Eleven years earlier when James Reilly, the then health minister, declared the conception of a new national maternity hospital, he confirmed a tentative budget of €150 million for the undertaking. Despite this, few anticipate that the ultimate expenditure for the proposed 244-bed hospital will align closely with this projected figure.
Government critics will undoubtedly express their displeasure should the expenses significantly exceed the initial estimate set in 2013, reflecting on past state projects that have also experienced significant budget overflow. These include the new national children’s hospital, which saw costs escalate from €650 million ten years ago to a projected €2.2 billion currently, and other overruns such as the €336,000 Leinster House bike storage or the €1.4 million security booth for the Department of Finance.
Conversely, academic scholars and some government representatives involved in new project development object to the interpretation that all state projects invariably endure time and budget overruns. They argue that the governmental approval process for large schemes can span several years, and during this period, construction and other costs inevitably inflate.
With respect to the new national maternity hospital revealed in 2013, the cabinet granted its endorsement just ten years later in 2023 to proceed to tender for a primary contractor. Simultaneously, risk behaviours and imprudent spending are regularly recognised and noted by the state’s financial watchdog, the Comptroller and Auditor General.
Earlier in the month, the University of Limerick was subjected to severe scrutiny by the comptroller due to two mishandled property transactions resulting in a financial blow exceeding €8 million. In 2022, a controller’s dossier revealed that HSE computing systems following the health service cyber attack, costing around €100 million, were only virus-monitored during daytime. Further critique of public service entities may be evident in the controller’s upcoming Monday report.
Professor Eoin Reeves, an expert in infrastructure economics at the University of Limerick, asserts that the public sector has successfully managed to deliver certain projects within their allocated budgets and timeframes. He mentions the National Development Finance Agency, the erstwhile National Roads Authority (currently under the jurisdiction of Transport Infrastructure Ireland), and the motorway network expansion.
In 2019, the HSE confirmed that the new central mental hospital was constructed within its budget and schedule.
Professor Reeves further emphasises the common instances of financial escalation in big projects globally. As an example, he notes the Boston’s “big dig” highway project in the United States, stating that about 90% of such large-scale projects exceed their proposed budgets, with an average overflow of around 28%.
In Ireland, large projects with budgets over €200 million must undergo a comprehensive sequence of procedures and “decision gates” to attain final validation.
According to economist Tom Ferris, the Irish government rolled out new “infrastructure guidelines” recently. For bigger projects, an external verification process should be part of strategic assessment and preliminary business case phases.
This validation step is then followed by an evaluation by the Major Projects Advisory Group from the Department of Public Expenditure at the same stage and weighed by the government at both the preliminary and final business case phases. Ferris stresses that approval is required at each phase.
All these steps are designed to safeguard public funds. Nevertheless, critics argue that lengthy processes augment costs in an environment of high construction inflation.
It’s not uncommon for projects that get turned down initially to be reassessed at a later stage when costs have significantly increased.
Former HSE chief executive, Tony O’Brien has expressed his disapproval of officials from the Department of Public Expenditure blocking the implementation of digital health records in hospitals. Projected to cost about €1 billion a few years ago, the cost is now expected to exceed €1.5 billion.
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