Merrion Square tea room contract award suspended amid construction cost concerns

The award of a 10-year lease for the operation of the controversial Merrion Square tea rooms has been suspended as concerns mount over the cost of the cafe’s development which range from €6.6 million to €7.5 million.

The price tag for building the tea room in the city centre park has spiralled since Dublin City Council in 2019 sought bids for its construction with an indicative cost of €4.27 million.

A recent Government audit report found the approved budget had as of April this year had increased to €7.5 million. However, councillors were told on Monday the current budget for completion of the work is in the region of €6.6 million. This includes construction costs, as well as design team fees which have risen to €693,385.

Councillors have been told expenditure negotiations are continuing and the final cost will not be known until the facility is completed.

A 2014 conservation strategy commissioned by the council for the Georgian city centre park recommended the development of a cafe. Architects Bucholz McEvoy were awarded a €246,000 contract in 2015 to design the scheme. Designs were developed and the council issued tenders for construction in 2019.

“Tender returns exceeded the pretender estimates,” the council said. The main contract was awarded to Bracegrade Ltd and the budget was later increased to €4.6 million.

Construction did not start until 2023 due to Covid-19 restrictions the council said and was due to be completed by the end of 2024. However, it said “this has since proven unrealistic”.

Construction was also subject to an 18-month delay “arising from a formal contractual dispute”, the council said. This was not resolved until the beginning of this year, following mediation with the contractor and the design team.

“The contractor’s current programme forecasts completion of the Merrion Square Park Tearoom in March 2027”, councillors were told on Monday.

“Meetings are being arranged with the consultant [design team] and contractor to achieve a clear time frame for completion of the project,” the council said.

The delays to the project coincided with a period of “unprecedented hyperinflation within the construction sector contributing significant cost to the project”, the council said.

“The increase in the overall project budget reflects the cumulative impact of scope changes, extended programme duration, additional design team fees, construction inflation, statutory compliance requirements, contractual disputes and associated delay costs over the period of the project,” it said.

Although the project has yet to be completed councillors were expected on Monday night to approve the award of a ten-year lease, at an annual rent of €100,000, to operate the facility. However the proposed contract was withdrawn from the council agenda on Monday afternoon.

The council will now commission an external review of the project, councillors were told. This review will be carried out by a “competent consultant” to assess “the extent and causes of cost overruns and schedule delays”. It will also “evaluate the effectiveness of project governance, reporting and decision-making arrangements” and determine whether “external factors” were “reasonably foreseeable and effectively managed”.

The consultant should “identify opportunities where intervention could have mitigated delays or cost escalation,” should “capture lessons learned and best practices” and “make recommendations to improve future project delivery, governance arrangements and organisational project management capabilities”.

This review will be procured shortly with a completion date of February 2027 the council said.

Independent councillor Mannix Flynn said there was a requirement for a “forensic audit” of the project.

“This grandiose scheme for a tea room is going €8 million when people in this city can’t afford a cup of tea. There is something seriously wrong here.”