Dublin City Council leisure centre comes in €27m over budget

The final bill to the country’s largest local authority for a leisure centre project has come to €45.5 million – or €27.3 million more than the original contract price.

The Local Government Auditor's Report for 2015 for Dublin City Council confirms that the total cumulative spend on the Ballyfermot Leisure Centre has reached €45.5 million.

The original contract price to construct the centre was €18.2 million.

The project involved the construction of a leisure centre and a youth centre with a total area of approximately 7,400m sq.

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The leisure centre contains a 25m pool with moveable floor, sports hall, gym and changing areas while the youth centre contains a performance space, creche, recording rooms and multi-function rooms. The project also included the construction of six all-weather five-a-side football pitches.

The massive bill for the centre follows a six-year row between the city council and the contractor concerning the final cost of the scheme.

The claim was only settled between the parties in June of this year.

Owen Keegan, chief executive of Dublin City Council, said after the contractor handed over the centre to the council as per the tender specification and with minimal changes in 2008, the final bill submitted was €38 million plus VAT and interest.

“This claim was based on variations, delay, disruptions and increased costs,” he said.

Spiralling costs

In his formal written reply to local government auditor Richard Murphy – who highlighted the spiralling costs associated with the project in his recently completed 2015 report – Mr Keegan said that "a conciliation process in 2010 was unsuccessful and an arbitration process commenced in 2011".

He said the arbitration process continued for five years up to June 2016 “during which time the arbitrator made a number of determinations”.

Mr Keegan added: “Following a review of the case and assessing the opinion of our legal counsel and our expert consultants, it was decided that the most financially prudent course of action was to negotiate a settlement with the contractor. A settlement was agreed with the contractor in June 2016 in the amount of €5 million plus VAT, representing full and final settlement of their claim and €8 million in relation to their costs to date.”

The €13 million settlement made up of contract and legal costs was, according to Mr Keegan, “agreed by Dublin City Council against the backdrop of an ongoing arbitration claim potentially lasting a further number of years where ever increasing costs would be incurred by both sides”.

He said: “The settlement represented a significant reduction in the original claim submitted by the contractor.”

Final payment

Mr Murphy noted the final payment on the centre this year “brings the total cumulative expenditure to date on this project to €45.5 million”.

In his report on the issue in the auditor’s 2014 report, Mr Keegan gave no hint that the council would settle and that the claim by the contractor would be fully contested. He wrote: “Since handover and opening of the facility, parts of the facility – the five-a-side pitches and the pool – had to be closed for remediation following the discovery of further substandard works.

“In view of the total disproportion between the sum claimed by the contractor and the original contract sum and the very large amount of money involved, defence of this claim has and will continue to be proactively and robustly managed.”

A spokeswoman for Dublin City Council declined to comment further including providing the name of the contractor concerned.