Cost of children's hospital to increase by €500m with total now topping €2bn

Picture: Sasko Lazarov / RollingNews.ie

The total cost of the National Children’s Hospital is set to increase by €500m, Cabinet has been told.

Health Minister Stephen Donnelly informed his Cabinet colleagues that the overall cost of constructing the hospital had risen, bringing the total to over €2.24bn.

In December, Cabinet approved a further €40m to go towards the project. At that stage, the bill for the NCH stood at €1.433bn. In 2017, the hospital was estimated to cost €450m. 

The Government said that the approved increase in the capital budget "will address areas identified in the 2019 report, the New Children’s Hospital Independent Review of Escalation in Costs, carried out by PwC". 

The report said that the New Children's Hospital "was unique in scope, scale and complexity in comparison to any other health infrastructure project in Ireland's history and was explicit in stating that the project's complexity should not be understated".

"However, it identified a series of weaknesses in terms of set-up, planning, budget, execution, and governance that have since been addressed.

"The report considered the alternative option of re-tendering the works. It concluded that this was an unrealistic fall-back option and would have increased costs further and would have likely resulted in no hospital being built."

Speaking following the Government decision, Mr Donnelly said: “We all want to see this hospital open as soon as possible. Today’s approval by Cabinet to increase the capital and current budget sanctions for the New Children’s Hospital project will assist in achieving the opening of what will be a world-class hospital.

“We already have two satellite centres open and delivering the new model of care. The construction of the main hospital is also well advanced at over 90% completion. I acknowledge that a significant amount of money is being spent on this project, but it must not be forgotten that this is a hospital built to serve children and their families for the next 100 years. The new hospital building is unprecedented in scale and technological advancement.”

The hospital itself is expected to be handed over to the State by developer BAM before the end of 2024, with a six-month fit-out process then due to take place. It is expected that the official opening of the new hospital will be in May 2025 — nearly 10 years on from the project first being approved.

The Government has been wary in recent times as to the final completion date of the project, citing the ongoing tensions between the developer BAM and the (National Paediatric Hospital Development Board (NPHDB).

Taoiseach Leo Varadkar told the Dáil that €2.2bn is the maximum allocation for the completion of the National Children's Hospital, adding that the Government "will not be allocating anymore".

Mr Varadkar said that construction on the hospital will be completed "later this year" with an aim that it will be finished in October. He said the hospital will be open and treating children next year and stated it will be "comparable if not superior" to hospitals across the EU.

He was responding to Sinn Féin leader Mary Lou McDonald who described the projected cost of €2.2bn as "staggering", and added she had "no confidence" this will be the final cost.

Mr Varadkar said that of the €2.2bn total, €1.4bn had already been drawn down, adding that it was important to remember that the costs included satellite offices in Tallaght and Blanchardstown, as well as decommissioning Crumlin and Temple Street Hospitals, and financial consequences associated with the examination of building the hospital at the Mater site in central Dublin.

Public Expenditure Minister Paschal Donohoe echoed the Taoiseach's comments, saying that the extra funding allocated to the hospital will be the last “significant settlement” made until the project is completed.

“I expect that the settlement that we have made here is the last significant settlement in relation to the overall cost,” Mr Donohoe said.

“We are involved in a legal dispute in relation to outstanding bills on this hospital at the moment and the State, through the board of the National Children's Hospital, is vigorously contesting all of them.” 

Asked if smaller payments will be provided to the NPHDB over the course of the next year, Mr Donohoe said that the extra €500m would deal with the “imminent costs”.

In an interview with the Irish Examiner late last year, Mr Donnelly said that it would be inevitable that further money would be sought by the board to complete the project.

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Mr Donohoe said that the State has “learned much along the way” in delivering the NCH, acknowledging the much higher cost than originally set out in 2014.

He added that the main priority for the Government is ensuring that the NCH is completed as quickly and as affordably as possible.

The Public Expenditure Minister added that calls to re-tender the project early in its development were wrong, and that doing so would have left the State with a higher bill and the hospital further delayed.

“With this project now, what we are trying to do is minimize the cost now in relation to it, get to the point that it can be open as soon as possible.

“When that happens, we will then see the amount of care that will be made available to very, very sick children.

“I believe if the project had been re-tendered then, we would be further away from doing that with no guarantee at all that it’d be cheaper.”