Wednesday, 13 March 2019

Questions (211)

Bernard Durkan


211. Deputy Bernard J. Durkan asked the Minister for Health the degree to which precise costings have been identified in respect of the new children’s hospital with particular reference to the need to ensure that the hospital when completed will be in line with best international, modern practice; and if he will make a statement on the matter. [12613/19]

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Written answers (Question to Health)

The vision for the children's hospital project remains to provide modern and appropriate infrastructure to best serve the needs of children, their families and the staff who care for them.

The National Paediatric Hospital Development Board (NPHDB) has statutory responsibility for planning, designing, building and equipping the new children's hospital and outpatient and urgent care centres. The size, complexity and specialist nature of the new children's hospital project informed the decision by the NPHDB to adopt a two-stage procurement process comprised of:

Procurement Stage 1: A full tender and contract for Phase A (below ground including basement works) on the basis of a detailed design with the tendering of Phase B (the main above ground works) on a Preliminary 1st stage design with an approximate and remeasurable bill of quantities reflecting the Preliminary 1st stage design. Contract Awarded to main and specialists contractor 3rd August 2017.

Procurement Stage 2: While the basement Phase A works were under construction, the 2nd stage detailed design for the above ground Phase B works was completed with a full bill of quantities priced at the 1st stage Preliminary design tendered rates. Phase B works instructed 8 January 2019.

That procurement approach resulted in estimated 2-year saving in total project delivery time, and brought issues on cost to the fore, and to be resolved, much earlier in the life of the project than is the case where traditional procurement approaches are deployed.

Following completion of the second stage of the two-stage tender procurement process in November 2018, the capital build cost of the project is now at €1.433b. There is also additional investment from other sources associated with broader programme which is outside of these capital costs. This relates to investment in ICT and the Electronic Health Record rollout funded through the ICT capital programme, the comprehensive Children's Hospital Integration Programme which is well underway, funded through revenue, to ensure the successful clinical and operational merging of three paediatric hospitals, pre-2013 project expenditure relating to the former Mater project, and the planned construction of the Children’s Research and Innovation Centre to be funded through philanthropic funding.

In relation to cost certainty , the Guaranteed Maximum Price (GMP) procurement process agreed with the contractors requires the contractors to take all risk for quantities following completion of the GMP process, and, as per the contract, limits their recovery of additional costs incurred by them to clearly defined scope changes, in excess of 4% inflation (as per the average of three published tender price indices) which may occur post July 2019 and changes in legislation (e.g. VAT, PRSI, statutory labour rates, building regulations). Other than in respect of exclusions, the GMP ceiling cannot be exceeded with any amount in excess not recoverable by contractors.

As the Deputy will be aware, in light of the concerns over the major and sudden cost escalation associated with the finalisation of the GMP, Government also approved the commissioning of an independent review of the escalation in cost at the same time. As part of its Terms of Reference, the review will comment on the major residual risks and the robustness/completeness of the current forecasts and, where possible, quantify those risks contractually excluded from the GMP/adjusted contract sum.