Mick Wallace (Wexford, Independent) | Oireachtas source

A big problem at the heart of all this is the procurement process. The National Paediatric Hospital Development Board was dealing with the construction element and with operational maintenance. We now find ourselves in a position where different entities such as BAM and others are able to look for an awful lot of extra money and we are still at a very early stage. I would argue this was avoidable, and it remains avoidable. We can reduce the damage that is likely to be done.

The board and its legal procurement agent, McCann Fitzgerald, were faced with two options. They could go for a fixed-price contract or a remeasurement contract. I am well aware of the fact that the Government has a serious obsession with fixed-price contracts. It depends on such contracts in the context of the capital works management framework. The trouble with a fixed-price contract is that it does not really work unless a watertight scope of works can be established. Truth be told, that is not possible with a project of this nature. If I was building a house or an apartment, or 100 of either, it would be possible to create an almost perfectly designed scope of works because of the nature of the work involved. It is modular and repetitive and one can measure every aspect of it. A hospital is different. There is no such thing as a fixed price for a seriously complex engineering project. We can call it a fixed price, but it is not. It does not remain the same.

In the case of the children's hospital, the scope of works was not well defined. I suspect that operations and maintenance did not have enough input, but I do not know. Either way it would have been just about impossible to have a scope of works as tight as we would like for a fixed-price contract. One just cannot define all the parameters of a project of this nature, so the fixed-price approach does not work. This project was always going to need very detailed commissioning of the various systems unique to a hospital. Commissioning is a systematic process that is ongoing throughout the pre-design stage, design, construction and operation and maintenance. There are systems that need to interact in order to bring about the output sought. The works delivered are constantly assessed to check that they comply with the employer's requirement or, as some people call it, the works requirement.

A bespoke civil engineering remeasurement contract was required. A bill of quantities visualises the drawings into items that will make the design happen. If properly drafted, it can be managed, as can the costs involved. The contractor carries out the work, it is measured as it goes along and the employer pays accordingly. Quantity surveyors on the side of the employer and that of the contractor know what are the costs. There will be a debate, but the difference is rarely more than 5% and there is access to arbitration. The difference between the quantity surveyors on both sides is rarely more than 5% when the parties measure and pay as they go.

The decision makers have approached the children's hospital project as if it is a regular building, which it is not. I wonder where the decision-making came from. Why did McCann Fitzgerald not insist that the capital works management framework was not suitable for a complex project such as this? I do not know if the Government has the answer. Alternatively, was it a case of the HSE pushing McCann Fitzgerald aside and insisting-----

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