Children’s hospital: ‘Fair assumption’ construction will cost more than €1.7bn estimate

The secretary general of the Department of Health faced criticism at the Dáil's spending watchdog as he refused to provide estimates for the final cost of the National Children's Hospital (NCH).

During an at times heated meeting of the Public Accounts Committee (PAC) Robert Watt insisted he would not speculate on the ultimate cost.

He argued that it is commercially sensitive amid disputes between the National Paediatric Hospital Development Board (NPHDB) and the main contractor BAM over claims relating to construction costs.

Mr Watt conceded that it is a “fair assumption” that the cost will be higher than the €1.7 billion estimate for the full cost of construction, fitting out the building and integrating existing services into the new hospital.

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In a briefing Mr Watt sent to the PAC prior to the meeting he said that any potential future costs that would be outside the approved €1.433 billion construction budget would be “commercially sensitive” and has to “remain confidential”.

He said “By the end of this year, it is expected that approximately €873m of the €1.433bn capital budget will have been drawn down.”

There has been controversy over the huge project amid spiraling costs and delays which means that the hospital will not now open for patients until the second half of 2024.

Concern over cost

There is concern the cost of the NCH will be much higher than €1.433 billion when delays — some caused by the Covid-19 pandemic — and other issues like inflation in the cost of construction materials and Brexit impacting on the supply of goods and services, are factored in.

Sinn Féin TD Imelda Munster put pressure on Mr Watt to send the PAC a report completed earlier this year which sets out estimates for what the final cost of the hospital will be.

She asked if an estimated final cost of €2 billion is in the report.

Mr Watt said: “I don’t think there’s any benefit in us at this stage speculating on what the estimate will be, the final figure.”

He said he could provide the report to the committee but “I’ve said repeatedly that I don’t think that’s something which is going to represent the interests of the taxpayer or the State.”

Mr Watt said: “my very clear view is that publishing commercially sensitive information at this stage in a contract which is subject to dispute will be very damaging for state interests.”

Asked if he would provide the report to the PAC on a confidential basis he replied: “And who’s going to take responsibility for ensuring this information stays private?”

He asked if the PAC would take responsibility if it was leaked.

Mr Watt said that for him to publish the report or send it to the PAC he would need to have “very clear instructions” that the Government and the committee “are happy to take the risk that this information would then be made available”.

Mr Munster put it to him: “You’re refusing to give us the report”.

Mr Watt said: "You're making out that I'm refusing to do it… The reason is that we're involved in commercially sensitive negotiations involving significant public funds. Is it really suggested deputy, with all due respect, that we will publish commercially sensitive information in the middle of disputes? Disputes that are going to the High Court, disputes that involve millions in taxpayers' money?"

Complex contract

Green Party TD Neasa Hourigan said the committee is aware there is a complex contract involved and it is subject to claims.

However, she added: “I have to say it is very unsatisfactory for you to come here today and say the discussion of costs by officials, however hypothetical or otherwise at this time may prejudice the enforcement of the existing contract and very likely negatively jeopardise the development board in its ongoing engagement with the main contractor.”

She said: “I know nobody likes to talk about spiraling costs but... oversight of public spending is a fundamental principle of public life and it’s in fact not your role to act as gate keeper here.

“It’s completely valid for the Public Accounts Committee to ask these questions. We should have access to that report.”

Mr Watt said he was “not refusing to answer any questions”, said he and other officials have previously appeared at committees to be quizzed on the hospital and added: “I don’t think it’s a fair characterisation to say we’re unwilling to answer questions.”

Sinn Féin TD Matt Carthy asked Mr Watt if the final cost will be higher than €1.7 billion. and if the reality is that figure is not going to be met.

Mr Watt replied: “we’ve said that previously that there’s a risk to that number absolutely.”

Put to him that the reality is that figure is not going to be met, he said: “I think that’s a pretty fair assumption yes.”

Mr Carty said: "I think it is incredibly worrying hat there is documentation that isn't being furnished to the Public Accounts Committee and that we don't even at this late stage have even a guestimate as to what he final cost of this will be."

Fianna Fáil TD Comac Devlin said a "ballpark figure" would be helpful and suggested the sum could be €2.2 billion if the hospital is around half built as Mr Watt suggested.

Mr Watt said: “I just don’t think there’s any benefit in me speculating at this stage.”