Written answers

Wednesday, 15 May 2019

Department of Health

National Children's Hospital Expenditure

Photo of Mick WallaceMick Wallace (Wexford, Independent)
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143. To ask the Minister for Health his views on the fact that the public spending code guidelines may have been ignored with regard to the construction of the national children's hospital; if he is satisfied that, in terms of the hospital, the public spending code guidelines on money being spent as efficiently as possible and waste being avoided have been followed; and if he will make a statement on the matter. [18044/19]

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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An independent review into the cost escalation associated with the new children’s hospital construction project was commissioned to understand the reasons for the cost escalation. PwC conducted this review.

The review Report, "New Children's Hospital Independent Review of escalation in costs", was published on 9 April 2019. The Report found that the Definitive Business Case which was completed by the National Paediatric Hospital Development Board did not adhere to the requirements defined in the Public Spending Code. The Report did not find that the guidelines were ignored but instead identified specific issues including the Business Case treatment of tendered costs, residual risk relating to quantities and optimism bias.

The PwC Report breaks down the cost escalation as between underestimation (by far the largest contributory factor), execution issues including delays in concluding the GMP process, consequential costs (e.g. VAT) and uncontrollable costs.

The Report also recommends more generally that the rules governing public sector spending on major capital projects should be strengthened. The Minister for Public Expenditure and Reform has already advised the Oireachtas of the work underway in his Department to revise the Public Spending Code. Finalisation of this Code will be informed by the PwC Report including the incorporation of further guidance as to how costs should be estimated, risk assessed and quantified and account taken of potential optimism bias.

The Minister for Public Expenditure and Reform and I are to revert to Government with a plan for implementing the PwC recommendations, and I expect that we will do so shortly. When the implementation plan is approved by Government, it will be published.


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