Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I welcome the opportunity to contribute on the motion regarding the national children's hospital. We must start on the basis of the information recently provided to the Committee of Public Accounts which set out an estimated cost on that date of €1.7 billion. Nobody believes that will be the final figure because, as has been pointed out, there is an agreement in the contract such that if construction inflation exceeds 4%, the additional cost will form part of the overall bill for the project. The sum of €1.7 billion is the baseline figure as of the date it was announced. Based on the contract signed by the Government, it is unavoidable that the cost will escalate significantly. I am quite satisfied that the Government has no idea where the final cost will end up.

It is interesting that the response of the Government on this matter at the beginning of the year was to invite PwC to examine the issue and review the cost escalation. To me, that was a public relations stunt. Aspects of the original draft terms of reference for the review were pathetic but have been improved as a result of the contribution of Fianna Fáil. Far more importantly, however, the final National Paediatric Hospital Development Board report on preliminary observations on the construction capital cost escalation of the national children's hospital was issued on 17 December 2018 by Mazars. I have the report in front of me. Within six weeks of it being issued, the Government decided, hey presto, it would appoint PwC to examine the cost escalation issue. That was a farcical decision. The Government had possession of the Mazars report which states that on the basis of the detail outlined in the report, it is clear that a number of capital projects, fundamental systems and checks and balances failed to protect the board from a large and sudden increase in costs of construction. It concludes that the costs estimation procedures used to produce the original capital budget did not serve their intended purpose and further states that the ongoing cost management systems failed to capture properly a significant element of the capital budget implications of the developing design. The Government knew all of that at Christmas. What did it do in the new year? It decided to order a further report. The Mazars report was on the Minister's desk. I do not know why he needed a new one.

The PwC report is geared financially to look at the costs and the re-engineering of the construction costs. The construction costs of the project as presented to the Committee of Public Accounts account for €1.4 billion of the €1.7 billion total, meaning that over one third of the costs relate to ICT, fit-out, equipment and electronic equipment, not construction. Such costs will not be incurred for several years, bearing in mind that the hospital is not scheduled to open until 2023. In light of the level of cost escalation, I do not understand how anyone could think that there will be no further cost increases between now and the hospital becoming operational in 2023. Anyone who thinks the final cost will come in even close to the current figure must be living in Disneyland. Not only will the final cost exceed €2 billion, it will be closer to €2.7 billion than €1.7 billion. If any current Deputies are still Members of the House when the hospital opens, they will find that I may be understating the situation.

We are in this mess because the Government wanted a PR photocall of construction commencing on the site. The project was in gestation for such a long period, with the Government having failed to secure permission on the Mater site, that a decision was made to get the contractor on site irrespective of the debate over the best location. Was there a design for the hospital? No. Did that matter to the Government? No. It decided to get the contractor on site to do the groundworks and to discuss the design of the hospital thereafter. Has anyone ever decided to put a contractor on site to build a house before the house has been designed? This must rank as the most serious incidence of commercial incompetence by any Government. What happened is extraordinary.

Thereafter, the Government decided on a two-stage contract, thinking that when stage 1 was completed, it would have the option to keep BAM on site, retender phase 2 or suspend the project. The Minister, Deputy Harris, admitted that suspending the project was not a real option, while retendering would have delayed the project. It would have been bad PR for the Government if BAM had to leave the site not having won the tender for phase 2 and it might have delayed the project by a few months. That PR situation was unacceptable to the Government. The Government entered into the contract looking for good PR. However, it locked itself into dealing with BAM. The contract is so bad from the Government's point of view that it provided that BAM was to be compensated for each day of on-site delay resulting from a Government delay in making a decision on moving to phase 2. This problem began and ended with PR and politics overruling all commercial sense regarding how a contract should be dealt with.

As Deputy Donnelly stated, when contracts are for five, ten or 15 years, there should be a root-and-branch assessment every couple of years of whether the project is progressing as originally planned or whether requirements have changed. That must be undertaken as part of good governance. Obviously, there has been significant change to the hospital design since work began, leading to substantial cost increases. Are those design changes in line with current EU procurement rules? That question has not been asked until now. I would like it to be answered.

This leads on to a bigger issue. The Government announced projected capital spending of €140 billion under the national framework for capital investment and the national development plan. Assuming a final cost for the children's hospital of €2.8 billion, it will account for approximately 2% of the overall figure, leaving 98% to go.

The Government has shown it was incompetent with the first major project and there is no reason to believe it is learning lessons because it is clear it is not. It is ploughing ahead, regardless of the cost. There is a need for overall Government control of such a project. I, therefore, call for the establishment of a national capital projects management agency that would do something in line with what the NTMA did with the national debt a number of years ago. We set up a dedicated Government agency to handle it.

Let me refer to the farcical comment that the national children's hospital will be the best in the world. The best hospital in the world means the hospital that has the best doctors and nurses and provides the best medical care. A hospital is not deemed to be the best in the world based only on the design of the roof. The quality will be achieved through the provision of medical care, not by construction and design.

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