Mr. David Gunning:

I thank the Cathaoirleach and Deputies for inviting the NPHDB to discuss our 2023 audited accounts. I am the development board's chief officer. I am accompanied by Phelim Devine, project director, and Emma Curtis, medical director of NPHDB and a paediatric consultant at Tallaght. The NPHDB was established by statutory instrument in 2007 with the purpose to design, build, equip and furnish the children's hospital.

In November 2021, the Government strengthened the governance structures for the project. This led to the appointment of the HSE lead director and the creation of a national oversight group, which is chaired by the Secretary General of the Department of Health. The function of this group is to oversee, monitor and support the project’s progress regarding timeline, scope and budget, and provide an effective and consistent challenge to the programme implementation.

In February 2024, the Government approved an increase in the capital budget to €1.88 billion. The increase addressed long-standing budget requirements that were not included in the original 2018 budget, including construction inflation above 4%. Like other areas of the construction sector, the project costs have been affected by external pressures, including the impact on supply chains as a result of the pandemic and global events such as the war in Ukraine and Brexit.

In addition, the approved increase in the budget addressed areas identified in the 2019 PwC report. That report found that the children’s hospital was unique in scope, scale and complexity in comparison to any other health infrastructure project in Ireland's history. The authors were explicit in stating that the project's complexity should not be understated. The 2019 PwC report also noted a number of risks that had the potential to place further cost pressure on the approved capital budget. These included the contractor entitlements; an outturn of provisional sums, which were items for which there could be no cost certainty until their procurement closer to the end of the project; recovery of construction inflation above 4%; and the need for additional capacity and capability in the NPHDB executive team. All of the recommendations from that report have been implemented in full.

The NPHDB’s 2023 accounts have been audited and approved by the Comptroller and Auditor General. Expenditure for that year was €156 million, as Mr. McCarthy mentioned, including accruals and VAT. The audit for 2024 is continuing. There is a table in the slide with the key areas; I do not propose to go through it.

On claims management and legal proceedings, claims are a part of all major construction projects. When the contractor submits legitimate claims, they are paid. The NPHDB, acting on behalf of the State, vigorously defends any claims it believes to be without merit or inflated. The contractor - BAM - continues to submit a high volume of claims. However, based on the outcomes from the dispute resolution process, which includes adjudication, conciliation and determinations made by the employer’s representative, the net increase to the overall contract value to date is approximately €50.5 million, excluding inflation. This represents less than 6% of the original contract value of €910 million. The information pack provided in advance included an overview of the claims process, a summary table of the most recent claims and details of the five sets of current High Court proceedings.

Regarding a project update, the centres in Tallaght and Connolly hospitals, which opened in 2021 and 2019, respectively, were handed over to Children’s Health Ireland and are fully operational. We have provided the images and the documents where members have seen the final stages of the construction approaching at the new children's hospital. In addition, the Ronald McDonald House family accommodation unit at the main entrance to the children's hospital is being progressed by Clancy Construction. It is approximately 75% complete as of now, with a scheduled completion in quarter 3 of this year. Work is ongoing on fit-out, including 52 family rooms, communal kitchens and dining and support areas. Mechanical and electrical work is progressing well and power-on is scheduled very soon.

While the NCH is reaching the final construction phase, progress has not been made at the expected pace. Most internal and external areas have been brought to an initial stage of completion. As per the contract, these areas must undergo a four-stage inspection and sign-off process, and the stages are set out in the statement. Stages 1 and 2 are approximately 80% complete and stage 3 is expected to begin shortly. Technical commissioning, which concerns the hospital’s mechanical and electrical systems, is also under way and is approximately 70% complete. It will continue until the substantial completion.

As far as equipping is concerned, advanced specialist medical and non-medical equipment, including MRIs, scanners, X-ray machines, dental suites and so on, have been installed and final commissioning is currently in progress. The construction of the hospital’s helipad is complete. It now needs to be commissioned, and following test flights, we would sincerely look forward to the licensing being completed by the Irish Aviation Authority. The NPHDB has appointed ClearSphere to carry out four specialist fit-outs within the hospital. These are scheduled for completion very soon.

On the timeline, when we appeared before the Oireachtas Committee on Health in September 2024, BAM had committed to a completion date of June 2025. In the past seven months, BAM has achieved approximately 60% of its planned progress as set out in that programme. We hold BAM to account across several KPIs, and all of these are currently indicated as being behind schedule. On 6 May, BAM indicated to the employer’s representative that it had extended the programme's substantial completion date to 30 September. Accordingly, the employer’s representative has formally requested that BAM submit a detailed programme setting out its actions and reasons for delay.

This further delay is a cause of great frustration. While we acknowledge that progress is happening, the pace at which it is happening is insufficient to meet the 30 June deadline that BAM committed to. At a meeting in early October 2024 with the former Minister for Health, BAM committed to permit early access three months prior to substantial completion. Early access for CHI has not yet commenced, as the areas identified for early access have not yet been completed to the standard required by the contract. We have been engaging intensively with BAM and CHI to enable this early access as soon as possible.

The NPHDB continues to utilise all levers in the contract to compel BAM to conclude its work and fulfil its contractual responsibilities. The NPHDB is focused on ensuring that the quality of every room, clinical space, operating theatre, play area and so on meets the quality standard that is required by the contract. Any rooms or spaces that do not meet that required standard will be rejected.

In conclusion, I assure the committee that the NPHDB is working with our colleagues in CHI, the Department of Health and the HSE and with the contractor to bring this world-class hospital to completion as soon as possible. We understand and share the concern that it has not been completed. Once completed and operational, however, this hospital will be transformational.