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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Children’s hospital cost overruns

Summary

Deputy Doherty presses the Government on escalating costs, delayed timelines and accountability for the national children’s hospital. The Minister says the final cost is still unknown, cites wider construction inflation and planning problems, and says Cabinet subcommittees are keeping the project under review.

Tá rudaí ag dul in olcas ó thaobh an bhreithiúnais atá déanta ag an Rialtas ó thaobh ospidéal náisiúnta na bpáistí. Tá na hamlínte sínte amach arís agus tá an buiséad imithe suas go dtí níos mó ná €1 billiún. Tá an cuma ar an scéal, ón méid a dúirt an bord leis an choiste oireachtais inné, nach bhfuil deireadh ar bith leis an scannal seo. Is í an cheist atá ann ná cad atá an Rialtas ag déanamh leis na héilimh ar chostais bhreise uilig atá curtha ar an mhéar fhada? Cén uair a bheidh an togra seo críochnaithe? Cad é an machnamh is déanaí maidir leis na costais dheireanacha?

Eight months ago, the National Paediatric Hospital Development Board made a commitment to provide the Oireachtas Joint Committee on Health with the revised cost and timeline of the national children's hospital. This project is years overdue and has overrun by more than €1 billion. It has been a shambles from the start. In 2019, it was described by the Tánaiste as a "debacle". Yesterday, the board was not able to give details of the time it would take to complete the construction of the hospital, which is not satisfactory. It is unacceptable that the board is not in a position to give clarity about the project's rising costs.

There is a vacuum of transparency and accountability surrounding the development of the hospital. Total claims have risen from 600 to 900. Most have been parked for later settlement, which is just kicking the can down the road. It is a never-ending saga of more claims, rising costs and no completion date in sight. The sketchy information that the board provided indicates that we are looking at the second half of 2024, if not 2025, as the earliest date on which the hospital will be in a position to open its doors. When will it be completed? Does the Government even know?

We should not lose sight of the root causes of this scandal. Policy failure and ministerial incompetence were at its heart. In 2019, the Government paid PricewaterhouseCoopers, PwC, €500,000 to review the cost overruns. PwC found that the total cost of the hospital had risen from the original budget of €790 million in 2013 to €1.4 billion by December 2018. PwC was of the view that, in 2019, the all-in cost would be €1.73 billion. That is some overrun. PwC found that the overspend was a direct result of "Significant failures [that] occurred during the crucial planning and budgeting stages of the project." That did not happen this year or last year, but from 2014 to 2019. The Tánaiste was the Minister for Health between 2014 and 2016. It was he who stood over a two-stage procurement process despite knowing it was untested, with significant risks. He was followed in that ministerial position by the current further and higher education Minister, Deputy Harris, who was informed by the Department of cost overruns of as much as €391 million in August 2018. He failed to share this information with his Cabinet colleagues, including the Minister for Finance.

This is a mess, but there seems to be no accountability or transparency. We have no idea as to what the revised additional costs will be, given there are 900 outstanding claims. The hospital board will not provide this information. Will the Minister, as a member of the Government, provide it to the Dáil? Someone in government must know. What action is being taken to rein in costs and bring this project under control? What will be the final cost?

Comment on this
Eamon Ryan Minister for the Environment, Climate and Communications Green Party

I cannot give the Deputy the final cost today. It is a live project and, as he mentioned, there have been significant cost increases and changed contractual arrangements throughout the process. There is a wider issue with significant cost inflation in the construction sector. As we all recognise, there is a problem with the planning, development, costing and delivery of major public construction projects. I am afraid to say that the children's hospital is a critical example of that. This does not just relate to James's Street. Going back further, the original proposal was for a site at the Mater hospital, which had benefits and coherence in terms of the transport plans, which included a metro station, for the same site. Both of those projects ended up not proceeding, which is one of the reasons for the incredible cost overruns with this hospital. The long time it has taken to get through planning to construction is one of the most critical factors in the overrun.

However, the project will be delivered. A significant milestone has been reached in the topping off of the main fabric of the building. It is a time for us to focus on getting the hospital delivered. The 2024 timeframe is far from ideal and constitutes a long delay, but for the health of the children of our country, it is important that we get it completed. There are complex and difficult contractual arrangements. No one in government will try to ignore that reality. We will have to manage them out to the hospital's completion. At that point, we will at least have a world-leading facility for our health system.

There have been developments. The acute centre in Connolly hospital is up and running. It is part of the overall children's hospital strategy. However, the main project has been bedevilled by significant delays. I do not disagree with the Deputy that one of the lessons we need to learn has to do with the two-phase contract process, wherein the broad outline was agreed but further contractual difficulties arose during the process. We should learn lessons from this.

We have had significant difficulties with Covid, including the availability of workers and, similar to the rest of the economy, the construction sector operating on a stop-start basis. We have a wider problem of skills shortages, which is increasing prices in the construction sector in particular. None of these difficulties will be resolved immediately, but critical to the Government's next steps will be ensuring that the economy has the necessary skills, we learn lessons about managing cost overruns in large public projects and we deliver a new and better planning system so that there will not be an incredibly long process again, given that this is one of the reasons the cost overruns have been so high. It is not ideal and has been an unsatisfactory process throughout, but it will be concluded with the delivery of a first class children's hospital. That is the most important aspect on which we should focus.

I cannot give the Deputy a specific price today because there are still contractual issues to be resolved. It would be a false figure if I gave one. However, we will minimise the cost to the best of the Government's ability and deliver the hospital, albeit after a long delay that no one has wanted. Now that the building has been topped off and its basic fabric has been built, we need to complete the hospital for the children of this country.

Comment on this

With respect, from listening to the Minister's answer, I believe that the Cabinet has taken a hands-off approach to this.

The Government does not know what the estimated costs are. Maybe it does not want to know. Where I do agree with the Government is that the root cause of this is the two-stage procurement process, a process Deputy Varadkar, as Minister for Health, signed off on. The cause of this is ministerial incompetence. The PwC report found it was not because of inflation or other matters but the lack of budgeting and failures in crucial planning at the early stages. That is why we have a situation in which Leo Varadkar promised this project would be built by 2020 and the all-in costs, including contingency and inflation, would be €650 million. We now have a figure of €1.7 billion. We have 900 outstanding claims.

As leader of his party and a senior member of Cabinet, can the Minister not even tell the Dáil what the total quantum of those claims is? Are we supposed to allow the Government to continue to write a blank cheque for this project? What actions is the Cabinet taking to make sure costs are reined it? Or is it the case that it had made such a mess of this in the 2014 to 2016 period that it has to pay no matter what comes?

Comment on this

Cabinet subcommittees have been meeting regularly to assess just this project because of concern about the contractual difficulties there. We have been paying it all our attention and we have every intention to get it built and keep the costs down. However, if I were to give false promises in terms of what the exact final cost would be, I would be guilty of the same things Deputy Doherty is accusing others of. There is a wider issue in our wider debate about construction, in housing, transport, water and a range of other infrastructure, that we in the political system start to recognise we cannot promise everything at the cheapest price to get it over the line and deal with the consequences of it later, something which parties of all colours and shades do. We have to start being realistic about the likely cost of various projects.

We can and will learn from this as an example.

Comment on this

The Minister should share them with the Dáil.

Comment on this

We have to, first and foremost, get them through the planning system. In terms of the cost overruns on this and the other main public infrastructure projects we have, the greatest factor in terms of cost inflation is the long lead times it takes to deliver projects. We all need to focus on improving that, especially in the planning system.

Comment on this
Catherine Connolly An Leas-Cheann Comhairle Independent

Thank you, Minister. I am moving on to the Social Democrats.

Comment on this