New children’s hospital comes at a price: one billion euro

As long as Grafton Street and as big as the Dundrum Town Centre, the new national children’s hospital will vault Ireland’s health system into the 21st century when it opens its doors in four years’ time.

With single rooms for every patient, sleeping accommodation for parents and acres of rooftop garden in a child-friendly design, it promises to be a welcoming place for vulnerable, sick children.

It will also boast the latest in technology; the project team promises “automated delivery systems” to deliver children their food, hospital-wide wifi and the fully truly electronic or digital hospital in the State.

After a week in which another major hospital development has almost stalled and confidence in our ability to complete big projects has again been shaken, the plans for the children’s hospital at St James’s may be just what the doctor ordered.

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But they come at a price – about €1 billion, or €1 million per hospital bed. It sounds a lot, and it is a lot. Yet, we are told, these costs are in line with those in other hospital building projects in the UK, the US and the Middle East.

The project team says this will not be the most expensive children’s hospital in the world, as this newspaper announced earlier this year, based on an international ranking by an architectural data company.

It says the hospital will cost €4,200 per square metre, compared to an average of €4,700 in recent projects in the UK and the US. The hospitals used for this comparison were not named so it is impossible to check the data on which this calculation was based.

Indisputable

What is indisputable is that the cost of the project has risen. In 2012, it was expected to cost €404 million. By the time the contract was awarded for the St James’s site, it had jumped to €485 million. Two years ago, when an application for planning permission was lodged, it had increased to €650 million.

However, this €650 million figure did not include equipment, educational facilities or shops and car parking. That, and some shared services with St James’s, pushed the price up to €800 million.

The rest of the increase is accounted by higher construction inflation – running at 9 per cent – delays in planning and higher tenders.

Cost overruns are not unusual in big projects but it is worrying that in this case costs have increased so much before it even starts. Now that the go-ahead has been given, the risk should transfer to the contractor but the project will need to be tightly managed in order to come in on budget.

The other issue is where the money will come from. The amount required is just a fraction of the €200 million supposedly ring-fenced from the sale of the National Lottery by the last Government. The children’s hospital will swallow most of the HSE’s capital budget over coming years, leaving little over for other urgent needs, such as the modernisation of the ambulance fleet, replacement of ageing equipment and the much-discussed construction of a new maternity hospital at St Vincent’s.