The financial fiasco that is the national children’s hospital flashes like a neon sign above the announcement that the Government wants civil servants to take more risks with taxpayers’ money to speed up the delivery of large infrastructure projects.
As has been well ventilated at this stage, the original sin behind the large budget overrun at the children’s hospital was the fateful decision in 2014 by the National Paediatric Hospital Development Board (NPHDB) to split the construction contract for the hospital in two in order to speed up its delivery.
The project had dragged on for more than 10 years before the decision was made on the basis it would knock two years off the timetable for construction.
There was one contract for getting the site at St James’s Hospital in Dublin ready for a hospital to be built and a second bigger one for building the hospital. The winner of the first contract would obviously have an advantage bidding for the second and so it came to pass that construction company BAM was awarded the contract for the first and second part. The rest is history.
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It is a useful exercise to cross-check the decision to split the children’s hospital contract in the name of expediency against the new Risk Appetite Statement (RAS) issued last week by Jack Chambers, the Minister for Public Expenditure. It sets out “to support faster and more efficient delivery of Ireland’s critical infrastructure, specifically projects in the water, energy and transport sectors”.
The whole thing is grounded in the increasingly long times it takes to deliver projects compared to 20 years ago.
The new RAS says there will be “greater openness to financial and delivery risks” and “strong support for innovation” as well as a “pragmatic approach to litigation and environmental risks”.
[ Public service must embrace risk to deliver big projects, Jack Chambers saysOpens in new window ]
In short, civil servants are being asked to accept the sort of risks that are part and parcel of delivering big projects in the private sector.
It gives a number of examples of the sort of thing that will now be “encouraged”. They include applying for planning before projects get the official go-ahead. Likewise preparing procurement documentation – tenders and the like – in anticipation that the planning applications will be successful.
Preliminary works and the purchase of land and materials “in advance of full approval certainty on the main construction works” are also encouraged. As is acceptance of higher upfront costs involved.
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Chambers also wants civil servants to make decisions even though they can expect legal or environmental challenges, and to take their chances in the courts despite the potential costs.
It is reasonable to suggest that the decision taken by the board of the children’s hospital to split the construction contract in two would have fallen within the parameters of what is now being encouraged and supported by the new RAS.
They took a calculated and considered risk in order to speed the project up. In the end it backfired spectacularly, damaging the reputation of pretty much everybody involved.
But it’s another thing entirely to argue that the new RAS would have saved them from the shellacking they have received over the past 10 years.
That is because while a lot of things are being “encouraged” and “supported” in the new documents, there is nothing to suggest that the political masters of civil servants and other decision makers will stand by them when the risks they are being encouraged to take don’t pay off.
The chain of accountability for the children’s hospital mess is instructive and would suggest the opposite. The NPHDB took the decision but they got approval from something called the Government Contracts Committee for Construction in order to break standard guidelines for public tenders.
The Department of Health and the relevant ministers were obviously in the loop and the Cabinet as a whole approved the splitting of the contracts in April 2017 when the cost of the second part of the process was unknown.
But instead of standing over their decision when things went wrong, politicians of every stripe engaged in an orgy of dissembling and buck passing. They claimed they were not made fully aware of the risks involved and neither were they made aware of the overruns in time to do anything about it. They basically hung the people who took the risks – with their explicit approval at Cabinet – out to dry.
Unless Chambers can offer something more than encouragement and support to civil and public servants who he wants to take potentially career-ending risks, he might as well rip up his new RAS statement.
It may play well with those saying that we need more “private sector energy” to get things done, but no civil servant or member of a State board who is in their right mind is going to put their career and reputation on the line to take some significant risk if their political masters do not have their back. And they won’t.
