Ms Tracey Conroy:

I will start with the first question. In regard to the evidence around the two-stage procurement process, it is important to say that, owing to the size and complexity of the project, and there was some discussion at the committee last week in this regard, it was decided at an early stage that the traditional design and tender method of procurement was not suitable or realistic. A procurement strategy was developed to ensure the new children's hospital would be delivered without further delay, as well as to deliver value for money, comply with public and EU procurement rules and reduce risk.

It is important to say there was extensive collaboration with the Government's contracts committee for construction. That committee recognised the challenges a project of this size and complexity would face in attracting contractors with the skill and capacity to undertake it. The Government's contracts committee accepted the principles of the procurement strategy in February 2014 and its procurement subcommittee agreed the detail of the strategy in May 2015, which is some way back in time. In regard to the investment decision for phase A, the Government was advised in April 2017 of the two-stage contract process, with stage one consisting of a scope refinement and value engineering process based upon tendered rates, as the Chair has mentioned, to finalise the contract sum and a guaranteed maximum price.

The Government was advised at the time that a risk contingency allocation had been set aside to fund the guaranteed maximum price. It is important to talk a little bit about the key components of that two-stage strategy.

The tendering of the substructure, or phase A, works on the basis of a full design with a full bill of quantities reflecting that, while then at the same time tendering the main project works, or phase B on a preliminary first stage design with an approximate and re-measurable bill of quantities, reflecting the preliminary first stage design.

Having started the phase A works on site, the second design phase for the phase B works could be completed, and the bill of quantities updated to reflect this.

By agreeing a guaranteed maximum price for the contractors involved, reflecting that detailed design, which requires the contractors to take all of the risk for the quantities thereafter, and limits their recovery of additional costs to clearly define scope challenges and changes and inflation in excess of 4% which might occur post-July 2019, it significantly de-risks the project. That was the decision was taken at a time.

In considering the benefits of two-stage procurement process-----