Minister for Health Stephen Donnelly was aware a conciliator had recommended that the firm building the National Children’s Hospital should receive an additional €107 million, but an official who appeared before the Dáil Public Accounts Committee (PAC) this week to answer questions about the project had not been told.
The Department of Health said senior civil servants were updated about the conciliation process on Wednesday evening and that the Minister, in turn, was briefed.
The Irish Times reported on Friday that the conciliator had proposed in recent days that €107 million should be paid to building firm BAM, which had sought further payments for delays in the project up to the early part of last year that could be attributed to the client. This is the most significant additional payment to be recommended under the conciliation/dispute management provisions in the hospital building contract.
The conciliator’s recommendation came hours before senior figures in the National Paediatric Hospital Development Board (NPHDB) and a Department of Health official were scheduled to appear before the PAC.
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The department said on Friday that while it knew the conciliation process was underway, the official before the committee “was not aware of the recommendation of the conciliator until after the meeting”.
“Senior officials in the department did receive an informal update on the ongoing conciliation process on Wednesday evening. The Minister was, in turn, updated on this ongoing process,” it said.
The department maintained the budget limit for the new hospital would not be breached even if the conciliator’s recommendation was accepted by the hospital development board.
The children’s hospital project has been beset by delays – some due to the Covid-19 pandemic – and spiralling costs, but it was expected that “substantial completion” of the hospital would happen by October 29th. However, the PAC heard on Thursday that the target date would be missed.
Earlier this year, the Government confirmed that the cost of the national children’s hospital had risen again
The original estimated cost of the project was put at €800 million in 2014, before construction costs were disclosed, by the then Fine Gael-led minority Government, to have risen to €1.433 billion in 2018. Another €300 million was expected to be spent on the integration and transfer of services from the existing three children’s hospitals in Dublin, including information technology and commissioning costs, bringing the total expenditure to €1.73 billion.
Earlier this year, the Government confirmed that the cost of the National Children’s Hospital had risen again. The total capital and current budget sanctioned for the project is now €2.24 billion.
Details of the €107 million recommendation were not given to the PAC when it heard from the development board on Thursday. It said about 1,600 claims for additional payment made by BAM in relation to the project were subject to the dispute management process.
However, it said the net change to the overall contract value so far, including conciliations and adjudications, had been some €27 million - less than 3 per cent of the original contract value.
It is understood the board believed the recent conciliator’s recommendation remained confidential as it could still be appealed to the High Court under the disputes procedures.
The Department of Health said in its statement on Friday: “The NPHDB undertook a series of scenario and risk exercises to robustly determine its additional budget needs. The enhanced capital budget of €1.88 billion approved by Government in February 2024, as outlined in the 2019 PwC report, includes the potential for contractor claims among other things.
“NPHDB has noted that the emerging recommendation by the standing conciliator is still within the conciliation process.
“Even if the conciliation recommendation is accepted by the NPHDB, it will not breach the revised budget. The department does not intend to make any further comment while the confidential and commercially sensitive process under the contract is still ongoing. Litigating a contract in the public realm damages the state’s ability to protect the taxpayer’s interest.”
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