Mr. John Pollock:

We were particularly conscious of a potential impact from inflation, as evidenced by the collapse in Carillion in Ireland which has had implications for other contractors, including Sammon and MDY Construction, which were building primary care centres. If a contractor failed in any way during the construction project, it would have a major impact. It was reported across the water that Carillion was building the Midland Metropolitan Hospital in the UK and because the firm went bust, the project will overrun by an estimated €300 million and be delayed by a further three years. People do not fully understand that consumer price inflation is very different from construction tender inflation. The Society of Chartered Surveyors Ireland publishes on its website construction tender inflation figures on a half-yearly and yearly basis.

People say costs do not come down but they do at times. From 2007, when the construction industry was running full steam ahead, the fall in tenders to 2010 was measured at 50%. If a party bought a project in 2007 at €100 million, in 2010 contractors would price it at €50 million. That is a major drop and people at that stage were trying to buy business and protect their organisations. They were trying to use their balance sheet to trade. They were looking to avoid adversarial claims in their approach to projects. From approximately 2013 onwards, construction inflation started to rise at 3% and it has been trending now nationally at approximately 7%. In Dublin it trends higher than that. Our construction contractors priced the job in 2016 and they have absorbed the risk to date on the project.