National Children's Hospital: Statements

As I said yesterday, the past number of weeks in the Oireachtas have been dominated by debate and discussion regarding the development of the national children’s hospital and cost escalation. I have been clear that my Department, the Government and I take seriously the significant increase in public funds over those originally committed by Government based upon the business case submitted by the National Paediatric Hospital Development Board, NPHDB. As I have set out, once I was notified of potential cost increases at the very end of August 2018, a period of intensive work took place, although this does not suit the narrative of those who suggest that there was inaction. There was a high level of activity to establish the extent of the increase, explore ways to reduce it, quickly commission independent reviews and consider all contingencies. This detailed work was essential to arriving at the final position in November and allowed the Government to make a thorough, considered decision in December which eliminated options that would have have cost more or delayed this vital project. I rebut fully the idea that partial information leads to better decision-making rather than full information and a considered and thorough thought process.

As I also said yesterday, the new children’s hospital project will transform the delivery of children's healthcare in Ireland, with major capital investment underpinned by a new model of care. The establishment of Children's Health Ireland by legislation passed by this Oireachtas at the end of last year was an important milestone and will further assist the ongoing operational and cultural integration of the three hospitals in advance of the opening of the new hospital and centres. There has been much discussion about governance recently but Deputies from all sides of the House had an opportunity to bring forward amendments when they voted to pass the Children's Health Bill at the end of 2018. The hospital will have a leadership role nationally in the implementation of the national model of care for paediatrics and neonatology, working closely with paediatric service providers in other hospitals across the country, in the primary care system and in the community.

We will replace outdated hospital buildings with modern and appropriate infrastructure, including fit-for-purpose, single en suite rooms for every child designed to best serve the needs of our children and their families and of the staff who care for them. There are currently only 14 theatres, including one cath lab, in the three existing hospitals, which has to be supplemented by outsourcing procedures to other hospitals. This limits our ability to tackle the long waiting times for surgery for children. In the new hospital there will be 22 theatres, including two cath labs, which will have a profoundly positive impact on activity levels and on theatre waiting times for children. The equipment at the new children’s hospital will include five MRls with space for two more, three CT scans, 30 ultrasounds and seven X-ray rooms, all of which will be state-of-the-art. New outpatient centres will be provided at Connolly and Tallaght hospitals, with the former opening later this year. Conversations relating to the new hospital often seem to be about a project that has not yet commenced, but part of it will open this year. These centres will expand outpatient and urgent care capacity and provide services in modern facilities. The three new sites will significantly increase capacity across all types of care, including increases of 16% in inpatient capacity, 7% in emergency department attendances, 26% in day case capacity and 47% in outpatient capacity levels. It is true that the costs of this project have increased significantly and taxpayers want to be assured, as does the Government, that their investment is being managed correctly. This is an investment that taxpayers were meant to make in the 1960s but, due to a failure of political leadership, it is now only about to be delivered in the 21st century. An inquiry is under way to understand the reasons for the cost escalation associated with the new children's hospital construction project and will report back by the end of next month. The report will be published and I welcome the constructive engagement of Deputy Donnelly and others in making sure that the terms of reference of the review are robust and that the focus will be on ways to reduce and mitigate costs. The primary focus of the review is on the governance and management arrangements in place within and between the NPHDB and executive, design team, relevant consultants, user groups and contractors. The review will deal with the accountability of the relevant key parties, functions and roles and this will inform appropriate next steps. As I said yesterday, the Government will act swiftly on its recommendations and is happy to work on a cross-party basis in that regard. The Government and I will not be found wanting when it comes to acting against any entity or any company where errors were made. If the report finds a requirement for governance or personnel changes, I have stated clearly that these will happen. It is important that we give the review an opportunity to undertake its work before drawing conclusions prematurely. Commissioning external reviews and then deciding the outcome of those reviews before they report is becoming all too commonplace in politics. Lessons must, and will, be learnt and the Cabinet took a number of decisions in that regard yesterday. Along with many others, I firmly believe that we are building the right hospital on the right site and for the right reasons. I was presented with three options: cancel the project, re-tender the project or proceed with the project. I know, and will always know, that the right decision was to proceed with the project. This hospital is now under construction. I invite Members to visit the Connolly site as it nears completion. I invite Members to visit the St. James's site to see the building work commenced as it comes overground. I have heard commentators suggest that we should just fill in the hole in the ground but there are bricks on top of bricks now. I invite Members to join me in ensuring that, while recognising and meeting legitimate and important concerns, we get on with delivering this vital project, and I assure the House of my willingness and desire to work on a cross-party basis in that regard.

I would like to go back and forth quickly enough with the Minister, if possible. We have been waiting for the past few weeks for the Mazars report, which was commissioned towards the end of last year to examine the reasons for the cost escalation and so forth, similar to what the PwC review will examine. We received the Mazars report approximately two hours ago and I want to focus my initial questions on it because it does put to bed some of the reasons or excuses we have heard so far. According to the report, the construction costs between April 2017 and November 2018, a period of a year and a half, went up by 56%. At committee, the first line of defence we heard, not from the Minister but from the Department, the HSE and the hospital development board, was that the increase was due to inflation. In fact, one of the Minister's colleagues said at a committee meeting earlier that this entire increase can be explained away by inflation. The Mazars report gives us the figures we have been waiting for and tells us that there was a 56% increase in construction costs in 18 months. The base case included an assumption on inflation of 4% and we know from the Society of Chartered Surveyors Ireland that construction inflation in that period was 6%. Inflation, therefore, was only 2% more than was allowed for in the contract. Given a 56% increase in costs and only a 2% additional increase in inflation, does the Minister accept that inflation does not explain the vast majority of the cost overrun?

Before I call on the Minister, I wish to explain to the House that each of the ten-minute slots can be taken in the form of questions and answers.

I thank the Deputy for his question. Yes, I accept that because it is the truth. The Deputy has put the truth on the record of this House. It if was simply a matter of inflation, we would not need an inquiry and we would not be asking which entities and companies, if any, and which individuals or key roles did not discharge their responsibilities correctly. Certainly inflation is a piece of this.

The Deputy has seen the documentation and he has followed this closely. While inflation is a piece of it, it does not explain all of this and, therefore, we need to allow PwC analyse what went wrong in other areas. I have my own thoughts on that but I will come back to the Deputy in that regard as I know he wants to speak.

I appreciate the Minister's candour on that issue because, to date, we have had five committee meetings on this issue and, hour after hour, we were told the overrun could be explained away by inflation.

I again thank the Minister for his candour. This has very little to do with inflation. The Mazars report confirms that the gross area has not increased either. We know that no additional bedrooms, operating theatres and so forth were added and, therefore, the overrun is not due to a larger hospital. The Mazars report states that the vision and functionality for the hospital did not change throughout this entire process. We can both agree with that.

I come now to the design team. The Mazars report has much to say about this team. In its analysis, it attributes an increase of €94 million on second stage measurement to the design team getting the quantities wrong. It attributes another €92 million to programme and preliminaries associated with the design team getting their initial quantities wrong and it states that the value engineering target was missed by €50 million, which it again attributes to the design team. We have only had the report for two hours. By my count, Mazars attributes between €230 million and €240 million in additional overrun to the design team and to the calculations it got wrong.

Page 21 of the report states: "The design team did not highlight or signal the looming capital budget overrun." The design team fees for the project were agreed in 2017 at €44 million but that the team asked for more money and a year later the €44 million was increased to €71 million, an increase of more than 60% in fees for the design team. Will the Minister identify the design team?

I do not want to say anything on the record of this House that in any way impedes the accountability piece that has to be discharged by PwC. I am certainly happy to share with the House all of the information I have, and I have been sharing documentation. The Mazars report makes clear, as the Deputy correctly outlined, that a number of things did not go right in regard to design, as listed on pages 22 and 23 of the report. The PwC report will examine this in more detail in ascertaining where changes could be made. I do not want to use up the Deputy's time but it is important to say that the report did find that the guaranteed maximum price, GMP, process was still the correct way to go. It also found that the process locked in costs at 2016 prices. Clearly the quantities of materials that needed to be used was completely misestimated. I await the PwC report to establish where to go in that regard.

I asked the Minister to identify the design team.

I will have to get those details for the Deputy. I will get them for him before the end of this debate.

I thank the Minister. I move now to an area we have to continue to focus on, namely, cost reductions. There is a massive cost overrun and we know some of the year 1 implications of that overrun, which will escalate as the years go by. The Minister and I have discussed this issue previously. I acknowledge that he amended the PwC terms of reference to identify costs and I appreciate that. In previous conversations the Minister and the Minister for Public Expenditure and Reform said that the State is nonetheless contracted at €1.43 billion. My belief is that the contracted cost should be driven down. Is it the Minister's intention to aggressively pursue cost reductions, which may include that contracted price of €1.4 billion being reduced?

Yes, it is, but if we are doing so on an evidential basis or if the PwC report finds, as the Deputy and I have discussed at great length throughout nine hours of questioning at the health committee over two days, it is possible to do so without doing what the Deputy and I, and the House, do not want to do, which is to reduce the clinical benefit of it. We could reduce costs easily by providing fewer theatres and less equipment but that is not what the Deputy wants to do and I know that is not what he means. That is not what I want to do either, or what the House wants to do. If it is possible to reduce costs, we will not be found wanting in terms of vigorously pursuing that. We have reflected that explicitly, at the Deputy's invitation to do so, in the terms of reference of the PwC report.

I have said previously in this House, and I will repeat it lest it be lost in the noise of this debate from time to time, that if the PwC report indicates that there was wrongdoing or a failure on behalf of professional firms to do what they should have done, or anything like that, we will pursue vigorously those firms through the contracts that we, as a State, through the NPHDB, have with them. There may be other ways to do it. If people made significant errors, we will make sure they are held to account and we will use the full rigor of the law to make sure that is a reality.

The Minister referenced the two-stage process. There are three positions in this regard as far as I can see. In committee we were told repeatedly by the board, the Department, the HSE and, I think, by the Minister - my apologies if I am wrong in that regard - that if the Government was to start again it would use the same two stage process. That is what we were told repeatedly. I have had only a short time to read the Mazars report but I do not believe it concludes what the Minister said it concludes. It highlights numerous issues with this two-stage process. I stand to be corrected but, based on my initial reading of it, the Mazars report does not conclude that the two-stage process was the right way to go; rather, it concludes the opposite.

Critically, the Minister, Deputy Donohoe, yesterday said in his statement that these kinds of processes will not be used again and that the full design and costs will be known before the contract is set. That is my understanding of what he said. There appears to be a conflict between what the HSE, the Department and the board are saying, which is that the two-stage process was not only right but knowing what we now know they would use it again, which I find extraordinary, and what I think is a new Government position as of yesterday, which is that not only will they not be allowed but such an approach will never be used on major capital projects again. Will the Minister clarify the position?

I will take these questions. What I said yesterday is that I believe we need to be far more sparing and careful with the use of two-phase processes in the future. I believe they may have a role in the future, in particular to facilitate preparatory works for some projects, such that when and if a final agreement is reached a project can then move ahead without further delay. As I said, we need to make sparing use of them in the future.

In response to the second point which Deputy Donnelly put to the Minister for Health, regarding the point at which we move ahead, the point I made yesterday, which I am happy to restate now, is that for large projects, which stretch across many Departments and for which there is a higher variance of cost than, for example, the construction of a primary care centre or a road in respect of which we all know the cost, the final decision from Government should not come until we are crystal clear on the tendered cost.

On a point of clarification, we have been given more than 100 new documents since the Minister for Health appeared in committee. I take him at his word that he was informed in September 2017 that there was a €61 million overrun and he was next informed in August 2018. Given the vast volume of information that we now know has been floating around between the Departments of Public Expenditure and Reform and Health, the HSE and the numerous boards that were involved signalling again and again the issue of cost overruns that were increasingly getting out of control, will the Minister confirm that at no point in that time did he seek an update on the €61 million report and that it was not brought to his attention that there were escalating issues with the capital costs?

The benefit of telling the truth is no matter how many times one is asked the same question, the answer will be the same. I received five memorandums in respect of this. I published all of them, despite the fact the health committee only asked for one of them, which was the one from 27 August. That is the extent of the briefing that I received on this. I was, as the Deputy will see from the memorandum that came to me at the end of September 2017, satisfied that there was rigorous activity in that regard. The Deputy will see the note from my Secretary General handwritten on that document, showing clearly that this was being projected managed and the specific steps there were taking to try to drive down costs.

The Minister came into the House yesterday and apologised but I do not think anyone was satisfied with that apology.

The Minister did not apologise for the €0.5 billion overrun and neither does he appear interested in taking any responsibility for that, which is very regrettable. As is the style with this Government, we will be drip-fed information, probably via journalists, rather than get direct answers to questions. However, we will hear over time of this incompetence, who will pay for it and what projects will be re-profiled or whatever word the Government wants to use, although it means they will not happen. It is not credible that overspending of this magnitude can happen without any consequences. There are clearly going to be consequences but the Minister simply has not told us what those consequences are going to be.

As of today, the overrun is currently at €0.5 billion. The Minster was aware of an overrun of at least €191 million on 27 August, plus an additional cost claim of €200 million from the main contractor. Why did the Minister not consult with the Minister for Finance on this issue? It is not credible to say that he did not have a full set of facts. One thing he would have known if he had asked - another very important question is whether he asked - is that the costs were only going in one direction. They were not fluctuating. The overrun went from €95 million to €191 million to €235 million. All the while this was happening, the costs were not fluctuating but were only going in one direction. Does the Minister honestly think it is credible that he did not inform his colleague, the Minister for Finance?

I counted approximately four questions there. No matter what I said yesterday the Deputy was not going to be satisfied with the apology because she had decided her position on this. That is okay because that is the style of her party, which is not hearing what people have to say before deciding the action to be taken. It is a parliamentary stunt her party uses regularly.

The Deputy's assertion on capital is completely untrue. We, as a Government, published what we were doing yesterday. We are very detailed and very clear on that. What it shows is the scaremongering that her party has been engaged in throughout the country, saying individual projects will not happen. That is not true but Sinn Féin should not let the facts get in the way of its narrative.

The Deputy factually misled the Dáil herself, so maybe she will apologise for suggesting that the project has overrun by €0.5 billion. That is obviously incorrect. The annual breakdown of capital funding to the end of 2018 was €235.64 million, so the project has not overrun. I presume what she means is that there is a projected overrun-----

Is the Minister being serious here?

------identified through the guaranteed maximum price, GMP, figures.

There will be sufficient time to ask questions. The Minister, without interruption.

Read the transcript. The Deputy said that the project had already overrun by €0.5 billion. The project has not overrun its budget.

Can the Minister answer the question, please?

I am answering the question. The project is projected to overrun by €450 million, of which €320 million is funding that will come from the Exchequer. The Deputy asked why I did not tell the Minister for Finance, which ignores the fact there was contact at official level, as is appropriate, between my Department and the Department of Public Expenditure and Reform, making people aware that was a GMP process ongoing. The Deputy said I had full facts but obviously I did not. I had the full facts on 9 November - the documents I published show that - and I immediately was in contact with the Minister for Public Expenditure and Reform and the Taoiseach. They both stated that was the appropriate action to take. Capital budgets were set on a multi-annual basis, the Deputy knows. We even had a very large launch about it earlier in 2018, so it was not a secret. We were constructively negotiating on the issue of current expenditure for health with the main Opposition party as to how to deal with what was going to be a supplementary overrun. I have said consistently why I took the actions I took and I stand by them.

I find it incredible that the Minister would not would not have told the Minister for Finance, but if that is his story and he is going to stick with it, that is fine.

In July the National Paediatric Hospital Development Board was informed that the Minister had accepted its memorandum requesting reappointment. These are the people who were in charge. We now know the scale and trajectory of the overrun was known to the development board with the size of the overrun going from €95 million to €191 million and on so by August. In this period, the Minister reappointed the entire board. When he reappointed the board and gave it that massive seal of approval, did he seek any advice on the performance of the board and its members? Did he discuss the results of the board's performance in relation to the project? If he did not, will he accept that was negligent on his part? If he did, will he tell us who the hell was backing this board? All the problems arose on its watch and that of the Minister. The Minister is supposed to be in charge. The board was supposed to be doing its work. The trajectory of the overspend as predicted was only going in one direction and yet in the middle of this, the board got a massive endorsement from the Minister.

If the Deputy would like to follow the facts on this issue, I took a decision to reappoint the board in July 2018, as the Deputy rightly said. In my letter of reappointment, I specifically referenced the fact that in this House we would be passing the Children's Health Ireland legislation, which would give me, as Minister, powers as to replacing that board, should I decide to do so. The Deputy voted in favour of that and I do not believe she brought forward any amendments to alter that reality and I was given powers at the end of 2018 in relation to that board that I did not have in advance of that. I took the decision to reappoint the board in its entirety to provide continuity for the delivery of a project. This was a competency-based board. The Deputy has been judge and jury on its performance. It was a competency-based board, appointed originally by my predecessors in the Fine Gael-Labour Party Government, of competent individuals who are doing their very best to deliver a major piece of infrastructure for our country. I now have powers under the Children's Health Ireland legislation to replace that board should I decide to do so and I will be led in relation to any governance and personnel changes by the PwC report.

The Deputy has decided the board has done a really bad job. The evidence to that effect has not yet been gathered and we should afford people due process in that regard. This is a competency-based board. We are often criticised as politicians for putting cronies on boards. This was a situation where people with the professional qualifications required to deliver a major infrastructure were asked to serve, and they did. I was pleased to reappoint the board in its entirety but its reappointment was pending the completion of the legislation in this House, and I made that very clear in my letter of reappointment, that I would have new powers by the end of the year and then I would decide what to do.

I brought forward amendments to that legislation, which were focused on the capacity of the health committee to have a role in assessing the members of the board. That aside, the Minister gave the board a ringing endorsement, all the while this project was escalating out of control. I will not use my words but I will quote a senior Fianna Fáil person who said that "the children's hospital scandalous overspend is affront to every child waiting for an operation and we now have a review that is an affront to accountability". I am not the only person who does not have a massive amount of faith in the Minister or in his many reports or reviews.

According to the minutes of the National Paediatric Hospital Development Board in March 2018, one of the subcommittees of the board was very critical of BAM's refusal to engage with the GMP process, that is, the GMP process the Minister is saying is the greatest thing since sliced pan. In September 2018, the board noted:

The performance of BAM during the phase A construction works fell far short of what would be expected from a Tier 1 contractor. BAM, had not demonstrated that they were adequately resourced to complete the phase A works. In the event of and prior to a phase B award the contractor would need to address these issues.

Before the Minister signed off on phase B, did he ask any questions on whether these issues and the poor performance of the main contractor, as outlined in the minutes, had been addressed? What steps did he take to ensure that performance had been addressed? Did he ask any questions about the performance of the main contractor before he handed it another massive cheque?

I will make two points. First, the Deputy continues to attack the credibility of people in this House who are not here to defend themselves, which is not a new tactic in relation to the Deputy. A number of months ago the Deputy was moving motions of no confidence in Tony O'Brien and today on Leaders' Question he was quoted as a source of great authority on Leaders' Questions. Maybe she will be quoting them in six months' time and taking their advice on board in that regard.

Phase A of the project, the completed phase, came in on budget. It is important to say that as one would not think that from the Deputy's assertion. I would be answering extraordinarily serious questions, in fact, I would not even answer the questions, if I had awarded the contract and picked the company. That was the bad old days of Irish politics. A process in place. The legal entity-----

The buck stops with the Minister.

Saying that the buck stops with the Minister is just a great piece of rhetoric. I know where the buck stops with me in political accountability for the decisions I make. I stand by that and I will always do so. We will deliver this hospital. Where the buck stops in terns of placing contracts, legally, under statutory instrument, is with the National Paediatric Hospital Development Board. That is the fact. It makes decisions on the awarding contracts.

Should I start doing that, the Deputy would be asking me a hell of a lot more serious questions.

On a point of clarification, does the Minister accept the performance of BAM during phase A construction works fell far short of what would be expected from a tier 1 contractor?

The assessment of the performance of contracts is a matter for the National Paediatric Hospital Development Board, funnily enough, and not me and the Deputy on the floor of the Dáil. That is not what we do. We do not discuss construction companies on the floor of the Dáil.

I am asking for an opinion.

The Minister, without interruption. He is well capable of answering questions.

I enjoy answering questions but it is nice to get a chance to answer the questions. I am not going to come in here and comment on the performance of companies in this country. We have laws in regard to procurement and laws in regard to contract, and we have an entity called the National Paediatric Hospital Development Board which places and monitors contracts.

It is its fault then. It is the scapegoat.

I am glad the Minister's colleagues are present and that he is here to represent the Government. I feel some of my questions will be more oriented to the Minister, Deputy Donohoe. I am pleasantly surprised he is here.

When we look at the hundreds of documents we have gone through, we find there is a letter that came in from the contractor on 24 August. It is an alarming letter, no matter what way one looks at it. It outlines how the company got special permission to tender for a project of €600 million without an external joint venture partner when the normal limit was €300 million - I think it bid €660 million. The documents then outline the minutes of the hospital board, as opposed to the other board which was set up for some other reason. They outline that in September, when there were concerns about it falling far short of what had been expected, it was wondering whether the company and the whole way in which the project had been put forward were fit for purpose to deliver a project of this scale and complexity. There were also concerns on the board about the contractor being sufficiently resourced, which backed up the previous concern.

Were these issues not worthy? These are serious concerns for a board. Was it not obligatory for the members of the board, many of whom would have reported to the Department of Health, to bring these concerns to the Minister at that point in regard to making a decision on the status of the project? Is the Minister not concerned when he reads those minutes that they were not brought to his attention at the time?

One of the reasons, along with transparency, that I chose to publish all of the memos was that we do not read them in isolation. The Deputy can see a memo came to me on 27 August. Of course, it is important to note that memo was quickly followed by another one on, I think, 7 September, which provides more assurance in regard to how some of those issues are being dealt with. There is also another note from the board, as the Deputy will know from his scrutiny. I am happy with the conduct of my officials in this regard. I am happy with the conduct of my Secretary General, who was my interlocutor in regard to these matters.

The Minister is fine that they did not raise concerns.

I got the memos and I was satisfied by 9 November that a very thorough deliberative process had concluded.

My next question is addressed to the Minister, Deputy Donohoe. He knows I keep going on about circular 12/10. We have a difference of opinion in regard to what that circular means and our party has a very defined view of what it means. I will outline what it means in regard to this project, where a very senior civil servant from the Department of Public Expenditure and Reform is sitting on the board. Point 4 of that circular states that the Minister must be notified without delay where there are serious weaknesses in controls that have not been addressed despite being drawn to the attention of the board or the chairman, or there is a significant strategic or reputational risk to the body that is not being addressed.

The Minister, Deputy Donohoe, answered a parliamentary question from me in recent days by stating that all civil servants across the public service are subject to this circular. It is not credible to most of us who observe this that there could be a senior civil servant from the Minister's Department sitting on the board who is subject to that circular yet, during all this period, there were Chinese walls and nothing was brought to the attention of the Minister or the Secretary General. In combination, it is not credible that, during a whole budgetary negotiation and a whole confidence and supply negotiation, none of the concerns being expressed at board level to this individual was being brought to the Minister's attention. It is also not credible that on 17 October the Department of Health contacted the Department of Public Expenditure and Reform yet, even though the Minister knew on 9 November, according to the emails released, the Department of Public Expenditure and Reform did not know or have detail until 21 November.

Either the timelines I have outlined are wrong, which would be a concern considering how far we have come, or else there is some dysfunctionality in that Department. There are a number of people in that Department whose full-time job is to manage the Department of Health's budget and where it is spending and over-spending. That has not changed. Either the timelines are wrong or there is some level of dysfunctionality. How in the name of God could it be reasonable to say a Government is functioning properly when it took more than a month to sit down and talk about the largest capital project in the State?

The Deputy opened up by saying he was pleasantly surprised to see me here. I do not know why he would be. This is the third time I have been subject to appropriate questioning by the Dáil or by a committee of the House in regard to my role in this. The Deputy opened up with an assertion and I am not sure why he opened on that point, given my role in it.

I will move on to answering the three questions he put to me. First, in regard to the circular which he spent time reading out, the circular makes very clear the role of the judgment of the civil servant in question regarding whether the matter is being dealt with on the board of which he is a member. I met the civil servant in question and he told me his judgment was that this matter was being dealt with in the board, and that subsequently led to the engagement the Minister, Deputy Harris, and I have detailed on a number of occasions.

In regard to the process of this issue and how we got to this point, again, both myself and the Minister, Deputy Harris, on a number of different occasions have outlined when we knew what.

As opposed to the Deputy's allegation of dysfunctionality in regard to the matter, the way in which I have worked with my colleagues across all Government Departments has led to and is one of the reasons we have Project Ireland 2040 and why we have such a strengthened public capital plan. Both myself and the Minister have acknowledged on a number of occasions that there are clearly learnings and issues that developed in regard to this project, and we have outlined how we are looking to address them.

That was not an answer. As I was driving up today, the Minister, Deputy Donohoe, said on "Morning Ireland" that something went very wrong here. I thought it was very honest of him to say that. He said, "I acknowledge my role in that ... we will learn for the future." I would like the Minister to tell me what role it was and what mistakes he feels he is acknowledging. He said something went wrong and he acknowledged his role in that. What is his role in it? What is his Department's role? It is bizarre beyond belief that in the whole of the Department of Public Expenditure and Reform, which, rightly, would fight you for a fiver, in all that time and despite the most senior procurement official in Ireland sitting on the board, nobody ever said during a budgetary process and a confidence and supply process, "Listen lads, we have a very serious issue here." The Minister was kept in the dark about it until 9 November. When the Minister answered another parliamentary question from me, he said he got full knowledge around 19 November. It is beyond comprehension for a project of this size that the Department of Public Expenditure and Reform, with full-time officials working on health, were not asking questions and were not aware. It is just not believable there was not a concern, given the fact we knew there was an overrun of more than €60 million from the year before. It is not comprehendible. If it is comprehendible to the Minister, then we have a bigger issue as regards functionality in the Department. I am sorry. This is not personal but it just is not credible.

The Minister referred to his role in this. What were the issues from which he should have learned or should have done better on, as he said on "Morning Ireland"? How can he say his Department is functionally operating in a way we can have confidence in when it did not have any awareness whatsoever until 9 November, and then, on 21 November, the Minister's officials said in reply to an email that it was the first documentation of which they had heard?

How can the Minister stand over that? Could he please answer the question as to how a Department of Health official could send an email on 17 October to his Department and yet it was 21 November before a meeting was arranged?

Time is very limited.

Deputy Kelly put three questions to me in respect of my role in the situation, the alleged dysfunctionality in my Department and the timeline for engagement with the Minister for Health. First, what was my role? As Minister for Public Expenditure and Reform, I have responsibility for the use of taxpayers' money. I acknowledge that. I have done so on many different occasions.

When did the Minister do that?

Clearly, an issue developed here -it has developed on my watch - in respect of a cost estimate and it has led to very serious concerns in this House and throughout the country. What would I have done differently and what are my learnings from what has happened? Yesterday, I published an entire set of different proposals on how we can change the procurement process relating to vary large projects in the future. The particular learning I have regarding this is that, in the context of genuinely large projects, having separate governance structures in place might work for a particular project. However, I have now seen, with organisations such as Transport Infrastructure Ireland, TII, and Irish Water, that if one has an institution in place whose only job it is to deliver multiple projects of the same kind, the kind of issues with which the Minister for Health and I are now dealing potentially could be less likely to happen in the future. I take responsibility for that, along with the Minister for Health. Both of us were responsible for the setting up of the structure relating to all of this.

On the point about dysfunctionality within my Department, let me make clear again that during this year we will have three major road projects delivered, we will have more than 6,000 new homes delivered, 6,000 new homes delivered and more than 18 primary care centres delivered.

What about this issue?

That matters because the Deputy is making an allegation about the operation of my Department and we are acknowledging-----

On this issue.

-----in the context of this issue what needs to be done differently in the future. In acknowledging that, I will also point to the kinds of projects that we do get right and that are in place.

What about the delay from October to November?

We are depriving others of time to ask questions.

The Minister never answered that question.

The Minister should respond to the final question. We are losing time. There are too many interruptions.

The reason for that is we had just finished many different sequences of budgetary meetings that had been focused on how we put together the budget. Nearly all of those meetings were focused on current expenditure. That is the reason, as some of the emails acknowledge. We had just finished a period of Estimates negotiations and we were then moving on to implement the budget. As soon as I became aware of the issue and the scale of it, the same memos will show the scale of engagement that then happened between the two Departments.

I wish to share time with Deputy Barry.

Is that agreed? Agreed.

I asked the Minister for Health in a parliamentary question why there was not a fixed-price contract for the national children's hospital. I got quite a long answer and I wish to tease out some parts of it. First, the Minister stated there was a two-stage procurement process, a full tender and contract for phase A, below ground, and then a tendering of phase B for the works above ground. He went on to state that the procurement strategy of phases A and B was developed and finalised between 2014 and 2016. Was that not when the Taoiseach was Minister for Health and does he not bear some responsibility for that? The reply goes on to state that there were several reasons for adopting the two-stage process. One was that market engagement with Irish and international contractors identified that this procurement approach would attract increased competition. Was it BAM which stated that market engagement with Irish and international contractors would attract increased competition, because somebody in the market said it? The contractors also went on to state that one would reduce the exposure to rising inflationary pressures in the construction markets throughout the procurement at 2016 tender market rates versus 2018 tender rates. That worked nicely, did it not? Could the Minister indicate who gave the Government that advice? I suggest to the Minister and the Taoiseach that the issue is not as the latter suggested, namely, that some bids are too low to be unrealistic, but that the entire process renders the State financial hostage to private companies that have various mechanisms to inflate their profits and margins. It is underbidding, but the State is entering a very useful cartel arrangement for the builders and developers. My final question is whether the State is also hostage to the EU procurement processes or if it can step outside them.

I will take that.

I will deal with the final question.

The Minister for Public Expenditure and Reform will deal with the question on EU procurement because it falls within his remit. As Deputy Bríd Smith correctly stated, we have already indicated on a number of occasions in reply to parliamentary questions why it was decided to have a two-stage procurement process. PwC will continue to analyse the appropriateness of all of those matters. There were benefits to the two-stage procurement process and it is important to acknowledge that. Deputy Bríd Smith is correct that it was decided and endorsed by the Government contracts committee for construction and by our procurement sub-committee in May 2015 that this was the right approach to take given the size and complexity of the project. It was also decided that the traditional design and tender method of procurement was not suitable or realistic. Those were not determinations made by me, as an individual, or by individual Ministers, they were made by procurement experts and endorsed by the Government contracts committee for construction and its procurement sub-committee in May 2015.

Some of the benefits of that process included full participation of suitable main contractors and some specialist subcontractors in the tendering process. Also, in terms of the timelines and the need to facilitate an early start on the site, the approach of breaking the work into sections ensured that the early phases of the work could commence while the detail on later phases was being finalised and agreed. I do not mind stating in advance of the PwC report that where we were extremely badly let down was in the context of the elasticity of the cost for phase B. So while the GMP process – a phrase we have all become used to now – locked in the prices at 2016 rates, it is the quantity of material required that were clearly not realistic. That is what PwC needs to grapple with now in the context of what went wrong and where. Had we gone with a different model, we would have potentially taken longer to deliver the project. That seems to have been the advice of the procurement experts at the time in 2014 and 2015.

Will the Minister answer the question?

He is answering the question.

Was it BAM that told the Minister to engage with this two-phase process-----

-----in order to increase competition?

I have answered that question. No. the Government's procurement strategy in 2015 was decided and endorsed by the Government's contracts committee on construction and was ultimately-----

Market engagement informed the process.

Deputy Bríd Smith will have an opportunity to respond if she so wishes.

Deputy Bríd Smith may not agree with or like the answers but they are-----

I am not getting answers.

The Minister should be allowed to speak without interruption.

Deputy Bríd Smith does not like the answers because she has decided that they are something to do with a construction company which she is going to keep naming on the record of the House, as is her right. I am not actually sure whether it is her right to keep naming companies on the record of the House but that is her choice. I am outlining to her the process the Government went through - I was not a member of the Government in 2015 - in terms of deciding the right procurement approach to take. That was a decision that I did bring to the Government in April 2017, and one I stand over based on the expert advice available.

Perhaps the Deputy could clarify why she thinks we are hostage to EU procurement rules. Broadly speaking, we are subject to and part of the procurement policy of the European Union.

So the Government cannot step outside of EU policy in any circumstances.

There are circumstances in which we can do so, such as, for example, in terms of the use of local labour. We can ensure that flexibilities are there in respect of procurement but because procurement policy follows on from the operation of the Single Market, I am not aware of any circumstances in which we could completely ignore it.

The Tánaiste stated earlier that there was no parallel whatsoever between the cost overruns in respect of the national children's hospital and those relating to the Cork event centre and that no conclusions could be drawn about the fact that one company, BAM, was central to both projects. The BAM overrun at the national children's hospital arose when the figure of €432 million ballooned to €556 million. At the Cork event centre, costs increased from €53 million to €74 million. Let us take the Tánaiste at his word and let us look at a different example entirely, namely, the example of the Port of Cork. BAM had the contract to redevelop the Port of Cork and move it down towards the mouth of the harbour at Ringaskiddy.

Could Deputy Barry refrain from naming companies? The information may be known but I am sure the Deputy can make his case without naming the company.

Okay. The tender was won at a cost of €46 million.

The bill that was submitted was for €58 million, a cost overrun of more than 25%. There was actually a court case about it. BAM said in the course of the court case that the €12 million overrun was down to an arithmetic error. Is the Minister concerned by the fact that this major construction company was linked to cost overruns of a major character in not one, not two, but at least three major State projects? Why does this company keep getting lucrative State contracts? Does the Minister not believe this underlines the case for nationalisation and the establishment of a State construction company to eliminate the for-profit element? Those are my questions.

I will deal with that. We tried to put together one utility company to deliver infrastructure for something that really mattered for our country, which was Irish Water. Deputy Barry opposed that too. Let us be clear.

Is the Minister bringing in Irish Water?

When we tried to put together an organisation whose job was to deliver infrastructure-----

The Minister should answer the question.

-----Deputy Barry was against that too. Deputy Barry can make speeches but when somebody on this side of the House responds, it is not good enough for him. He has made several allegations and statements about a company that does not have the ability to defend itself here.

I warned the Deputy about that.

The Leas-Cheann Comhairle may have warned him, but he kept going.

He had a good run of it.

It is important to state that every procurement policy-----

Hold on a minute. I am not psychic. I do not know what is going to come out of Deputies' mouths so I warn them when it emerges. I have a lot of attributes, but that is one I do not have.

It is predictable from Deputy Barry.

It is interesting that what he says appears to be what he has stated repeatedly in the past.

The Ministers are doing everything except answering the question.

To answer the question, a company has the right to participate in a procurement process. It is up to those running the process to decide what they believe to be the best value for the project. That is what happened in respect of the different processes-----

Is the Minister concerned about three major cost overruns involving one company?

I call on Deputy Wallace to control himself.

Again, I am trying to answer the question.

I know the Minister is.

That is Deputy Barry, not Deputy Wallace. He did not get a haircut.

The Minister has a right to reply and to be heard. He can take an extra half a minute.

The Government agreed yesterday that there is a role for other tendering processes in respect of very large projects in future. I have outlined what are the characteristics of those projects. We will look at how we can conduct tendering processes differently in the future. It is not appropriate to go beyond that.

A big problem at the heart of all this is the procurement process. The National Paediatric Hospital Development Board was dealing with the construction element and with operational maintenance. We now find ourselves in a position where different entities such as BAM and others are able to look for an awful lot of extra money and we are still at a very early stage. I would argue this was avoidable, and it remains avoidable. We can reduce the damage that is likely to be done.

The board and its legal procurement agent, McCann Fitzgerald, were faced with two options. They could go for a fixed-price contract or a remeasurement contract. I am well aware of the fact that the Government has a serious obsession with fixed-price contracts. It depends on such contracts in the context of the capital works management framework. The trouble with a fixed-price contract is that it does not really work unless a watertight scope of works can be established. Truth be told, that is not possible with a project of this nature. If I was building a house or an apartment, or 100 of either, it would be possible to create an almost perfectly designed scope of works because of the nature of the work involved. It is modular and repetitive and one can measure every aspect of it. A hospital is different. There is no such thing as a fixed price for a seriously complex engineering project. We can call it a fixed price, but it is not. It does not remain the same.

In the case of the children's hospital, the scope of works was not well defined. I suspect that operations and maintenance did not have enough input, but I do not know. Either way it would have been just about impossible to have a scope of works as tight as we would like for a fixed-price contract. One just cannot define all the parameters of a project of this nature, so the fixed-price approach does not work. This project was always going to need very detailed commissioning of the various systems unique to a hospital. Commissioning is a systematic process that is ongoing throughout the pre-design stage, design, construction and operation and maintenance. There are systems that need to interact in order to bring about the output sought. The works delivered are constantly assessed to check that they comply with the employer's requirement or, as some people call it, the works requirement.

A bespoke civil engineering remeasurement contract was required. A bill of quantities visualises the drawings into items that will make the design happen. If properly drafted, it can be managed, as can the costs involved. The contractor carries out the work, it is measured as it goes along and the employer pays accordingly. Quantity surveyors on the side of the employer and that of the contractor know what are the costs. There will be a debate, but the difference is rarely more than 5% and there is access to arbitration. The difference between the quantity surveyors on both sides is rarely more than 5% when the parties measure and pay as they go.

The decision makers have approached the children's hospital project as if it is a regular building, which it is not. I wonder where the decision-making came from. Why did McCann Fitzgerald not insist that the capital works management framework was not suitable for a complex project such as this? I do not know if the Government has the answer. Alternatively, was it a case of the HSE pushing McCann Fitzgerald aside and insisting-----

I do not want to stand accused. I ask Deputy Wallace-----

I am not bringing any accusations. I am looking for answers.

The Deputy must refrain from mentioning names.

I am sorry. Did the HSE insist on the capital works management framework? Who did? I do not know if those answers are readily available. Perhaps they are. In any event, I will come back in.

I thank Deputy Wallace. He is one of the few people in the House who can speak with authority on this subject and I thank him for his reasonable points, which I have been noting down furiously. The first point to make about the decision makers and how we got to this process is this: some version of the National Paediatric Hospital Development Board has been in place since 2007. That was a recognition by successive Governments and Ministers that the skill set required to build such a specialist hospital, which is at the core of the Deputy's point, does not exist within a Department. We could argue over whether the Government got the appointment right or wrong in 2007. Many of us have served in government since then. Deputy Shortall will get her moment soon. I am dealing with Deputy Wallace's question.

Deputy Wallace has asked where the decision makers were. I am making the point that there have been various iterations of the National Paediatric Hospital Development Board in place since 2007, which was a recognition that this expertise was required.

I do not want to use up the Deputy's time outlining the reason the decision was arrived at to do the two-stage process, but long consideration was given to it and it was recognised that there were specific benefits because of the complexity of the project. The Deputy may have a different view and may be much better informed. Some of the reasons were that it allowed early commencement on site two years ahead of traditional procurement; it allowed market engagement with Irish and international contractors - they had identified through this market engagement; this procurement approach would attract increased competition in a situation where, as we know, there was very limited competition at this time; claims would be addressed upfront and, therefore, we are talking about a potential cost overrun before it has happened so we can have the chat about how to mitigate those costs as well; it would reduce exposure to rising inflationary pressures in the construction market; it would provide an opportunity for the three contractors to interrogate detailed design; and the programme for the main works were fully aligned across three contractors with a single point accountability for site management. There was definitely a view from the procurement experts available to Government, from the Government's construction contracts committee and the procurement sub-committee that there was merit in this.

What the Government decided yesterday, as my colleague, the Minister for Public Expenditure and Reform outlined, was that we need to seriously interrogate this approach as we go forward on other capital projects. However, a solid and explicit rationale was put forward back as far as 2015 that this was the right way to go.

Regarding many of the questions the Deputy is asking about detailed design and the like, it is clear we were badly let down here somewhere and we need the PwC report to identify where we were let down.

I am not arguing about the two-stage process. Whether the Ministers had opted for one-stage in total or two, if they had opted for a remeasurable contract, they would not have run into the problems they are running into now. It is February 2019. This project will take approximately four years. The Minister said he knows that going ahead is the right thing to do. None of us know that. The Minister does not know if that is the case. I am not saying that I know but if we continue with this procurement and this contract process, this project will not be built for €1.7 billion nor will it be built for an extra €500 million. I guarantee that the costs will not stop at €2.2 billion because this process is tailor-made for BAM to reef us.

Please, the Deputy is an intelligent man. I do not have to remind him-----

It will rob us blind with this form of an arrangement.

The Deputy cannot use that language; I am telling him.

I am sorry, a Leas-Cheann Comhairle.

I am going to move on.

I ask the Minister one question.

Ask the question but refrain from mentioning names or making accusations.

I believe it is possible to stop the project. If the contract was drafted properly, we have default determination, which does not apply, but we have termination of will, which is the Minister's call. In terms of public works contracts, condition 12.6.3(3) states: "... all other amounts due to the Contractor under the Contract but not damages". They are excluded from loss of profit. The Ministers can manage this. They should stop this contract now. I believe that we will save a lot of money if we redo the process and do it differently.

It is true there are matters in respect of the future cost of this project and how we can save money on it on which the Government is still working. That is why we have appointed Fred Barry as the new chair of the board and why we have a PwC report under way. The Deputy acknowledged that none of us has a monopoly on wisdom or certainty in respect of this matter. It is my genuine view, having reviewed where we are and other options, that the best course available to us is to move ahead with this project and through the work that is under way by PwC and the Government, look at finding ways in which we can deliver the project as cost effectively as possible while looking at the lessons learned to date, which we acknowledge are very big.

We move on to the Rural Independents. I call Deputy Mattie McGrath who will be followed by Deputies Danny Healy-Rae and Michael Collins. I understand they may have a new recruit.

Yes, a new recruit. With the permission of the House, Deputy Cowen will ask a question at the end.

Within the ten minutes.

Yes. I visited the site today with my colleagues and, as I said last week, there is a black hole in the ground. Nothing of any height is coming out of the 15 m depth yet, so spending €80 million on it so far is a lot of money.

In December 2018, the Minister welcomed the announcement by the European Investment Bank, EIB, of its decision to provide a loan of €490 million to Ireland to support the construction of the new national children's hospital and associated outpatient centre. He stated:

This is the EIB's largest ever single capital loan in Ireland and the loan represents almost half of the €1 billion Exchequer investment required to develop the core hospital and the two outpatient and urgent care centres. Securing this long-term financing from the EIB will reduce the overall interest cost to the State of financing the new children's hospital and centres.

Clearly, nothing of this kind has happened in terms of reducing costs. What was the interest rate for the loan and what is the cost of the repayments to date? Is he considering going back to the EIB to request another loan? What happened to the €200 million he got from the sale of the national lottery? Where is that gone? This hole is getting bigger and deeper.

PwC has no construction experience. Will the Minister not bring in a construction expert from Switzerland or somewhere outside the country who is not connected to BAM or anyone else?

On the interest rate for the funding we have from EIB, I do not have that information. If the information is publicly available and we can share it with the Deputy, I will write to him with it.

As to whether we have looked for a further loan from the EIB for the project, the answer is "No. We have not". We know how much extra money is currently needed for the project-----

-----and it should be made available from the Exchequer.

On the specific services question from the Deputy and the point he raised about it just being a hole in the ground, he said approximately €80 million had been spent on the project but, as I said earlier - and he may not have been in the House - €234.64 million had been spent as at the end of 2018. Far from this project just being a hole in the ground-----

The Minister can leave it. If he does not want the answers, then I will call Deputy Danny Healy-Rae.

I want the truth.

I am sure the Deputy wants to put the answer on the record of the House.

I want the truth.

I want to put the answers on the record because there are parents who would like to know how these services will affect their children rather than rhetoric.

The Minister did not listen to parents.

Some €235.64 million had been spent by the end of 2018 and far from just being a hole in the ground, part of this hospital facility at Connolly hospital, which I hope the Deputy visits, will open this summer to start serving our children. The X-ray facilities were delivered to that facility only this week.

The clients in this case are the taxpayers and the people who need a children's hospital. Who was responsible for signing the contract with the contractor? That is one question.

The Deputy should ask the second one.

Who decided to enrol PwC or how was the price of €450,000 to be paid to it agreed? Will Kerry be compromised now due to the fact that we may not get our community hospital in Killarney that was promised? I ask the Minister to answer those questions.

I ask the Minister to be as brief as the questions were.

They were very good; they were very forensic. The NPHDB has the legal responsibility to sign and issue contracts. That is the answer to the first question.

On the second question, parts one and two, PwC was chosen because it was drawn off a framework that the HSE has in place. The HSE appointed it. Regarding the cost of the report, there is a daily rate for that company so that is the maximum cost. I hope and expect it will come in much cheaper.

On the issue in Kerry, as I am sure the Minister of State, Deputy Griffin, will be happy to remind people, that project is not affected in respect of this matter and will proceed.

The people of Cork South West elected me to this House. I have spoken to them on this issue and they have told me they are astounded by the carry-on in respect of this children's hospital. I have a number of questions. First, €50 million will be cut from the health budget as a direct result of the overrun on the children's hospital. Does the Minster have an exact breakdown as to the areas in the health sector that will suffer these budget cuts? Second, will the overspend on the children's hospital have a negative effect on the recent announcements of funding for the rehabilitation unit in Bantry General Hospital in west Cork? Will it also affect the funding for the newly announced endoscopy unit? If these units will not be affected, what is the likely start date for these?

In respect of rural development projects in west Cork, many groups are coming to see me asking if their projects are gone by the wayside. Will those of us in west Cork be negatively affected by the budget overrun on the children's hospital and the rural development project? An announcement was made recently that funding would be made available to complete the Bandon bypass in west Cork.

Will this project now be negatively affected by the overspend on the children's hospital?

I was pleased to visit Bantry recently with my colleague, the Minister of State, Deputy Jim Daly, and, indeed, the Deputy was there. All of the commitments that have been made regarding Bantry will be delivered. I will respond to him in writing on some of the specific questions but there is no impact on those important projects. However, children in west Cork will sadly get sick as well and will use this new hospital, and there are children in west Cork in our hospitals tonight in inadequate, antiquated facilities. This is, therefore, not a Dublin project; this is a national project-----

Of course it is, we cannot access it.

This is a national project to transform-----

There is no helipad.

-----paediatric healthcare in our country. On how we will find the money, as I outlined yesterday, the Department of Health will make a contribution to meet the costs from a budget that we provide to the HSE for equipment, replacement and infrastructural risk. This budget was extraordinarily low during the recessionary years. We received a large increase in that budget in 2019 and we will take €24 million from it this year but it will still mean that there will be an awful lot more in that fund than there was this time last year.

I want to ask the Minister for Finance a question on the European Investment Bank, EIB. There was a loan of €490 million for a project that we thought then would be €893 million, which was over 50% of the cost and which is perhaps 30% of the cost now. What monitoring and reporting system was put in place between the EIB and the Department? Will the Minister publish all the communications on that monitoring system since the loan was granted?

There were agreements in place on how the loan would be drawn down and the circumstances upon which the loan could be accessed. If nothing in those agreements is commercially sensitive, I will make the information available to the Deputy.

Have there been communications since the project began with the EIB and its representatives?

I assume that there have been communications between the EIB and officials in my Department. I do not know the nature of those but I assume there have been communications and if there is anything there that is not commercially sensitive, I will share the nature of it with the Deputy.

Is the Minister not kept abreast of those communications?

Not on the nature of a loan and how it is being operated. I would have been involved in the decision on accessing the loan. Nothing has happened since then that I am aware of but I will check for the Deputy.

Dr. Jimmy Sheehan, Dr. Finn Breathnach and Dr. Róisín Healy came in here in 2017 and they told the Government about the pitfalls of this disastrous site. They have requested again, through us, to appear before the Joint Committee on Health. I received a letter today refusing that request. There are none so blind as those who cannot see. The Government will not listen to people who have a track record in building hospitals. Will the Minister now reject this site? He can make it into a car park or whatever or he can do something else with it. Will the Minister move to a greenfield site on which a perfect hospital with three helipads, if necessary, can be built in 14 months? There is no helipad on this site. Will he please listen to reasonable people who know what they are talking about?

I absolutely will not change the decision that the Government made and that successive Governments have endorsed on moving ahead with this. I have listened to so many politicians in different parties who have been involved in debates over the years about the location of the site. At some point, a decision has to be made and we have to get on with delivering a hospital. It was first mentioned in this House in 1962 that we should build-----

The Government will be building it forever.

-----a national children's hospital. We are building it on a site adjacent to St. James's Hospital. We are doing that for good clinical reasons endorsed by many paediatricians today. That work is under way. We have invested €235 million in the development of this project-----

The Government has not.

I believe we have. To do anything other than that would be scandalous.

The Minister is misleading the House.

I ask Deputy Mattie McGrath to be more careful than to accuse the Minister of misleading the House. The Deputy suggested last week that I was protecting the Minister for Finance, Deputy Donohoe. The Deputy will not get in. The Deputies in the Rural Independent Group are all very good and I am intrigued that if they do not get enough time, I am blamed, but nobody ever accuses me of giving too much time so I am moving on to the Social Democrats and the Green Party.

I am sharing time with Deputy Eamon Ryan. It is quite clear that what we have here is a most shocking failure of governance and an inability to protect the public purse on the part of the Departments of Health and Public Expenditure and Reform, under their respective Ministers. It is simply not credible that the Minister for Health did not tell his colleagues for over two months that there was this looming problem of a significant overspend with the hospital. He knew at that stage that it was almost €400 million.

No, I did not.

It is not credible that he did not tell his colleagues and if he did not, he certainly should have. The Minister has not answered that. Everybody is coming out with this mantra that the Minister did the right thing, but he did not do the right thing and that is quite clear.

Let us go to 9 November. On 9 November, the Minister talked about the Government taking a decision based on three options. Can he present the basis on which that decision was taken, including the costings involved in each of those options? There is a fourth option, however. This should have been looked at and still needs to be looked at, namely the option of halting this project and starting again elsewhere. Has the Minister costed that option? He talks about clinical importance. The clinical importance is in ensuring that this project is brought in, along with the long promised maternity hospital on that site. Has the Minister costed what is entailed in providing a maternity hospital on that site? I understand that it will involve great expense with the difficult site, but it will also entail knocking some of the existing buildings in the general hospital. Has the Minister considered that and has he done the costings on what it would mean to halt the project at this stage and build the children's hospital and a maternity hospital in an alternative location? Is he is aware of the fact that in Hamburg, in the past year, a children's hospital with almost 150 beds was built for €70 million? In Helsinki, a 140-bed hospital was built for €170 million. That would bring our hospital in at approximately €400 million. That is a long way from what the Minister is talking about at the moment. Has he done the costings on each of the options that were before him and has he costed the possibility of moving to another site?

There are a number of questions there and I will answer them as quickly as I can so as not to take the Deputy's time. I did not know about an overrun of potentially €400 million. We will not debate that point, other than to say that it is quite clear that some of that was a claim from a contractor, which was not accepted by the board and which, through very robust negotiation and action, as opposed to the inaction people like to suggest, was reduced-----

It was out of control and that was clear.

I will not interrupt the Deputy's time but the €200 million was reduced to €60 million so it shows how coming in here and putting partial information on the record of the House or putting partial information to the Minister for Finance does not lead to better decision-making. The Deputy asked what the three options were and I published the document that outlined them last Thursday.

I know what the three options are. I asked the Minister if he costed them.

The Deputy asked me what the three options were-----

I believe she did but if she did not, that is okay. The three options and the reference to the impact they would have on delaying the project and on additional costs to the project are outlined on page 2 of a memorandum dated 9 November, which I published last Thursday to provide Members with full transparency. The Deputy asked if I knew about Hamburg and I am not familiar with that specific project but I will make myself specifically aware of it. We did provide the AECOM cost benchmarking report to the Joint Committee on Health, however, and it is a publicly available document now. In that document we looked at international comparisons in terms of the cost of this hospital versus other comparable hospitals. If one looks at it, this hospital will come in at €6,500 per sq. m, according to AECOM ,compared to €9,000 per sq. m to build an equivalent children's hospital.

One of the most expensive in the world.

The Deputy, as a former Minister of State in my Department who did good work there on primary care, knows that it is not all about beds. It is an awful lot more than beds so beds is not a fair comparison. When one looks at sq. m-----

Did the Minister factor in the cost of the maternity hospital?

What I certainly have not done is cost moving this to another site at this stage because we made that decision. In fact, the previous Fine Gael and Labour Government made the decision on the site. I believe it was the right decision and we have invested €235 million of taxpayer's money in delivering it.

On the maternity hospital, I do not have the costings here but I will certainly be happy to provide them to the Deputy.

I can take from what the Minister is saying that he did not factor in the cost of the maternity hospital.

It is a separate development.

I want to ask about the head of the Office of Government Procurement, OGP, briefly. Can it be clarified that he would have been in a position to inform his Minister of the cost overrun and that he was not a company director?

I am unaware of what his status is from a company law point of view-----

The Minister is unaware of his status.

-----because, as far as I know, he was subject to the standards he would be as a civil servant and the different circulars which, for example, were raised by Deputy Kelly. He questioned me on them. What he had to do-----

As far as the Minister knows-----

Acting Chairman (Deputy Durkan)

The Deputy should not interrupt.

I will answer the question to the best of my ability. According to the circular that the head of the OGP was subject to, it was his role to ensure that the parent Department responsible for the project was being informed of what was happening and that was happening. At the appropriate point, the Minister for Health became aware of it. He briefed me on it and we took action from there.

I hope I will not repeat some earlier questions. I asked the Taoiseach a couple of questions yesterday but I did not get answers. First, under this two-phase approach did the Minister for Health not realise it in February 2017? That was when there was €950 million for the hospital, €100 million for IT and €100 million for equipment. Anybody I have spoken to who has expertise in this area has said that alarm bells should have been ringing. It should not have waited until August 2018 for the Minister to realise he had a problem. That is when the problem became clear. Why is it that he did not become aware of it at that time? That was a fatal mistake in the two-phase process. The €100 million for IT and €100 million for technology were clearly just figures plucked from the air. Why did the process not stop then to start getting it right?

The Deputy does not want me to repeat previous answers but I have outlined the rationale behind why the two-phase project was decided. I will not put it on the record of the House again. The Government signed off on the figure of €983 million in April 2017. The Deputy makes a fair point regarding what happened with the elasticity in respect of phase B. How could the Government of the day have been informed, with significant expert advice, that the expectation was that when further detailed work was done on phase B, the price range would be €983 million? That is something the Government was extremely disappointed with. It is something I have flagged as a cause of great concern, not just to me but also to taxpayers. I want PwC to get to the bottom of it.

Of course, there were advantages with proceeding with phase A in terms of getting it done at 2016 prices and bringing it in on budget as well. However, I do not dispute the fact that the Deputy outlines righteous disappointment on behalf of taxpayers that there was such a big disparity between what we expected phase B to come in at and what it did come in at.

I will ask the same question I asked the Taoiseach yesterday. I am not certain on this so I am asking the question for information. Is it true that the professional services companies such as the architects and others were on a fixed percentage contract and, therefore, when the cost ballooned their percentage went up as well? If so, what might that have cost?

I do not have that information. I will ask the NPHDB to provide it to me, as I am sure the Taoiseach probably has since the Deputy raised it yesterday. I will refer back to him directly.

I would appreciate it if I could get that tomorrow.

I will do that.

My final question is for the Minister for Public Expenditure and Reform. I was wondering if we had built a hospital like this in the past and Tallaght hospital came to mind. That hospital was opened in 1998. It has 560 beds and 12 theatres so it is not very different. I believe the cost was €140 million.

Tullamore hospital.

Tullamore hospital might have been similar but I am familiar with Tallaght hospital. Where was the institutional memory in the Department of Public Expenditure and Reform? There were capital overruns of IR£2.5 million for Tallaght hospital and there was uproar. Deloitte was asked to report on it. Where was the institutional expertise and memory in the Department that it did not look back to 1998 and what was done with Tallaght hospital? How come that expertise in the Department seems to have disappeared?

These are completely different projects. The hospital in Tallaght and some of the other hospital projects that have been mentioned this evening are completely different in complexity, scale and process from the national children's hospital. It is like comparing the experience in building a road to the experience of building a metro. They might be in the same policy area but they are very different projects in scale.

Regarding the institutional learning that exists in my Department and in the Department of Health, it has been successful in delivering many other important projects I have mentioned. We are acknowledging very clearly in respect of this project that there are clear lessons for projects of this scale. We acknowledged all of that yesterday, as well as what we are going to do to address it.

One of the cost overruns I have heard about is for cabling. I refuse to accept that cabling for a children's operating theatre versus a general operating theatre could not have been managed from previous experience. I do not believe the big cost overruns are necessary because of some high technology medical difference between a children's hospital and a general hospital. The Minister just got the process wrong.

In terms of the number of theatres, the volume of technology and the scale and nature of the project, they are fundamentally different.

Acting Chairman (Deputy Durkan)

The Minister has five minutes for a closing statement.

I acknowledge all the questions and points that have been put this evening. As the Government and I have acknowledged over the past number of days, we have made progress in how to deliver important capital projects well. We have made progress with Project Ireland 2040. In both the Department of Health and other Departments there are examples of how projects are delivered well and how they can deliver benefits to citizens and communities.

Let us consider the position in 2019. In healthcare alone, important developments will be delivered in Cork University Hospital, important projects will be delivered in Letterkenny General Hospital and improved services will be delivered in Kerry and Portlaoise.

There is no accountability.

These are capital projects that communities and the country want and which the Government is delivering. With regard to accountability, the Minister for Health, Deputy Harris, and I have answered the questions Deputies have put to us and we have participated in committee meetings on this. Both Departments have made available all the information they have on the matter and we are subject to the full rigours of accountability here in the House.

When we launched Project Ireland 2040, Deputy after Deputy denied that the projects would ever happen. Now we see the Deputies saying today that the projects are going to happen, but they wonder if they will be delayed. This Government has significantly increased investment in public capital for this year. It is more than €7 billion and we are planning to find ways to increase it further. We have acknowledged what could have been done differently on this project, the lessons we have and how we will learn from projects of this scale in the future. We have acknowledged how taxpayers and citizens feel about this project and the concern of families and children who will depend on the delivery of this project in the future. That is why we published yesterday what we will do differently for projects of this scale in the future, how we can change our processes and the further work that will happen to ensure that Departments and agencies are equipped to deliver projects of this scale.

However, in acknowledging that, I will continue to make the point that transport projects such as the M4, the Ardee bypass or the Ballyvourney to Macroom project, which the Deputies want, the additional 6,500 homes that are being delivered in Project Ireland 2040 and the projects under way in the Department of Education and Skills to build new schools and restore and repair existing schools are being well delivered by the State and are sought by communities. With regard to this project, the Minister for Health and I have acknowledged that there are clearly key areas that we will learn from in the future.

They are very expensive lessons.

This project will matter for children's health in the future. We have acknowledged repeatedly what must be done differently for projects such as this and the lessons we have from this. We will progress with two priorities - seeking to deliver projects the country needs and ensuring that the national children's hospital is delivered - and when we move on to other big projects of similar scale, the lessons that the Government and I are acutely aware of are learned and make a difference to such projects in the future.