Hospital fallout fear factor ‘could delay new projects’
Ireland needs infrastructure but Sisk director Pat Lucey says jobs are not starting soon enough, writes Fearghal O’Connor
THE fallout from cost overruns on the new National Children’s Hospital could hit other badly-needed infrastructure projects, according to the new president of the Construction Industry Federation.
There are fears that extensive plans for major public transport, roads, water and energy projects under the Government’s capital plan could face delays and complications because of a fear of further political damage should they go wrong.
“You’d have to have some concerns,” said Pat Lucey, who is also director of civil engineering at John Sisk & Sons. “Very often when something goes wrong on a major project, people with the best intentions put in rules to deal with that exceptional occasion that are actually detrimental to the normal run-of-the-mill work that we do all the time and about which there are no problems,” he said.
“There can often be, and in fact invariably are, unintended consequences of introducing something to deal with an extraordinary situation that won’t happen.”
Building the hospital on a greenfield site would have been easier, he said. But he hailed the Government’s determination to push on with the project at St James’s as “a major positive despite the political pitfalls that have opened up”.
“We are a great nation at revisiting decisions made. There is always someone who wants to revisit a decision. If we keep revisiting decisions we will never do anything. So often we have seen projects stopped and stalled for that reason. Construction and infrastructure needs the kind of brave decisiveness that says ‘go ahead and do it’.”
Lucey also backed the rights of residents in Ranelagh to object to Metrolink plans, but he said it was vital that, even if delayed, a suitable design for the southside portion of the line was progressed.
AT Sisk’s joinery training centre at its Naas Road headquarters, apprentice carpenters are busy making door frames for a range of jobs under way at Ireland’s biggest construction firm — from a new hotel to the CenterParcs resort in Longford. Sisk director Pat Lucey, who has responsibility for its civil engineering unit in both Ireland and the UK, is extremely proud of a training programme that sees young people complete an apprenticeship before broadening their construction experience on building projects and at third-level courses.
It’s the type of apprenticeship model that was neglected for a long time by many in the industry.
“As an industry we need to do more,” says Lucey, who has just taken over as president of the Construction Industry Federation, which itself is about to launch a campaign to attract young people into the industry.
“It all comes back to certainty. If someone takes on an apprentice they want to make sure they have four years’ work ahead of that person to make it worthwhile. A lot of contractors are struggling with that,” he says.
Lucey has been in the industry for 36 years and has been involved in a range of high-profile projects with Sisk over that time, including the Luas cross-city connection, Limerick Tunnel, and the tunnelling for the huge Crossrail project in London.
Right now, despite the ever growing need for infrastructure, there are surprisingly few largescale civil engineering projects at the construction stage. Roads, public transport, water, energy are all sectors earmarked for massive investment but there is a paucity of on-the-ground activity.
“People see cranes in Dublin and they see a lot of large building projects going on and they think construction is booming,” says Lucey. “Yes, construction is booming in Dublin. It is not booming in the regions or for small builders in the west of Ireland. And for civil engineering, it hasn’t come out of the recession. In fact, civil engineering has been in recession for more than 10 years.”
This will have undoubted consequences in the future, he says. “You almost need to have a crisis before people look at it. But civil engineering and infrastructure doesn’t cause a crisis that is in your face. But what it does is it undermines the economy and stops it performing better in the future. We have seen how putting in the motorway network has allowed to country to blossom.”
He points to the housing market as an area in which failure to think ahead has led to a crisis. When housing completions fell to record low levels and stayed there over a number of years “someone should have been raising a red flag”, he says.
Lucey said the length of time a project such as Dublin’s metro has taken to date is frustrating.
“But at the same time you realise that every project that ever happened had a long period of talking about it like the metro. It’s not unusual for a project to have 20 to 40 years of a life before it happens. We all know that so why don’t we get better at it? Because the problems tend to be the same old problems.”
The southern half of the metro project looks set to be put on hold after thousands of objections to the closure of local roads and the shutdown for a period of the tram service.
Local stakeholder influence always adds cost to projects and always causes delays to projects, said Lucey.
“It’s really important to have that consultation. Locals have a point of view and they are looking after their community. If they don’t look after their community nobody will look after it for them. But then you need for someone to take an overall balanced view of what is best overall and maybe we are not as good at that as we should be.”
The real frustration for Lucey is that projects are not started early enough. Every large project needs a four- to five-year initial period of assessments, surveys and consultations but the money to do this on a range of projects is always the first money to be cut in a downturn, he said.
“It doesn’t cost an awful lot of money, but it takes four to five years. If you don’t do that you can’t get to the point of going for planning and sometimes it is said we can’t afford to do this.”
He cites the proposed new billion euro-plus Cork-to-Limerick motorway which is crucial to help create a counterbalance to the Dublin region and the various promised Luas extensions as examples.
Politicians from time to time approach the industry looking for ‘shovel ready projects’, he says. There is no such thing: “Shovel ready comes after four or five years.” About €15m over four years must be spent to get the motorway project through its initial phase, says Lucey. “That money is always a casualty in a downturn but with construction you can’t just throw a switch and tomorrow be building.”
The spiralling budget for the National Children’s Hospital has caused a major political issue and Lucey hopes that a PwC report into the project can help to open up a wider discussion on budgeting practices in the industry. The project itself is hugely complex and coming up with the correct budget ahead of time would be extremely difficult, says Lucey.
“What you would like to see [in the PwC report] is lessons learned, both positive and negative, not just a focus on the budget. I have no doubt there was a lot of good stuff in there.”
But Lucey is fearful that the furore around the new hospital is going to cause a retreat from other big projects. “You’d have to have some concerns. Very often when something goes wrong on a major project people with the best intentions put in rules to deal with that exceptional occasion that are actually detrimental to the normal run of the mill work that we do all the time and about which there are no problems. There can often be, and in fact invariably are, unintended consequences of introducing something to deal with an extraordinary situation that won’t happen.”
“As long I’ve been in construction there has always been an issue about the budgets put to projects at the very start. There is an approval process and a business case that has to be put forward. If the number is too high the business case will fail. That pushes people into as low a number as they can to get the business case approved, knowing full well that it is going to rise afterwards. That’s common in all projects.”
The Children’s Hospital project is just the latest and most obvious example in the construction sector where an initially low tender price has subsequently ballooned as labour and other costs jumped in a rising economy. Critics have pointed the finger at contractors for ‘low-balling’ bids in order to win work, while the construction sector itself has long argued that government tendering practices and contracts are not fit for purpose and do nothing to stop the practice.
“Every contractor needs work right now and has done for the last 10 years. Some contractors went in below cost on jobs with the hope they would recover the money somehow or other. But if you take any company submitting a bid for any project and they want to win the job, in the mind you would be thinking ‘I can do it better than those guys up the road, I can go faster, I can get better output out of my equipment, the sun is going to shine every day, when I dig a hole in the ground it’s going to be exactly like the site conditions said.’ Now, of course, that never happens — it rains, the ground is never the same as the exploratory holes you dug — but contractors will never be able to stop that. As we always say, there is always one. You can have six contractors on a list, five can be completely sensible but there will always be one that will think that it will work out for them. We actually need the clients to protect us from that.”
A lot of clients realise that and want the best price rather than the lowest price so as to have less problems when it goes to construction, said Lucey. Complex EU procurement rules make it difficult to put together a tender that is not focused on lowest price, according to Lucey. But he cites Transport Infrastructure Ireland as a client that operates on that basis with two new pilot evaluations — for roads in Cork and Mayo — that could potentially become a benchmark for the rest of the public sector.
“Their new system does give marks for the lowest price but it also gives marks for how deliverable the job is at that price. If they can make that work it will be a game-changer for construction. There are clients out there who don’t care about contractors and don’t care if they go bust. But most certainly the State should not be that way. The State should be trying to build a resilient industry that delivers value for money, that makes a profit but not super profits.”