Mr. David Gunning:

I thank the Chair and Deputies for the invitation to attend this morning. I will skip the introductions and some elements of my opening statement which have already been covered. The NPHDB was appointed by the then Minister for Health in 2013 to design, build and equip the new children’s hospital. This includes the new children’s hospital on the site at St. James’s Hospital as well as the urgent care centres at Tallaght and Connolly hospitals, both of which are currently in operation. We are also overseeing construction of the new Ronald McDonald House, with 52 family bedrooms, at the new children’s hospital. It will be operated by Ronald McDonald House Charities Ireland. That construction commenced in March 2024 and is progressing well.

On the financial accounts, the details are presented in the table in the written opening statement I have provided and relate not just to 2021 and 2022, but also to non-audited figures for 2023, and a year to date figure for 2024. To date, the Comptroller and Auditor General has identified the amount of money already paid. Since 2019, the NPHDB has been reporting to our key stakeholders through established governance structures, including the Department of Health, the Health Service Executive and our client, Children's Health Ireland, that the project is behind schedule. Updates on these timeline changes and challenges and the associated impact on costs have been shared with all key stakeholders. In February, the Government approved enhanced capital and current budget sanctions for the project, bringing the total approved capital budget to €1.88 billion for the NPHDB component.

The Government-approved increase in the capital budget addresses areas not comprehended within the original 2018 budget and subsequently identified in the independent review carried out by PwC. The report said that the new children's hospital was unique in scope, scale and complexity in comparison to any other health infrastructure project in Ireland and was explicit in stating that the project's complexity should not be underestimated or understated.

The PwC 2019 report also noted that a number of risks had the potential to place further cost pressure on the approved capital budget, including contractor entitlements under the contract, the outturn of provisional sums, recovery of construction inflation above 4%, the need for additional capacity and capability in the executive team of the NPHDB and the contractor’s right to claim for additional true costs in line with public works contract provisions. Project costs, like other areas of the construction sector and wider society, have been impacted by other external pressures including the impacts to supply chains arising from the pandemic and other global events such as the war in Ukraine and Brexit. The NPHDB addressed all of that in its engagement with stakeholders on the capital increase. The enhanced budget of €1.88 billion reflects this at an appropriate level.

In terms of the progress update, we have provided a number of photographs and information, which the members can see. I do not propose to read through the bullet points other than to make it clear that the number of individual inpatient rooms being constructed and fitted out is 380. Specialist equipment is progressing very well in terms of MRIs, CAT scanners, X-ray machines, theatre imaging equipment, the central decontamination unit, CDU, and others. The commissioning of all the many hospital systems is well advanced.

On the programme timeline, the contract with BAM states that substantial completion was due in August 2022. Additional time has been awarded by the employer’s representative, which has extended the completion date to November 2022, from a contractual perspective. Since March 2020, BAM has changed its forecast completion date multiple times. The last baseline programme that was deemed compliant by the employer's representative was in quarter 1 of 2021. The latest baseline programme submission was received on 29 September 2023 and included a substantial completion date of 29 October 2024. This was evaluated by the employer's representative and determined as not being compliant with the contract. BAM is not meeting its contractual obligation to provide an updated programme which is compliant with the requirements of the contract. The employer's representative has requested an updated revised baseline programme from BAM that addresses the programme comments issued by the employer's representative, as is required by the contract. In its latest monthly progress report, BAM has indicated a further delay to the substantial completion date. The primary driver of the cost increases on the project has been the ongoing delay to the completion of the project. All possible contractual levers are being applied to secure certainty and the NPHDB continues to engage with BAM to explore mechanisms to deliver programme certainty and the earliest possible date.

We have provided the committee with an overview of the claims and there is a commentary on those in the documentation that has been circulated. I do not propose to read that unless we need to go through it, which I am happy to do. The employer’s representative award to the contractor is approximately €27 million in relation to those claims, which is just under 3% of the overall contract value. In addition, under the contract, an additional of payment of €48.5 million in inflation payments have been made.

In relation to dispute management, there are disputes at project board level currently in conciliation and in all parts of the contract management process. There are currently no adjudications. There have been nine adjudications to date, in which BAM has claimed approximately €63 million and has been awarded €2.3 million in those nine adjudications. There are two proceedings in the High Court: the phase B instruction and the frame claim. In relation to the phase B proceedings, the discovery phase is ongoing and is expected to finish in July, but we do not expect any outcome of the proceedings or the court’s decision until 2025, at the earliest. The frame claim proceedings were initiated in April 2021 and no further action has been taken by the contractor here.

The new hospital will provide 6,000 clinical spaces and 380 state-of-the-art inpatient bedrooms, 20 of which will be part of the new CAMHS unit. Some 60 beds are dedicated to critical care and there are an additional 93 day beds. There will be 22 operating theatres. The building will accommodate five MRIs and 110 outpatient rooms, a hydrotherapy pool, a rooftop helipad, a hospital school for primary and secondary level patients, a third level education centre for postgraduate students and more. I assure the committee that the NPHDB is fully committed to delivering the new children's hospital in as timely a manner as possible, giving the best possible value to the State and to a standard and of the quality that the children of Ireland deserve.

I will add some comments in relation to the programme issues, if I may. The baseline programme, which we received in September 2023, has been deemed non-compliant with the contract by the employer’s representative. The employer’s representative has directed the contractor to provide an updated programme and we have not yet received the updated programme. I wish to inform the committee that BAM’s most recent mostly update has indicated to the development board a substantial completion date of February 2025.