Public works overhaul aims to avoid repeat of National Children’s Hospital fiasco

Dispute mechanisms on major infrastructure projects are to be overhauled in a bid to avoid future National Children’s Hospital-style delays and overspends, writes Craig Hughes. Five disputes between the National Children’s Hospital Development Board and the developer BAM have ended up in the High Court after failure to reach a resolution. BusinessPlus.ie understands Minister for Public Expenditure and Reform Jack Chambers told Cabinet on Tuesday he is preparing a suite of changes to the State’s public works contracts system in a bid to reduce costly rows between contractors and the Government. The changes will apply to public works contracts worth more than €1m. The reforms are intended to create a less adversarial approach to resolving disputes while also speeding up decisions when disagreements arise. Under the revised arrangements, contractors and contracting authorities will be able to formally trigger structured cooperation meetings at an earlier stage in disputes in an effort to prevent issues escalating into expensive legal or arbitration battles. Those meetings will be facilitated by a standing conciliator, an independent figure already provided for under public works contracts, but whose role is now being significantly expanded. BusinessPlus.ie understands that either side in a contract dispute will be able to notify the other that a matter would benefit from a formal cooperation process, with strict timelines applying to ensure engagement happens quickly. The process may also allow disputes to be paused temporarily to create space for a negotiated resolution. The Government believes the changes will help resolve issues before positions become entrenched. BusinessPlus.ie understands Mr Chambers told Cabinet that the purpose was to “resolve issues early” before they harden into entrenched disputes, while retaining all existing contractual rights. Under a second major reform, the standing conciliator will chair project boards established under public works contracts unless both parties agree otherwise. The change follows a review by Indecon Economic Consultants, completed in 2022, which found project boards worked best when led by an independent chair with a detailed understanding of both the project and the contractual relationship between parties. Officials believe assigning the conciliator that role will improve continuity and reduce tensions during disputes. The Government is also introducing institutional arbitration for more complex cases. While a fast-track arbitration process limited to 100 days will remain the default mechanism, disputes that cannot be resolved through that route will now fall under the rules of the International Chamber of Commerce. That will introduce more formal case management procedures, clearer timelines and greater transparency around costs. One of the most significant changes involves legal costs. The State is removing an existing provision that effectively required both sides to bear their own costs in arbitration proceedings. Instead, the system will move toward the traditional legal principle that costs generally follow the outcome of a case. Industry groups have previously argued that the existing arrangements discouraged some contractors from pursuing legitimate claims because of the financial risks involved. Government sources said the revised approach is intended to improve confidence in the dispute resolution system while still encouraging early settlement. BusinessPlus.ie understands Jack Chambers told Cabinet on Tuesday he is preparing a suite of changes to the State’s public works contracts system The reforms also form part of the Government’s broader efforts to accelerate the delivery of infrastructure projects amid criticism over delays in housing, transport, water and energy developments. The changes are part of the recommendations by the Accelerating Infrastructure Taskforce, which called for a more collaborative approach to public procurement and contract management. Updated contract conditions and guidance documents are due to be published before the end of May.

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