The final cost of the new national children's hospital could exceed €2 billion, the Public Accounts Committee has heard.

Labour's health spokesperson Alan Kelly said it is "mind boggling" that up to September last year, the cost of the project was expected to be €983m and four months later it cannot be guaranteed that it will come in under €2bn.

The overall cost of the project has now risen to a total of €1.733bn.


Department of Health officials have confirmed that the cost overruns at the project will cost the exchequer €100m in 2019. 

Secretary General of the Department of Health, Jim Breslin, said a study - a scenario sensitivity analysis - is now being carried out to identify potential further cost increases. 


Breakdown of costs:

The Department of Health has provided an up-to-date breakdown of the €1.7 billion expected costs to complete the new National Children's Hospital.

PAC chairperson Seán Fleming read out the figures, breaking down a total of €1.7 billion, to the Public Accounts Committee this afternoon.

Construction costs:

  • €14.5m for decanting costs in relation to the site
  • €5.8m for aspergillosis, which is about infection control in the hospital during the course of construction
  • €550m for main contractor BAM
  • €177m for the Jones Group
  • €157m for Mercury, another contractor
  • There is also an extra contractor providing lifts

So far, that adds up to €890m, and is described as the main construction costs.

A further construction cost added on is:

  • €53.4m for outpatient and urgent care centres in Tallaght and Connolly

That comes to €963.7m, plus VAT at €130.1m.

That gives a total figure of €1,093.8m (or €1.0938 billion) as the gross construction costs of the project.

Other costs related to the construction are as follows:

  • €87.9m to equip the hospital with MRIs and furniture
  • €13.6m for planning and development fees
  • €13.6m for development levies payable to various local authorities
  • €71.3m for design team fees
  • €51.3m as a contingency
  • €66.04m to cover the cost of running the National Paediatric Development Board Company for the entire course of the project, and their legal and professional fees

These costs add to €290.1m. The gross of these costs - including VAT of €49m - is €339.1m.

Added to the construction costs of €1.0938bn, it results in a building cost of €1.433bn.

Other costs are being handled by the Children’s Hospital Group, outside of the construction. These are:

  • €18m for the Children's Research and Innovation Centre
  • €97m for information and communications technology in relation to computers
  • €86m for the children’s hospital integration programme, for the integration of the Children’s Hospital at Crumlin, Temple Street and Tallaght
  • €52m for a new electronic healthcare records system
  • Approximately €40m of a write-off paid for the Mater Hospital site, which was the original first option that did not proceed

"Those costs come to €293m, giving a grand total, as of today, of €1.7 billion," said Mr Fleming.


There were heated exchanges at the committee between Fianna Fáil TD Shane Cassells and Mr Breslin.

The Meath TD questioned if the Minister for Health, Simon Harris, misled the Dáil in a response to a parliamentary question asked by Barry Cowen on 18 September last.

Mr Cassells pointed out that Mr Cowen asked the minister a question about the budgeted cost of the project - about the cost incurred to date and if everything was going to come in on budget. He was told it was coming in on budget and on target.

"But we now know of course that at the time that the minister was told on August 27th that this was already out of control. So the Dáil was misled, was it not?" 

Mr Breslin said the minister answered about the budget for the hospital and if it was on profile.

He added: "They were on profile, what we did not have was an agreed guaranteed maximum price and we did not have that until November."  

Sinn Féin TD David Cullinane asked the Department of Health if any decision has been made on what projects will or will not suffer as a consequence of the cost overruns at the Children's Hospital? 

Jim Curran, the HSE's Head of Estates, replied: "No, no decision has been made on how we are funding the €50 million required for 2019 and we are awaiting clarity from the Department of Public Expenditure." 

He was pressed further by Mr Cullinane who asked: "Is it possible that there will be some capital projects that may not go ahead as quickly as possible because of the overrun?"

Mr Curran said: "Yes because we have to find in 2019 an additional €50 million."  

He was pressed further by Mr Cullinane who asked: So yes is that the answer? That there is going to be an impact on some capital projects but you haven't decided which projects yes?" and Mr Curran replied: "Yes". 

Mr Cullinane asked the Department of Health if the second second catheterisation lab in Waterford is one of the projects at risk?

Mr Breslin said that it is one of the projects under consideration but he was reluctant to get into a discussion on individual projects. 

Answering questions from Sinn Féin TD Jonathan O'Brien, Mr Breslin said the additional cash required for the project this year is €100m - €50m from health and €50m from the overall exchequer. 

C&AG says children's hospital costs will increase

The Comptroller and Auditor General has said additional costs will be incurred by other agencies before the new children’s hospital becomes operational.

In his first comments about the costs controversy, Seamus McCarthy told the PAC that the budget for the development of the hospital has escalated significantly.

He said: "In 2014 the Department of Health approved a total budget of €790m for the board's work. As of December 2018, the costs expected to be incurred under the board's remit were estimated at €1.433 billion.

"However, additional costs will be incurred by other agencies including Children's Health Ireland to fully equip and commission the hospital before it can get up and running."

Mr McCarthy noted that the Department of Health has engaged a team of consultants to review the causes of the budget cost increases for the project.

Representatives from the National Paediatric Hospital Development Board (NPHDB), the Health Service Executive and the Department of Health are also before the PAC where they are facing questions about the cost overruns at the new hospital.

Outlining the cost overruns Mr Breslin said: "When Government approved the construction investment decision in April 2017, the capital cost for the delivery of the hospital build project, following the evaluation of main construction tenders and selection of preferred contractors, was €983m, of which €916m was to be met by the Exchequer.

"In December 2018, following completion of the Guaranteed Maximum Price process, the capital cost for the delivery of the hospital build project now stands at €1.433bn.

"The total of €450m [cost overrun between April 2017 and December 2018] requires net additional Exchequer funding of €320m (of which €50m is VAT) and an additional €130m in philanthropy funding." 

He said the department is taking the "situation extremely seriously and regret the very significant increase in public funds over that originally committed by Government based on the business case submitted by the Development Board."

In his opening address, NPHDB Project Director John Pollock said: "We are deeply disappointed that costs have increased so significantly and acknowledge the challenges these pose.

"We are also very mindful of the Government’s concerns to ensure that the project is indeed delivered now within the agreed time and within the revised budget.

"Our focus now is on ensuring that all parties work safely and collaboratively and deliver a hospital of outstanding quality, a project we will all be proud of transforming the delivery of paediatric services and providing unsurpassed care for the nation's sick children for generations to come."  

The NPHDB is responsible for planning, designing, building, equipping and furnishing the new children's hospital.

Children's Health Ireland is the newly established single statutory entity, to provide paediatric services and take over responsibility for the services currently provided by the existing three Dublin children's hospitals - Our Lady's Children's Hospital, Crumlin, Temple Street Children's Hospital, and the paediatric services at Tallaght University Hospital.

Sinn Féin TD Jonathan O'Brien pressed Department of Health and HSE officials to find out exactly when they knew about escalating costs of the hospital were brought to the attention of the finance committee or the executive board.

He said that this information should have been passed on to the Minister for Health in a very timely and appropriate manner.

He also asked Jim Breslin, the Secretary General of the Department of Health, when the minister was made aware of it?

Mr Breslin said: "At the end of August when the Department was aware, not of the extent of it, but that there was an emerging issue, the Minister was advised at the same time."

He said: "I would like to know the date that the finance sub-committee first discussed the escalating costs. Since 10am today we have gone from late August 2018 to June 2018 to now a time before the executive board.

"In terms of the significant escalation of costs, in terms of the difference between the 2017 and the 2018 figures, when would you have first become aware of that or that there was an issue in relation to that?"

Mr Pollock said the project was on budget for the first six months of 2018 and then a cost overrun of €40m was identified.

The committee heard that €40m overrun went from €200m by the end of August and by November the overrun of the project cost went up to €450m.

Mr O'Brien asked the Comptroller and Audtior: "Would it be unusual for a project of this size to be on track one month and then four months later to see an escalation of costs of €450m?"

Mr McCarthy replied: "That would be very concerning."

Mr O'Brien said: "I find it astonishing that we are on track one month and four months we are €450m over and above what we predicted. It just seems to have snowballed in a very short period of time. One would have to question the controls and processes that were in place."

Mr McCarthy agreed and added: "The question is if there was some major change in the project, then why did that occur? Or were the controls that were in place operating properly from the get go? Those would be the two possibilities that it would seem to me."

Additional Reporting Mary Regan