National Children’s Hospital: €873m to be drawn down by end of 2021

Sum amounts to 60% of approved cost of project hit by spiralling costs and delays

About 60 per cent of the approved €1.433 billion budget for the National Children’s Hospital (NCH) will have been drawn down by the end of the year, the Dáil’s public spending watchdog has been told.

In a briefing for the Public Accounts Committee (PAC) Department of Health Secretary General Robert Watt said any potential future costs outside the approved budget would be "commercially sensitive" and have to "remain confidential".

However, Mr Watt said that “by the end of this year, it is expected that approximately €873 million of the €1.433 billion capital budget will have been drawn down.”

There has been controversy over the huge project for years amid spiralling costs and delays which means that the hospital will not now open for patients until the second half of 2024.

There is concern the cost of the NCH will be much higher than €1.433 billion when delays – some caused by the Covid-19 pandemic – and other issues like inflation in the cost of construction materials, and Brexit impacting on the supply of goods and services, are factored in.

Mr Watt’s briefing to the PAC comes ahead of an appearance at the committee on Thursday to discuss the Department of Health’s 2020 accounts.

He said an NPHDB analysis on the NCH project “relates to the best way forward on a project that is subject to a live contract, and as such, continues to be commercially sensitive.”

Mr Watt said the analysis “related to the forecasting of critical paths/scenarios for the optimal completion of the project.”

He added: “discussion of costs by officials, however hypothetical or otherwise at this time, may prejudice enforcement of the existing contract, and very likely negatively impact or jeopardise the Development Board in its ongoing engagement with the main contractor, and the Board’s responsibilities for the timely completion of this critical project.”

Mr Watt also said: “As with any capital project, there are residual risks, for which there cannot be cost certainty, including construction inflation, claims, changes in scope/design and certain uncontrollable risks, such as any changes to building regulations, sectoral employment orders and costs relating to Brexit, the pandemic and global supply chain.”

“The NPHDB and its contractors continue to address and mitigate these risks and externalities to the largest extent possible”.

Mr Watt said: “Information on any potential future costs relating to the live contract the NPHDB is enforcing, and which would be outside of the approved budget, would be commercially sensitive and would have to remain confidential.”

Last month Minister for Public Expenditure Michael McGrath told the Committee on Finance that the final bill for the NCH is still “some distance off” because of disputes with the building contractor, BAM, over costs.

BAM has lodged nearly 900 substantiated claims totalling €514 million, said Mr McGrath, but he added that sum was the values determined by the contractor and “those have not been agreed or approved”.

Mr McGrath said 700 of the additional bills had been priced at just €15 million by the National Paediatric Hospital Development Board (NPHDB).

He said those judgments have been contested by BAM, who have referred 650 of them to a dispute management process set out under the contract.