of the new national children’s hospital has been commissioned which will itself cost €450,000.

The review by consultants PWC began in January and will be completed by March.

Consultants will look at the factors that contributed to the escalation in cost of the project at St James’s Hospital