Oireachtas Joint and Select Committees
Thursday, 19 October 2023
Public Accounts Committee
Children’s Health Ireland and National Paediatric Hospital Development Board: Discussion
9:30 am
Brian Stanley (Laois-Offaly, Sinn Fein)
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Apologies have been received from Deputies Brady, Verona Murphy and James O'Connor. I welcome the witnesses. I remind all those in attendance to make sure their mobile phones are switched off or on silent mode.
Before we begin, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or of those who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. This means that the witnesses have an absolute defence against any defamation action for anything they say at the meeting. However, witnesses are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure it is not abused. Therefore, if the witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. Witnesses are reminded of the long-standing parliamentary practice that they should not comment on, criticise, or make charges against any person or entity by name or in such a way as to make him or her identifiable, or otherwise to engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply.
Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
The Comptroller and Auditor General, Mr. Seamus McCarthy, is permanent witness to the committee and he is accompanied this morning by Ms Elena Moldovanu, audit manager at the Office of the Comptroller and Auditor General. It is Ms Moldovanu's first time attending a meeting of the committee. She is very welcome.
This morning, we will be engaging with representatives from Children's Health Ireland and the National Paediatric Hospital Development Board. We have Mr. Derek Tierney, assistant secretary general from the Department of Health, with us as well. We will examine the financial statements 2021 for Children's Health Ireland and the financial statements 2021 for the National Paediatric Hospital Development Board. The following areas have been flagged for particular interest: the independent review of the operating theatres in the new children's hospital; the timeline for the commencement of the commissioning period for the hospital; the level of claims and potential liability; updated budget and timelines for the completion of the new children's hospital; and the handover of the new children's hospital to Children's Health Ireland.
From Children's Health Ireland, we are joined by Ms Eilísh Hardiman, CEO, Mr. Stephen Flanagan, chief financial officer, and Ms Julia Lewis, transformation director. From the National Paediatric Hospital Development Board, we are joined by Mr. David Gunning, chief executive officer, Mr. Phelim Devine, project director, and Dr. Emma Curtis, medical director. As stated, Mr. Tierney from the Department is also with us. There is a big list of witnesses this morning. They are all very welcome.
To begin, I ,call on Mr. Seamus McCarthy, Comptroller and Auditor General, to make his opening statement.
Mr. Seamus McCarthy:
As the members are aware, the National Paediatric Hospital Development Board is responsible for the planning, design, construction and fit-out of the new children's hospital at the St. James's campus, together with the construction of two paediatric outpatient and urgent care centres located at Tallaght and Connolly hospitals. Children's Health Ireland, CHI, will operate the services in the buildings into the future. Construction and fitting out of the centres at Tallaght and Connolly hospitals has been completed and they are now being operated by CHI. As members are aware, construction of the main hospital at St. James's is ongoing.
The overall budget approved by the Government in December 2018 to get the hospital and both satellite centres up and running was €1.73 billion. The budget for the physical development and equipping of the hospital and the satellite centres is the responsibility of the National Paediatric Hospital Board and amounts to €1.43 billion. The budget for the parallel CHI integration projects is €300 million. The development board is funded by Oireachtas capital grants provided via the HSE. In 2021, the grant funding provided amounted to €302.8 million, matching the expenditure in the year. The 2021 financial statements were certified by me on 22 September 2023 and have just been presented to the Oireachtas. I issued a clear audit opinion. However, my report draws attention to a disclosure in the statement on internal control of a board payment in March 2022 of almost €1 million in penalties to the Revenue Commissioners in respect of the board's non-compliance with certain tax obligations in the period 2016 to 2019.
Note 2 to the financial statements indicates that the total accumulated project costs incurred by the board to end 2021 amounted to €923.5 million including VAT. This included €86.3 million spent on the construction of the assets at Tallaght and Connolly, which have been transferred and are no longer included as assets of the board.
In note 8, the board indicates that at the end of 2020-21 it had future capital payment commitments estimated at €527.8 million. Combined with the expenditure already incurred, this implies an expected total project expenditure of at least €1.45 billion, which exceeds the approved project budget. Further commitments yet to be contracted for and the value of claims yet to be finalised will raise the overall cost further.
Notes 12 and 13 to the financial statements disclose that the board has been notified of a large number of claims by the main contractor. The note also outlines the structures in place for the resolution of such claims, as provided for in the contract and the board's intention to strongly contest the claims.
CHI was established as a legal entity on 1 January 2019 through an amalgamation of the existing children's hospitals located at Crumlin, Temple Street and Tallaght. CHI operates as one of the section 38 agencies supported by grant funding from the HSE. In 2021, income totalling €459.4 million was recognised by CHI. Grant funding received amounted to €415 million including €17.5 million provided to fund hospital integration programmes.
Retained staff superannuation contributions amounted to a further €15.5 million. Income from patient charges amounted to €19.1 million and other income was €9.3 million. Expenditure in 2021 totalled €462.1 million. This comprised €327.1 million spent on pay and pensions and €135 million on non-pay. The deficit for the year was €2.3 million.
The 2021 financial statements were certified by me on 14 October 2022. I qualified my opinion on the financial statements on the basis that, in compliance with the directions of the Minister for Health, CHI accounts for pensions only as they become payable. The standard accounting approach requires that financial statements recognise the costs of retirement benefit entitlements earned in the period and the accrued liability at the reporting date. The audit report also draws attention to non-compliant procurement by CHI, about which the committee has previously corresponded with the chief executive officer.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Mr. McCarthy. I now call on Ms Hardiman to give her opening statement. There are three opening statements, so I ask everyone to try to keep it within five minutes.
Ms Eil?sh Hardiman:
I thank the committee for the opportunity to address it today on CHI's financial statements for 2021 and to give an update on the commissioning programme for the new children’s hospital, including an extensive integration and transformation programme currently under way.
I am the chief executive of CHI. I am joined by Mr. Flanagan and Ms Lewis, who is charged with leading CHI’s efforts to be ready and able to move into and open the new children’s hospital.
We represent 4,845 people working diligently at the front line of healthcare in CHI at Temple Street, CHI at Crumlin and CHI at Tallaght, as well as in the CHI urgent care centre at Connolly Hospital. Despite often dealing with outdated and inadequate infrastructure, annually CHI treats 153,000 emergency department attendances, 26,000 day cases, 23,000 inpatient admissions and 15,500 theatre procedures.
The financial statements before the committee have been audited by the Office of the Comptroller and Auditor General for the year ended 31 December 2021. Notwithstanding issues like Covid-19 and the ransomware attack on the HSE, significant increases in activity were attained in 2021, plus, we opened the new outpatient and emergency care unit in CHI at Tallaght. As members will have read in our accounts, CHI returned a deficit of €2.3 million for 2021, compared with a surplus of €584,603 in 2020. This deficit related to statutory accounting adjustments made during the preparation of the financial statements. CHI achieved break-even on operational expenditure compared with the final HSE allocation provided for 2021.
The key drivers for the increase in HSE allocation of approximately €28 million in 2021 are: full-year funding in relation to service developments in 2020; significant new service developments across CHI in 2021; Covid-19 funding; funding associated with public pay policy implementation; and the implication of the reduced scope for private income generation. An increase in patient income of €2.7 million primarily reflects the return of increased patient activity and the reduced impact of Covid-19 when compared with 2020.
Total expenditure in CHI increased by €33 million in 2021. Of this amount, €20.6 million relates to pay expenditure including national pay restoration and increments, increased headcount related to service development funding, the full-year pay costs of prior years’ service developments and Covid-19 related costs. Non-pay expenditure increased by €12.4 million, driven by inflation. The main drivers of clinical expenditure growth have been in medical and surgical supplies and laboratory costs.
CHI notes the committee's correspondence of October 13, outlining its concern regarding non-compliant procurement processes. CHI is very aware of our duty to comply with procurement regulations when expending funds in the delivery of our mandated services. While CHI has disclosed amounts related to non-compliant procurement in our financial statements, significant progress has been made in this regard. CHI has worked since its inception to centralise procurement teams, implementing standardised processes and controls. In 2023, CHI went live with a single HSE-supported SAP finance system across all CHI locations, providing a single foundation system for contract, vendor and material management and the end-to-end procurement to pay cycle. While much progress has been made, we still face challenges in achieving 100% procurement compliance. Reasons for this include: the complexity and range of patient treatments across our 39 clinical specialties; significant challenges in facilities management, especially in CHI at Temple Street, and often urgent requirements to act and avoid impacts on delivery of services. While noting progress made, in the interest of transparency we continue to foresee a level of non-compliance in 2022 as we address these challenges.
As client to the National Paediatric Hospital Development Board for the new children’s hospital project, I welcome the opportunity to provide this committee with an update from CHI’s perspective. Once the development board hands over a fully completed building, CHI will complete whole hospital commissioning of the building for it to be operational to international standards. The commissioning team is currently implementing a detailed commissioning plan to ensure the safe opening of the children’s hospital on a shared campus with St. James’s Hospital. CHI has secured commissioning experts who have extensive international knowledge and experience of successfully opening digital hospitals and have commissioned 24 hospitals across the world.
A dedicated commissioning framework is being used to ensure day one opening success, with 171 workstreams to be completed before opening the children’s hospital. The hospital is being commissioned to international best practice to open a digital hospital by applying Joint Commission International, JCI, accreditation standards to the commissioning process. The cross-city clinical directorate model was implemented in 2023, which is CHI’s clinical and operational leadership model for the new hospital.
A detailed CHI staff engagement programme is in place to educate and involve our staff in the commissioning process. All areas of the children’s hospital will have agreed a scope of service for each department, service and function as part of this engagement process.
To get our state-of-the-art children’s hospital ready, there are significant interdependencies and complexities that need to be thoroughly planned, including alignment with go-live of the electronic healthcare record. To ensure safe services for children and families on opening the hospital, all staff will need to be familiar with the building and with new ways of working in a digital hospital. To do this, staff will receive training in their new teams, know how to use new equipment and will run scenarios such as running a ward, theatres and a helicopter landing. All of this activity will take place while 36,000 pieces of equipment are placed, installed and commissioned. It is a complex operation requiring meticulous planning. We have provided an update on operating theatres to the committee on 19 September, and I am happy to answer any questions on this.
CHI’s primary focus at all times is to deliver safe care to the highest possible quality. Our integration journey continues and by the time the new hospital opens, we will be one team with one set of standards and processes. We look forward to continuing to meet the needs of children and their families in our current hospitals, as we wait for the day when we can welcome them to the new children’s hospital; one which is nothing less than what they need and deserve.
Mr. David Gunning:
I thank the committee for inviting the National Paediatric Hospital Development Board, NPHDB, today to present on our 2021 financial statements 2021.
The NPHDB’s 2021 accounts have been audited and approved by the Comptroller and Auditor General. The expenditure as at 31 December 2021 for that year on the design and build of the hospital was €302.82 million. I draw the committee’s attention to the table on the bottom of page 1, which sets out not only 2020 and 2021 audited financial statements but also includes 2022 and 2023 year-to-date to September 2023 unaudited financial information for the committee.
In December 2018, the Government approved an investment decision of €1.433 billion for the design, build and equipping of the new children’s hospital and the two outpatient and urgent care centres at Tallaght and Connolly hospitals. There are a number of contract provisions that were not included as part of the capital approval. These include construction inflation in excess of 4%, any changes in scope resulting from healthcare policy changes; statutory changes; Covid-19, implementing PwC recommendations, claims defence and the sectoral employment order.
These items have added cost to the project. To date, the total amount spent by the NPHDB up to 30 September 2023 is €1,361,703,344, including accruals and VAT. This leaves €71 million remaining in the current overall capital budget of €1.433 billion. Work on the hospital is 92% complete as of the end of September 2023.
I will move on to the issue of progress to date. I do not propose to read through the detailed bullets in the opening statement. I would like to say that the NPHDB is fully engaged with CHI on the operational commissioning phase of the hospital to ensure there is a seamless handover at substantial completion. The key work streams are equipping, technical commissioning and the hospital's ICT systems.
On the programme timeline, the building is well advanced but there is still some way to go to substantial completion. Typically, in a building of this size and scale, the last 10% is the slowest to complete because it incorporates all the finishes, system integration and commissioning to ensure the room finishes are to the highest clinical standards. The contract with BAM states that there was substantial completion in August 2022. Some additional time was awarded to BAM by the employer’s representative, which extended the contractual substantial completion date to November 2022. Clearly, this date has been missed. Over the course of the past two years, we have received a number of revised programmes from BAM, with changing substantial completion dates.
We said at the Joint Oireachtas Committee on Health in July 2023 that BAM had committed to delivering an updated programme. This programme was delivered in mid-July 2023. The NPHDB highlighted concerns with this programme and this resulted in BAM providing a new programme at the end of September 2023. This September programme is currently being evaluated by the employer’s representative. The stated substantial completion date in this latest programme is 29 October 2024. We are in constant engagement with BAM to ensure that the October 2024 substantial completion is achieved. All our efforts are focused on getting certainty on this date.
Regarding costs, the NPHDB has kept the HSE and the Department of Health informed of the potential cost implications of the extended timeline. The capital request was submitted to the HSE lead director on 31 May 2023. This is being considered by our stakeholders and as such I am precluded from discussing the details of those figures.
On claims, etc., the NPHDB has provided the committee a pack with details on the current claims status. BAM continues to submit large volumes of claims. Some 2,379 claims have been raised up to the end of September 2023. The substantiated value as claimed by BAM is €769 million. The employer’s representative has determined 1,610 claims at a value of €16.75 million and a further €2.1 million has been agreed through the dispute management processes. The additional €18.85 million is approximately 2% of the overall contract value.
The NPHDB is fully committed to delivering the new children’s hospital in a timely manner, delivering the best possible value to the State, to a standard and quality that the children of Ireland deserve and staff of CHI are proud to work in. We have worked and will continue to work with BAM to do all we can to ensure certainty on the completion date. We are acutely conscious of the need for certainty required by our colleagues in CHI. The substantial completion date of the building phase becomes the start date of the operational commissioning phase. I want to assure them and all members of the committee that we remain focused and fully committed to delivering the project.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Mr. Gunning. The first committee member this morning is Deputy Dillon. He has 15 minutes.
Alan Dillon (Mayo, Fine Gael)
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I would like to welcome our guests back to the Committee of Public Accounts. They are very welcome. It is safe to say that we all want to see this hospital being built as quickly as possible. We are dealing with children who need better healthcare and certainly better outcomes. This hospital will be revolutionary in terms of access to the future healthcare they all require.
I will start with Ms Hardiman. The development board has indicated that the substantial completion date in their latest programme for the children's hospital is now 29 October 2024. How important is it for CHI to have clarity about when that timing will be?
Ms Eil?sh Hardiman:
I thank Deputy Dillon. Of course, all our planning falls out from the substantial completion date. We have an operational commissioning programme. Once the development board has finished with the technical commissioning, we will have to get this hospital open. We have, as the Deputy can see, almost 5,000 staff who need to be made familiar with all the buildings. We also have the electronic healthcare record and many other ICT projects that need to be implemented. Certainty around the date is therefore important to us. While we have a plan, it is important to ground it in time. It is critical, yes.
Alan Dillon (Mayo, Fine Gael)
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I thank Ms Hardiman for that. CHI will take over following the end of the building phase and the technical commissioning. How long will the commissioning programme take?
Ms Eil?sh Hardiman:
I want to assure the Deputy that we are working very closely with the development board. Even in the pre-substantial completion period, our teams are actually engaging with the technical commissioning element of it. We are loading as much as we can into the pre-substantial completion period to try to achieve the tightest timeline. The Deputy can appreciate that we want to get this hospital open as fast as possible, as he suggested in his opening remarks.
Ms Eil?sh Hardiman:
We have made an estimate with these international experts who have opened 24 hospitals. We have timed out what is at least a six-month programme of operational commissioning. That will obviously be subject to even more as we continue to do our planning. However, that is currently our estimate process.
Alan Dillon (Mayo, Fine Gael)
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Will it be until the end of April 2025?
Alan Dillon (Mayo, Fine Gael)
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Is CHI saying that the hospital will see children being admitted, and the hospital being opened, by April 2025? When does Ms Hardiman expect the hospital to be fully operational for admissions and for public use?
Ms Eil?sh Hardiman:
We are saying the same. As I said, the commissioning period will take at least six months. The Deputy has heard from my colleague, Mr. Gunning, that the current date is the end of October, and it is subject to that programme being tested by the development board. From our perspective, we have a detailed plan with 171 workstreams that need to be done. We also have a migration plan because we will then need to move the three children's hospitals. That will be over a period we estimate will take between seven and ten days. As we get nearer to the planning, we will firm that up and that will be done well beforehand. That is our plan. Then, it is our plan to be fully operational. Because we are already in four locations, opening up another location will present a significant challenge from a staffing perspective. This therefore needs to be a pretty narrow period. We do not intend for that to be a long period of migration. Then, we will close down the units in Temple Street and Crumlin and we will move out the inpatients from Tallaght.
Alan Dillon (Mayo, Fine Gael)
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CHI was allocated a project budget of €300 million. Does that include the commissioning element?
Alan Dillon (Mayo, Fine Gael)
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In terms of the experts CHI has engaged with and the procurement it has entered into, does it feel it will stay within that budget of €300 million to deliver the commissioning programme and have it fully operational?
Ms Eil?sh Hardiman:
That figure was originally for five years and we have managed to make it stretch to seven years because of the delays. However, further delays on this project mean that CHI will require additional funding. We are engaging with the HSE through the governance structure that is in place with the lead director in the HSE and with the officials in the Department of Health in relation to this. This is a matter that has to go to the Government for consideration.
Alan Dillon (Mayo, Fine Gael)
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What are the estimated or predicted additional costs?
Ms Eil?sh Hardiman:
At the moment, we are still in discussions with the HSE officials and the Department of Health. It is my understanding that this will have to be considered by the Government.
Alan Dillon (Mayo, Fine Gael)
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It is important that we have an understanding in the Committee of Public Accounts in terms of what that figure could subsequently be.
Alan Dillon (Mayo, Fine Gael)
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It is a very important figure on which we would like to have visibility if there are going to be cost overruns. CHI is before the Committee of Public Accounts. This has implications for the taxpayer and we are seeking information on that. I would ask that we get a note from CHI regarding the breakdown of costs.
Alan Dillon (Mayo, Fine Gael)
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I will move on to Mr. Gunning with regard to the contract compliance programme that was submitted to the board by the contractor, BAM. It eventually got one in mid-July. Did the board have any concerns from the one that was submitted in July?
Alan Dillon (Mayo, Fine Gael)
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What were the concerns?
Mr. David Gunning:
-----of problems with it. Just to be clear, it was given to us in July and it was clear as soon as the end of July and then into August that the contractor was not able to deliver to its own programme in the July period. There were a number of technical reasons for that around the profile of the work, the way it was laid out and the sequencing of the activities. There were issues with a number of areas that were incorrect. We engaged with the contractor to point out these difficulties and point out the underperformance with regard to what it had just told us it was going to achieve. It did replace that programme-----
Alan Dillon (Mayo, Fine Gael)
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What changes?
Alan Dillon (Mayo, Fine Gael)
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Is Mr. Gunning happy and satisfied with the new programme?
Mr. David Gunning:
To be clear, there is a two- to three-month review period. The contractual responsibility with the review of the programme rests with the employer's representative. That is a process that has to be gone through contractually and it will take two to three months. I will say that we are concluding our initial review of the new programme. There are still some issues with it but it is an achievable programme.
Alan Dillon (Mayo, Fine Gael)
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Mr. Gunning is saying it can be-----
Alan Dillon (Mayo, Fine Gael)
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Mr. Gunning is expecting 100% compliance with this new programme, and if not will there be-----
Mr. David Gunning:
It is subject to review. Our initial assessment is that it is an achievable programme. I would not ever say we will get 100% compliance with anything - we have not on this project to date - but is it good enough and will we get it in October? The answer is that we believe it is an achievable programme.
Alan Dillon (Mayo, Fine Gael)
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Has the board implemented sanctions or penalties for any variance in the programme?
Alan Dillon (Mayo, Fine Gael)
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We have seen delivery commitments time and time again and we have failed to achieve them. What is different with this programme?
Mr. David Gunning:
The Deputy asked me if we can apply sanctions. Under the contract, a failure to provide a programme by the contractor is something the development board can take action in relation to. That action amounts to withholding 15% of monthly payments. We have done that in the past. Now, we have a programme from the contractor so there is no basis for us to apply any sanction under the contract.
Alan Dillon (Mayo, Fine Gael)
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Again, that contract fell out of compliance in 2021 and we are in October 2023.
Alan Dillon (Mayo, Fine Gael)
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Is the board satisfied with the current activity on site and the productivity from the contractor?
Alan Dillon (Mayo, Fine Gael)
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That is not the question.
Mr. David Gunning:
To put it in context, myself, the chair and others have detailed engagements with senior executives from the contractor. We have seen quite an impact flowing from that engagement with regard to increases in resources and commitments for further increases in resources. We are seeing what I would say are behaviours on site that we welcome and that give us some confidence. We are not there yet, but we have been given some confidence that things have improved. That is what I am saying.
Alan Dillon (Mayo, Fine Gael)
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When will you get there?
Alan Dillon (Mayo, Fine Gael)
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How is the board tracking progress? Is it weekly, monthly or daily?
Alan Dillon (Mayo, Fine Gael)
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In terms of the cost, and we have talked about costs numerous times at this committee, the most recent information is that it is €1.73 billion. Is that correct?
Alan Dillon (Mayo, Fine Gael)
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What is-----
Alan Dillon (Mayo, Fine Gael)
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What is Mr. Gunning's current estimate of the remaining payments to which the board is already committed?
Alan Dillon (Mayo, Fine Gael)
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We are aware of that.
Mr. David Gunning:
With regard to the capital sum required to get this project across the line, the development board has been through a process of finalising those numbers. They were shared with our lead director and the Department of Health at the end of May this year. It is my understanding that they are the subject of a pending memo to the Government.
Alan Dillon (Mayo, Fine Gael)
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Do they include the value of the claims that have already been agreed?
Alan Dillon (Mayo, Fine Gael)
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These are straightforward questions-----
Alan Dillon (Mayo, Fine Gael)
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-----and I expect an answer.
Alan Dillon (Mayo, Fine Gael)
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To what value?
Mr. David Gunning:
It is in the table that we provided to the committee. At the bottom of that table, the Deputy will see that under the heading of conciliations agreed and no longer in dispute - this is on the left-hand side - the number is 28 and the value of those claims is €2 million. In addition, claims have been determined by the employer's representative. There were 1,610 claims for which BAM was seeking €641 million. The employer's representative has said the value of those settlements, or what she is proposing, is €16 million. Therefore, the total amount settled is the sum of those, which is €18.8 million, which is less than 2% of the value of the project. The increase in the liability of the project from its original value is approximately 1.8%.
Alan Dillon (Mayo, Fine Gael)
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What is in conciliation at the minute?
Alan Dillon (Mayo, Fine Gael)
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What is the value associated with that?
Alan Dillon (Mayo, Fine Gael)
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It is €656 million. With regard to the disputes Mr. Gunning has talked about, how many claims are currently in the High Court?
Mr. David Gunning:
There are two separate proceedings in the High Court. Briefly, we refer to the first one as the phase B claim. This where BAM made a claim on the phase B instruction, which the NPHDB issued instructing it to initiate and complete the phase B works. We are questioning the validity of that claim.
That claim was put during the moratorium, which we have discussed here previously. That was paused or put on hold in the High Court. As of earlier this year, before the summer, BAM reinitiated those proceedings and they have been admitted to the commercial list of the High Court. There will be a hearing today in relation to the discovery phase of that particular process. The second one is the frame claim, which is in the High Court, but nothing is happening in relation to it.
Alan Dillon (Mayo, Fine Gael)
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Is there a value associated with both of those? Have they been submitted-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Could Mr. Gunning give us the figures determined by the employer's representative?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Please do.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It would be good if somebody could get that information during the meeting.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Yes, that would be very useful. There are many issues around the word "compliance". I will raise a different type of compliance. The Comptroller and Auditor General has drawn our attention to a settlement of almost €1 million between the board and the Revenue Commissioners in regard to relevant contract tax. I want to explore how that occurred. Will Mr. Gunning clarify the figures we have that are related to nearly €1 million in transactions? The contract tax should have been withheld by the hospital board. Will Mr. Gunning explain how that came into being?
Mr. David Gunning:
I can explain. This was a misclassification of tax. Instead of operating using the relevant contracts tax, RCT, system, the development board at the time operated VAT. This was in the period from 2016 to the middle of 2018. During that period, the wrong tax system was being operated. It is important to say that exactly the same amount of money was paid by the development board to the Revenue Commissioners during that period.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is Mr. Gunning saying there was no penalty attached?
Paul McAuliffe (Dublin North West, Fianna Fail)
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What was the amount of that penalty?
Paul McAuliffe (Dublin North West, Fianna Fail)
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When Mr. Gunning suggests that it is the same amount, therefore, that is not true because there is a penalty of almost €1 million.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is it fair to say that the error of using the wrong system, or the "misclassification", as Mr. Gunning calls it, has cost the taxpayer €1 million?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Obviously, it has come back to the Revenue Commissioners. However, it has cost the project €1 million. That is a significant sum.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Given all the legal and governance advice available to the NPHDB, why did the hospital board which deals with construction contracts not explore the possibility that the RCT system should have been retained? Mr. Gunning spoke of 2018, whereas the date I have is 2019. Why did the board not sit down with the Revenue Commissioners to discuss this until that date?
Mr. David Gunning:
I was appointed in September 2019. One of my first actions was to get advice from tax advisers in relation to this matter. The tax advice was that the development board should make a voluntary declaration in relation to this matter. That is what we did. That was the decision taken by the finance, audit and risk committee and, ultimately, it was the decision taken by the board.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is Mr. Gunning saying that the question had not arisen until he raised it?
Paul McAuliffe (Dublin North West, Fianna Fail)
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The reason to have the board is for it to be the legal vehicle for managing the contracts and the financial arrangements around them. Was this not discussed at the very beginning of the contract?
Mr. David Gunning:
I have been reading the minutes of various things to understand and give the committee this detail. I was not personally present at the time. The understanding was that because the development board did not see itself as a contractor, it therefore did not apply RCT and it applied VAT. Again, it was exactly the same amount of money that was remitted to Revenue.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Was that the opinion of the internal staff or was it the-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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Is it the case that no external legal advice was sought when that decision was made?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Okay. I will move on to the increased costs claims. I have some sympathy for the NPHDB in this area. It is well known that contractors often tender for something and they make their profit through the process of increased costs claims and wearing people down along the way. By and large, the NPHDB has fought many of those claims, with some success. I am fearful that we might be rushing to buy out the options within those contracts. Is the board seeking to buy out options where increased costs claims might apply?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Yes.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Okay, so I-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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I am interested in the process of how that is done. When the decision is made to do that, what checks does the board put in place to ensure that what has been claimed by the contractor is physically in place on the ground?
Paul McAuliffe (Dublin North West, Fianna Fail)
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She examines the work on the ground, on-site and the condition of the outcome.
Mr. David Gunning:
Correct. She is very experienced and she has a team that conducts that work. That work is carried out and she makes her determinations. In general, that is it. As the Deputy can see in the top half of the table, she has made determinations on 1,610 claims for which BAM is claiming €641 million. She says those are worth €16.7 million to the contractor and we align with that position. However, if I could just go to the bottom of the table-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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She is independent.
Paul McAuliffe (Dublin North West, Fianna Fail)
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That work is then taken at face value.
Paul McAuliffe (Dublin North West, Fianna Fail)
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Something like-----
Paul McAuliffe (Dublin North West, Fianna Fail)
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I take Mr. Gunning's point. Something like a building management system will have huge levels of complexity. Even the detailed measurement of the components of that system could incur a very significant cost. We have seen here how building sizes have been measured incorrectly and have incurred huge costs for the taxpayer. My question is on the specific measurements of those works. Are they being carried out to Mr. Gunning's satisfaction?
Paul McAuliffe (Dublin North West, Fianna Fail)
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Unfortunately, I am due to ask a parliamentary question, which will save two minutes. I might come in for the second round.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Deputy McAuliffe has two minutes' credit.
Paul McAuliffe (Dublin North West, Fianna Fail)
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I am glad.
Alan Kelly (Tipperary, Labour)
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I appreciate that a number of the witnesses have not been involved throughout this project and were not responsible for some of the issues that went on in the past.
I ask for short answers to my questions because our time is obviously limited. I am not being rude; it is just the way we have to work. Deputy Catherine Murphy and I have a long track record on this issue going back to a previous Committee of Public Accounts. I think it was in February 2019 that I asked the then Secretary General if this whole project would come in at under €2 billion. I said I did not believe it would and he could not give an answer. I said it would go over €2 billion.
That was nearly five years ago. I am not clairvoyant or anything. I know there were other issues but this is going to come in substantially over €2 billion. If anyone in the room would like to contradict that, he or she should please tell me now. That is as I expected.
My question is going to be to the Department because we have heard a lot from Mr. Gunning and Ms Hardiman. I appreciate everything they are trying to do and the conditions by which they have to do them. I have been in government and I understand the way in which these things have to be done.
Ms Hardiman and Mr. Gunning have put forward a plan as regards the expectation in terms of what capital they will require to close off this project. Is that fair? The question is directed to Mr. Tierney who, for the audience, is in charge of capital projects on behalf of the Department of Health.
Alan Kelly (Tipperary, Labour)
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So we have a ballpark budget of €1.4 billion for the infrastructure and building of the hospital and we have €300 million for the work Ms Hardiman is doing as regards commissioning. By the way, does the commissioning include additional staffing?
Alan Kelly (Tipperary, Labour)
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The current figures are that we have €1.4 billion plus €300 million, which is €1.7 billion, and it does not include staffing. That is plus X. We know that Mr. Gunning and Ms Hardiman - I have put my caveats as regards their roles, in fairness to them - have had to put in substantial claims on 31 May, both on the same day. The Department and the HSE are fully aware of what the capital envelope on this project will potentially be but it has not gone to the Government.
Alan Kelly (Tipperary, Labour)
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That is right.
Mr. Derek Tierney:
One of the primary reasons is that the contract that was signed does not align with the sanctioned budget. There are a number of provisions and entitlements to the contractor within the contract which were never catered for in the original budget so they will have to be accounted for. They include a recovery of inflation over 4%-----
Alan Kelly (Tipperary, Labour)
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In fairness, they are listed.
Alan Kelly (Tipperary, Labour)
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I accept all that.
Mr. Derek Tierney:
I guess what my colleague, Mr. Gunning, is bringing us to is that until we have a determination by the employer's representative, ER, on the programme - that would give everybody certainty, because the ER is an independent body under the public works contract. That will give us certainty on how robust the contract is from a contractual compliance basis, whether the 40,000 activities are logically linked, what is the critical path etc.
Alan Kelly (Tipperary, Labour)
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When does Mr. Tierney expect to be able to send a memo to the Government saying this is going to cost two point whatever billion euro?
Alan Kelly (Tipperary, Labour)
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So at the end of this month, Mr. Tierney expects that all the variables will be there for him to make a guesstimate as regards what it is.
Alan Kelly (Tipperary, Labour)
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As we all know, it will be well over €2 billion.
I listened to the Taoiseach talk this morning on Newstalk about it. One of the things he said was that BAM did not have enough workers on site. That was effectively it in layman's terms. Is that an accurate statement? I ask Mr. Gunning to respond very briefly.
Mr. David Gunning:
I think there are two issues. Yes, historically we have not had enough workers. BAM's progress up to July, on average, was 65% of its programme. BAM would argue that it has enough workers. Our argument is that it does not because if it is only hitting 65% then it is not getting-----
Alan Kelly (Tipperary, Labour)
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Let me just get it straight. Mr. Gunning has had a long history in this and in fairness to him, he has given very direct answers, I do not think there is a snowball's chance of the October deadline being met next year. In fairness to Mr. Gunning, he actually conditioned it in his commentary and in what he wrote, to protect himself. I think he is right. I do not think there is a snowball's chance of that happening.
I also think that when it comes to Ms Hardiman's work, which I read thoroughly - it is very comprehensive – I am very excited about some of it. The e-health part is something that I have been roaring and shouting about for years. I just do not think that the handover line and handover positioning is going to be at the stage that will allow this to happen, so we will not have this six months after that. I would even be surprised if this is up and fully operational in 2025 at all, based on the evidence that the witnesses have given us here. I am not saying that is their fault.
Let us just get some facts for the public. This project is going well north of €2 billion. That is what I would expect and it could possibly be even closer to €2.5 billion. I do not think anyone disagrees with that. We also have a situation where the Government is going to have a memo outlining in ballpark terms what that is, at the end of this month or early next month. Is that correct?
Alan Kelly (Tipperary, Labour)
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We have a situation where the chair of the board, to be fair to him, is hoping that his project will be completed and handed over on 29 October 2024, but we have a severe doubt about that. We know that until that happens, Ms Hardiman's work and CHI's work cannot fully happen until the date is met accurately, although I acknowledge some preparatory work can be done. Is that not all correct? Does anyone disagree with anything I have said? I want to break it down into bite sizes for the public watching.
I am sorry, but I forgot one piece. The outline of the amounts does not include staffing. I do not want to put Ms Hardiman on the spot but what figure are we looking at there?
Ms Eil?sh Hardiman:
As Deputy Kelly can appreciate, we are funded on an annual basis through the Estimates process and we work with the HSE on that. We have two Estimates processes before we expect to open in 2025. We are actively engaging with the HSE through the governance arrangements around what staffing we can bring in in 2024 and 2025. The Deputy can understand that there is some staffing that we cannot bring in because we do not have the resources for them to work in-----
Alan Kelly (Tipperary, Labour)
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Yes, I appreciate that.
Alan Kelly (Tipperary, Labour)
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Okay. I wish to raise a couple of other specific issues in the remaining time. I have a question for Ms Hardiman on electronic healthcare. I am a huge advocate for it and I have been talking about it for nearly a decade. My background is in technology. Is this reversible back into all other health scenarios within the HSE? In other words, has it been tested so that this will eventually be the healthcare that will be used across the health service? In other words, we are not spending a huge pile of money on something that cannot be reverse-engineered into the rest of healthcare in the HSE.
Alan Kelly (Tipperary, Labour)
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I accept that. I remember the history.
Alan Kelly (Tipperary, Labour)
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I just want to know if it is scalable.
Ms Eil?sh Hardiman:
I can get Mr. Flanagan, the CFO, to talk to it a bit more, because in the procurement process we identified how we could communicate to our colleagues in the regional hospitals, for example, in paediatrics. The HSE is also rolling out a platform that allows systems to talk to each other and it will fully work with that.
Alan Kelly (Tipperary, Labour)
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I hope Mr. Gloster is watching this because we need whatever amount of money that has been spent on this not to be lost and for it not to be another small white elephant whereby we have one e-healthcare inside in the children's hospital and we have something else going on elsewhere. I thank Ms Hardiman.
Alan Kelly (Tipperary, Labour)
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Previously, €168 million for this hospital was coming from philanthropic sources. Could Mr. Tierney state if that is still the current figure or whether it is has gone up or down?
Alan Kelly (Tipperary, Labour)
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I am sorry but I just want the figure.
Alan Kelly (Tipperary, Labour)
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It has not changed.
Alan Kelly (Tipperary, Labour)
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So how much is it now?
Alan Kelly (Tipperary, Labour)
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But the previous amount was €168 million.
Alan Kelly (Tipperary, Labour)
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Ms Hardiman might just write us a note in regard to all philanthropic projects. That might break down the figure.
Alan Kelly (Tipperary, Labour)
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I have one last question for Mr. Tierney. When it comes to this capital project, it has had a huge impact. The learnings are massive and we have been conditioned, in that everybody was not here at the beginning of it and all of that. No one can tell me, because I have seen it on the ground in my own area, that this has not had a major impact on other projects not happening. I know the word "profile". A lot of projects do not ever disappear. It is like the roads projects with the Minister for Transport, Deputy Eamon Ryan. They do not disappear, they just get profiled. I am also seeing that with primary care centres, public nursing homes and other projects. Will he provide a list of changes to the approved capital plan?
Incidentally, the capital plan is managed by the HSE. The Minister cannot direct any project to be funded in any way, shape or form. It would be a resigning matter, under the Act, if he did. Will Mr. Tierney provide us with all changes that have been made in relation to the capital plan over the past three years, based on the fact that this project has overrun?
Alan Kelly (Tipperary, Labour)
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There is no doubt but that this had an impact on the project.
Alan Kelly (Tipperary, Labour)
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Is it not a fair statement to say that this project has delayed other projects?
Alan Kelly (Tipperary, Labour)
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I have parliamentary questions going back years. I can show timelines where projects were expected and I could nearly compile the list myself.
Alan Kelly (Tipperary, Labour)
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A fair point. I thank Mr. Tierney for his contribution.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Can a list be supplied to the committee?
Alan Kelly (Tipperary, Labour)
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I do not expect a thesis.
Catherine Murphy (Kildare North, Social Democrats)
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If we do anything here, we decode language, routinely. Mr. Gunning talked about an achievable programme, which I think was a heavy caveat in relation to the October 2024 deadline for handing it over. He went on at another point to talk about sufficient staff being on site and the project being behind profile right from the word go. We are well aware of this issue because it has come up before.
He mentioned a rate of 65%. That will come into the evaluation. If it is at 65%, the project will not be completed by October 2025. Is that correct? It has to be at 100%.
Catherine Murphy (Kildare North, Social Democrats)
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It is not at 100% the moment.
Catherine Murphy (Kildare North, Social Democrats)
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Every week that goes by that it is not at 100% means there is slippage.
Catherine Murphy (Kildare North, Social Democrats)
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What are the encouraging signs?
Catherine Murphy (Kildare North, Social Democrats)
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That they want to or that they have put in place?
Mr. David Gunning:
They are putting in place a core team and afterwards a finishing team to come along through the areas afterwards. I will give one metric. When we reported to the health committee earlier this year, we talked about our disappointment with the number of rooms being offered as completed. Since then, 32% of the rooms have been offered, so there has been a significant improvement.
Catherine Murphy (Kildare North, Social Democrats)
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It was 11% before, is that correct?
Catherine Murphy (Kildare North, Social Democrats)
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It is at 32% now?
Catherine Murphy (Kildare North, Social Democrats)
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Is it correct that Mr. Gunning would not be satisfied to tell us he would guarantee that this would be handed over in October of next year?
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Gunning would not give us that guarantee.
Catherine Murphy (Kildare North, Social Democrats)
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I completely understand that and we have been trying to be fair all along in this regard. The behaviour of the contractor right from the word go, in terms of not having sufficient staff on the site, not providing the substantially completed programme, all of that will only change if there are sanctions and funding is withheld. In any contract there are always opportunities, because a contract is a two-way process. There are always opportunities for sanction if things are not completed. For example, this contract was supposed to deliver a hospital by a particular date. It was not delivered and after that, inflation took over, adding to the cost. Yet the State is picking up on the over-4% building inflation rate. I maintain that we should be looking at a counterclaim at this stage and I think we have been through that before.
There have to be sanctions to ensure this is delivered as quickly as possible, albeit well behind the schedule.
On a separate issue, Mr. Gunning says that €71 million remains in the current overall capital budget of €1.43 billion for the build. How far will that take us?
Catherine Murphy (Kildare North, Social Democrats)
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The board will run out of money at the end of the year?
Catherine Murphy (Kildare North, Social Democrats)
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The money will only stretch into the new year if there is slippage in the deadline. Is that correct?
Catherine Murphy (Kildare North, Social Democrats)
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The Government and the Department will be more than aware that money has to be available from January next year. As Deputy Kelly says, we can only spend money once and this is impacting on other projects. Claims will have to be paid out of this amount as well, if claims are approved. The potential implications for the extended timeline has gone to the Department. Has any contingency gone to the Department in relation to claims?
Mr. Derek Tierney:
There is a full readout within the brief and Mr Gunning's opening statement on the extent of claims and the commercial position taken by the contractor. I cannot comment on that because if I do, I am giving the contractor a floor target with which to aggressively pursue the State.
Catherine Murphy (Kildare North, Social Democrats)
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I am not asking for the amount, I am asking whether it has been included.
Catherine Murphy (Kildare North, Social Democrats)
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Okay, so it has been included. Is the Government aware that it must come up with additional funding by the end of this year?
Catherine Murphy (Kildare North, Social Democrats)
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The 2021 accounts were laid this week. We had expected to be able to see some amounts or some contingency. That is not included. I direct this question to the Comptroller and Auditor General. If the accounts do not accurately reflect, in terms of payments that are decided afterwards in relation to claims, would that mean that there are embedded arrears and does that mean that there would be an adjustment in those accounts or how is that treated?
Mr. Seamus McCarthy:
I am not sure that I follow. Obviously, the accounts have to reflect the payments that were incurred in the period and all the previous periods. At the end of the year they are required to indicate the level of commitments that they are locked into. If there is a determined figure, if a claim has been decided, then that should be included and it is a payment that will be made in the future. That should be already incorporated into the figure but obviously, if there are claims that have not been determined-----
Catherine Murphy (Kildare North, Social Democrats)
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It would go into the following year.
Catherine Murphy (Kildare North, Social Democrats)
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For contingent liability.
Catherine Murphy (Kildare North, Social Democrats)
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Okay. The committee received a reply from CHI a couple of weeks ago on a range of topics, one of which is agency and recruitment. CHI draws staff from seven different recruitment agencies. Ms Hardiman is telling us there is a staff engagement programme and training of new teams. How does CHI train agency staff? Is workforce planning under way to avoid the need for agency staff as much as possible? A hospital may have world-class facilities but it will only be a world-class hospital if there are staff to deliver the services. Agency is emergency. It is not ideal.
Ms Eil?sh Hardiman:
From the perspective of the healthcare agency spend, we try as much as possible not to rely on agency staff. Paediatrics is specialist and the agencies do not have staff available who meet our requirements. Some of our agencies are in niche areas and that is why we have to work internationally to get consultants in from the UK's National Health Service, NHS, and so on. In terms of our objective, we have already engaged in the commissioning programme and staff are already coming in. We have an immersion programme. It is like when we designed the hospital. They are coming together. They walk onto the ward where they will be working from all the hospitals. They learn about how it will happen. It is part of how they are-----
Catherine Murphy (Kildare North, Social Democrats)
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I appreciate all that.
Catherine Murphy (Kildare North, Social Democrats)
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At the moment there is a high level of dependency on agency staff, however. CHI deals with seven different agencies. How will it avoid that when this hospital opens?
Ms Eil?sh Hardiman:
That is one part of the training programme. We rely on narrow, niche areas. There are some agency staff who work with us regularly because it is a very narrow profile of people whom we can bring into paediatrics. We will have to include them in our training programme. That is part of the plan.
Catherine Murphy (Kildare North, Social Democrats)
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That assumes there will still be agency staff after-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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I call Deputy Munster.
Imelda Munster (Louth, Sinn Fein)
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I will start with questions for Mr. Gunning, if I may. BAM furnished an updated programme of work in July and it was non-compliant. What date was given in that programme of work?
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning can state definitively that he sees the new updated programme of work as being compliant.
Imelda Munster (Louth, Sinn Fein)
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Did Mr. Gunning state that only 65% of targets are being hit but BAM is insisting there are sufficient workers?
Mr. David Gunning:
Historically, looking back to the first half of this year and last year, BAM hit 65% or 66% of its monthly performance targets, on average. If it set out to deliver 100% in a month, it was hitting 65%. Our contention in that regard is that more resources and supervision are required to get that done. It has always been our position that there are not enough resources to get the job done.
Imelda Munster (Louth, Sinn Fein)
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Is there a guarantee in the new updated programme of work that those resources will be in place? If so, as of when?
Mr. David Gunning:
We have had several meeting with Mr. John Wilkinson, the chief operating officer of BAM, who heads up its UK and Ireland operations He is also a member of BAM's executive board. The chair and I and other members of my team have met with him and we got assurances from BAM that it believes it can hit the October date.
Imelda Munster (Louth, Sinn Fein)
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Given what went on in the past, does Mr. Gunning believe that updated programme and the commitments BAM has made are genuine? The previous one was non-compliant, so BAM furnished the board with another one. Is this a way for BAM to avoid financial fines?
Imelda Munster (Louth, Sinn Fein)
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That is why I am asking. Mr. Gunning has engaged and the history is there.
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning is taking that as genuine.
Mr. David Gunning:
To be clear, the optimism has been beaten out of all of us in respect of this project. At times, however, when one has that kind of interaction with a person, one likes to be able to say, "I think they are serious about this." As I stated to Deputy Murphy, however, there remain challenges in getting this across the line. Our focus now is on how we can assist and support getting and building certainty and confidence in that date. That is where we want to be.
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning is going with the date of the end of October 2024. The actual completion would take a further six months.
Imelda Munster (Louth, Sinn Fein)
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Yes, the service activation will take six months.
Mr. David Gunning:
Service activation is the responsibility of CHI. We are going with the date. We do not have any role in that regard. I am reporting our opinion on it. It is accepted by the employer's representative. That is the legal contractual position. We have done our assessment, which I am happy to share, in terms of what our-----
Imelda Munster (Louth, Sinn Fein)
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I am concerned-----
Imelda Munster (Louth, Sinn Fein)
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Okay. With regard to the service activation, there is reference to a six-month period. Ms Hardiman stated it is a complex operation. Is it not normally a nine-month period for service activation? I asked Mr. Gunning at a previous meeting about the nine-month period and he stated that was correct. Given it is a complex operation, why is a period of six months being given?
Ms Eil?sh Hardiman:
CHI is engaging with some of the technical commissioning now. We are not waiting for us to be engaged at substantial completion. We are trying to work with the development board and what they can do with the contractor to see what we can achieve before substantial completion. We have a detailed plan. The key areas relate to the electronic healthcare record. That commenced in July. We have those on board and are in detailed planning. At the moment, we are saying it will be at least six months. That is our best estimate.
Imelda Munster (Louth, Sinn Fein)
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At least six months.
Ms Eil?sh Hardiman:
We will refine that further. We are doing extensive planning. It is our best guesstimate. The more we can get done before substantial completion, the better it will be. It is still work in progress. We are working with the development board to try to bottom that out. We expect to be in a better position around this-----
Imelda Munster (Louth, Sinn Fein)
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Being extremely optimistic that everything falls into place and goes to schedule, it will be six months. Realistically, however-----
Imelda Munster (Louth, Sinn Fein)
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We all want that but my point is that in the general scheme of things, it is normally a nine-month period. I know CHI is doing work in advance, but it is a massive project and it is normally a nine-month period.
Imelda Munster (Louth, Sinn Fein)
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I accept that.
Imelda Munster (Louth, Sinn Fein)
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I thank Ms Hardiman. The NPHDB wrote to the Minister to request additional capital. To what specifically does that relate? Is it anything to do with the claims?
Imelda Munster (Louth, Sinn Fein)
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I asked whether it relates to the claims.
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning cannot give an overall new price tag whatsoever.
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning stated BAM submitted 2,379 claims.
Imelda Munster (Louth, Sinn Fein)
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For a total of €756 million. Mr. Gunning gave a breakdown of the 28 claims that settled for €2 million. Realistically, could we be looking at that sort of amount being paid out for those claims or is there no chance whatsoever that it will not cost us more than €700 million?
Mr. David Gunning:
I will set out the position currently from the development board’s point of view. We rely on the decision of the employer’s representative. To repeat, on the claims table, the employer’s representative has looked at 1,610 claims where BAM requested or is claiming €641 million, and change, and she has valued that at €16 million. That is the gulf between the development board and BAM with regard to the assessment of the claims. I was asked whether I can give certainty on any of these things. I cannot provide certainty about these claims. I can give the Deputy certainty that we will defend each and every one of these claims robustly. Let there be no-----
Imelda Munster (Louth, Sinn Fein)
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Is that not going to delay the completion date? Are there not legal concerns around-----
Imelda Munster (Louth, Sinn Fein)
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Mr. Gunning has no fear that there may be concerns legally that this will delay the opening of the hospital. There is nothing with regard to these claims or legal actions that could possibly delay the completion date. Is that what Mr. Gunning is telling us?
Imelda Munster (Louth, Sinn Fein)
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We know there is a stand-off and there are claims disputed and all that. However, the fact that Mr. Gunning cannot give absolute clarity on it-----
Imelda Munster (Louth, Sinn Fein)
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Yes. By saying that, Mr. Gunning also cannot give absolute clarity on the completion date and opening date of the hospital and what the overall cost will be. Even years on, we still do not know when the hospital will be open, when the first patient will be treated and how much the hospital will cost. It that not ludicrous? This hospital will earn the title of the most expensive children’s hospital in the world at this stage.
Imelda Munster (Louth, Sinn Fein)
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It is the reality.
Mr. David Gunning:
There are many challenges here. On the claims, I cannot give an absolute guarantee. I do not know what claims the contractor will put in front of us. Then, if these claims go to the High Court, that is a different ball game completely. I cannot give an answer that I think will satisfy-----
Imelda Munster (Louth, Sinn Fein)
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This has been a complete and utter mess, and we are now looking at the National Maternity Hospital. Would the development board consider making a submission to the HSE and the Department on all of the problems encountered, everything that has gone on in this and the nightmare it has been, to make them aware for future in order that lessons could be learned? Would the board consider providing them with a detailed analysis of what happened and everything encountered? Would they consider doing that to ensure-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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The question is clear.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The development board has considered being involved in that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Mr. Gunning for the clarification. Deputy Ó Cathasaigh is next but Deputy Devlin is trying to attend to parliamentary duties. Perhaps Deputy Ó Cathasaigh will give way to Deputy Devlin, the deputy Chief Whip, to allow him to fulfil his duties. Is he okay with that?
Marc Ó Cathasaigh (Waterford, Green Party)
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We are both Whips but I will let Deputy Devlin have this slot.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank the Deputy for being agreeable.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank the Cathaoirleach and Deputy Ó Cathasaigh. I appreciate it.
I thank the witnesses for the update and the information provided. Mr. Gunning remains optimistic and has a positive outlook, given the history of the project and the issues with it. He said that 32% of the rooms were near completion or progress was being made-----
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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So there is substantial progress. The update Mr. Gunning provided shows much progress on various wards and rooms since members visited the site. That is good to see, if we are to take a silver lining from today. That said, and to take up the issue my colleagues raised, which I appreciate is a tricky conversation for the witnesses, there is a substantial number of outstanding claims. I think the figure given in the briefing document was 2,379, at a total value of €16 million or so. When the satellite centres were opened in Connolly and Tallaght, were there claims outstanding from those two sites?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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They are not included in the 2,300 claims.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The 2,300 figure is purely for the children’s hospital.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Roughly how many claims were there for the satellite centres?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I appreciate Mr. Devine has provided a figure off the top of his head. Of those approximately 300 claims for the satellite centres, how many were disputed? Were they all disputed?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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What was the total cost?
Mr. Phelim Devine:
In terms of the budget, the €1.433 billion, that project ran over by about €5 million. In saying that, I think the overall outturn, including all the support, was about €82 million, off the top of my head. The Comptroller and Auditor General mentioned a value of €86 million. That was our direct cost for it, so that is €86 million. However, in terms of construction design team fees, Aspergillus works fees and everything, that is €82 million. With regard to the extra €5 million, part of that was additional investment, particularly in Tallaght. We had to put in new chillers, new condensers and do new road works, so there was also additional investment in the Tallaght site as part of the €5 million.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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It was not just the centre itself.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Regarding the Comptroller and Auditor General’s report, there were internal control disclosures in 2021 for CHI amounting to €2.2 million because it did not follow procurement guidelines. That included the external laboratory testing facility management, ICT, recruitment, medical consumables and professional services. From that period until now, what has changed and how did it happen?
Mr. Stephen Flanagan:
We are aware of our duty with regard to European regulations when expending funds for our mandated services. While we have a level of non-compliance, we believe we have in place all the appropriate governance structures, policies and processes one would expect of a public entity of our materiality. Unfortunately, when running a live hospital environment, there are challenges. Some of those challenges are borne out in the non-compliance we see. For instance, the Deputy mentioned laboratories. Laboratories would have come into use across these hospitals historically under some clinical guidance, not through procurement processes, for externals. Now, at this point, procurement will be the correct route. For CHI, as we prepare for day one-go live at the new hospital, we have some very large procurements we need to do. We need to take all those laboratories and procure altogether what we call a managed laboratory service. In some sense, this precludes us from actioning these issues now to ensure that we are ready for day one-go live at the new children’s hospital.
That is just one of many challenges in that regard.
Some of the infrastructure in the likes of Temple Street, while we have frameworks in place for contractors, etc., is too large essentially to react urgently when you have a Portakabin on top of a flat roof and some guy has to go in underneath and fix that roof on a Tuesday morning to stop a ward being closed down. It is a challenging environment. We do have good systems and policies, and processes, in place.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Is Mr. Flanagan saying those systems and policies were not in place for 2021 and they have been strengthened?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Is Children's Health Ireland, CHI, applying them across the board now?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Okay. Obviously it stands out in the financial statement. From CHI's financial statement, page 20 of the annual report states that €77,000 in respect of request for settlement of private insurance invoices was rejected by the insurance company. Who wants to take that and what was the issue there?
Mr. Stephen Flanagan:
I will take that. Under a memorandum of understanding between the HSE, including CHI, and the VHI insurers, there is an agreement in place where private claims are essentially paid upfront to the relevant healthcare institution and then there is a nine-month period under which you are required to provide the full submission to them. In some of these instances, the claims and coverage are complex, and the additional services which would become part of the claim are also varied. Then there are other challenges in terms of getting the relevant approvals from clinical teams, etc, who move around different entities for us.
In this instance, there was a loss of income for claims that would have either submitted after the deadline or submitted and were seen as not valid. There would have been a recoupment of those amounts if the claim was genuine.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Are the processes changed somewhat to try to minimise that rejection of invoices?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The reason I ask is it will be a bigger challenge with the bigger entity. Mr. Flanagan mentioned complex claims. I presume it will be a more challenging issue for the bigger hospital.
Mr. Stephen Flanagan:
On the contrary, private income relative to public hospitals is reducing through the Sláintecare initiatives and as we have more consultants move to public contracts, and as the Deputy will be aware, children's public stays were all made free in the last number of years. This is an issue which should reduce over time.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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That is a fair point.
I only have two minutes left. In terms of the recommendations from the PwC report of April 2019, there were 11 recommendations made. Specifically, the report states:
The Guaranteed Maximum Price established through the two-stage tender process does not provide a contractual ceiling on cost and significant residual risks remain of further cost escalation. A primary focus of the NPH Client must be on managing this risk and preventing further cost increases. In this regard we make the following recommendations.
Preferably in a word, have all 11 recommendations been implemented fully now at this point?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Every single one?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I just wanted to clarify that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Mr. Tierney wants to comment briefly on that.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Sorry, yes?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank Mr. Tierney for that.
Finally, in terms of the special purpose body established in 2007 that Mr. Gunning leads, sticking with Mr. Gunning's projected timeline of October 2024, if that is happening, what happens to the special purpose vehicle? Does it continue on for 12 months or 24 months? What is the timeline attached to the special purpose vehicle?
Mr. David Gunning:
I thank the Deputy for that question. We have mapped out the end phase, if you like, in terms of the wind-down. I certainly want to send a message that we want to keep our team very much in place to get to the substantial completion and then, as we go beyond that, through the warrant period and various other legal matters, depending on the tail that is on this, we may or may not need to retain some of the skills for a longer period. Ultimately, this development board disappears. It dissolves or whatever the correct term is.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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If Mr. Gunning were to hit the ambitious October 2024 target, is it 12 months, 24 months or does it depend on the work?
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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Okay.
Mr. David Gunning:
It will be beyond that. Then it will depend on whether there are legal issues and whether the development board can successfully transfer those to another entity to take those forward, and if so, is that the HSE, or who is it? There are some questions to be asked there. I guess we are just trying to get the thing across the line. While we have modelled that from a financial point of view, which is included in our memo or what Mr. Derek Tierney has talked about, we have a very clear plan on that.
Cormac Devlin (Dún Laoghaire, Fianna Fail)
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I thank Mr. Gunning for that and I thank the Chair.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I propose we suspend the meeting for ten minutes for a short break and resume at 11.15 a.m. sharp.
Colm Burke (Cork North Central, Fine Gael)
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Chairman, I am now caught as I am due in the House.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Deputy Colm Burke is caught. Would the witnesses mind if we proceeded for ten minutes to facilitate the Deputy? The Deputy wants to speak now because he will be caught in the Dáil.
Colm Burke (Cork North Central, Fine Gael)
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If they do not mind.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will lift that proposal to suspend and we will continue. Is that agreed? Agreed.
Colm Burke (Cork North Central, Fine Gael)
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My apologies about that. It is just that I am in on questions with the Minister for Further and Higher Education, Research, Innovation and Science.
First of all, I thank the witnesses for being here this morning and for the information they have given. On the contract and the inflation clause in it, under the contract there is building inflation. What additional cost has occurred as a result of inflation since the contract was first signed?
Colm Burke (Cork North Central, Fine Gael)
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That is purely, not as regards additional claims-----
Colm Burke (Cork North Central, Fine Gael)
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-----but only the inflationary element of it.
Colm Burke (Cork North Central, Fine Gael)
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Inflation has changed quite dramatically over the past 12 months. Is there an estimate as to what the additional inflationary costs will be by the time we get to October 2024?
Mr. David Gunning:
I will clarify the development board's position on this. It is that the inflation payable to the contractor under the contractor - that payment - ceases at the contractual substantial completion date, which is November 2022. The development board's position is that no further inflation is payable beyond November 2022.
Colm Burke (Cork North Central, Fine Gael)
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What of additional items that the builders are claiming, say, for argument's sake, they say the specifications did not include a particular item and the cost of that additional item is €1 million but, because of inflation, it will now cost €1.050 million?
Colm Burke (Cork North Central, Fine Gael)
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Because the increased building costs now have gone beyond the completion date, is Mr. Gunning saying that the development board is entitled to defend any inflationary cost claims that are being made?
Colm Burke (Cork North Central, Fine Gael)
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I accept that.
Mr. David Gunning:
-----the Deputy mentioned where things are now materialising, they will materialise at current rates and, therefore, that would apply. However, on a continuation of paying anything like the €55 million, I have clarified that position. If I might say, the contractor has inflation claims because they do not accept that position.
Colm Burke (Cork North Central, Fine Gael)
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I accept that.
Colm Burke (Cork North Central, Fine Gael)
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The additional cost because of building inflation is €55 million but Mr. Gunning does not believe that they are entitled to validly claim for inflation costs going forward.
Colm Burke (Cork North Central, Fine Gael)
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In contracts, there is a penalty clause because of delays by builders. What is the story on the penalty clauses that are in place and can they be used as a bargaining tool in relation to new claims being made by the builder?
Mr. David Gunning:
Deputy Catherine Murphy mentioned sanctions. There are three sanctions in this contract. There is a right to withhold 15% in the situation where the project programme is not provided. There are so-called liquidated damages.
There are three instances in which we can apply liquidated damages: sectional completion of the family unit; sectional completion of the ICT rooms, which are called something different in the contract; and the entirety of the NCH works. There are two sectional completions and then the project itself. The other sanction is the extreme sanction of termination of the contract. We have three sanctions within the public works contract. Those are the formal sanctions available to the development board.
Colm Burke (Cork North Central, Fine Gael)
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Do those sanctions put the board in a bargaining position in dealing with the additional claims being made?
Colm Burke (Cork North Central, Fine Gael)
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I fully accept Mr. Gunning does not want to declare-----
Colm Burke (Cork North Central, Fine Gael)
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Deputy Munster asked earlier about possible delays as a result of claims being made. The contractor has no right to delay the opening of the hospital once it is substantially completed.
Colm Burke (Cork North Central, Fine Gael)
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I want to clarify that because it was a bit unclear when Mr. Gunning replied. If I buy a house and do not pay the builder for additional work, he can refuse to close the sale. This situation is not the same.
Mr. David Gunning:
It is not. To be clear, where the employer's representative, ER, has determined the contractor is entitled to additional money, and I have given the number of €16.75 million, and if that has fallen due, it has been paid to the contractor. There is no suggestion we have not paid the contractor what the contract says they are entitled to.
Colm Burke (Cork North Central, Fine Gael)
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It was outlined already that the board is trying to fast-track some of the checking processes. The builder cannot prevent the hospital from putting in place cross-checking of equipment, etc., and the whole system inside there.
Mr. David Gunning:
Mr. Devine can maybe talk in more detail about this but the contractor is responsible for installing a large amount of the equipment. That is clear. It is part of that process. Where we are working closely with CHI is on items such as CHI appointing people who will ultimately be facilities managers or clinical engineers, so it is involved at this stage in installation, turning up the services, making sure they work and learning through that process. It is part of our team from that perspective.
Colm Burke (Cork North Central, Fine Gael)
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So the builders cannot interfere.
Colm Burke (Cork North Central, Fine Gael)
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I will touch on the computerisation issue. Some maternity hospitals have put in place a computerised system. What is the link between the maternity hospitals and the computer system the witnesses are doing? Will there be a connection between them?
Ms Eil?sh Hardiman:
The HSE plans as part of its e-health strategy to have a platform connecting computer systems so they can talk to each other. That is the proposal and it is being progressed as a priority within the HSE. It is because there are different systems out there for labs, for imaging-----
Colm Burke (Cork North Central, Fine Gael)
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I understand at one stage we had something like 1,700 different computer systems in the HSE and one would not talk to the other. I am wondering are we sure we can get all of this in order.
Ms Eil?sh Hardiman:
That is an important platform the HSE is looking to progress. If you look at the system that is in five of the maternity hospitals, that happens internationally and they have ways of communicating with them. There is evidence of this happening internationally.
Colm Burke (Cork North Central, Fine Gael)
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Where are we with computerisation in the existing children's hospitals in terms of it being transferred over? We are talking about a huge transfer of staff, patients and information.
Ms Eil?sh Hardiman:
We explored this. It is not feasible to retrofit the electronic healthcare system into the existing children's hospitals and then bring it across. That would be four different implementations. It is not viable. What we have is what is being done with this system internationally. EPIC has been procured, has a very good success rate at implementation and goes from paper to electronic. What we are doing is not just around the electronic healthcare record. We are also looking at our corporate systems and other systems. As much as possible, we are bringing in the systems that will be in the children's hospital, bedding them in now and just going across with them. However, the electronic healthcare record is such a big implementation it will go from paper to electronic healthcare by the time of the opening of the hospital
Colm Burke (Cork North Central, Fine Gael)
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Will the transfer from paper to electronic only start when patients start to be transferred?
Colm Burke (Cork North Central, Fine Gael)
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Will there not then be a long period, probably nearly six months, when there will be a huge workload involved in transferring information?
Ms Eil?sh Hardiman:
We have a data migration process to manage the data. Not everything needs to be transferred. There is a data migration element to it but the biggest risk talked about internationally is getting staff trained so they can move and become familiar with the project. The company we have, EPIC, has a big training and familiarisation programme and we will be doing that in the hospitals before we move across.
Colm Burke (Cork North Central, Fine Gael)
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Will there be connection between the other children’s units around the country as regards computerisation? If I am transferring a child from CUH in Cork to the new hospital, will the records in Cork be computerised and capable of being transferred over?
Ms Eil?sh Hardiman:
That is what we are talking about, a system that will be able to transfer electronically. We are also working with our colleagues in the regional units. We have a chief information officer who is a consultant doctor and who has been linking with clinicians in the regional units to look at providing them with read-only access to our system so they see the child’s record. The Deputy must remember this is transformational.
Colm Burke (Cork North Central, Fine Gael)
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Absolutely.
Colm Burke (Cork North Central, Fine Gael)
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I have come across a scenario in a hospital where records were computerised but a section of the hospital refused to computerise. As a result, there were two files, one manual and one computerised, which caused----
Colm Burke (Cork North Central, Fine Gael)
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Okay. Thank you.
Brian Stanley (Laois-Offaly, Sinn Fein)
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We will take a short break.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The next speaker is Deputy Ó Cathasaigh.
Marc Ó Cathasaigh (Waterford, Green Party)
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I thank the witnesses for what has been a fairly forthright and honest discussion today. I might be going over old ground, so I apologise if I ask questions or restate points that have already been covered. I want to start with claims. Looking at the opening statement, it is a bit apples and oranges in terms of how it is expressed. According to the statement, 2,379 claims have been raised and the employer's representative has determined 1,610 claims of €16.75 million. Then the language changes and it states that "a further €2.1 million has been agreed through the dispute management process". If I do very simple subtraction, I can see that that €2.1 million does not touch the sides of the 770 remaining claims. We have been told that there are two claims before the High Court. Of the 770 claims that are not accounted for in that metric, how much does that €2.1 million cover and how many outstanding claims are not included within that?
Marc Ó Cathasaigh (Waterford, Green Party)
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It is not the easiest to decipher.
Mr. David Gunning:
I will do my best to try to guide members through it because it does contain the information required. So, 2,379 claims have been notified, of which 1,937 have been substantiated. In other words, the contractor has provided explanations that are required under the contract to justify them.
That is where we get the €769 million in claims.
Marc Ó Cathasaigh (Waterford, Green Party)
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We have 442 then yet to be substantiated.
Marc Ó Cathasaigh (Waterford, Green Party)
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Have we-----
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. That is what we are interested in in terms of the accountability of public money. Have we any sort of metric? Do we know how much the company has made that claim for? Have we any sort of metric?
Mr. David Gunning:
Absolutely. Of all claims, 1,937 have substantiation. Therefore, we know what the money dimension is. I just want to jump to an explanation here. Where is the money in all of this? There are 17 claims that account for 82% of the €769 million. There are 17 big claims, just to be clear. We have claims for values in excess of €100 million and then claims right down, as Mr. Devine said. The materiality here is €500 under the public works contract. Therefore, the contractor can claim for €501. However, the money is in extensions of time where the contractor is saying the project has been extended and that time is our responsibility. It is holding us responsible. It says it is our responsibility that happened.
Brian Stanley (Laois-Offaly, Sinn Fein)
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To clarify for the meeting, Mr. Gunning said some claims are so big they are in excess of €100 million.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Okay, that is all right.
Marc Ó Cathasaigh (Waterford, Green Party)
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However, there has been an enormous disparity between the size of the claim initially made and the figure that is finally settled on in settlements. Mr. Gunning gave that figure of €16.75 million-----
Marc Ó Cathasaigh (Waterford, Green Party)
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-----that had been settled on-----
Marc Ó Cathasaigh (Waterford, Green Party)
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-----but the nature of the claims submitted were in the order of being ten times larger. Am I right in saying that?
Marc Ó Cathasaigh (Waterford, Green Party)
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Mr. Gunning might give me a context to understand that in terms of similar-sized projects. To go from €641 million to an actual figure of €16.75 million-----
Marc Ó Cathasaigh (Waterford, Green Party)
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-----seems incredible to me. Is that normal in disputes of this kind or is it irregular?
Mr. David Gunning:
Under the contract, the contractor is entitled to submit claims to the value it sees and thinks it is entitled to. Whether it is time or money, it can submit those claims and we have the responsibility, through the employer's representative, of dealing with those claims. We do not control what the contractor puts in. It is up to the contractor to put in its numbers. The Deputy can see the numbers in front of him.
Marc Ó Cathasaigh (Waterford, Green Party)
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The process should be that if there are disputes of this type, it should go through the employer's representative and it should be settled there. From the company's point of view, how many has it escalated beyond that in percentage terms? Has Mr. Gunning found himself in a situation where the employer's representative made a finding and he pushed back against that?
Mr. David Gunning:
Again, going back to the table, 1,338 are in dispute. That is the total number that are in the dispute process. The Deputy can see that some of these have been determined. The High Court is mentioned there. Then, of the ones the Deputy mentioned that have been settled, 28 have been settled. Out of the 2,379 claims, 28 have reached a conclusion.
While we are looking at it, in addition to the contract, the contractor can also use the construction payments Act and refer items to adjudication, which is a separate process. Six items have gone to adjudication where the contractor claimed approximately €60 million. The total that has been awarded by adjudication is €1.9 million.
Marc Ó Cathasaigh (Waterford, Green Party)
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It is important to get clarity about this.
Marc Ó Cathasaigh (Waterford, Green Party)
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I want to put this in-----
Marc Ó Cathasaigh (Waterford, Green Party)
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It is just to get a clear picture in terms of the public purse, which is our job here. It is difficult to get and I know much of this is still in play, so it is difficult to arrive at a final figure.
Marc Ó Cathasaigh (Waterford, Green Party)
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I want to-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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And Mr. Gunning added that as a percentage.
Marc Ó Cathasaigh (Waterford, Green Party)
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I want to direct a question to the Comptroller and Auditor General around the timelining of the accounts. The National Paediatric Hospital Development Board 2021 financial statements were certified by Mr. McCarthy in September of this year. By contrast, the 2021 financial statements of Children's Health Ireland were certified on 14 October last year. That is nearly 12 months in the difference. Is this usual or unusual? How is it that it took this long?
Mr. Seamus McCarthy:
It is unusual. I would have cleared the 2021 financial statements in December of 2022. However, there were two areas where additional information needed to be provided - additional back-up, effectively - for the figures that were in the financial statements. That related to the commitments figure and to these claims. We basically went to and fro for a significant number of months trying to settle on, if you like, sufficient support for the information that was being presented in the financial statements.
Marc Ó Cathasaigh (Waterford, Green Party)
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Considering we are likely to be back at this again before we have an open and functioning children's hospital, is that something that needs to be streamlined so that both the Comptroller and Auditor General and we as a body have better oversight?
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. Will Mr. Gunning be able to commit to working a bit more proactively with the Comptroller and Auditor General on this?
Marc Ó Cathasaigh (Waterford, Green Party)
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It is important because we very much rely on the Comptroller and Auditor General's expertise to do the job that is in front of us.
I will go back to this programme, which is landing us at 29 October 2024. The poor employer's representative has been kept incredibly busy by this job. There is a line that states the programme is currently being evaluated by the employer's representative. Do we have a timeline for that piece of work so that we at least get a little bit more clarity on how reliable that October 2024 date is?
Marc Ó Cathasaigh (Waterford, Green Party)
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It will be another month or two before-----
Marc Ó Cathasaigh (Waterford, Green Party)
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We are hoping that will firm up-----
Marc Ó Cathasaigh (Waterford, Green Party)
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In the time remaining I will ask a final question that is different in character. I want to focus on this accounting practice for forecasting future pension liabilities that was identified as an issue by the Comptroller and Auditor General. We are told this is done at the direction of the Minister. The material effect of that is to minimise the pension liability. We know there are a considerable number of people who are working in the area for whom pensions will have to be provided. What is the rationale for reporting it in this way rather than the standard accounting practice?
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay. CHI is reporting in the way it is told. Does Mr. Tierney wish to comment?
Marc Ó Cathasaigh (Waterford, Green Party)
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Okay.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank Deputy Ó Cathasaigh. I have some questions regarding the timeline.
The new date, released this week, is October 2024 for substantial completion. That is what we are being told. I would take substantial completion to mean completion of the building and substantial fit-out. Is that correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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You said in answer to questions earlier that if you have 100% performance, it is doable to comply with that-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Achieving it is doable but it would require 100%. Has there ever been 100% performance in terms of progress on the development of the hospital in the past six years?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Would I be correct in saying there were months when the performance was in the mid-30s, at 33% or 34%? Would that be correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Over the next 13 or 14 months, it would need to be 100% every month to get to the target.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes. Hallowe'en next year, and then we are looking at the commissioning. Ms Hardiman has outlined a lot of that and she referred to nine months as the expected timeframe for that. Six months would be a high bar to set. Would that be correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Therefore, we are looking at a scenario where it will be August 2025 at the earliest before the doors would be open to accept patients.
Ms Eil?sh Hardiman:
At the moment we are saying the summer of 2025. As we do the more extensive planning, the question of how much we can do before substantial completion is an important factor.
An Cathaoirleach:This requires everything to go according to plan, 100%, including the commissioning and the timeline with the contractor.
Brian Stanley (Laois-Offaly, Sinn Fein)
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If you operate at 65%, which has been the average, then we are possibly looking at beyond Christmas of 2025. If you operate at 65% in terms of progress, then we could be looking at January 2026.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Given that it is nine months for the commissioning and given the fact that there has never been progress over a three-month period of 100% or anything near it, with the average coming in at 64%, then we are looking at a scenario of possibly January 2026 for actually opening and accepting patients. Is that a possibility?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I understand, as I have said previously, that everything is easy until one goes to do it. I understand that. Even a small job can turn out to be more difficult and I understand that. However, I want to put a couple of points to Mr. Gunning. Hindsight is great, of course, but would he agree that the location presented a lot of challenges? I do not expect him to say, because he cannot, that this was the wrong location. I understand how far he can go here but would he agree that the location has presented huge challenges, given where it is in that warren of little streets, in a high-density residential area?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I watched one day for about 15 minutes. I watched trucks going in and out when the excavation was going on and I could see the difficulties even then. Would Mr. Gunning agree that it does present challenges? No matter where you go, there will be challenges. If you went down to a green field site beside the M50-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes, but especially in that particular location, and the design, which could be described as a wow or vanity project from an architectural point of view, is complex. It is probably not the easiest building to build. Would that be correct?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I know it did.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I have seen the most awful buildings getting planning permission, as has everybody in this room and everybody watching these proceedings. The design is both complex and challenging. Would Mr. Gunning agree with that?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I understand that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I am questioning Mr. Gunning, as project manager, at this point. In terms of the contract, PwC produced a report and recommendations, which I read yesterday. PwC said that the type of contract that was used presented risks. If we were doing it all again-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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We will have Mr. Gunning's response first and then I will let you in, Mr. Tierney.
Brian Stanley (Laois-Offaly, Sinn Fein)
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PwC had a good deal to say about the way the contract was structured.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I know that. I understand that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The site is challenging though.
Mr. Derek Tierney:
It would be remiss of me to comment on that. On the contract itself, that contract form is public procurement policy. We do not have a choice, unless there are exceptional circumstances, to stray outside of that policy. Again, that is the contract form and future construction will be dictated by public works contracts.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The future came up earlier and obviously everything we do can be improved the next time.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It can always be improved, no matter how many times we have done it. If a team has played ten matches in the season and is going out to play the 11th, it will look at the mistakes made in the first ten games and try to improve for the next one. I understand that and what is important is that there are other contracts coming up, including for a national maternity hospital, which is badly needed. It is important that the lessons from this are learned so that improvements can be made.
I want to ask about the claims now. The way we were provided with the information on this made it difficult to understand but the Office of the Comptroller and Auditor General did some further work on the data. It drew up a chart for us, using the figures provided, which was helpful in terms of deciphering exactly what is happening with regard to claims. The overall sum claimed for determination by the employer's representative is €769 million. That is obviously the figure given by the contractor. The figure as determined by the employer's representative is €641 million. To date, just over €18 million has been paid out. On the disputed claims-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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That is what I meant by the contractor. I meant BAM.
Brian Stanley (Laois-Offaly, Sinn Fein)
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That is what I meant by the contractor. BAM put forward the figure of €641 million but the outcome was €18 million. There is a huge gulf between those two figures. On the determination of disputed claims, how many have been submitted by the board itself?
Brian Stanley (Laois-Offaly, Sinn Fein)
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No. I am going to ask my question in a different way because I want to try to get an answer here. Of the 2,379 claims, which is the total on the project so far, how many have been submitted by the board?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Every one of them?
Brian Stanley (Laois-Offaly, Sinn Fein)
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When you say contractor claims, what do you mean? I want the public to understand this.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Has the board submitted any claims?
Brian Stanley (Laois-Offaly, Sinn Fein)
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How many? That is what I am asking.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is it ten?
Brian Stanley (Laois-Offaly, Sinn Fein)
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The board has made ten to 20 claims in respect of this project, but in the context of the contract for BAM there have been 2,379. We have established that. The total figure is now €18.85 million, if the extra €2 million is added in. It was said regarding delays that CHI has the right to withhold 15% per month. Has there been an occasion when that has been done?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Yes, but subsequently paid.
Brian Stanley (Laois-Offaly, Sinn Fein)
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On the payment for July, in the absence of a programme for future progress, which CHI was not getting, and trying to advance the project, it did not have a satisfactory schedule from BAM. CHI then got that and released the payment but withheld 15%.
Brian Stanley (Laois-Offaly, Sinn Fein)
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On costs, we are now looking at this project running until January 2026. A figure €2.5 billion was mentioned, but it is safe to say, at this stage, it will go over €2 billion. That is as far as we will go for now. The original budget was €900 million. This increased to €1.433 billion in 2018. There is now a request for more. Mr. Tierney said he cannot state the figure because he would obviously be giving the game away in terms of the public interest. What was the highest level of inflation as regards a section of the project? There were reports of in excess of 20% at times. As I understand it, construction inflation is normally in the region of 4% but that obviously changes-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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That reflects the post-Covid surge in prices in construction generally.
Mr. David Gunning:
Absolutely. Again, what makes this project more difficult is that those rates have to be applied in a compound sense. We provided the formula to the committee in the past. For example, the actual compound inflation applied in 2022, because of the higher number in 2021, was 14.79%.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It can be seen, however, when the budget started at just over €900 million, then went to €1.43 billion, and that we will go way past €1.7 billion given what we heard this morning and the information CHI supplied, that the runaway nature of it is obviously of huge concern. It is about trying to rein that in. It was illuminating what was said regarding claims. There were 17 large claims that accounted for €621 million.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Some are more than €100 million, although that is the figure being put on it by BAM.
Brian Stanley (Laois-Offaly, Sinn Fein)
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What is the highest claim?
Brian Stanley (Laois-Offaly, Sinn Fein)
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It could be €200 million.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Will the CHI contest that vigorously?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Okay. I will open for a second round of questions. Deputy Catherine Murphy has seven minutes.
Catherine Murphy (Kildare North, Social Democrats)
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CHI stated it would not get into discussion about the extended timeline up to next year, but it was extended from November 2022 until now. What was the cost of that extension?
Catherine Murphy (Kildare North, Social Democrats)
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Are there additional claims-----
Catherine Murphy (Kildare North, Social Democrats)
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Those figures would be disputed because they are gone past. That falls into the same category as CHI's approach to inflation. Once you go beyond November 2022, building inflation does not apply. I am just trying to establish-----
Catherine Murphy (Kildare North, Social Democrats)
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-----that there is no advantage to the contractor in stretching this out.
Catherine Murphy (Kildare North, Social Democrats)
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When the snagging is substantially complete, does that mean all of the snagging is done or will there continue to be work?
Mr. Phelim Devine:
The contract states that on substantial completion there can only be very minor snags permitted. That is what the published work contract states and that is what we are aiming for. Obviously, a good tier 1 contractor should be aiming for, as much as possible, a defect-free building and substantial completion. That is what is being discussed-----
Catherine Murphy (Kildare North, Social Democrats)
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On the issue that arose regarding the ventilation problems in the theatres. I think it was 11 theatres or something.
Mr. Phelim Devine:
The concern related to 11 theatres. I am delighted to say that we have, with our design team, which was responsible for the design of the ventilation in the theatres, done a significant amount of computer modelling and physical testing. We now have a proposed solution set out in a comprehensive report that demonstrates that the theatres will be in full compliance with the guidance, which is the National Health Service, NHS, health technical memorandum, HTM.
Catherine Murphy (Kildare North, Social Democrats)
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Does that require amendments to what is there?
Catherine Murphy (Kildare North, Social Democrats)
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It is very modest.
Catherine Murphy (Kildare North, Social Democrats)
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There was a big controversy around that at the time.
We are all probably a bit confused about the claims, including where they are and at what part of the process. I appreciate the table CHI provided us with, although I do not find it that easy to read. CHI is trying to pack a lot of information in there. The financial statements tell us that in April 2023, the employer had been notified by the contractor of 2,506 claims. The point I am making is the numbers do not seem to align with the table and-----
Catherine Murphy (Kildare North, Social Democrats)
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Is that what it is?
Catherine Murphy (Kildare North, Social Democrats)
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That is how that is accounted for. It is really a simple table. Information on the nature of the claims would be quite useful, including whether they are to do with inflation or breakages.
For example, hand basins were changed to metal basins or something at one point. I remember that was one of the issues that-----
Catherine Murphy (Kildare North, Social Democrats)
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It was for infection-control reasons.
Mr. Phelim Devine:
The change that has gone through the employer's representative relates to a number of issues. It is critical that we complete the hospital in a way that is fully compliant with statutory, regulatory and clinical best practice or standards. There have been a number of changes because it is a huge, complex project. There are over 5,600 rooms and spaces. The public works contract does not allow you to set out any products or materials. The contractor comes after the GMP is set and comes to build the building, offering a range of different products and systems, all of which have to go together. When put together, there are slight changes, updates and variations, and that is what causes the changes in question. Some of them may have an impact on a compliance issue.
Catherine Murphy (Kildare North, Social Democrats)
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A lot of that is avoided by nailing things down in advance of a contract.
Catherine Murphy (Kildare North, Social Democrats)
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Therefore, there can be a change from ceramic to aluminium. I would have thought that something with the highest level of infection control could at least be specified. The highest level of infection control is surely something that should be specified by a quantity surveyor. That determines the product.
Mr. Phelim Devine:
I might clarify that. Let us say a stainless steel stink of a certain type is specified. A sink is quite simple but different manufacturers' sinks might have to be fixed in slightly different ways although they may be very similar and all meet the specifications. They might have very slightly different dimensions, and incorporating them within the panel in the room might cause a minor or very small change.
Catherine Murphy (Kildare North, Social Democrats)
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Is Mr. Devine saying one can never actually nail down in advance the cost of building a hospital?
Mr. Phelim Devine:
You can nail down the cost because, when you specify a sink, the contractor prices for that in the bill of quantities or pricing document. However, when it is incorporated into the works, there may be something missed, the alignment might require an extra bit of mastic, or the bulkhead might have to be built out further. The costing will be for a certain number of kilometres of bulkhead or plasterboard, but there might be an extra bit of plasterboard required. The contractor is entitled to seek the amount of the additional cost because it is a re-measurement contract.
Catherine Murphy (Kildare North, Social Democrats)
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It is very hard to know how you learn lessons if that kind of practice exists. I refer to lessons in terms of location. I completely understand this is not a function of the NPHDB, but we are going to be building a national maternity hospital when the census is telling us babies are not being born. It seems a lesson should be learned about location. One of the issues with this location has always involved people asking how sick children will get to the hospital. The Luas was pointed to as the means of doing that. Good luck with that if you have a sick child in the car.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I will come back to the Deputy again for another round.
With regard to the procurement process, PwC stated that significant failures occurred during the crucial planning and budgeting stages of the project, that the basis of the original budget was flawed and that risks were underestimated in the business case. It stated there was a lack of sufficient comprehensive and robust planning for the process to establish a guaranteed maximum price, GMP. It went on about that. It also stated that the two-stage procurement process used to award the contract for the construction of the national children's hospital is widely used. That is fair enough. It stated that the process can deliver significant benefits in regard to accelerating project time but added that the controls required to mitigate the associated risks and the consequences of this approach were not put in place. In this regard, reference was made to the understanding of the risk profile, the procurement strategy and so on. Does Mr. Tierney want to comment on that from the point of view of the Department, which oversees this? His Secretary General was told, "Write the cheque." Has a lesson been learned in this regard?
Mr. Derek Tierney:
There are two vantage points. We have committed to providing Deputy Devlin with a note on how the recommendations are applied in this project. In a wider sense, the public spending code has been revised whereby two independent assurance steps are asked for at the outset so any business case worth over €200 million will be put through independent evaluation. This is something every Department needs to do. There is a second step whereby every project, after external evaluation, needs to go through a major projects advisory group step, controlled by the Department of Public Expenditure, National Development Plan Delivery and Reform. That is all about giving assurance to the taxpayer, the Government, sponsoring Departments and approving authorities on the viability, credibility and assurance behind the proposal. Yes, lessons have been learned as a consequence of the process that have been applied at a macro level to the public spending code, and there are direct lessons transferable from this project to the thinking around how we plan for the next project.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I mentioned three things. I do not expect our guests to agree with my observations on the location, design and contract. These are what I was referring to. With regard to the contract itself, PwC examined this matter. From my reading of this, the design was not finally nailed down until nearly three years after the contract was awarded. The first phase of the contract was in 2016 and the second and third phases were in 2017. However, there were still design issues in 2019, three years from the original date. I am trying to understand how that happened. It is a complex project and the hospital is not the easiest thing to build. It is large and expensive. Why would design not be finally pinned down before sticking shovels in the ground?
Mr. David Gunning:
I might make a comment on that, and then Mr. Devine can add some more detail. This is really the issue at the core of the phase B court case in the High Court. Again, there are quite differing views from the development side regarding the contract. I just want to make sure that is clear. Mr. Devine was on the job during the phase and maybe he can provide some information without putting us on the hazard in relation to the High Court. We can still provide some commentary.
Mr. Phelim Devine:
Just to add detail, we originally tendered the job in the middle of 2016. The contract was signed in August 2017. The phase A works, which entailed the basement, piling, drainage and works up to low ground, started officially in October 2017. In the 15 months from October 2017 to the GMP instruction, which was issued in January 2019, the Government having signed off in December 2018, the contract was modified. It was turned from an initial tender, the first stage, into a second
stage, which involved the completion of the GMP. The responsibility of the design team and employer at the time was to bring the design to a level that allowed the GMP to be agreed, which is the completion of procurement. While we had a two-stage process to bring us to a GMP, normally in a contract there is a single stage, but it brings you to the same point, after which the job pretty much goes to site. Then, obviously, you operate the contract.
As was explained earlier, during that phase the contractors were paid by the State to input into the design and satisfy themselves that it was at the required level so they could agree the GMP. We paid them approximately €8 million for that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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On the day of the site visit, in the presence of a member of the board and a member of BAM management, I asked to be shown an example of something that had brought about a claim. I was shown a doorway and window that had to be moved slightly. Am I correct in saying that during the process over the past five years - I know there was a period at the beginning before the contract was awarded when it was not finalised - many of these claims have arisen from design issues?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I am trying to understand this. The public are trying to understand it. I accept there will be claims. If it was only a house that was being built, there would be variations. However, there is a substantial number of them in this case. A substantial amount of money is being sought. I am trying to get my head around how this came about. Is it the case that there were design changes and tweaks throughout the process in the past five years that caused many of these claims?
Brian Stanley (Laois-Offaly, Sinn Fein)
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That is what I am asking about.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I do not-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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A lot of claims arose from that.
Brian Stanley (Laois-Offaly, Sinn Fein)
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How much has the design team been paid to date?
Brian Stanley (Laois-Offaly, Sinn Fein)
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How much will they have been paid by the time the ribbon is cut? What is the total?
Brian Stanley (Laois-Offaly, Sinn Fein)
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A figure must have been agreed at this stage.
Brian Stanley (Laois-Offaly, Sinn Fein)
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They could be on site for another two years.
Brian Stanley (Laois-Offaly, Sinn Fein)
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None of the witnesses disagreed that this could run into January 2026.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I understand that. We could be looking at early 2026 before the opening of the doors.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I know. It is also a matter for the development board because CHI is depending on the board. If the house is not built, the furniture cannot be moved in.
Brian Stanley (Laois-Offaly, Sinn Fein)
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The design team has received €89 million.
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is there a final price for either?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Incrementally, if payments are being made every three months, perhaps it can be roughly estimated that-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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We have approximately another two years to go. Okay, I will bring Deputy Dillon back in.
Alan Dillon (Mayo, Fine Gael)
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What level of agreed staffing resources is the main contractor obliged to provide to meet the agreed October 2024 deadline?
Alan Dillon (Mayo, Fine Gael)
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How does the board know it will get there?
Mr. David Gunning:
I guess it is down to looking at progress on a monthly basis. We watch the progress. We monitor it monthly. We look at a number of key performance indicators, KPIs, and at the resources. To be clear, there is nothing in the contract to say the contractor must have X or Y resources. We have no levers other than the application of liquidated damages. As I explained earlier, the three sanctions we have-----
Alan Dillon (Mayo, Fine Gael)
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Sorry now, I-----
Alan Dillon (Mayo, Fine Gael)
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No, no. The questions come from this side. Will Mr. Gunning give me some detail on the KPIs being tracked?
Alan Dillon (Mayo, Fine Gael)
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Let us look at room completions. How many rooms has the contractor offered as complete for inspection by the design team?
Alan Dillon (Mayo, Fine Gael)
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What is the contractor's projected monthly number of completion offers? What is the forecast?
Alan Dillon (Mayo, Fine Gael)
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Have there been any delays in it offering rooms to date?
Alan Dillon (Mayo, Fine Gael)
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What about previous to that?
Alan Dillon (Mayo, Fine Gael)
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What is the projected productivity or level of resources required to deliver 80 rooms per week?
Alan Dillon (Mayo, Fine Gael)
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The board is tracking it.
Mr. Phelim Devine:
There are 40,000 activities in the programme, of which approximately 10,000 remain to be completed to complete the project. We track those activities to make sure they start and finish at the right time and we look at where BAM is in any given activity. From that, we monitor its progress against the programme. We also look at the room completion offers Mr. Gunning spoke about and we look at commissioning KPIs. This job is now all about technical commissioning, which includes the mechanical electrical systems such as the boilers, the air handling units, the air site commissioning------
Alan Dillon (Mayo, Fine Gael)
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BAM is subcontracting those to specialists.
Mr. Phelim Devine:
Yes, Jones Engineering/H.A. O'Neill is the mechanical subcontractor and Mercury Engineering is the electrical subcontractor. They are the two main players for the mechanical and electrical systems. Schindler Limited is providing the 36 lifts that are to be commissioned in the building, 12 of which have been commissioned and 12 are in progress.
Alan Dillon (Mayo, Fine Gael)
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Has all the specialist equipment been installed? Is there much left?
Alan Dillon (Mayo, Fine Gael)
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What was the total cost for the procurement?
Mr. Phelim Devine:
Approximately €25 million of built-in equipment was part of the BAM contract. Separately, we have procured €20 million worth of specialist medical equipment which will be installed before substantial completion - the MRI scanners, the CT machines, the X-ray machines, the fluoroscopy machines and so on. Some of them have been manufactured, some are being manufactured, some are about to be installed and most will be installed in the coming months.
Alan Dillon (Mayo, Fine Gael)
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Will Ms Hardiman tell the committee how much of CHI's €300 million budget for equipment has been spent to date?
Alan Dillon (Mayo, Fine Gael)
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Has CHI spent any of the €300 million that was allocated?
Ms Eil?sh Hardiman:
No, the equipping is the board's responsibility. We have committed to transfer equipment from the existing children's hospital. We are making sure any new equipment that we procured last year or this year, or that we will procure this year or next year, is compliant and can come with us to the new children's hospital.
Alan Dillon (Mayo, Fine Gael)
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I read that CHI will be looking at 36,000 new pieces of equipment.
Alan Dillon (Mayo, Fine Gael)
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It is in BAM's contract. What is the €300 million for CHI being spent on?
Ms Eil?sh Hardiman:
Some €40 million related to the Mater project, €88 million relates to our integration programme and the rest is part of the electronic healthcare record, EHR, which is broken down to the level of procurement of the hardware. We look after what is outside the walls. Our costs relate to the teams who will implement the programme.
Alan Dillon (Mayo, Fine Gael)
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How advanced is the validation for the EHR at this stage?
Ms Eil?sh Hardiman:
We obviously spent the last 18 months in procurement. We just started in July of this year to do implementation. That then requires us to do design because it is the first in the country even though it has been in the NHS and they are doing it in Northern Ireland. We actually work with them.
Alan Dillon (Mayo, Fine Gael)
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Has CHI frozen the design of the EHR?
Alan Dillon (Mayo, Fine Gael)
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Will it be done in the current facility before deploying it in the new hospital or will it be directly installed in the new hospital?
Alan Dillon (Mayo, Fine Gael)
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Will the EHR be available on the opening of the new hospital?
Alan Dillon (Mayo, Fine Gael)
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What is the timeline for that to be commissioned and validated, and be live?
Alan Dillon (Mayo, Fine Gael)
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I thank Ms Hardiman.
Catherine Murphy (Kildare North, Social Democrats)
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What was the maximum agreed price when the tender was signed?
Catherine Murphy (Kildare North, Social Democrats)
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That did not transpire to be the-----
Catherine Murphy (Kildare North, Social Democrats)
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I will come back to Mr. Devine on that.
I have a question for CHI. Does Ms Hardiman expect it to stay within the €300 million budget or have inflation or other costs impacted that?
Ms Eil?sh Hardiman:
As I said earlier, the delay in the project means that we require additional funding. We have brought that up through the HSE and the Department. It is part of the Government consideration.
Catherine Murphy (Kildare North, Social Democrats)
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Ms Hardiman is saying it will be brought to substantial completion and then there are a further six months. If this does not occur at the end of next year and continues to, for example, February 2025, it would then be September or October before the work is complete. Is it tenable to open a hospital at that time of year?
Ms Eil?sh Hardiman:
One of the things we have assessed in particular is winter opening. As the Deputy will appreciate, there are additional risks related to the surge period. Our preference would be that it would be outside the November to February period because that is when we would have the RSV and other respiratory illness season. It is where we have huge surges. In migrating the hospitals, to get it to the absolute minimum number of patients - they are usually the sickest who need to be moved - we would be looking at our elective activity. However, when we are in winter surge very little of what we do is elective and a lot of what we do is emergency and urgent care, and those patients are quite sick. Our preference - it is a timing issue - is to open in summer 2025; that would be ideal for us.
Catherine Murphy (Kildare North, Social Democrats)
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Therefore, the time for substantial completion is critical to avoid being delayed by another year.
Catherine Murphy (Kildare North, Social Democrats)
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Okay. I think those are all the questions I have.
Brian Stanley (Laois-Offaly, Sinn Fein)
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We have been provided with some photos of what the building looks like. When we had the site visit and were up on top of the building as it then was, I asked whether solar panels would be fitted on it. Will there be solar panels on it?
Mr. Phelim Devine:
We looked at solar technology when we did the design back in 2015-16. At that time, we could not get enough solar on top of the roof to make it viable. The Chairman might remember from when he was out on the site that the helipad is on the south side of the roof which is the area where solar panels could be put. Obviously, we cannot put solar panels on that south side of the building because of down drafts affecting the helicopters and obviously the reflection from the solar panels.
Brian Stanley (Laois-Offaly, Sinn Fein)
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It is a big building on a small site in a confined space.
Brian Stanley (Laois-Offaly, Sinn Fein)
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I have another bit to go on this. Are there any built-in mechanisms for any renewable energy?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Here is the question I am asking. The building is substantially complete and we welcome that. If I were building a house tomorrow, I would need to get planning permission from the local authority and to do a whole lot of things in terms of energy efficiency. Is anything built into this project in terms of renewable energy?
Brian Stanley (Laois-Offaly, Sinn Fein)
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I am asking about anything built into the project.
Mr. Phelim Devine:
We had originally built into the design a combined heat and power plant, which is gas fired. That may change because that was the most sustainable technology at the time. Now, that will probably evolve differently. We have built in 1,000 sq. m of grey space in the basement to allow for any emerging technologies that may come to the fore. Hospitals use a lot of energy in terms of heat; it is all medium-grade heat. The heat-pump technology that is now used in houses is getting better and better. At some stage in the future, there may be the possibility of retrofitting heat-pump technology into that 1,000 sq. m to help with reducing energy costs. The systems we have put in place, in terms of the thermal insulation of the facade, the building systems, and natural ventilation where permitted, all reduce the energy footprint of the hospital quite significantly compared with existing facilities.
Brian Stanley (Laois-Offaly, Sinn Fein)
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When I looked around that day, on the neighbouring streets I saw many terraced houses and semi-detached houses. They are all very modest houses, and some of them are small houses. Even though that was nearly two years ago, I was struck by the number of them that had solar panels. I understand that it needs to fit in with the helipad and a number of other things. We were standing on this massive roof space, a lot of it tilted towards the south, which could capture sun and get the best results. However, there was no attempt to put in any measure that would capture any of that solar power. It struck me-----
Brian Stanley (Laois-Offaly, Sinn Fein)
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Is it because of the location that the hospital needs a helipad to get patients in and out quickly in emergency situations?
Brian Stanley (Laois-Offaly, Sinn Fein)
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What will heat the building?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Will that gas be supplied by Bord Gáis Éireann?
Brian Stanley (Laois-Offaly, Sinn Fein)
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Has there been any estimation of gas usage, energy usage?
Brian Stanley (Laois-Offaly, Sinn Fein)
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As the project has evolved, a lot of things have changed - even politically - in the last seven or eight years. Have modifications been made to it in terms of further upgrading? I am wondering whether we will be going back in a few years' time talking to SEAI about retrofitting part of the building or anything like that.
In other words, as the project evolved, were changes made to upgrade it because of the changes to specifications over the last seven years?
Mr. Phelim Devine:
I do not see the fabric of the building changing in any way because we have already set a very high standard in terms of its design. It is class-leading. Because of the transformation that is under way as regards heating, solar panels, renewable energy and heat pump technology, over the medium term, there may be a change as to how heat is brought into the building. Most of the energy consumption of a hospital relates to the air systems. That is what generates most of the cost and that is not going to change.
Brian Stanley (Laois-Offaly, Sinn Fein)
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In terms of the national maternity hospital, while I know it is not possible to put solar panels on certain buildings and in certain places, I advise Mr. Tierney to note the issue of renewable energy. Issues around energy availability, energy usage and energy costs are going to ramp up over the next 20 years and we will have to deal with those. I suggest that be taken on board in respect of this project.
Alan Dillon (Mayo, Fine Gael)
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I have two or three follow-up questions. When will the Department of Health make a decision on the request from the development board for additional capital?
Alan Dillon (Mayo, Fine Gael)
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What about Children's Health Ireland, CHI?
Alan Dillon (Mayo, Fine Gael)
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It will be at that time as well.
Alan Dillon (Mayo, Fine Gael)
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On the details that have been presented today, we have a substantial completion date of October 2024 to be followed by a six-month commissioning programme, leading us to April 2025. Are we safe to say that this hospital will be delivered in summer 2025? How close to summer 2025 do the witnesses feel is realistic?
Mr. David Gunning:
I can comment. I will probably be repeating myself in mentioning the contractor's programme. We talked about October as a date. That is certainly achievable but not without challenges. That is what the contractor has said it is committed to. If that happens, it will be handed over to CHI to begin its processes.
Alan Dillon (Mayo, Fine Gael)
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In terms of future change management and change control, does this hospital have to be delivered with 100% efficiency and productivity if we are to deliver on that timeline or can there be any slippage? Is there contingency built into the timeline?
Alan Dillon (Mayo, Fine Gael)
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The board must have project management consultants scrutinising these matters.
Alan Dillon (Mayo, Fine Gael)
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Will Ms Hardiman speak about the experts CHI has to deliver on the commissioning programme? I have worked in validation and commissioning myself so I understand there will be failures, mitigations and new equipment that just will not operate or fit. Is there contingency built into the six-month plan?
Ms Eil?sh Hardiman:
There is very little, to be quite honest. We are trying to do as much work as possible with the development board on as many of these issues as we can before substantial completion, subject to the board's discussions with the contractor. We are trying to predict as much as possible as early as possible and to deal with things as early as possible to allow us to succeed. The further planning we are to do over the coming months will give us greater certainty and security about that so we will probably be in a better position in that regard later on. This is complex. There are a lot of parts that need to fall in line. We are committed to doing it as fast as we can but the current estimate is for at least six months. As we move into next year, we will have a greater understanding of what the detailed planning will be able to tell us.
Brian Stanley (Laois-Offaly, Sinn Fein)
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That more or less completes the questioning. I thank the witnesses from Children's Health Ireland, Ms Hardiman and her team, Mr. David Gunning of the National Paediatric Hospital Development Board and Mr. Tierney from the Department of Health for the work involved in preparing for today's meeting. We have covered a lot of ground. I thank the witnesses for the information and the replies. I also thank the Comptroller and Auditor General, Mr. Seamus McCarthy, Ms Elena Moldovanu and their staff for their assistance in preparing for the meeting.
Is it agreed that the clerk will seek any follow-up information and carry out any agreed actions arising from the meeting? Agreed. Is it also agreed that we will note and publish the opening statements and briefings provided for today's meeting? Agreed. I wish the project well and I hope that it will be as near as possible to 100% successful, that timelines are kept to and that we can prevent runaway costs from running too far away. I will suspend the meeting until 1.30 p.m., when we will resume briefly in private session before resuming in public session.