(Director, Dún Laoghaire Institute of Art, Design and Technology) called and examined.
Dún Laoghaire Institute of Art, Design and Technology — 2001 Accounts.
Mr. J. Devine
We will now dealing with the Dún Laoghaire Institute of Art, Design and Technology 2001 accounts. Witnesses should be aware they do not enjoy absolute privilege and should be apprised as follows. As and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents; and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited to appear before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the proceedings that the committee considers appropriate in the interests of justice.
Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. Members are also reminded that under Standing Order 156, the committee should refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, or the merits of the objectives of such policy or policies.
I invite Mr. Jim Devine, director of Dún Laoghaire Institute of Art, Design and Technology, to introduce his officials.
Mr. Jim Devine
I am accompanied by Mr. Donal Keane, secretary and financial controller, and Mr. Conor Logan, finance manager.
I invite Mr. Tom Sherlock of the Office of Public Works to introduce his officials.
Mr. Tom Sherlock
I was in the Property Management Service at the time you were dealing with the Hanover Pavilion. I am accompanied by Mr. Liam Egan, assistant principal architect, who was also dealing with that matter.
I invite Mr. Michael Davitt from the Department of Enterprise, Trade and Employment to introduce himself.
Mr. Michael Davitt
I am an assistant principal officer at the National Standards Authority of Ireland dealing with Expo 2000 from 1999 to date.
Mr. Purcell may make his submission.
Mr. Purcell
The committee will note that in my audit report on the institute accounts for the year ended August 2001, I draw attention to the circumstances in which over €500,000 costs was incurred in dismantling and storing the Irish Pavilion after the Expo 2000 exhibition in Hanover. The detail is contained in note 7 to the account, which was included at my insistence.
The committee has visited this issue on a number of occasions since I first reported on the matter in my annual report on the Appropriation Accounts 2000. We are now in a position to finally get closure in the matter. To recap on the post exhibition phase, once the exhibition was over some thought had to be given to what to do with the structure. There were two options — to sell it in Germany or to dismantle the pavilion and re-erect it in Ireland. A decision was made in March 2001 to go for the second option. Expressions of interest were sought by public advertisement and the institute was successful in its application which involved re-erecting the pavilion on its own site in Dún Laoghaire.
The Department of Education and Science undertook to meet the cost up to a sum of approximately €2.5 million, which was well within the indicative cost estimate provided by the OPW. The pavilion was now the property of the institute and it had to meet any subsequent costs. The institute engaged the services of a local architect and building firm to dismantle the structure and to put it into storage pending shipment to Ireland. The cost of doing so is the €525,000 shown in the institute's accounts. Around that time, a revised estimate of €3.2 million for the re-erection of the pavilion was obtained from the OPW and by March 2002 this had increased further to almost €3.5 million. At this stage, the institute said "enough" and formally withdrew from the project as the Department of Education and Science had indicated that it was not prepared to fund the venture at the increased cost level, because it did not represent value for money. Since then elements of the structures have been sold off in bits and pieces in Germany. My information is that what is left is being dumped, with the OPW meeting the estimated cost of €19,000 of doing so.
In summary, nugatory expenditure in excess of €500,000 was incurred because a realistic assessment of the situation was not undertaken when the decision was being taken about what to do with the pavilion, once it had served its function at the exhibition.
I invite Mr. Devine to make an opening statement.
Mr. Devine
I furnished an opening statement. Can I take that as read?
Yes.
Mr. Devine
I draw attention to the fact that in the scheme of things we are a new institute. Dún Laoghaire Institute of Art, Design and Technology was established in 1997. I have tried to explain it was not exactly a green field situation and I have given some background information on how the campus developed.
In the context of the Hanover Pavilion, while the committee has dealt with this matter previously but not in the context of this institute, I have provided a photograph of the pavilion for the committee. I assume that is with the members of the committee.
I have not got it.
Mr. Devine
There are copies of it.
I have it now.
Mr. Devine
I can only give the background from the perspective of the Dún Laoghaire Institute of Art, Design and Technology. The Expo exhibition took place from April to the end of October. The Irish Government's pavilion was designed to be put in Hanover, against the sustainability theme of Expo for that particular year, and something very unusual was done in that the architects Murray O'Laoire won the design competition to put in place a pavilion which could be dismantled for reuse somewhere after the exhibition. We were aware of that.
As early as 10 August of the year of the Expo, we made some inquiries as to what might become of the pavilion post the Hanover exhibition. I visited in September and we became clear in our own minds that there was a very close fit between the building, which is a fine building, the nature of the space and how it might be reused, particularly in the context of our urgent and the emerging need to have an industry-liaison type facility on our campus. We pursued an inquiry. My record indicates that in November, which was one month following the ending of Expo, a tender notice was placed in the newspapers to which we responded. As Mr. Purcell noted, the following March, which would have been March 2001, a decision was taken, in principle, that the pavilion would be brought back to Ireland and in respect of bidders who had expressed an interest in it, it was decided that Dún Laoghaire Institute of Art, Design and Technology was to be the location for it. The letter communicating that decision to us asked us to provide further information, in particular in regard to guarantees that the money estimated, as Mr. Purcell said, some €2.5 million, would be available. We had been in separate communication with the third level buildings unit and it provided that guarantee. We responded accordingly.
That was a guarantee of €2.5 million, is that correct?
Mr. Devine
Yes, €2.5 million. We would have been talking about £2 million at the time. We responded accordingly and, ultimately, that resulted in a letter being sent on 10 April, which basically indicated that the proposal was to go ahead.
We were urged to proceed with a high level of urgency. The reason for that, as I understand, was that it was April and Expo had finished the previous October. The Department of Enterprise, Trade and Employment had taken out a bond that, in effect, would be called in if the building was not off-site by a certain date. We proceeded with all necessary speed.
Separately, we brokered an arrangement to extend the bond into July. The building was dismantled against that timeframe. I would like it to be noted that the amount of money represented in the accounts would, by and large, be the figure in the original estimate. There was no over-expenditure on the dismantling phase of the project.
The €2.5 million estimate was to cover the dismantling and the reconstruction work. In that period while the dismantling was taking place, we started the process of seeking to apply for planning permission to erect the building on site in Dún Laoghaire. At that stage we engaged quantity surveyors to examine the question of costs. Then the spiralling figures, to which Mr. Purcell referred, became apparent.
We made strenuous efforts when that became clear to us in May to June of 2001 and through that summer into September to establish what could be arranged or brokered with the various parties. Ultimately, by December 2001 we concluded that this project was not going to happen because it could not be done in a value for money way. Barring some minor discussions and correspondence after that, we formally exited from the project with effect from April 2002.
That is the story as we understand it. We engaged in a process and acted in very good faith. Admittedly, it would have been an unusual project to construct a building, dismantle it, bring it back here and so on. It was an innovative project and we would have liked to have been part of what we had hoped would be its successful outcome. It would have immediately delivered a very fine building and useful space to us at an early stage in our campus development. In spite of the best efforts of everybody concerned, the project did not happen and it is my great regret that it did not.
Who made the decision to repatriate the pavilion?
Mr. Devine
We responded to the tender placed by the Office of Public Works. In regard to the wider project, I understand that the OPW was acting with or on behalf of the Department of Enterprise, Trade and Employment. Our point of reference was the OPW.
From the perspective of the OPW, can Mr. Sherlock indicate who made the decision in that regard?
Mr. Sherlock
The theme of the Hanover Expo was sustainability. A decision was made at the design stage that the pavilion should be designed in such a way that it could be repatriated and reused at the end of the exhibition, in line with the theme of the exhibition. I understand most of the pavilions there were designed on the same basis. In reality, very few, if any, were successfully dismantled, re-erected and repatriated at the end of the exhibition. Most were demolished. A very small number were retained in situ. That was one of the options down the line that we considered in regard to this pavilion, but it did not seem to work. There were expressions of interest but there were indications of serious planning problems when we tried to harden them up locally.
How much was received for the bits and pieces that were sold off?
Mr. Sherlock
It was a very small amount of approximately €25,000.
The amount of €25,000 is all that has been redeemed to date.
Mr. Sherlock
Yes. The Comptroller and Auditor General has given the figures. The costs, which were written off by Dún Laoghaire institute, were approximately €521,000. In terms of the amount recovered from the sale of items and the costs incurred in the use of local agents and storage, we have incurred a cost of approximately €19,000. Therefore, the overall cost incurred is €540,000. It was necessary to incur a substantial element of that cost. We do not have a figure for that because in a sense we did not do that. Based on estimates we secured for dismantling the pavilion, in order to comply with the terms on which we had the site, which were that we had to leave a cleared and restored site at the end of the exhibition, our estimate was that it would have cost approximately €450,000 to have cleared the site using a local contractor. We got prices for the cost of using an Irish contractor, which would have involved a higher figure. We were envisaging an expense of approximately €450,000 to hand over a cleared site.
I am astonished about this now that we have heard the whole story. It is like a fairytale when account is taken of the overruns in terms of the original figure given and the commitment to give €525,000 to the Dún Laoghaire institute to dismantle the pavilion. Why was an assessment of the cost involved not carried prior to that agreement? It was bad enough to have made an agreement in this regard in Germany, but it is not acceptable to have allowed €500,000 to be spent and to have paid storage costs since then. What amount has been paid in respect of storage since that time? I understand the pavilion was dismantled in 2001.
Mr. Sherlock
Yes.
What amount has been incurred in storage costs since?
Mr. Sherlock
I do not have an exact figure for that. The storage costs were relatively low. The figure was approximately €26,000.
There is nothing relatively low about any of these figures.
Mr. Sherlock
I was referring to that figure in the context of the cost of the overruns.
I am trying to grasp this from the point of view of the agreement made. The college had an ambitious plan to bring the pavilion back to Ireland, an evaluation was carried out and it was agreed to give a principal sum of €500,000 in terms of the dismantling costs, but it has now been decided to scrap this pavilion. Will it be dumped?
Mr. Sherlock
It has been dumped. Some of it has been sold locally and will be incorporated in developments in Germany. I do not have the details of those. Part of it has been sold to local developers. What was left of it has been disposed of at this stage because it was costing money to store it.
With regard to making the decision to decide to go to tender, when the institute tendered for this proposition, to take down the pavilion and invest the principal sum, what evaluation was carried out before the OPW decided to go to public tender? How did it seem such a good idea then, yet it has become a disastrous one since?
Mr. Sherlock
I think the idea remained good. What happened was that we did an evaluation and came up with an estimate of costs based on figures supplied to us by quantity surveyors. The cost to dismantle it, transport it from Germany and re-erect it in Ireland would be of the order of €2.5 million. I have had to make some conversions because the figures were in Irish punts at the time but it was roughly €2.5 million. Forgive me if I stray a small bit on the figures.
There were some items that were not included in that cost and with hindsight it is fair to say that we should have flagged the fact more positively that those costs were not included. We went through a process — we sought interest from Departments but there was none. We then sought interest through public advertisement and as a result of that process the Dún Laoghaire institute was awarded the task of repatriating the pavilion. It then appointed its own design team which examined the estimates but, unfortunately, the figure jumped.
There was a number of elements in that, Chairman. One was a substantial increase because of inflation. It was at a time of particularly high inflation, not necessarily in the economy generally but in the building industry. In the process of dismantling the pavilion itself, the level of breakage was higher than we had anticipated. There, was therefore, a fairly substantial increase because of the need to replace parts which had broken.
Another issue concerned the site work that had to be undertaken in Dún Laoghaire and we could not have fully anticipated that in the estimate. That issue gave rise to a fairly significant increase in cost. In circulating to the interested parties, we gave an estimate which indicated that the cost of dismantling, transporting and re-erecting would be €2.5 million, or IR£2 million. We also provided a number of indicative schemes. We had three indicative schemes which were in fact other possible configurations in uses for the pavilion. With hindsight I would say that we should have made it clear. I felt it was clear but we should have put it in black and white so that there could not be any misunderstanding. It was one of those schemes that the Dún Laoghaire institute wished to implement. The cost of those schemes had an extra price tag of about €200,000 on it. Our figure did not adequately allow for professional fees because we were not to know what the position of a group undertaking the job would be.
There was a number of major elements some of which, with the benefit of hindsight, I accept, we could and should have flagged more clearly as having been excluded. Others were entirely outside our control, which pushed the price up. At that point the Department of Education and Science, which was essentially judging this project on the basis of the cost norms for building a new building, decided that it no longer represented value for money. Therefore, it was not willing to commit the sum of €2.5 million, which it had committed at the outset. We were very clear at the outset, in terms of the best estimate we had, as was the Dún Laoghaire institute, that the funds were in place at that figure to deliver the finished project.
The Department of Education and Science agreed in principle to give the €2 million to supplement the fund, and originally advanced the investment to the institute, giving the clear impression that this was a done deal. Why were the goalposts changed then?
Mr. Dalton
It was put to the Department that the estimate had been provided and was advertised at €2.5 million. That was slightly more than our normal building costs would be at that time, but there was a premium to be paid for the time in which this building could be delivered. Therefore, we estimated that it represented value for money at that time. When the goalposts changed — this did not become clear to the Department until May 2001 — and they had changed significantly, it was at €3.7 million and rising. We still had fees and VAT to put on top of that. In the Department's view there was no way it could be justified as representing any value for money.
This must have been highly embarrassing. It was a huge embarrassment to the Department as it promoted this building which emphasised sustaining energy. I think it should be sustaining cash and reclassifying the whole expense. It was designed as a mobile building and it is clear that, once the Expo was completed, the building was to be returned to Ireland for use in some Government or State organisation. What went wrong?
Mr. Davitt
To some extent, of course, it is regrettable that the building has not been returned to Ireland. Indeed, it was superbly designed and constructed with the emphasis on sustainable construction and operation during its period in Hanover, to the extent that it was designed to be dismantled and re-erected. It is regrettable that it was not possible to achieve a better outcome. At the time it would have been difficult to engage with the theme of the Expo on that basis. That being said, we could not necessarily have anticipated what the eventual outcome of the building would be. For example, it may have been possible for it to have been sold in situ, in which case it would have fulfilled its purpose, or it may have been re-erected elsewhere in Germany, also fulfilling its purpose. Had inflation or certain other costs relating to its re-erection been less, or if third party sponsors had come in, it may well have been possible to have the building re-erected in Ireland, but we could not have anticipated all of this in the process.
I will start briefly with Mr. Devine but I want to broaden it out to other witnesses. Mr. Devine mentioned that he responded to a tender notice, is that correct?
Mr. Devine
Formally, that is the situation. Prior to that I would have written on a number of occasions to express interest, having knowledge of the fact that the pavilion had been designed with relocation in mind.
In other words, it was a case of waiting for the end of Expo and returning it to Ireland.
Mr. Devine
No, I was not waiting for the end of Expo. I became aware early on of the situation regarding Expo because I read about it in the newspapers. I said this is a particularly exciting building and somebody will be the beneficiary of a very interesting building reconstructed, hopefully, back in Ireland. As I said, my first expression of interest was on 10 August, during the Expo period.
Yes.
Mr. Devine
There was no mechanism simply to make a decision that it was going to go to Dún Laoghaire. Some proper process would have been needed and that process commenced, in my view, with the tender notice which appeared in the newspapers in November.
Let me go back to August. Obviously, Mr. Devine was aware that Expo was on. He saw the pavilion and decided it would be good to have it. Therefore, he wrote this letter.
Mr. Devine
I expressed interest and I visited it. I happened to be attending a conference in Berlin in early September and I took the opportunity to visit the pavilion. Following the visit, it became clear that as a building it would, in many respects, be an ideal fit for the campus in Dún Laoghaire both in terms of a headline building designed for a particular Irish event in Hanover and in terms of its functionality — its ability to provide immediate space for, effectively, an industry liaison centre. From my perspective, there was a very close fit in terms of what this building could offer us, and I was anxious to pursue it in whatever way I could. The tender was the obvious point at which one could make a formal proposal. In parallel with that, we would have discussed it with the buildings unit as our funder in this matter. As Mr. Dawson said, it was very willing to work with us against the estimate provided.
The official tender notice was some time in November. What was the tender period?
Mr. Devine
I cannot remember. It would have been a matter of weeks.
Months, perhaps.
Mr. Devine
If even. That did not necessarily present us with a difficulty. We had done a lot of thinking about it. We were in a position to respond very quickly to that tender.
That is what I was going to ask. At that stage, was the institute happy it had a solid plan — not only that we would like it, but where it would go and what it would involve? How detailed was the institute's costings?
Mr. Devine
We were in no position to know the cost. I think, informally, we might have known. These kind of figures were being bandied around. When the tender had been looked at — I understand we were not the only expression of interest — the letter, which did not come back to us until 23 March, basically said that, in principle, the decision had been taken to bring the pavilion back to Ireland and that, in principle, the Dún Laoghaire campus had emerged as the most suitable location. It asked that we respond and give assurances that, among other things, funds estimated to be £2 million at the time, or €2.5 million, would be available to us to realise this project. At that stage, we communicated——
Prior to that letter referring to the sum of €2.5 million, what estimate, if any, did the institute have as to what the project might cost?
Mr. Devine
We had none.
Absolutely none.
Mr. Devine
We had no formal estimate. For clarification, the tender did not require a bid saying that we would do it for X amount of money. It was an expression of interest-type tender.
The institute knew that if it was successful, it would incur a cost.
Mr. Devine
Absolutely. We would have been in discussion with the Department of Education and Science in that if this was to occur, would we——
It does not have an open cheque book. It must have asked what the institute envisaged.
Mr. Devine
The Department's view, which I would totally support, would be that the benchmark starting point for any such discussion would be a norm in relation to how much new build would cost for a building of that size and for that purpose. We would have been operating within that ballpark. As a director, I would not for a moment approach my funders to fund a building at a cost which, as in this case, would be more than 50% higher than the cost of new build. That was not known at the time. We responded to an expression of interest. Will I give the Deputy a sense of the conditions?
Just generally.
Mr. Devine
The letter we received on 23 March, dated 15 March, asked us to respond giving a map of where we proposed to put the building; clarification on zoning in relation to our development plan, etc.; outlining that we would be able to get planning permission; details of our title to the site, which is vested in us by the Minister; and confirmation that, if our proposal was selected, we would, within seven days of notification, enter into a contract with the Minister for Enterprise, Trade and Employment. I can read on; there are pages of this.
That is not necessary.
Mr. Devine
We responded to that letter. That was the beginning of engagement.
Mr. Sherlock, in regard to the expressions of interest, advertised or tendered, to which the Dún Laoghaire Institute of Technology responded, I understand others responded as well. Is that right?
Mr. Sherlock
That is right.
Were there many?
Mr. Sherlock
As far as I recall, there were five in all. Essentially, we had set a number of absolute requirements, that is, that a successful bidder would have to have an identified site and identified funding. Those were the absolute sine qua non.
That was clearly not the case. They were two absolutes, as has been said — that is, an identified site and identified funding. There was not identified funding because if there was, that project would have been complete.
Mr. Sherlock
There was, in the sense that the estimate of cost, which we had and which we provided to all interested parties based on an estimate done by our consultant quantity surveyors, was that the pavilion could be repatriated for a cost of £2 million, or €2.5 million. We provided that estimate for everybody. There was confirmation from the Department of Education and Science that it would provide that funding for the institute if it was successful in its application, bid or whatever one cares to call it. It also had an identified site. There was only one other party which fulfilled both of those conditions. The others were, to use an analogy used earlier, fishing in the pond to see what was there. Essentially, we were dealing with two serious bids, both from educational institutions, to bring the pavilion home.
We had identified what we believed to be the cost of repatriating the pavilion, dismantling it and putting it back together exactly as it was in Hanover. The institute was then selected. We engaged a design team to carry through the project for it. At that point, some of the additional cost factors, which I went through earlier, suddenly came into focus. If we were doing this again, we would, with the benefit of hindsight, do it differently. With the benefit of hindsight, we should have been explicit rather than leaving it to be implied that they were not included. Others appeared post the award, such as the breakages in the dismantling process, the degree of site works which had to be done and so on.
The OPW was involved at all stages — in the disposal and at the first stage in the erection of the pavilion. Am I right?
Mr. Sherlock
Yes. As we acted as agents for the Department of Enterprise, Trade and Employment, we commissioned the design team, appointed the contractors and put supervisory arrangements in place.
There were also cost overruns on the original set up. Is that right?
Mr. Sherlock
I cannot answer that.
The point at which I am getting——
Mr. Sherlock
There were some.
The project was originally to cost £6 million or £7 million but by the time it was constructed, it cost somewhere in the region £11.5 million. Mr. Sherlock will have the figures there. There were overruns. At that stage, was the cause of the overruns identified? On the disposal side, does Mr. Sherlock have any of those costs?
Mr. Sherlock
They were two separate exercises. In regard to the overruns on the initial project, as far as I recall, the site was approximately 170 hectares, which was being covered by pavilions. There were many cost issues relating to a large amount of building going on in a short period. They were separate from the broadsides we received when we tried to repatriate. There was no link.
I wish to ask Mr. Davitt some questions. What was the actual cost of the Expo pavilion?
Mr. Davitt
The gross estimate provided, subject to the sanction of the Department of Finance — I will give the figures in punts if that is acceptable — was £9.1 million. The eventual cost was approximately £8 million. The net cost, as a consequence of receiving German VAT receipts returned to Ireland, was £7.1 million. This compares quite favourably with the original estimate made in 1998 in a memorandum for Government submitted by the Tánaiste of a rough cost parameter of between £5 million and £6 million. If we consider it from a net position, the Government would have thought that the cost would be approximately £6 million in 1998 whereas the eventual net outturn was £7 million in 2000. I can provide further figures if the Deputy so desires.
Those were the costs incurred by Mr. Davitt's Department and they do not include anything incurred by the Department of Education and Science.
Mr. Davitt
No, they do not.
The design was ambitious and it was recognised at an early stage that we were designing a product which would, effectively and eventually, be brought back to Ireland. Why, at that point, was there no planning as to where it would be situated? It was only when a certain pressure was exerted in terms of getting the pavilion off the site that the tendering process and so forth commenced. This question is directed towards the Department that was running the project. Surely this issue should have been addressed early on. Something was being built which would eventually have to be dismantled and shipped back to Ireland. The Department was aware of the timescale it had on the site because of the bond tied up with the project. At that stage of the design process, should there not have been a plan in terms of where the pavilion would be situated rather than trying to sell it on afterwards? The latter did not happen, it was placed in storage for a couple of years and eventually the Department paid to dump most of it. I am of the view that the planning stage of the process created the gap.
Mr. Davitt
That is a valid point. It would also be important to state, however, that, in the context of the Government's decision to participate and the planning arrangements, the immediate priority was to engage in the participation. That is what we did and successfully so. It would also have been difficult, at the planning stage, to anticipate the eventual outcome of where the pavilion would ultimately reside. The decision to return the pavilion to Ireland was not taken by the Tánaiste and the Minister of State, Deputy Kitt, until March 2001. It was not the explicit intention of the Department or the Minister to return the pavilion following the conclusion of Expo 2000. It is possible, as we mentioned in another context, that the pavilion may have been dismantled and reassembled in Europe or on the site itself or sold in some other fashion. It could also have been returned to Ireland. From that perspective, that was the principle reason that, at the initial planning stage, the issue of repatriation and the costs associated therewith were not discussed.
It was always intended that the pavilion would be dismantled and rebuilt. However, that did not happen and it was dumped. How much was added to the cost of the project in order to have a pavilion designed in such a manner that it could be dismantled and rebuilt rather than having it built for a once-off purpose?
Mr. Davitt
I could not answer that question but the Office of Public Works may have a view on it.
Mr. Liam Egan
It would be virtually impossible to distinguish which elements were more expensive. At the design stage, the steel frame was bolted rather than welded, which would be the norm. The actual cost of that detail is——
In other words, when the decision was made at an early stage that it would be designed for dismantle and rebuild, there was no cost implication. That did not come into the analysis. It was not the case that there could have been standard build for X amount or rebuild for X plus an additional figure. Mr. Egan is stating that there was no evaluation carried out.
Mr. Egan
As the detailed design progressed, we discovered that, for example, to try to make a roof covering that could be reused was ridiculously more expensive than using a disposable roof covering. There were elements of compromise in the actual construction. While the building was designed to be reused, it was also designed to attract the maximum number of people to the Irish pavilion to see——
I am not disputing that. I am questioning the decision-making process and seeking to discover what, if any, evaluation was given to the difference between a standard one-off build and a dismantle and rebuild model. At some point a deliberate decision had to be made that it would be constructed in a way that would allow it to be dismantled and rebuilt. That had a cost implication. It seems clearly evident that nobody knows what was that cost implication. It was probably not a consideration but it should have been because if a dismantle and rebuild model was to be used, there should have been a better analysis carried out at the outset regarding where it might eventually be situated. It should not have been the case that a decision was left until it was time to move the pavilion off-site. Unfortunately, however, it appears that this is what happened.
Mr. Sherlock
If we were doing it again, we would approach it differently. It was a severe learning experience. I reiterate that we would have incurred a substantial amount of the cost in any event. In an ideal scenario — the time-lag would present some difficulties — there would be a repatriating partner in place from the outset and the design would have taken this fact into account. That was not feasible because of timescales, etc. There is not an identifiable figure on which the decision was based. For example, it was not the case that it was estimated that the cost of a standard design, traditional build would be X, that the cost of a demountable build would be Y and that the difference would be Z. The design brief from day one was to construct a sustainable building which was capable of being reused. However, as Mr. Egan stated, in the process of designing the building there were times when it became clear that in order to design a 100% reusable structure, there would be a price tag attached to some of the elements involved that was quite ridiculous. Decisions were made that we would settle for a slightly lower threshold. There was a consciousness of the cost element and decisions were made as one considered the different elements of the building.
Mr. Devine
I want to make it clear that the escalation in costs was not due to any special requirements that occurred in trying to relocate this building to Dún Laoghaire, with one exception. Quite clearly, there are site works that are local. For the record, €150,000 was the amount of money that——
However, it has been clearly stated that this could have been relocated anywhere.
Mr. Devine
I just want to make it clear that there was no special requirement on our part. The final point I would make — I feel strongly about this — is that had all of this become clear at an early stage and had we not been engaged in the project, however it fell, the bill for dismantling or doing whatever with the pavilion would have fallen to the OPW. As it happens, it fell to my institute and the Department of Education and Science. The vagaries of moneys in the public sector do not allow cross-billing from one Department to another. I do not understand these issues but I collaborated with my contributors in good faith and we footed a bill having proceeded on an innovative and exciting project.
I accept that.
I fully concur with Mr. Devine that he was an innocent caught in a trap not of his own making. He was correct to think the building could have been built at a competitive cost. I assume he is paid to ensure when a new building is sanctioned on his campus, it must be built as cheaply as possible. Eyebrows were raised in Hanover at the time. It was a fine project, the launch of which I recall vividly, but whether the institute believed Mr. Devine could do it, he could have done little else once he believed that is what his institute wanted.
A monumental blunder was made on this project by a number of Departments. The project related to a significant building, not Santa Claus's cabin. I question the concept of reusing a building of that size in Hanover given the distance and cost involved. My county council tried to use a small demountable. A person would take up residence and then bring it to another part of the county. However, it usually would not get 20 miles before falling asunder. I do not agree with relocation.
When the project was first mooted, was a strategic management team set up comprising the Departments of Enterprise, Trade and Employment, Education and Science and Finance and the OPW? The project cost €8 million in the taxpayer's money. Who was behind it?
Mr. Davitt
From the time they decided to participate, the entire project was overseen by an interdepartmental and agency group, which was chaired by my Department. It included representatives from the Departments of the Taoiseach, Arts, Heritage, Gaeltacht and the Islands, Agriculture and Food, Tourism, Sport and Recreation, Foreign Affairs, the OPW, FÁS, Enterprise Ireland, IDA Ireland, Bord Bia, Bord Fáilte and so on.
Who had expertise within the group to construct a building in Hanover, Germany, dismantle it and return it to Ireland? Is there a precedent for this? Half the population could have been on the strategic team but if someone did not know what was going on, there was a problem.
Mr. Davitt
In answer to your first question, all the stakeholders in the project relied exclusively on the expertise of the OPW.
I will question those officials shortly.
Mr. Davitt
To answer the Deputy's second question, I am not aware of what happened with previous buildings.
Have Mr. Egan or Mr. Sherlock in their time with the OPW ever commissioned a building and then demolished it for relocation elsewhere?
Mr. Egan
Not a conventional building. Prefabs have been relocated and reused, quite effectively in some cases.
We are talking about an old log cabin in comparison to this building.
Mr. Egan
This was a first. It arose out of the goals of Expo and the ground rules it set.
They were uncharted waters. The OPW had not a clue what would happen to the building once it was constructed in Germany.
Mr. Egan
They were uncharted waters but we planned for reuse. We could not have known the specific reuse when it was designed. We investigated the possibility of getting a partner on board at the design stage but it was not feasible to find somebody at the time.
It was important that the building should have been designed and built by Irish crafts people. I assume that is a major selling point at an international trade fair. Was it possible to do something in conjunction with local experts in Germany in order that there would have been use for the building somewhere other than Ireland? Were those issues considered when the project was discussed?
Mr. Egan
Issues such as that were discussed at the design stage. The construction involved a great deal of Irish material and German and Polish workmanship. An international team constructed the building but soundings were made both in Germany and Ireland from an early stage. The initial estimate for re-erecting the building was prepared in January 2000, at which——
What was the estimate?
Mr. Egan
It was £2 million.
Was that the cost of dismantling the building and bringing it home?
Mr. Egan
And re-erecting it.
That is when Dún Laoghaire comes into the picture.
Mr. Egan
Yes.
If I was in Hanover this minute on the site of Expo 2000, what would I see?
Mr. Egan
Exactly what we found there before we started building. Our obligation was to return the site to the condition it was in. It is used as an overflow car park for the main trade fair that takes places on the adjoining site.
Was it possible to get paid for that by the company operating the site or did it get a freebie?
Mr. Egan
The arrangement was that we leased the site for the duration of Expo. There was a possibility of obtaining permission to retain the building as it was and we explored that but there were severe restrictions on what use the building could be put to, emanating, in particular, from the shopkeepers of Hanover who did not want a new commercial centre being established.
It is interesting that the building is being used commercially.
Mr. Egan
No, the site is being used commercially not the building.
Did the Department ever own the site?
Mr. Egan
No.
Where are the parts of the building? I assume they did not disappear into thin air.
Mr. Sherlock
Unfortunately, I cannot tell the committee precisely but they were bought by a developer who was developing a building. That led to some of the storage costs. Once he had expressed an interest, he had to go through the entire planning process in Germany for planning approval before he finally collected what he was taking and paid for it. I do not have information about this. We were dealing with an agent whom we appointed in Germany to dispose of the pavilion. It is an element in a much larger structure. We examined the possibility of having it reconstructed in its entirety in Germany with the Irish provenance of the building acknowledged. However, because of the planning issues etc. that proved a non-runner.
It became the pavilion that nobody wanted.
Mr. Sherlock
Frankly, it was a building that Dún Laoghaire institute dearly wanted but could not——
The problem is that through no fault of its own it paid very dearly for it, but did not get it. What happened is not good. It appears that everybody lost out. We can only hope that our attendance at Expo 2000, which I believe was successful, will rub off well on the commercial life of Ireland, no credit to the Department involved. Looking at it from my position, it was nothing short of a shambles.
Does Mr. Purcell wish to comment before we conclude?
Mr. Purcell
I will clarify some issues as I understand them. I have had some connection with this pavilion although I did not have the pleasure of visiting it. We were press-ganged into participating in the exhibition in the first place with no real commercial value placed on that. The valuation in terms of marketing etc. was done afterwards. Our participation was as much to further or preserve Irish-German diplomatic relations as anything else.
It was never an option to leave the pavilion on the site. Part of the conditions of exhibiting on the site was that participants had to enter a bond to clear the site by the following February. Therefore, that option was never a runner. The real runner was whether it could be sold in Germany and reconstructed or brought back here and reconstructed. It is probably unfair to say the institute was duped, but it was in a sense inadvertently duped by the costings produced. The first costings were produced in January 2000 and amounted to €1.7 million. However, these costings did not include matters such as dismantling and transporting to Dublin Port. We now know the dismantling cost up to €500,000 and many other items were not included in the costings.
Mr. Sherlock acknowledged that some of the estimates were received from architects or quantity surveyors — I am not quite sure which — and put down as order of magnitude costs. When it came to September 2001 the penny was beginning to drop for the institute, although it did not formally withdraw until six months later. The estimate then was for €3.12 million, but it also excluded dismantling and transport to Dublin Port. It excluded professional fees and a huge list of items, including site works and data cabling etc. The matter had gone out into the stratosphere at that stage.
In my opening remarks I said that when the decision was taken to return the pavilion to Ireland, it was based on unrealistic costs. That was the beginning of the end for the project. Having been with the project, in one way or another, from the beginning, it is great to get some closure to the issue now that the final surplus materials have been dumped.
I hope when we arrive in Hanover again we will have a different system. I assume we will not use this project as a model.
What was the overall total cost involved, allowing for the net VAT, as Mr. Davitt suggested?
Mr. Purcell
After net VAT and recoveries, the figure came to approximately £7.5 million, perhaps £7.4 million. I will not disagree over €300,000. Extra costs were then involved in dismantling, etc. A ball-park figure of approximately £8 million would not be too far out.
I thank Mr. Purcell for that clarification. It was a difficult story to tell. As Mr. Purcell said, lessons must be learned. The issue must be an embarrassment for the OPW, from the initial concept to the bill, the dismantling and the full story. Hopefully the message emanating from this meeting is that something like this should never happen again. I sympathise with the Dún Laoghaire institute. It had an ambitious plan, but is paying the price for it through the loss of its €500,000.
This concludes our business today and I thank everybody who attended. Is it agreed that the accounts are noted? Agreed.
The witness withdrew.
The committee adjourned at 1.45 p.m. until 2.30 p.m. on Tuesday, 5 October 2004.