Policy information
Budgeting for Major Flood Projects
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The procurement of all services and works associated with delivering flood relief schemes must be carried out in line with public procurement principles, set out in the Capital Works Management Framework, the Public Spending Code, and relevant statutes. Outside of that model, a number of flood relief schemes are delivered by a Directly Managed Scheme model, that uses a combination of OPW’s own construction crews, contracted labour and discrete sub-contracted packages.
The stages and rigour adopted by the OPW to completing a scheme takes by its nature some years to bring a scheme through development, planning, design, procurement and construction. Coupled with the above known work and estimated timeframe for each stage, are their respective potential risks that are carefully managed but by their nature extend timelines and associated costs. Some of these factors include:
• appeals and judicial review at planning stage can lead to additional time and contract management costs,
• site investigation works are conducted to inform a scheme’s design. These are constrained as the lands are often privately owned, and flood relief schemes can extend over long stretches and in built-up areas with varying ground conditions. Furthermore, the nature of flood relief works, adjacent to river and/or the sea means that ground conditions cannot be fully known at the commencement of the construction phase. During construction some other ground conditions issues may arise, including archaeological, and these are carefully managed where they occur.
• the scope of construction can evolve as schemes are being built, informed by agreements reached with landowners. These negotiations may, for example, extend planned scheme finishes. Negotiation of land agreements can also take longer than envisaged leading to contractual costs. In a worst case scenario, where land agreements cannot be reached, it becomes necessary to rely on the powers of entry contained in the statute under which the works are being carried out, which can entail lengthy and costly legal actions such as court injunctions.
Hence, the OPW’s budgeting for a flood relief scheme comprises a number of elements:
• contract costs for a consultant to develop a preferred scheme, bring a scheme through planning and design, procuring and managing the construction phases on behalf of the OPW,
• contract construction works for a flood relief scheme that has been granted planning permission, and
• contingencies and allowances for the ‘known unknowns’, such as ground conditions, archaeological mitigation and landowner agreements – but which are not possible to accurately estimate for any scheme at the outset.
Under the Public Spending Code, the OPW and its Local Authority delivery partners are required to revisit the economic viability and cost effectiveness of flood relief scheme projects at a number of approval stages throughout the project, ensuring they remain economically viable throughout the project lifecycle.
Expenditure on flood relief schemes can continue for a considerable period of time after substantial completion (or completion) of the scheme, as compensation payments continue to be negotiated with landowners; and final accounts are agreed, sometimes through protracted conciliation and there is ongoing maintenance costs over the 50 year lifespan of a flood relief scheme.
