Children’s Hospital builders make claims for €446m in extra costs

The builders of the National Children’s Hospital (NCH) have made more than 900 claims for additional costs totalling around €446 million, the Dáil’s public spending watchdog has been told.

There has been controversy over the huge project for years amid spiralling costs and delays which means that the hospital will not now open for patients until 2024.

The last official figure for the cost of the project was €1.433 billion.

There is concern the final cost will be much higher when delays - some caused by the Covid-19 pandemic - and other issues like inflation in the cost of construction materials and Brexit impacting on the supply of goods and services, are factored in.

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Officials from the National Paediatric Hospital Development Board (NPHDB) and Department of Health refused to provide the Dáil's Public Accounts Committee (PAC) with current estimates of the final cost.

NPHDB chief executive David Gunning said claims by the contractor BAM have the potential to contribute to the overall cost of the project but elaborating on the estimated total cost could compromise the board's ability to negotiate on behalf of the State.

Fiona Prendergast, Director of Health Infrastructure at the Department of Health, said there is an analysis on the best way forward for the NCH project but it is "commercially sensitive and must remain confidential for an extended period".

She said it would be “inappropriate” and “likely detrimental” to the project to speculate on the costs.

Fianna Fáil TD Paul McAuliffe said there is "huge frustration" surrounding the project and he asked for the total value of the claims made by the contractor.

The assessment of the claims involves a review by an Employer Representative who at this point has been notified of 906 claims totalling €446 million.

The number of these that have been referred to the project board for conciliation stands at 549.

Just nine claims - totalling €2.9 million including Vat - have reached the point where they’re agreed and no longer in the dispute management process.

Mr McAuliffe suggested that the cost of the NCH could be in the region of €1.9 billion as a result of the claims, while accepting that “they may not go that way”.

Defending claims

Mr Gunning said: “One of our main tasks I would say is defending each and every one of these claims.”

He said the claims defence budget is in the order of €15 million with €2.3 million spent in 2020, adding: “We believe this money is well spent to save the State money longer term.”

Social Democrats co-leader Catherine Murphy asked Mr Gunning if the NPHDB is making counter claims over delays believed to have been caused by the contractor.

She pointed to information the NPHDB previously gave the PAC outlining how by the end of December 2019 the contractor had progressed 8.5 per cent of the work by value when it should have been progressed by 22 per cent at the time.

Ms Murphy said these kinds of delays have implications in terms of increased costs through construction inflation.

Mr Gunning said there are provisions in the contract for penalties for delay or as he described it from “liquidated and ascertained damages”.

However, he said such matters were for consideration during the “final furlong” of the project and there is no provision in the contract to make an interim claim of delay.

Ms Murphy asked about a delay last year where the Government shut down construction sites due to the pandemic but the builders didn’t return to the site for 15 weeks.

Mr Gunning said there was “a lot of pressure from the contractor seeking some additional costs to be borne by the development board, by the State”.

He said the NPHDB has not agreed to pay additional costs which the PAC was told were claimed on the basis of delays related to Covid-19.

Sinn Féin TD Matt Carthy said the original estimate for the cost of the NCH was €800 million and suggested it would "very likely exceed €2 billion".

Ms Prendergast said she was not prepared to discuss such a figure, adding: “At no stage has this department ever considered a figure of €2 billion.

“I’m not sure where that number is coming from. There’s a range of numbers out in the public domain that we won’t comment on.”