Gino Kenny spoke on 12 July 2023 about the children's hospital project, sharply criticising BAM's claims and calling them grossly inflated. He argued the contractor's claimed sums and alleged days of delay far exceed the contract value and must be challenged to protect public money.
Claims and contract totals
Gino Kenny said the contract between BAM and the Development Board is about €909-€910 million. He said contractor claims are approaching that contract value, citing a reported position of €756 million and rising, and noting 16 claims totalling €573 million, including at least one claim of more than €100 million.
Days claimed versus working days
He highlighted that the contractor is claiming 2,376 individual days of delay, while the period from the contractual completion date in November 2022 to 7 May represents about 405 working days. He said many of the days are duplicated, overlaid or concurrent and that compensation cannot be paid multiple times for the same day.
Employer's representative awards
Gino Kenny noted the employer's representative (ER), the independent contract administrator, has awarded BAM about €14 million so far — a figure he contrasted with the much larger sums being claimed by the contractor.
Budget and capital request
He referenced a government investment approval of €1.433 billion for the project, with roughly €1.3 billion already expended and about €100 million remaining. He said a capital request has been submitted to Governance to seek approval to increase the current €1.433 billion level to the amount required to finish the build under public spending rules.
Defence of public funds and entitlement
Gino Kenny said the State's position is to refute entitlement to the full extensions of time being claimed and to challenge each claim and each day of delay. He acknowledged that some claims may have entitlement and will be paid, but characterised the overall quantum of claims as grossly inflated.
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Good morning everybody, I suppose anybody that was, we were a number of us at the children's hospital last year, and it is an incredible piece of architecture, incredible building, and hopefully when it's finished that, you know, children of this country and the families can use it, and I think, hopefully that will be quite soon. Just in relation to the claims by BAM, would this be kind of normal practice in a kind of, a large scale project such as this, in kind of other kind of structural kind of projects in Ireland? I, I think we've thought a lot about this and done the analysis, and I think what's unusual is, maybe not the number of claims, but the quantum, you know, the amount of money that the contractor is claiming, you know, is, is, is, is heading towards the actual contract value. I know. You know, the contract is 910 million, and we're at 756 and rising, and I think that's the kind of, the incredible aspect of, of, of this. Can you just remind, obviously, viewers and listeners, what was the original value by BAM in relation to construction, the site itself? What was the, the, the, the contract, the contract is 909, say 910 million for round numbers. That's the, the contract between BAM and the Development Board in terms of BAM's scope of works. Okay. To deliver, to deliver that. That's 910 million. 910 million. That was the regional sum to build a hospital. Correct. As such as this. Well, that's called the adjusted contract sum, but that's, that's, that's, that's the baseline. Right. And obviously the claims are coming up to that figure. Well, that's what we think is, is a kind of a incredible, you know. And, and you were saying obviously the 16, those 16 claims totaling 573 million. Yes. One of them claims is a hundred million. Well, correct. Yeah. Or more than a hundred million, but this is the, this is the nature of the claims. I think it's interesting just to, just to point out to the committee members, you know, those 16 claims, as I mentioned, there's 2,376 days, individual days being claimed by the contractor. 2,000 days. 2,376. When you mean days, what do you mean? So each day it's in, they're in delay. They're claiming for compensation for those days. And then much more, one day. Well, I want to make a slightly different point if I may, Deputy Kenny, which is the, if we just take the November 22, the contractual completion date to the May the 7th, where BAM is talking about, that's 405 working days. Right. That's just, so that the total number of days, if you count them, is 405. Right. Yet BAM is actually claiming for 2,376 days, just on those EOTs alone. So they're claiming nearly six times for each day, with duplicate claims, overlay claims, you know, somebody mentioned M&E earlier, you know, we have M&E claims, and several of them are all layered on top of each other. And that's the position. So I just, just to make that point, there's a lot of duplication and repeat and overlap and concurrency in the days that are being claimed. Okay. So just, just to, to understand, so you could, you could only ever get compensation for the one day. You can't get it six times. Right. You can't get six times compensation for the one day. Okay. And obviously we, we refute they're entitled to any extension of time in this project. Right. So, so, so get back to your, back to your question. Can you explain what's the, what's the, you know, the point is that we would see these are grossly inflated claims. Okay. You know, there, it's not to say that some of these claims do not have entitlement. Of course they have entitlement. Yeah. And they will be paid. And the current scores on the board or the current position is that the ER has awarded BAM 14 million. When is the ER? The employer's representative, who's the contract administrator. Right. The independent contract administrator has awarded BAM 14 million. 14 million euros. So they're claiming 756. 14 million. And they get 14 additional million. And why do you think BAM is, you know, putting all these kind of claims forward? Particularly in relation to the days. Because obviously the figure that, you know, you're explaining to us is, in relation to BAM, it's six times greater than the figure that you're saying. Yeah. There has to be a kind of, I suppose, a logic to that. You know, or is there an ill, I mean, this seems to be completely illogical from, from the beginning. There's a, there's a strategy. Right. Right. And, and I don't want to speculate what that strategy is. But there's, there's clearly a strategy. Yeah. That, that the contractor is following here. And, you know, our position is to defend that. Right. It's public money. And, and to kind of, and to kind of challenge each and every one of those claims and each of every one of those days. Yeah. So if it is 405 days, we absolutely do not believe that BAM is entitled to 405 days extension of time. Okay. Absolutely not. But, you know, if BAM was sitting here, and they do make the point that they believe that the development board and the design team is responsible by not having provided, you know, the design and by producing change orders, and that's their narrative. Okay. Which, just to be clear, we do not accept. Okay. Just in relation to the government investment of 1.43 billion, which is an enormous amount of money, and thus far, 1.3 billion has been expanded. So that leaves, correct me for wrong, 100 million left. Yeah. So will that be breached over the lifetime of the construction of this hospital? Well, I think that brings us back to the, the earlier point that I answered for Deputy Cullinan's point in relation to the, you know, we have submitted a capital request to the Governance looking for additional funds to increase, if you like, the, the, the approval level from 1.433 up to what we think it will be required to finish. So we don't, we can't breach 1.433 because of public spending rules. Right. So we need to get approval for this, and this needs to be a government decision to, to provide that money. And do you think it would need to go beyond the 1.43 billion? I do. Yes. Yeah. Absolutely. How much? I'm, I'm not commenting on that, Deputy Kenny, as I said earlier, but you know. But it definitely will be breached. Yes, I do believe. Yes, absolutely. Yeah. Okay. Just in relation to the low productivity in relation to BAM, I mean, it seems extraordinary that, you know, that when, kind of in the evolution of this hospital lab, productivity has gone down rather than gone up. It seems to kind of suggest that BAM, do they actually have the will to actually finish this project? You know, in relation to their commitment, because there seems to be kind of all sorts of sideshows going on here in relation to claims, counterclaims and all that. But you would think that productivity would be actually increased rather than being decreased in relation to finishing the project. So do you think, hand and heart, that actually BAM won't actually finish this project? Well, BAM is in contract and is in contract to finish this project. You know, there's a, there's a logic in my mind, which is, you know, once you're in contract, the sooner you get the thing finished, the more cost effective you can be. That's the reality on all construction projects. I know from my conversations with BAM, what they say to me is that they are absolutely committed to finishing the project. And furthermore, I would go on and say, you know, that the large Irish subcontractors working in this are equally committed and want this project to be a success. There's absolutely no doubt in my mind about that. And in a recent letter from BAM, they have committed to providing, you know, to finishing out the project and getting it done. And we just need, now we need to get that, get our arms around that and how do we get that completed? Is there a time period in relation to when the first children and staff will be able to go into the hospital? What are we talking about? Well, we're, we're, we're talking about the substantial completion, which is the end of the building phase. And as I mentioned, we're, we're, we would expect to get a program from BAM next week and be able to define that, that point. Right. And then Children's Health Ireland take over after then and do their operational commissioning for whatever period of time that takes them, which will determine the opening date for the hospital. Okay. But again, back to the program is really critical. The program is, you know, for example, we have bought all this equipment. Yeah. Right. CT scans and all that. We need the program to tell us, you know, when we get onto Siemens or GE or Miele or whoever it is that's providing this high tech equipment, you know, when we want to get it manufactured, produced, delivered, ready to install. And, and the whole program that BAM needs to provide has got to give us those dates. Yeah. And then the follow onto the program is the Eilish Hardiman and the, and the people at CHI, that whole team need now to take this forward. And they have several work streams under their remit. They have to, um, uh, really do carry out the operational commissioning. They have to do the digital hospital piece that Deputy Hurricane referred to earlier, which is the EHR and all the operating processes and the development of those. They have to merge three hospitals into one, you know, which is, and all of these have to happen. So it's absolutely critical. We all have clarity on when the timing is going to be. So if I was asked for anything now, it would be certainty. I want certainty on the date. I, but we share, of course. Just my final question, in relation to the concessory car park. Yes, sir. Um, how will that work? Well, the car park, we are leading the procurement of a concessionaire. Right. To use the appropriate title, which is somebody, and we're well advanced on that. That's, that's, and we will shortly be getting, you know, I think it's an October time for getting, you know, formal offers of, you know, what people are willing to, to offer for that. It's set out in the, in the tender documents, and this is someone who will operate the car park, uh, uh, on behalf of CHI, if you like, and for CHI. Uh, the minister has made decisions in relation to maximum charging on a daily basis in the hospital. I think we may have commented on that before. Uh, so we're well advanced on that. What's the maximum charge per day? 10 euros per day. Staff won't have to pay, do you? I don't, I don't know the details. I know there are designated car staff, car parking spaces. I, I, I leave it to CHI to negotiate, or I, I, that's outside of our, not, not within our, our remit, but. Okay. That's a CHI matter. As is, you know, we're procuring the car park, but ultimately CHI currently operates a number of car parks and it will be their responsibility to take this to conclusion. Thank you. Thank you. Thank you.
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