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The Dáil’s public spending watchdog today heard a claim the main contractor building the new National Children’s Hospital (NCH) is “underperforming”.
The National Paediatric Hospital Development Board (NPHDB) has been in dispute with the main contractors BAM over progress on building the hospital.
The project has been beset with delays – some resulting from the Covid-19 pandemic – and there has been controversy over the construction costs which are set to top €1.4 billion.
The final sum to be spent on the hospital – including its fit-out – is expected to be more than €1.7 billion.
NPHDB chief executive David Gunning appeared at the Dáil’s Public Account’s Committee (PAC) this afternoon to face TDs’ questions on his organisation’s 2019 accounts.
His opening statement claimed the main contractor is “underperforming”. Mr Gunning said the NPHDB tracks progress and performance on a weekly and monthly basis and “we continuously engage with the contractor in an attempt to make up lost time”.
He added the contractor is obliged to provide the NPHDB with a compliant programme of works that sets out its approach to delivering the new hospital in accordance with the contract.
“However, since the agreement of the Programme as part of the Phase B Instruction, the programme updates provided by the contractor have not been compliant with the contract.
“As a result, we are currently withholding 15 per cent of monthly certified payments until such time as a compliant programme is submitted,” Mr Gunning told the committee.
He told TDs this is one of the levers permitted to the NPHDB under the contract to “incentivise the contractor to deliver on its contractual obligations”.
Mr Gunning also claimed: “While the contractor has been underperforming as regards project execution, it has been extremely assertive as regards claims as has been indicated at previous Joint Oireachtas Committees on Health and Public Accounts Committee meetings”.
He says that since the start of the NCH project there have been “a significant numbers of claims, of a very substantial value”.
There is an agreed Dispute Management Process in place between the NPHDB and the main contractor.
Mr Gunning said: “As it stands, claims are now at all levels of the dispute management process, which involve the Employers Representative, Project Board, Conciliation, Adjudication and one of the cases has reached the High Court. ”
He says the NPHDB is “defending each claim robustly in order to manage the cost of the project and defend the public purse, however the sheer volume and nature of claims on this project is consuming a significant amount of executive and project team time and incurring significant costs.”
The Irish Times has sought a comment from BAM.
Mr Gunning said the figure approved by the Government for the project is €1.433 billion but there are a number of items not included in this as “there was no price certainly for them and nor can there be for the duration of the project.”
These include construction inflation, statutory changes, and any change in scope resulting in healthcare policy changes.
He told the committee the main contractor can recover the cost of construction inflation in excess of 4 per cent.
Such payments from August to December 2019 came to €1.6m and this was paid last July.
Mr Gunning said expenditure on the design and build of the hospital was €199,622,000 as of December 2019. He said this was against budgeted spend of €262m approximately.
Mr Gunning claimed the underspend in 2019 “is due to the fact that the main contractor did not advance the construction of the build against the planned original programme”.
He also alleged: “This lack of advancement is primarily due to under-resourcing of the project by the main contractor – a situation that has been in place since the beginning and which continues today.”
Mr Gunning said the construction completion date for the new children’s hospital set out under the terms of the contract was August 2022 before it is handed over for commissioning.
He said the NPHDB last presented to the PAC the project was behind schedule and “since then that delay has been exacerbated as a result of Covid-19 and ongoing issues with resourcing on site.”
The NPHDB is responsible for overseeing the project to build the new hospital at a site beside St James’s Hospital in Dublin’s south city as well as satellite centres in Blanchardstown and Tallaght.
The facility at Connolly Hospital, Blanchardstown, opened in July 2019.
Mr Gunning said the Paediatric Outpatient and Urgent Care Centre at Tallaght University Hospital was due to be completed this month but that construction will not complete before September 2021.
It is then to be handed over to Children’s Health Ireland, the organisation that will run the NCH for eight weeks of operational commissioning and equipping.