A fool and his money...

THE chaos that reigns over the new children’s hospital must surely be an indication of a government that is incapable of managing major capital projects, and to blame the main contractor is facile. Much of the vast cost overrun, it seems, results from frequent changes and additions to the project specification. But one might ask why those changes and additions were not included in the specification in the first place?

They all result in the issuing of variation orders [an alteration to the scope of works], and any such [orders] will always be considerably more expensive simply because in any project there will be many subcontractors involved, all working within rigid time deadlines with many critical stage points.

If one subcontractor is (inevitably) delayed as a result of a variation order, then his delay is going to affect most or all of the others and cause delays for them too.

To avoid such situations it is common practice for the client to appoint a substantial design and project management specialist (normally referred to as ‘the client’s engineer’) to prepare the design, specifications, contracts, and tender documentation.

That specialist is expected to consult with all statutory bodies to ensure compliance with their requirements as the design progresses, and before issuing of tender invitations.

Was the authority not invited to comment on the design at the beginning? This would be enough of a glaring mistake if it were not, apparently, one of many such. And who was the engineer who made them? Could it be that the HSE didn’t actually employ one but was its own engineer?

As to the main contractor ‘low balling’ the client, that is simply an indication of the naivety of that client. Capital project bidding is a ruthless process. All bidders will examine the designs and specifications with a jaundiced eye, estimating the likelihood of variation orders and prolongation charges that will push up the project value to their advantage. Prolongation claims are not submitted at cost!

BAM, the main contractor, would have considered that in their bid but they wouldn’t have deliberately bid 20% less than their competition because they wouldn’t know what those bids would be: tendering is confidential.

The client who fails to understand these realities is a fool but, perhaps, that doesn’t matter too much as long as the client is spending someone else’s money, at least until the media finds out!

Given this seeming level of client incompetence, a €1.6billion escalation is not only possible but almost inevitable.

ANTHONY MANSER, Faithlegg, Co. Waterford.