New children’s hospital will cost €1.433bn, Taoiseach confirms

Construction of the new national children’s hospital is to start early in the New Year after the Government accepted an increase of almost €450 million in the cost of the project.

Below ground works at the site at St James’s Hospital began over a year ago but construction and fitting out of the seven-storey building can now proceed after the Cabinet gave the go-ahead for the second phase of the project.

The project cost of the hospital is now €1.433 billion, Taoiseach Leo Varadkar confirmed yesterday, though he conceded this figure could rise further.

Mr Varadkar said it might turn out to be the one of the most expensive children’s hospital in the world, but it would be the best. The hospital is the biggest single investment in children’s health in the State’s history, he said.

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Speaking in the Dáil, he acknowledged there were increased costs and “there will be further investigations as to why costs increased”.

The board of the new hospital was responsible for the project and answerable to the Minister for Health who in turn was answerable to the Dáil.

Mr Varadkar said people appointed to the board had experience in large projects and would be happy to meet and attend before the Public Accounts Committee. He said the project was based on an agreed maximum price, but within that there were elements around tendering and cost inflation.

The board responsible for developing the project said “significant additional construction and associated costs” had led to a higher than originally envisaged overall cost since a business case was submitted to Government in early 2017.

It identified the key drivers of additional cost as finalisation of the detail; statutory issues - changes in fire regulations following the Grenfell fire and the need to add additional sprinklers following a decision by An Bord Pleanála; and additions to the design following consultation with staff.

Other factors were a nine-month addition to the build time; increased construction labour costs and a failure to make anticipated savings.

“The board has sought to keep costs as low as possible in this highly inflationary construction market. However, the final cost is higher than had previously been forecast and higher than the approved investment figure approved by Government in 2017,” the National Paediatric Hospital Development Board stated.

Minister for Health Simon Harris said there was “ no doubt that the additional costs associated with the project are of great concern and we must have assurance that Phase B of the construction project will be delivered within budget and timescale”.

Siptu expressed concern at the cost overrun but insisted it was not due to labour costs.

“Construction workers’ terms and conditions have certainly not been a contributing factor to this reported overspend. At best, most construction workers are only receiving the legal minimum payments negotiated under a Sectoral Employment Order,” said Siptu construction sector chairman, Eddie Gunnery.

In the Dáil, Mr Varadkar told Fianna Fáil leader Micheál Martin that €319 million was attributed to increased building costs, €50 million was for Vat and the remainder was a for range of issues including hospital equipment.

Mr Martin said that on September 27th the cost was €1 billion and in a matter of six weeks the costs had risen by €400 million.

“Who is responsible?” he asked regarding the “extraordinary” €450 million cost increase.

Mr Varadkar said progress was being made and from January 2019, the three children’s hospitals would be amalgamated into a single governance system. He said the satellite centre in Connolly hospital in Blanchardstown would be open next summer, the Tallaght centre the following year and the new main hospital in 2022.

The extra €433 million - where it is being spent

- Extra or more costly sanitary fittings, theatre lights, gas outlets, etc - +€21 million

- Drainage, pipes, air vents, glazing, etc; gaps identified by contractors- +€94 million

- Extra fire sprinklers, fire protection post-Grenfell - +€27 million

- Omissions in stage 1 design (eg, cable supports, fire stop detail, pipe cladding) - +€20 million

- Loss of targeted savings - +€46 million

- Extension of construction programme by nine months - +€90 million

- Contractor claims - +€22 million

- Other construction works - +€13 million

- Additional staff, office, insurances, procurement, etc costs - +€36 million

- Equipment - +€16 million

- VAT - + €48 million