Joint Committee on Health debate -
Wednesday, 5 Oct 2022

Construction of the National Children’s Hospital: Discussion

Chairman

The purpose of today's meeting for the joint committee to discuss the current status of the new national children's hospital. I am pleased to welcome from the National Paediatric Hospital Development Board: Mr. David Gunning, chief officer; Mr. Phelim Devine, project director; and Dr. Emma Curtis, medical director. I also welcome from the Department of Health: Mr. Derek Tierney, assistant secretary in the health infrastructure division; and Mr. Eamonn Quinn, principal officer for major capital works. I also welcome from the HSE: Mr. Martin McKeith, assistant lead director of the children’s hospital project and programme.

All those in the committee room are asked to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19.

All witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if any of their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against persons outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate where they are not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask members partaking via Microsoft Teams that, prior to making their contributions, they confirm that they are on the grounds of the Leinster House campus.

I now invite Mr. Gunning to make his opening remarks on behalf of the National Paediatric Hospital Development Board.

Mr. David Gunning

I am grateful for the invitation to be here. Our statement was provided to the secretariat. I do not propose to read it but I would like to draw the committee's attention to a number of key points. I thank the committee members who visited the construction site in July and got a full tour. It is an important opportunity to reconnect to the vision of what we are all trying to create together, namely, a child-centred world-class facility that will support excellence in paediatric healthcare.

Dr. Emma Curtis, medical director, has been with the project since 2009 and therefore through the detailed design phase of that. Mr. Phelim Devine, project director, has been with the project since 2014.

I remind members we have already opened the Connolly and Tallaght outpatient and emergency care centres.

Even since members were on-site in July, we have made significant progress. We have provided a set of images that show developments since then, including the biome that connects the two sides of the doughnut on top. The rugby ball on top is now glazed. We are working with the intensive care areas. We are kitting out the operating theatres. Work on the emergency department, imaging, critical care and therapy areas is progressing at pace.

The National Paediatric Hospital Development Board, NPHDB, is also responsible for the equipping of the hospital. I am glad to report we have made excellent progress in this area. For example, we have now acquired all the imaging equipment - X-ray, CT and MRI. All the equipment to be built into the fabric of the building has been procured. Some purchase orders have been placed and some are being placed. I am glad to report to the committee that the work on the integration of this equipment into the building is well advanced.

The first rooms in the hospital will be deemed to be fully completed by October of this year, according to the plan. Some 4,600 spaces will be completed on a phased basis.

In terms of expenditure, the Government approved the investment of €1.433 billion. Let me bring that figure up to the end of August of this year. The expenditure in the report here is €1.13 billion. That is the current situation.

Again, I would like to remind members of the committee that there were certain elements within the original Government approval and there were items outside it. The biggest item that is currently on the table is inflation, but there were also items that had been excluded, such as regulatory change and the implications of the sectoral employment order. However, as the contract has evolved, we have also increased significant costs, such as in defending the claims and in terms of the implementation of the recommendations of the PwC report from April 2019. There are also ongoing costs related to Covid-19 and some costs related to Brexit. We are fully engaged with all stakeholders in these particular matters and that dialogue continues.

I will not spend much time on the wider construction sector challenges. I am sure that committee members are well aware of the disruptions and the market shortages. I guess that the main word is “uncertainty”, referring to that caused by these particular issues. We are seeking to engage with the contractor to manage those. On the issue of claims, we have provided a table and we certainly can go through that, depending on what the committee would like to do. We provided that to the committee in advance of the meeting, and I think that was yesterday.

In terms of the construction project timeline, the contractor is now reporting to us that substantial completion will be at the end of March 2024. We are engaged in a constant ongoing review with the contractor on the programme, on the potential mitigation and on securing that date.

In conclusion, there are agreed and established governance structures around this programme and this project. We are heavily engaged with both the HSE and the Department of Health, with the lead director of the HSE and with the national oversight group on all aspects of the project. All parties remain committed to delivering substantial completion of the children's hospital within the shortest possible timeframe. I would like to end this short contribution by saying that I again thank members of the committee for attending the hospital. I extend an open invitation to them to come back and see the further progress.

Chairman

I thank Mr. Gunning and I call Mr. Tierney.

Mr. Derek Tierney

Like Mr. Gunning, we have submitted a statement. I will not go through it all, and I will just draw on some key point just referencing back to the PwC report. I would like to also thank the committee for extending the invitation to the HSE. In this regard, I welcome my colleague Mr. Martin McKeith, who is the assistant lead director for the children's hospital project and programme.

The HSE plays a vital role in the NCHI project. This is reaffirmed by the role of the lead director emanating from the PwC report of 2019. The new children's hospital on the shared campus at St. James’s Hospital is a key enabler of a major reform programme and acute paediatric services, bringing together three children’s’ hospitals into one and consolidating expertise, research and excellence to ensure the best outcomes for the sickest children of Ireland for generations to come. It remains the most significant capital investment programme undertaken in the healthcare system in Ireland. It is unlike anything that we have ever constructed before, providing 39 clinical specialties in one location, under one roof. This will facilitate the provision of services on a national basis.

Within my statement, I set out some characteristics, as well as the scale of the project, and I do not intend to go through that. I will just say that while 2021 saw significant progress on the exterior, the major focus now in 2022 is on continuing the internal fit-out, with the installation of joinery, such as the nursing stations and the plumbing of the en-suite bathrooms. Those members who were on site, or who intend to visit in the coming weeks, or even indeed members of the public who have recently passed the site, will have noticed that the exterior scaffolding is coming down, the completion of glazing and that the external facade has been completed.

Earlier in the year, the building was connected to a permanent power supply. The main glazed biome structure that encases the feature stairway and lifts is due to be completed in a matter of weeks. It is truly incredible to see what has been delivered in terms of vision, scale, quality and enormity of effort by all the contractors involved under the stewardship of the development board.

Of course, as many of the members will be aware, the construction project is only one part of the three interrelated elements of the national children’s programme for delivery of a new paediatric model of care. The others are the ICT and electronic health record, on which I will give a brief update, and the operational integration of the three existing children's hospitals. Earlier this year, the Government approved the business case for the new electronic health record system. Contracts were signed with the vendor in August of 2022. This represents the most extensive electronic health record, EHR, deployment in Ireland and it builds upon successful EHR programmes at our largest maternity hospitals in St. James's Hospital, which, by the end of 2022 will have reached 70% coverage of our maternity in newborns. Recruitment of the project team to deploy the electronic health record project is under way, with 106 full-time equivalents being recruited as I speak.

While today's focus is on construction of the NCHI, I am also happy to confirm that the wider children's hospital programme is already delivering terms of the two new constructed satellite centres at Connolly and Tallaght. These are open and they are delivering the new model of ambulatory care for children in the greater Dublin area.

Again, as Mr. Gunning outlined in his opening statement, in any project of this scale and ambition, there remain challenges to be mitigated and managed until completion. The Department understands that of the 6,000 spaces that are currently under construction, the first of these will be completed in the coming weeks, ready for system commissioning. The remaining 4,500 clinical rooms will fall on the detailed and planned sequence in the following months. Later on, Mr. Devine will give an overview in terms of the intensity and detail within the commissioning programme. While we are all focused on the capital project works and delivery, we are also focused on the outcomes that these will deliver as part of the wider programme. That is that the children's hospital will deliver world-class facilities and a paediatric model of care that will improve and prioritise medical outcomes for the nation’s sickest children, while bringing around transformational change to the delivery of healthcare for the children of Ireland for generations to come. In other words, this is not a building for 20 or 50 years but, rather, one whose design and construction are being as future-proofed as possible. It is a hospital for the next 100 years and it is one that can adapt as models of care and clinical practice evolve.

Again, I reiterate Mr. Gunning’s invitation to any members of the committee who wish to visit or revisit the site to see its progress first hand. I know that the development board would be happy to facilitate them with this. It is only when you see the facility in person that you get a full appreciation of the vision, scale and difference that this new hospital will make for generations to come.

Chairman

I again thank Mr. Tierney for the invitation to visit the hospital. On behalf of all members, we found it interesting. We got a sense of the scale of the operation that is going on there and particularly of the potential of the actual site itself. I thank them for that. Before bringing in the members, one of the big questions in the minds of many people who are watching this morning will be how much this will actually cost. Do we have a sense of how much it will cost? When will we see patients moving into the hospital? The witnesses might walk us through those two points before we get into the nub of the meeting itself. Does anyone want to kick off on those two points?

Mr. David Gunning

I can start on those. As I mentioned in my comments, the substantial completion is set for March 2024. That is what the contractor has confirmed to us. There will of course be a period of commissioning to follow that by the hospital by Children's Health Ireland, CHI, which is the hospital operating entity. My colleagues here can discuss that.

On the costs and to the ongoing analysis, as I have mentioned to the committee before, we have been and continue to analyse all the costs in this project. There is a range of cost elements. We have already signalled that the costs will increase, which is predominantly due to the fact that this is a prolonged programme. We are looking at a 17-month extension of the programme beyond the contractual completion date. It was due to complete in August 2022. It was then extended to October 2022 because of Covid-19. We are looking at an extension of that period and that will bring additional costs. I can say to the committee that we are engaged in a detailed process with stakeholders, who are here today, in terms of the analysis and landing those costs in a particular way that we feel comfortable to share that with colleagues here and with the Government at the appropriate time.

Chairman

When can we expect to see patients in beds? Will it be on a phased basis? Will they wait until the hospital is completely finished or will they be moving in in phases?

Mr. Derek Tierney

I might come in on that. As Mr. Gunning said, the contractor’s own programme is now suggesting a substantial completion date of March 2024.

That will be followed by at least a six-month commissioning programme. Colleagues within the HSE and CHI are engaged in a commissioning programme. There are probably two commissioning stages - a technical commissioning stage around bringing equipment online and services into use and then a period to integrate the services across the existing three hospitals on one site. Those discussions are ongoing and will be largely informed by the progress of the construction programme. I understand completely the desire for certainty but we are in uncertain times. We have a contractor's programme that states a date and that is the date to which we are holding the contractor.

Deputy Bernard J. Durkan

I apologise that was not possible for me to visit the hospital in July, as I had Covid around that time. I did not think it would be a good time to visit a hospital when there was the possibility of spreading it. I congratulate all involved, including the development board etc., for bringing to this stage a massive development of worldwide importance and on such a scale as to amaze me and everybody else who has seen it.

However, there is a necessity to reassure the public on an ongoing basis that the project is on target. I accept there will be some overruns but for what it is worth, the theory abroad is the project has already gone three or four times over its original estimate, which is not the case. Last night, the Minister for Finance gave the Dáil a very strong report on the extent to which the resources are still in place that were in place to meet the original plan. However, there is still a need to launch a major programme to ensure that the public knows that this is a massive project that is going beyond what we had thought of previously and has still not exhausted its budget and that any attempt by anybody to strip it down, cut it back or discontinue it is not in anybody's interest and certainly not in the interest of children throughout the country, their parents or paediatric medicine in Ireland. I ask that such a programme be put in place. Incidentally, I visited the site last Sunday and was most impressed with it. If a single position can be adopted to dispel the myth that this is something that can be dissected, stripped down and rendered useless, it would be good because that would be an appalling thing to happen. There are still people throughout this country running around on the basis that this project has exceeded its usefulness. Are the witnesses aware of that? Are we prepared to take measures that will counter that?

Mr. Derek Tierney

I thank the Deputy for his support and remarks. We agree completely. There is an ongoing stakeholder engagement programme. We hear the Deputy. We will underscore a unified communications programme and engage every relevant stakeholder, including members of the public, and bring some transparency regarding where we are. This is a matter of when and not if. It is about building public confidence and reassurance. As my colleague said, we are at 78% progress completion on the construction side of it and have started to mobilise both the electronic held record and the integration of services on the services side. Perhaps through working with this committee, we can bring forward our progress reports in due course.

Deputy Bernard J. Durkan

What about an ongoing programme to illustrate the benefits of the project to the health of children, the project's necessity and the degree to which the project is still as close as possible to budget as any other project notwithstanding Covid and all the other things that intervened in the meantime? What about a campaign to promote it because there are plenty of people willing to denigrate it?

Mr. Derek Tierney

That is a commitment we will give at this committee now. We will work again with CHI to amplify the outcomes we expect the programme to deliver, as well the construction progress update. If we look at progress to date through the two satellite centres, very clearly the opening of CHI Connolly outpatient and urgent care centre in July 2019 is already delivering on that vision. I can give the Deputy some facts and I believe this is the level of detail he is looking to uncover. Up to the end of August 2022, over 14,000 children had presented to CHI Connolly urgent care centre, which is an increase from 6,795 in 2020. The current full year projected activity for 2022 is around 27,500 cases. Up to the end of August 2022, 7,500 children attended their outpatient appointment at CHI Connolly and projected outpatient activity for 2022 is just 11,500. CHI Connolly commenced opening at weekends in March 2022, further improving paediatric urgent care services for the greater Dublin area. Currently 75% of children attending are seen and treated within three hours. We can also confirm that additional X-ray and ultrasound activity is being undertaken by radiographers in CHI Connolly, which has the additional benefit of freeing up some capacity within CHI Crumlin and CHI Temple as we head into the winter season. CHI Connolly has provided invaluable physical capacity for several waiting list drives positively impacting on waiting times in the specialties of allergy, gastrointestinal and ultrasound diagnostics. I draw out these points to reaffirm the Deputy's comments that the paediatric model of care is currently delivering, notwithstanding that we are progressing completion of the site at St. James's. I agree with the Deputy that it is important to communicate more with the public and our stakeholders to show we are already starting to derive benefits even though we are 80% complete on the campus at St. James's. I can also give an update on Tallaght, given that it has been open just over a year. I can provide the committee with a note after the meeting. We will look to underscore more communications in this area.

Deputy Bernard J. Durkan

A progress report to show the success, benefits and positive side of the project, as opposed to what many people want to show as a negative side is very important. Is there anything of concern that Mr. Tierney might like to share with the committee regarding the project at this time?

Mr. Derek Tierney

As I said in my opening remarks, we live in uncertain times across all walks of life. The health sector and this programme are not immune. Everybody is craving certainty, which we do not have at this time. We have been through a period of very volatile trade markets where we have seen material increases in costs in respect of timber and steel but at this point in the project, that risk is largely mitigated against, given progress. We are seeing an impact on supply chains and trade chains through increased energy costs and increased disruption. We are just under 80% through the construction programme and those risks are mitigating but there is still volatility in our construction sector and global markets on which we rely. Notwithstanding that BAM is a tier 1 construction company and has reach into global supply chains, we must remain concerned as a project sponsor and a project funder but we are working very closely through the HSE, the board and CHI to get certainty on programme assurance. At the moment, we are holding the contractor to account through the board in terms of achieving substantial completion in March 2024. I can assure the Deputy that the Department and the board are taking every step possible to mitigate against risks to that construction programme.

Deputy Bernard J. Durkan

I will finish by congratulating St. James's Hospital, again on the basis of a recent visit, for continuing to provide a high quality of service in the middle of a building site and continuing with its functions in the way it would have expected to in any event. Doing so on a building site makes it all the more difficult.

I congratulate them on that.

Deputy David Cullinane

I welcome our guests. When we hear about the national children’s hospital and when it is talked about in the media, the issues of costs and the timeline inevitably dominate, and I think our guests will accept the reasons for that. There have been cost overruns, it is an expensive project and there is no certainty yet on the timeline for when it will be opened to deliver the services people need. Nevertheless, this is a massive project and the scale of what it will do for children's healthcare cannot be understated. It will be a world-class centre for the treatment of children and for training and education. I would love to get more detail and have a full session of this committee to focus on the additional capacity that will come and the healthcare changes that will arise out of this hospital. If I get a chance, I will ask some of those questions, but we need to get as much clarity as possible on some of the other issues.

I acknowledge Mr. Gunning will not be able to give us definitive costs, as he pointed out in his opening statement. We were here 15 months ago and no matter how many times we ask the question, we are not going to get the answer. Even so, he might be able to shed some light on what he said in his opening statement. He stated that the Government has approved a capital investment of €1.433 billion and that expenditure up to the end of August had amounted to €1.13 billion. Is that correct?

Mr. David Gunning

Yes.

Deputy David Cullinane

He went on to set out that there are increased risks such as cost escalation but indicated that the board is doing everything possible to minimise costs. As we know, claims are still being examined and so on. Are we likely to exceed the €1.43 billion figure? I accept he will not be able to give us a specific figure but, in his view, given where we are, is it likely that figure will be exceeded? Can Mr. Gunning at least give us that information?

Mr. David Gunning

Yes, it will be exceeded. As we look at the programme and the 17-month extension, the additional cost will bring us beyond that sum. We are working closely with our colleagues here to scrutinise, analyse and land that additional cost to the two substantial companies-----

Deputy David Cullinane

Without getting into the specifics, does Mr. Gunning expect that to be a substantial increase on the €1.43 billion?

Mr. David Gunning

I would not like to qualify it with words that are ill defined. There is going to be additional cost and that will land when it lands. That is my response. I have to be very careful in what I say here, as the Deputy indicated. I have responsibilities that require me not, in any sense, to damage our legal ability to defend this contract or our negotiating ability. I appreciate the Deputy's acknowledgement of that-----

Deputy David Cullinane

I think that is understood, but it has at least been acknowledged that the figure will exceed the €1.433 billion figure.

Mr. Gunning referred to some drivers of additional costs, such as inflation, healthcare policy changes, technology changes and sectoral employment orders. He mentioned claims defences, the implementation of the Committee of Public Accounts recommendations and costs relating to Covid and Brexit. I assume some of those additional costs have been borne.

Mr. David Gunning

That is correct.

Deputy David Cullinane

Who bears the cost of inflation? Is it the contractor or the State?

Mr. David Gunning

There is an inflation clause in the contract and the cost is shared. With tender price inflation, up to 4% is taken by the contractor.

Deputy David Cullinane

Where are we now with inflation?

Mr. David Gunning

Anything above 4% is taken by the State. The average tender price inflation in 2019 was 6.67% and that resulted in a payment to the contractor for inflation of €1.77 million. In 2020, while inflation was 2.48%, the formula is a compound formula, so the net rate levied in that period was 1.15%, which yielded a payment to the contractor of just under €1.5 million. In 2021, inflation shot up to 10.24%, which, again on a compounded basis, equated to 7.39%, yielding a payment of just under €18 million. All those figures include VAT.

We have run an analysis of this year's payment and we assume the rate will be approximately 10%, which on a compounded basis becomes nearly 13.4%, meaning a payment to the contractor, including VAT, of about €30 million for 2022. The total payments to the contractor for inflation amount to about €50 million so far, including VAT. As I said, these were outside the €1.433 billion figure.

Deputy David Cullinane

The witnesses submitted to the committee a table showing claims. Will Mr. Gunning outline, in simple terms, how many claims have been made, or at least notified, and how many are outstanding? There is a figure of 989, which refers to claims determined by the employer’s representative, ER, that are disputed and referred to project board conciliation or the High Court. Are those 989 claims outstanding?

Mr. David Gunning

We outlined in the submission the process of steps to go through. If we start with 1,623 claims, the number of claims substantiated, whereby the contractor has to give us a written explanation of what it is, is 1,296. Of the 1,296, the ER has determined 1,131. The contractor value that the contractor was looking for associated with that figure was €503 million. The employer’s representative, that is, the independent entity that reviews these claims and determines them, has stated the contractor is entitled to €9 million of that €503 million. We also identify savings for the employer on our side. We also have a number of claims.

Deputy David Cullinane

My time is limited. I am trying to establish how many claims are unresolved, either through conciliation or subject to High Court proceedings.

Mr. David Gunning

A total of 989 claims are still in play, somewhere along the disputes process.

Deputy David Cullinane

That is in that envelope of €503 million, which the contractor says is the value.

Mr. David Gunning

The contractor says the value of the 989 claims is nearly €480 million.

Deputy David Cullinane

We have no idea how much of that will ultimately, arising from court cases or conciliation, be borne.

Mr. David Gunning

We have carried out substantial analysis and we have our position on each of these claims, although we are not going to discuss that here. We have a strong team in place to defend each and every one of these claims. As for when they will play out, if they are resolved in conciliation or in the disputes management process, we will have an answer, but if they go to the High Court, it will be beyond the opening date of the hospital before the final account will be fully known.

Deputy David Cullinane

How many beds will there be in the new hospital on the St. James's Hospital site when it is completed?

Mr. David Gunning

I might pass that to Mr. Devine, who has all that information.

Mr. Phelim Devine

There will be 380 inpatient beds, 60 ICU beds, 20 child and adolescent mental health services, CAMHS, beds and 93 day case beds. The total is 573.

Deputy David Cullinane

How many operating theatres will there be?

Mr. Phelim Devine

There will be 22 operating theatre spaces, comprising 18 theatres, of which three are hybrids, two endoscopy suites, an intraoperative MRI room and a cath lab.

Deputy David Cullinane

Will any of those theatres be protected for elective surgeries?

Mr. Phelim Devine

That will be a matter for Children's Health Ireland but I believe so. Dr. Curtis might like to come in on that.

Dr. Emma Curtis

In the planning of the theatres, two theatres are designated emergency theatres, one of them trauma and the other non-trauma. The plan is that emergency cases will be directed towards those theatres, thereby protecting elective work.

Deputy David Cullinane

Are there plans for the two existing sites in Crumlin and Temple Street? Realistically, will it be 2024 or 2025 when children begin to be treated in the hospital?

Mr. David Gunning

Our job, as a development board, is to get the hospital built. The work streams that combine to turn it into an operating hospital-----

Deputy David Cullinane

I know that a handover is anticipated for March 2024.

Mr. David Gunning

-----are for CHI. I know that colleagues here are working with CHI on that particular issue at the moment.

Deputy David Cullinane

Mr. Gunning cannot answer the question. It is not one that can be answered.

Mr. David Gunning

It is not mine to answer, shall I say.

Deputy David Cullinane

Okay.

Mr. David Gunning

If I speak on behalf of colleagues, the position is that we are doing whatever we can to try to-----

Deputy David Cullinane

Perhaps I could put that question to Mr. Tierney. I have only ten seconds left in my speaking slot. Does Mr. Tierney envisage children being treated in the hospital in 2024 or 2025? What plans do we have for the significant sites at Crumlin and Temple Street?

Mr. Derek Tierney

Given the sensitivity around where we are with the construction contractor, the potential earliest we foresee treatment taking place is the end of 2024, if that answers the Deputy's question.

The sites will continue to be a part of the HSE estates. With any site that becomes available as a result of the existing service being relocated or deemed unnecessary, there is a consideration around the reuse of that site. We currently have no definitive plans for the sites at Crumlin or Temple Street but I will provide a note to the Deputy in respect of some considerations that are at play.

Deputy David Cullinane

May I make one more quick point? I had a discussion with the head of CHI about the Crumlin site. There was some talk of that possibly being used for nursing accommodation. We know that the cost of living in Dublin for nurses is profound. If a process is being put in place to look at the two sites for a change of use, it would be useful for this committee to engage with that process. I am sure members of the committee have many ideas. I hope that is something Mr. Tierney can take with him to the Department.

I wish everybody well. Notwithstanding all the issues around costs and timelines and frustrations that we cannot get answers, we all accept that when the hospital is built, it will be a fantastic addition to children's health in Ireland.

Mr. Derek Tierney

I thank the Deputy.

Deputy Róisín Shortall

I welcome our guests and thank them for their presentations. I would like to return to the table of claims we were talking about a few minutes ago and to clarify the situation. The number of claims determined by the employer's representative, ER, was 1,131. Determined claims that are disputed and referred to the project board amounted to 989. Does that imply that the difference of 142 between those two figures are claims that have been resolved?

Mr. David Gunning

A number are caught in a timeline, shall we say. It is not necessarily clear whether the contractor intends to refer those to dispute resolution or not. There is a question mark over the difference between those two numbers. The number of claims that are resolved is at the bottom. Eight disputes have been totally resolved. That is it.

Deputy Róisín Shortall

Eight cases out of 1,131 have been resolved.

Mr. David Gunning

That is correct.

Deputy Róisín Shortall

What is the timeline for resolving the other 1,123?

Mr. David Gunning

I will comment on that. There is a process. However, currently, and since May last year, the parties, namely, the NPHDB and the contractor, BAM, have been working in a detailed engagement process around the project. As part of that engagement, we have agreed a moratorium on disputes. While claims are still received, we have agreed to park the disputes process on a temporary basis to allow the teams on both sides to focus on the important work of getting the hospital finished as quickly as possible.

Deputy Róisín Shortall

I accept that. However, is that not kicking the can down the road?

Mr. David Gunning

We considered all of these aspects and worked with the contractor to come to this agreement. We had been in a very intensive engagement and all that yielded was eight settled claims. I do not think the intensive engagement around the disputes process was delivering in the short term.

Deputy Róisín Shortall

That would seem to indicate a problem with the disputes process. Parking that number of claims for some time down the road seems to make no sense at all. I would be concerned that the opening of the hospital will be delayed because of that level of ongoing dispute.

Mr. David Gunning

Our discussions with the contractor are ongoing. I met senior executives from BAM last Thursday. I meet them on a monthly basis and often at times between those discussions. It is fair to say, and we have heard this from the most senior levels of BAM, that all parties are committed to getting this hospital open as soon as possible. It is fair to say that there is the project of getting the hospital done and then there are the other aspects around commercial matters on which we are working in parallel. I would like to land it by saying everybody is committed to getting this done and the other side-----

Deputy Róisín Shortall

Okay. With all due respect, that is not normally the way big projects work. The development board does not want to find itself in a position where it is over a barrel in respect of the opening of the hospital because of the enormous number of disputes that have been parked and remain to be resolved. A difficult situation will arise because those disputes have not been resolved at the point when the hospital is due to open. Can Mr. Tierney outline what is the Department's view of this strategy?

Mr. Derek Tierney

I will make two comments. Both the contractor and the board have entitlements under the current contract. That is a fact. The contractor is exercising its rights. The board is doing the same is in protecting the State's position. Mr. Gunning was making the point that the moratorium freed up capacity to concentrate on the construction progress. While we have experienced delays, real and achievable progress is being made on the ground. The moratorium is designed to take away the distraction of being embroiled in claims management and difficult claims discussions with the contractor. It has freed up capacity and allowed the project to progress. I take the Deputy's point that it does not give us any visibility in respect of cost certainty now. However, that is the nature of these kinds of contracts. Clause 10 of the public works contract sets up the contract in that way.

Deputy Róisín Shortall

What is the proposal? When is the large quantum of claims going to be addressed?

Mr. David Gunning

There is a process in place that will have to be gone through to resolve the claims.

Deputy Róisín Shortall

When will that process commence?

Mr. David Gunning

The timelines are not defined. An individual claim goes to the project board and to conciliation. The conciliator may make a recommendation.

Deputy Róisín Shortall

I understand that. When are we going to start tackling the claims? For how long have they been parked?

Mr. David Gunning

The moratorium has been in place since May or June of last year.

Deputy Róisín Shortall

How long more will it remain in place?

Mr. David Gunning

That is discussed on a monthly basis between ourselves and the contractor.

Deputy Róisín Shortall

There is no agreement on that point.

Mr. David Gunning

The moratorium continues on a month-to-month basis. That is the agreement.

Deputy Róisín Shortall

We have no idea when these claims are going to be addressed.

Mr. David Gunning

That is not correct. The claims will be addressed as the contract progresses. That will happen.

Deputy Róisín Shortall

Can Mr. Gunning give me any indication of when that will be?

Mr. David Gunning

I cannot give the Deputy that indication. As I was saying, the claims must go through a process. Either party may reject the conciliator's recommendation, which in turn then means the claim goes to the High Court. I cannot possibly tell the Deputy at this time when that will be resolved. That is the position for each of the claims.

Deputy Róisín Shortall

Has the Department concerns about this matter not being addressed and being pushed out to some point in the future and about the potential implications for the opening of the hospital?

Mr. Derek Tierney

The Department's view is that it would be better to avoid the High Court. We plan to take all necessary steps in advance of that. As Mr. Gunning has pointed out, the timeframes around the conciliation process and the High Court are externally driven. As an organisation, a funder or a sponsor, we have no control over that. The process is outlined in the public works contract we are currently administering. It would be better to resolve matters before we get to conciliation or the High Court but we have no control over that. The contractor is still entitled to reject any recommendation of the conciliator and push claims forward.

Deputy Róisín Shortall

I understand the process. My question is-----

Mr. Derek Tierney

I cannot give the Deputy certainty.

Deputy Róisín Shortall

-----when will the process start?

Mr. Derek Tierney

I cannot give the Deputy certainty in that regard and I do not think anybody can.

Deputy Róisín Shortall

I thought that would be part of any agreement. A moratorium to concentrate on the construction works is valid and understandable. However, our guests must have some indication of when they will tackle this thorny and potentially expensive issue. This is an enormous issue. There are more than 1,000 claims outstanding and our guests cannot say when that will be addressed or when any process to address it will start.

Mr. Derek Tierney

If the Deputy is looking for absolute certainty, we cannot give that to her today.

Deputy Róisín Shortall

I am not looking for an actual date. How long will the moratorium last?

Mr. Derek Tierney

That is a question for the board.

Deputy Róisín Shortall

It should be a matter of concern to the Department. I should have said at the outset that I visited the hospital a few months ago with other members and was extremely impressed. It is a magnificent development on a scale unlike any other public building in this country. I have no doubt it will be fantastic when it finally opens. Our concern today are the costs involved and the kind of timeline.

I will go through some of the stages referenced. It was said that the project will be substantially completed by March 2024. Does that include fit-out?

Mr. Derek Tierney

Yes.

Deputy Róisín Shortall

Okay. Does the six-month period for commissioning that was talked about include the two types of commissioning, namely, the technical and the integration of the three other hospitals?

Mr. David Gunning

I will speak to the NPHDB's piece on that. The technical commissioning precedes March 2024. On that date, the technical commissioning will be complete, and all the systems and everything will be working. It is then handed over to Children's Health Ireland, which will conduct the operational commissioning of the hospital, including the integration the Deputy talked about.

Deputy Róisín Shortall

The integration is likely to take six months.

Mr. David Gunning

Again, that is a CHI issue but that is my understanding. That is currently being discussed between the HSE, CHI and others.

Deputy Róisín Shortall

When Mr. Gunning was asked earlier about the likely approximate ballpark figure for the final cost, he talked about a range of cost elements. What is included in that range of cost elements, apart from the dispute resolutions?

Mr. David Gunning

We mentioned, for example, the inflation cost. There are costs to do with claims. For example, there are a number of Covid claims the contractor has put in that will have to be resolved. There is the resolution of the sums that were provisional at the time the contract was signed that will have to be finalised. There is the additional cost for the running of the development board and the design teams. As we are now going beyond August 2022, there will be additional costs and we need to cover all of those. Those are a number of the cost items.

Deputy John Lahart

I thank the witnesses for attending. I met some of them when we visited the site. I was very struck by it and had long and interesting conversations with Mr. Gunning and the project manager. I get the uniqueness of the site. For members of the public who might be watching, I was very struck by the fact that, if I interpreted it correctly, if this was a house-building project, normally a contractor has all the space around the house in which to work and the rest of it. However, this project has the footprint of the hospital and everything has to take place within it because everything else is built around it. That imposes additional costs. I understand that it is a pretty unique project. I am aware that it is a cutting edge project, not just from a medical and children's health perspective, but from an architectural perspective. I am also aware that it is so unique and cutting edge that it is being visited and international inquiries are coming in about the development of it. These are all very positive things. We await the completion of the hospital.

In layman's terms, and I am not trying to belittle this, I could not help thinking of Dermot Bannon who presents "Room to Improve". Every time he revisits a site there is an additional expense and the quantity surveyor is tearing his or her hair out. We are trying to account for taxpayers' money to some degree. What is the difference between this process and a much more minor process in trying to quantify how much this project will cost in the end? What kind of processes are there to determine that and to determine the impact of things like inflation on it? These are the kind of normal things that come into any building project. Someone sits down and says that inflation will severely impact this. At some stage, we will know what the final bill is.

The witnesses must have some sense of what the final bill will be, with some of the things coming in. If they were to quantify it, and let us get it out now, can they give us even a ballpark figure? I ask for this is in part because, like many infrastructural projects that get to a certain stage, the public resigns itself to some degree to overrun costs when it begins to see a project materialise. It happened with the Luas, the Dublin Port tunnel and terminal 2 at Dublin Airport. People then say, "This is almost here. We just have to get on with it." Do we have a ballpark or some kind of figure that we can land on regarding the overall cost?

Mr. David Gunning

I will respond to that. A great deal of analysis has been going on. I have appeared before this committee a number of times and given various guidance regarding our processes that are in place, and that seek to land that particular point of what exactly the cost will be to bring us to substantial completion. That work continues. I was invited earlier, before the Deputy arrived, to volunteer the same information. I indicated that I was not in a position and was not willing to do that. There is, of course-----

Deputy John Lahart

If Mr. Gunning has answered it, that is fine, but at some stage he will sit down with the Secretary General and the Minister to look for additional moneys.

Mr. David Gunning

That is the case. We are working-----

Deputy John Lahart

Is it because of commercial sensitivity? Does the board not want it out there with BAM and other contractors that this is what it is looking for?

Mr. David Gunning

The commercial sensitivity of this is our primary concern.

Deputy John Lahart

Mr. Gunning can understand why people might be cynical about the term "commercial sensitivity" and that it is a cover-all. Can he, in one minute, and I am sorry to pin him down to that, develop that a little?

Mr. David Gunning

I have a responsibility to come to speak to this committee but I also have responsibilities under the code of corporate governance and other requirements to deliver this project in the most efficient way, in the shortest time and at the lowest cost. We are all united on that. My concern is that I do not want to say anything, or volunteer information, that could in any way compromise our legal or contractual position either with contractors or, through the contractors, subcontractors on any aspect of the project. I simply cannot do that.

Deputy John Lahart

Mr. Gunning will understand how frustrating that is for us on this side of the table because we are dealing with a lot of taxpayers' money. What does Mr. Gunning say to us?

Mr. David Gunning

I totally understand that. In the not-too-distant future a time will come when we will be able to share that information with the committee but I will not go there today on it.

Deputy David Cullinane

We heard the same in July of last year, with respect.

Mr. David Gunning

I will make the same comment. In the not-too-distant future, we will be in a position to share this information.

Deputy John Lahart

If the 10% concrete block tax materialises in the finance Bill, will that have an impact on the construction costs?

Mr. David Gunning

I will ask Mr. Devine to jump in on that one because he is dealing with this. In summary, as the Deputy will have seen from the photographs, and he has been on the site, the vast majority of the concrete and the concrete blocks, of which there are very few on this project, are done.

Mr. Phelim Devine

Mr. Gunning has answered it. There is very little concrete left for us to pour. It is only needed for the external works. The frame is complete and everything is complete in the building. Concrete is needed for just a few foundations and a little external works for bus shelters or play structures and so on. It is a very small amount. We are still awaiting the detail on that 10% and how it will apply. When we know what that is, we will carry out a review of what the impact will be but we do not expect it to be-----

Deputy John Lahart

Mr. Devine does not expect it to have an impact because most of the work around that piece has been completed.

Mr. Phelim Devine

That is correct. We are 97% or 98% through on all the concrete on the project. It is just the external pieces that are left. Bits of concrete for the external works on the perimeter of the site are needed.

Deputy John Lahart

What if the NPHDB was meeting with the Minister this morning, and he asked when he will cut the ribbon and wanted as close a date as possible for that?

Mr. Derek Tierney

The earliest the potential opening will be is the end of 2024.

Deputy John Lahart

The completion date is March and commissioning will be six months.

Mr. Derek Tierney

At least six months.

Deputy John Lahart

At least six months for commissioning. Therefore, the earliest date is November or December 2024.

Mr. Derek Tierney

The earliest date.

Deputy John Lahart

What is the realistic date?

Mr. Derek Tierney

I just do not want to comment on that, given where we are with the construction programme. However, we know that one follows the other.

Deputy David Cullinane

There will be a change of Government by then.

Deputy John Lahart

I refer to the satellite piece. Everybody sits to attention and flicks pages. How is it doing in terms of what was anticipated, footfall and delivery? There is about two minutes left for the witnesses.

Mr. Derek Tierney

I can provide a detailed note to the Deputy after the meeting.

Deputy John Lahart

Could Mr. Tierney please do so?

Mr. Derek Tierney

Perhaps I will provide a note after the meeting. Certainly, it is open and it is performing. We are already delivering. I can confirm, for the record, that the outpatient emergency care centre in Tallaght, currently in its first year of operation, has provided at least just under 3,000 additional outpatient appointments. We have seen just over 25,000 emergency care presentations between January and September of this year. The number of outpatient appointments has been increasing throughout 2022, as four new paediatric consultants took up posts throughout the year, with the final appointee having taken up their post.

I can also confirm that Children’s Health Ireland, CHI, Tallaght accommodates the existing children’s emergency care unit relocated from the adult hospital and will expand outpatient services to children and young people from Dublin south west, south city and the surrounding areas of Kildare and Wicklow.

I was struck by Deputy Durkan’s comments earlier on. We committed to build a stronger communications campaign around how we are performing both in Tallaght and Connolly, even as we are nearing completion of construction on St. James’s campus.

Deputy John Lahart

So as to alert the public that it exists.

Mr. Derek Tierney

Correct.

Deputy John Lahart

Blanchardstown seems to have exceeded expectation.

Mr. Derek Tierney

Yes.

Deputy John Lahart

How is the Tallaght satellite comparing with that at this stage?

Mr. Derek Tierney

That is not in my area but I will provide a note after the committee meeting, just to get a sense.

Deputy John Lahart

What is the cost of that project?

Mr. Phelim Devine

I do not have the exact number here, but the overall cost is circa €82 million versus a budget of circa €77 million, including VAT. The overspend on the budget was pretty much associated with additional investment at the Tallaght University Hospital campus, which we had to upgrade infrastructure to support the outpatient emergency care centre.

Senator Seán Kyne

I welcome the witnesses and thank the board for facilitating us in July on the visit to the campus. As others have said, I was hugely impressed with the scale and size and what the project can and will be. As I said at the committee previously, a picture paints 1,000 words, and a site visit paints another 1,000 or 10,000. Well done to all involved. I am proud to part of the Government that sanctioned this and got it moving. There was much talk for many years on the delivery of this project.

Others have touched on the disputes. We were given the example that Covid was one of the reasons. Can the witnesses tell us the highest value of an individual claim? During Covid, how long was the construction of the facility shut down? Was the company in receipt of the State supports that were provided at the time, such as the employment wage subsidy scheme, EWSS, and the temporary wage subsidy scheme, TWSS, and all of that?

Mr. David Gunning

Back at that time, the site certainly closed for the Government-mandated period. The Senator may remember there was a situation where the contractor was very slow to come back to work after that period, but eventually coming back perhaps a month after the approved period. The Senator can probably imagine there are claims in and around that and there are claims for additional delays and costs associated with, shall we say, restarting post-Covid shutdown. That is the subject of a number of claims and ongoing dialogue.

On how I would characterise the claims, they are predominantly for what are called “extensions of time”, which is the contractor is claiming delay for various reasons. I will not go into the exact numbers, but ten claims account for 80% of the entire quantum claimed. That is where the primary focus is from the development board’s point of view on the big money side of things.

On whether BAM was involved in various Government schemes, that is not within our remit. That is a separate issue between BAM and Government. I am not aware of the details of that so I cannot comment on that. However, I presume, like many companies, it continued. Certainly, while the site was closed, the back office work of BAM continued - the procurement and all of the activities happened, other than having workers on-site.

BAM did an excellent job of managing the return to work and all the Covid and health protocols. It was a very good example of how to do it properly. I know we have our differences on things, but I would like to acknowledge its excellent work in that particular area.

Senator Seán Kyne

The point I was making on EWSS or TWSS is if it was delayed but being compensated, as it would be entitled to given many hundreds and thousands of businesses were, that would just be-----

Mr. David Gunning

I can clarify that. The contractor does not get any additional money under the contract for that delay, however, they get a day-for-day. While the Government mandated close down was happening, it was allowed to extend the contract by that period. It did not get any payment for the site works at that time.

Senator Seán Kyne

Just to confirm, ten claims account for 80% of the money.

Mr. David Gunning

Correct.

Senator Seán Kyne

Mr. Gunning is not in a position to say what-----

Mr. David Gunning

I do not think it would be appropriate to do that.

Senator Seán Kyne

Okay. The facility will be the amalgamation of the three existing hospitals. Perhaps this not a question for the board but more so for the Department. What level of staffing over and above the existing staffing complement would be anticipated in this facility? Is that budgeted for? Is recruitment starting or when is that envisaged?

Mr. Derek Tierney

I gave an overview earlier on. We have started to deploy a mobilisation on the electronic health record. It takes 106 staff to run that programme. On the question of the wider integration of the existing services and what that means for staff complement and recruitment to add capacity, perhaps I will pass a note on after this meeting. It is not my specific area, but I will return some detail on that for the Senator.

Senator Seán Kyne

Presumably, there would be a level of staffing in both the existing-----

Mr. Derek Tierney

A full resource plan is being developed by CHI and it has started to recruit. I will come back on that for the Senator.

Senator Seán Kyne

I refer to something that came up in the tour. Deputy Cullinane asked the question of when procedures will take place. I think it was said during the tour that the busiest time in the existing children hospitals would be the winter period. I am not sure whether it is the post-Christmas winter period in particular. Therefore, in terms of the transfer of patients, it would not be during that period and would be perhaps later on in the spring or summer. Could Mr. Tierney confirm that? The question was asked when the facility would be up and running.

Mr. Derek Tierney

I am not a clinical specialist, but I could envisage a case where we could start to see some transfer of services over a phased period. That is currently at the point of discussion between my colleagues within the HSE and CHI – what that commissioning period and what the phased transfer might look like. I do not have any definitive detail on that at this time. That is the current discussion at the moment.

Senator Seán Kyne

The Department’s opening statement said that the children’s hospital ought to be a centre for learning, with school facilities for the children, which is very welcome, including third level teaching spaces and a 300-seat lecture theatre. Is that in conjunction with the Royal College of Physicians of Ireland, RCPI, or schools of medicine? How is it envisaged that would operate?

Dr. Emma Curtis

There are a number of universities, three medical schools in Dublin and the nursing colleges, from which there will be attendance. There are seven institutes of higher education involved in the planning of the use of the education space. There are two elements to it. There is the school for national and secondary school age children, which will be run by the Department of Education. There are also a number of special school areas envisaged. There will undergraduate training, which will be doctors, nurses, health and social care professionals. This is not only a Dublin-based resource. Those training in nursing in Cork, for example, would spend a period in the children's hospital as part of their training. It will be a national resource as well. There will be the postgraduate training of doctors whose training specialty is paediatrics and also general practitioners who are doing paediatric training. There will also be the continuing professional development for the clinical staff within the hospital. There is a very extensive education plan at all levels for the new hospital.

Senator Seán Kyne

During the debate on the original move and plans, the issue of accommodation for staff was discussed. Is there any provision or plan for an accommodation block for nursing staff, particularly those on lower salaries?

Dr. Emma Curtis

That is not something I know anything about.

Mr. Derek Tierney

That is not part of the construction programme. We understand that Children's Health Ireland has been engaging with stakeholders in the area looking at any other development opportunities. Perhaps I will get a note on that as well for the Senator.

Senator Seán Kyne

It would make perfect sense to have a facility that could be used and available. International recruitment is necessary and there are huge recruitment challenges in all areas of the country. The lack of accommodation will, we hope, change over the coming years but in a capital city with an influx of people, it would make perfect sense to look at accommodation options.

On inflation, there will have been forward buying of materials and so on. To what extent has this avoided inflationary pressures in recent months?

Mr. David Gunning

It is down to how the contract treats inflation. It treats it in a particular way. It is a lagging indicator for the previous year. It looks at three different scores of inflation. Three measures are taken from three different institutions to come up with an average, which is applied retrospectively. There are opportunities for the contractor to optimise and buy forward, where possible. The reality, however, in the construction sector today is that there are material shortages, whether they are Covid related or Brexit related or due to the additional costs of transport and logistics. These are all matters that are landing. While people might have the best intentions to plan ahead, there is a lot of uncertainty and turbulence in that particular sector currently.

Deputy Seán Kyne

I thank the witnesses.

Deputy Colm Burke

I thank the witnesses and apologise for not being here for the presentation. I read all of the documentation beforehand.

What is the total number of people now working on the hospital site? The witnesses may have been over this already but I just want to get an idea of the number of people working on-site at the moment.

Mr. Phelim Devine

Last month, there were 1,400 BAM and subcontractor employees on the site, of whom some 1,100 or 1,150 are productive labour making the hospital, while the rest are support staff, management, leadership and welfare.

Deputy Colm Burke

Are we satisfied that the contractors and subcontractors are able to get the staff they require? Are there still challenges in that area?

Mr. Phelim Devine

There are big challenges for the contractors and their supply chains to get staff. The industry is at capacity. As Mr. Gunning said, it is difficult for them to resource up. They are trying to get additional resources but they are struggling to find them.

Deputy Colm Burke

There are many different aspects to the contract, including electrical, IT, plumbing and construction work. Where is the biggest challenge with staffing? Is it in any particular area or is it across the board?

Mr. Phelim Devine

With construction, we are well advanced and progressed in the fit-out of all areas of the hospital. The challenge is in the fit-out. It is mainly on the electrical side rather than the mechanical works, which are nearly complete. The mechanical side is about 85% or 90% complete for the whole hospital.

Deputy Colm Burke

Will Mr. Devine give us an idea of the scale of the electrical work because many people do not understand the scale involved? I understand there are 6,000 rooms in the hospital. The electrical side of the work is substantial.

Mr. Phelim Devine

There are 6,000 spaces, of which 4,600 are clinical rooms. There are also IT hubs and so on. There are 36,000 data points that must be threaded from IT rooms that are 90 m apart. There are hundreds of kilometres of cable in the building. Every data point is, on average, 70 m of cable. That is 70 m by 36,000 just for data cabling, and another 56,000 building management system points, BMS, that monitor how the building behaves, including temperature and the opening and closing of windows. The electrical installation is vast. As part of future proofing the hospital and making it world class, we have interwoven all of that data cabling so that, God forbid, if anything were to happen to one of the intensive care hubs in the future, the hospital could quickly switch over to a second one. We have full resilience built in with regard to data cabling. There is also full resilience built into the back-up generation. The main distribution boards and sub-distribution boards all have A&B.

Deputy Colm Burke

At what stage is the development of the 22 operating theatres?

Mr. Phelim Devine

The theatres are all constructed. All of the walls have been double-sided and nearly all the services are in, including the lead lining. The ceilings within the theatres are being finished and the pendant supports are all in. The next phase will be to install the pendants. The flooring will go in, which is a very special epoxy floor. We have put in the ICT boxes for the audiovisual screens, which will be put in at a future date by Children's Health Ireland. The theatres are very well advanced.

Deputy Colm Burke

What of the actual equipment for the theatres? This involves a large project. I am involved in one hospital which wants a piece of equipment and cannot get it until mid-December. Given the number of theatres in the new children's hospital, will the hospital have every piece of equipment it requires for the theatres in 12 months' time? Where are we with that?

Mr. Phelim Devine

There is a certain amount of equipment that is bought with the contract, namely, the pendants, which were bought a long time ago. Then there is all of the sophisticated equipment that is going into the theatres. We have a paediatric intervention radiology theatre, a cath lab, and biplane and single-plane imaging equipment that sits in the theatre. We have bought all of this. We have bought all of the MRI scanners, CT scanners and SPECT-CT scanners. We have bought all of the large medical equipment that will be built into the hospital. It has all been procured and we are now finalising the integration of that into the final design.

Deputy Colm Burke

To go back to building inflation, I dealt with a contract in Canada. I referred to his previously. An inflation rate of 15% was built into a project that was to take five years to complete. We have had building inflation across the board, whether for dwelling houses or commercial buildings. What has building inflation been in real terms since 2018,? I am not talking about this contract specifically but in comparison with other projects.

Mr. David Gunning

Our data on the inflation we apply come from three different sources.

They are the Society of Chartered Surveyors Ireland, Linesight and AECOM. Two are large consulting firms and the other is the society itself. We take an average of those historically in the preceding year. Tender price inflation in 2019 was 6.67%. Inflation in 2020 was 2.48% and inflation for 2021 was 10.24%, so we have had quite a spike. We are assuming that inflation level will continue. Our forecasted outturns we talked about this morning are assuming 10% inflation for this year.

Deputy Colm Burke

Mr. Gunning is talking of an inflation rate of over 30% in the time.

Mr. David Gunning

We have a compounded inflation, so as it goes through the process, the assumption we are having is that what applies in 2022 is about 13.39%. The State does not take the risk on the entire inflation amount on this project.

Deputy Colm Burke

I know that.

Mr. David Gunning

The 4% must be taken off and then there is a compound formula on how to figure it out.

Deputy Colm Burke

All right.

Mr. David Gunning

This year we are estimating if tender price inflation is 10%, and it has dropped a small amount recently, we are assuming about 13.4% is what will apply.

Deputy Colm Burke

Okay. I return to the issue of staffing when the hospital opens. Taking the hospitals all the staff are going to come from, can we get a breakdown of the current make-up of staff in the existing hospitals who will be moving to the new children's hospital? The officials may not be able to give it to me today but could we have that broken down by nursing staff, care assistants, junior doctors and consultants so we can get an idea of the total number that will now be moving to this site when it is fully finished?

Mr. Derek Tierney

We will provide a note to the Deputy after this committee setting out that in the level of specificity he is looking for.

Deputy Colm Burke

One way to judge the size of the project is by the number of staff who are going to be moving in there. Going back over what other people have raised about accommodation, it is a huge challenge. I know of people who worked in the UK, and at every hospital they went to, there was accommodation available to them, and that was more than 20 or 25 years ago. We have done nothing on that. With the colleges we are beginning to get it right with student accommodation, but it is 20 or 25 years too late. Do we need to start building this issue into healthcare planning? It is not just about beds in the hospital. We have very many junior doctors who have six- or 12-month contracts, and it is likewise with nurses. They need training and to move from hospital to hospital. Do we now need to change policy in this area, especially in the major cities like Dublin, Cork, Limerick and Galway? Do we need to do a lot more planning in that area?

Mr. Martin McKeith

I will come in on that to note that once the services have transferred to the new children's hospital from the existing sites at Crumlin, Temple Street etc., we will be doing an exercise with CHI as to the future uses for those sites, which may include nursing accommodation and suchlike. I commit to coming back to the Deputy with a written response on that particular point.

Deputy Colm Burke

In overall terms, though, do we need to look at this? It would need to be done now rather than when the hospital opens, because if we want to give the best to the staff and to retain them, then this is going to be a challenge. The rental costs in Dublin, Cork and all the other cities are a challenge. Is now not the time to have a careful plan on this? We have a two-year timeframe in which to look at this so we can ensure we hold on to the staff we have, who are very dedicated and committed as well.

Mr. Martin McKeith

Absolutely. We are working with CHI to identify uses for the sites and to plan. We will come back to the Deputy with a written response.

Deputy Colm Burke

What is the Department's attitude to this?

Mr. Derek Tierney

The Deputy makes a valid point. We will engage with CHI. It has a workforce model which is integrating from the three sites. Part of our engagement with CHI will be to look at the accommodation pressures and how we are going to mitigate those with opportunities either around the campus itself or reuse of existing facilities. We will come back with a note on that and provide a bit more detail.

Deputy Colm Burke

I am talking about the Department's overall policy outside the children's hospital. A number of people have contacted me in Cork in the past six months because they are running into serious problems with accommodation. This is especially so if they are on contracts where they are rotating. They might have a five-year contract or be senior registrars. If they have a five-year contract, they are doing a year in Cork, two or three years in Dublin and a year in Galway, and they are running into this kind of problem as well. Will the Department look at this policy issue as well?

Mr. Derek Tierney

Yes.

Deputy Colm Burke

The officials might come back to us on that issue.

Mr. Derek Tierney

Yes.

Deputy Colm Burke

Okay. I thank the Chairman.

Chairman

One area we probably have not touched on that I should have mentioned at the start of the meeting is the local residents. There has been huge patience and co-operation and the meeting should not go by without the officials addressing that and how it is going. Consider the impact having a huge building site on your doorstep would have in the form of noise levels and everything else.

I have a couple of other points. I do not understand the compound rate. Maybe there is a simpler term or maybe the officials could send us a note. I do not know about the people at home but I did not understand that and I assume many people listening would not either. It is important we as legislators know how that actually works.

The fitting-out of the hospital was mentioned and I raised during the visit the issue of the 60 ICU beds. On the basis of a growing population and so on, are there sufficient beds within the national children's hospital? We have not built it yet and we are talking about whether there is enough space in it for that and whether there is flexibility within the site if we wanted to put additional beds there. I asked that on the day and people were saying it was sufficient. Is it?

Mr. Derek Tierney

I might let Mr. Gunning deal with the compound issue and Dr. Curtis can deal with the design principles and the estimated population growth to 2040.

Mr. David Gunning

I will start with the Chairman's invitation to pay compliment to the residents. He is right they have been very patient. We value the local community's participation and commitment. There has been much engagement with the residents through the residents' project monitoring committee, which was set up by the development board in co-operation with the local residents. It is also a good opportunity to point out the community benefit fund that was put in place by BAM. Contributions go to local charities and activities from the project to try to ensure there is a value-add in the local area from the fact the project is continuing. There are also the efforts to ensure and try to drive employment within the project and ultimately the hospital for the local community in this new hospital which is quite significant on the skyline. I thank the Chairman for the opportunity to do that.

On the compound, there is an appendix to the contract that has it. We will share that calculation with the committee and do so shortly. I ask Dr. Curtis to deal with the question on ICU beds and that particular issue.

Dr. Emma Curtis

I thank Mr. Gunning. When the healthcare planning happened, it took into account current service provision and unmet need, that is, the limitations of current infrastructure and what you might optimally have in a new environment. It also looked at Central Statistics Office, CSO, population data up to 2041. It also looked at developments in paediatric care and what it was felt was coming down the line. The other piece that was useful was the HSE had commissioned a review of intensive care services. That was carried out by an intensivist from SickKids in Toronto. That was also useful and informative because that had been a review of paediatric intensive care services and where they needed to go. Given all that, the decision was made that 60 intensive care beds were likely to meet future need. Obviously however, medicine progresses and a new initiative in the new hospital is a neonatal intensive care department that is separate to paediatric intensive care. We currently look after sick neonates but they are looked after within paediatric intensive care.

The future hospital, however, will have an 18-bed neonatal ICU unit. One thing that is evident is that year-on-year there is an increase, and a very welcome one, in the survival of very premature infants. These children are vulnerable, however, and often have medical and surgical comorbidities. Therefore, the plan was that 60% should meet our needs. This would not be with full occupancy. The projected occupancy of ICU is 75%, whereas that of standard bed units is 85%. Obviously, we do plan for some spare capacity, but we planned a greater spare capacity in the ICU because it is a limited resource. The plan is that this would be sufficient. In the design of the hospital, though, the ICU occupies two-thirds of the large hot block. I may not be exactly precise about that two-thirds estimation, but at the other side of the building there is an extensive piece of soft area, which is currently designated for workspaces. Therefore, there is an obvious expansion capacity within the current building design, should that be required in future.

Chairman

In a post-pandemic context, we all realise the importance of ICU beds. It is good to know we have this type of flexibility, because who knows what we may be facing in future? Another small aspect in the overall context, but a major one for the patients going into the facility, is that I am conscious it is an all-Ireland facility. In this context, accommodation for nurses was mentioned. There are also facilities to allow parents to stay in situations where children may be seriously ill. There is a major challenge, however, with hotel beds. I have come across people looking after loved ones in hospital who were sleeping in their cars. I refer to the cost of parking as well. This is not just an issue in the context of parents going to the hospital but also for the staff coming from other hospitals. Has this aspect been explored?

On the additional footfall that will be going into the hospital, and the associated requirement for additional buses and extra Luas trams, in the overall context of how people will be able to get to and from the site, have discussions in this regard been ongoing? We would like to think so. Is part of the plan concerned with how it will be possible to get people in and out of the hospital in a safe and orderly manner? I refer to those people who will be working in and visiting the hospital, as well as the patients who will be using it.

Mr. Phelim Devine

I will take this question. On the accommodation aspect, a 52-bed family accommodation unit is to be built outside the hospital. It will be adjacent and linked through the basement. This is a separate procurement and we are working closely with the HSE in this regard. This contract will go to tender by the end of this year or early next year. It will then take approximately 18 months to build.

Turning to mobility management, CHI and St. James's Hospital are working closely on this element. There are other stakeholders on the campus, including the Blood Transfusion Board and Trinity College Dublin research facilities. These are all part of a campus-wide mobility management plan. This examines optimising public transportation, vehicular transportation, pedestrian and cycling routes into the campus. We have taken the opportunity in the design of the hospital to provide 500 bicycle parking spaces, most of which are in a car park underground. We also have optimised parking for patients and their families. The 675 spaces we are providing are for patients and their families, which is about one and a half times the number of spaces available on the adult campus. Therefore, as part of the EIS, we did a great deal of detailed work to ensure we have the right numbers of parking spaces. This provision does not exist in the three hospitals now. The committee will be aware that Temple Street hospital has no parking, while that at Crumlin hospital is limited. We have now addressed this issue.

Equally, the NTA's roll-out of BusConnects, which will occur shortly, perhaps by next year, will mean many new buses will be coming onto the campus. While from a vehicular perspective we have looked after all the patients and their families, we must also think about all the staff who will be working in St. James's Hospital and in the CHI when it opens. We will be talking about 7,000 people at that stage. Taking students into account as well, the overall total could be close to 9,000 people on campus. Most of those will use public transport, cycle or walk, and some will drive. Therefore, there is a joined-up, campus-wide approach to mobility management.

Chairman

One of the positive developments is the development of an electronic patient indicator. Since we have some time, I ask one of the witnesses to expand on this initiative and how it is going to operate. Do we need to follow up with legislation in this regard? How is this system going to develop? I refer again to the idea of moving away from a paper-based system and this meaning it would be possible for people outside Dublin and in rural areas to have instant access to files. On the basis that this is an all-Ireland facility, I refer to the connection that will exist in this regard as well. This is one of the more exciting elements of the new children's hospital.

Mr. Derek Tierney

On electronic health records, EHR, and as I said in my opening statement, CHI has now signed a contract with a vendor, Epic, and it is starting the deployment of an electronic health record system for the new children's hospital. This ultimately means the delivery of a paediatric model of care in a paperless environment. The deployment of EHR on the campus is not a first. We have reached somewhere between 50% and 70% of deployment of electronic health records for national newborn and maternity systems. We have also deployed electronic health records for the National Rehabilitation Hospital and the National Forensic Mental Health Service facility in Portrane. We are also now considering how best to deploy electronic health records as we start to mobilise regional health areas.

How can we truly deliver integrated services from a community and an acute perspective? How can we integrate these elements? What will this mean for patients as they journey through the healthcare continuum? There are issues and challenges, of course. These have been well noted, and include legacy systems and fragmentation of systems. The real challenge, however, concerns how we can integrate systems from a technical perspective. We are now starting to turn our minds to consideration of what this level of capability means for our regional health areas. Obviously, institutional and cultural issues will be encountered as we move from paper to electronic records. The Government has approved the heads of a health information Bill to allow the Department to progress this process. For the first time, this will provide absolute clarity around two purposes of information sharing. The first would be deemed the primary purpose, and this refers to ensuring patients' data follow them. This would be the case whether the healthcare setting concerned is private, public or community practice. The proposed Bill will clarify patients' entitlement to their data and how they can receive them. The second purpose, which is important from a health planning perspective, is to allow the use of patient data at an aggregate level to plan for future needs. It will mean that as we are planning for our future health capacity and needs we will have data and evidence to give us insights regarding what we need to do, when and where.

Turning to the issue of the parking charge, the Minister has decided to cap the daily parking charge at €10. We are working with the HSE to see how we can best institute this charge in the context of a procurement process to engage a provider to run and manage this contract on behalf of the State.

I turn now to the last element of the question and I will add to Mr. Devine's commentary on transport planning. Regarding how staff and patients access the existing campus, there are already strong links between St. James's Hospital and the NTA, through engagement with Dublin Bus and the operator of the Luas, concerning how to best match transport capacity to the needs of the campus. CHI is also active in this discussion in the context of understanding what it means in terms of being able to rely on public transport to access the site. Extensive parking is also being provided underground to facilitate parents as they arrive with children for treatment. This is all part of a wider transport planning consideration.

Chairman

I thank Mr. Tierney. I call Deputy Cullinane.

Deputy David Cullinane

I do not say this often, but Mr. Tierney has given us a very impressive articulation of what is going to happen in the hospital. I thank him for that. I will return to the issue of the claims and seek more clarification from Mr. Gunning. Before that, however, the only date referred to in the opening statement is given in the context where it is said it is hoped to achieve substantial completion, or that at least the contractor has signalled that it hopes there will be substantial completion, by March 2024, with a hand over then to CHI. I would imagine, then, that it is anticipated that the hand over to CHI will happen sometime in mid-2024. Is this the timeframe we are working towards?

I know there is a period of commissioning but in terms of the handover, are we talking about 2024?

Mr. David Gunning

Let me clarify. Our intention is to bring forward the engagement with CHI so that the substantial completion and the handover happen at the same time. That will optimise things and lead into the operational commissioning, which is the CHI's responsibility.

Deputy David Cullinane

That is the date we are working towards.

I want to come back to the claims issue now. I am not sure if Mr. Tierney or Mr. Gunning can answer this. There are 989 claims still outstanding, in whatever form they are outstanding, and there may well be more High Court challenges as well. As Mr. Gunning articulated earlier, there is a suspension of the process of dealing with those claims. Do all of those claims have to be completely done and dusted before the handover or is it possible that there will be outstanding claims even after the hospital is handed over?

Mr. David Gunning

It is fair to say in a lot of public works projects, not only in Ireland but around the world, the discussions and disputes continue long after the substantial completion.

Deputy David Cullinane

That is the point I am getting to now, and I understand that. It is the case, then, that all of these disputes, and the additional cost that may be associated with them, could go on for months, if not years, after the project is completed and the hospital is open and doing business.

Mr. David Gunning

That is correct. The Deputy is absolutely right.

Deputy David Cullinane

While Mr. Gunning cannot forecast this, it is also possible that some of those 989 claims go before the High Court.

Mr. David Gunning

Yes, and that would be a decision of either the development board-----

Deputy David Cullinane

I understand that, but what I am saying is that it is possible.

Mr. David Gunning

Yes, it is possible but I would make the point that I made earlier when the Deputy was out, which is that ten claims account for 80% of the total value.

Deputy David Cullinane

I understand that.

Mr. David Gunning

That is where the-----

Deputy David Cullinane

I understand the value point and had heard that but there are 989 outstanding claims. What I am trying to get at here is the process. Some of those may well end up before the High Court and that is a matter for the contractor if it disputes the conciliation process or the outcome of it.

Mr. David Gunning

It could also be a matter for the development board if it does not agree with it.

Deputy David Cullinane

Yes. How many claims have been or are before the High Court so far?

Mr. David Gunning

If I talk about Tallaght and Connolly hospitals and this, four cases went to the High Court.

Deputy David Cullinane

That process, I presume, is not suspended or is it?

Mr. David Gunning

There is what we refer to as the phase B instruction case, which has been adjourned generally. It is, in layman's terms, "on hold" in the High Court, although I do not think the High Court will agree with that term. Then there is one relating to the frame claim, which was brought by BAM and that is a matter for BAM. Then the two on the satellites at Connolly and Tallaght have now been completely discharged. There are two cases in front of the High Court currently.

Deputy David Cullinane

Is it correct that two were resolved correct?

Mr. David Gunning

Yes, two were resolved. Mr. Devine just spoke about how the satellite cases were concluded and that, as part of the final account on the satellites, those issues were stood down.

Deputy David Cullinane

I want to go back to Mr. Gunning's opening statement. Maybe it was just an omission, but it would have been better had he mentioned this in his statement. He said that it was imperative that the NPHDB evaluates each claim and robustly defends those it considers not to be justified, which is fair enough. He also said that there was a comprehensive process in place for the assessment of claims submitted by the contractor. What he did not say in his opening statement is that the process is currently suspended.

Mr. David Gunning

That is correct. My apologies-----

Deputy David Cullinane

That would have been good information to give us. Immediately after making that point, he then said that robustly defending claims is both time-consuming and costly. I understand why the board has sought a pausing of the claims process. It wants to concentrate, with the contractor, on getting the hospital built and there is an element of wisdom in that. However, Mr. Gunning did say that the process of defending claims is both time-consuming and costly and that is the point I am making. When we are talking about the final cost of the national children's hospital, given everything I have just said, it will be long after the hospital is built before we get to a final cost. If he is agreeing that it is time-consuming and the board has put the process on hold, then even after the handover in March 2024, we are still going to have some of those claims potentially, if not probably, not dealt with. Is it the case that it could be years before we have a final cost?

Mr. David Gunning

To use the Deputy's word, potentially, yes. I do not know what the High Court timelines are currently, in terms of getting in and getting out and the quantum of those claims that could go to that stage but that is a potential scenario.

Deputy David Cullinane

It is unlikely to be months, given where we are so far. Deputy Shortall raised this issue earlier as well. If it is a time-consuming process, then it would be good for us to have some sense as to when that process will resume. When Mr. Gunning said the process is suspended, does that mean all of the conciliation work is also suspended?

Mr. David Gunning

There are claims and then some claims become disputes. We still receive the claims because that is a contractual -----

Deputy David Cullinane

I know that claims can be lodged. I am talking about the conciliation process.

Mr. David Gunning

Beyond that point, in terms of referral to the project board, conciliation, and referral to the High Court, all of that other part of the process is suspended.

Deputy David Cullinane

All parts are suspended but all will have to be done at some point.

Mr. David Gunning

We explore every opportunity to resolve this in the most expeditious manner possible with the contractor.

Deputy David Cullinane

I know it happens in other projects, but given the high profile of this project - and even though Mr. Gunning wants to talk about the other issues associated with the hospital, including the wonderful additional capacity it will provide for children - unfortunately there is some controversy, whether the development board likes it, around the costs that is not going to go away. People will be a bit surprised to hear that long after the hospital is opened and providing services, we are still likely to be locked into a process of contractual disputes around costs. It is accepted that the costs will probably be in excess of the €1.4 billion that the Minister has outlined but our job is to hold the Minister to account and the Minister's job is to ensure that we have cost control because ultimately, if there are additional costs, the taxpayer has to pay for them. There is no indication here as to what the amount will be or how long it is going to take. It will surprise people that long after the hospital is built, we are still likely to be locked in disputes, High Court challenges and cost differences. I accept that Mr. Gunning cannot tell us when that is going to be resolved but I suspect - and I do not think I will be proved wrong - that we are talking about years rather than months.

Mr. David Gunning

Again, I cannot disagree with that because potentially that could happen. That may happen.

Deputy David Cullinane

It is likely to happen. It is not a question of potentially, but of very likely-----

Mr. David Gunning

What we will be attempting to do is to get this completed, not just the building but the entire process, as soon as is practically possible. That is our intention. We are working very closely with the contractor and with all of the other stakeholders to bring that about. We want to get this hospital open. That is our first priority. After the development board has completed its task, it will be dissolved and then we move on to the next set of challenges.

Chairman

Members of the Law Library we will not be out of pocket. Deputy Shortall is next.

Deputy Róisín Shortall

I want to return to the issue of claims and clarify a few issues. Approximately 1,000 claims are outstanding at the moment and the estimated cost of those is €500 million. Mr. Gunning said that ten claims account for 80% of that value, or approximately €400 million, as of now. What is the likely impact of inflation on those? Are they fixed figures or are they likely to be impacted by inflation when the final reckoning comes?

Mr. David Gunning

That is a very good question. The contractor could reformulate some of those claims as time progresses. That option is available but inflation is addressed within a separate clause in the contract relating to the main expenditure that we anticipate. It could happen but what we will need to guard against is any element of double payment for inflation to the contractor.

Deputy Róisín Shortall

What is the understanding on the part of the development board, which agreed to the moratorium and the parking of these outstanding issues, regarding the value of those claims, at whatever point they are addressed?

Mr. David Gunning

That will have to be litigated or whatever the process will be, whether that is in conciliation, dispute management or whatever forum in which it will be discussed and resolved. That will have to be dealt with in that case. However, the issue of inflation, as well as when and how it applies, is clearly set out in the contract. We will be seeking to enforce that. I would not like for it to be the impression that just because this has gone on for a year, the inflation will have changed or will have increased and that inflation will apply to the claimed sum. That is not-----

Deputy Róisín Shortall

Earlier, I asked Mr. Gunning when these outstanding claims are likely to be addressed and he was not able to give me any indication of that. What kind of agreement did the development board reach with the developer or developers regarding these outstanding claims on how you would estimate their value if it is three years after the claims were initially made? Will inflation be rolled into the value of those claims to bring us to the point when they will be finally addressed?

Mr. David Gunning

The issue here is how inflation is applied within the contract. That is set out within a particular-----

Deputy Róisín Shortall

No, I am not talking about what is within the contract but about what is in this agreement the development board has regarding a moratorium on the claims.

Mr. David Gunning

The moratorium applies, as I said, on a month-by-month basis. As for inflation, it will be our responsibility when each individual claim comes to dispute resolution, whether it is conciliation or otherwise, to put forward our case regarding inflation. If inflation has already been paid to the contractor to address that cost, if the contractor was entitled to it, it certainly will not be paid it again. That will have to be resolved in each and every case, however.

Deputy Róisín Shortall

I repeat that kicking outstanding claims down the road is a strange way of dealing with them, which is essentially what seems to be happening here.

I wanted to ask Mr. Gunning what the development board agreed. Was this a written agreement in relation to the moratorium? Were conditions then attached? Mr. Gunning is saying that this is being reviewed on a monthly basis. Is that what the claimants agreed to, namely, that it would be under review on a monthly basis? He must have some general sense of when all of these parked issues will be addressed, because the amount of money involved in this is huge.

Mr. David Gunning

Certainly, the claimed amount is significant. There is no doubt about that. The numbers are there in front of the Deputy. We have our own assessments of what we think the entitlements of the contractor might be-----

Deputy Róisín Shortall

Is there a written agreement about the moratorium?

Mr. David Gunning

There was a written agreement on the moratorium between the parties. The agreement was to defer the application of the disputes process.

Deputy Róisín Shortall

Until when?

Mr. David Gunning

Until a time that is to determined and agreed by both parties.

Deputy Róisín Shortall

How would that be determined?

Mr. David Gunning

As I said, this is reviewed on a monthly basis at senior executive level between both parties and decisions are made at each one of those.

Deputy Róisín Shortall

Does the development board have a view in relation to the optimum time when this would be resolved or when these issues would be addressed?

Mr. David Gunning

This goes to the core of our commercial strategy in dealing with the contractor. We are more active than we have ever been in looking at, valuing and validating claims, contractor entitlements, delays and design issues. All of these are highly complex issues and we are working through them in relation to our ongoing activities with the contractor.

Deputy Róisín Shortall

Mr. Gunning is stating that they are highly complex and they undoubtedly are. However, from the taxpayers' perspective, it is reasonable for us to expect that Mr. Gunning would have some idea of what his objective is for the point at which he will address these outstanding claims.

Mr. David Gunning

Let me be clear. Our objective is to minimise the cost to the State-----

Deputy Róisín Shortall

Okay-----

Mr. David Gunning

-----and we have been-----

Deputy Róisín Shortall

-----I do not know what that means.

Mr. David Gunning

That is exactly what it means. We are extremely robust in our engagement on all of these matters.

Deputy Róisín Shortall

But there are outstanding claims of €500 million and Mr. Gunning cannot tell us when the development board is likely to apply itself to address those claims. That is a matter of concern and it is kicking an important issue down the road.

I want to turn to the Department at this point. I note its reservations in relation to this strategy. What intervention has it made to date or is it likely to make an intervention regarding this strategy of leaving things until some later point?

Mr. Derek Tierney

There is a point of fact I would first like to raise. While the contractor has valued just over 1,000 of its 1,200 claims at €500 million, the board has valued those at €7.5 million. There is a balance to be struck here between what the contractor is claiming an entitlement to and where the board has landed as a position. That is the state we are operating within on behalf of the taxpayer. The board has a responsibility to get the best value in its engagement with the contractor. We have two positions. That is the reality of the commercial engagement that is ongoing at this moment. All I can say is that if and when there is clarity on a outturn on the construction contract, we will be going back to Government. There are no two ways about it. We have an approved sanction for the figure of €1.143 billion. If the costs rise beyond that, we will be obliged to go back to the Government to seek an increase.

Deputy Róisín Shortall

Has the Department of Public Expenditure and Reform expressed a view on this particular strategy of the moratorium?

Mr. Derek Tierney

I am not aware that it has a view on it, no.

Deputy Róisín Shortall

To get back to the subject of oversight, this project predates the public spending code. Is that the case?

Mr. Derek Tierney

No, not necessarily. There was a revision to the public spending code in 2019, but the public spending code existed before 2019. We are applying the public spending code as it currently stands. We have refreshed the governance arrangement of the project as a consequence of an independent, third-party report by PwC in 2019. That has looked to ensure that there is a full integration between the build project and the CHI commissioning project. It comes under one lens, so they are not being dealt with in isolation.

Deputy Róisín Shortall

Is there an external assurance process involved in this project?

Mr. Derek Tierney

Insofar as the board has responsibility to deliver the capital works and to bring whatever assurance or expertise it needs to bring to bear on that to support it, that, together with CHI’s activity, comes through the HSE as lead director and then is reported to the Department in the context of a national oversight group. I think the Deputy might be referring to the recent addition to the public spending code around the need for the application of an external assurance process as a project business case travels through a gated process. That does not apply in this case, because we are in post-market engagement and are in a live environment.

Deputy Róisín Shortall

What, then, is the independent oversight?

Mr. Derek Tierney

In the first instance, it is by the HSE. There are HSE advisers who will give a view on the board’s engagement with the contractor, as well as with CHI. That level of assurance then ultimately comes to the Department.

Deputy Róisín Shortall

Can I ask just one more question? I have a concern as a representative from the northside of Dublin that there are considerable tracts on the northside of Dublin that are not adequately served by the urgent care units, particularly for those who depend on public transport. I raised this at our visit, and I was told that they were aware that there is a big area around Drumcondra, Marino and out to Glasnevin, where parents find it difficult to access one of the urgent care units and that consideration was being given to a further unit. Can the Department of Health confirm that it is involved in that?

As a related issue, what is the situation as regards the Temple Street building? For non-serious conditions, such as sports injuries, scalds, and that type of thing, parents on the northside of Dublin are used to jumping on the bus with their child or jumping into a car and going to Temple Street. You are talking about people going to Connolly or to Crumlin, which is certainly not convenient for many people. What is the plan for the Temple Street building? Is it a possibility for a further urgent care unit?

Mr. Derek Tierney

At this stage, there is no definitive plan. My colleague, Mr. McKeith, has confirmed that there is an ongoing engagement between the HSE and CHI to look at both Crumlin and Temple Street in the context of future uses, whether that is a need for accommodation or, as the Deputy said, whether there is another need to provide healthcare services. However, no definitive use case has been defined. We might provide a note on some of those considerations.

In the context of general transport planning, I understand the concern the Deputy raises. We can engage with the HSE and the NTA to see if we can reach any solution or agreement on that. Again, that would be primarily a matter for the NTA working with Dublin Bus and other transport providers in terms of existing links. Perhaps there is an opportunity to understand where BusConnects fits in within that.

Deputy Róisín Shortall

I would appreciate a note on Temple Street specifically. I thank Mr. Tierney.

Deputy John Lahart

I would not hang my hat on BusConnects. What is Mr. Tierney's response to that?

Mr. Derek Tierney

It is not in my area. We do not deliver transport services.

Deputy John Lahart

No, but it must concern him.

Mr. Derek Tierney

Is the Deputy asking if I have a concern?

Deputy John Lahart

No. How people get to the hospital will concern Mr. Tierney.

Mr. Derek Tierney

Is the Deputy referring to this particular hospital? To add to Mr. Devine's earlier comments, we know that St. James's campus has strong links with the NTA in the context of public transport provision, and we know CHI is engaged in that. I am not party to those discussions.

Deputy John Lahart

On the children's hospital satellite at Tallaght, it was stated that the original cost was €77 million and the outturn cost was €83 million. Did I get that right?

Mr. Phelim Devine

Yes, the outturn cost was €82 million, including VAT, and the amount of €76.5 million was in the €1.433 billion budget.

Mr. David Gunning

To be clear, that relates to Tallaght and Connolly.

Mr. Phelim Devine

Yes, it is not for Tallaght alone.

Deputy John Lahart

Does that include all the settled claims?

Mr. Phelim Devine

That includes everything - the fit-out budget, design team fees, the prevention of aspergillus works, all the claims and equipping and everything else.

Deputy John Lahart

How much did claims amount to?

Mr. Phelim Devine

I do not have that figure with me. The project overran by €5 million because we had to make additional infrastructure investment in the Tallaght campus. We had to put in a new generator, a new transformer and electrical wiring.

Deputy John Lahart

I appreciate that. I have been to the facility and it is excellent. Did the overrun manifest in the context of claims?

Mr. Phelim Devine

There was some additional money paid for claims over the original contract sum.

Deputy John Lahart

It would be useful to know in regard to the Connolly and Tallaght sites how much of the modest €5 million overrun in the overall cost of €82.5 million was the result of claims.

Mr. Phelim Devine

We can come back and clarify that in a note.

Mr. David Gunning

We provided that information previously so we can do so again.

Deputy John Lahart

Would it be reasonable to suggest that we could correlate the ratio of claims in Tallaght and Connolly to the main build of the NCH? In other words, if claims amounted to 5% of the final figure of €82.5 million, we could correlate that, potentially, to the total overrun cost for the NCH, giving an overrun cost of in or around 5%?

Mr. Phelim Devine

It is very difficult to do that for two reasons. First, all of the three projects are bespoke projects and sit on three different host campuses. Second, the satellite centre projects - the outpatient and emergency care centres - are less complex projects and we had two different procurement models. I would not use a percentage on one to work out a percentage on the other. They have to stand alone.

Deputy John Lahart

They are all with BAM.

Mr. Phelim Devine

All three projects are built by BAM and the monitoring and evaluation, M&E, supply chain is exactly the same, although there are swaps between the children's hospital and the two outpatient and emergency care centres.

Mr. David Gunning

I think the best proxy we have currently is as referred to by Mr. Tierney. BAM is claiming €503 million and the independent employer's representative has valued BAM's claims at €9 million. When we offset from that the savings and the employer's claims of approximately €5.5 million, the net change to the contract as of today - the additional cost to the State - is €7.5 million on the €880 million contract. That is the best indication we can give currently. We cannot give assurance that some of these big claims will not land in BAM's favour, but we are doing everything we can to defend against those claims. I give that assurance.

Deputy John Lahart

I thank the witnesses for that. Mr. Gunning has a background in business. I think it was in Hewlett-Packard. Let us go back to our room to improve analogy. If Mr. Gunning was before Hewlett-Packard's board, the chairman would insist on a final figure. Has the Secretary General of the Department looked for a final figure? Has Mr. Gunning had conversations with the Secretary General and the Minister that he is unable to have with us for reasons of commercial sensitivity? Would that be a reasonable thing to do for the moment? The Minister has to provide the budget. I presume at some stage the Minister or the Secretary General has asked what the bottom line is and how much the State is likely to have to commit here if this is not a bottomless pit. Have those conversations been had? I imagine in the context of a company like Hewlett-Packard Mr. Gunning would have faced requests to cut various areas because the company would not go over its budget. I would welcome a general answer to that.

Mr. David Gunning

That is a very good question. Deputy Lahart may remember that we have provided scenarios and updates to our stakeholders, formerly shareholders, right back to January 2021. We have been engaged in a very intensive process of continuing to update, refine and work to try to quantify and scrutinise each and every one of those cost elements. We are getting to the point where we are able to call it, as Deputy Lahart says we will have been asked to do. I have not had a discussion with the Secretary General for some time. Our day-to-day activities within the development board are with the stakeholders - the people who are here beside us. We are the team that is working this cost forecast for this project through to substantial completion.

Going back to my public company days, the key issues in any project are cost, scope and timeline. They are all related. We have the scope nailed down. We are attempting to nail down the timeline, but we have had some movement in the timeline, mostly for reasons outside of the contractors' control in terms of the headwinds they have faced. We are trying to tie down these variables and once we do that, we can give a very definitive picture in terms of the potential costs for this project, within a reasonable plus or minus. We are approaching that point. We are not there yet but we are arriving at that point. That dialogue is very intensive between us at the moment.

Deputy John Lahart

I was very impressed with the BAM personnel we met, not just from a professional perspective but that many of them have bought in to the project emotionally. That is important to state. I know the new national maternity hospital is probably not going to be as bespoke, but what would Mr. Tierney say if he met the board and was asked for advice on his experience of dealing with pretty significant projects? The reason I ask is that I was a public representative, a councillor, in the years after 1999 when motorway projects began. Companies drove a coach and four through local authorities and the State and there were incredible cost overruns. These companies were experts at making claims. The Government got caught out until 2002 or 2003 when it brought in fixed terms and penalties if projects were not delivered on time.

What we had then was a plethora of contracts that were delivered ahead of time and below the original contracted price. What has been learned from this? I get the bespoke nature of it. We cannot underestimate Covid and the materials cost inflation - maybe someone will be able to account for that - but it appears from the headlines that the cost will exceed expectations. If I understood the CEO correctly, the excess cost right now is €9 million in claims. That is a big sum but it seems that a tight game is being played in the overall cost of it if some of that has been due to court decisions and if those decisions land your way, as was said. The figure we are dealing with is between €9 million and €500 million, which is a big gulf.

Mr. Derek Tierney

The system has learned since 2019. In my response to Deputy Shortall, I said that the public spending code has been adapted to take on board the journey and the learnings. In the case of any project over €100 million, as it goes through a gated process from outline through to post-market engagement, there is now an obligation to layer in an external insurance review at two of the gates. Every project over €100 million is now subject to a Department of Public Expenditure and Reform process, which it calls a major projects advisory group. That seeks to remove as much uncertainty as possible as a project travels through the public spending code to the point of contract award. Full and 100% certainty will never be achieved because that is the nature of the market we engage with and of construction projects over €100 million, but the key learning and what it seeks to do is get as much certainty as possible before we commit to contract. We are tied to public works contracts and they are on a fixed price, lump sum and time-bound basis. That is under review by the Office of Government Procurement under the Department of Public Expenditure and Reform. We await the outcome of that review in terms of that contract form and how we might use it in the context of future developments, whether it is the national maternity hospital, the construction of elective care centres in Dublin, Cork and Galway or future projects over €100 million.

Deputy John Lahart

Has the board been documenting the construction of the hospital from start to finish?

Mr. David Gunning

Mr. Devine can reply on the detail but we have a very significant amount of documentation. For example, in the building itself we take 360° photography on an ongoing basis so we can see every change. We have records and we tie them back to individual rooms. We have the build records and all the other project records and we have photographic evidence of every aspect of the project.

Mr. Derek Tierney

The HSE is inextricably involved in this project and we carry that knowledge forward as we go into relocation of the national maternity hospital and future construction. We have a link from these experiences into future developments.

Chairman

That is an important point and it is important that we are learning from the process, particularly around cost, but in other matters as well. That is a positive message to hear. Before I move on to Deputy Gino Kenny I want to go back to the issue of Tallaght University Hospital and Connolly Hospital Blanchardstown and those claims that were resolved in the High Court. Were the claims hanging on Covid-related issues?

Mr. Phelim Devine

No. The Tallaght University Hospital and Connolly Hospital Blanchardstown contract was agreed; it did not go through the High Court. There was one particular conciliation that was referred to the High Court and that has been discharged but we reached a final account settlement with BAM for that contract.

Chairman

It was not Covid-related.

Mr. Phelim Devine

Only a small aspect of it was Covid. As Mr. Gunning set out, the contractor only recovers time and it did get time for any impact on the project being finished but it did not get money associated with Covid. It was a small contract as well.

Mr. David Gunning

I want to clarify this. Those two cases, one from Connolly Hospital Blanchardstown and one from Tallaght University Hospital, did not appear in front of the judge. They were active and when we reached a conclusion and negotiated the final settlement they were, as a result, discharged.

Deputy John Lahart

What does that mean?

Mr. David Gunning

It means there was a negotiated outcome to these cases rather than fighting it through the courts.

Chairman

Conciliation.

Mr. David Gunning

Claims were referred to earlier and these claims elements were part of the final account. We will provide the committee with the information on the outcome.

Chairman

I am sorry for delaying Deputy Gino Kenny.

Deputy Gino Kenny

No problem. I thank all our guests. The national children's hospital is an important subject. Construction of this hospital has been an ongoing issue in recent decades and it will finally take place. I visited the site a number of months ago along with a number of other Deputies and Senators and it is extremely impressive. When it is finished it will be a major asset to our public health system. Notwithstanding that, there is one big cloud over the whole construction and there is no getting away from the question of cost. I know all our guests have mentioned cost but it staggers the mind how this has spiralled out of control. In 2014 the original cost of the construction of the national children's hospital was €800 million, in 2018 that was quantified to €1.4 billion, in 2022 it is €1.7 billion and I am guessing that the cost will definitely go over €2 billion. All the indications are that it will go over that €2 billion mark, which is an extraordinary amount of money for a hospital.

I do not know if the witnesses can answer the following question definitively: how did people get this so wrong? How did they get the cost so wrong for the construction? We all know construction prices can go over budget over time. We all understand that and Covid was thrown into the environment as well but how could a company get it so wrong? Was it self-inflicted or were the players in the ongoing construction of this project completely unprofessional? How did it go so wrong in the cost?

Mr. David Gunning

I want to reset and make sure we are all dealing with the same set of facts. The approved investment by Government from the end of 2018 for this project is €1.433 billion. That includes the construction contract, which is the BAM works and it includes the additional costs of the development board, the design team and other related charges which come in. Of that €1.433 billion, as of right now €1.13 billion has been spent. We are still below the Government approval, therefore, but there are cost pressures on that. I do not mean to be reminding the Deputy of the following point but outside of that approval there were already a number of items that were not given definitive quanta within that €1.433 billion approval. We had items outside of that, such as inflation, which we have talked about already and which we can go through again. There was the cost of defending the claims, which was significant, and there were additional costs due to Covid and Brexit. There would have been some change in cost due to regulatory change of the design but not much. That is the position and the major contributor to the cost increase as we look forward is delay. The contract is in delay and a lot of discussion can be had on that.

Certainly, there is no doubt that the current construction environment and current set of uncertainties with regard to what Brexit, Covid-19 and other aspects have inflicted on the contract are significant. That will all be fought out as to who has to pay for that in the conciliation and dispute resolution and possibly the High Court. As I have already summarised, at the moment, we see we are responsible for €9 million of that €500 million or so of the costs. Where we are responsible and the contractor has an entitlement, we have paid that money, as we are required to do. That is the actual position.

As I mentioned earlier, as we look forward, there is a process ongoing to look at those additional costs, primarily the ones due to prolongation and how those will be quantified and then ultimately approved for additional capital approval by the Government. That is where things stand currently.

Mr. Derek Tierney

The Deputy mentioned two figures of €1.43 billion and €1.7 billion. The €1.43 billion is the Government-approved capital budget. Over and above that, there is another €300 million to bring the entire programme to €1.73 billion. The €300 million is to allow integration and mobilisation of the services side. A lot of figures are being used so I just want to bring clarity to the relationship between the €1.433 billion, which is for the works only and as my colleague said, within that Government-approved budget of €1.433 billion, there are items to which the contractor is entitled and external factors are now adding pressure to that. Over and above the €1.433 billion, there is an additional allowance to allow mobilisation of services. It is important for anybody watching to understand that relationship.

Deputy Gino Kenny

Is it plausible that this could reach the €2 billion mark? Obviously, if we look at the commentary around this, particularly this year, all indications are that it will. There is a big question mark on this. Is it plausible that this construction could go to the €2 billion mark given all the mitigating circumstances that are involved with this? We all understand they are highly challenging. However, is there a possibility that this could actually go well beyond the figures Mr. Tierney just mentioned?

Mr. Derek Tierney

We advised the Government last year that there will be increased cost as a consequence of delay. That is not news today; that was a stated fact approximately four months ago. I am not going to answer that question definitively for the very reason that the board is engaged in a live commercial environment with the contractor. The contractor has a position on what his entitlement is and the board has equally taken a position on what that is. I do not want to get into a discussion around setting a precedent or giving any signal in terms of a definitive costs. I do not think that would be wise for the Exchequer at this stage.

Deputy Gino Kenny

Is it plausible?

Mr. Derek Tierney

As I said, we have advised Government that as a consequence of delay, there will be additional cost. I am not going to quantify that today.

Deputy Colm Burke

I thank the witnesses for their contributions to date. Both Tallaght and Connolly hospitals are finished and up and running and doing very well. Looking outside of Dublin, because all the focus with regard to children's healthcare has been very much about Dublin, we have now got planning permission for the paediatric unit in Cork. Where are we with regard to going forward with the project in Cork now? While the focus has been totally on Dublin, there are 731,000 people now living in the Cork and Kerry region alone. There has been a huge growth of population in Cork over the last ten or 15 years. Is Cork now going to be put on the back burner for another ten years? Can we get a definitive timeline for when we can move forward with the project in Cork?

Mr. Eamonn Quinn

I thank the Deputy for his question. The answer is that we recognise the Dublin-centric model, which the Deputy mentioned, but that has been on the basis that we are developing a unique hospital on a national all-island basis, as has been referred to by some members of the committee. That is necessarily developing a hospital for the whole of Ireland and all the children of Ireland on 39 clinical specialties. Supporting mechanisms have been put in place in terms of the models of care for the satellite centres. The Deputy is quite right that there is a need and demand around the country, not just in the Cork region but elsewhere in the country in terms of delivering a pediatric model of care. Much work is ongoing in terms of scoping that out and speccing out what that pediatric model of care looks like as it links into the central hub around the new children's hospital.

Deputy Colm Burke

One of the things we do not want is a situation where people have to go to Dublin when we can provide care in Cork if we have the facility. The problem we now have with the pediatric unit in Cork is that it is no longer adequate for the population in the area. We have got planning permission. The issue is not that we need to get planning and do a design. That is all done. All the homework is done. The question now is when we can put it on the list for moving forward to construction stage.

Mr. Eamonn Quinn

With respect, all the homework is not done just yet. As the Deputy pointed out, the design piece and planning permission are in place. As my colleague, Mr. Tierney, pointed out, however, there is a new updated public spending code requirement in terms of a phase of decision gates to move through. I am aware that a strategic assessment report is being developed at the moment and that is the first point in the public spending code cycle for the development of any new major infrastructural investment. That process is being moved through.

I would not like to prejudice today the outcome of those gates and processes. As I understand it, however, the first rung of that ladder is under way. The Department has not received that strategic assessment report yet. The fact that such an advanced design is in place and that they have gone for planning permission is very encouraging in terms of the homework.

Deputy Colm Burke

There is, however, a challenge for the people working in the present paediatric unit in Cork in that they do not have the same access as regards the care they should be able to provide because they do not have an updated facility. What I am saying is that more and more people are being referred to a central hub when, in fact, we should be able to care for them in the hospital in Cork.

Mr. Eamonn Quinn

I hear what the Deputy is saying. There is a piece of work under way in terms of developing and driving that through. However, there is a very clear process under way as well in terms of determining that on the back of this process.

Deputy Colm Burke

On the timeframe then, is Mr. Quinn-----

Mr. Derek Tierney

We will provide the Deputy with a note after the meeting to give him some certainty around where we are and the next steps.

Deputy Colm Burke

We are also looking for an elective hospital in Cork that seems to keep being pushed down the road. Again, it is about growth in population, not only in Cork but in the entire Munster region. More and more referrals are being made to Dublin because of the fact that we are not developing outside of Dublin. We are putting €2 billion, in real terms, into the development of paediatric facilities in Dublin and we are doing nothing outside of Dublin. That needs to be dealt with.

Mr. Derek Tierney

I take the point. We commit to coming back with a note on the elective facility. We will shortly be coming to Government on that to bring certainty to both Cork and Galway and then follow up with Dublin.

Deputy Colm Burke

Okay. I thank Mr. Tierney.

Deputy John Lahart

I have been looking back on previous meetings we had. The witnesses must know they are close to being out through the gap when they start fielding questions about what happens after this project is completed and when Cork and other regions will be looked after. I kind of articulated that at the start. There is a question of what if something goes wrong now; one of those unforeseen things. This is probably one of the easier sessions the witnesses have had before this committee, which I think is because the public are beginning to see it just as we have seen it. Mr. Devine mentioned a project with 4,400 rooms.

Mr. Phelim Devine

There are 6,000 spaces and 4,600 clinical rooms.

Deputy John Lahart

It is 4,600 clinical rooms. The project is over the hill in that sense but that is not a cause for complacency. There are still difficult questions to answer. I will not congratulate the board yet but I think its representatives have handled themselves reasonably well today. There may be people in the media or other commentators who do not agree.

The witnesses have a big responsibility in developing the site. The visit to the site helped to join many of the dots and gave me an overall impression. I do not know where a project manager starts work every morning on a project of this scale. It is truly phenomenal. There must be a couple of thousand miles of cables in the building.

When Tallaght University Hospital was finally opened it was so long overdue that it was discovered many of the required utilities in it did not fit because they had all changed in the intervening period. Nothing like that has happened with this project, has it?

Mr. Phelim Devine

No, thankfully. We spoke earlier about future-proofing the hospital so that nothing would come at us from left field. We believe we have a good balance. We have just finished full procurement of the very sophisticated hospital equipment. There was a real balance to be struck between making sure we had it procured on time to properly integrate it in the hospital and not in any way impact the construction works and getting the best equipment for the children of Ireland. I believe we have achieved this. I am glad to say that for all the equipment we purchased we had fantastic vendors involved. We have had a very successful outcome on purchasing this sophisticated equipment. The clinicians are very happy.

Deputy John Lahart

Given the emphasis the State puts on data centres and the manner in which the technology sector dominates the conversation in Ireland, particularly as inward investors, the number of jobs it provides and the amount of corporation tax revenue it provides, the State is a very slow adapter to cloud technology. Where will this project be at?

Mr. Derek Tierney

I think we have seen a shift. At the start of this year, the Government published the Harnessing Digital framework, which is about leveraging digital to make the economy more resilient and take every opportunity. In 2020 or 2021, the Office of the Government Chief Information Officer published new guidance for public sector entities on leveraging cloud. It is being mainstreamed. In this development and other projects I am working on, we see, even in the HSE, a move to cloud because it provides resilience. I am not sure it is a barrier. In the HSE and in this programme, we are leveraging cloud as we build the digital capability in the provision of paediatric services. Generally, leveraging digital throughout the health service-----

Deputy John Lahart

To go back to-----

Mr. Derek Tierney

We are mainstreaming cloud.

Deputy John Lahart

I thank Mr. Tierney. The report into the cyberattack on the HSE showed the most resilient aspect of the HSE was the cloud.

Mr. Derek Tierney

Yes.

Deputy John Lahart

Is this hospital bullet-proof with regard to records?

Mr. Derek Tierney

To the best of my knowledge the vendor, Epic, will have a cloud-hosted solution. I will confirm this by note.

Deputy John Lahart

This is quite significant because of the impact.

Mr. Derek Tierney

It is.

Deputy John Lahart

We know from the CEO of the HSE that the cyberattack had more of an impact than Covid.

Mr. Derek Tierney

Correct.

Deputy John Lahart

We also know from the report that what was resilient in the HSE's information technology was the cloud. I will be looking out for the report. Ms Eilísh Hardiman told us when we were there that it will be groundbreaking with regard to patient records.

Mr. Derek Tierney

Yes. I will provide a note on it.

Deputy John Lahart

Good.

Mr. Martin McKeith

I want to add with regard to electronic healthcare records that part of the procurement was to ensure the provider would always operate the most up-to-date version of the software to provide additional resilience and protection against cyberattack.

Chairman

I do not know whether I agree with my colleague about being over the hill but we are over the meeting. I thank the representatives from the National Paediatric Hospital Development Board, the Department of Health and the HSE for their assistance to the committee on this important matter. This has been a good engagement. For people listening at home, many questions have been answered. There are still questions, particularly on the cost. Previous meetings have been focused on the cost and claims. In fairness to members there is no point in pursuing these if we cannot get the answers. This is why people moved on to other issues. The meeting has been very useful.

I wish the witnesses well with the project. It is very important for the Irish people. There has been some discussion about the lack of investment in other regions. This hospital is for people on the whole of the island. We need to keep stressing that it is for everyone and not for one region. It is based in Dublin but it is for children all over Ireland and that is very important. At some stage, we may take up the invitation to visit the project again as such visits give us a sense of how it is moving forward. I visited the campus in Tallaght. It is forward-looking and positive work is going on. It is delivering for children, which is the most important thing. I wish the witnesses well in their important work.

The joint committee adjourned at 12.06 p.m. until 9.30 a.m. on Wednesday, 12 October 2022.