The conclusion of the PWC report that the final cost of the National Children’s Hospital could exceed €1.7 billion is a deeply depressing indictment of our political and administrative system. While the findings come as no surprise, given the drip feed of information that has come into the public domain in recent months, they are shocking nonetheless.
The cost of building the hospital has risen from an estimated €800 million in 2014 to €983 million in 2017 and €1.43 billion now. When equipping the building and providing IT are added, the bill comes to €1.73 billion and this does not include the cost of family accommodation, a research centre, excess construction inflation and any other changes to clinical standards.
This is not the first time a major State capital project has gone way over budget but it should finally prompt a fundamental rethink about the way such projects are sanctioned, developed and completed in the future.
The project was driven by an imperative for timely completion, within a cost envelope that was never adequate to deliver the envisaged outcome
The report found that the bulk of the escalating costs arose due to an underestimation of the price of building it in the first place, as well as delays, changing specifications, higher building standards and the knock-on effect of VAT. Unfortunately there is nothing that can be done about the cost at this stage. According to the report there is little scope for reducing the cost of the project due to the restrictions in the various contracts involved. It says that while cost reduction may be technically possible, exercises of this nature come with considerable risk of further claims from contractors.
It also says that finding a new builder for the hospital now would cost the taxpayer more than continuing with the current builder and could result in the project not being completed.
One of the problems from the start was that the project was driven by an imperative for timely completion, within a cost envelope that was never adequate to deliver the envisaged outcome and from a design that was continually evolving. The reporting of cost information between the three main boards overseeing the project was described as sporadic and inconsistent while the role of the quantity surveyors was singled out for criticism.
The report did point out that the programme of work involved in a vital project of this nature could never be fully de-risked, and it found that many difficult issues had been overcome to bring it beyond the false starts which had beset the project in the past.
A crucial element was that significant weaknesses which led to the massive escalation in the cost only became known at far too late a point in the process. All of those involved at every level of the project are responsible to some degree but the buck stops with Minister for Health Simon Harris and his senior officials who allowed the cost of the project to spin out of control.