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Written Answers. - Roads Projects.

Tuesday, 26 November 2002

Dáil Éireann Debate
Vol. 558 No. 1

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 92. Mr. Gormley Information on John Gormley Zoom on John Gormley  asked the Minister for Transport Information on Seamus Brennan Zoom on Seamus Brennan  his views on a recent evaluation of the cost overruns of the NDP roads programme which found that the average overrun in capital costs of road projects from the estimated cost at initial decision to the estimated costs at tender issue is 95%; and if he will arrange an independent external audit, similar to that applied to Campus Stadium Ireland, to ascertain the effect that these cost escalating factors have had on the value of these projects. [23572/02]


 390. Mr. Boyle Information on Dan Boyle Zoom on Dan Boyle  asked the Minister for Transport Information on Seamus Brennan Zoom on Seamus Brennan  if his attention has been drawn to the contents of the recent Fitzpatrick Associates report of the NDP roads investment cost escalations; if the cost escalation of the 1999 NDP roads investment programme is, in monetary terms, the single difference between the estimate for roads investment started in the national development plan in 1999 and the total estimates for the current NDP roads programme as calculated in the Fitzpatrick report; and the amount in monetary terms which is related to construction inflation, to land compulsory purchase order inflation, to initial underestimation, and to scope changes or the addition of new projects to the NDP, with reference to this cost. [23567/02]

Minister for Transport (Mr. Brennan): Information on Seamus Brennan Zoom on Seamus Brennan I propose to take Questions Nos. 92 and 390 together.

The report by Fitzpatrick Associates on behalf of the NDP-CSF evaluation unit of the Department of Finance reviews the implementation to date of the national roads programme provided for in the NDP. The report highlights the increased cost, €15.8 billion, of completing the programme based on NRA data and makes a number of recommendations in relation to the management of the programme, including in relation to cost estimation and control.

The increased cost of the programme is due to some underestimation in 1999 costs which were based on updating national road needs study data; construction cost inflation in the period 1999 to 2001 estimated at 15% per annum in 1999 and 2000 and 9.5% in 2001; exceptional items such as the upgrade of the N9, higher land costs on the south eastern motorway and additional costs on the Dublin Port tunnel; higher land acquisition costs, particularly in Dublin and adjacent to urban areas; the availability of more accurate and detailed estimates as projects progressed from preliminary to more detailed planning. As the updated estimated cost is based on individual project estimates, it is not possible to provide accurate estimates of the extent to which each of the factors outlined above contributed to the overall increased cost of the programme.

In relation to the difference between the estimated cost of projects at outline design stage and tender stage, the report noted that a range of increase from 5% to 95% was observed in the case of five projects which the consultants reviewed. The main factors identified were construction cost inflation and significant scope changes in some projects. The 95% figure referred to relates to one project and does not represent an average for the programme.

The report also noted that it is understandable that the initial indicative estimate of cost may differ from the cost at tender stage as a project moves through the various planning stages and more accurate information becomes available. It should also be noted that the report acknowledges that cost control procedures at the level of individual projects appear adequate. Recom[173] mendations in the report to strengthen cost control at programme level will be pursued by my Department and the NRA.

The increased cost of the programme – combined with the changed economic and budgetary conditions – will impact on the pace of its implementation. Some projects will, of necessity, take longer to implement than originally planned and some reprogramming by the NRA will therefore be required. As a result, the ambitious upgrade programme provided for in the NDP may take somewhat longer to implement but the Government is committed to doing so.

Nevertheless, the strategic framework set out in the NDP for the upgrading of the national road network is generally recognised as urgently necessary to ensure that we have a road network that is capable of providing for the safe and efficient movement of persons and goods by road. The poor state of the national road network is generally recognised, including most recently in a report by the competitiveness council, as a potential constraint on future economic and social development and the achievement of more balanced regional development.

I do not propose, therefore, to carry out an audit or review of the programme as suggested by the Deputy. However, I will be seeking, with the NRA, to ensure that we get maximum value for money for the high level of investment in the road network. In this context, all major road projects will continue to be subject to cost/benefit analysis and to assessment and evaluation in accordance with the Department of Finance guidelines on the appraisal and management of capital projects.

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