Children’s hospital board ‘had no grasp of actual costs’
The team tasked with building what is set to become the world’s most expensive hospital put part of the project out to tender without any grasp of the actual amount of materials required.
Tom Costello, chair of the National Paediatric Hospital Development Board, said as much when he told the Joint Oireachtas Health Committee that by mid-2018, “it became clear that there was a very significant gap developing” between tender-stage estimated quantities for mechanical/electrical systems and actual quantities.
Mr Costello was addressing cost overruns in the national children’s hospital project that were costed at €800m in 2014 and now heading north of €1.7bn. He said while “every element of the project was identified, costs were not finalised” ahead of the second stage work commencing in 2018.
For instance, they knew they required lots of cabling to create a digital hospital, but the “quantum (over 5,000km) was not fully defined”. When they learned of the hike, they commissioned an external review to see if they were “overdesigning” but it found they were not.
Before that, the estimated cost of the hospital had climbed to €983m (February 2017), largely due to higher construction inflation.
By December 2018, the capital cost was an estimated €1.433bn, mainly due to unanticipated construction cost increases and a nine-month extended project timeline.
Mr Costello said between August and November 2018, the building costs essentially grew by €450m.
The cost per square metre currently stands at €6,500, up from €2,500 in 2014.
John Pollack, project director, said by mid-2018 and in light of the overruns arising, other options were considered other than letting builders BAM continue to stage two of the project, having won stage one.
“We could have retendered, but the issues with that was it would have cost a further €300m in addition to the €1.4m. And it would have taken two years extra to deliver the project,” he said.
“So the board decided in November to award the contract to BAM.”
Mr Costello told the committee yesterday they had opted for a two-stage tendering process “given the history of cost overruns” on public-sector projects associated with more traditional forms of tendering.
Moreover, even though the National Paediatric Hospital Development Board was “deeply disappointed” with cost increases, it would use the same procurement method if starting the project again, he said.
The committee heard the 6,000-room hospital, due for completion in 2022, would have 473 inpatient rooms, just 68 beds over and above the current complement of the three existing children’s hospitals.
Committee members criticised the board overspend as a “catastrophic failure” and said it would have detrimental knock-on effects on other capital projects for decades to come.
