The cost of building the National Children’s Hospital is estimated to increase by €51million due to inflation, the Public Accounts Committee has heard.
David Gunning, chief officer at the National Paediatric Hospital Development Board told the committee yesterday that construction inflationary costs above 4% would fall on the State, rather than the contractors.
He said: “So for 2021, the payment is €17.89million. The total inflation payments to date are roughly €21.16million.”
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Mr Gunning said the average tender price inflation that applied in 2021 was 10.24%.
Fianna Fail TD Paul McAuliffe noted that additional inflation costs “could go as high as €100million”. He added: “This is a very significant risk to the overall cost of the project.”
Phelim Devine, project director at the NPHDB explained that the 4% limit was included in the contract to attract companies to pitch for the tender due to the length of time the project would take to build.
He added: “We felt the 4% was an appropriate figure to put in the contract and then anything above 4% would be paid by the State.”
Mr Gunning agreed that the value of 81% of the 1,314 claims made relates to the time extension for the hospital, but said it was still to be determined who is liable for the delays.
Social Democrats co-leader Catherine Murphy asked: “So if the hospital had been completed on time, we wouldn’t have attracted a lot of these claims?”
Mr Gunning replied: “Or you could put it that the reason the claim exists is because the project is in delay.”
The National Children’s Hospital is the largest current infrastructure development in the State.
The Board said it is aiming to complete the build as soon as possible, but that disruption caused by the Brexit deadlock, the Covid-19 pandemic and the war in Ukraine has slowed that timeline.
The overall cost of the project has risen from an estimated €800million in 2014, to €983million in 2017, to €1.4billion as of December 2019.
In recent appearances before the PAC both the Department of Health and the NPHDB have stated that the approved budget for the capital project remains at €1.4billion, but the Department has conceded that it would be a reasonable assumption that costs would exceed the current budget.
The budgeted cost for equipping the new hospital is €300million.
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