Building firm goes to court in fresh row over children’s hospital

Construction firm BAM is to initiate High Court proceedings against the board overseeing the development of the new national children’s hospital after it rejected a conciliator’s recommendation that it should make an additional payment of more than €100 million to the builders.

BAM revealed on Thursday that the conciliator had also recommended that the formal completion date for the hospital – before any potential penalties could apply – be extended by more than a year.

The National Paediatric Hospital Development Board (NPHDB) said on Thursday it had rejected the conciliator’s recommendation. The move meant that BAM had to initiate a High Court case if it wanted to secure any such additional payment.

The confirmation by BAM that it will now go to the High Court means there will be further conflict over the new hospital.

The NPHDB said it would “defend the matter before the courts to minimise exposure to this and any other claims that it considers to be without merit and/or to be inflated”.

It said in the meantime it expected BAM “to honour its contractual commitments, manage the project appropriately, provide sufficient resources and complete the project as soon as possible”.

The Irish Times reported at the end of May that a conciliator operating under the disputes procedure in the contract had recommended that BAM should receive an additional payment of about €107 million for delays in the project attributable to the client.

On Thursday the NPHDB said it had issued a “notice of dissatisfaction” in respect of the conciliator’s recommendation.

“As per the dispute management process, the NPHDB must pay the sum recommended by the conciliator… only if BAM initiates High Court proceedings and raises a surety bond from a third party for the sum.”

In essence this means that while the board will have to pay €107 million to BAM following its decision to initiate High Court proceedings, the company will also have to take steps to guarantee that the money would be repaid in the event of it losing its case. The NPHDB said if it was successful in any High Court case, any repayment would include interest.

The NPHDB said any payment would not increase the overall cost of the hospital project.

BAM said the conciliator’s recommendation reflected the company’s “repeated highlighting of 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 is the build-only contractor on the project and is not responsible for design.”

The company said it was “disappointed” that the NPHDB had rejected the conciliator’s recommendation. The company said its focus was on completing the hospital project “as quickly as possible for the benefit of the children of Ireland”.

The NPHDB said it would be “premature and incorrect” to speculate that issues before the court would ultimately lead to an increase in the cost of the new hospital.

The new national children’s hospital has been beset by delays – some due to the Covid-19 pandemic – and spiralling costs. Last month the Dáil Public Accounts Committee heard that the latest date for substantial completion of the project of late October would be missed.

The original estimated cost of the project was put at €800 million in 2014 but the latest Government figures indicate it could now cost €2.24 billion.