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National Children's Hospital Expenditure

Dáil Éireann Debate, Thursday - 18 April 2019

Thursday, 18 April 2019

Questions (1, 2)

Barry Cowen

Question:

1. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform the level of engagement his Department will have in developing an implementation plan for the recommendations from a report (details supplied) on the cost overruns on the national children's hospital; and if he will make a statement on the matter. [18078/19]

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Jonathan O'Brien

Question:

2. Deputy Jonathan O'Brien asked the Minister for Public Expenditure and Reform the number of quarterly progress reports submitted to the Department of Health for the national children's hospital that have been audited by his Department; and if he will make a statement on the matter. [18076/19]

View answer

Oral answers (10 contributions)

Regarding the national children's hospital, we might have had an apology on the part of the Government but we have not definitively had accountability on its part for the debacle that was, and is, the children's hospital. The PricewaterhouseCoopers, PwC, report concluded that the definitive business case did not adhere to the public spending code. What can the Minister and his Department do, if anything, when the public spending code is breached, first before the finalisation of a definitive business case and, second, after the business case has been finalised? What level of accountability exists between him, his Department and other Departments in similar cases?

I propose to take Questions Nos. 1 and 2 together.

The management, delivery and oversight of individual investment programmes and public services within the agreed allocations are a key responsibility of every Department and Minister. With this in mind, the monitoring of the national children's hospital project, including regular progress reports, is a matter in the first instance for the Minister for Health and the Department of Health.

On 9 April, the Government published the report on the independent review of the escalation in national children's hospital costs carried out by PwC.

The report acknowledges that the national children's hospital is a project which is unique in scope, scale, and complexity in comparison with any other health infrastructure project in Ireland's history and is explicit in stating that the project's complexity should not be understated. However, the report did identify a series of weaknesses in set-up, planning, budget, execution and governance.

The PwC report made 11 recommendations to address issues of planning, budget execution and governance relating to the national children's hospital, and the Government has accepted these recommendations.

Nine of the recommendations relate to the specific execution, oversight and governance of the hospital, on which my colleague, the Minister for Health, is currently preparing an implementation plan. The other two have a wider application to capital infrastructure projects generally.

My role is to oversee the national development plan, NDP, up to 2027 and to maintain the national frameworks such as the public spending code, within which Departments operate to ensure appropriate accounting for and value for money in public expenditure.

To support the efficient implementation of the NDP, we have put in place the following measures: the establishment of a construction sector working group; a Project Ireland 2040 delivery board of Secretaries General; the establishment of an investment projects and programmes office; the publication of a capital projects tracker; and a capability review of public sector bodies. The public spending code is being reviewed in tandem with the review of the construction procurement strategy as part of the ongoing reform of our capital management systems. The reviews of the public spending code and the construction procurement strategy will strengthen existing guidelines on key areas of project delivery, including cost estimation; development of business cases; governance and project roles; and quality of information, risk identification and mitigation.

The revised central elements of the public spending code relating to the appraisal and management of public capital projects will be published before the summer. Further technical guidance building upon these central elements will follow in the second half of 2019 and into next year.

I thank the Minister for his response. I have not seen it in written form yet, and there is much detail contained in it regarding various groups and bodies he has put in place in his efforts to seek to adhere to the likes of the recommendations contained in the report. Focusing on recommendations Nos. 10 and 11, which relate to other capital infrastructure projects, is he convinced now that the standards to which business cases must adhere are more clearly defined? Has he reviewed or audited which business cases were in place? Does he now have criteria such that he is convinced that these business cases will be more robustly enforced, as indicated and sought by the PwC report?

My answer, when the Deputy sees it in written format, will slightly fill out some of the points I have made to him. I am clear that with business cases being developed now, particularly in the aftermath of the great challenges and difficulties we had with the national children's hospital, I am seeing two features in place more and more. First, I am seeing the costs in place refer to projects after they have been tendered or with far greater certainty and clarity as to what the likely cost will be. The second factor I am seeing is more and more recognition, particularly for very big projects, of the complexity and risk and, because of this, the contingency cost. I am seeing more of this in place but I also believe we need to keep on challenging ourselves to see whether both these factors are as realistically in place as they need to be. This work is under way.

Is the Minister satisfied that he will more robustly challenge, analyse or scrutinise the recommendations that emanate from various groups to these boards? Ultimately, it is his decision as a member of Government to make the recommendation for Government to accept a recommendation that emanates from these boards. They are supposedly at arm's length from political decisions, and I understand that, but the Minister has a responsibility on behalf of the taxpayer and the Government to ensure that taxpayers' money is well spent and that those who represent the taxpayer on these boards have a line of communication for which, ultimately, he is responsible. This was clearly lacking in the case of the children's hospital, as became clear during the course of the investigation.

My Department and I play a role in appraising and further understanding cost-benefit analyses that come into our Department. However, this is the case not just with analyses that come in from independent boards, but also with those that come in from Departments.

To respond to the Deputy's second question about the participation of officials of mine on boards, we have seen a greater clarity now regarding the roles and responsibilities that individuals should have when they are on these boards. I have a small number of officials who may serve on boards of other projects. I continue to be of the view that their first line of reporting should be to the line Minister for a given project.

My experience of the national children's hospital project has reaffirmed that to me. We have all drawn many lessons from the difficulties that have developed with that project, however.

Turning to the quarterly progress reports that are going to be forwarded to the Minister's Department for any projects costing more than €20 million, how will those reports be handled when they come into the Department? What will the process be? Will they be reviewed every quarter? If I recall correctly, the Minister stated last night that the reports will be put on a tracker on the departmental website. Will the Minister give us some information on what happens when those progress reports come into the Department and where they go from there?

As I stated to Deputy Jonathan O'Brien in our debate last night on the national children's hospital project, when information comes into the Department regarding the delivery of the project it feeds into an online tracker. That is available but we are going to publicise it further in the coming weeks. I have to decide whether we need to go beyond that. Having quarterly reports come into my Department for every single project costing more than €20 million would result in a vast number of reports coming in. I do not mean to diminish the point made by the Deputy. I would be concerned, however, that having so many reports coming in would diminish the responsibility of the line Departments which, first and foremost, have responsibility for projects. I have to make a final decision on this matter but in the interim we are feeding everything into the tracker. That tracker will be available to the public and it will include information on what is happening with a project, when and the current status of planning and construction.

I agree that the Department would be crippled if progress reports came in for every single project costing more than €20 million. To have some confidence, however, in the progress reports coming in and being put on the tracker, we have to ensure there is sufficient expertise within line Departments to ensure all relevant information is forwarded. If there is an issue, a red flag should be raised and that should be brought to the attention of the Minister. We would at least know then that a difficulty, or a potential for difficulty, with some projects will be raised with the Minister's Department at the earliest opportunity.

I appreciate the Deputy recognising the scale of information that might come into my Department. I expect that any red flags regarding a project will be flagged to my Department. Many different difficulties develop with many projects along the way, however, though none on the scale of what we are now dealing with in respect of the national children's hospital project. It is first and foremost the responsibility of Ministers who receive budget allocations from the Department of Public Expenditure and Reform to make sure they live within those allocations and deal with issues regarding projects for which they are responsible. As I will state in a later response to a parliamentary question from Deputy Cowen, my Department plays a major role at the start of the project, particularly in the cost benefit analysis aspect. Once that is approved by Government, it is then up to individual Departments to deliver on their commitments.

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