THE National Children’s Hospital will be substantially complete by the end of January 2024, however construction “hyper-inflation” is likely to push the cost of one of the most expensive healthcare facilities in the world even higher.
he Public Accounts Committee (PAC) will be told on Thursday that the “dramatic increase in construction inflation is now beyond the contractual 4pc threshold” meaning that contractor BAM can recover increased costs from the State.
The final cost of the facility beside St James’s Hospital in Dublin is not yet known, but according to some estimates could exceed €2bn upon completion.
“The degree of hyper-inflation that we are currently experiencing would have been very difficult to foresee at the time the parties entered this contract or indeed other forms of construction contracts leading to recent Government policy responses in this regard,” Department of Health assistant secretary Derek Tierney will tell the PAC.
“For this reason, the compound effect of this increased inflation will be a driver of additional cost which has always been outside the €1.433bn budget for the capital project.”
Mr Tierney will tell the committee that BAM is now forecasting a substantial completion date of the end of January 2024.
It points to the disruption to supply chains as a result of Brexit, the Covid-19 pandemic and the war in Ukraine as risks beyond the control of the hospital development board.
“The wider construction industry is challenged by these same supply chain issues and dramatic price increases and the NCH project cannot alone be immune to these external risks,” Mr Tierney will state.
However he will point out that most of the steel and concrete has been installed and many materials have been procured and assembled offsite.
“The key driver of costs across the sector and that affect this project also relate to increased costs of energy, fuel, and transport of goods,” he will add.