Contractor costs at children’s hospital rose 65% in a year

The prices charged by the main contractors for the new national children’s hospital rose by up to 65 per cent in little over a year, a briefing note from the Department of Health reveals.

An underestimate of the quantities of material needed to build the hospital at St James’s Hospital added €115 million to the cost, while omissions in design added a further €20 million, according to the note.

BAM Contractors, the firm building the hospital, submitted a tender price of €432 million in 2017 but this grew to €556 million last year, an increase of 29 per cent.

Jones Group, which won the contract for the mechanical systems, originally tendered at €107 million, but this has grown to €177 million, an increase of 65 per cent.

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Meanwhile, the cost of the electrical systems contract won by Mercury Engineering grew from €98 million to €157 million, a 60 per cent rise.

The briefing note was prepared by the Department for the Oireachtas health committee, which on Tuesday afternoon resumes its hearings into the soaring cost of the project. The cost of building the hospital has grown from €987 million to €1.43 billion since the start of 2017.

According to the note, the Government decided last December to proceed with the second phase of the project - the construction of the hospital - in the face of the major escalation of cost as this was judged to be “the least-worst option for the delivery of this priority project”.

Before the tender process got underway, the Government Contracts Committee, which deals with construction procurement issues, accepted that given the project’s scale and complexity, “the circumstances were such as to warrant a deviation from the standard form of Government contract and agreed a derogation from its use”.

The committee is due to hear from Minister for Health Simon Harris and the Department of Health secretary general Jim Breslin.