Oireachtas Joint and Select Committees

Wednesday, 13 March 2019

Joint Oireachtas Committee on Health

National Paediatric Hospital Development Board: Chairperson Designate

9:00 am

Mr. Fred Barry:

I caution everyone that my comments are based on limited knowledge since I have just come into the role. Regarding the costs, I am not sure regarding the sum of €1.7 billion. I am more familiar with what is involved in the approximately €1.4 billion for the build than I am for the other €300 million being incurred by the hospital operating entity. I am not familiar with its cost structures. Regarding the €1.4 billion, as far as I can judge - and much of this is in the public domain - what happened was an underestimation of the scope of the project at a very early stage. That was compounded by initial tender documents for the construction, which did not properly pick up the full scope. That led to prices coming in which did not represent what the cost would be.

In any circumstance, it would have been better to have had more of the total cost determined through competitive tendering rather than partially through competitive tendering and partially through subsequent negotiation. We could argue the toss as to whether the price is exactly what it would have been if it had gone through competitive tender. I do not think, however, that it would be significantly different from where it has ended. When I was reviewing this with my future colleagues, I found that an independent expert signed off on many of the additional costs and adjudicated on them as fair and reasonable for the work involved. What we are looking at here is a late recognition of the scope of the work and what it is going to cost, rather than a case of spending far too much on achieving the result that is to be obtained.

On the question of reducing costs, a major value engineering exercise was carried out at the time of the original tender. An ambitious target to save €70 million was set at the time and a saving of about €20 million was achieved. I know value engineering has also been carried out over the past few months examining further measures and some efforts are also being made at the moment. We are now, however, in the area of diminishing returns. There are no savings to be had that will significantly affect the headline figure. The challenge in the next few years is to contain any growth in that figure. The committee will be aware from previous evidence that there is a GMP with the contractor for the main construction elements. There are, however, exclusions to that. There is inflation, which is outside of our control completely. That will be what it will be. There may also be issues to be dealt with if there are scope changes as medical technology evolves over the next few years. Regulatory changes may also affect aspects of the project.

Our challenges, in reality, in the coming years centre on getting the hospital built. It is a five-year programme to build and commission this project. Thousands of people will be working on a constrained site and the challenge for me, the board and the executive will be getting the hospital built safely. We do not want accidents on the site and that will be a key aspect. We also have to ensure we get the design and build quality we are entitled to get for the money being spent. In addition, there is also the challenge of mitigating the impact of large-scale construction on hospital operations and on the surrounding neighbourhood. We are building in a busy neighbourhood. We also have to procure a great deal of equipment and deliver it to the hospital, deal with the integration between ourselves and Children's Hospital Ireland, as well as with all of the unexpected events that will occur over a five-year construction programme. Those are the areas where my focus, and that of the board, will be in the years to come.