Oireachtas Joint and Select Committees

Wednesday, 6 February 2019

Joint Oireachtas Committee on Health

Quarterly Update on Health Issues: Discussion
Quarterly Update on Health Issues: Discussion

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Chairman and the committee members for having me. I am more than happy, as the line Minister, to be here and I note the comments the Chairman has made and they will also be noted by others.

The contract with BAM has been signed for phase B. The decision to proceed was taken by Government on 18 December and that decision was conveyed by me to the director general of the HSE. I obviously conveyed the disappointment that Government felt about the lack of early warning systems and, therefore, the need for this external review in the letter I sent to the director general.

PwC has expertise in procurement and construction. It is important to say that, even when we were amending the terms of reference in recent days, we took on board the Chairman's concerns and PwC satisfied itself that it could deliver on those terms of reference. I am satisfied that is the case.

I will be very clear that the target cost for the hospital was €983 million. That was the sanction given by Government when it made its decision in April 2017. That was always meant to be the cost of the hospital.

There was a two-stage procurement used. The Chairman did not quite say this, but I presume he is thinking, as we all are, whether that was the right model to use. At the moment the view seems to be that it was. The report commissioned from Mazars by the project development board before we proceeded with phase B suggested that, while there were weaknesses and a lack of early warning, from my memory, the gross maximum price, GMP, process would have highlighted issues at an earlier stage than the traditional procurement model. One would hear about the overrun at the end of the project under a traditional procurement model whereas the two-stage process highlighted the problem earlier and we can now have the conversations about how to mitigate and manage the problems.

What happened when the Government approved €983 million? I have been asking a lot of questions about this, as one can imagine. We can talk about GMP processes and all of this, but, for people watching at home, the way I think of it is we effectively approved phase A, the excavation works, which, by the way, came in on budget. We also acknowledged there was further work to be done under phase B but, based on the outline design, the project would come in at €983 million. We were all badly let down when we went beyond the outline design and design teams, and the likes, did further work and it was clear that the costs were an awful lot higher. Where the responsibility for that lies is something that, even with privilege, I should not prejudice, though I have strong views about it, and I hope and expect PwC to get to the bottom of it. We will then act on that.

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