When embarking on a construction project such as an extension, it’s highly doubtful that one would enlist a contractor solely to demolish the existing structure and prepare the area, and then start the new construction, without setting a total cost from the beginning. This strategy entails agreeing on the price during the project’s execution, with a back-up plan of switching to another contractor if a consensus on the cost isn’t reached.
This methodology is flawed in manifold ways, chief among them being a lack of certainty about the project’s total cost, which can lead to budget overruns. The option of switching contractors might provide relief, but in reality, it likely inflates expenses further and stalls the timeline. If there are compelling factors like an impending planning permission expiration, one might consider this route. Nevertheless, cautious consideration is crucial, as without it, this approach may end up being significantly expensive.
A prime example of this scenario is the national children’s hospital project, currently overshooting its budget by €1.6 billion and substantially delayed. In 2015, the Government was urged to launch the project; a plan that had been in consideration for some time. An initial plan to establish it next to the Mater hospital was overruled by the planners in 2011, leading to St James’s Hospital being chosen as an alternative site. The decision to separate the project into three distinct portions was taken ahead of an upcoming election.
The first portion’s bidding process, involving clearing the site at St James’s, was initiated in August 2015. In June 2016, the Dutch-owned mega company, BAM, secured the contract and the work commenced two months later. In January the following year, BAM also won the tender for the principal works, incorporating both the basement and foundation construction and the primary hospital building contract. The total cost wasn’t pre-set, rather a process was settled on where a guaranteed maximum price (GMP) would be determined during the basement’s construction. If the parties couldn’t settle on the GMP, the option for the Government to employ another contractor remained open.
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The Government, has quickly found itself floundering out of its comfort zone. An in-depth report on this debacle conducted by PwC in 2019 concluded tersely that the essential checks necessary to alleviate the related risks and repercussions of this method were conspicuously absent.
[ Resources for the national children’s hospital continue to pale in the face of what is required to complete the task. Opens in a new browser tab ]
The report terminated with a finding that the Government was grossly unaware of their actions, be it the risks they were taking on or the ramifications of their choices. The alternative to find a different service provider for the hospital construction turned out to be fundamentally futile. The report was exceedingly critical of the National Paediatric Hospital Development Board, responsible for overseeing the project. The board over-trusted the managing team, leading to an unfortunate lack of question and challenge.
The representation given by the PwC report illustrates a lack of competent guidance of the project from the State. Despite numerous attempts to lay the blame at the feet of construction firm BAM, the Government’s difficulties appear to be self-inflicted, with BAM aggravating matters with their defiant stance. Disputes between the Government and BAM persist, however, at this point, it’s akin to desiring nothing more than to part ways with a troublesome builder.
A comprehensive review by PwC in 2019 summed up that ‘the necessary safeguards required to diminish the associated risks and effects… were not implemented.’
Hopefully, the entire incident will become a dim recollection after the inauguration of the new hospital due in about 12 months.
The State, however, is just commencing the construction of an 18km extensive high-capacity rail route connecting Swords and Dublin city centre. The Metrolink, which is expected to incur expenses of approximately €9.5 billion and is projected to be operational early in the following decade, is one among several colossal projects under review.
The successful completion of the project managed by the National Transport Authority is seen to hinge heavily on the capability of Transport Infrastructure Ireland to supervise its execution. The critical role of a project director is emphasised, ideally one with a global background in leading and managing large metro or tunneling schemes. A lack of someone suitable would significantly and unacceptably escalate the overall risk aspect, possibly leading to future preventable and foreseeable costs to the taxpayer, as alerted by the Department of Transport.
The state has given its consent to assign Sean Sweeney, a New Zealander, as the project director owing to his impressive qualifications, including his role in the launch of New Zealand’s maiden metro – the City Rail Link in Auckland. His compensation for the new role is set at €550,000, despite commanding a salary of around €475,000 in 2023 in his previous job. The substantial pay package positions him as one of the highest earners within the public sector, although no objections have been raised to date.
The appointment indicates that lessons have been learned, albeit the hard way, regarding the overcommitment to large-scale projects. Such skills aren’t easy to come by and don’t come at a low price.