Jim Daly (Cork South West, Fine Gael) | Oireachtas source

The National Paediatric Hospital Development Board has confirmed that significant value engineering analysis has been carried out on the project, at each of the stages, namely, pre-tender, pre-contract award and post contract award.

At an early stage in the process, the development board determined that the traditional method of procurement was not suitable or realistic for a project of this size and complexity. Accordingly, the contract is subject to a two-stage process with stage one consisting of a scope refinement and value engineering process, based upon tendered rates, to finalise the phase B works above ground. This value engineering process yielded savings of approximately €20 million.

Following the completion of the second stage of the two-stage tender procurement process, the final cost of the design, build and equipment programme for which the National Paediatric Hospital Development Board is responsible now stands at €1.433 billion, €450 million more than advised to Government in April 2017.

As the Deputy will be aware, in light of the concerns over the major and sudden cost escalation associated with the finalisation of the guaranteed maximum price, the Government also approved the commissioning of an independent review of the escalation in cost at the same time.

The terms of reference require the review to develop recommendations, if possible, which may identify any areas of potential cost savings or reductions which are consistent with the applicable contractual undertakings and the completion of the project to deliver on the vision to improve services for the children and young people of Ireland.

This independent review is under way and PwC has recently advised that the report is now expected to be completed by early April.

See this speech in context