Seán Crowe (Dublin South West, Sinn Fein)
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Apologies have been received from Senator Annie Hoey. Before we get into the main item on today's agenda, minutes of the committee's meetings of 18 September 2024 have been circulated to members for consideration. Are they agreed? Agreed.

The purpose of today's meeting is for the joint committee to receive an update on the construction of the new national children's hospital from representatives of the National Paediatric Hospital Development Board, NPHDB. It has been some time since the committee last had an engagement on this issue or visited the development. The committee is conscious of recent reports of further difficulties arising with the project.

To commence the committee's consideration of the matter, I am pleased to welcome from the National Paediatric Hospital Development Board, Mr. David Gunning, chief officer and Mr. Phelim Devine, project director.

In giving this note on privilege, I am conscious of the subject matter. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if a witness's statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that any such direction is complied with.

Members are reminded of the long-standing parliamentary practice to they effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way to make him or her identifiable.

I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex to participate in public meetings. I will not permit a member to participate where they are not adhering to the constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member participating via MS Teams that, prior to making their contribution, they confirm that they are on the grounds of the Leinster House campus.

To commence our consideration of the current position regarding an update on the construction of the new children's hospital, I invite Mr. David Gunning to make his opening remarks on behalf of the National Paediatric Hospital Development Board.

Mr. David Gunning:

The National Paediatric Hospital Development Board was appointed by the Minister in 2013 to design, build and equip the new children's hospital on a campus shared with St. James's Hospital in Dublin 8, a paediatric outpatient and urgent care centre at Connolly Hospital Blanchardstown and a paediatric outpatient and emergency care centre at Tallaght University Hospital. Both satellite centres were handed over to CHI in 2019 and 2021, respectively, and are now fully operational.

BAM was instructed to proceed with the phase B above-ground works on the new children's in January 2019. In February 2024, Government approved enhanced capital and budget sanctions, bringing the total approved capital budget to €1.88 billion for the NPHDB component of this important project. The revised Government-approved increase included provisions to address areas not originally included in the 2018 budget, a number of which were clearly set out in the independent review carried out by PWC in 2019. The PWC report, which noted that the children's hospital was unique in scope, scale and complexity, also noted the number of project risks that had the potential to place further cost pressures on the approved capital budget. These risks included contractor entitlements under the contract; the outturn of provisional sums, recovery of construction inflation above 4%, the need for additional capacity and capability in the executive team of the NPHDB, changes in healthcare policy and regulations, and the contractor's right to claim for additional true costs in line with public works contract provisions.

Project costs, like other areas of the construction sector and wider society, have been impacted by external pressures, including impacts to supply chains arising from the pandemic and other global events such as the war in Ukraine and Brexit. The NPHDB addressed all of these risks and previously unidentified costs in its engagement and discussions with stakeholders ahead of the approval of the capital increase and believes that the enhanced budget of €1.88 billion reflects the additional requirements at the appropriate level. As of the end of August 2024, the total amount spent on the project by the NPHDB was €1.478 billion, including VAT.

I turn to progress to date. As the committee can see from the images and information pack we provided, construction on the NCH is approaching its final stages. The main focus relates to bringing all the rooms and spaces within the hospital up to the completion standard required by the contract. In addition, the technical commissioning is being undertaken and will continue until substantial completion. This work stream is approximately 40% complete. The external works include the main entrances, road junctions, emergency department car park, upgrades to the St. James’s campus internal roads, hard and soft landscaping, gardens and play areas. The connecting paths to the St. James’s adult hospital are well advanced with outstanding elements such as the new CHI and St. James's ambulance yard and canopy programmed to be complete by quarter 4 of 2024. The specialist clinical equipment built into the hospital such as MRI, CT, X-ray, C-arms, AGVs, etc., are installed and are being commissioned.

In 2024, the NPHDB will complete its procurement of the medical and non-medical equipment to be installed post-substantial completion. Almost €66 million of clinical equipment has already been procured. The most advanced and contemporary equipment is being procured for the hospital. Where equipment is required to interface with the CHI's electronic healthcare record, that is being developed by CHI, and this has been delivered to CHI for validation and testing. The construction of the helipad is complete and test flights will take place towards the end of 2024 and continue into early 2025.

The NPHDB procured ClearSphere as its contractor to undertake four specialist fit-outs within the NCH comprising the pharmacy, the radio-pharmacy aseptic compounding units, the stem cell laboratory and the biosafety laboratory. These specialist fit outs commenced in September 2024 and are due for completion in quarter 1 of 2025.

In February 2024, construction of the new Ronald McDonald house commenced, which is located across from the main entrance of the new children’s hospital. Clancy Construction Limited was appointed to design and build this facility, which will provide accommodation for 52 families each night, more than double the accommodation available at the current Ronald McDonald house in Crumlin. The new facility is already 30% complete, on budget and due to complete in quarter 3 of 2025.

In the past four years, the main contractor, BAM, has shifted its substantial completion date 14 times. In the past 12 months alone, BAM has shifted the substantial completion date four times, pushing out the completion date by a total of eight months. BAM is currently communicating June 2025 as its anticipated substantial completion date. In the absence of a written, contractually compliant, realistic and resource-loaded programme, the NPHDB cannot and will not simply accept BAM’s ongoing deferral dates. The employer’s representative, which is the independent contractor administrator, has not accepted this latest update, and has requested that BAM submit a revised baseline programme, in accordance with the requirements in the contract. A baseline programme is a critical requirement, fundamental to any construction project, as it provides a clear approach and timeline for works under way up to substantial completion, allowing for work to happen in an efficient and effective manner. The absence of a baseline programme on any construction project, especially one of the scale of the new children’s hospital, is completely unacceptable. BAM’s continued failure to provide a compliant baseline programme, and its shifting of dates, is not acceptable to the NPHDB, nor to our colleagues in CHI. It shows a complete disregard for internationally recognised professional processes and contractual procedures. The approach being taken by BAM also shows complete disregard for the sick children and young people and their families, as well as the dedicated and excellent staff in Children’s Health Ireland. It is clear to the NPHDB that the biggest factors contributing to the continued delay to completion are BAM’s continued insistence on offering rooms and areas within the hospital as complete when they are still incomplete, BAM’s continued failure to manage the project execution and BAM’s continued unwillingness to resource the project appropriately. This is why BAM is consistently failing to deliver on its planned commitments month on month.

BAM’s most recent forecast completion date is June 2025. This is 31 months behind the current contractual completion date of November 2022 and four months later than the substantial completion date the NPHDB provided to the Committee of Public Accounts in May 2024. In the contract programme provided by BAM in January 2019, it committed to a peak resource of more than 1,700 productive operatives. The highest level of resources provided by BAM to date was in June 2022 with circa 1,260 productive operatives. In 2024, there has been an average of 774 productive operatives on site. This dropped to 612 in August 2024 and was 631 in the first two weeks of September, which is unacceptable.

BAM has failed to resource this project sufficiently. This is evidenced by their continued failure to meet their own planned progress, the low monthly valuations and the continual shifting of the completion date. Since September 2023, BAM has, on average, achieved 64% of its planned progress. As of today, not one room has been fully completed in line with the standard and finish set out in the contract. There are 5,678 clinical spaces in the new hospital and while, to date, BAM has offered 3,128 as complete, none were completed to the required standard. All rooms offered by BAM require additional work prior to our team being in a position to sign them off as complete. BAM persists in offering sections of the hospital for review and sign-off when they are very obviously incomplete. BAM is currently abdicating its contractual responsibilities with regard to its quality management plan, fit-out inspection plan and final room inspection plan. BAM contractually undertook to deliver a building that is completed to the standard expected and with all snags addressed. The State is paying for a high-standard building complete to the level designed and I assure the committee we will not accept anything less. In order to ensure that the handover process is appropriately managed and completed, the NPHDB has had to assign additional resources to this handover process, and we are holding BAM to account on its processes.

Given BAM’s reputation in the market as a tier 1 contractor, the NPHDB finds its continued failure and refusal to comply with its obligations under the contract to be completely unacceptable. The manner in which BAM has progressed the works towards substantial completion is, and has always been, completely unacceptable to the NPHDB. The outcome being a loss of benefit to the State and importantly to sick children and their families, due to the delay in substantial completion of Ireland’s new children’s hospital.

The NPHDB is continuing to do everything in its power to compel BAM to conclude its work and fulfil its contractual responsibilities. BAM is not fulfilling its contractual obligations and consequently, we have moved to withhold 15% of certified payments due to BAM. This is a lever available to the NPHDB within the contract and we have initiated it again. The NPHDB previously withheld 15% of moneys due to BAM between May 2020 and February 2021, when BAM’s programme was deemed by the ER to be non-compliant. The NPHDB also threatened to withhold 15% in 2023. This was not actioned as BAM did provide a baseline programme.

Meanwhile, BAM continues to submit large volumes of claims, including duplication and triplication of the claimed time and value. It is the view of the NPHDB that BAM is seeking to implement a strategy to exert pressure on the State to secure additional moneys above the contract sum, by whatever means. The NPHDB is robustly defending claims that it considers to be without merit or to be inflated to prevent cost escalation and to protect the public purse. Regardless of how many times BAM asks, BAM will not be given another cent beyond what it is entitled to under the contract.

Where there have been changes instructed by the NPHDB - and it is not unusual on a construction project of this nature that there would be some changes instructed by the employer - we pay BAM for additional resources, and their supervision to minimise the impact on the programme.

We continue to do everything in our power to compel BAM to conclude its work and to fulfil its contractual responsibilities, including notifying it of the NPHDB's intention to apply liquidated damages for late completion.

I very much regret to have to report today that BAM is continuing to fail in its contractual obligations. It is a source of frustration, concern and anger that we are dealing with the issues that have been set out. I assure the committee that the NPHDB has not left any stone unturned or any legal route unexplored in our efforts to seek to influence and, indeed, compel BAM to meet its contractual obligations, but to date the efforts have yielded limited return. The approach by BAM to this project is unacceptable and we continue to do all in our power to ensure the hospital is delivered to the standard required as soon as possible.

Seán Crowe (Dublin South West, Sinn Fein)
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I thank Mr. Gunning. I will move straight away to members' questions.

Martin Conway (Fine Gael)
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I thank Mr. Gunning and his team for attending. The last time Mr. Gunning was before the committee was July 2023. Much of the statement is probably in line with what was delivered then, except the figures have changed, the timelines have changed and it is getting more serious. Probably the saddest element of Mr. Gunning's statement is the fact there is not one room in the national children's hospital that is fit for purpose to accommodate a young sick child. It is a reflection of the disaster this project has been to date.

In February 2024, the NPHDB received sanction from Government for €1.88 billion. I sat here in July 2023 and put it to Mr. Gunning that the cost of the children's hospital could be €2.5 billion. It was not appreciated at that time that I put that figure on it. Now we see the potential liability is not far off that figure. Is there a further request going into Government in the coming weeks and months for additional funding and what now is the top-line figure Mr. Gunning expects the children's hospital will cost, given the difficulties there are with BAM and given the significant claims it has made? Some claims may be duplicated, some may be disputed but, clearly, it will succeed with some. What is now the top-line figure Mr. Gunning is able to indicate to us will be the cost of the national children's hospital to the taxpayer?

Mr. David Gunning:

I thank Senator Conway for his question. The Senator is correct that it is not long since we got Government approval for the additional funding up to €1.88 billion. There is an additional amount on top of that, which is the CHI component, which brings it to approximately €2.2 billion. That is the total amount.

I can speak about the NPHDB element. As I said in the statement, there was a considerable degree - I would say nearly two years - of preparation in that process. As of now, I am confident, with the analysis we did at that time, that the €1.88 billion will be sufficient for the NPHDB to continue to complete this project.

Martin Conway (Fine Gael)
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In 2018-2019, when the NPHDB got the approval for €1.4 billion, it was satisfied then. Why is Mr. Gunning so confident now that €1.88 billion is enough?

Mr. David Gunning:

I guess we are 94% complete on the building of the project. We have a particular date from the contractor, which I am sure we will talk about in more detail, but we are working on the end of this project. We are working at the finish. In 2019, we were at the very start. In 2019, as the Senator will appreciate, the completion date of the hospital was August 2022. The Senator mentioned the middle of last year. In the middle of last year, the completion date was October 2024. As we sit here now, in September 2024, the completion date is January 2025.

Martin Conway (Fine Gael)
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On that, I note the frustration in Mr. Gunning's statement about the timelines. In the past 12 months alone, BAM has pushed out the completion date four times and the NPHDB has looked for further assurances and guarantees, but it is reasonable to expect that when one comes to the end of a project this size there will be further delays. Can Mr. Gunning sit before the committee and give us an assurance that he does not believe it will be pushed out again? I do not think anybody here believes there will not be further delays. I must put it to Mr. Gunning that it will be, most likely, 2027 before a sick child is treated in the national children's hospital.

Mr. David Gunning:

I hope our frustration in dealing with this particular issue comes across to the Senator and to other members of the committee.

Martin Conway (Fine Gael)
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It does.

Mr. David Gunning:

We, and I, personally, in this role, have been dealing with this for five years as it has moved out and out and we are sick of it. We have been dealing with this day in, day out, with commitments made and commitments missed. I am approaching-----

Martin Conway (Fine Gael)
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Is it fair to say Mr. Gunning has lost all confidence in BAM?

Mr. David Gunning:

Let me come back to the Senator's question on June 2025. As of right now, we do not have a detailed programme from BAM. We do not have the detail setting out how the contractor plans to execute the last ten months of the project and, without that detail, I certainly would not go so far as to give any assurance to this committee in terms of the bankability of, or confidence in, the June 2025 date.

Martin Conway (Fine Gael)
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I understand and totally appreciate Mr. Gunning's frustration with that, but those watching have a realistic expectation of an indication from Mr. Gunning as to when. At this stage, we need to be as honest with people as possible. I believe Mr. Gunning is being, but it is realistic to expect that it will be at least 2027 before children will be treated in the hospital. One more delay would nearly push it out to 2027 anyway.

Mr. David Gunning:

When this was moved by BAM from March to June 2025, that was an extremely disappointing and sad day for the project because it essentially means this is a 2026 hospital opening and that is a CHI matter in terms of what it has to do. By moving it to June, it certainly moves it out. There is no doubt about that. To come back to the key issue-----

Martin Conway (Fine Gael)
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The confidence.

Mr. David Gunning:

-----I do not control the resources. We are in contract with the contractor who is responsible for the programme and for the resourcing of this project. I would say very clearly that this timeline can be secured if the resources are applied. I refer to not only the operatives on the ground but also the supervision. If it is appropriately managed and executed, this timeline can be secured. That could be done.

Martin Conway (Fine Gael)
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What about the 15% the NPHDB is retaining? Can that be increased under the contract?

Mr. David Gunning:

The quick answer to that is "No" because that is what is in the contract, but it increases on a monthly basis. I will explain it briefly.

Martin Conway (Fine Gael)
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Mr. Gunning does not need to because if the answer is "No", it is "No" and it is in the contract.

Mr. David Gunning:

It does not go above 15%, but every month we get to withhold 15% of the contractor's payment. The contractor's payment, at the current resourcing of 630 people on the site, is €5 million a month. The contractor should be invoicing. We should be making progress to the tune of €10 million or more per month. If we were, we would be in a much better position. We would not have the delay we do.

Martin Conway (Fine Gael)
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I am interested in getting to understand the NPHDB's engagement with the Department of Health and the Minister. How regularly over recent months has Mr. Gunning met the Minister, the Secretary General or both within the Department to keep them apprised of this and to brief them on this developing situation? It would appear the Minister was only in a position to brief the Cabinet and the Taoiseach on the escalating situation, the delays, the costs, etc., last Friday.

Mr. David Gunning:

I will break it down into the different components.

This day two weeks ago we had a board meeting and the Minister, Deputy Donnelly, met the board two weeks ago for an extensive discussion in relation to the current state of the project. I participated in that meeting.

Martin Conway (Fine Gael)
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That is fine. Since-----

Seán Crowe (Dublin South West, Sinn Fein)
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Senator, you asked a question. Will you let the witness respond, please?

Mr. David Gunning:

Shortly after the capital increase, there was also a special meeting in the Department of Health in Baggot Street between the members of the board and the Minister. As the chief executive, I also attended that particular meeting. The Minister also visited the site for the opening of the Ronald McDonald house charity and I had a chance to speak, as did other members. I know for a fact that our chair, Ms Fiona Ross, has extensive discussions with the Minister and she keeps me fully briefed in relation to those matters.

Martin Conway (Fine Gael)
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Would she have weekly or biweekly meetings with the Minister?

Mr. David Gunning:

I know they are regular but I am not fully in the loop on that. I know there as a lot of interaction between the Minister and the chair.

In relation to my dealings with Department officials, our official line of reporting is through the HSE to the Department. The Senator will not be in any way surprised to hear that there is wide open communication between the development board, the HSE governance piece and directly with the Department. There is a lot of interaction from that. I have less interaction with the Secretary General but I have quite a bit because I am often invited to the national oversight group meetings that are chaired by the Secretary General. I was at the last one about two months ago. There is, therefore, a huge amount of interaction between us, the Department, the HSE and the Minister.

Martin Conway (Fine Gael)
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I thank Mr. Gunning for our engagement this morning. I do not have any confidence that the project will not go further over budget and there will not be further delays, unfortunately.

Mr. David Gunning:

BAM controls the answer to that particular issue.

Martin Conway (Fine Gael)
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I agree.

David Cullinane (Waterford, Sinn Fein)
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I am sick of all of the failures as well, Mr. Gunning, in relation to this fiasco, which is what the children's hospital has turned into. I am sick of the fact that we have 14 completion dates that have come and gone. In fact, there have been 17 in total, if we are being honest. I am sick of the fact the costs have escalated where it is now €2.2 billion and will be potentially more. I am also sick that children will not have access to the state-of-the-art services they need. I would much prefer to be here today talking about a state-of-the-art hospital that revolutionises healthcare for children. That is what I want to be talking about, yet here we are on groundhog day.

As was said earlier, the opening statement given by the board is almost a carbon copy of the one we were given last year. Nothing much has changed. There are the same issues in relation to the contractor not resourcing the project, rooms not completed and so on. It is a source of frustration. Mr. Gunning made a number of very serious allegations in his opening statement in relation to the contractor. By the way, it is not our job as a committee to adjudicate on any of that. That will be ultimately done through the courts, I imagine. He said the contractor is using a tactic to exert pressure and extract additional resources. The Minister for Health made the same allegation in his letter. Am I right that the outstanding claims valued by the contractor amount to over €800 million?

Mr. David Gunning:

I know we provided the table in our attachment but, yes, that is correct.

David Cullinane (Waterford, Sinn Fein)
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It is hundreds of millions of euro in any case.

Mr. David Gunning:

They are not all fully substantiated but there is-----

David Cullinane (Waterford, Sinn Fein)
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I understand that.

Mr. David Gunning:

-----a bit of detail in there.

David Cullinane (Waterford, Sinn Fein)
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In terms of the process to deal with those claims, am I right in saying there is a standing conciliator as part of the contract. Obviously, if any party does not agree with the adjudication of the standing conciliator, it can go to court. Ultimately, the High Court can adjudicate. Claims can also be settled by agreement where both parties agree they will reach a compromise. From a policy perspective, given Mr. Gunning has said he believes BAM is trying to exert pressure to extract additional funds and the Minister is saying that as well, is it now the policy of the board, because it is the policy of Government, not to compromise or to even seek agreement with the contractor in relation to outstanding claims? Is that the current position?

Mr. David Gunning:

Our message to the contractor is twofold. It is, "When are we getting our hospital?" and "Not one penny more". Those are the two points.

David Cullinane (Waterford, Sinn Fein)
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My point is that Mr. Gunning cannot say for certain that it will not be one penny more because, as I have just pointed out, there is a conciliator. I will come to that because Mr. Gunning makes an interesting point. In May 2024, the standing conciliator adjudicated on some of the claims in relation to delays. Am I right that the standing conciliator awarded BAM €108 million, excluding VAT?

Mr. David Gunning:

The numbers are correct. I will make one comment. There is no award here. The conciliator does not have the power to award. He has the power to make a recommendation.

David Cullinane (Waterford, Sinn Fein)
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He made a recommendation then. His job is to make a recommendation which is binding unless it is overturned by the courts.

Mr. David Gunning:

It is binding. I apologise. I do not wish to interrupt.

David Cullinane (Waterford, Sinn Fein)
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It is binding unless it is overturned by the courts but the conciliator made a binding recommendation to award the contractor €108 million. That was outside the board's control and it is additional money that will have to be now paid to the contractor. In fact, it may have been paid, and it can only be returned if the High Court adjudicates on it, which it may well do. Am I right that the €108 million was a recommendation from the standing conciliator?

Mr. David Gunning:

That is correct. In response, the development board, as it is allowed to do, issued a notice of dissatisfaction in relation to that conciliator's recommendation.

David Cullinane (Waterford, Sinn Fein)
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The board can issue that notice.

Mr. David Gunning:

That has the effect of neutralising that decision. Under the contract, we are required to pay the money but we are only required to pay the money on two conditions. The first is that the contractor initiates legal proceedings in the High Court and the second is that we get a bond for that money. We have paid the money but we now have a bond through a bondsman who is providing it to the development board in relation to that money.

David Cullinane (Waterford, Sinn Fein)
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There are a lot of smoke and mirrors in that. The bottom line is we have a standing conciliator who has all of the evidence. It is a legal-----

Mr. David Gunning:

It is not legal.

David Cullinane (Waterford, Sinn Fein)
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It is. It has-----

Mr. David Gunning:

No, it is not.

David Cullinane (Waterford, Sinn Fein)
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-----status in relation to the contract. Of course it has status.

Mr. David Gunning:

Once we have issued the notice of-----

David Cullinane (Waterford, Sinn Fein)
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As Mr. Gunning has agreed, it is binding and the conciliator has recommended €108 million. I understand what Mr. Gunning is saying, namely, that the board is going to fight this and that, ultimately, the courts will decide on all of these claims. The conciliator looked at the evidence and all of the information from the board and decided, as part of a partial claim on what are delays, that €108 million was recommended for BAM. I am homing in on that for this reason. Mr. Gunning says that the big part of the problem in relation to the delay in the project is that BAM is not adequately resourcing the project. Is that Mr. Gunning's main contention? BAM is not putting feet on the ground.

Mr. David Gunning:

It has not done so. It has made on average 60-something percent since the very start of its own programme. It has not progressed things.

David Cullinane (Waterford, Sinn Fein)
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As a consequence, Mr. Gunning would argue that is the main contributing factor to delays.

Mr. David Gunning:

That is correct.

David Cullinane (Waterford, Sinn Fein)
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Why did the independent conciliator, the referee, not agree with that?

Mr. David Gunning:

This will all be litigated in the future. Why did the conciliator make the decision he made? BAM sought €250 million and was awarded €108 million. Sorry, I used the wrong word that I said the Deputy should not use. There was a recommendation for €108 million. This money has been paid over. We do not accept that BAM has an entitlement to that money. We have issued our notice of dissatisfaction. Our claim is that the conciliator, in making those awards, and it was a bunch of awards, has made fundamental errors in that award.

David Cullinane (Waterford, Sinn Fein)
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We are not here to adjudicate. There is a lot of blame to go around. There is an obvious blame game because we have counterclaims from the contractor who is talking about all of the additional design changes and so on, which I will not go into. We have these claims and counterclaims. Ultimately, the courts will decide on all of this. My point is that Mr. Gunning cannot say for certain that there will not be additional costs because that will not be his decision to make. Does he accept that will be a decision ultimately for a court to decide?

Mr. David Gunning:

Ultimately, I would expect at that stage the development board will have been wound up, as the Deputy is well aware, and the responsibility for this-----

David Cullinane (Waterford, Sinn Fein)
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That is saying I will walk away from my responsibilities. Ultimately-----

Mr. David Gunning:

That is the intention here, and how the State will do that, I do not know.

That is another day's work. I am talking about right now-----

David Cullinane (Waterford, Sinn Fein)
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That is my point exactly. You do not know.

Mr. David Gunning:

I cannot possibly know what-----

David Cullinane (Waterford, Sinn Fein)
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You said that not one extra cent would be paid.

Mr. David Gunning:

What I am saying is that right now there are no discussions going on with the contractor in terms of making any type of sweetheart deal or any type of payment as a trade-off for resolving-----

David Cullinane (Waterford, Sinn Fein)
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I am not looking for a sweetheart deal. Somebody who is very senior in this project is saying not one more cent will be paid, which may be the case right now in terms of what the National Paediatric Hospital Development Board wants to pay. I am simply making the point this will be taken out of the power of the board and even the Government and will be decided by the courts. Nobody can say with certainty there will not be additional costs.

Mr. David Gunning:

I can say with certainty that we will be robustly defending all of these issues.

David Cullinane (Waterford, Sinn Fein)
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That is a different matter.

I want to come to the rooms because it seems extraordinary that the board is essentially saying not one room is complete to standard. With all of the issues, cost overruns and completion dates that have come and gone, I find it hard to explain to people that we have 3,100 rooms which the contractor is saying are complete but the board is saying are not complete to the appropriate standard. Perhaps Mr. Devine can answer this question. When the board says the rooms are not completed to the appropriate standard, what do we mean by this? Are we speaking about simple snagging? It strikes people as incredible that not one space or one room is complete. What does this mean? People want it explained because they cannot get their head around it when they see the building. Will Mr. Devine explain what is meant by them not being up to the appropriate standard?

Mr. Phelim Devine:

I will begin by saying that, as Mr. Gunning said, this is a world-class hospital The quality of the completion standard that we will accept for the hospital will be world-class. I want to make this point.

We are at the final stages of the project. The contract very clearly sets out that at the final stages the contractor has to complete the rooms to substantial completion standard before they are offered to the design team. The design team has gone into the 3,128 rooms it was offered at the end of August and inspected more than 500 of them. Mr. Gunning spoke about BAM not following its quality management plan. The quality management plan states that BAM must offer the rooms as snag free or close to snag free within reason. It must also evidence that it and its supply chain have gone in and done their quality assurance procedures and signed a piece of paper stating they have been in there and they are snag free. This has not happened. Until last week this has not happened. We have no signatures. The design team has gone in and inspected 500 of these 3,120 rooms in detail and we are averaging approximately 13 or 15 defects.

David Cullinane (Waterford, Sinn Fein)
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My time is up.

Mr. Phelim Devine:

These are not scuffs of paint or scuffs on the floor. These are issues with incomplete works above ceilings to do with the ventilation duct work, installation, labelling, dust and fire sealing around doors. These are all compliance issues that are critical to getting BCAR compliance It is remarkable that these rooms have been offered as complete when in fact they are not complete.

John Lahart (Dublin South West, Fianna Fail)
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We are public representatives who have been trying to get to the bottom of this in the best way we can over recent years. Much media commentary in recent days seems to suggest the truth seems to lie somewhere between what the development board says and what BAM says. I took a look at BAM Ireland's website over the past 60 seconds. We would imagine a company as big as BAM would be showcasing this project on the homepage of its website. It is a large project. There is no mention of it. It has images of bridges and civil engineering projects labelled BAM Civil and BAM Building. The children's hospital does not feature. There are also images labelled BAM Property, BAM Rail, BAM FM and Modular Homes. The latest news is that BAM will deliver a new post-primary school. The website mentions BAM's new role supporting 2,500 new homes. I am intrigued as to why BAM is not showcasing the national children's hospital on the homepage of its website for the world to see. We would imagine it would do so as it is a colossal project, and that if we went to the homepage of Royal BAM, this famous great Dutch firm, it would want to be showcasing this project. I could be wrong but we tend to the view that the State gets it all wrong. What the witnesses have painted here is a picture of a failure in the mechanisms to be able to call the company to account.

I have a number of questions. Would the board recommend BAM for any State project in future based on its experience?

Mr. David Gunning:

I heard the Cathaoirleach's warnings about making statements at the beginning of the meeting. I do not have the protections Deputy Lahart does in here. This might be one I should not answer. I apologise but I do not think that I should. I have clear opinions on it but I do not believe I should answer the question.

John Lahart (Dublin South West, Fianna Fail)
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I will put it another way. Does Mr. Gunning think that EU procurement should consider past performance and present performance in the rules governing states entering into contracts?

Mr. David Gunning:

I remember being here when I believe it was Deputy Lahart who asked me what my private sector background would bring to this issue. The big learning point from the private sector building large buildings, whether it is Intel building a new plant or some of these new pharma plants, is that if you do not perform as a supplier or construction partner with one of these companies in the private sector you do not get to bid on the next project. It is accepted in the private sector that your performance is your dance ticket and opening card for the next project. The State does not operate in this way. I am not a procurement expert but I believe this is due to EU procurement rules which preclude this at present. I read in the newspapers about the Minister's initiative to try to get to the point where the past performance of contractors is considered with regard to selecting contractors for future State work. There is absolutely merit in this approach.

John Lahart (Dublin South West, Fianna Fail)
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There are two satellite elements to the children's hospital, one of which is in my constituency, which is the children's hospital in Tallaght. Who built the Connolly Hospital and Tallaght Hospital elements of the new children's hospital?

Mr. David Gunning:

BAM.

John Lahart (Dublin South West, Fianna Fail)
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They were completed on time and-----

Mr. David Gunning:

They were not quite on time. Mr. Devine can give the details as he was dealing with it. There were many claims and other issues. They were much smaller projects. I will not say they were dream projects in any sense.

John Lahart (Dublin South West, Fianna Fail)
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As chief executive officer Mr. Gunning engages directly with BAM.

Mr. David Gunning:

I do.

John Lahart (Dublin South West, Fianna Fail)
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When was the most recent encounter?

Mr. David Gunning:

Yesterday two weeks I had a long conversation with BAM Ireland's chief executive.

John Lahart (Dublin South West, Fianna Fail)
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Was that one-to-one?

Mr. David Gunning:

Yes.

John Lahart (Dublin South West, Fianna Fail)
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How did that conversation go?

Mr. David Gunning:

It was a "without prejudice" conversation. Deputy Lahart can imagine it was about the programme. I will not go into the details. It was about resourcing. From BAM's point of view it was about how it gets to resolve its commercial difficulties, which come back to money. Our key point is when we will get our hospital. That is it. We want to know when we are getting our hospital.

John Lahart (Dublin South West, Fianna Fail)
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Will Mr. Gunning give us an insight into the resourcing issue, which has been ongoing since the start of the contract? What is BAM's explanation for the lack of resourcing of personnel and boots on the ground as Mr. Gunning has described?

Mr. David Gunning:

I believe this ties back to a commercial strategy. Perhaps this is going too far but let me say the way it appears to me. It is almost as if BAM will slow down the progress and the hospital is the hostage in this negotiation. It is only if additional moneys are paid that we can get this hospital done and completed in time. This is a very hard thing to say but it is how I feel that things are being managed.

John Lahart (Dublin South West, Fianna Fail)
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That might be how he feels but what is Mr. Gunning's evidence for that?

Mr. David Gunning:

I have spent five years trying to get a completion date. That is the first piece of evidence. I will not be-----

John Lahart (Dublin South West, Fianna Fail)
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Is there evidence that BAM adequately resources other contractual projects in which it is engaged?

Mr. David Gunning:

On the private sector side, we know through public information from the construction sector that BAM was very successful as one of the parties that completed the most recent Intel project on time and on budget. We know that BAM can perform in certain areas but we are not getting BAM's A-game on this project. I can only conclude that is because of commercial difficulties and this is a tactic to try to extract money from the State.

John Lahart (Dublin South West, Fianna Fail)
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I presume Mr. Gunning has said that in discussions with them.

Mr. David Gunning:

That is correct.

John Lahart (Dublin South West, Fianna Fail)
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Does BAM dispute that?

Mr. David Gunning:

Of course.

John Lahart (Dublin South West, Fianna Fail)
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Can Mr. Gunning share with us on what grounds?

Mr. David Gunning:

Deputy Cullinane has reminded us of what the grounds are. It is all design change and we fundamentally disagree with that point. We do not agree that design change is the cause of delays on this project. We simply do not buy it. Even if it was in the past, and I acknowledge that, the design phase is over. We are 94% complete and we still cannot get these rooms.

Design is not holding up the project at the moment. These rooms are partially finished. This should be working like a factory, spitting out finished rooms that we can get our design team into and get them accepted. We need to get to the point where we can get CHI teams in there to start working and turning this building into a hospital. That is why we are all involved in this project.

John Lahart (Dublin South West, Fianna Fail)
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Can Mr. Gunning say a bit more about how the design is finished and what it is about now?

Mr. David Gunning:

Our position on this has been clear right from the start. There has been no significant design change on this project right from the start. Where we make a change or instruct a change, we pay the contractor for the change. We pay over and above the agreed price and that payment is to allow the contractor to provide additional resources for the project. It is not expected it does it with the same resources but we pay for additional resources. We also expect the contractor not to allow those types of changes to impact on the substantial completion date and there is a contractual commitment on that by the contractor. That is the position.

We could get into the design discussion because there is employer design and there is also design from the contractor. The contractor is responsible for a large amount of design on this project. Yet from the way it speaks, you would think it has no responsibility.

John Lahart (Dublin South West, Fianna Fail)
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Can Mr. Gunning explain that? Is he saying some of the project is organic?

Mr. David Gunning:

I would not use that word. The contractor is responsible for very significant elements of the project and the design team then works with the contractor on things like how the facade system, which is from Turkey and uses Portuguese granite, will interface to the structure of the building. That requires collaboration. Mr. Devine can talk in more detail about the contractor design elements than I can.

Mr. Phelim Devine:

Mr. Gunning gave the example of the facade. The contractor is completely responsible for the facade and the whole envelope of the building. They are responsible for the stone, glass, all the components and the backing walls that hold it together because it is a very specialist design, carried out by two companies based in Turkey. They are also responsible for many of the mechanical and electrical components within the hospital. Their specialist subcontractors, Mercury Engineering and Jones Engineering, are responsible for the fire alarm design, the medical gas system and the steam system. These are very specialist and it is normal within the industry that the contractor would take on certain design responsibility.

The design team is responsible for the design intent, this is the specification and this is what I want. The contractor then has to respond to that. EU procurement precludes us from specifying any products and systems so BAM and their specialists come with their products and systems. They have to be brought together and that is done within a collaborative process. That causes drawings to be updated because if you take the facade, the design intent might state that mullion is somewhere between 200 mm and 250 mm wide, whereas they might say they have designed it now and it is 230 mm wide. That means the whole setting out of that facade has to be tweaked or the setting out of the slab has to be tweaked so all the drawings for this slab have to be updated. That is a design change and that happens on walls and ceilings. All the co-ordination of the mechanical and electrical services requires certain holes to go into walls, which requires an update to the drawings. That is why the employer has issued 23,500 drawings on the job since the guaranteed maximum price contract, GMP, was signed in January 2019.

Conversely, BAM and its specialists have issued 25,500 drawings and documents to the design team setting out all their design and co-ordination responsibilities. They have actually issued more drawings than we have and they all have to be brought together. It is a collaborative process and it happens on every public works project. As I said before, this hospital is ten times the size of a normal, large hospital project, so there are big numbers.

Mr. Phelim Devine:

It is not.

Mr. Phelim Devine:

To go back to the point the Deputy made, when we started in January 2019 there was a design intent. The design team cannot set out-----

Mr. Phelim Devine:

-----a lot of those components until the contractor gives them back information. There is always going to be-----

Mr. Phelim Devine:

They are not actually design changes. That is just a clarification to say it is still the same piece of mechanical and electoral plan, the same wall and the same floor. None of that has changed. They might have tweaked some positions-----

Mr. Phelim Devine:

There are 6,000 drawings on the project and they have been revised up to three times. There are 23,300 drawings in total. BAM and their subcontractors have issued us 25,500 drawings. To try to simplify, as that is complex, to date, the employer's representative has determined there has been €35 million worth of employer change on the project. That is about 4% of the contract sum. Conversely, BAM has pushed out the end date by 66%. BAM will say design change is causing the delay. The employer has changed a maximum of 4% and the end date has been pushed out by 66%. Those figures do not align.

In terms of the programme and the resources we talked about, the contractor has been on site for just over 68 months since January 2019. I could probably count on two hands how many times they have actually met their monthly progress for any month during those 68 months. If you are not even-----

Mr. Phelim Devine:

This is actual, factual information.

Mr. Phelim Devine:

I am sorry for cutting across the Deputy but they are not changes. They might include additional information setting out-----

Mr. Phelim Devine:

There have been 449 change orders issued on the project since January 2019.

Mr. Phelim Devine:

That relates to updated drawings.

Mr. Phelim Devine:

Yes. The contract states anything over €500-----

Mr. Phelim Devine:

Yes. The contractor has a right to claim where it feels-----

Mr. Phelim Devine:

That is in the pack table. We have received 3,020 claims from the contractor. A total of 2,473 have been substantiated by the contractor, totalling €862 million. Of those, the employer's representative has determined 2,191 versus €748 million at a cost of €31 million. Regarding those 2,190 claims equalling €748 million, the employer's representative has determined that at an additional cost of €31 million to BAM.

Mr. Phelim Devine:

It is in the table in the pack.

Mr. Phelim Devine:

The employer's representative has 113 claims currently outstanding over the period that need to be determined. There are 2,470 substantiated and 2,191 determined, so the balance is about 200 to be determined by the ER.

Mr. David Gunning:

At that stage, the moratorium we had entered into had finished. That had preceded that time. The resolution of those claims was not progressing up to that time. I think it was until May of 2023 when we exited the engagement process with the contractor.

Mr. David Gunning:

The process of how they are dealt with is in the contract. Step one is ER determination. The ER has determined BAM's €750 million at €30 million. That is what she says they are worth. BAM says they are worth €750 million. If BAM is not happy with that, it goes to the project board, and then on to conciliation. From there, it is the High Court.

Mr. David Gunning:

The value claimed by BAM is €750 million. A total of 2,161 claims make up that number.

Mr. David Gunning:

There is a process, and there is a backlog just because of the volume of these things. I will cut to where is the meat here. Eighteen claims make up 80% of the €748 million. That is where the big money is. Not all of those have gone through the process yet. They have not all got to-----

Mr. David Gunning:

This is a process run by the standing conciliator. There is a process where the contractor has to initiate the proceedings and then it goes through a process. There is then a recommendation from the standing conciliator and all that. As to how long that will take, we do not control the process.

Mr. David Gunning:

I can come back with an answer on that. Let me think about it.

Mr. David Gunning:

Maybe. I wish to offer an observation on the claims. I feel I should make this comment. The total number of days between the contract date, which is November 2022 and June 2025, is 720 days, or something to that effect. If the contractor is entitled to anything and it got every day paid for, it would get paid for 720 days. Its claims currently are for three times that many days. It wants to get paid three times for every day in delay. This €748 million is a gross exaggeration, even if we-----

Mr. David Gunning:

No, that is a fact.

Mr. David Gunning:

I will summarise it briefly. There are three levers in the contract. Number one is withholding 15% of monthly payments in the event that a compliant programme is not provided. Number two is to do with the liquidated damages on the contract. We have initiated the process to charge the liquidated damages.

Mr. David Gunning:

Termination of the contract. I wish to remind everybody of the following one sentence. Post the Covid issue, where BAM refused to come on site, the development board sought to initiate termination proceedings. The ER wrote to BAM and threatened the actions. As a result of that, BAM returned to site and therefore cured its breach, which brought an end to termination. We have exercised every lever in the contract already and we continue to exercise-----

Seán Crowe (Dublin South West, Sinn Fein)
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Deputy Shortall is finished asking her questions. She got the last one in.

Neasa Hourigan (Dublin Central, Green Party)
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I wish to focus on the baseline programme and commissioning, but before I do, I will come back quickly to the legal claims part. Just for clarification, it is my understanding, only because so many projects would run into a problem if this was the case, that ongoing legal claims or litigation are not necessarily a barrier to handover.

Mr. David Gunning:

Correct.

Neasa Hourigan (Dublin Central, Green Party)
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It is important we say that. I wish to take a minute to look at some of the change orders. On the issue of claims, one of the more significant change orders that has been discussed here previously has been the operating theatre grilles. Is that a live claim? I thank the witnesses for such substantial briefing documents. It states in the briefing documents that they have not withdrawn that claim, despite them not being the group that completed the work.

Mr. David Gunning:

Mr. Devine can deal with that.

Mr. Phelim Devine:

The operating theatre grilles have all been changed in the building. That is complete. The works are complete. It was completed in a matter of weeks, which was fantastic. The original claim for €25 million for the operating theatres and an extension of time has not been withdrawn. It is within those claims we talked about. It is about to be determined by the ER. It is within the overall €862 million. It has not been withdrawn. It is still a live claim in the system.

Neasa Hourigan (Dublin Central, Green Party)
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How long has it been live?

Mr. Phelim Devine:

I cannot remember the date it originally was put in. It was probably put in about nine months or a year ago.

Neasa Hourigan (Dublin Central, Green Party)
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So it has been nine months of legal wrangling about a claim that will probably be withdrawn.

Mr. Phelim Devine:

At this stage, it is just going through an ER determination. The works are completed on site. There is no impact on substantial completion. It probably cost about €200,000-----

Neasa Hourigan (Dublin Central, Green Party)
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For the public the question is whether there are more legal staff now working on this hospital than there are builders on site.

Mr. Phelim Devine:

No, not from our side.

Neasa Hourigan (Dublin Central, Green Party)
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Moving to the operating theatres, it would be helpful for me to do a deep dive on a particular change order. Change orders would be standard on a domestic house. It would not be unheard of, nor would variations in drawings or further clarification. I am just trying to understand the involvement of subcontractors or even third-party advice on behalf of the development board. The board seems to have taken on the contractor and reviewed the situation. The way it was described in the information the board sent us, it seems they did some significant testing. Investigations were undertaken and they challenged the bid. What happened then?

Was there a revision where the board got advice from outside or was it simply that BAM undertook to take on that work for a cost much lower than what was originally estimated?

Mr. Phelim Devine:

When the grill issue was originally spotted, it was because we and CHI brought in a couple of experts as part of our own assurance process. Internationally, many large hospitals fail from a technical commissioning perspective and we did a lot of work early on to try to avoid or mitigate any such thing happening with the children's hospital. That is how that issue got spotted. We originally thought we might have to move the grills slightly. BAM's original estimate was that it would cost €50 million and add a year's delay to the job. I believe that was even said in the Dáil at one stage. We then did some work and it got reduced to €25 million and a lesser extension of time on the contract.

Neasa Hourigan (Dublin Central, Green Party)
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It was reduced by BAM.

Mr. Phelim Devine:

Yes. We worked very closely with our design team and brought in international expertise. Through that, we identified that it was an issue with the health technical memorandum, HTM. The current HTM will not work if you use a particular set of grills. We came up with a solution and BAM carried out demonstration and testing on site to help us prove that our solution was correct. That proved very successful and we then just issued the change order to change the 11 theatres from a square grill to a circular grill, which required only minimal works that were done in a matter of weeks and which cost circa €200,000 rather than €25 million.

Neasa Hourigan (Dublin Central, Green Party)
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Does that €200,000 include the advice that was contracted from international experts? Much of the stuff to do with high-level hospitals is effectively proprietary and the work is quite international.

Mr. Phelim Devine:

No, the €200,000 is the cost of the physical works on site. However, all of the lessons learned from that have been fed back into the HSE. Obviously, our design team carried out the work as part of its scope of services. We did bring in an international third-party expert to help validate but that cost a small amount - a couple of thousand euros.

Neasa Hourigan (Dublin Central, Green Party)
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That brings me to commissioning. At this committee and others, every time substantial completion is talked about, commissioning has to be added in. We have always talked about six to eight months. Is the board happy with that as a number?

Mr. David Gunning:

This is CHI territory. We will do the technical commissioning, which means ensuring that all systems are working, the lights are on and all of that. We will then hand over to CHI so that is outside of our scope.

Neasa Hourigan (Dublin Central, Green Party)
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There is a grey area here, however. There is an overlap in respect of some of the very complex systems such as the MRI machines and CT scanners that live in the substantial completion part. Is that correct?

Mr. David Gunning:

When we get to substantial completion, they will have to be installed and we will have to make sure we can turn them on. It will then be handed over to CHI. However, as it happens, our health technology team will transfer intact across to CHI at substantial completion.

Neasa Hourigan (Dublin Central, Green Party)
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Mr. Gunning described how CHI cannot go into the rooms it would have expected to be completed to start its work because they are simply not complete.

Mr. David Gunning:

It would not normally happen until substantial completion but we are discussing early access for CHI with BAM and BAM is being positive about that. We hope that, in turn, that will de-risk some of the CHI programme. To be clear, what the Deputy is talking about, the six to eight months, is CHI territory. However, we will obviously be supporting that. CHI will take the lead.

Neasa Hourigan (Dublin Central, Green Party)
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When we are discussing what we call specialist equipment, in Mr. Gunning's opening statement, there was a piece regarding the board and ClearSphere. It says that the radiopharmacy units and stem cell laboratory should be beginning in September. Have they commenced?

Mr. Phelim Devine:

Yes, they have.

Neasa Hourigan (Dublin Central, Green Party)
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Is that all of them?

Mr. Phelim Devine:

Yes, there are four areas in the hospital, approximately 500 sq. m, of specialist fit-out. These are all designed to a very high standard. There is a biosafety level 3 laboratory, a stem cell laboratory and two aseptic compounding units where drugs are to be made for the patients. These are highly regulated. A specialist adviser has helped us and CHI to develop the user requirements. That was tendered for and ClearSphere started the work this month and will finish-----

Neasa Hourigan (Dublin Central, Green Party)
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Is ClearSphere starting now or did it start at the beginning of the month?

Mr. Phelim Devine:

It started on 2 September and will finish at the end of February next year in quarter 1.

Neasa Hourigan (Dublin Central, Green Party)
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In my last two and a half minutes, I will ask for clarity as regards the baseline programme. The last time we talked, we were talking about BAM submitting programmes that were then not accepted by the board. I am trying to get some clarity on the board's opening statement. It outlines the many times the completion date has been pushed out, which we are all aware of, but I am trying to understand how many of those attempts were successfully agreed attempts to change the timeline and how many were changes that were applied for but rejected by the board.

Mr. Phelim Devine:

The way the process works is that we should have a compliant programme in accordance with the contract. That is what we call the "baseline programme". The last submission we got from BAM as a baseline programme was received in July or September 2023, which the Deputy might have referred to before.

Neasa Hourigan (Dublin Central, Green Party)
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I did, yes.

Mr. Phelim Devine:

The employer's representative, ER, then needs a bit of time to work with the contractor to review that programme and to see whether it is compliant or not. What happened over the months that followed was that, even if the programme had been compliant, which it was not, BAM was not making the progress it said it would. It was effectively falling further and further behind, which means that it was-----

Neasa Hourigan (Dublin Central, Green Party)
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Was there a compliant programme in place from July of last year?

Mr. Phelim Devine:

No, a process was entered into with the ER, the independent person who, under the contract, determines whether the programme is compliant or not. She entered into a long process with BAM between September or October and early 2024. On 2 April, she determined that the baseline programme was not compliant and requested a revised programme. She then again requested a revised programme in June. BAM wrote back to say it would issue one in July. It issued a programme in July and the ER has since gone through that programme and any progress updates since then.

Neasa Hourigan (Dublin Central, Green Party)
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Am I right in thinking that there is still no compliant programme in place between the board and BAM?

Mr. Phelim Devine:

That is correct. To give an example, there are fundamental issues with the last programme we received from BAM, which covered up to the end of July, because the remaining activities on the project up to June were not levelled or scheduled correctly. Without going into detail, BAM had hoped to achieve 50% of the remaining activities up to next June in one calendar month, which was impossible.

Mr. David Gunning:

The summary is that we do not have a compliant programme from BAM at this stage.

Neasa Hourigan (Dublin Central, Green Party)
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Am I to infer from what the witnesses have told us that the times BAM has tried to change the finishing point were when it was submitting a programme the board felt to be non-compliant?

Mr. David Gunning:

That has not always been the case. It may advise us of a new date via a monthly progress update.

Neasa Hourigan (Dublin Central, Green Party)
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The witnesses are describing a process whereby a staff member is working with BAM to agree a compliant programme. When will that come to fruition? Is there a time on the horizon when there will be a compliant programme?

Mr. David Gunning:

It is not a staff member. The ER is an independent contractual person. Her job is to do those assessments and she protects her independence on that, as she should. She has been engaged with the contractor for a period. We are now at the point where she has given BAM a deadline.

Neasa Hourigan (Dublin Central, Green Party)
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What is that deadline?

Mr. David Gunning:

It has passed and, because of non-compliance with that deadline, we have now issued notice to the contractor that we will start withholding 15% until such time as it starts to provide-----

Neasa Hourigan (Dublin Central, Green Party)
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Is there another deadline on the horizon?

Mr. David Gunning:

The contract has lots of different time periods. Once you give notice, 20 days is usually required. It is quite complex as regards all of these issues.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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I thank the board for its presentation, which was very detailed. I am sure the witnesses are extremely frustrated, to say the least, by this soap opera. In the meantime, the taxpayer, everybody in the country, is on the hook for this and there is obviously no hospital. Do the witnesses accept the statement BAM made during the week to the effect that the hospital is 93% complete?

Mr. David Gunning:

It is there or thereabouts. We might argue about a percentage point or two. One of my team asked me yesterday to please communicate to the committee members that we are all taxpayers and parents and that this should be acknowledged.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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It is in everybody's interests that this is-----

Mr. David Gunning:

That is the way it is.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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On the other 10%, what is left to complete the hospital?

Mr. Phelim Devine:

There are two main components left. One is bringing all the 5,578 room spaces in the hospital up to the completion standard.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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None of those are complete or signed off at this moment in time.

Mr. Phelim Devine:

None of those are signed off. They are very advanced, but they are not signed off. They are not complete in accordance with the contract. The second thing in parallel, sometimes following, that we talked about is the technical commissioning. That is all the mechanical and electrical systems, the nurse call systems, the fire alarm and causes and effects in the hospital. That technical commissioning is the last piece, so the rooms have got to be complete to the right standard then overlapping and following that, the last thing to do is complete the technical commissioning for the hospital. Then we are at substantial completion.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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In Mr. Devine's opinion, are any of the rooms at any stage where they could be signed off, where we could say they are complete and the construction workers can move on?

Mr. Phelim Devine:

No room has been accepted and signed off by our design team as yet. We are getting to that point. In the past week, we have had a re-offer of 72 rooms the contractor states are at the completion standard. The design team is currently inspecting those, so we are starting the process again, which is good.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Does Mr. Devine envisage that when a tranche of rooms is given the green light it will happen quickly? It will not be a case of a single room being ready for Tuesday. I presume hundreds will be ready.

Mr. Phelim Devine:

Yes. We expect there will be hundreds per week. To meet the programme for June there must be hundreds per week offered to the design team for inspection. That is where the resources come in, which are really important. The BAM programme at the moment does not allow for bringing these rooms up to the right standard. It only allows for the work to be done once. If you are building a house extension and there are snags you have got to go back and fix things to get it to the right standard. That is not in the BAM programme. Resources are needed for that.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Those resources are not there, in Mr. Devine's opinion, when it comes to BAM's commitment to signing off on these rooms.

Mr. Phelim Devine:

The fundamental fact is if you are only achieving 60% to 64% of your programme, then for the other 30% to 40% you need more resources to undertake that work. It is really as simple as that. A significant increase in resources is required. There are some really dedicated, really good people on the site working really hard for the children of Ireland, but there just are not enough of them. That is it. The contractor needs to significantly increase its resource if it is to meet its committed date.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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These are quite obvious questions, but if the contractor committed those resources to finalise those rooms things would move very quickly on.

Mr. Phelim Devine:

Yes.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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It seems like common sense.

Mr. Phelim Devine:

As Mr. Gunning has said before, the design is done. The contractor knows exactly what is required of it to get this hospital to completion. We simply want BAM to come out and say June is our date, this is what we are going to do to increase resources to deliver this job in June, this is our new baseline programme, this is how we are going to execute that and we are going to deliver this hospital in June. That is all we want from the contractor.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Yes, but at the moment the board is saying that with the baseline programme, there is an absence of a commitment by BAM to even do that.

Mr. Phelim Devine:

The planning and methodology within that programme is not correct and needs to updated. Then it needs to be properly resource-loaded with the resources that are going to deliver 100% of planned progress month on month until this building is handed over to us, and then to CHI in June.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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I hope this does not happen, but is there a situation where this just goes on and on and the hospital is never finished at the level of final details. While there is intransigence from BAM, could this go on and on until the Government says that if BAM is not going to complete the job it will have to get somebody else in? That would delay the project for years, I assume.

Mr. Phelim Devine:

There is no reason BAM, if it properly resources this project and approaches it in the right manner, cannot finish it to the date given. There is no reason. That is a decision for BAM. BAM is fully responsible for the programme and for delivering this job to the completion standard of substantial completion. It should be able to do it; it just needs to go and do it.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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On the claims that are in litigation, there is a concentration of claims. I think 18 was the figure given. What is the dispute between BAM and the State? What is at the heart of that dispute?

Mr. David Gunning:

I think I summarised that 18 claims made up 80% of the money with BAM. BAM is entitled under the contract to say it is seeking additional time and payment for that time. It can have a compensation event. In other words, if we change the scope of something, such as by saying we want more expensive sinks going into the whole hospital, BAM would say it wants to get paid for that additional scope change.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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That is fair enough.

Mr. David Gunning:

That is fair enough and there are examples where, as we have talked about, we have changed square ventilation grilles to circular ones. We have done that and BAM is entitled to get paid for that. Just to say again, any entitlement BAM has we have paid and will continue to pay as we are contractually obliged to. However, where we do not agree is on the extensions of time. As I said, BAM is claiming not just for the extension of time from the contractual completion date to its forecast end, but for that three times over, currently. It is seeking compensation three times over. "Extensions of time" is the phrase used in the industry and time is expensive.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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How common would it be in big civic projects such as this to go into that amount of litigation and dispute?

Mr. David Gunning:

The number of claims here is off the charts.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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I know.

Mr. David Gunning:

I have been involved in different businesses and different types of projects around the world and I have never seen anything like this. We are in uncharted territory from my experience with regard to this.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Based on Mr. Gunning's experience, why is that? He has obviously-----

Mr. David Gunning:

I have theories but they are not ones I can share. We do not believe the contractor has an entitlement to additional time. It is entitled to some additional time for the types of things we have talked about and the ER has valued that at €31 million, which we have paid.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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What is the ER?

Mr. David Gunning:

The employer's representative makes an assessment of BAM's claims. BAM has looked for €748 million and she has said what it is entitled to for all that is €31 million.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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That is a fraction.

Mr. David Gunning:

Correct. It is less than 4% of the total. That is what her assessment is, but BAM does not have to accept that assessment under the contract and can go to the next forum, which is the project board and then on to conciliation, where they have got, you know, more sympathetic and then ultimately if we do not agree with that we will move onto the court. The court is different to conciliation. We have talked about conciliation and there were comments about conciliation. In the court, you have to produce actual detail of your real costs. The contractor will have to say "I was delayed by this and it cost me that" and not inflated claims that will be adjudicated in the High Court.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Have any of the disputes via the court been resolved?

Mr. David Gunning:

No. There are four cases in the High Court currently. Of the four, three are just at the very preliminary stages and proceedings are not under way and one, which we refer to as the phase B proceedings, will shortly finish its discovery phase, so there is one significant case that is moving through the High Court currently.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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Do they all have to be resolved before BAM will hand over this project to the State?

Mr. David Gunning:

No. About a year ago, BAM had an incident in Düsseldorf or something and 11 years later it finally got the award or the claim is resolved. None of that stops the metro or the hospital opening. Those issues will continue in the legal process in parallel to the hospital opening and various other aspects.

Gino Kenny (Dublin Mid West, People Before Profit Alliance)
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I thank the witnesses.

Seán Kyne (Fine Gael)
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I welcome the witnesses. Having been on-site on two occasions with the committee, it is clear it is a very impressive building.

It will be a world-class facility. At some stage these issues will be resolved and it will be about the care and well-being of children. The issue is we do not know when that will be. We do not know how many additional costs will be incurred between now and then. There are a couple of things. You have the time delay issues and the claims. Being devil's advocate, could some of the time delay issues be related to the claims, in terms of changes and knock-on impact for example? Is that the case? If so, are we talking about days, weeks or months? Is that a possibility?

Mr. David Gunning:

I will ask Mr. Devine to come in on this, but where we instruct additional works or change orders are issued, if those changes have some legitimate impact on the timeline that is accepted and paid for. There have been a number of days paid for, but it is fewer than 20, while the contractor is claiming 770 or whatever it is. We are in a different place with the expectations of the contractor. That is the quick answer to the Senator's question.

Seán Kyne (Fine Gael)
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There is an issue between the number of claims and the value of the claims. These are clearly disputed. Mr. Gunning said in his statement that 1,648 claims are disputed but of those, 1,106 claims have a disputed value of less than €10,000. It adds up to €1.83 million, which is a sum of money, but is not in the order of the issues we are dealing with. There is an issue with the number of claims and the value. It is important to note that Mr. Gunning is saying there is a small number of claims of a high value.

Mr. David Gunning:

A small number. We said 18 claims make up 80% of the total. Similarly, there are 1,100 or 1,200 claims that are below €10,000. We have made an offer to the contractor to settle those, but it does not want to discuss that particular issue.

Seán Kyne (Fine Gael)
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Okay. It was reported in the media during the week that following visits by certain doctors or consultants that a number of the rooms were not wheelchair accessible. Is that the case, and how in God's name would it be true if that is the case?

Mr. Phelim Devine:

That query arose and is probably between a year and a year and a half old.

Seán Kyne (Fine Gael)
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It was reported again at the weekend.

Mr. Phelim Devine:

It was reiterated. That is incorrect. I have checked that with CHI. We have a full disabled access certificate granted for the project. Every room is wheelchair accessible. There are two specialist audiology rooms, which are for cochlear implants and things like that, where there is a threshold on the door because of acoustics. It is to get the seal around the door to make sure they can carry out the treatment. That has a temporary ramp that can be put down both sides to allow a wheelchair in. If those are the rooms they are referring to, that is the only area, but it is by design and was signed off by CHI and the specialist clinicians when we designed that.

Seán Kyne (Fine Gael)
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That is an important clarification.

Seán Crowe (Dublin South West, Sinn Fein)
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We got a briefing note yesterday as well from the National Paediatric Hospital Development Board about the wheelchair issue.

Seán Kyne (Fine Gael)
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It is an important clarification. I apologise, I missed the private meeting yesterday. It is something that was reported at the weekend, so it is an important clarification.

Seán Crowe (Dublin South West, Sinn Fein)
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No problem.

Seán Kyne (Fine Gael)
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I take up Deputy Kenny's point. Some 94% of the building is complete. That is positive. However, the witnesses are saying that the issues relate to what are more than snags and are important issues relating to completing the sign-off of the individual rooms. Were those issues that could not have been seen in the oversight as the building and the first rooms were going along? Could they not have been told to hold on a minute, something different was needed or something was not compliant, and needed to be sorted out before the rooms were completed? Is that not the detailed hands-on work that is needed on a project like this?

Mr. David Gunning:

There has been a huge amount of detailed engagement between members of the design team - especially its inspectorate - and BAM throughout this whole process in terms of what they call walk downs, which is walking with the contractor and highlighting the issues that will be of interest and concern. That has been going on, so it is even more disappointing that we get to this point. You cannot inspect approximately 5,600 rooms in the last two weeks of this project. They have to be handed over in a sequence. When they are handed over zone by zone, room by room, that zone gets secured, and nobody goes in there again. It is now ready to allow CHI in the next time. There has to be a process to do it. The process is so frustrating because we are not there, but once it happens it will start to deliver rooms pretty quickly and the contractor will start to get its processes fine-tuned. At the moment we are not there. As Mr. Devine said, as of last week, we seem to be edging closer to that better level of performance.

Seán Kyne (Fine Gael)
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Is the issue that equipment was not put in, or that the wrong type of equipment was put in, instead of putting in the correct equipment?

Mr. David Gunning:

No.

Seán Kyne (Fine Gael)
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Ventilation and ceiling issues were mentioned. Was something done wrong in every room that could have been sorted at the start if they were inspected?

Mr. David Gunning:

I will hand over to Mr. Devine. It is more incomplete works rather than things done wrong. They are just not finished. For example, mastic around the door is not done or partly done, or there is a problem with a door switch, a ceiling tile, vinyl flooring or something like that. Mr. Devine has the detail on all of it, but they are the types of issues we have.

Seán Kyne (Fine Gael)
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It is not the one issue repeated in every room.

Mr. David Gunning:

Sometimes it is.

Mr. Phelim Devine:

The frustrating thing for us is that there has been a process of inspection all the way through as the project has been built out. In these final room offers where they offer rooms as complete for review by the design team, most of the issues were pre-known. There has been a huge representative sampling of inspection done on the project. They are not surprising issues. That is where we talked about the contractor following its QMP. There were known issues. There might be the odd new one. There is always a new issue that somebody might not have seen before but the majority were known issues. They should have been brought to the right standard before they were offered. That is the frustrating thing. That has not happened. It has been pointed out on numerous occasions to the contractor that things were not to the right standard. It needed to go back and make sure it was doing its QA and getting things up to the right standard before they were offered. However, it continues to keep on re-offering rooms at the wrong standard. As Mr. Gunning said, I am glad to say we got a re-offer of 72 rooms last week and it looks like we are now getting to the right starting point. It is now just a factory process of rolling it all out until we get to the end of the job.

Seán Kyne (Fine Gael)
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If those 5,000 plus rooms are brought up to standard, is that getting the NPHDB to 100%, or are there other outstanding issues?

Mr. David Gunning:

The next big piece of work is commissioning all the systems. You get the rooms ready, but then a big thing in a hospital is ventilation systems. That is why the grilles in the operating theatres are so crucial. Infection control in hospital is all around air changes in the rooms and taking the stale hour out a number of times per hour or per minute. That is different depending on the acuity or particular function of a particular room.

Seán Kyne (Fine Gael)
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Is that a commissioning issue?

Mr. David Gunning:

It is a big design issue. It is a technical commissioning issue. It is our job to make sure that BAM and its subcontractors gets every one of those rooms ventilated appropriately. As Mr. Devine said, we are 40% of the way along the entire commissioning process. We should be 60% or 70% along at this stage, but we are not, so there are some delays in that particular area. In a similar way, it is not just the air. There is also water in a hospital. Everyone is familiar with legionnaires' disease and the problems with that. Water is a critical issue. Medical gases in these rooms all have to work and have to be absolutely perfect, and because it is a digital hospital all the digital systems have to work.

Seán Kyne (Fine Gael)
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That is all commissioning.

Mr. David Gunning:

I cannot remember, but there are 27 or 37 different systems that all have to be turned up individually and then they all have to work together. That is the job we have to do.

Seán Kyne (Fine Gael)
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Absolutely, but those are all commissioning issues.

Mr. David Gunning:

Getting the rooms ready is like when you want to get the paint right in your home extension. Now we are layering a hospital on top of that, with all of the systems that have to be turned up. Again, that is a contractor responsibility.

Then we get to the substantial completion when all of that is accepted. Then we hand over to CHI, which really starts to put it through its steps in terms of operational commissioning around how this will be brought into use with low risk to all the patients and ensuring a high quality of service.

Bernard Durkan (Kildare North, Fine Gael)
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I have a question on the grills. At the time of the announcement that the grills were wrong, who decided they were wrong? Where they specified in the original specification as round or square grills for air extraction?

Mr. Phelim Devine:

The guidance document, which is a health technical memorandum published by the NHS in the UK, is what Ireland and the UK generally follow in terms of theatre design. It gives the option of either square or circular grills. I talked previously about us and CHI having an expert involved. Our design team engaged with that expert who said that in his view we should go with square grills, which we did. However, the guidance document says that those grills should ideally be located in a certain part of the room and they were not. When the final co-ordination of the theatre was done, they got moved out slightly. Then it was flagged as an issue.

Bernard Durkan (Kildare North, Fine Gael)
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Was all that provided for in the contract? For instance, if windows in a house or a block of houses are moved, that must be provided for in the contract.

Mr. Phelim Devine:

Yes, it is a change. We-----

Bernard Durkan (Kildare North, Fine Gael)
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So, was it provided for in the contract or not?

Mr. Phelim Devine:

No, the original position-----

Bernard Durkan (Kildare North, Fine Gael)
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I am asking if it was extra to the contract.

Mr. Phelim Devine:

Yes. It is probably around €200,000 extra to the contract.

Bernard Durkan (Kildare North, Fine Gael)
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At the time of the announcement that the grills were not the appropriate grills, I presume the National Paediatric Hospital Development Board blamed the contractor and the contractor blamed the board. Would that be right?

Mr. Phelim Devine:

No, that did not happen.

Bernard Durkan (Kildare North, Fine Gael)
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I say that because it was stated publicly in the media that this would set back the opening date of the hospital by a considerable time. Is that not correct?

Mr. Phelim Devine:

Well-----

Bernard Durkan (Kildare North, Fine Gael)
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Following on from the previous question by Deputy Lahart, it only took a very short time for the two sides to get together and work out what was required to resolve the problem in accordance with requirements set down by the National Paediatric Hospital Development Board and the contractor. Is that true?

Mr. Phelim Devine:

Everything the Deputy said is correct, but in terms of the resolution of the issue, the development board did that with our design team and our third-party theatre specialist. We came up with the solution. BAM assisted us with doing testing to prove and demonstrate that that solution would be correct and that we could validate the theatres as close to substantial completion.

Bernard Durkan (Kildare North, Fine Gael)
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Before any alarm was set off, for want of a better term, about the suitability of the grills, would it not have been better to sit down quietly with each other and work out a solution rather than trying to exaggerate the difficulty?

Mr. David Gunning:

I might come in on that. The development board certainly did not raise any alarm on this. We were as surprised as others were when there was a statement in the Dáil, I think, that this was going to add a year to the programme and cost €50 million.

Bernard Durkan (Kildare North, Fine Gael)
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That is right.

Mr. David Gunning:

That is not-----

Bernard Durkan (Kildare North, Fine Gael)
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Whose fault was that?

Mr. David Gunning:

I do not know who put out that statement. I have my suspicions, but I do not know. Here we are, 12 months later, and the cost of the works is around €200,000 and it was done in around a month. Two to four weeks was what it took.

Bernard Durkan (Kildare North, Fine Gael)
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That was a tremendous achievement-----

Mr. David Gunning:

Well-----

Bernard Durkan (Kildare North, Fine Gael)
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-----without any of the hoo-ha about its setting the development back by a year and all that kind of thing.

Mr. David Gunning:

Just to be clear, Deputy-----

Bernard Durkan (Kildare North, Fine Gael)
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I want to concentrate on one other question.

Mr. David Gunning:

Just to say, the contractor is still claiming that costs €25 million.

Bernard Durkan (Kildare North, Fine Gael)
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It was resolved at the time and given the degree to which the contractor will continue to allege it costs €25 million, what was the actual cost?

Mr. David Gunning:

It was about €200,000.

Bernard Durkan (Kildare North, Fine Gael)
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That is noted and I am sure it will be used as appropriate.

Is it true that the contractor essentially went off-site during the Covid pandemic?

Mr. David Gunning:

The contractor's workers left site during the Government-mandated shutdown period of about seven weeks. They then stayed off for approximately another eight weeks after that while they effectively demanded money to entice them to return to the site.

Bernard Durkan (Kildare North, Fine Gael)
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In the period before and after the Covid pandemic, by how much did construction costs in the country increase generally?

Mr. David Gunning:

We can dig out the construction inflation numbers for those years. We have them because they apply to this contract above 4%. I do not have that information off-hand. I can get it for the Deputy. However, we are working on-----

Bernard Durkan (Kildare North, Fine Gael)
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I want to hold Mr. Gunning to that question first. Construction costs did increase, I presume that is agreed.

Mr. David Gunning:

Yes, they did.

Bernard Durkan (Kildare North, Fine Gael)
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From the time of the contract until now, by how much have construction costs increased generally?

Mr. David Gunning:

There are several reports. As to how our contract works, we have to look at three indices relating to inflation. Those indices are published by three different bodies and we have to do an average of those three indices and apply them to the contract. However, we only pay above 4%. The contractor took the risk on 4%. We have produced the table previously for the committee. We will update the table. What we have paid in inflation to the contractor - this is a more direct way of answering - is about €48 million over and above. It is in the slide.

Bernard Durkan (Kildare North, Fine Gael)
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Some in the construction industry will say that construction costs and building costs generally have increased by considerably more than has been suggested by Mr. Gunning. In fairness to the contractors, they are not present. I think they should be present. We accept Mr. Gunning's bona fides in his replies to questions. However, there is another side and the contractors have a different view which is not being heard. The questions around the table have been useful in determining what the actual situation from their point of view might be, which is very much part of the overall costs of the production of the hospital and the keeping of the timelines.

My next question relates to the percentage of completion, which we have already established. Would it be true to say that the construction work is entering its final stages now and it is only a matter of agreement or disagreement? Mr. Gunning says the completion date is in June of next year. There are those who will say it could have been next month; it was originally next month. Who is moving the date onwards? Is it the contractor by virtue of the work that is still outstanding or is it the client, the development board on behalf of the Department? Who is moving that forward, apart from the work that is still to be done? If 93%, 94% or 95% of the work is done, we are very much in the closing stages.

Mr. David Gunning:

That is welcome, but we need to get to room completions with rooms at the right standard. I support what Mr. Devine has said, that we will not be accepting anything that is not at the right standard. We are trying to build a world-class hospital.

Regarding the programme, under the contract, the contractor is responsible for the programme. Therefore, the timeline is fully a contractor responsibility. The contractor is communicating the particular dates we have mentioned, June 2025.

Bernard Durkan (Kildare North, Fine Gael)
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Mr. Gunning has already indicated that the completion of the number of rooms still to be completed could be done in a very short time if there is agreement on the modus operandi. Is that true?

Mr. David Gunning:

We would like it to be moving a lot faster than the zero it is at at the moment. It is about confidence building in terms of the design team. BAM has the responsibility to provide high-quality compliant rooms. If we start to see those coming on a consistent basis, we would very much welcome that.

As Mr. Devine has already mentioned, to hit the target of June 2025, we need to see hundreds of rooms coming through. I questioned the capability to reach that number. We still need to build confidence and see where we get to.

Bernard Durkan (Kildare North, Fine Gael)
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Confidence building is really a matter for speculation at this stage. The time for confidence building was some time before now to ensure that the contract moved smoothly to its natural conclusion. We have come to and gone past that by virtue of reference to the works that are still outstanding, Covid, which was an interruption, and so on. I am concerned about references being made to the courts. I accept the courts can be the final adjudicators all of the time but it is not in the interests of the State, the Department, the HSE, the children or the parents of children throughout the country to have these matters fought out in court. It is the ultimate place to go but it is in the interest of the children, the clients and their parents, the HSE and the Department that we resolve these matters to the best of our ability in the shortest possible time. Could we do that, with the will to succeed, in the time that is left? Yes or no?

Mr. David Gunning:

It is a very complex question. We have been involved in a contractual process here. We are implementing the State's public works contract. The final option in that is court and that is the reality of where we are at. We have made a number of efforts outside of the contractual mechanisms. We have engaged in alternate dispute resolution mechanisms with the contractor with a view to resolving matters but we have not reached a successful conclusion on that. We have wanted to achieve two things, namely, certainty on the timeline and certainty on the cost. Despite all of our discussions either outside the contract or via the contract, we have not been able to get the certainty we would want on those particular matters. In the absence of that, it is an aspiration to be able to get these matters resolved ahead of the court but we are just not there at the moment.

Bernard Durkan (Kildare North, Fine Gael)
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I must go now but I have been in and out of that hospital on numerous occasions in the past 12 months and it is massive. We are underestimating the progress made.

Seán Crowe (Dublin South West, Sinn Fein)
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I thank the Deputy. Senator Black is next.

Frances Black (Independent)
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I apologise for being late but I was in meetings all morning. Please forgive me if I ask questions that have been answered. I only have two questions. In his response to the Committee of Public Accounts, Mr. Gunning highlighted the importance of sustainability in the design of the new children's hospital project. While we gain an understanding of the environmental impact as the project progresses, was a system to calculate the embodied carbon or to measure to carbon emissions of the project incorporated during the design stage? It is an important issue and I just wanted to find out about it. I am sure the witnesses have covered all of the other questions that have been asked of them this morning.

Mr. David Gunning:

I will refer this question to Mr. Devine who was involved in the design issues and all of those points at that time.

Mr. Phelim Devine:

We set out very early on in the design to make it as sustainable as possible. The project has been awarded a BREEAM "excellent" rating in design, which is a high accolade for a hospital development. We have also designed to an A3 rating. We did look at a number of sustainability measures early on but it is a hospital, at the end of the day. We looked at using ground water. We also looked at using a district heating system with Diageo but unfortunately, that fell through. That would have been a great thing to achieve. We looked at PV solar panels at one stage but we only have one roof available, which is the roof where we have the helipad so that would not work. However, that does not mean it might now work elsewhere on the site or campus in the future because PV technology has come on hugely since we designed the hospital. We have made it as sustainable as we could. I do not have the figure for the embodied carbon but I can talk to the design team and come back to the committee on that. Our design team is working closely with CHI, which will operate and run the hospital, on estimating the running costs. We fed into that but it would be a matter for CHI. I hope that answers the Senator's question.

Frances Black (Independent)
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I thank Mr. Devine. It would be great if he could come back to us on that. That would be fantastic.

The PwC report recommended that the "commercial capability and capacity of the NPH Executive should be strengthened so that it is ... less reliant on external advisors". It further recommended that this be done "in the short term to support the planning and execution of the next phase". Will the witnesses outline the approach taken to implementing those recommendations? Have those measures proven beneficial to the development of the project and the ability to overcome challenges? PwC also recommended that a project assurance strategy be developed and implemented for the remainder of the project. Has this been accomplished?

Mr. David Gunning:

All the recommendations in the PwC report have been implemented. The NPHDB had some recommendations. That project assurance one rested with the HSE and the Department and that has been actioned. The PwC report was produced five years ago in April 2019. The board of the NPH formed an implementation subcommittee, which disbanded a couple of years afterwards once all of those particular issues had been addressed. In terms of enhancing the capacity of the executive of the development board, we are the two additions to the executive that were funded via the PwC implementation report in terms of adding a chief executive and a dedicated project director. They were the actions that were taken. All of us would be quite happy that those recommendations were implemented.

Frances Black (Independent)
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I have one final question and again, I apologise if it has been covered. In his opening statement Mr. Gunning said that BAM will not be allocated more money beyond what is provided for under the contract. Given the volume of claims submitted by BAM, is there any instance or provision within the contract that would cause work on the project to come to a halt completely? I also seek clarity on whether an updated baseline programme has been provided.

Mr. David Gunning:

We have not yet got an updated baseline programme and we discussed that at some length earlier. In terms of works coming to a halt, that would be a terrible situation to arrive at. It would just be unacceptable to all of us. There are examples around the world of hospitals that, for whatever reason, came to a stop and the recovery period for those was years. The Sidra Paediatric Hospital in the Middle East was a large hospital that was more than 90% complete and it stopped due to a dispute. We had the collapse of Carillion in the UK about five years ago, which affected hospitals in both Birmingham and Liverpool. Recovery in those situations was appalling and those projects were set back by years. We certainly do not want that to happen. We have to get the contractor to get this project finished in June of 2025, or shortly thereafter, to get it open in 2026. That is what we need to achieve. We are dependent, as I have said several times, on the contractor. We want the contractor to get its staff and resources in there and get it done. That is where we want to get to.

Frances Black (Independent)
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I thank Mr. Gunning

Seán Crowe (Dublin South West, Sinn Fein)
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We will have a comfort break now for five minutes. When we resume, we will have a second round of questions from members.

Seán Crowe (Dublin South West, Sinn Fein)
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I have a couple of questions regarding the situation before I bring in members for a second round of questions. From talking to people about the national children's hospital, a fair assessment of it would be that it is a bit of a mess. That is the general consensus. There are two questions people would ask. One is when it will open, and there is no certainty in that regard, while the other is how much it is going to cost, and again there is no certainty in that regard. Would that be a fair assessment? The witnesses have said there is no certainty about the timeline or costs. There could be other additional costs. Mr Gunning mentioned in his statement the impact this is going to have on children. That is the big thing that is at the back of people's minds. Many of those children are extremely sick. The committee has had before it both children suffering from scoliosis and the parents of those children. There are additional waits and timelines and waiting lists

Everyone is saying that when the theatres are open, the waiting lists for those very sick children will hopefully come down. That is the pressure that is on it. The other pressure is on the Irish taxpayer in regard to it. I remember passing the site when it was a hole in the ground and people were asking whether it was ever going to be built and so on. One can see now the scale of the building and, as other members have said, it is impressive when one goes in. Some would say this is a flagship hospital and if we had done a box design, it might have been simpler. As was said, there may be awards in regard to it but this is something that will, hopefully, be there for the next 60 years.

One of the worries is around the key learnings from this. The worry others would have is that there is a tender out at the moment for the national maternity hospital and the big question everyone is asking is around the contract where the weakness seems to be. The worry for most people looking in today and who have discussed this is whether we are going to repeat this in the future. What they will want from politicians, from our witnesses and from everyone else is to know that there have been key learnings and that this will never happen again. Can the witnesses assure people, from the experience they have had and so on, that they have fed that into the political system and, probably more importantly, into the system itself that this is not going to happen and that we are not going to repeat those questions?

One of the clear weaknesses is that we agreed a contract on the basis of a design that was not finished and things have expanded since then. Is that a fair assessment with regard to the witnesses' view of what is happening to this? All of us have been approached by the general public but the consensus among the Oireachtas Members is that this is a mess and that it should never happen again.

Mr. David Gunning:

I thank the Chair. I will pick up on the design point to start. It was never the intention that design would be completed before this building would start. It would be impossible to do that because of the degree of design that rested with the contractor and the subcontractors. It was just never going to happen. The contract clearly states that the design will evolve as the works continue. The key issue is that the design is ready when the contractor is going to step in to do the work in a particular area or in a particular function. The contractor needs to have sufficient notice of what is required there.

To familiarise not just the main contractor, BAM, but also some of the main subcontractors with the design, all of those people were paid a total of €10 million before the project started to familiarise themselves with the design in detail as it was at the time. The claim we hear is that our the expectation was that the design would be ready and that there was a lack of knowledge of where things stood with regard to the design right up to end of 2018, before the phase B was signed in 2019 and the gun went off to start the project. There was a lot of clarity between the design team and the subcontractors and the main contractor on the status of design at that time. A significant consideration past €10 million was paid to those parties to participate in that process. I just want to push back on that design piece. I know there is shorthand here that it is all about design. That is the BAM line and we do not accept that.

Seán Crowe (Dublin South West, Sinn Fein)
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On the timeline, when does Mr. Gunning think the hospital is going to be fitted out? Has he any idea?

Mr. David Gunning:

I would be very reluctant to give the committee any assurance of or confidence in the June 2025 timeline in the absence of the information we need to look in detail and to do a critical analysis of what the work is, what the work packages are, how they are all lined up and how they will all flow from now right through to a successful conclusion. Underpinning that is the resources the contractor is going to apply to get that done. In the absence of that detail, I cannot give the Chair that assurance and BAM cannot provide us with that assurance until it gives us the programme. It has been requested a number of times and we now await it.

Seán Crowe (Dublin South West, Sinn Fein)
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On the last occasion the witnesses appeared before the committee, they spoke about the inadequate number of staff working on the hospital and that this was one of their key concerns at the time. Is there anything the board can do on the staffing element of this?

Mr. David Gunning:

I summarised earlier the three levers we have. There is not a particular contractual element which says that the staff has to be at X or we can do something else. It is just not there. It is important to point out, and we made the point in our opening statement, that the contractor did indicate that it would have 1,700 people - workers, operatives - on-site and that it would peak at that level. It has never got to that level and now we are at 630. Again, we say to BAM to get the resources and to get it finished. That is the message.

Seán Crowe (Dublin South West, Sinn Fein)
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What is BAM saying to the board on the staffing element? Is it a case that it cannot hire staff or has the contractor given the board any excuse?

Mr. David Gunning:

BAM often says to us is that it is confident in the date it is providing to us. That is number one. It also says that it has adequate resources on the site to deliver that date. We, again, fundamentally disagree with those two points.

Seán Crowe (Dublin South West, Sinn Fein)
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The other concern is where Mr. Gunning said that there are no rooms finished and he outlined the number of spaces there. BAM said that 3,128 rooms were completed as far as it was concerned. I am concerned, and it was mentioned when we suspended, about some of the machinery which has gone in. I refer to the likes of MRI and CAT scanners, which are worth millions of euro. Are those rooms not finished?

Mr. David Gunning:

They are finished-----

Seán Crowe (Dublin South West, Sinn Fein)
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Are those rooms prioritised with regard to that equipment?

Mr. David Gunning:

Mr. Devine would have the right line there. They are finished to a standard but they are not necessarily at the standard they need to be at.

Seán Crowe (Dublin South West, Sinn Fein)
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When can those rooms be sealed off?

Mr. David Gunning:

That is down to particular issues and perhaps Mr. Devine has the detail.

Seán Crowe (Dublin South West, Sinn Fein)
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We are talking about millions of euro of equipment.

Mr. Phelim Devine:

We are expecting to have all of that complex equipment such as the MRI, the CT scanners, the Biplanes and the theatres fully commissioned by October or November. Three of the theatres have special imaging within them and we expect to have them around November time. There are finishing elements which BAM have to come back into in a number of those rooms just to finalise them and bring them up to the substantial completion standard.

Seán Crowe (Dublin South West, Sinn Fein)
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That is grand. I am going to open up the meeting to members again. Deputy Cullinane indicated first.

David Cullinane (Waterford, Sinn Fein)
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I want to go back to the issue of claims. I understand that there has to be a strategy, so the question then is: is the strategy working? Certainly, up to now, the strategy has not been working because we have delay after delay. The board is essentially saying that this is exactly the tactic of the contractor to try to drag things out and to try to force the board and the Government's hand on claims. I go back to what I said earlier. There are a number of options. There is the option, and we spoke about this before, around trying to get agreement on some sort of settlement on the claims. As I pointed out earlier, at some point that will be adjudicated upon. I, or Mr. Gunning, does not know what way that will land and that would possibly be out of all of our hands. I ask again whether Mr. Gunning has absolutely closed off the option of trying to have some sort of mediated settlement with the contractor around claims that can put that issue to bed. Is Mr. Gunning saying that that is just not on the table, that the board is sticking to its guns, that it is not talking and that it will fight BAM on every claim and will see BAM in the High Court if that is the case? Is that the only position the board is now adopting? Is that something that is coming from Government or is that the board's and Mr. Gunning's position?

Mr. David Gunning:

I remember well Deputy Cullinane asking me the last time whether there be scope for us engaging to seek to find a way forward and I answered that in the positive. I can say that there has been considerable engagement with the contractor in exploring what are generally referred to as alternative dispute resolution mechanisms to try to find a resolution to the difficulties.

Our objectives going into this are to get certainty on time, in other words, when we are getting our hospital, and certainty on cost so we can tell the committee this is the timeline and, as time drives cost, this is the cost.

David Cullinane (Waterford, Sinn Fein)
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I suppose my question is-----

Mr. David Gunning:

We have been going through a process for several months. This is round two of alternative dispute resolution. We had previously been in it in 2022 and 2023. The fundamental issue is we cannot get the timeline. We do not have confidence, and we did not then have confidence, in what the contractor tells us as to when it will deliver the hospital. That is the history.

David Cullinane (Waterford, Sinn Fein)
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I accept all of this. Mr. Gunning said he had a meeting with the CEO, one of the senior figures in BAM. I am asking whether an attempt was made to meet BAM, or whether there were any discussions about it, to see whether the board could come to some compromise or settlement that would be reasonable and protect the taxpayer, whereby BAM may well recover some of the claims it has submitted, this issue would be put to bed, and we could move on and deliver the project.

Mr. David Gunning:

We have done this.

David Cullinane (Waterford, Sinn Fein)
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And?

Mr. David Gunning:

And we had no successful conclusion to that process.

David Cullinane (Waterford, Sinn Fein)
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No success.

Mr. David Gunning:

To summarise, there has been no clarity and certainty on the timeline.

David Cullinane (Waterford, Sinn Fein)
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There is €500 million additional money allocated to the project. There was total expenditure of €1.7 billion, which increased to €2.2 billion. As we know, the Cabinet signed off on €500 million more. Where did that €500 million go? Where is it?

Mr. David Gunning:

Most of it is still unspent. The NPHDB element of the original budget was €1.433 billion.

David Cullinane (Waterford, Sinn Fein)
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Has it been allocated?

Mr. David Gunning:

We are now at €1.47 billion. We have increased our money. There is a lot of headroom to go to that.

David Cullinane (Waterford, Sinn Fein)
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What is the €500 million for?

Mr. David Gunning:

The costs of running the project. There has been elongation of the project. The project has gone out from-----

David Cullinane (Waterford, Sinn Fein)
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Mr. Gunning has told us the board will not pay BAM any more money and he is also saying the board has €500 million more-----

Mr. David Gunning:

I am saying the intention is not to pay extra money.

David Cullinane (Waterford, Sinn Fein)
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I know, but €500 million more has been allocated. I am asking whether, within this €500 million envelope, provision is made that includes the possibility of having to pay more for some of the claims, whether it is because of High Court judgments, conciliation or because an agreement was reached.

Mr. David Gunning:

Deputy Cullinane will fully appreciate that I will not give any indication to him or the contractor on what provisions we may have made so it can-----

David Cullinane (Waterford, Sinn Fein)
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I will take that as a "Yes".

Mr. David Gunning:

It is not right for me to provide a response to that question.

David Cullinane (Waterford, Sinn Fein)
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I can understand that because there is a live negotiation, or not a negotiation as such-----

Mr. David Gunning:

There is a live contract and lots of issues.

David Cullinane (Waterford, Sinn Fein)
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I am making the point that €500 million was made available. I would imagine, and I would even take an inference from the response I got, that built into it is provision for a settlement but we have not got there. It is very frustrating for all of us. We have the June deadline and the completion date next year, which I assume will not be met and it will be pushed out. What is the realistic completion date in Mr. Gunning's head? Is he looking at September, December or are we guessing at this point with no idea?

Mr. David Gunning:

The programme under the contract is entirely the responsibility of the contractor. I would be confident that, if the contractor applies the resources that are required, we can get this thing done-----

David Cullinane (Waterford, Sinn Fein)
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But if it only applies-----

Mr. David Gunning:

-----but I do not control its resources.

David Cullinane (Waterford, Sinn Fein)
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Here is my point. Mr. Gunning told us in his opening statement the contractor has committed only 64% of resources to reach the targets since September or October last year. Obviously it has lost time. It states it will complete this by June. Mr. Gunning must have some estimation. If it were to provide 100% of what it states it can provide, what would be the timeframe it could reach? Mr. Gunning must have some idea. He must be working to some date. Is it December of next year?

Mr. David Gunning:

To be clear, the programme is the contractor's responsibility. It is telling us June. We have concerns about that. Until we get a detailed programme submission, we are not in a position to answer.

David Cullinane (Waterford, Sinn Fein)
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Is Mr. Gunning telling me today that the contractor is still telling him and the Government that it will have the hospital completed in June of next year?

Mr. David Gunning:

That is what it is telling us exactly.

David Cullinane (Waterford, Sinn Fein)
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It is telling him this.

Mr. David Gunning:

Exactly, but we do not have the detailed programme to support it so we cannot analyse and scrutinise it or come to a conclusion that it is real or not real. We do not know.

David Cullinane (Waterford, Sinn Fein)
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It has also given the board 14 other completion dates, which have come and gone.

Mr. David Gunning:

Historic performance is not an indicator of future performance but it is as close as we can get.

David Cullinane (Waterford, Sinn Fein)
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We say this all of the time because we can only speculate but I would say it is a racing certainty it will not be June next year. We are going into a further delay.

I want to make this point because it is important for us as committee members to do so. I call on BAM and the contractor to do everything possible to resource this project, step up to the plate and do what they need to do. This is a call we should all make. Equally, if there are other issues from the board's side that BAM is stating are delaying the project, then I appeal to the board to make sure this happens because we want to get this project done. There has to be political accountability also. Earlier we discussed the role of the Minister and meetings with the Minister. Are there weekly, bi-weekly or monthly meetings with the Minister? What way does this happen? Are they formal? Are they in-house or Zoom meetings? In what way do the meetings take place?

Mr. David Gunning:

I have been present at meetings and I can look back. I have given Deputy Cullinane the dates when I met the Minister. It is usually as part of the board.

David Cullinane (Waterford, Sinn Fein)
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No, I am not speaking about Mr. Gunning. I am speaking about the board and those responsible.

Mr. David Gunning:

The board has met the Minister formally at least twice since May and I was in the room both times. This has happened.

David Cullinane (Waterford, Sinn Fein)
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Prior to that?

Mr. David Gunning:

We can dig that up.

David Cullinane (Waterford, Sinn Fein)
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I ask Mr. Gunning to supply us with the dates. My point is that every day becomes a month and becomes a year. We have been here last year and the year before. We are being asked reasonable questions by the public and the media on what more can be done. Of course the contractor has to do more. I am not convinced this strategy of having endless rows with the contractor is working. It is clearly not because we have all of these delays. I am concerned whether this strategy is the right strategy. Only time will tell whether this is the case. There is political accountability also. Am I right in saying that, in 2018, the Minister for Health at the time was presented with three options, one of which was ending the contract with BAM? Am I also right in saying that, in 2019, BAM offered to withdraw?

Mr. David Gunning:

The year 2018 is before my time. I do not know.

David Cullinane (Waterford, Sinn Fein)
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Mr. Gunning does not recall what-----

Mr. David Gunning:

Not while I was here. I have been here since September 2020. I have no knowledge of what Deputy Cullinane has mentioned, none whatsoever. The State is in contract via the development board. I am not sure anyone has the ability to come in and pull a lever that does not exist in the contract that will give the type of outcome we want. We are all frustrated with this.

David Cullinane (Waterford, Sinn Fein)
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Mr. Gunning has hit the nail on the head. The problem is we are asking what the levers are. Mr. Gunning is telling us he has all of these levers but clearly they are not sufficient. Clearly there were flaws in the contract whereby sufficient levers were not in it to allow the board, the Government and us to hold the contractor to account. What I am hearing is that we are powerless. The board has withdrawn funding before from the contractor. It has not worked. Whatever levers are there are not worth anything because they are not moving the project on. I am just making the point that there are fundamental flaws in the contract that are preventing the board from being able to hold the contractor sufficiently to account.

Mr. David Gunning:

This is the public works contract that is used on public works throughout the country. There is no bespoke element to this. We will certainly take Deputy Cullinane's comments on board. I cannot disagree with some of them. This is what the State is using and we as an agency of the Department of Health of the State are in flight.

David Cullinane (Waterford, Sinn Fein)
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I accept that.

Mr. Phelim Devine:

To confirm, there have been 469. I gave the wrong number earlier. I do not have the exact costs against them.

Mr. Phelim Devine:

Based on what has been determined by the employer's representative, the employer has made changes equalling €31 million versus a claim figure from BAM of €748 million. I can be definitive about that. Some of those change orders have not yet been determined through the contract, but most of the recent ones are very localised in nature and only entail small amounts.

Mr. Phelim Devine:

No.

Mr. Phelim Devine:

Approximately 2,190 claims have been determined by the ER for €31 million versus BAM’s claim value of €748 million. That is the total number of determined employer changes made in the project.

Mr. Phelim Devine:

Correct.

Mr. Phelim Devine:

The contractor has substantiated approximately 2,400. I do not have the exact figure with me. Of those 2,400, the ER has determined 2,190. The majority have been determined by the ER, equalling €31 million versus €748 million claimed.

Mr. David Gunning:

I will give the Deputy an estimate, but we will provide the exact number later. The number we are not putting out is for the claims defence and the costs having to do with the legal cases and so forth, as those are legally sensitive.

Mr. David Gunning:

We have incurred expenses of approximately €4 million.

Mr. David Gunning:

I have my finance man in the room, so I will get that figure for the Deputy immediately after the meeting.

Mr. David Gunning:

I believe the figure in question was for that year.

Mr. Phelim Devine:

Technical commissioning has already started. We are 40% of the way through that. I believe it started in earnest six months ago. The hospital’s technical commissioning will take more than a year. It is approximately six months in and 40% complete, so it has another-----

Mr. Phelim Devine:

It will go all the way to the June date that BAM has indicated.

Mr. Phelim Devine:

It will not. The last piece of work that will be done on the hospital will be the final commissioning.

Mr. Phelim Devine:

It will go right up to substantial completion. There is what we call commissioning systems in isolation and commissioning systems together is called integrated commissioning. The last piece of the technical commissioning will be what we call cause and effect, which is the fire alarm and happens in the last three to four months of the project.

Mr. David Gunning:

I will deal with the programme first. We have gone through the levers in the contract in terms of what we can do. There have been two periods – one at the start and for a time in, I believe, 2021 – when we had a compliant programme. What happens is, the programme is compliant for a period but, as the contractor falls further behind in its work, the programme falls out of compliance. The employer’s representative has had a lengthy engagement with the contractor to try to get it back into compliance. That brings us up to the current period.

Mr. David Gunning:

The ER is responsible for the entirety of the contract.

Mr. David Gunning:

There have been multiple programme submissions from the contractor that are ultimately-----

Mr. David Gunning:

That is correct.

Mr. David Gunning:

That is our view. The only lever we have in that regard is the application of liquidated damages, which has to do with delays. A lack of resources means a delay and we can apply this rather blunt instrument, but it is not-----

Mr. David Gunning:

It is a contractual requirement.

Mr. David Gunning:

The lever that the employer has via the contract is to withhold moneys until such time as the contractor comes back into compliance.

Mr. David Gunning:

I have-----

Mr. David Gunning:

The problem is the lack of resources from the contractor to complete the works.

Mr. David Gunning:

Regarding the works, I am sure that, if the Department of Health were present, it would be able to comment more on its hospital building programme. We have been engaged a number of times to provide the Department’s capital projects people and others in the wider Government feedback about our experience, the lessons learned and how those are taken on board. We are in contract. Our job is one project, one contract.

Mr. David Gunning:

Our position as of right now is for us to get our hospital and not a penny more-----

Mr. David Gunning:

The way out of this is for the contractor to provide the resources to deliver the project.

Mr. David Gunning:

Not yet to an adequate-----

Mr. David Gunning:

We will apply, as we are now doing, the liquidated damages clause. That is the remedy that we have under the contract to address delays.

Mr. David Gunning:

I would forecast several disputes going before the High Court.

Mr. David Gunning:

These issues go through the mechanisms of the contract.

Mr. David Gunning:

We have not yet got to that point.

Seán Crowe (Dublin South West, Sinn Fein)
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Time, Deputy.

Mr. David Gunning:

I do not have a particular opinion on that, Deputy.

Seán Crowe (Dublin South West, Sinn Fein)
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Next is Deputy Hourigan. I will then invite Senator Conway. I did not see him indicating.

Neasa Hourigan (Dublin Central, Green Party)
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I will not use all of my time, so the Senator need not worry.

First of all, I am not entirely comfortable with describing this as a boilerplate public works contract because it was a two-stage situation that would not be found in every contract. That left us open to perhaps some of the difficulty we find ourselves in now.

I want to go back to technical commissioning. Mr. Devine described it as 40% along. Are there any ongoing tender processes? Has everything been tendered for and complete?

Mr. Phelim Devine:

From our perspective, in terms of the technical-----

Neasa Hourigan (Dublin Central, Green Party)
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Yes, right up to substantial completion. Is there anything that is still out to tender?

Mr. Phelim Devine:

It has all been procured. All the equipment has been built into the hospital that we are responsible for. It has all been procured and it is all being installed.

Neasa Hourigan (Dublin Central, Green Party)
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Then all the subcontractors and all the specialist people have entirely been-----

Mr. Phelim Devine:

My understanding is BAM and its specialists have procured everybody required to complete the technical commissioning of the hospital.

Neasa Hourigan (Dublin Central, Green Party)
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Have most of those tenders happened in the last six months? When did that tender process occur?

Mr. Phelim Devine:

We are not party to that because that is BAM, Mercury and Jones's responsibility. We are not party to any of that tendering process. We just see the people onsite undertaking the works.

Neasa Hourigan (Dublin Central, Green Party)
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Let us take, for example, the change orders outlined by the board in the additional material. BAM is described as being in a joint venture with ClearSphere tendering for a specialist fit out.

Mr. Phelim Devine:

When we originally went to the market for that specialist contract BAM and ClearSphere JV was successful, but BAM subsequently withdrew from that tender and we had to retender it.

Neasa Hourigan (Dublin Central, Green Party)
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When did that occur?

Mr. Phelim Devine:

I have not got the exact dates here. I can go back to 2023 and then we retendered it. We went straight back into the market and retendered it.

Neasa Hourigan (Dublin Central, Green Party)
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It was relatively recently, then, that we were still allowing BAM-----

Mr. Phelim Devine:

It was 2023, yes.

Neasa Hourigan (Dublin Central, Green Party)
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BAM was still tendering for unique projects within this project.

Mr. David Gunning:

Yes. that is correct. Being familiar with public procurement, people can put themselves forward.

Neasa Hourigan (Dublin Central, Green Party)
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I am just pointing out that slightly amazing fact.

Going back to the lower-level claims, Mr. Gunning was saying quite a large proportion were below €10,000 and BAM has refused to come to the table. He described how the board has offered a sum or some kind of agreement on that and BAM has refused to come to the table. I assume that even without that offer there would be a bundling of lower-level claims together and usually they just get agreed and signed off. Will the board explain to me why there was no agreement or has been no agreement? I thought within contracts there was usually a set-out timeframe for people to come to the table on those issues.

Mr. David Gunning:

Not in this case. I guess I cannot comment on why BAM refused. I do not know for a fact, but these also have an element of time delay in them. On the money element we are quite happy to settle, but the EOT element is undetermined, if you like, or undefined.

Neasa Hourigan (Dublin Central, Green Party)
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Is Mr. Gunning describing it as the contractor choosing not to settle on those lower-level claims because it provides evidence for its-----

Mr. David Gunning:

EOT.

Neasa Hourigan (Dublin Central, Green Party)
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-----larger claim.

Mr. David Gunning:

Maybe not the larger claims, but it just makes the number of claims bigger.

Neasa Hourigan (Dublin Central, Green Party)
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All right. That certainly helps BAM in the media.

On the liquidated damages mentioned in the opening statement, we do not have a huge amount of information about what that is. Is it a pre-agreed sum?

Mr. David Gunning:

In the contract there is a sum laid out.

Neasa Hourigan (Dublin Central, Green Party)
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And what is that?

Mr. David Gunning:

I will just get it now. Currently it amounts to approximately €15 million. If it was to roll on to the substantial completion date it would be about-----

Neasa Hourigan (Dublin Central, Green Party)
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Does Mr. Gunning mean €15 million by year, by month or what?

Mr. David Gunning:

The total amount from the contractual date, which is November 2022, right up to I think we said 20 September or whatever the date was, is approximately €15 million.

Neasa Hourigan (Dublin Central, Green Party)
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In the context of €2.2 billion that is not a huge amount.

Mr. David Gunning:

The limited bit I know about the law here is it has got to be a genuine pre-estimate of the loss.

Neasa Hourigan (Dublin Central, Green Party)
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All right, but the pre-estimate is agreed at the time of signing the contract, which is before you understand the inflation implications and the implications of delay. I understand the concept-----

Mr. David Gunning:

This is a legal-----

Neasa Hourigan (Dublin Central, Green Party)
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-----of liquidated damages and am not arguing the board could have done anything different. I am just saying that in the context of €2.2 billion €15 million is a drop in the ocean.

Mr. David Gunning:

This is to do with BAM's €888 million contract and not €2.2 billion, which is the NPHDB in its entirety plus CHI, so it is back to that.

Neasa Hourigan (Dublin Central, Green Party)
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Okay, I thank the witnesses.

Martin Conway (Fine Gael)
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I agree with the Deputy's description of it as not a standard public works contract. Even those have issues at the moment. There is one just outside in the car park called the bike shed. This is something an awful lot more serious. It is the biggest capital commitment the Irish taxpayer has made in history, or certainly recent history. It is still mind-blowing to think no room is yet up to the standard that means it can be handed over. It is very worrying. It begs the question as to what other areas have issues with them. What about the common areas, the car parks, the kitchens, the theatres and all those areas? Is there a theatre in the hospital that is fit to be handed over at this moment?

Mr. Phelim Devine:

Those 3,100 rooms we referenced includes the theatres as well. They are very advanced, but not at the completion standard at this time.

Martin Conway (Fine Gael)
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Mr. Devine is saying there is not a single room in the hospital that does anything that has been handed over yet. Not a kitchen or anything. It is just mind-blowing.

On the disputed claims, one of the board's spreadsheets gives a figure of €497 million and then one of €957 million. Is it the case the board agrees there is a potential liability of €497 million, whereas BAM is putting in a claim of €957 million?

Mr. David Gunning:

There is an issue here insofar as in the aforementioned conciliation the conciliator unfortunately awarded, or made a recommendation of, €108 million. Some of those claims that made up that amount are effectively being doubly accounted for in that note, which is very small and hard to read.

Martin Conway (Fine Gael)
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Has BAM acknowledged that?

Mr. David Gunning:

BAM has not withdrawn them. It has got an award for a bunch of claims, or a recommendation, but it has not withdrawn the claims even though they have been through the process, as they are required to.

Martin Conway (Fine Gael)
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Surely that is a simple thing all parties could agree. If that cannot be agreed then we will have serious problems in the immediate future. Would Mr. Gunning agree?

Mr. David Gunning:

Correct.

Martin Conway (Fine Gael)
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We have to be somewhat fair to BAM because it has not had the opportunity to come in and give its side of the story. I am trying to put myself in the contractor's shoes. I imagine it is having huge difficulty retaining staff in the current employment market. Would that be part of the reason? What explanations have been given to the board for BAM not committing the resources expected?

Mr. David Gunning:

As I mentioned earlier, the BAM view communicated to me is the contractor is of the opinion it has adequate resources on the job for the current phase of it. I would like to make a comment on being fair to BAM. At the coalface and on the ground there are a lot of people turning up every day and doing really good work for BAM and its subcontractors and making progress. We just need a lot more of them to get it done.

Martin Conway (Fine Gael)
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I think we would all like to acknowledge the people on the BAM side of the equation as well. They are important people and important in terms of getting this project delivered. Going back to what I asked earlier, what is the final cost of this going to be? It is going to be well north of €2.5 billion and I fear we could hit €3 billion. I also fear we are looking at 2027 or 2028 before the facility has any patients in it. Are those fears legitimate?

Mr. David Gunning:

We are looking at this on the basis BAM is telling us 2025, which will facilitate a 2026 opening. I really do not want to contemplate going beyond that. I have to say I really do not.

Martin Conway (Fine Gael)
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In all fairness, if you are building a house and the builder tells you he is going to hand it over in June you would be hoping he would but be expecting it might be a couple of months later. If we are talking about a children's hospital of this size, I do not think anyone on this committee believes it will be handed over any time before 2026. If Mr. Gunning is being honest, and he articulated that view, he probably does not believe it either.

Mr. David Gunning:

We believe that if the appropriate level of resourcing were applied-----

Martin Conway (Fine Gael)
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Therein lies the problem. BAM is telling the board that it is committing what it deems, and these are Mr. Gunning's words, to be the appropriate resources. Therein lies the problem. BAM is saying one thing, namely, that it is committing the appropriate resources. Mr. Gunning is saying it is not. How are we going to resolve this?

Mr. David Gunning:

My reason for saying the resources are not appropriate and are insufficient is that, as we look backwards on BAM's progress on its own programme, BAM is progressing at 60% every month on its programme. It is just not enough. It needs to hit 100%. To do that, it needs additional resources on the ground, including operatives, and additional supervision to make sure this work happens and then is done appropriately.

Martin Conway (Fine Gael)
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Assuming that BAM continues to commit just 60% resources, we are talking about adding another four or five months to the handover date, if it continues as it is today.

Mr. David Gunning:

The earlier observation that another slip on top of the 14 slips we have already had is not an unreasonable expectation.

Martin Conway (Fine Gael)
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Or another two slips perhaps.

It is important to commend Mr. Gunning and his team. I have no doubt that they are doing their best but there are a lot of unanswered questions. Perhaps it is not in their control but there are a lot of unanswered questions and the public are rightly not happy that this has not been delivered. Children are sick out there. We are waiting ten years for delivery of what was promised and committed to. It is not acceptable. However, I thank the witnesses for their attendance.

Seán Crowe (Dublin South West, Sinn Fein)
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I have two questions. The opening statement referenced additional resources that had to be submitted for the handover process. Will Mr. Gunning explain what that entailed? It was stated, "BAM continues to submit large volumes of claims, including duplication and triplication", which was mentioned. Will Mr. Gunning give some examples of, and his view on, those triplicate and duplicate claims?

Mr. David Gunning:

We can deduce the duplication or triplication by just looking at the entire claims table and, as I said, the fact that every day is claimed for three times. That is what I mean by triplication in this case. A lot of claims are stacking up on the same day, if you like, but the contractor can only be paid once for a day's extension of time.

Seán Crowe (Dublin South West, Sinn Fein)
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Are these lost days?

Mr. David Gunning:

The contractor is saying that we have issued a change and it will now take it that bit longer, but it is going further than that. It is saying that this is a critical path change. In other words, it is extending the timeline of the project. Therefore, the contractor is saying it is entitled to payment for that extension of time. Let us say the extension of time is 30 days. BAM is claiming 90 days for that extension of time, which is three times the amount. We are saying it is not entitled to it. We are disputing BAM's entitlement in any case but we are certainly disputing that it is entitled to three times what it is looking for.

Seán Crowe (Dublin South West, Sinn Fein)
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What are the additional resources you are talking about with BAM?

Mr. David Gunning:

On the additional resources, when we dimensioned the design team and the inspectorate within the design team, who are the people on site, including the resident architects and resident engineers who are on site every day looking at the progress, observing the works that are going on, engaging with our area managers, BAM's area managers, the Mercury and Jones people, and working with all those, we thought it would take a certain number of people to complete that task. Due to the challenges on quality, and this is the issue, BAM offers something and we say, "It is not ready. There are defects in it. Go and fix it." BAM comes back and offers it again but it is still not ready. It then offers it a third time. We have to add additional resources in order to do that. I do not think it is right that the State should pick up the cost of these additional resources to police the work of the main contractor, which is regarded as a tier 1 contractor. I do not think that is correct. That is what we mean. Mr. Devine has the details of who we have working on that.

Mr. Phelim Devine:

Mr. Gunning's answer is the core issue. We have a team of 25 people from our design team checking quality on a daily basis. It goes back to the implementation of a quality management plan. You learn lessons as you go on. You know what to look for. As you go through any process of completing areas of the hospital, they should get better and better. Mr. Gunning mentioned confidence - confidence should then build up. We just have not seen that. To make absolutely sure that we get a world-class hospital that we designed and specified, we have had to increase our team to make sure that BAM delivers it. That is why we have had to increase the team. We have gone from about 15 people to about 25 people. There are an extra ten people on site. On top of that, even to assure us internally within our organisation, I have a number of people on my team who have built, commissioned, designed and equipped hospitals of this scale previously. They are a second layer of assurance that we have internally, which looks at what the design team are doing to make sure all the technical issues are picked up and the quality is right.

Mr. Phelim Devine:

When we modified the contract for the purpose of the children's hospital project, it was modified to allow for two-stage procurement. Fundamentally, nearly all of the clauses that are in our bespoke contract for the children's hospital are pretty much aligned and identical to the standard form of PWC. The main difference is because we went through a two-stage process to arrive at a guaranteed maximum price we effectively have a lump sum contract with categories of change. Certain changes are allowed, such as the employer change we talked about. In the standard public works form, it is a remeasurement contract. It does not have that-----

Mr. Phelim Devine:

The standard public works contract is a remeasurement contract. It is not as tight as the contract we have on this project. When we modified the form, we had a procurement subcommittee of the board. We had representation from the HSE and sometimes from the Department. The person who is chair of the Government construction contracts committee, GCCC, attended one or two meetings. When we had the proposed changes, we made a presentation to the GCCC and sought is approval to make those changes. We got that approval.

Mr. Phelim Devine:

Not now. We did have the assistant secretary general of the OGP sitting on our board for a while, but he left the board about two years ago.

Mr. David Gunning:

There is a large board. We have a lot of legal people-----

Mr. David Gunning:

-----but those particular skills are probably brought by others. We have, for example, the former Secretary General of the Department of Finance, we have a former Minister and two former now-retired-----

Mr. David Gunning:

I am just giving you the scope of who we have-----

Mr. David Gunning:

Our procurement was done in 2018. It is done. At that time-----

Mr. David Gunning:

It was done. We are in a different phase.

Seán Crowe (Dublin South West, Sinn Fein)
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We have to finish. We are over time.

Mr. David Gunning:

Two eminent now-retired construction lawyers and one senior counsel.

Seán Crowe (Dublin South West, Sinn Fein)
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I thank the representatives of the National Paediatric Hospital Development Board for their engagement with the committee on the important matter of progress being made on the construction of the national children's hospital. The committee remains acutely concerned about the escalating cost of the project, the repeated delays in its construction and the lack of a definite timeline for the opening. The committee will give further consideration to how we will proceed with and interrogate this matter. For the information of board members and the general public, the Minister has been invited to discuss this sensitive matter. We have invited him to a public session on this and are awaiting a response from him. I again thank the representatives for their attendance and their fulsome answers.