The board overseeing the development of the national children’s hospital (NCH) intends to seek damages from construction firm BAM with a claim which could run to more than €20 million over delays in the completion of the project.
It’s the latest development in the row over the construction of the new national children’s hospital, which has been hit by successive delays and spiralling cost overruns.
It comes after a letter from the Minister for Health, Stephen Donnelly, to Taoiseach Simon Harris, Tánaiste Micheál Martin and Green Party leader Roderic O’Gorman, in which he warned that the completion date for the hospital would probably slip again, beyond the previous substantial completion date of February 2025.
The necessary subsequent fit-out time for the building casts doubt on the prospect of the hospital opening next year as a result.
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BAM has disputed some of the contents of the Minister’s letter, describing the claims as not “helpful to ensuring this complex and vital project is completed at the earliest possible juncture”.
Earlier this year it was revealed that the cost of the hospital has increased by more than €500 million, bringing the total sum expected to be spent on the project, including transitioning of services to the building, to €2.2 billion. The various parties have been increasingly blaming each other for the delays and cost escalations.
The National Paediatric Hospital Development Board (NPHDB), in a statement to The Irish Times, said that BAM had “shifted its cited substantial completion date for the new children’s hospital 14 times since it commenced above ground works in early 2019″.
[ Key children’s hospital positions not filled permanently as opening date loomsOpens in new window ]
The NPHDB said it “is continuing to do everything in its power to compel BAM to conclude its work and fulfil its contractual responsibilities”.
It said it had “moved, for a second time, to withhold 15 per cent of certified payments due to BAM”, and notified the construction firm of its “intention to apply Liquidated Damages for late completion”.
Liquidated damages are a specific instrument within construction contracts which relate to a particular sum agreed by the parties deemed to be payable in the event of a breach.
In May, David Gunning, the chief executive of the NPHDB, told the Public Accounts Committee (PAC) that the total cost of the damages could be more than €21 million.
The NPHDB statement did not offer an updated figure for the level of liquidated damages it expects to seek but said: “The figure will be dependent on BAM’s monthly progress.”
In its statement, it blamed the delays on “BAM’s continued insistence on offering rooms and areas within the hospital as complete, when they are incomplete”, as well as “BAM’s continued failure to manage the project execution”, and its “BAM’s continued unwillingness to resource the project appropriately”.
It said the company “has not provided a compliant Baseline Programme since February 2021″, referring to a timeline required as part of the construction contract.
It described the absence of such a programme as “highly unorthodox” and “utterly unacceptable on a project of national importance like the new children’s hospital”.
BAM has refuted those claims and said it is not responsible for the entire €2.2 billion cost of the hospital, noting that “the proportion of this amount relating to the BAM works, including sums likely to be awarded through a dispute resolution process, will be slightly above half of the overall capital spend on this project”.
It responded to the NPHDB’s claim of incomplete rooms, it said that it “is fully confident in the quality of the construction work for this world class hospital”, describing the “handover of rooms and de-snagging of minor issues [as] routine”.
It noted that “late, extensive changes to the reflected ceiling plans”, which it said required the company to go back through the building to “remove and reinstall more than 2,200 ceiling-mounted devices” such as smoke detectors and sprinkler heads, at what it described as “enormous financial and time cost”.
It also disputed the NPHDB’s characterisation of the causes of the delays, insisting that it had “repeatedly highlighted the fact that the primary driver of delays and additional cost on the project has been the volume and frequency of design changes requested by the client”.
BAM’s statement said that an independent conciliator had awarded the construction firm an extra payment of €107 million had “cited this level of change as by far the biggest factor in the increased costs and delays to the project”, and that “the conciliator’s award also extended the official completion date of the project by 13 months, reflecting the level of change instructed by the client”.
The NPHDB statement disputed this saying that BAM has not been awarded €107 million, that “this is a bonded figure and was a recommendation by the Standing Conciliator, as part of the dispute resolution process. The NPHDB will defend the matter before the courts to minimise exposure”.
It said: “Now that this matter has been referred to the High Court, the conciliation process is terminated, and the conciliator’s recommendations are no longer valid, and his findings are not considered by the High Court in its determination of the disputes.”
The BAM statement also noted that the NPHDB had recently told the Public Accounts Committee that at the end of April 2024 “it had issued 23,283 revised design drawings to BAM following this initial technical submission exercise”.
BAM’s spokesman said that “accountability for these changes and their impact on cost and delivery timeline are clearly reflected in the conciliator’s decision”.
It said that it has “complied at all stages with all requirements and provisions set out in the contract and has not been sanctioned by the NPHDB”, a view that has been disputed by the NPHDB.
The spokesman said that BAM’s sole focus was completing the hospital “for the benefit of the children of Ireland” and that the build phase was 93 per cent complete “based on the original scope, notwithstanding the additional work generated by the significant number of design changes”.
The National Paediatric Hospital Development Board (NPHDB) will be appearing before the Joint Oireachtas Committee on Health on September 25th to give a detailed update to the Committee members.
