From Department of Public Expenditure, NDP Delivery and Reform
By: Minister for Public Expenditure, NDP Delivery and Reform; Paschal Donohoe
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Cathaoirleach and Members of Seanad Éireann,
I am honoured to have been invited to speak with you today about the National Development Plan for 2021-2030.
The National Development Plan was first launched in 2018 with the revised Plan published in 2021. The NDP is our largest, greenest and most ambitious infrastructure plan to date. Over the lifetime of the plan out to 2030, we are investing €165 billion in new and upgraded infrastructure that will meet the needs of our growing population. The NDP will also deliver the infrastructure required for the digital transition of our economy and address priority solutions in supporting the implementation of Housing for All and the implementation of the Climate Action Plan. Delivering the NDP will have a transformative impact on employment opportunities, economic development and regional growth to support our growing population.
My department is at the core of supporting that delivery and making those ambitions a reality. Such significant investment does not come without delivery challenges. The NDP sets out the range of actions that are being taken to strengthen infrastructure delivery, maximise value for money, and ensure to the greatest extent possible that projects are delivered on time, on budget and with the benefits targeted at the outset.
However, the government has decided to sharpen the focus on delivery even further in 2023, putting responsibility for that focus with my department which is now known as the Department of Public Expenditure, National Development Plan Delivery and Reform.
Reflecting its change in name, my department is examining how the support structures and levers at Government’s disposal can be used to drive delivery of vital infrastructure such as housing, schools, hospitals, roads and public transport. I want to look at the additional steps we need to translate that higher level of expenditure into real output for our society and support my colleagues in Government who are the key players in the management and delivery of all our NDP projects.
The revised NDP is undoubtedly an ambitious plan but the evidence base upon which the capital ceilings are set mean I am confident that it will support a more resilient, sustainable future for our country and improve the lives and living standards of all the people living here.
Well targeted public capital investment can have a transformative impact on employment opportunities. At 5% of GNI*, our NDP investment is well above the recent EU average of 3% of national income and this level of investment is set to grow under this NDP.
This NDP is built on the foundation of evidence-informed analysis which shows that more than 80,000 additional jobs will be supported in the construction sector as a direct result of NDP investment over the coming decade. Our analysis also finds that there will be an increase of 3% in the total persons employed by 2030 because of this plan against a base where public investment is held constant at 2021 levels.
This country has seen a step change in capital investment in a short period of time - in 2017 just before the first NDP we spent €4.6 billion on capital, in 2023 the equivalent figure is €12.1 billion. However, to achieve the high quality stock of infrastructure that is required to meet our overall Project Ireland 2040 goals, this concerted and continual investment will be required beyond the life of this NDP.
Delivery of NDP projects have been adversely impacted over the past 3 years as a result of pandemic related pauses in the sector, the inflationary impacts from both COVID and the war in Ukraine, with knock-on impacts on the supply chain for construction materials. This has resulted in underspends in capital spending over the past few years.
But we are already reaping tangible outcomes across regions with many capital projects having been successfully delivered since Project Ireland 2040 was first launched in 2018.
To give you just a few examples of recently completed important infrastructure projects:
The continuing development and implementation of the NDP will help improve quality of life and maintain economic growth through investment in ongoing projects such as:
With the scale of capital investment in the NDP, it is vital that proper oversight and governance procedures are in place and that capital projects are appraised in a manner that ensures value for money and that the projects are delivered on schedule and within budget. This is key to the successful delivery of the NDP.
All options to improve delivery and ensure that capital allocations are best utilised are currently being examined and a review of the Public Spending Code is ongoing with the objective of streamlining the capital appraisal requirements for government departments in order to improve NDP delivery and maximise delivery of vital infrastructure such as housing, schools, hospitals, roads and public transport.
A number of reform initiatives are continuing in the department to ensure the robust, transparent and considered oversight of public funds through reforms to the Public Spending Code. These changes are aimed at strengthening our approach to capital expenditure management.
A Major Projects Advisory Group that supports government departments in outlining the merits of a project has been established.In 2022, this group completed four reviews of major project proposals; BusConnects, Metrolink, Clonburris URDF and the elective care centres proposed for Cork and Galway. The reviews focussed on issues such as project risks, delivery feasibility, and robustness of costings, governance and procurement and were a key element of the government’s consideration of these proposals.
Experience from other countries which have introduced similar independent assurance processes shows that such arrangements reduce project schedule delay and cost overruns, as well as being in line with leading international performers and meeting a recommendation of the IMF’s Public Investment Management Assessment of Ireland.
Further to this, an enhanced challenge function, expert knowledge and independent rigour has been introduced to the deliberations of the Project Ireland 2040 Delivery Board by the appointment of five external members to the Board in 2022. These external experts have brought a different viewpoint on the delivery of the National Development Plan, the governance structures in place, and consideration of risks to successful major project implementation.
Capacity, innovation and digital adoption within the Irish Construction Sector is increasing through this government’s collaborative approach and continued regular engagement with industry representatives via the Construction Sector Group. Increasing the levels of innovation in the construction sector through digital ambition supports will ultimately see public projects delivered to a higher standard using digital efficiencies.
In early November 2021, my department announced that a consortium led by TU Dublin were awarded €2.5 million in grant funding to deliver the Build Digital Project. This project is one of seven priority action points arising from the Build Innovation Report, which drew upon an extensive consultation and international benchmarking process and an economic analysis of the causes of productivity trends in the Irish Construction Sector. This project aims to embed the use of digitalisation in many areas such as procurement, sustainability and standards by enhancing the skills of the workforce and focusing on driving a cultural change to realise the full potential of digitalisation. Build Digital will assist in the effective delivery of projects and ultimately in us meeting our Project Ireland 2040 ambitions.
The government will continue to foster innovation and digital adoption through initiatives such as the Build Digital Project, the Construction Technology Centre known as Construct Innovate, and the Demonstration Park for Modern Methods of Construction (MMC) in Mount Lucas.
The Office of Government Procurement (OGP) is currently progressing its review of the Capital Works Management Framework (CWMF) and the Public Works Contract. Amongst other elements, the review will look at means to measure the performance of a project and its key actors during the course of its delivery, and beyond into its operation and maintenance.
Furthermore, the OGP is engaged with bodies charged with delivering the NDP to finalise a plan for the adoption of Building Information Modelling (BIM). External advisers have been engaged to draft contract amendments to incorporate BIM into the Capital Works Management Framework and to prepare template procurement documents for publication.
The Supporting Excellence Action Team (SEAT) report, published alongside the NDP, examined the capability of the public service to deliver a large scale capital programme and set out a number of significant recommendations to support the agenda of improved delivery capability. Accordingly, some of the key actions in SEAT report were targeted at improving delivery capability in the sectors, leverage existing supports from the centre and also fostering stronger coordination and leadership on matters of professional capability, advice and knowledge-sharing. For 2023, each department must develop action plans at sectoral levels to bridge existing capability gaps and improve sectoral delivery. Further coordination of the central expertise is planned for 2023 to boost professional capability around project delivery, including the Office of Government Procurement, the Office of Public Works and the National Development Finance Agency.
I am acutely aware of the challenges that the construction industry has faced over the last two years in terms of material price inflation and supply chain disruption. In order to safeguard the delivery of key NDP projects, in January 2022, my department introduced measures to address inflation for new contracts and tenders. In the same month, the OGP introduced measures to address the impact that price increases in construction materials were having on public works tenders. For example, the fixed price period duration was reduced to 24 months (previously 30 months minimum). In addition, greater flexibility on Professional Indemnity Insurance was introduced to contracts in February 2022. Furthermore, in May 2022, a new set of measures to apportion additional inflation costs between the parties to public works contracts were introduced, with the State bearing up to 70 percent of the additional inflationary related costs.
This NDP will deliver significant and essential infrastructural projects that will transform this country’s employment prospects, economic development and regional growth. As I mentioned earlier, my department has a renewed focus, reflected in our name, on delivering on the NDP. It is timely to consider what this will mean for us, our ways of working and innovations we may adopt to tackle the challenges facing us in NDP delivery.
As part of its new remit, my department must decide how we can optimise delivery. In doing so I want to strike the balance between the appropriate scrutiny that is needed for all projects, particularly larger capital projects, and safeguarding public funds.
I look forward to collaborating with my government colleagues to make this a reality. At the same time, I want to keep the focus on value for money, ensuring appropriate governance and oversight of capital projects and supporting innovation in project delivery. Delivering the NDP is a huge undertaking but we must, and will, continually strive to ensure that projects are completed on time and on budget.
Thank you for the opportunity to speak to you today and I look forward to hearing the debate on these important policies.