Builder of children’s hospital slates ‘uncontrollable risks’

Taoiseach Leo Varadkar has been warned by the chief executive of the company building the National Children’s Hospital that builders will not take on major infrastructure works if they are faced with “uncontrollable risks”.

Theo Cullinane, who heads one of Ireland’s largest civil engineering consortiums, Bam, said difficulties with the State’s procurement rules must be “managed” by Government.

Unless changes takes place, Mr Cullinane warned that the construction industry might not be able to complete works in the State development plan Project Ireland 2040.

Mr Varadkar has previously criticised unnamed construction firms, saying there were a small number of contractors who quoted unrealistic prices for contracts and then hiked prices afterwards.

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Cullinane was angered last February by the Taoiseach’s charges during the controversy about a €450 million increase in the cost of the children’s hospital that companies were deliberately “low-balling” when bidding for State projects.

Bam was involved in a number of PPPs amounting to about 600 kilometres of motorway which it would typically manage for 25 years

Opening the M11 extension on Thursday, however, Mr Varadkar said it had been delivered “on time and on budget” by contractors, Dragados and Bam, and he wanted to acknowledge their role “in making that happen”.

‘School bundles’

Mr Cullinane said Bam was involved in a number of PPPs amounting to about 600 kilometres of motorway which it would typically manage for 25 years, as well as a number of “school bundles” and the National Children’s Hospital, among others.

These were provided under the PPP model where the State funds the asset over its lifespan, and had achieved “great value for money” for the State, he said.

But, he said, “if you look at the national children’s hospital, the broadband project and now the Dunkettle interchange [in Cork], all have highlighted issues with the public procurement process.”

The main problem, he said, was the “allocation of uncontrollable risks”. He said the largest of the construction companies in Europe “cannot and will not take these risks”. It was, he said, “the main issue facing the Irish Government from a procurement point of view and it must be addressed”.

I would say that it is better that these uncontrollable risks are addressed early on in these large projects

Mr Cullinane said “it is best the Government, as the real benefiting party, takes ownership and leads the management of these risks”.

“This is leading to a very fragile and under-resourced industry with questionable capacity to meet the demands of the 2040 project,” he said.

‘Trickle down’

“These risks do not go away – they just go elsewhere. In the end they will end up costing society. These risks, if they are not addressed early on in a project, will trickle down through the supply chain or will revert back to the Government and will cause a lot of legal issues and take up an awful lot of time.

“So I would say that it is better that these uncontrollable risks are addressed early on in these large projects,” he declared..

However, he added, the risks can be managed by partnership. “That can be seen where we see Irish contractors now being asked by the likes of large multinationals such as Google and Facebook to operate all over Europe and outside of Europe. These companies feel that Irish contractors are the best.”

Defending the reputations of Irish-based construction firms, he said the fact that they are used by multinationals is “an expression of confidence in Irish construction”.