No sanction over children’s hospital overspend

No sanction over children’s hospital overspend

No children’s hospital officials will be sanctioned or removed due to the project’s runaway costs, despite warnings that the final cost could top €2bn.

A long-awaited independent report on the spending scandal has said that, despite a litany of financial control failures and surging prices, any Government action risks further damaging the project.

In a 128-page report, PricewaterhouseCoopers states that “red flags were missed” from the very start of the project and that firms “exploited” opportunities as they knew more about their contracts than officials negotiating with them.

The PwC report says the Government’s original €650m price ceiling and its €1.4bn December prediction will be dwarfed by a final figure which will hit a minimum of €1.73bn and is set to surge past €2bn due to Vat and other costs.

Taoiseach Leo Varadkar said the findings were “grim”.

The report says that removing National Paediatric Hospital Development Board officials would leave a “knowledge gap” in the project.

Health Minister Simon Harris will meet that board’s chairman, Fred Barry, today to hear his views.

Mr Harris said delaying or cancelling contracts would leave the State open to substantial extra payouts.

    According to the PwC report:

  • The children’s hospital will now cost at least €1.73bn, with any 10% construction Vat rise costing another €97m and further design costs likely to push the project’s price above €2bn;
  • The vast majority of costs were controllable, with officials in charge missing “red flags” from the outset and the “basis of the original budget” being “flawed”;
  • Firms involved understood contractual relationships better than officials, “allowing them to exploit opportunities”;
  • Once the cost overruns were realised, it was already “too late” to re-tender the project — finding a new building was now deemed an “unrealistic fall-back option”;
  • The quantity surveyor was using different figures to that of the wider project.

The report states that despite a desire and public commitments to reduce costs, the reality is that “the ability for cost reductions in these committed areas is very limited due to the restrictions in the respective contracts”.

Mr Harris said he and Finance Minister Paschal Donohoe will respond to the report within a month.

Mr Harris suggested on RTÉ News last night that he would like firms’ project histories to be considered in the future.

However, sources said Mr Harris is unlikely to press for company action as it is a matter for the National Paediatric Hospital Development Board.

The report was published on the same day as Mr Harris faced further problems as the number of patients on hospital trolleys hit its highest point since the start of the year.

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