New Department of Health headquarters leased in December 2016 lay empty for 17 months at a cost to the State of €15.8 million.
Delays in relocating to the Larry Goodman owned Miesian Plaza on Dublin's Lower Baggot Street were due to protracted disagreements over its internal layout.
A report by the Comptroller and Auditor General (C&AG) said these related in particular to objections over open plan office space, how many people needed to be accommodated, and the provision of meeting rooms.
At one point, the Department of Health was said to have delayed a final mock-up of new office furniture as it required “bespoke” items that would have to be purpose designed first.
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“It is acknowledged that the move towards more modern forms of workspaces - open plan etc - is a complete culture change for many client departments and can be challenging to implement,” the report said.
It also found that “confusion” over what method should be used to measure the office space when calculating the lease ultimately led to an annual overpayment of €344,000. The rent is just over €10 million per year.
“Depending on the rate of inflation, this could result in an additional cost of between €9.5 million and €10.5 million over the 25 year term,” it said. An independent review of the draft lease is to be undertaken.
While some delay in the relocation of departments is generally expected, the Miesian Plaza case was estimated to have represented “ineffective expenditure” of about €11 million.
The building also became home to the Department of Children and Youth Affairs which had similarly delayed its relocation during protracted negotiations with the Office of Public Works (OPW), the body charged with arranging State body accommodation.
As one point the OPW considered offering the Plaza to other clients as “agreement could not be reached” on the details of with the Department of Health.
It had been intended that the building would be occupied by March 2017. However, the Department of Health would not relocate until July 2018 and the Department of Children until May 2018.
The building “cannot currently accommodate” all existing Department of Children staff or the anticipated future needs of it and the Department of Health, the report found.
A central issue regarding the latter department, the report noted, was the allocation of open plan workstations for assistant principal officers who had been in separate offices in their former Hawkins House building.
The Department of Health denied this, saying open plan offices were “fully acceptable”.
The report noted a “substantial caveat” had been provided by the Department of Children, that whatever was agreed for the Department of Health would have to be agreed for it too.
The Department said moving assistant principal officers to an open plan environment would represent a “significant cultural change”.
It was “striving to maintain industrial relations harmony in the context of more than 50 assistant principals moving from individual cellular office accommodation,” it said.
As a result of the delays, the C&AG report has recommended that the OPW review its approach to engagement with departments to guard against a repeat of the experience.
In its commentary on the OPW, the C&AG said there was no evidence of detailed consideration of other building options; no cost effectiveness analysis or other economic appraisal carried out; and no evidence the full costs of leasing Miesian Plaza were identified and evaluated.
In a statement, the OPW said large scale commercial building fit-outs are complex and given the scale of Miesian Plaza, a period of nine to 10 months “would not be considered unusual.”
“However, there is no doubt that the move represented significant challenges,” it said, adding that staff from both the Departments of Finance and Public Expenditure and Reform had also been accommodated.
“The move from cellular offices to an open plan working environment added a layer of complexity to the project which resulted in unforeseen delays.” New measures regarding its approach to large scale projects have been implemented.
