Oireachtas Joint and Select Committees

Thursday, 16 June 2022

Public Accounts Committee

National Paediatric Hospital Development Board: Financial Statements 2020

9:30 am

Mr. David Gunning:

I will answer that question. There are a number of indices published. One can pick up consultant reports that give all sorts of forecasts but the contract specifies three specific ones. The first is the Linesight construction inflation report, the second is the AECOM construction industry report and the third is the Society for Chartered Surveyors of Ireland inflation report. Those reports are retrospective and look back at the previous year. An average of those three is used to determine the number that is applied to the contract. Let us say the number was 10%. In that case, we would take away the 4%, which is at the contractor's risk, and that number goes into that compounding formula that goes from year to year to calculate the interest. That is the practical way it was worked out. We have to assess that by the end of June of any particular year and make the relevant payment to the contractor for the previous year in the July payment. That is the practical way it all works.