The cost of building the new national children’s hospital could be up to €60 million higher than originally envisaged, the Government has been warned.

The Irish Times understands that a confidential assessment given to senior officials in recent weeks has signalled that the bill for building the hospital could be substanitally higher than previously forecast due to inflation in the construction sector.

This is now estimated to run at more than 7.5 per cent, rather than a rate of just over 3 per cent at the time of previous cost projections for the development.

The Government previously indicated that the new national children’s hospital, which is planned for the campus of St James’s Hospital in Dublin, could cost about €650 million. It is understood this figure does not include the cost of equipping the building.

Well placed sources said the additional money required for the construction of the hospital could be up to €60 million but mainatined this was to be expected in a recovering economy. It was also pointed out that further additional costs may be incurred if An Bord Pleanála [ABP]require additional elements, such as access roads, if it approves the project.

“You can’t predict what ABP will do,” a well placed figure said.

Overall cost

One source said the final cost of the project would only be known once it is put out to public tender, but expressed the view that there would be healthy competition to build such a significant project and this could drive down the overall cost.

“It’s such an iconic project one would hope a big consortium would low ball to get it for prestige,” said the source.

In addition to the extra costs of construction, the prospect of more resources being needed to fit out the hospital was raised in a letter to the Minister for Public Expenditure Brendan Howlin in August 2014 when Minister for Health Leo Varadkar warned that providing IT services in the hospital when constructed could cost between €55 million and €80 million.

The Government said about half of the €405million proceeds from the sale of the national lottery would go towards the cost of building the new hospital.

A decision planning permission for the hospital is expected before mid-May.