Pádraic McCormack
Question:65 Mr. McCormack asked the Minister for Finance if the new system of presenting capital programmes is improving his capacity to track overruns. [14585/03]
Written Answers. - Capital Projects.
Jim O'Keeffe
Question:68 Mr. J. O'Keeffe asked the Minister for Finance the steps which are taken to ensure that major capital projects do not cost appreciably more than the estimated or contract figures. [14709/03]
I propose to take Questions Nos. 65 and 68 together.
In accordance with the principles underlying the strategic management initiative, my Department has been pursuing a strategy of maximum delegation of spending authority to line Departments in recent years. In relation to large capital programmes, therefore, spending authority for individual projects is generally delegated to the relevant spending Department.
The role of my Department is to set out a clear framework in relation to the management of capital investment. In this regard, my Department has published guidelines for the appraisal and management of capital expenditure proposals in the public sector. The guidelines outline the steps to be followed in appraising capital expenditure proposals and managing capital projects across the public sector.
The aim of the guidelines is to promote the most effective allocation and use of scarce resources across the public sector; improve the quality of information about capital expenditure proposals available to decision makers; ensure that public services provided are appropriate responses to public needs and are efficiently supplied; and encourage a systematic and consistent approach to the appraisal and management of public sector capital expenditure measures. The type and depth of appraisal depends on the size and nature of the project proposed.
While the Department's guidelines set out overall principles, these are supplemented in many cases by spending Departments and agencies by more detailed instructions where large scale or complex projects are proposed. The detailed procedures adopted by Departments, therefore, may vary from the guidelines in line with the particular needs of the organisation concerned.
The Department of Finance guidelines set out four main stages of project appraisal and management. The first stage is the appraisal stage, the aim of which is to provide a basis for a decision on whether to approve a project in principle. This stage will include an assessment of uncertainty and risk. The second stage is the planning stage. This involves establishment of a project management structure, preparation of a design brief, detailed planning and design of the project and a review of costings. The third stage is the implementation stage. This stage of a project begins once the final approval for the award of a contract has been secured. This stage requires clear arrangements for monitoring and cost control. The guidelines advise that regular management reports should be prepared by the sponsoring agency and submitted to the sanctioning authority covering all significant developments relating to the project and its costs. Following the completion of a project, the final stage is post project review. Such a review is recommended to evaluate both the project outturn and the effectiveness of appraisal and management procedures.
My Department is finalising a revised version of the capital appraisal guidelines which will issue to Departments shortly. It is not anticipated that there will be significant changes to the existing guidelines. The issue of the new guidelines, however, will enable my Department to impress on Departments and bodies under their aegis the absolute imperative that the guidelines must be adhered to in relation to project planning and implementation. In this context, I share the unease expressed as to overruns on the costs of some of the key infrastructure programmes in the national development plan. Whether the factors behind these overruns were, in some instances, outside of the control of the implementing agencies, proactive implementation of the capital appraisal guidelines can assist in mitigating these factors.
More generally, I have under consideration the option of a five year annual capital investment framework. By providing relative certainty on funding levels over a number of years, such a framework should facilitate a better environment for the cost effective implementation of capital projects.