LAST UPDATE | 25 Sep
THE DEVELOPERS OF the delayed and over-budget National Children’s Hospital appeared before an Oireachtas Committee this morning.
The National Paediatric Hospital Development Board (NPHDB) faced questions from TDs and Senators in the Health Committee about the status of the project, which is years overdue and seen its approved budget reach €2.2 billion.
It was previously due to be completed in 2020 at a budget of €650 million.
Here’s how the session played out:
Good morning from The Journal.
The Oireachtas Committee on Health is convening today to discuss the state of the new National Children’s Hospital – four years after it was originally scheduled to be completed – and extract answers from developers about the delay and overspend.
Representatives of the National Paediatric Hospital Development Board (NPHDB), which is responsible for getting the hospital up and running, are expected to take a critical view of the progress made by construction company BAM.
The committee hearing will be live from 9.30am and is available to watch on Oireachtas TV. We’ll be liveblogging the meeting here on The Journal to bring you all the important updates.
As we wait for the meeting to get underway, let’s recap some of the recent developments.
I visited the site of the hospital for The Journal in 2022. At that time, inflation and supply chain issues due to the the war in Ukraine were blamed for challenges in the hospital’s development but a representative still said it was aiming to finish construction by the end of 2023 and open its doors in 2024. That date has been well missed.
The committee hearing has now started. Chief Officer David Gunning is making his opening statement.
Spending: As of the end of August 2024, €1.478 billion has been spent on the hospital, including VAT, Gunning confirms.
Delays: Gunning says that construction company BAM has deferred the expected substantial completion date 14 times over the life of the project.
In the last 12 months, Gunning says, BAM has shifted the date four times, pushing out completion date by eight months. It is currently communicating June 2025 as the expected date.
Gunning says the NPHDB “will not accept” BAM’s “ongoing deferral dates”.
“As of today, not one room has been fully completed in line with the standard and finish as set out in the contract,” Gunning says.
BAM has offered more than 3,ooo clinical spaces as complete but they are not up to the necessary standard, he says.
“The state is paying for a high standard building complete to the level designed and I assure you that we will not accept anything less.”
In a bid to compel BAM to fulfil its obligations, Gunning says, the NPHDB is withholding 15% of certified payments due to the company.
With Gunning’s opening statement finished, politicians on the committee will now have their turn to put questions to him, starting with Fine Gael Senator Martin Conway, who wants to know what the Board expects the final topline cost of the hospital to be.
The €2.2 billion figure is still the working figure, Gunning says. €1.88 billion of that is linked directly to the NPHDB and the remainder is related to Children’s Health Ireland. On the NPHDB side, Gunning says, he is “confident” that the €1.88 billion amount will be sufficient to complete its work.
Conway is not quite convinced, putting it to Gunning that he had previously been satisfied with the former budget for the hospital’s development, which has now been far surpassed – “So, why are you so confident now that €1.88 billion is enough?”
Gunning says the building of the hospital is 94% complete and that the financial picture is clearer as it approaches the end stages of development.
Lack of confidence: Chief Officer David Gunning says he cannot assure the committee that he is confident the new scheduled completion date of June 2025 will be met.
Sinn Féin TD and health spokesperson David Cullinane says he is “sick” of the “fiascos” surrounding the hospital.
Cullinane puts it to Gunning that it may not be within his ability to say there will be no additional budget needed for the project because a court may decide to approve extra claims put in by BAM.
Gunning responds that the board will be “robustly defending” any additional spending claims by BAM.
Cullinane turns now to Phelim Devine, the Board’s Project Director, to ask if he can explain the assertion that not a single clinical space in the hospital is fully finished.
“It strikes people as incredible that not one room is complete. What does that mean? People want it explained because they can’t get their head around it,” Cullinane says.
Devine outlines:
Gunning tells Fianna Fáil TD John Lahart, who is now in the questioning seat, that he had a one-on-one meeting with BAM’s Ireland chief executive two weeks ago.
He declined to go into details but said that the meeting involved conversations about resourcing. The ultimate question was: “When are we getting our hospital? We want to know when we’re getting our hospital.”
Social Democrats TD Róisín Shorthall raises BAM’s argument that the project has been delayed due to design changes, of which BAM says there have been over 23,000.
On the NPHDB side, Devine disputes how changes are being defined, saying that there have only been 449 change orders, adding that many of the changes BAM describes could have been minor updates to drawings.
However, Shorthall makes the point that a contractor has a legal right to make a claim for additional changes due to expenses (if, Devine contributes, they believe the cost of the change is more than €500).
Cost of claims: The value placed by BAM on the additional cost claims it’s making amount to €748 million, the committee hears.
Jumping back to Gunning’s initial statement for a moment – here’s where you can read the full text of his opening remarks to the committee:
Opening statement of NPHDB Chief Officer David Gunning to the Oireachtas Committee on Health this morning as the committee meets to discuss the continued delays and overspend on the project pic.twitter.com/XBOd5hDb1j
— Lauren Boland (@laurenanna_1) September 25, 2024
Green Party TD Neasa Hourigan asks for more information about BAM’s applications to extend the timeline of the project.
Project Director Phelim Devine says a new baseline programme was submitted in 2023 but that it was determined that the programme was not compliant.
BAM has been asked to submit a new programme but it was found not to be compliant by an independent assessor, according to the NPHDB. A deadline by the assessor to provide a new programme has passed.
Responding to questions from People Before Profit TD Gino Kenny, Gunning says that the amount of claims from the contractor are, from his perspective, “uncharted territory”.
“I have been involved in different businesses and projects around the world and I’ve never seen anything like this. This is uncharted territory from my experience.”
Senator Seán Kyne asks if some of the delays to the project are due to the changes that BAM is claiming additional costs for.
Gunning says that if the NPHDB instructs additional workers and issues change orders, and if those changes have legitimate impact on the timeline, then it accepts that extension and pays for it, but says it disputes the amount of additional time that BAM is claiming necessary.
The NPHDB says that the number of additional days of work it believes it needs to pay for is fewer than 20 but BAM is claiming more than 700.
Here are some photos released by the project’s public relations agency showing parts of the hospital as of September 2024:
Fine Gael TD Bernard Durkan says he accepts the NPHDB’s bona fides in replies to questions but that he would have liked to also hear BAM’s side.
Durkan said the to Board’s representatives that there are some people working in the construction industry “who would say that construction costs and building costs have increased by considerably more than it’s been suggested by you, in fairness to the contractor”.
“The contractor is not present – I think they should be present,” Durkan said. “The contractor has a different view which isn’t being heard.”
Climate impact: Independent Senator Frances Black takes a different line of questioning, asking the NPHDB about the hospital’s embodied carbon – that is, the CO2 emissions that are produced due to the building’s construction.
Devine said he didn’t have the figure for the embodied carbon to hand but that he could come back to the senator with it.
He said the hospital construction has strived for sustainability – but he pointed out several instances where potential options were ultimately not taken up.
A district heating system, which “would have been a very great thing to achieve”, Devine said, “fell through”.
“We looked at solar PV panels at one stage but we only have one roof available, the roof where we have the helipad, so that won’t work,” he said, adding that it could potentially work somewhere else on the site in the future.
The committee takes a break before another round of questioning.
On the BAM side – asked to provide a statement responding to the NPHDB’s claims, the contractor says it will respond after the committee has concluded. We’ll bring you that update when we have it.
With questioning resumed, Sinn Féin TD David Cullinane wants to know how often the NPHDB meets with Minister for Health Stephen Donnelly.
Chief Officer David Gunning says that since May, the Board has formally met the minister twice.
“At the coalface and on the ground, there are a lot of people turning up every day doing really good work, BAM and subcontractors, and making progress,” the committee hears from the NPHDB.
However, “we need a lot, lot more of them to get [the hospital] done”.
As the meeting runs out of time, one of the last points discussed is again the matter of quality management.
“This is the issue: BAM offers something and we say it’s not ready, there are defects in it, go and fix it,” Gunning said.
“Then they come back and they offer it again, and it’s still not ready. And then they offer it a third time,” he said.
“We have to add additional resources in order to do that and I don’t think it’s right that the state should be picking up the cost of these additional resources to police the work of the main contractor.”
Cathaoirleach Seán Crowe of Sinn Féin wraps up the meeting, thanking the members of the NPHDB for attending.
“The committee remains acutely concerned about the escalating cost of the project, the repeated delays in its construction, and the lack of definite timeline for the opening,” Crowe says.
“The committee will give further consideration as to how it will proceed with and interrogate this matter.”
He says that the committee has invited Minister for Health Stephen Donnelly to come before it in a public session to discuss the issue and is awaiting a response.
BAM responds:
A few hours later, BAM has released a lengthy response to the discussions at the committee earlier, saying that it rejects the allegations made against it.
The construction company says it is currently conducting works that are necessary to correct design errors identified by the NPHDB’s design team in January.
Fixing the errors involves, it says, the removal and relocation of thousands of ceiling-mounted services such as smoke detectors, light sensors, CCTV cameras, emergency signage and sprinkler heads, and the majority of ceilings in the hospital are affected.
“The scale of the change is reflected in the fact that, having discovered these issues in January 2024, the NPHDB’s design team was only in a position to instruct the required scope of work in May, after an intense period of design review to attempt to identify all of the issues,” BAM says.
It describes the ceilings works as “critical activity” and the “substantive cause of the delay which has occurred since January 2024″.
Design changes:
The BAM statement says the company has received “over 23,900 new and revised drawings, sketches and BIM models and schedules for the project”, calling it “an unprecedented volume of change, particularly when considering the project had been under design for over eight years by the time the instruction to commence Phase B was issued”.
“The Board claimed BAM had supplied it with thousands of new designs. These are only a consequence of the client-initiated changes as we seek to process them and get the work done,” it says.
It also says the design of the project should have been complete, but was not, when BAM was instructed to begin Phase B construction works in January 2019.
Finish date:
BAM claims it provided a “detailed” programme to the NPHDB detailing the impact of the ceiling works and movement of the finish date to June 2025.
“In July, BAM notified the Employers Representative and the NPHDB that the completion date would need to move out to June 2025, and BAM provided a detailed, logic-linked programme clearly explaining the impact of the ceiling design errors,” it says.
Claims:
“BAM has tried on multiple occasions to reach a settlement with the Board on outstanding claims, but this has been unsuccessful. The mediation process must restart as soon as possible and we urge the Board to engage with us,” the statement says.
“The claims process as set out in the contract requires BAM to submit claims on an itemised basis, a process which forces duplication. BAM is only seeking the amount it is fairly due.
“The conciliator’s decision in May 2024 to award BAM €107m and a 13-month extension to the completion date dealt with all claims for the time period it covered, December 2019-February 2023 and removed any element of duplication.”
Changes to theatre grilles:
“Under the terms of the contract, BAM was required to submit a claim for the scope of work as originally requested by the NPHDB,” BAM says.
“This scope was significantly larger and more invasive than was ultimately required, and BAM and its supply chain played a critical role in developing a more straightforward redesign which could be delivered at a fraction of the initially anticipated cost.
“The Minister incorrectly claims these works were not completed by BAM. They were, and BAM is not seeking payment for this additional work beyond the material costs already incurred.”
Quality:
Earlier, the NPHDB said that BAM had handed over 3,000 rooms as ‘complete’ but that significant flaws were subsequently found in many of the rooms.
BAM is disputing this, calling it a ‘misrepresentation’ and saying it is fully confident in the quality of its construction work.
“To be clear, none of the 3,000 rooms reference by the Board were handed over as ‘completed’ and, in many cases, cannot be handed over as such, due to ongoing remediation works on the reflected ceiling plans,” the BAM statement says.
“The handover of rooms and de-snagging of minor issues is a routine element of the project which has clearly been affected by the level of client-instructed change. This is a process, not a one-off event, and rooms are never presented as final until the completed building is handed over to the customer.”
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