Tuesday, 15 January 2019
Department of Health
National Children's Hospital Expenditure
578. To ask the Minister for Health if he will report on the rising costs of the children’s hospital; the way in which the projected costs are accumulating; and if he will make a statement on the matter. [54237/18]
600. To ask the Minister for Health the reason given for the significant levels of additional extra funding required for the national children’s hospital at St. James's Hospital; the measures he is taking to prevent further increases; and if he will make a statement on the matter. [54314/18]
I propose to take Questions Nos. 542, 578 and 600 together.
The children’s hospital is one of the most complex and important public capital projects that this country has ever embarked upon. The hospital will facilitate the implementation of a new model of care that will have a profound impact on all paediatric services once the new hospital is open.
Considerable work has been undertaken on the project since April 2017 when Government gave the green light for the construction of the hospital. Enabling works on the main hospital site are complete and Phase A construction works (substructure works on the main site), which commenced in October 2017, are also now nearing completion. The Phase B 7-storey above ground works will begin early this year. Development is also well advanced on the paediatric outpatients and urgent care centres. Works at Connolly are on target for practical completion of the building in the Spring with the opening scheduled for July 2019. Works at Tallaght are underway with a target hand-over date of July 2020, and the construction of the main hospital to be completed in 2022.
At an early stage in the process, it was 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 approach allowed the early phases of work to commence on site while also allowing for the detail of later phases to be finalised and agreed. This approach brings issues on cost to the fore much earlier in the life of the project than is the case where traditional procurement approaches are deployed.
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 is now at €1,433 million, €450m more than advised to Government in April 2017. €319m of the additional cost relates to construction costs, and the balance of €131m, which includes €50m in VAT, relates to costs associated with staff, consultants, planning, design team fees, risk/contingency, and Management Equipment Service.
As I have already stated the increased cost is a matter of great concern and I have made it clear that Phase B of the construction project must be delivered within budget and timescale. Accordingly, there will be an independent review, commencing in January, of the escalation in cost in determining the adjusted contract sum, the contributory factors and associated responsibilities so that any potential weaknesses are identified and comprehensively and speedily resolved in the interests of the successful completion of the project and the effective management of public funds. The National Paediatric Hospital Development Board will be required to provide on-going assurance to the HSE, Department of Health and Government that Phase B of the project is being delivered within budget and timescale.