The new children’s hospital – a crisis of competence
Sir, – I was interested and surprised to read that the Government is to examine whether contractors have submitted low tenders in order to win construction contracts (News, February 13th). Surely such an examination should always take place as a matter of course.
I was involved in the building of a primary school in the early 1980s. When the tenders were examined by the OPW, it approached the contractor who had submitted the lowest bid and pointed out to him that the project couldn’t be completed for that price and he withdrew.
That sort of expertise was availed of by government departments nearly 40 years ago, and it seems a shame that this is no longer the case. To quote John Healy: “No one shouted stop!” – Yours, etc,
Sir, – With respect to the cost overrun of the national children’s hospital, how is it fair to all tenderers that the winning bidder’s actual costs are multiples of what was initially stated in competition? A legal challenge might be the only thing to halt this project, seeing as how our leaders and those tasked with responsibility are deep in the hole that they’ve dug.
There’s no pot of gold down there to pay for this scandal! – Yours, etc,
Sir, – We need not worry about the new children’s hospital. All will be well.
What we need to do is create a TV programme that follows a familiar script. Thus it begins with the client reviewing plans in a muddy site. In due course, architects and builders abound. The budget is (ahem) a lot of money. A year later and – oh no! – there’s trouble. The site is an unfinished mess, the builders have withdrawn, and the budget is blown.
The client decides there’s nothing for it. He will live on site and finish the work himself, with possibly a few friends to assist. Some five to 20 years later, the cameras return to a gleaming facility with tree-lined atriums and birdsong.
It’s sure to be a ratings winner! – Yours, etc,
Sir, – Many of us in the architectural profession and elsewhere have, for many years, being highlighting the problem of “low-ball” bids.
Although it may seem to some counter-intuitive, there is a strong argument to be made for setting the lowest bid aside in any tender process, as happens in some other jurisdictions. The inherent problem with accepting bids that are too low, often below what it will cost to do the job, is that either the contractor will fail financially or the client will have to allow him increase costs to a viable level afterwards.
Some building (and consultancy firms) have bidding down to a fine art and understand well how to chase increased costs after being awarded a contract. As a result many building and consultancy firms have effectively given up bidding as they cannot – or do not want to – cut their price to the bone in the hope that everything will go their way afterwards, depriving the market of a wider range of skills and resources.
So it is arguable that awarding success to a very low bidder is in fact anti-competitive as too many entities have given up investing significant costs and resources in submitting tenders that they know have very little chance of winning. – Yours, etc,
JOE KENNEDY, FRIAI
Smith + Kennedy
Sir, – Prof Bent Flyvbjerg attributes “mega-project” overspend to the challenges encountered at the intersection of politics and project management (“Pattern of overspending in major Irish infrastructure projects”, News, February 11th).
Leaders are typically comfortable identifying “whats”. Translating them into tangible, deliverable, “cost-managed” results is, as a Gaeilgeoir might say, “scéal eile ar fad”.
John Harvey-Jones, a non-chemist who rose through the ranks to lead the British chemical company ICI, observed that: “Planning is an unnatural process; it is much more fun to do something. And the nicest thing about not planning is that failure comes as a complete surprise rather than being preceded by a period of worry and depression.”
The roll-call of projects listed by your correspondent suggests that the current “project failure” should not be considered a surprise.
Neither is it a surprise that the Minister is pursuing the “least worst option” of keeping going.
Prof Flyvberg identifies that the children’s hospital is at the “big hole” stage. It is but one such national project. The Government would be well advised to look at the big picture and adhere to the first rule of holes – stop digging.
Before having any more “fun”, it needs to comprehensively and urgently overhaul its programme management approach.
No more Project Ireland 2040 initiatives should be undertaken in advance of same. – Yours, etc,
Sir, – In order to pay for the massive overrun in costs of the new children’s hospital, why not divert funds earmarked for the so-called “rainy-day fund”?
This would mean other deserving projects won’t have their funds cut. Surely this would be a good use of this fund?
After all the overspend for the hospital is a “deluge” in rainy-day terms.
Also, in future, maybe we should change the name of the fund to the “everyday incompetence fund”. It would be more appropriate, with plenty more deserving causes in the future. – Yours, etc,
Sir, – Maybe we should have a national construction authority to oversee large infrastructural projects.
It might seem old fashioned, but if being taken to the cleaners by private contractors every time we have an important project to deliver is modernity, then I think a lot of taxpayers might agree with me. – Yours, etc,
Sir, – On a recent visit to our Dublin office, the topic of the children’s hospital came up with our practice leader, Jack McInerney. As specialists in project and cost management of healthcare facilities, we take great interest in the cost increases currently impacting the project.
Having worked on numerous healthcare facilities in North America, Europe and Turkey, with similar scale and complexity to the children’s hospital, we know firsthand that for large hospitals worldwide, it is not unusual for project costs to be in the range of €1 billion to €2 billion.
For example, Canada has delivered over €18 billion in healthcare facilities over the past 15 years, with at least two super-hospitals procured in excess of €1.3 billion utilising fixed-price contracts and equitable risk-transfer to protect the taxpayer.
Similarly, in Turkey, a country with an ambitious pipeline of new healthcare facilities, the Etlik Integrated Healthcare Campus in Ankara is another example of a project procured in excess of €1 billion.
The question that comes to mind then is, was the children’s hospital budgeted appropriately in the first instance? Perhaps this is not a simple matter of blaming the Government.
What did the planning process involve at the outset? What benchmarks were used and were the preliminary estimates tested robustly? And is the product currently being built the same one that was budgeted for?
In the two countries noted, the authorities undertaking these projects sought independent advice to establish their procurement models and best practices, utilising lessons learned in other global markets in delivering projects with speed and efficiency.
Even at this stage, with many of the costs already built into the design, Ireland can benefit from undertaking a similar exercise. – Yours, etc,
Sir, – Jim Holohan (Letters, February 12th) suggests that “ a billion ain’t what it used to be” and suggests “we calm ourselves”. If I owed Mr Holohan €1 million and repaid at a rate of €1 per second, my debt would be cleared in 12 days. If I owed a billion and repaid it at the same rate, the repayment period would be 33 years, or about 12,000 days, give or take.
It’s all about perspective. – Yours, etc,