Dublin City Council Suspends Merrion Square Tea Room Lease Over Cost Surges
A 10-year operating lease was pulled from the agenda after project costs rose from an initial estimate of €4.27 million to a current budget of €6.6 million.
By Rafael Bailey ·
Dublin City Council suspended the award of a 10-year lease for the Merrion Square tea rooms on Monday. The council moved to pause the contract after concerns emerged regarding the escalating costs of the café's development. The project’s price tag has grown substantially since the initial public bid was issued in 2019.
In 2019, the council sought construction bids with an indicative cost of €4.27 million. A government audit report released this year indicated that the approved budget had increased to €7.5 million by April. However, councillors were informed on Monday that the current budget for completion is approximately €6.6 million. This figure covers construction costs and design team fees, which have risen to €693,385.
The project timeline began in 2014 when a conservation strategy commissioned by the council recommended the addition of a cafe to the park. Architects Bucholz McEvoy received a €246,000 contract in 2015 to design the facility. The council issued tenders for construction in 2019, but the returns exceeded pre-tender estimates. The main contract was awarded to Bracegrade Ltd, and the budget was subsequently raised to €4.6 million.
Construction was delayed until 2023 due to restrictions imposed during the pandemic. The council stated that an original completion target for the end of 2024 had proven unrealistic. The project also faced an 18-month delay caused by a formal contractual dispute. Mediation with the contractor and design team resolved the dispute at the beginning of this year. The contractor’s current schedule forecasts completion in March 2027.
The council attributed the budget increases to several factors, including scope changes, extended project duration, and construction inflation. It noted that the delays coincided with a period of high inflation within the construction sector. Statutory compliance requirements and delay costs from the contractual dispute also contributed to the rising expenses.
Councillors were originally scheduled to approve the 10-year lease on Monday night. The contract would have set an annual rent of €100,000 for the operation of the facility. The proposed agreement was withdrawn from the council agenda on Monday afternoon pending further review.
The council will commission an external review to assess the extent and causes of the cost overruns and schedule delays. A competent consultant will evaluate the effectiveness of project governance, reporting, and decision-making arrangements. The review will determine whether external factors were reasonably foreseeable and effectively managed. The consultant is expected to identify opportunities where intervention could have mitigated delays or cost escalation. The council aims to procure this review shortly, with a completion date set for February 2027.
Independent councillor Mannix Flynn called for a forensic audit of the project. He stated that the scheme is projected to cost €8 million while residents struggle with the price of basic goods. Flynn described the situation as a serious problem for the city.
