Minister for Public Expenditure and Reform announces details of Capital Reallocations and Project Delivery Reforms

Speaking today, 12 February 2019, Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, outlined how the €99m necessary this year for the timely provision of the National Children’s Hospital will be accommodated with a minimum of disruption to the scheduled rollout of key infrastructure projects under Project Ireland 2040. The Minister also detailed reforms that are designed to ensure world class project management across the whole of Government.

Ensuring Delivery

Speaking post Cabinet, the Minister said

The National Children’s Hospital is a vital and much needed project. It is the most significant healthcare investment ever undertaken by the State, one that will have an impact on children, young people and their families in Ireland for decades to come.

In meeting these funding pressures we have examined all our projects and programmes across government. Where projects are, due to external issues, paused such as in the case of A5 Motorway in Northern Ireland, we moved those currently unused funds to where they are needed now. Where the timing of drawdown of payments could be updated without jeopardising the pace of project planning, design and delivery, we have made adjustments to ensure that the much-needed National Children’s Hospital will be delivered.

Therefore, in Health the scheduled draw-down of €24m across both 2019 and 2020 will be amended to facilitate delivering the overall investment programme, as set out in Project Ireland 2040. This adjustment will still leave a year-on-year increase of 25% in capital investment in the Health sector in 2019.

The remaining €75m will be met by:

re-scheduling of €27m arising in relation to the A5 Motorway in Northern Ireland;
re-scheduling of €10m arising in relation to the National Forensic Science Laboratory;
advance payment of a sum of €10m from the Department of Education and Skills in respect of higher education facilities at the National Children’s Hospital;
an updating of the scheduled draw-down of €16m from the two Project Ireland 2040 Regeneration Funds, which are being profiled for expenditure throughout the course of both 2019 and 2020 without delays in project planning, design and delivery;
re-profiling of payments of €4m under certain programmes of investment in Communications, Climate Action & Environment;
€3m from the re-profiling of investment under the Flood Risk Management Programme of the Office of Public Works to allow for capacity to be built up over the course of the NDP period;
revision of the schedule of drawdown of funding in the PER and Finance Groups of Votes totalling €3m; and
€2m through changes to the timing of payments relating to certain capital works by the Department of Culture, Heritage and the Gaeltacht, with full project delivery scheduled across both 2019 and 2020.

Project Delivery Reforms

The Minister added:

Project Ireland 2040 has already delivered major projects including the Luas Cross City and the M17 Gort to Tuam motorway which dramatically improves road access along the western coast. We are continuing important investment programmes for roads and light rail, improving our environment, with 90 new schools under construction in 2019 and 700 benefiting from minor improvements. Investment will provide 10,000 social housing units and support better health outcomes with primary care facilities to be opened or upgraded in 18 locations nationwide. We are undertaking enormous investment and we have made much progress delivering projects on time and on budget but it is clear that the experience of the National Children’s Hospital must be drawn upon, and lessons learned, to ensure that this type of cost overrun is avoided in future and so our project management procedures keep pace and are world-class.

As a result we are speeding up the reforms to our public procurement process which were put in train as part of Project Ireland 2040. These include the below:

Government will now no longer pre-commit to major bespoke projects until there is clarity on tendered costs. The Government will approve major projects to be evaluated and designed, but there will no final commitment until after the tendering process is complete.

In the future, the budgets for large bespoke projects will include a significant premium for risks so that these indicative costings more adequately reflect the holistic total for the entire project over its lifecycle.

We will link payments to advisory firms to clear performance standards. A number of high profile projects have highlighted issues with the performance of advisory firms. Therefore, we will bring in performance standards linked to payments in future contracts with those firms;
We will explore new mechanisms for the management and recording of performance on projects. Therefore we will investigate mechanisms that can be used to ensure that companies who fail to meet those performance metrics can be used to penalise firms in future tender evaluations; and
We will develop new measures for tender evaluations to minimise the risk associated with abnormally low tender prices.
We must have the right people working on the right projects. Internally, we need to be more flexible, have a broader toolkit and more diverse skillset. The Department of Public Expenditure and Reform is commencing a Capacity and Capability Review of public sector bodies. In responding to those findings, we will ensure that the State’s delivery practices are to the highest standards.
In addition we need a robust, dynamic and productive construction sector, continually adapting to keep pace with advances in technology and through the Construction Sector Group – which met again last week – we are working with Industry to ensure this.

Capital Projects on or Below Budget

Published February 12 2019 by Press Release.

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