National Paediatric Hospital Development Board: 2019 Financial Statement (Resumed)

Apologies have been received from Deputies Dillon, Hourigan, MacSharry and Munster. I welcome everyone to the meeting. Due to the situation with Covid-19, only the clerk, support staff and I are in the committee room. Members of the committee are attending remotely from within the precincts of Leinster House. This is due to the constitutional requirement that, to participate in public meetings, members must be physically present within the confines of the place where Parliament has chosen to sit, either Leinster House or the Convention Centre Dublin. I ask members to confirm their location before contributing to ensure we are adhering to that constitutional requirement. The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness and is attending remotely.

Today we engage with officials from the National Paediatric Hospital Development Board and the Department of Health. This engagement is a continuation of our meeting in February and we will resume our examination of the board's 2019 financial statements.

We are joined remotely from outside the precincts of Leinster House by officials from the board: Mr. David Gunning, chief officer; Mr. Phelim Devine, project director; Dr. Emma Curtis, medical director; and Mr. Jim Farragher, finance officer.

We are also joined remotely from outside the precincts of Leinster House by officials from the Department of Health: Mr. Derek Tierney, assistant secretary of health infrastructure and Ms Fiona Prendergast, acting director of health infrastructure. All of the witnesses are very welcome.

When we begin to engage, I ask members and witnesses to mute their devices when not contributing so that we do not pick up any background noise or feedback. As usual, I remind all in attendance to ensure their mobile phones are on silent mode or switched off.

Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give their evidence from within the parliamentary precincts is protected, pursuant to the Constitution and by statute, by absolute privilege. Today's witnesses are giving their evidence remotely from a place outside the parliamentary precincts and as such they may not benefit from the same level of immunity from legal proceedings as a witness physically present. Such witnesses have already been advised of this and may have thought it appropriate to take legal advice on this matter

Members are reminded of the provisions within Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

To assist our broadcasting service and the Debates Office, I ask that members direct their questions to a specific witness. If the question has not been directed to a specific witness, I ask each witness to state his or her name the first time that he or she contributes.

The Comptroller and Auditor General, Mr. Seamus McCarthy, delivered his opening statement on the board's financial statements in February and it was recirculated to the committee before this meeting. Will the Comptroller and Auditor General wish to address it again?

Mr. Seamus McCarthy

The Chairman can take it as read.

I thank Mr. McCarthy. I will now invite Mr. Gunning to make his opening statement. I hope Mr. Gunning will appreciate that, unfortunately, we have limited time due to the restrictions. We are limited to two hours. As detailed in the letter of invitation Mr. Gunning will have five minutes to make his opening statement.

Mr. David Gunning

I thank the Cathaoirleach for his invitation and welcome. I thank the committee for inviting the National Paediatric Hospital Development Board, NPHDB, today via video link to provide an update on the construction progress on the new children’s hospital. I am the chief officer at the NPHDB and I am joined this morning by Mr. Phelim Devine, project director; Dr. Emma Curtis, medical director; and Mr. Jim Farragher, finance manager.

The National Paediatric Hospital Development Board was appointed in 2013 to design, build and equip the new children’s hospital on the campus shared with St. James’s Hospital in Dublin 8, and two paediatric outpatient and urgent care centres Children's Health Ireland, CHI, at Connolly, Blanchardstown, and Children's Health Ireland, CHI, at Tallaght. The national children's hospital project, NCH, a government priority, will have a significant impact on the healthcare outcomes of 25% of the population once completed and is the most significant single capital investment project in the healthcare system ever undertaken in Ireland. It will bring together the services currently provided at the three children’s hospitals into one modern, custom-designed, digital hospital where staff will deliver the best care and treatments to Ireland’s sickest children and young people.

The NPHDB’s 2019 accounts were audited and approved by the Comptroller and Auditor General on 17 June 2020. The expenditure as of 31 December 2019 for that year on the design and build of the hospital was €199,622,610. The NPHDB’s 2020 accounts are currently being audited by the Comptroller and Auditor General and will be finalised shortly. We have provided in the statement a brief table showing the 2019, 2020 and cumulative to the end of 2020 expenditure.

I will now turn to the construction update. The new paediatric outpatient and urgent care centre, CHI at Connolly was opened in July 2019 and is already fully operational. On the CHO Tallaght update, it is a priority for the NPHDB and indeed all stakeholders to open the paediatric outpatient and urgent care centre at Tallaght in 2021 and we are pleased to report that we are on target to do that. Members will see from the images distributed as part of the briefing pack that construction work on the 4,600 m2 centre is nearing an end with a substantial completion date scheduled for September 2021. It will then be handed over to Children’s Health Ireland to open for services after an eight-week period of operational commissioning and equipping. The works at Tallaght are nearing completion.

Final internal works comprise painting, commissioning, cleaning and snagging. External works comprise final pavements and landscaping. The work on the OPD centre at Tallaght included a significant investment in the adult hospital which involved the delivery of a new changing and administration block, a new creche and the upgrade of roads, pavements, car park and electrical infrastructure.

Progress on the main new children’s hospital is also continuing at pace. The primary concrete frame was completed in March 2021. The infill concrete slabs over the steelwork frame closing in the concourse will be completed by August 2021, as will the unitised glazing to the ward block at levels 4 to 6. The façade will be complete by the end of 2021, with the glazed biome that links the building to be completed by the end of the first quarter of next year. The fit-out of the south finger rooms, comprising outpatients, cardiology and therapies, and the hot block rooms, comprising emergency department, imaging, critical care and theatres, are progressing well. The remainder of the fit-out of the north finger rooms, comprising outpatients, the hospital school, third level education, parent overnight accommodation, pharmacy and the ward block rooms, will commence in the next month. The primary mechanical and electrical plant, comprising boilers, combined heat and power plant, generators, transformers, main distribution boards and medical gases, are well progressed, with the focus now on primary and secondary distribution around the site.

On equipping, some of the group 1 medical equipment, such as theatre and critical care pendants, are currently being installed. The group 2 equipment, comprising automated guided vehicles and clinical decontamination unit equipment, is in procurement. The balance of the group 2 equipment, such as MRIs, CTs and other advanced diagnostic equipment, will commence procurement in the next quarter.

Sustainability is embedded in the design of the new children’s hospital. The hospital very recently received a BREEAM excellent rating in design and is one of only a small number of hospitals in the world to have achieved such a rating. BREEAM is the world’s leading sustainability assessment method for major projects.

On the topic of wider construction sector challenges, the global pandemic, Covid-19, has disrupted the construction sector and all its supply chains both nationally and internationally. The NCH project has not been immune to this. In 2020, both the construction of the new children’s hospital and the Tallaght outpatients and urgent care centre were closed for a period following the arrival of Covid in Ireland. In 2021, the sites remained open during the level 5 lockdown. The contractor introduced extensive health and safety measures, which include weekly screening and PCR testing for all workers, and more than 5,000 tests were conducted during the month of June.

It is acknowledged by all stakeholders that Covid and Brexit will likely place pressure on the availability of essential supplies in the market globally. The construction sector is facing challenges related to the supply of market essentials as a result of increased global demand and shortages driven by Covid-related factory shutdowns, production disruption and inventory depletion. In addition, it is reported that there are Brexit-related import delays and constraints. This is a global challenge, one that is not unique to the construction sector, but one that will have potential impacts on the project, with cost and lead time uncertainty. The contractor continues to work through these challenges and will manage the risks.

With regard to the timeline, as outlined to this committee in December 2020, there are delays to the programme of works. We have previously reported to the committee that we did not have a compliant programme from the contractor. I am delighted to be able to report to the committee that a compliant programme was submitted by the contractor in March 2021 and has been determined by the employer’s representative, ER. This, in itself, is a major milestone for the project. With over 40,000 separate activities to be completed over the course of the build, the programme details each and every one, ensuring that it is in the right sequence and at the right phase of the build. By determining the programme as compliant, the ER has essentially confirmed that it is feasible to complete the construction phase within the timeframe set out. This is only feasible if the project is executed and resourced efficiently by the contractor and its subcontractors, and if all other external factors, including Brexit and Covid, do not impact on supply issues and goods and services. The compliant programme takes account of the known delays, and all stakeholders are fully aligned around the goal of opening the hospital in 2024. The NPHDB and the main contractor are engaged in a series of workshops to map out the detail within the programme to take account of the risks that remain and to make every effort to ensure that the target date can be achieved.

As part of the combined effort to achieve delivery of the programme within the shortest timeframe possible, all dispute mechanisms have been paused for a period of time. This moratorium has been agreed, which enables the parties to focus all their efforts on ensuring that the new target completion date can be realised. This does not remove the risk of claims, nor does it mean that we will not continue to receive claims. Claims will continue to be determined by the employer’s representative as set out in the contract. We have provided an information document as an appendix to this document setting out the current position with contractor claims on the NCH and on Tallaght.

With regard to cost, the Government approved an investment decision of €1.433 billion for the project. This investment decision excludes items where there was no price certainty, nor can there be certainty for the duration of the project. These include construction inflation, statutory changes, any change in scope resulting from healthcare policy changes and also the sectoral employment order. While we now have a compliant programme, the target completion date for the programme is 14 months later than that set out within the contract. Any elongation of the programme will lead to additional cost. There are potential cost implications in regard to Covid-related delays, costs associated with additional health and safety measures, as well as ongoing claims that have the potential to contribute to the overall costs. These matters, as well as those associated with any change to the programme duration, are currently subject to commercial mechanisms and are part of the live contract that exists between the NPHDB and BAM, the main contractor. Therefore, I am not in a position to elaborate further at this time as it could compromise our ability to negotiate on behalf of the State. There is an extremely high likelihood that any discussion on costs, however hypothetical, would prejudice enforcement of the existing contract and very likely negatively impact or jeopardise our current engagements with the contractor.

On project governance, the NPHDB reports to the children’s hospital project and programme, CHP&P, steering group on a monthly basis, providing comprehensive updates on risks to costs and programme, including all aspects of the project. We also report to the CHP&P board. We continue to work closely with officials in the Department of Health and the HSE, as well as with colleagues in Children’s Health Ireland.

In conclusion, the children’s hospital is taking shape and the outpatients centre at Tallaght is nearing completion. Significant progress has been made, as is evident from the photographs and video that we have provided. The project continues to have challenges. However, we are moving forward with a spirit of co-operation with the main contractor and with all of our stakeholders to ensure that this badly needed hospital is delivered as soon as possible. I look forward to answering any questions the committee members might have on the project.

Thank you. I call Ms Fiona Prendergast. We have a copy of her statement. Due to the timeline we are operating to, she might give a brief summary of the statement, in particular the parts of it that pertain to the national children's hospital. I am sorry to put her on the spot but we are working to a tight timeline.

Ms Fiona Prendergast

I thank the committee for inviting the Department to join the National Paediatric Hospital Development Board to assist the committee in its resumed examination of the 2019 financial statements. I am director in the health infrastructure division. I was hoping to be joined by my colleague, Mr. Derek Tierney. He is having some connectivity issues and, hopefully, he will join us shortly.

I acknowledge that the committee has requested a detailed update on the current status. The Department has previously written to indicate there are commercial sensitivities and elements which are confidential due to the fact there is a live contract in place, and there is an extremely high likelihood that any discussion on costs, however hypothetical, would prejudice engagement between the parties and could very likely negatively impact or jeopardise this project.

The children’s hospital is the most significant capital investment programme ever undertaken in Ireland’s healthcare system. It is a Government priority project and will bring together the services currently provided at three children’s hospitals into a modern, custom-designed, world-class digital hospital to deliver the best care and treatments for Ireland’s sickest children.

Despite the obvious challenges the Covid-19 pandemic has imposed on us all, significant progress has been made on the project. Mr. Gunning and colleagues have spoken to the specifics but the distinctive shape of the building is now clear. The fit-out of certain internal areas has begun and rooms and clinical areas now discernible. On a recent site visit, we got a real sense of how welcoming an environment it will be for children, their families and CHI staff, with lots of natural light and break-out spaces in addition to the world class health facilities.

I understand that committee members will be visiting the site tomorrow and will see at first hand the progress on the ground. It it will become clear to members that this is not just a hospital. It is effectively a new village to provide for Ireland’s sickest children, their families and the healthcare professionals who will care for them. There will be gardens, recreational facilities, a school for the patients and a university campus for future healthcare professionals.

One of most impressive aspects for us is the seemingly endless corridor on the theatre level that will be home to 22 world-class theatres and the respective prep rooms and anterooms. With the mock-ups of how the various rooms will be completed, there is a tangible sense of the positive clinical care experiences that patients and their families will have in the new hospital. I hope members will see that the vision for this new hospital is being realised and will garner an appreciation of the scale and complexities of the project, as we did.

The paediatric outpatient and urgent care centre at Connolly Hospital Blanchardstown opened in July 2019. From 4 January to 7 May of this year, approximately 2,500 children presented to the centre at Connolly. Approximately 96% of children are discharged home after their first visit. A small number are transferred for further investigation and treatment at Temple Street, Crumlin and Tallaght hospitals. The average amount of time spent by patients in the urgent care centre is 102 minutes. This is the time it takes from registration to being discharged after being seen and receiving the appropriate treatment from a doctor. The efficacy of this new facility, despite the challenges of the pandemic, speaks volumes.

The second satellite centre at Tallaght will open before the end of this year. This opening of the second of the three new campuses will be another important milestone in the NCH programme and in the delivery of children’s health services.

As already stated, the members of the committee also expressed an interest in the timeline and projected costs for the completion of the hospital. The Department acknowledges the responsibilities and duties of the Committee of Public Accounts and the interest of members in such matters. As the committee will be aware, a thorough analysis of the project was sought by the Minister for Health in the summer of 2020 to consider the optimal way forward for the completion of the project. I must advise that the analysis remains ongoing and the Department continues to work closely with the NPHDB towards its completion. As this analysis relates to the best way forward on a project that is subject to a live contract, it is commercially sensitive and must remain confidential for an extended period. A definitive update on costs cannot, therefore, be provided and it would be inappropriate and likely detrimental to the project to speculate on these.

Following the completion of this analysis and submission to the Minister for Health, who commissioned it, an update on the position will be provided to the relevant stakeholders, where appropriate, in light of the commercial sensitivities. I am pleased to say, however, that the development board is providing an update in relation to the timeline. In addition to this ongoing analysis, the NPHDB and the main contractor are currently working together to identify possible obstacles to the timely completion of the project. To allow this process to continue unencumbered and without distraction, both parties have agreed to a period of moratorium on claims. This ongoing moratorium applies to conciliations, adjudications and High Court proceedings. This will allow both parties to dedicate all their energies towards delivering the project as quickly as possible and is very much welcomed by the Department.

While there is demonstrable progress, there are also challenges associated with the project. Many of these are not specific to this project, however. We are still in the midst of a global pandemic. While work on NCH sites continued through the lockdown earlier this year, the National Public Health Emergency Team, NPHET, is advising that we should expect a significant wave of Delta variant transmission and we must anticipate the many challenges this pandemic will continue to present. Indeed, the wider construction industry is challenged by supply chain issues and dramatic price increases. This was reflected in the recent national economic dialogue where it was noted that the pandemic and Brexit are impacting the economy and productivity and creating bottlenecks in the context of supply. These challenges face the children’s hospital project too, and notwithstanding the commercial sensitivities, makes speculation and definitive forecasting of costs and timelines even more unwise.

Nevertheless, reflecting the positives, we now have paediatric outpatient and urgent care being delivered at Connolly, a site at St. James's that is progressing well, with constructive engagement between the development board and its main contractor, and a new paediatric outpatients’ facility at Tallaght University Hospital is coming online later this year.

The lead speaker today was to be Deputy Hourigan but she is absent. I propose that we divide the Deputy's time among other members. This will mean that they will now have more than the usual five minutes. Is that agreed? Agreed. Deputy McAuliffe is listed as the second speaker. He has ten minutes. I propose to give every other member six minutes and then see how we go. We will try to get in a second round of questions.

I thank the Chairman. I will change my timer so I do not run over. I welcome the witnesses. Given that the witnesses appeared before the Joint Committee on Health recently, in many ways this is the replay. I hope we all have a better match than we had on 7 July.

There is huge frustration in respect of this project. Forums like the Committee of Public Accounts give those people responsible for delivering projects the opportunity to give the public confidence in what is happening. I will begin by asking Mr. Gunning about the issue of claims. There is a realistic expectation that we would know the maximum possible exposure the State would have in the construction of this hospital. How many claims are outstanding and what is the value of them?

Mr. David Gunning

I thank Deputy McAuliffe. I draw his attention to the table we provided to the committee to assist in answering this particular question. An introductory remark would be that claims are a part of construction contracts. If the contractor considers that there should be an extension of time or an adjustment to the contract sum or if the contractor has any other entitlements in connection with or under the contract, the contractor submits a claim. That is where the claims come from. I am speaking here about the national children's hospital. The table on the second page of the attachment outlines the current situation with claims relating to the NCH project. I will talk members down through the table, which gives numbers but it also gives us a chance to talk about the process. The number of claims notified for determination by the employer's representative, ER, on the NCH project is 906.

Could Mr. Gunning separate them for me between those made by the contractor and those made by the development boards?

Mr. David Gunning

These are primarily all contractor claims. The figure is 906.

Do they include claims made by the development boards?

Mr. David Gunning

No, these are contractor claims.

Mr. David Gunning

Substantiated claims are then issued for determination. There is a process of substantiation and some iteration around the claims process as clarity is brought to each individual claim. The number of substantiated claims is 749. That is the number the ER could pass judgment on. That is the number submitted with all the details provided. The number of claims that the ER has determined, and this is an independent determination process, is 631. The next figure to note, which relates to the number of ER claims determined that are disputed and referred to the project board and conciliation, is 549.

Of the 631 claims, 549 have moved into the conciliation process. There is a formal referral to conciliation required as part of that process. In terms of what has emerged from the conciliation process, the number of disputes that are agreed and no longer in dispute management is nine of that 541. To return to the start, there are 906 claims. In regard to the nine disputes, the value in terms of the impact on the contract sum of those nine is €2.9 million, inclusive of VAT. The purpose of this table was to clarify these particular issues and to also set out some of the process. I hope that is helpful.

Mr. Gunning has given us the detail of the response he gave to the Joint Committee on Health in regard to a handful of claims, which he suggests is nine. My question was what is the total value of the outstanding claims?

Mr. David Gunning

Let me be clear, a claim is not a liability on the contract. It is a claim by the contractor and it only becomes a liability when it impacts the contract sum, that is, it is agreed or it is the subject of a court proceeding or conciliation process.

I appreciate that. I am seeking the total value.

Mr. David Gunning

The total amount of claims is €446 million. The value of the 900 claims as submitted by the contractor is €446 million approximately.

The total outstanding claim is €446 million. That is in addition to the €1.4 billion which was indicated. I ask Mr. Gunning to link those two figures.

Mr. David Gunning

That is correct. The sum claimed is additional to the contract sum.

That is the value of the 906 claims. I accept Mr. Gunning's point that they may not go this way, but at this point the upper limit in terms of the exposure could bring the cost of the project to in the region of €1.9 billion.

Mr. David Gunning

One of our main tasks, I would say, is defending each and every one of these claims. You will see through the process how this goes. So far, the impact on the bottom line, the contract value, is a change of €2.9 million, inclusive of VAT.

In terms of the 900 claims, what date does that bring us to?

Mr. David Gunning

This was the end of last month. This is not quite fully up to date, but it as up to date as-----

It includes all potential claims relating to Covid and so on.

Mr. David Gunning

Correct.

We might now move to the process. Mr. Gunning outlined the number of claims at each level. How much is the dispute resolution process currently costing the development board?

Mr. David Gunning

I will refer to the PWC report which set a number of recommendations. Those recommendations referenced putting in place a more definitive claims defence process. The claims defence process and the implementation of the other recommendations had a total value of approximately €27 million. The budget put in place for the claims defence process was of the order of €15 million.

The board is spending €15 million to avoid having to spend €446 million. Is that correct?

Mr. David Gunning

We are investing in a robust claims defence process. That brings litigation and claims defence costs. In 2019, our litigation and claims defence cost was €436 million. These are not the audited numbers, but we will take them. In 2020, the litigation and claims defence cost was €2.3 million. From 2019 to 2020, there was a significant decrease in the claims defence cost. We believe this money is well spent defending each and every one of these claims to save the State money longer term.

I presume the board is disappointed when the claims reach High Court level. I understand there are four claims outstanding at that level. Do we know at this point the total value of those claims?

Mr. David Gunning

They are part of the overall number I have given to the Deputy. I am not in a position to separate out those cases. It would not be advisable since they are part of a High Court process. That is one of the stages of the disputes process. If the parties cannot agree the outcome then either party has the right to refer the matter to the High Court. That is a fact of the public works contract that we have entered into.

I understand one of the cases was referred by the development board. I ask Mr. Gunning to explain the decision of the board to refer that case.

Mr. David Gunning

Again, this is currently live in the High Court, but I can give a couple of lines if that will assist the committee. This is around a particular position where the contractor received an instruction to commence works. It regarded the instruction it received from the employer's representative as invalid. The response of the development board was that we did not believe we could accept that and, therefore, have referred the issue of the instruction for the phase B works to the High Court for resolution. There may be a mention in the High Court today on that particular issue. I remind the committee that all of our disputes processes are subject to a moratorium. While there is a moratorium these issues are not progressing; they are paused temporarily.

I call Deputy Colm Burke.

May I come in later as I have another meeting to attend for approximately half an hour?

Yes, that is fine. I call Deputy Matt Carthy.

Is it fair to say that the position of the board is that it will not give an updated cost of the project?

Mr. David Gunning

That is correct. We have set out that we will not be providing a definitive update on the cost projections at this stage.

Does the board have a definitive estimate?

Mr. David Gunning

We have a continuous process of analysis of the various cost components that could, and will, contribute to the cost. I can go through a narrative on those if the Deputy would like.

Mr. David Gunning

I can definitively say that we have ongoing analysis on all cost elements.

Does the board have an upper limit in terms of an estimate of how much this project could potentially cost?

Mr. David Gunning

As I said, we have an analysis that is ongoing. The biggest issue at the moment is trying to get a good handle on construction inflation. The Deputy will be aware of the various issues in the market in terms of price spikes of a whole range of different construction materials. I have read three reports in the last two days. It is very difficult to call that. There are challenges in landing this, but we have a range of scenarios that we have shared with our stakeholders in relation to the project.

The board has, I presume, analysed the claims and assessed the likelihood of any of them being successful or otherwise and, looking at inflation, it has an idea as to what the maximum cost of this project will be?

Mr. David Gunning

We have a process of analysis and good solid information from that analysis on where we think this may end up. It ranges between certain issues, depending on factors that may emerge.

Has the board shared that information with the Department of Health?

Mr. David Gunning

We shared analysis with the Department of Health at a particular time earlier this year and we continue to share updates with the Department on an ongoing basis.

That is as clear as mud. Mr. Gunning said the board shared information a number of months ago and also that it continues to share information. Which is it? Does the Department of Health have the current likely maximum figure?

Mr. David Gunning

We continue to share analysis with the Department of Health. The situation changes on a dynamic basis, as the Deputy is aware, in terms of new claims coming in, our assessment of inflation and our assessment of other aspects of this project. The scenarios continue to develop, shall we say, but we have a constant dialogue with the Department in regard to all matters. We report to the Department and to Children's Health Ireland on the project on a monthly basis in terms of our assessments of these issues.

Does the board engage with the Department of Public Expenditure and Reform? Is that Department aware of the figures?

Mr. David Gunning

We do not directly do that. My colleagues from the Department of Health may have a comment in that regard. I personally do not have a-----

Let me put my question to Ms Prendergast. Is she satisfied the Department of Health is aware of the maximum estimated cost at this stage?

Ms Fiona Prendergast

As Mr. Gunning said, we have been engaging with the paediatric hospital board. We get updated information on an ongoing basis from the board in regard to potential outcomes, bearing in mind the way in which scenarios-----

I am sorry to interrupt Ms Prendergast but the time is very limited. Is she satisfied the Department is aware of the projected upper limit cost of this project?

Ms Fiona Prendergast

I am satisfied the Department is aware of the ongoing updated position in regard to it.

Is that information shared with the Department of Public Expenditure and Reform?

Ms Fiona Prendergast

We keep the Department of Public Expenditure and Reform updated on all matters in regard to the hospital.

In essence, is it the Department's case today that it cannot divulge that information due to commercial sensitivities?

Ms Fiona Prendergast

Absolutely.

In 2016, however, the Department was able to inform us the estimated cost was approximately €800 million. In 2018, it was able to tell us the estimated cost was €983 million. In December 2019, the Department was able to inform us the estimated cost was €1.43 billion. Was the Department not cognisant of commercial sensitivities at those times?

Ms Fiona Prendergast

At that stage, the contracts either had not been signed or were in an early stage. We are midway through a contract with the main contractor at this stage and it is not appropriate to consider discussing this in open forum.

Does Ms Prendergast have any idea how crazy it sounds that the Department was able to give an estimated cost before, and at the early stages of, a project but, in the heart of that project, which has been severely delayed, commercial sensitivities mean the people who will be paying for this hospital, namely, the taxpayers of Ireland, cannot be informed as to what the potential maximum cost will be?

Ms Fiona Prendergast

It is very difficult to tell what the maximum cost will be, given the uncertainties outlined by us and by Mr. Gunning in the context of Covid, Brexit, inflation, etc. There will be full and total accountability in regard to the cost of this hospital in due course.

Is it the case, then, that it is only when the bill comes in that the public will be told how much they are on the hook for?

Ms Fiona Prendergast

I am not quite getting the Deputy's point.

My point is that we, as a committee, have an obligation on behalf of the taxpayers to ensure there is good value for money. It is impossible to determine whether there is good value for money when we have no idea as to what the maximum cost will be. Does Ms Prendergast accept now that this was a really bad contract for Irish taxpayers in terms of the original negotiation with BAM Ireland?

Ms Fiona Prendergast

I would not accept that.

Even though we began with an initial cost of €800 million and we could potentially, and very likely, exceed €2 billion in terms of the overall cost?

Ms Fiona Prendergast

I am not prepared to discuss a figure of €2 billion. At no stage has this Department ever considered a figure of €2 billion. I am not sure where that number is coming from. There is a range of numbers out in the public domain that we will not comment on.

It would be helpful if some clarity could be given.

I must move on to Deputy Devlin.

I will come in again later.

I will let Deputy Carthy in a second time. I call Deputy Devlin.

I welcome the witnesses and thank them for their opening statements. We all want to see a national children's hospital built, completed and fully operational as soon as possible. During our last engagement, we heard about the number of claims that were potentially outstanding. As other speakers noted, it is extremely regrettable and very worrying that we cannot get a handle on the cost. We are here on behalf of the public to establish the costs to, and potential exposure of, the public purse in respect of this project. For the witnesses to come here this morning and say they cannot estimate that cost, or will not do so out of fear of litigation, is worrying from our perspective and will be worrying for the public. That is not to take away from the importance and strategic nature of the children's hospital. I look forward to visiting the site again. I was there before when I was on the HSE's regional health forum prior to being elected to the Dáil. I look forward to seeing the progress made on site.

I have a number of questions for the witnesses. Colleagues have asked about claims. I refer to the report of this committee in 2019 arising out of its engagement with the witnesses. Recommendation No. 1 stood out for me. It notes: "The Committee finds it absolutely unacceptable that nobody can give a reasonably accurate estimate of the expected final costs for the completion and fitting out of the National Children's Hospital." Two years later, we are still none the wiser and that is why I am so worried. It is really concerning that, two years on and given the delays that have occurred, both the witnesses from the board and the Department still cannot estimate the cost. Recommendation No. 2 in the report states:

The Committee agrees with the recommendations presented in PwC's New Children's Hospital Independent review of escalation of costs, April 2019. The Committee recommends that all 11 recommendations in review are implemented without delay.

Can Mr. Gunning inform the committee whether the 11 recommendations from that PwC report have been fully implemented?

Mr. David Gunning

I thank the Deputy for his question. I can say definitively that all of those recommendations have been implemented fully by the development board.

Okay. In terms of the-----

Mr. David Gunning

I apologise for interrupting. I want to point out that a number of the recommendations in the report did not apply directly to the development board and I cannot comment on them.

I am aware of that.

Mr. David Gunning

There was something like 37 actions, if I remember correctly, under that set of recommendations. I can confirm that they were carried out. The development board formed a special sub-committee of the board to supervise that and it has reported. Again, I confirm that all of those actions have been taken.

I accept that the recommendations that are under the board's control are the ones Mr. Gunning is addressing. I would not ask him to comment on any others.

My next question is for Ms Prendergast. Is the Department of Health satisfied those recommendations have been implemented?

Ms Fiona Prendergast

Yes, we are satisfied they have been implemented.

There is ongoing engagement anyway between the Department and the development board.

Ms Fiona Prendergast

Absolutely.

In his opening remarks, Mr. Gunning stated that he was hoping for a completion date in 2024 for the hospital. Is that early, mid or late 2024? No one foresaw this pandemic, obviously. Presuming all goes well between now and 2024, though, is he satisfied that timeframe will be adhered to?

Mr. David Gunning

I thank the Deputy for that question. First, I will be delighted and look forward to welcoming members of the committee to the site so they can see for themselves the progress being made. I guess what we have is a compliant programme. That means that the employers' representative has stated that it is theoretically possible to deliver the remainder of the works by December 2023. We will then have a period where Children's Health Ireland and the development board will work together on commissioning systems and opening the hospital. We are trying to optimise as much concurrent engineering between the activities of the development board and Children's Health Ireland to accelerate and bring about the successful opening of the hospital as early as possible. It is, however, unlikely that the opening will happen any earlier than the second half of 2024. I ask my colleague, Mr. Devine, to comment on this question as well. He has been working with the contractor on the programme and the detailed review of it.

Mr. Phelim Devine

As Mr. Gunning has outlined, the project can be completed in 2023. All the stakeholders, including ourselves and BAM, are working very closely to bring about that date. A certain level of resource and project execution is required to deliver that outcome. We are hoping that BAM will be able to achieve it. Some 1,350 workers are now involved in the project, and BAM is hoping to increase that number above 1,600 in the next two months. It is that kind of resource level, or above, which is required to deliver completion of the hospital in December 2023. We are hoping and becoming more confident that the resources are increasing and going in the right direction.

As Mr. Gunning outlined regarding completion in 2023, when we hand over the hospital to Children's Health Ireland, the technical commissioning of all the mechanical and electrical, M&E, systems will be completed in the hospital. An operational phase then follows, which will be undertaken by Children's Health Ireland. It includes putting in the equipment - which we will assist them with - cleaning the hospital and familiarisation. Some 2,500 to 3,000 staff must become familiar with the hospital before it can go live. Therefore, a serious amount of detailed planning is going on now regarding that exercise. The overall time for completion, then, as Mr. Gunning mentioned, will most likely take until the second half of 2024. Children's Health Ireland is, however, undertaking that detailed plan of work.

I thank Mr. Devine for his reply. I am conscious of my time. Mr. Gunning mentioned the digital hospital.

Deputy Devlin has gone over his time by one minute.

I am sorry. I will come back in later.

I thank Deputy Devlin and I call Deputy Carroll MacNeill.

I thank all the witnesses for coming to this meeting. Looking through the briefing documents and, especially, as I have been listening to the contributions, I wonder if I have a very different perspective on this matter compared with some of my colleagues. I come to my questions with that query in mind. We obviously have a significant cost tension. Costs for this project have been going up and up. Many claims have been put in since the start of the contract. The last time Mr. Gunning was before this committee, I asked him if the level of claims being made in respect of this contract was much higher than has been experienced previously. I recall that he said then that it had been - I cannot remember the exact phrase - essentially exceptionally higher. Is that a fair reflection of what Mr. Gunning said?

Mr. David Gunning

That is correct. I think I used the word "inordinate" concerning the number of claims.

I thank Mr. Gunning. Yes, that is certainly what I came away with. At the same time, I see him defending each of those claims. What I think we are forgetting is that Mr. Gunning is defending those claims on behalf of the State.

Mr. David Gunning

That is correct.

He is also defending them in respect of the overall escalation of the costs generally. From the briefing documents and my reading of what Mr. Gunning has said this morning, the approach taken has meant that a lower additional cost has been incurred than might otherwise have been the case in respect of conceding claims repeatedly and establishing a new precedent. That is my reading of the situation.

Mr. David Gunning

That is correct. This is an ongoing process. We will not use sporting analogies, but we are in the midst of the process and in the heat of the battle. It is an ongoing process and challenge. We have good advisers to assist us. We are using good experts and expertise from within our team and from abroad to advise us and to allow us to deliver the hospital in time and at the lowest possible cost.

I acknowledge that I have a strong interest in this project being delivered, as does everybody else. I have a strong interest as well, as a member of this committee, in it being done in the most efficient way for the State. This is the second time that Mr. Gunning has appeared before this committee and he also gave evidence to the Joint Committee on Health last week. Mr. Gunning has an obligation to be here and to answer these questions being asked by public representatives, as do officials from the Department. It is completely correct that we hold Mr. Gunning to account in this way, but I also acknowledge that we are doing that at a time when he is also fighting this battle on behalf of the State.

I turn to a different point mentioned by Ms Prendergast in response to a question from Deputy Carthy, although I will not use phrases such as "as clear as mud", which I do not think help anyone, to try to get into newspapers. I refer to going into the Department some three years from now when this contract is completed. It has been stated that there is ongoing analysis, presented by Mr. Gunning to Ms Prendergast, where updates are provided based on the challenges coming in, the expected costs and the liability that may go a certain way if those costs come in or not. There is a stream of documentation between Mr. Gunning and Ms Prendergast in this regard. If representatives of this committee went to the Department of Health in a private context, and if these documents were to remain private and not to be leaked in some fashion, I wonder if would we get to see this documentation, analysis and accountability throughout. Presumably, the Comptroller and Auditor General will have access to all this material at a later stage. All this material exists.

Mr. David Gunning

That is correct.

We will consider this matter and hold people to account at an appropriate time when this process is no longer commercially sensitive. I refer to a contractor putting in an inordinate number of claims against a State entity trying to deliver a project for the State. In that regard, Mr. Gunning has to come in here to carry out this aspect of the battle in public, but representatives of the contractor do not. We must put this pressure on the witnesses and it is totally appropriate that we do so. However, I do not want Mr. Gunning, for the purpose of fulfilling his accountability obligations, to have to behave in a way that results in costs being driven up, such as might happen by setting a target for the final cost for the hospital, for example. I want to know how much the hospital is going to cost, but not if that figure then becomes a target for a contractor instead of the cost that will represent the best value for the State. Is that the case, or am I just way off base here?

Mr. David Gunning

Inadvertently giving targets to the contractor which it will then look at with a great degree of desire to land is certainly a deep consideration of ours. We must avoid that situation. Hence, the need to provide as much information as we can, while being unable to give this definitive update on cost projections. We are in a very sensitive position now regarding negotiations because this is a live contract.

I understand why this is the case. In addition, the evidence and experience to date shows that there has been a series of claims and I can see very good commercial reasons for what Mr. Gunning has just said. However, from the perspective of State accountability, we still want to see how this project has been undertaken and how it has been managed. What I do not want to see in two or three years, though, is that the way in which this process has been handled, possibly because of pressure from this committee - but which I hope Mr. Gunning will resist - resulting in an increase in costs because of a failure to have offered an appropriate defence in this regard. I have a strong interest in the completion of this hospital and I am really looking forward to going to see it tomorrow. I spent four nights in Crumlin hospital over Easter and I understand the great need there for this new hospital and the importance of the timeline. From the State's perspective, this project must be done cost effectively as well. I reiterate that I may be coming to this issue from a perspective that is different from my colleagues, but sometimes that is no harm. I have a final question if I have time.

The Deputy has less than half a minute.

Briefly, and coming at this issue in what may be a different way, what lessons does Mr. Gunning think can be derived from this process that may be of benefit to procurement processes generally and help future Governments and the State?

Mr. David Gunning

I will avoid that question. There is a whole process that must be undertaken in this regard. The Department of Public Expenditure and Reform is involved in examining how we can protect similar projects in this respect. Other hospitals are now being considered and discussed.

My focus is on a contract that exists and in getting this done as soon as possible for the lowest cost possible. I will leave the learnings and other things. I am happy to participate in that process but that neither my primary focus at the moment nor is it the focus of the development board. We are here to deliver this project and are happy to participate and share our experiences with others.

That was a very clever answer.

The next speaker is Deputy Verona Murphy but I do not think she is present.

I am. Can you not see me, Chairman?

Please proceed, Deputy Murphy.

I thank to the National Paediatric Hospital Development Board representatives for appearing today. I am not in line with Deputy Carroll MacNeill's questioning simply because, as Mr. Gunning said, his focus is to deliver the hospital. My focus as a member of the Committee of Public Accounts and as an elected representative is to try to make sense of it from the perspective of the public coffers. There is a vacuum in transparency and accountability with regard to the project. There have not been any real answers from the board representatives this morning. I appreciate that we can have commercial sensitivity, but we can take it too far. I believe the board is taking the interpretation in the broadest possible sense in respect of commercial sensitivity. As a member of the committee I believe the information being requested is in the public interest.

When we do eventually see the complete construction of the national children's hospital, the overspend will have a significant impact on other capital projects within the Department of Health. That is a serious concern. Can Mr. Gunning tell me, as there are no competitors in this field, what is the basis of the commercial sensitivity? I do not want a long-winded answer. The board representatives can appreciate that. I imagine the witnesses have been asked this before and we have limited time.

Mr. David Gunning

To me, the core of this issue is the fact that we have a live contract. We have talked about the number of claims and we have talked about the ongoing engagement that we have currently at intense level with the contractor.

There are no competitors.

Mr. David Gunning

Irrespective, it is not about a competitive situation in a competitive market. This is about a single contract that was procured some time ago. It is about ensuring that we get to the end of this at the lowest possible cost. I am not going to reveal the State's negotiating position, the position of the development board or where we think this thing will end up in terms of maximum cost, because all that does is provide a target as opposed to-----

The question I asked Mr. Gunning was about the reasoning behind it. The difference is that there are no competitors. This is about public information, accountability and transparency for the spending of public moneys. As Mr. Gunning is going to persist in not giving me an answer, I will not persist in asking him on that basis but I believe there is an absolute obfuscation in respect of the board's accountability to this committee and to the committee to which the board is answerable. The board members did not give the information to that committee either. There is a serious transparency issue here. Having been in business for 30 years, I do not for a moment accept the stance of the board on the broad interpretation of commercial sensitivity. Mr. Gunning must at some point understand the impact of an overspend not being revealed to this committee and to the electorate in general on the basis of capital infrastructure projects. That is the reason we are asking about the impact on the public purse if there is a significant overspend and the impact on other health projects that are badly needed.

I have other questions relating to the structure of the board. Are we still three board members short?

Mr. David Gunning

I believe it is two board members. We had two new appointments to the board in the past 12 months or so. This is a Department responsibility.

Has a chairperson being appointed?

Mr. David Gunning

The process is under way but I am not aware of any appointment as of today.

Does Mr. Gunning believe that is inhibiting the ability of the board to perform on this project?

Mr. David Gunning

I report to the board and I wish to assure the committee the board is holding the executive to account. We have an interim chairman, who is performing the role of chairman, and we have what I regard as a highly experienced board with great expertise across the entire construction sector. I believe we have a strong board serving the project exceptionally well.

Mr. Gunning is happy that the board has the critical skills and expertise to deliver. Is that correct?

Mr. David Gunning

Yes, I think it is a strong board.

The moratorium Mr. Gunning spoke of was due to expire in June. Has that been extended?

Mr. David Gunning

The moratorium has been extended twice at this stage. It started off a little earlier than June and then moved to the end of June. It is now the end of July. I assume, and I would like to think, we will continue in the collaborative sense with the contractor and that it may be extended a little further depending on how things are progressing. I might be getting a little ahead of myself in making that statement but that would be my desire.

The problem I have relates to the actual effect of Covid-19. How long was the lockdown on the site?

Mr. David Gunning

The Covid lockdown or closure was approximately seven weeks.

I am interested to know how it transpired that it led to a 14-month extension of the project.

Mr. David Gunning

It makes up part of the extension. I will ask Mr. Phelim Devine, who is the project director and who is dealing with the programme matters, to respond to the 14-month issue.

Mr. Phelim Devine

Prior to Covid, the project was six months in delay. We put that on the record before. Since Covid, there was a statutory shutdown period of seven weeks. The contractor did not come back to site for 15 weeks from the Covid shutdown. There was a four-month period. Then because of Covid, it takes more time. We cannot simply turn 1,000 workers on and off. It took some time for the contractor to ramp up. Obviously, Covid has impacted on productivity and measures. The period of six months plus the four months for the Covid shutdown amounts to ten months. There has been an ongoing impact of Covid since workers came back to work in July 2020.

Will there be any penalty to the contractor? If the shutdown is for seven weeks and the contractors did not return for 15 weeks, is there a penalty incurred by the contractor?

Mr. Phelim Devine

The contract sets out that the seven month period is recoverable. The contractor recovered time for that period. The original contract substantial completion date was August 2022. That has been extended to October 2022 for the shutdown period. The other period when the contractor was not back to site is not recoverable nor possibly are some of the impacts that are ongoing. That is being disputed by the contractor and is one of the claims referred to earlier by Mr. Gunning.

I would like to address all my questions to Mr. Devine only. Can Mr. Devine please help me to understand what a variation is? I have six minutes so let us not have any plámás.

Mr. Phelim Devine

Some of the 906 claims we talk about are variations. A variation might be where a partition detail has changed because we found something on-site. There may be a design issue in respect of the guaranteed maximum price report that shows the number of partitions, but they might be laid out in a different format to suit that system on the site. This might mean a socket or outlet might have to be moved. That is a variation and the contractor might be entitled to some additional money for that.

The variation would be made at the behest of the project director. Is that the case?

Mr. Phelim Devine

No, what would happen is that our advisory team, which is our design team, would work with the contractor-----

Is it at the behest of the design team?

Mr. Phelim Devine

It is between the contractor and the design team. The variation will be assessed for whether there is an entitlement in the contract. That will be determined by the employer's representative and then money would be entitled.

To give the Deputy an idea, some of the 906 claims are for additional money for the contractor. Some of them determine-----

Mr. Devine have answered the question and I thank him. It is not the main contractor making the variation, it is the board making the variation that gives rise to the claim. I would like a "Yes" or "No" answer. I am trying to understand this correctly.

Mr. Phelim Devine

Yes.

I thank Mr. Devine.

Mr. Phelim Devine

In many circumstances it is.

So who is the employer's representative in this process?

Mr. Phelim Devine

The employer's representative is the architect.

Mr. Phelim Devine

It has an independent validation role of claims under the contract. It must be third party without prejudice.

Help me out here. The architect is the designer of the project from day one but the architect is also the arbiter in respect of the decisions on claims. Is this correct?

Mr. Phelim Devine

That is correct but it is a separate person in the architectural team who is the employer's representative. That person is bound by professionalism and must independently and partially assess the claims.

In broad terms I am correct in what I am saying.

Mr. Phelim Devine

The Deputy is correct. That is-----

Mr. Devine is saying an independent person is built in but it is still the architect and it is still coming from the project board side. That is the point.

Mr. Phelim Devine

Yes.

That is fine.

There are 906 claims notified under clause 10.3 for determination by the employer's representative. Mr. Devine has sent us the document on the 10.3 clause and there are six subheadings. People will be able to interpret them quite easily. If I understand it correctly what the witnesses have stated today is the value of those 906 claims is now approximately €446 million. Is that correct?

Mr. Phelim Devine

That is correct.

There are nine disputes agreed and no longer in dispute management to the value of €2.9 million.

Mr. Phelim Devine

Correct.

That is correct.

Mr. Phelim Devine

I will add one piece of information, which is also on the list. Of the 906 claims, 631 have been determined by the impartial employer's representative. They have been determined to the value of €2.8 million, which is 0.3% of the contract sum. Of the €446 million that Mr. Gunning noted, €331 million of those claims has been determined by the employer's representative to the value of €2.8 million.

We do not have the main contractor or any of the subcontractors before us. We do not have the mechanical, electrical or lift contractors before us. We have to take everything Mr. Devine is saying at face value. I am trying to dig a little bit deeper on this. It seems to me the claims arise from variations made. Notwithstanding the line, which is well co-ordinated, that has been put forward to us today by the Department of Health and Mr. Gunning that external costs will drive this project well beyond whatever figure is to be determined and well beyond the initial costs and the stated public cost, there is also the issue that the development board, and I am trying to be as objective as possible, is part of the process of driving up costs because of the variations it is making. Is this a reasonable statement to make? Effectively, the main contractor is the postbox used for any subcontracting increases or variations. The witnesses explained what a variation or claim is. Where there are such variations to the order outlined, any mechanical, electrical or lift variations have to come from the subcontractor to the main contractor through that postbox to the board. Is this correct? Do I have that right or am I wrong?

Mr. Phelim Devine

That is correct.

Mr. Phelim Devine

All of the subcontractor claims have to go through the main contractor to us.

Mr. Phelim Devine

There are different categories of claims. The sectoral employment order is a big part of the €31 million claim. We spoke about Covid earlier and there are claims of approximately €40 million. There are quantum claims, which are the variations the Deputy mentioned. These are extra things or fewer things. There is also compensation for extension of time claims. The majority of the €440 million are claims by the contractor for additional time and the cost of that time. Of the €440 million, approximately €370 million is time related. Much of it overlaps. The contractor is claiming for time on multiple occasions.

Is it reasonable in a normal contractual process to claim for time? Is this Mr. Devine's experience as a project director? The project is running into billions of euro at this stage. Is this normal practice?

Mr. Phelim Devine

It is normal for contractors to apply for an extension of time if they feel they have that entitlement. We have a different view from that. It is not normal that those extensions of time overlap as much as they have in this project.

Mr. Gunning has spoken about an inordinate number of claims. He referred to the heat of the battle.

I will let Deputy Sherlock in a second time. We have gone way over time.

I thank the Chair.

The witnesses are welcome. No one disputes the value of the hospital. What is at issue is the cost over and above what was originally estimated and how we keep the costs down. The Committee of Public Accounts will see the ultimate cost. We are concerned about real time as opposed to historical issues. This is part of the reason we are having this meeting.

Going back to the statement Mr. Gunning made in February, I want to speak about construction inflation. He referred to expenditure until 31 December 2019. He gave us a statement and said by way of example that at the end of December 2019 the contractor had progressed 8.5% of the work by value when it should have been progressed by 22%. The contractor is responsible. The delay continued to grow month by month. The contractor is responsible for some of the delays by virtue of not having sufficient staff on site. This was prior to the pandemic. It was part of the contract. The longer this goes on the more likely it is to accrue construction inflation or add it to the ultimate cost.

We also see the site was shut down for seven weeks due to the pandemic but the contractor did not come back for 15 weeks. I presume the staff were paid a wage subsidy or a pandemic unemployment payment in that time so there was a double cost. What kind of counterclaims are being put together on the other side of the contract? We hear about the claims the contractor is making. Contracts are a two-way process. What is being done on the other side regarding delays and where the contractor is not keeping up its side of the bargain?

Mr. David Gunning

I thank the Deputy. The current process with the contractor on the compliance programme is an effort to get to the point where all stakeholders are aligned around a clear programme. That is the first point. I guess our priority is to get clarity on this, get committed to it and deliver it within that timeframe. As the Deputy will be aware, there are provisions in the contract. Some people refer to these as penalties for delay but the appropriate title is for liquidated and ascertained damages. There is a provision in the contract whereby if the contractor is delayed and, following the various dispute processes we have spoken about, that delay is felt to be the responsibility of the contractor then the employer and the development board would have the right under the contract to claim a certain amount of money from that contractor for that delay.

Has work happened on this?

Mr. David Gunning

This will be as we approach the final furlong as opposed to doing it now.

There is no provision in the contract to make an interim claim on delay. We are pursuing a small number of employer claims on some specific issues, where we believe we as the employer have incurred additional costs.

Is there a quantum on that?

Mr. David Gunning

There is a quantum on it. However, because it is before conciliation, it is a confidential matter and I cannot share that information with the committee. These are not tens of millions of euro. These are smaller amounts of money. The liquidated damages is an issue that gets raised in the final account negotiations with the contractor. That is when that will happen. That is winding towards the conclusion.

Our primary focus here is on eliminating any more delay. Delay is the biggest source of cost, as I am sure Deputy Murphy is well aware of. We want to eliminate any further delay and get this hospital-----

Yes, but this hospital was due to be completed in 2022.

Mr. David Gunning

It was due to be August 2022. That date moved to October 2022 because of the Government shutdown. The Deputy is aware of this from what we have told her. The December 2023 substantial completion, as I said last week, is not without a degree of risk, around Brexit and other issues of supply and resources.

On a previous occasion when the hospital board was in front of Committee of Public Accounts, we were told about some post-construction amendment. Is that additional works when the hospital is complete?

Mr. David Gunning

I will have to ask my colleagues. I am not familiar with that. We might come back on that, as I am not clear on that question. It does not spring to mind. Apologies, but we can we can come back to the Deputy on that.

If you would, please. Can Mr. Gunning tell me, in the seven-week shutdown during the pandemic, why did the contractor not come back for 15 weeks? What was the reason for that?

Mr. David Gunning

There was a long, protracted correspondence. Discussions went on during that period. Our expectation was that the contractor was going to come back to site. In the end, the contractor came back later.

Did the contractor tell Mr, Gunning why?

Mr. David Gunning

There is a lot of correspondence and a lot of pressure from the contractor seeking some additional costs to be borne by the development board and the State. We have resisted entering into that agreement. We have not agreed to pay additional costs on that basis.

Were they Covid-19-related costs?

Mr. David Gunning

They were Covid-19-related and delay-related costs.

I call Deputy Colm Burke, who has six minutes.

My apologies, as some of this may have already been raised. Unfortunately, I had to be at another committee meeting this morning. I have a question about the initial contract that was entered into, which was about the structural elements of the building and all of that structural work. My understanding is that work is now substantially completed. Why cannot the issues about the additional claims for that work be now dealt with, so that we can have clearer picture of the initial contract and the additional cost to the initial contract? As I understand the contract, it is in two different sections. Can Mr. Gunning give us an explanation for that?

Mr. David Gunning

I will ask Mr. Phelim Devine, who was involved in the project at that time to deal with the question. However, effectively, the phase A works to which the Deputy referred were a little over €100 million. Then, the phase A contract was subsumed into the €1.433 billion. I ask Mr. Devine to expand on the detail.

Mr. Phelim Devine

As Mr. Gunning said, the phase A works are now all complete. They are subsumed into the overall contract. That is the way the contract is structured. The development board had the option whether to instruct phase B to BAM, which it did. It is, therefore, all one contract. There are still a number of claims. All claims have been through the employer's representative, ER, determination stage, but some of those determinations that relate to phase A have been disputed by the contractor.

What was the initial price in relation to phase A?

Mr. Phelim Devine

It was just over €100 million, including VAT.

Are there still outstanding issues as regards the dispute about phase A in terms of additional claims?

Mr. Phelim Devine

Yes, there are claims that have been determined by the ER but have been disputed by BAM. They are pending conciliation. There are a number of phase A claims.

Even phase A claims are still not resolved.

Mr. Phelim Devine

Correct, because they are pending the appointment of a conciliator to deal with them.

Can I ask about the process of dealing with the claims? Is Mr. Devine saying that, at this stage, we are going to try to get this project finished, before all of the claims will finally be determined? Are they all parked until such time as everything is finished?

Mr. David Gunning

I will deal with that question. The claims process continues. There is a moratorium currently in place, but claims are being received. Those claims are still being determined by the employer’s representative. The parked phases follow that; the conciliations adjudications and High Court are parked. The reason for that was to allow both our team and the BAM team to focus on the delivery. As the Deputy can imagine, as the claims process, the defence of claims, goes from one forum to another, for instance, from conciliation to the High Court, that puts it into a different place. It is difficult for us to call when that would be complete. It is not unusual in public sector projects like this that the claims go on past the life of the substantial completion, in this case the completion of the hospital. I expect that the hospital may well be completed and that some of the analysis and the discussions on claims will continue for some time after that. That would be my assessment and that is not unusual in some of these public sector projects.

Can I ask about hospital projects in other parts of the world? Has the board looked at those projects and learned from them? For instance, it is estimated that Canada’s SickKids Foundation will cost an additional 15% per annum, as the contract goes on. Has the board looked at other projects to make sure that we do not make the same error? While we have already made errors, we want to make sure that further errors are not made.

Mr. David Gunning

There is an ongoing process of learning from other hospitals, not just on the clinical side, but in this case, on the delivery of the unit. Mr. Devine has been involved in these. We also have a strong team of people in our executive, many of whom have experience with hospitals in the UK, the Middle East and other places around the world. I ask Mr. Devine to comment on that.

Mr. Phelim Devine

Our medical director, Dr. Emma Curtis, who is on this call, has been heavily involved in the clinical side, in terms of benchmarking other large international pediatric hospitals. This is to ensure that our hospital is best designed for the future, that it takes care of future expansion, and that it looks to where contemporary clinical services are evolving. On the technical side, in terms of the mechanical, electrical, and technical commissioning, there have been lessons learned from recent projects in the UK and Australia, where things have gone wrong. We worked hard to ensure that we understand those downsides. They have delayed the opening of these large hospitals for a number of months or years. Our team worked hard to ensure that we understand those issues and overcome them for the new children's hospital. We have taken many lessons learned internationally and applied them to this project.

Is it possible that we would get information on the projects they looked at?

Mr. Phelim Devine

Yes, I am sure we could share that. We can share information on the number hospitals we look at. That can be arranged.

This is so we can also see where mistakes were made in other projects outside of Ireland, that we do not make the same mistakes and that we, as a committee, are aware of what occurred. I ask that we would be given that information. On the Ontario project, I consulted with the developers there for an hour, and they gave me as much information as I needed.

Likewise, we should be made aware and be familiar with the challenges there are in this type of project. I want to go on to-----

The Deputy is way over time. I will let him back in a second time. I thank Mr. Gunning. I have some questions.

Mr. Gunning will recall that, in November last year, we wrote to the board requesting that the board come in. The issue we were concerned with was the timeline because we want to see the hospital built, like everybody else. As public representatives, we are acutely aware of that right across the political spectrum. There is obviously the issue of costs as well. Subsequently, as Mr. Gunning will recall, that engagement was delayed because the report was not ready. We met on 9 February and we were promised on that date that we would have that in the month of March. We are now into the second half of July, the second half of 2021. Although Mr. Gunning cannot speak for the Taoiseach, he will recall that the Taoiseach said that the national children's hospital project would be built by 2020. However, we learned today that the board and the Departments of Health and Public Expenditure and Reform are aware of where the landing point is in terms of price. As the Committee of Public Accounts, we are accountable to the public and to the taxpayer, who will see at the bottom of their wage packets this week deductions for PRSI, PAYE and various other deductions, and it is similar for self-employed people and small businesses across the country, yet we are not able to extract answers. Would Mr. Gunning, as the chief officer, agree that this is not satisfactory?

Mr. David Gunning

I thank the Chairman for his questions. We have given the committee good information on the timeline and where things are currently at, and our intention to deliver on that. I am happy to provide a narrative around the costs. To me, the issue here is really back to the timeline and is about eliminating delay. The more delay we can eliminate, the better we can manage the cost situation. We are absolutely focused on this. As I mentioned, we report this on a monthly basis. We are not short of scrutiny or detail in terms of the way the development board is delivering this, and delivering it in a way that is eliminating and reducing the cost for the taxpayer.

The question I am putting to Mr. Gunning is whether he would agree that this is not a satisfactory situation for us to be in. Does he agree with that?

Mr. David Gunning

As I mentioned, I cannot provide a definitive update on costs at this time. I am simply not in a position to do that. We have explained why that is in terms of the discussions and the nature of the live contract with the contractors. I would ask for the committee's understanding of the reality of where we are currently in this particular project. That is the position.

I am trying to be as understanding as possible.

Mr. David Gunning

I appreciate that. Thank you.

We are due to visit tomorrow. I look forward to that because there is nothing like seeing the situation on the ground. The only sight I have had of it up to now is from outside the perimeter fence, but I look forward to being in and around it with the other members of the committee.

On the cost and the claims, of the six grounds set out, the sixth concerns contractors' claims for delays, extensions of time, disruptions due to employer’s delay or compensation for events. I take this to mean that Covid would come in under that. We know the contractor was off-site for 15 weeks, and there was a shutdown of construction for seven weeks. I have not been able to find any good reason an extra two months was added on to that. Am I correct in stating that the main contractor, and the contractors working for the main contractor, would have been in receipt of the employment wage subsidy scheme and the temporary wage subsidy scheme? I would like a “Yes” or “No” answer to that.

Mr. David Gunning

I would assume so but that is not part of our scope in terms of what arrangements the contractor put in place for staff or subcontractors. I would assume so. I do not think I am in a position to answer that. It is not a development board-----

I am asking the question directly because some of these claims Mr. Gunning has outlined relate to delay and timelines. He has outlined, and I clearly understand, that as time passes further inflation kicks in, but there is also the question of loss of time and being off-site for unforeseen events like Covid. My point is that Mr. Gunning, as the chief officer, is telling me that he assumes they were. Surely the board should be aware of this and should be dealing with it as part of both the claims process and its defence. Surely it is part of defending the taxpayer's interest that it would be aware. The point I am clearly making is that it may be that the company or companies operating on the site were in receipt of the temporary wage subsidy scheme or the employment wage subsidy scheme payments from the taxpayer during those periods, and I am not arguing they should not have been, and there are now claims in for extra payments due to that time lag and inflation as a consequence. Surely Mr. Gunning, as the chief officer, and the board should be aware of that.

Mr. David Gunning

I would draw a distinction. If someone is on a social welfare scheme, they are not on the site, they are not working and they are not engaged by the contractor. Our focus is on people who are on-site and working, and we have a very good process in place in terms of monitoring what happens in those circumstances. What happens outside, or within the contractors and the layers of subcontractors in terms of what happened, is not an area we have been looking at. We have focused on people working on the site. That is a contractual matter.

I am talking about what is happening on the site. There is a situation where the company or companies are in receipt of those subsidies for the period they are off the site, and they are claiming for the period they are off the site because they are carrying a loss. We have a situation where two months were lost, for which we have not got a clear explanation, and they then came back on-site, and the taxpayer finds itself facing claims as a result of this loss and the subsequent consequence of price inflation. The taxpayer is being hit twice. Does Mr. Gunning understand that?

Mr. David Gunning

I get the point.

I want to move on.

Mr. David Gunning

I understand where the Chairman gets that. This is all tied in. We have claims from the contractor, they are in conciliation and they are in the process, and the fullness of analysis will reveal all the details, absolutely.

At the weekend, there were media reports of Ministers being quoted as stating that this project is “flying blind”, that it is a case of “build it and send on the bill”, and so on. No one knows where it will end. Mr. Gunning understands why the public are alarmed when they read direct quotes like that, not from one Minister but apparently from different Ministers.

In January of this year, there were 792 claims and now there are more than 900. The value of the claims, as Mr. Gunning has confirmed, is €446 million. A determination was made on 549 claims and the value of those appears to be €229 million. In regard to the value of what is there, the nine claims that were settled cost €2 million. We can deduct from this that we are looking at around €220 million, if we were to compare the costs across those. Would Mr. Gunning accept, given the ones that are settled, that the rest could potentially be a lot higher than that? Would he accept that?

Mr. David Gunning

I would not accept that. There is a lot of work to be done on all of these claims. I would not think nine would be representative.

It would be wrong to interpolate or draw conclusions from what is there. Each one of these claims has got to be defended robustly by us. That is one of our primary tasks in addition to delivering this building.

I accept that. The last time Mr. Gunning was in front of the committee, towards the end of the meeting I asked him to confirm that the project would come in under €2 billion. On that day, he confirmed that he was not in a position to do so and it could well go over €2 billion. Is that still the case today?

Mr. David Gunning

To be clear, I do not think I confirmed that it could go over €2 billion but, again, in line with-----

I will put it this way, he wanted to confirm-----

Mr. David Gunning

We cannot provide a definitive cost projection at this stage. We are not in a position to do that for the reasons I have already mentioned, which are ongoing engagement and a live contract with the contractor. I have asked for the committee's understanding of the position we are in in negotiating this on behalf of the State.

To be clear, Mr. Gunning was not able to confirm on that day that the project would come in under €2 billion and he is not in a position to confirm it today.

Mr. David Gunning

I am not making any comment on a definitive update on cost projections. That is what I am saying.

The only answer we have at this point is the answer Mr. Gunning gave on 9 February.

Mr. David Gunning

I have given the committee two answers, which is the same answer twice now. I am not getting into this issue. We cannot provide a definitive update. We are absolutely focused on delivering this project for the lowest cost we possibly can. That is the focus for us.

A number of Deputies want to come back in for a second time. I will allow them three minutes each.

My initial question about commercial sensitivity over public accountability should have been directed to Ms Prendergast. How is the Department able to balance commercial sensitivity with public accountability?

Ms Fiona Prendergast

Our view is absolutely in line with that of the development board. I understand there is a public interest in State bodies making informed decisions in the course of carrying out their functions but we must be able to maintain the confidentiality of deliberative processes, particularly where these relate to ongoing negotiations and commercially sensitive information, some of which are subject to legal proceedings. We are absolutely at one with the development board in that discussing this matter is just not appropriate at this stage.

Does Ms Prendergast believe that commercial sensitivity, even where there are no competitors, is trumping the fact that we should be able to be transparent about public expenditure in this regard?

Ms Fiona Prendergast

We will be transparent at the appropriate time. Mr. Gunning and Mr. Devine's ability to undertake the work they are undertaking in dealing and negotiating with the contractor is, and falls under, commercial sensitivity.

I do not accept that. I will move on. The HSE, on behalf of the Government, commissioned a report from PwC to conduct a review to comprehend the reasons for the cost escalation associated with the children's hospital construction project. In the report, PwC identified a number of residual risks that if not managed could lead to additional costs. One of those risks was inflation. I am not sure who is responsible for answering this but can someone tell me what inflation is linked to?

Mr. David Gunning

There is an inflation clause in the contract. It states that construction inflation above 4% becomes a cost the State will bear and below 4% it is the contractor's responsibility. The inflation is measured in a particular way based on indices in the market. We have calculated what the contractor is responsible for in 2019 and 2020. I will pass the question to Mr. Devine who will answer the question in terms of specific payments to the contractor.

No. I want to know what the inflation is based on. Is it the consumer price index or construction inflation?

Mr. Phelim Devine

It is based on an average of three published tender inflation indices from Linesight, AECOM and the Society of Chartered Surveyors Ireland. It is averaged and anything above 4% is payable and due to the contractor. In 2019, the published average was 6.59% so the contractor received 2.59% of certified payments for half that year because payments kicked in in the middle of the 2019-20 period. That was €1.7 million including VAT. For this year, and it is about to be determined by the employer's representative, ER, the projected figure for inflation is below 4%. It is cumulative inflation that applies so it is +2.5% for 2019 and -1.5% because it was 2.5% this year-----

Does Mr. Devine believe that figure of 4% was a little low, given what the rates were? For instance, construction price inflation was approximately 7%.

Mr. Phelim Devine

No. You make your best prediction. We got a lot of expert advice from our project quantity surveyor, QS, and from other advisers within the industry on what the appropriate level would be in terms of procurement of the contractor and what the market would bear. The 4% figure was the result of detailed analysis we did back in 2016 when we issued the job out to tender.

What does Mr. Devine expect that rate to translate to in money terms?

Mr. Phelim Devine

For half of 2019, we paid out €1.7 million. We expect it to be around €1.3 million this year because the inflation rate was below 4%. However, it is cumulative so approximately 1.1% still applies to the certified amount. That is a projected figure, which has to be determined by the ER in the next month.

I ask Deputies to stick to three minutes because I am trying to get them all in for a second round.

I will go back to the 906 claims notified for ER determination under the 10.3 clause. Have we determined that the estimated cost of outstanding claims is €446 million?

Mr. Phelim Devine

Yes. That is what the contractor is claiming. It is not the estimated cost.

I am sorry. That is what the contractor is claiming. Can Mr. Devine clarify what has been settled from that €446 million?

Mr. Phelim Devine

Out of the €446 million, 631 claims have been determined by the employer's representative at €2.8 million, which is added on to the contract sum. Of the €446 million, that 631 represents €331 million of the €446 million in claims. However, as Mr. Gunning said, the contractor has referred many of those ER determinations to dispute. The contractor disputed those determinations and has now entered a conciliation process.

This leads me to my next question about the legal processes. This is a matter of public record so it should not be sensitive information. Can the witnesses quantify the number of proceedings that have ended up in the High Court? On how many occasions has the development board ended up in the High Court? Who has instigated those proceedings and what has been the cost to the taxpayer, ultimately, of that? That is public knowledge-----

Mr. David Gunning

Well-----

It is public knowledge so please give a straight answer. It is not commercially sensitive. What are the costs so far?

Mr. David Gunning

I have already given the Deputy the figure we have spent on conciliation and claims defence, which includes the court costs of €2.3 million for 2020. That has, therefore, been a big increase. I have to be a little bit cautious because these things are still live. As somebody indicated earlier, the development board initiated the phase B instruction, which is in the High Court. There are two others. If the Deputy bears with me, I will come back and confirm this because one is either about to start or has just started. I am just caught in that. Two or three others are in process and we can and will provide a short note to the committee to set that out. They have been initiated primarily by the contractor.

BAM has a reputation of going in at tender with a lower price and then making up by way of claims. Essentially, it is demoralising to other construction firms that tender in a different way. At a previous Committee of Public Accounts session, BAM was described as hostile and was said to have a culture of claiming. How the NPHDB matches that is the key issue in terms of fighting fire with fire and, certainly, the NPHDB is disputing and going through every single solitary claim. How much is the NPHDB withholding in terms of monthly certified payments? What other aspects are we seeing of the hospital board showing teeth in terms of how it is dealing with this kind of culture?

Mr. David Gunning

I thank Deputy Murphy. I will provide a commentary on that. We are in a phase currently where we are attempting to be co-operative and collaborative with the contractor with a view to securing a date that all parties believe is deliverable. We are currently focused on 23 December as a substantial completion date. That is one aspect of the interaction. At the same time, we are defending the claims and we must do all this, obviously, in line with the contract that is in place. It is practically a standard public works contract.

A two-way contract.

Mr. David Gunning

It is a two-way contract, of course. The contractor has the right under the contract to submit claims, however, and it is our responsibility to defend them. In terms of withholding the monthly certified payments, we have no entitlement under the contract to withhold payments because we have a large number of claims. We make payments that are certified. Our quantity surveyor company provides the details, the payments are certified by the employer's representative and then the payments are made in accordance with that. We do not have the right to withhold any payments. I will make a point that I probably have not stressed enough before. If, under any circumstances, the contractor has claims and entitlements, it is our responsibility to make sure it gets paid for those, which we are endeavouring to do.

Is the NPHDB withholding any certified payments at this stage?

Mr. David Gunning

No, we are not. The Deputy my remember that we had a withholding with regard to not having a compliant programme. That amounted over a period of months to approximately €3.2 million. Once the ER determined we had a compliant programme, that withholding was reversed and the money was paid to the contractor. That is entirely in line with the contract.

The compliant programme is two years behind schedule, however. Is it compliant with the contract?

Mr. David Gunning

The role of the employer's representative is to make that decision. She has made that decision in accordance with the contract and we must then deploy the contractual mechanisms around that. That is the way we work.

I will move on to the issue of equipping out and the work now being done. Obviously, subcontractors have been brought in to do much of this work. What is the inflation rate with regard to equipping out and the work that must now be done, for instance, putting in theatres? Is there now an increase in cost on that because of the delay that has occurred or because of the delays that will occur into the future?

Mr. David Gunning

The only cost escalation under the contract would be to do with inflation. Mr. Devine is dealing with the details of the fit-out. I will ask him to respond to the Deputy's question.

Mr. Phelim Devine

Approximately €25 million worth of what we call group 1 equipment is embedded in the BAM contract. That would be subject to the 4% inflation clause we discussed earlier. The balance of the equipment is our responsibility to procure.

To date, therefore, the Connolly Hospital Blanchardstown outpatient urgent care centre has been delivered under budget. Equipping out the Tallaght University Hospital facility, which is to be delivered by September to November this year, is trending under budget. That budget is approximately €2.3 million. We are going to deliver that under budget. The hospital then is approximately €100 million. Including VAT, it is €104 million. That is trending slightly above but we are working very hard with CHI to bring that back within budget. It is very slightly over at the moment. We have not, as yet, seen any major increases in medical equipment procurement but we are just starting that process. We have a couple of procurements under way.

Have we contracts in place for the purchase of that equipment at this stage?

Mr. Phelim Devine

Yes, it is finished for Connolly Hospital Blanchardstown. We have some contracts in place for Tallaght University Hospital. We are putting the rest of them in place this minute to equip that facility out by between September and November this year. We are in procurement on the new children's hospital job for the group 2 equipment, which is actually the equipment that gets built into the building. That is currently in procurement and the balance of that will be done by the end of the year. The group 3 and 4 equipment, which is what we call plug and play equipment, will not be procured until next year and 2023 ahead of going in in 2024.

Is there a likelihood that some of that equipment will not now be required until 2023 or 2024 and we will have an increased cost there as well?

Mr. Phelim Devine

There is a risk because if there is an increase in the cost of medical equipment, there is an increase or a challenge to that budget we have in place.

Has there been any effort to tie down contracts at this stage in order that we can avoid that escalation in cost?

Mr. Phelim Devine

For the large medical equipment - the big stuff like the MRIs, CTs and central decontamination unit, CDU equipment - yes, we are trying to get them procured. They will be procured this year and we will be tying down the cost.

Okay. I thank Mr. Devine.

Mr. Phelim Devine

The group 3 and 4 equipment, which is diagnostic imaging monitors and stuff like that, that will not be procured. There is a balance between getting the right cost and getting the right technology that is contemporary and up to date. If we procure too early, we might procure something that is out of date by the time the hospital opens. We cannot do that. We must, therefore, get the best value for money in terms of price and quality for the CHI.

I am sorry for rushing Mr. Devine.

I had questions for the Department but the representatives do not appear to be present. I will go back to Mr. Gunning. He will recall that in December 2019, the estimated cost was provided at €1.43 billion. What is the sum total of the costs that have been incurred to date that were not included in that estimate? I am talking about costs related to inflation, settled claims, legal costs and any other costs that were not envisaged at that stage. What is the sum total to date, please?

Mr. David Gunning

I will go through the Deputy's list and comment. I do not have a table indicating this but the inflation is the sum of the €1.6 million and €1.3 million to which Mr. Devine already referred. With regard to the claims, the impact has been that the €2.9 million is the only change on the contract sum so far. There is no other material change to the contract sum in terms of-----

Are these the costs Mr. Gunning referred to earlier?

Mr. David Gunning

They are within the overall scope but it is tending to, shall we say, eat up the contingency that we had perhaps quicker than would have been planned. We are, therefore, reviewing all these matters. As the Deputy can imagine, there are a range of issues we have to address.

To clarify, in terms of unforeseen costs, which are not perhaps unforeseen but were not included in that figure, Mr. Gunning is talking about a cost that has been incurred of €5.8 million.

Mr. David Gunning

The Deputy is absolutely right. The implementation cost for the PwC recommendations and the claims defence cost is estimated at approximately €27 million, which is additional to the approved amount of €1.433 million. The Deputy is right that there are additional costs, including the ones I have mentioned, namely, inflation and others. Those were clearly signalled in the PwC report. Mr. Devine has mentioned provisional sums, to which the PwC report referred. The report stated that we must watch that area because there may not be enough in the budget. We have already talked about equipping and we know that we are in the ballpark-----

Is there no single sheet of paper that outlines when a cost has been occurred that was not planned for?

Mr. David Gunning

All the costs we have incurred have been planned for. If the Deputy is asking whether all costs fall within the €1.433 billion that was approved by the Government, we definitively and absolutely have full accountability on all of these numbers.

Mr. Gunning cannot tell me what that number is.

Mr. David Gunning

I have told the Deputy what the two numbers are and I have told him that other expenses are being incurred. We anticipate those will go above and beyond what was approved by the Government.

What is the total of those? Mr. Dunning mentioned an amount of €5.8 million.

Mr. David Gunning

That is the total. The rest is within the scope of-----

I call Deputy Carroll MacNeill.

The total is €5.8 million. I think this is important.

I ask the Deputy to be brief.

Outside the scope of the approve budget, the total figure for expenditure is €5.8 million.

Mr. David Gunning

That is what has been spent. That is correct.

I will follow on from Deputy Sherlock's point about the provision of a note on the court documents. Those court documents will be in the public domain. What exactly is Mr. Gunning going to be able to provide to us?

Mr. David Gunning

I will have to take a look at that. If I remember correctly, the Deputy asked about the individual cases that are currently active. We can provide a summary of those. Deputy Sherlock's specific question was about who initiated those particular proceedings. We can provide a quick summary as to the small number. Forgive me, I do not know if it is four or five. I do not recall because we are in real time here. We will provide that table, the cases concerned and who initiated the proceedings.

How quickly does Mr. Gunning think he will be able to get that back to us?

Mr. David Gunning

That will happen in a matter of hours.

That would be great. Our difficulty is trying to deal with what Deputy Catherine Murphy correctly described as a live issue. There is obviously sensitivity around the public nature of the issue. Will that information come back to us today or tomorrow, ideally before we visit the site tomorrow?

Mr. David Gunning

We will try to get that information back to the committee today. We look forward to welcoming the committee members tomorrow and giving the tour.

I will ask two questions together if Mr. Gunning would not mind coming back to me. I was at another committee meeting so I ask Mr. Gunning to forgive me if he answered this question in my absence. There is a digital hospital element to the new children's hospital. Mr. Gunning has said it is going to be the first smart, digital hospital in Ireland. Give recent events in terms of ICT and the HSE cyberattack, what reassurances can Mr. Gunning give to this committee that it will be robust in its defences?

I asked Mr. Gunning when he was previously before the committee about the completion date for the urgent care centre in Tallaght. Are we still on course for that date? What is that date? Are there any cost overruns or claims relating to that centre?

Mr. David Gunning

I am going to answer the Deputy's question about the care centre in Tallaght. I will ask Dr. Curtis to respond to the digital hospital elements. That issue relates to the operating model of CHI. Our job is to make sure that the network, plumbing, cables and radio network are installed, in place and fully operational to support that operating model.

The building of the care centre in Tallaght will be substantially completed by September this year, with an eight-week commissioning period. We are fully committed, as are all stakeholders, to getting Tallaght open by the end of November 2021. It is important to everybody for that to happen.

That is absolutely the case.

Mr. David Gunning

It is one of the positive stories emerging from this project, after a long and difficult period. I will ask Dr. Curtis to come in if she has a comment on the operating model to address the Deputy's question. I know from my conversations with CHI, it is committed to delivering on that vision of a digital hospital.

Dr. Emma Curtis

CHI is responsible for developing the digital aspect of the new hospital. It has an experienced ICT team. The impact of the cyberattack has been challenging and difficult for CHI. It is conscious of ensuring that the future digital hospital is protected, insofar as expertise allows, against future attacks. That is high on the priority list.

That is good to hear. Mr. Gunning did not respond to my question about claims and cost overruns for the Tallaght centre.

Mr. David Gunning

I apologise.

Mr. David Gunning

Mr. Devine has that information. We are in good shape in that regard but we are approaching final account. Tallaght and Connolly will, we hope, be wrapped up by the end of the year. I will ask Mr. Devine for a quick comment.

Mr. Phelim Devine

This is in the information pack, but the budget for the centre in Tallaght is €34.9 million. The current contract sum is €34.07 million, just under the budget. However, the project is trending over budget because we have had to make an additional investment in the Tallaght adult campus. Part of the work we are doing out there was to build a new crèche and new administration and changing facilities for Tallaght. There has been an additional investment in external infrastructure such as roads, paths, electrical equipment, new transformers and stuff like that. That was not envisaged when we put the budget together. The project is costing more but that money has been invested in a healthcare campus.

What about claims?

Mr. Phelim Devine

Like the national children's hospital, there have been a number of claims. There were 291 claims made on Tallaght, of which 254 have been determined, including that contract sum of €34.07 million I mentioned. Thirty claims are in dispute and are going through a process, four of which have been closed out to a value of €1.6 million that is included in that €34.07 million contract sum figure.

We are going over the time allowed under the pandemic regulations. Unfortunately, it is my job to try to keep proceedings within the limits. I thank everybody for their patience. Before we go, I will ask Mr. Gunning when this committee will see the report on the cost and a definitive completion timeline? When should we have that? I understand the Department officials have had to leave the meeting due to a fire alarm. Can Mr. Gunning, as the senior representative of the board, give me that timeline?

Mr. David Gunning

I do not represent the Department.

I know that.

Mr. David Gunning

Nor do I represent the Minister.

I am asking Mr. Gunning in his capacity as chief officer of the board.

Mr. David Gunning

This is the Minister's report. We are doing everything we can to keep the Department, the HSE and other stakeholders fully up to speed. We have given the committee our ambition for the timeline and we will get greater certainty on that. The costs issue is live and dynamic. I would certainly prefer to be coming into a meeting such as this and being absolutely and totally open. However, I cannot put the board or the State into a position that would compromise our ability to negotiate with the contractor. I understand the frustration but I hope the committee will also understand the challenges we face in trying to do a good job on behalf of the State on this project.

I have a practical, procedural question for our visit tomorrow. Will the contractors be there to meet us?

Hold on a moment. On the final cost of the project, one professor in DCU has set out that the €1.4 million to €1.7 million does not include the cost of the fit-out. He has mentioned figures of between €800 million and €1 billion for the fit-out. Is that on the mark?

Mr. David Gunning

We have had no interaction with anybody from DCU or anywhere else.

I know that. I am asking-----

Mr. David Gunning

The Chairman mentioned a professor from DCU. I have had no interaction with anyone. I do not know that professor.

Will the cost of the fit-out be within those cost estimates?

Mr. David Gunning

The fit-out-----

I ask Mr. Gunning to hold on until I have asked him the question.

Mr. David Gunning

The cost of the fit-out is included in the original costs.

The fit-out is fully contemplated in the original budget. The information referred to is not correct.

Could the fit-out be within the range of €800 million to €1 billion?

Mr. David Gunning

I confirm that fit-out is included in the cost, the original €1.433 billion, of which €900 million or so is the construction cost. The fit-out is included within that.

I thank Mr. Gunning. I will ask the clerk to follow up on all the information from the Department. I was just asking Mr. Gunning in case he had information on the matter. When will we see the report that will detail the finished cost and the definitive timeline? While we are on-site tomorrow, will we have the opportunity to meet representatives from BAM?

Mr. David Gunning

Yes.

We will have.

Mr. David Gunning

Absolutely. We have been doing a series of visits recently with many different VIPs. We are delighted to host. We will show members of the committee around tomorrow-----

We look forward to it.

Mr. David Gunning

-----us and BAM, in terms of all the excellent work that is going on there. I know they will be impressed by what they see there tomorrow.

Fine weather and hard hats are all that we need.

Mr. David Gunning

I thank the Chairman and the members.

I thank the witnesses for joining us. I thank the staff of the board and the Department for their work in preparing for the meeting. I also thank the Comptroller and Auditor General, his staff and the committee members. It is very difficult trying to do everything within these timeframes.

Is it agreed that the clerk will seek any follow-up information and execute the actions agreed at the meeting? Agreed. It also agreed that we note and publish the opening statements and briefing material for today's meeting? Agreed.

The witnesses withdrew.
Sitting suspended at 11.42 a.m. and resumed in private session at 12.19 p.m.
The committee adjourned at 1.05 p.m. sine die.