National Children’s Hospital cost has risen to more than €2.2bn, Donnelly confirms

The cost of the national children’s hospital (NCH) has risen to more than €2 billion, Minister for Health Stephen Donnelly has told Cabinet.

At a meeting of the Government on Tuesday morning, Mr Donnelly confirmed the full cost including commissioning has now risen to more than €2 billion.

The last publicly available estimate for the total cost was €1.7 billion.

In a statement released on Tuesday lunchtime, the Government confirmed the total capital and current budget sanctioned for the project was now €2.24 billion.

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Included in this are the design build and equipping costs, including satellite centres at Tallaght and Connolly hospitals, and a separate €360 million for the integration and transition of services to the NCH.

It said the new increase in the budget will address areas identified in a 2019 report on the project carried out by consultancy firm PwC.

The costs and delivery date for the megaproject have been consistently revised upwards and delayed for years, with the latest indication that substantial completion will take place in late October this year.

However, it will take several more months to finish the hospital through fit-out and commissioning processes, with a real prospect that no child will be treated in the hospital before the next general election.

On Tuesday afternoon Taoiseach Leo Varadkar told the Dáil the Government will not be allocating any more funding towards the NCH with €2.2 billion the “maximum allocation” for the project.

He said that the “target” was for the hospital to be completed by October 2024 and would be open to patients next year. Mr Varadkar also said there would be “years of disputes” with the contractor about payments “even when the hospital is fully open”.

“This will not impact on other projects because the cost of this is spread out over 10 to 15 years,” he said.

Speaking during Leaders’ Questions, Mr Varadkar said €1.4bn had been drawn down already, with an additional €0.8 billion available to complete the project and commission it.

“Two point two billion euro is the maximum allocation made by the Government for this project, we will not be allocating any more,” he said.

Mr Varadkar was responding to Sinn Féin leader Mary Lou McDonald, who accused the health minister of taking a “hands off approach”. Ms McDonald said costs were spiralling and out of control, with constantly shifting timelines for the hospital’s completion and there was “a complete lack of confidence in delivery”.

“I have to say that this debacle shows that the entire leadership of Government is asleep at the wheel,” she said. “As this fiasco goes from bad to worse, children are waiting longer than ever for care.” The Dublin Central TD added that the issue “strikes at the heart of Government’s credibility”.

Members of the Dáil’s Public Accounts Committee have long speculated that the final cost would rise above €2 billion, and may not receive patients until 2026.

Mr Donnelly told RTÉ News at One on Tuesday it would be April or May of 2025 before the first patients can be admitted to the new hospital, but only if the contractor BAM “meets its own deadline” of completion by October 29th, 2024.

He appealed to the contractor to stick to the deadline, saying the hospital which will be “transformative” when it opens. Mr Donnelly was adamant that none of the funds will be towards claims made by BAM for extra funds. Of the €770 million claim from BAM, €645 million has been adjudicated and less than three per cent awarded, he said with the remaining €123 million yet to be adjudicated on.

It had been known since 2019 that the cost of the hospital was going to be higher than the original figure with additional costs identified, since then the combination of Covid and the war in Ukraine had “significant increased building inflation and those costs fall to the State”.

Mr Donnelly acknowledged that the contractor could take further legal action in relation to costs, but as far as the Government was concerned the additional funding approved by Cabinet was the final cost.

“This is an expensive hospital. It is an expensive design. It is an expensive size. It is not the most expensive hospital in the world, but there is a lot of money that Irish people are paying,” he said.

“What I would say is, if there is a silver lining to that, is we are getting a huge amount in return for that money in terms of children’s healthcare. This is going to be transformative.”

Meanwhile Minister for Public Expenditure and Reform Paschal Donohoe said he expected the latest tranche of the funding for the hospital would be the “last significant settlement in relation to the overall cost” of the project.

Asked if there would be smaller payments in the future, he said the settlement “that we’ve made here is going to deal with all of the imminent costs”.

Speaking to reporters on Tuesday, Minister Donohoe denied the Government should have paused the project or retendered in the face of spiralling costs at some earlier point.

If the Government had retendered the project “we would have even larger costs and we would have a project that would be more delayed,” he said.

“There was of course the charge made that we should have hit pause on the project, that we should go back out and have the project retendered again. I believe if that had happened or if it was happening now, there would be huge risk to when this project would then be completed and what it would finally cost,” he said.

While acknowledging taxpayer concern, Minister Donohoe said the Government had learned the lessons in terms of “how we tender, how we cost, how we communicate the timelines of other really big projects”.

He said he hoped that when the hospital was open and operational and providing care to children “we would be able to make a broader case about the value of the hospital but I accept we are still some way off from doing that while the hospital is being built”.

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