Dáil Éireann debate -
Wednesday, 18 Jun 2003

Vol. 568 No. 6

Written Answers. - Public Private Partnerships.

Dan Boyle

Question:

119 Mr. Boyle asked the Minister for Transport the way in which the risk costs in the public private partnership process for the construction of new roadways is estimated and allocated; the main risks in such road construction; if it is the private developer who carries the full costs of these risks; if the State is charged for the risks in question; the outline process in a green PPP; the stage the outline details of the contract are available to Members of the Oireachtas for scrutiny; and if he carries out a public sector price comparison in each PPP case. [16956/03]

Minister for Transport (Mr. Brennan):

The development and implementation of national road PPP projects is a matter for the NRA within the statutory and administrative framework provided by the National Development Finance Agency Act 2002 and Department of Finance draft interim guidelines on the assessment, approval and procurement of PPP projects.

In the case of national road projects, I understand that as part of the PPP assessment process for an individual project undertaken by the NRA, a risk assessment is undertaken which identifies and quantifies the significant risks likely to arise on the project and considers their optimum allocation between the public and private sector. This exercise results in a risk matrix showing where it is proposed to allocate risks. The main risk areas likely to arise on a road project are design inaccuracies and errors, construction time and cost over-runs, underestimation of maintenance and reinvestment costs and incorrect estimation of traffic volumes.

The key to achieving maximum value for money in PPP projects is to allocate risk to the party which can best manage it. In the case of national roads, risks and costs in relation to design, construction, maintenance, traffic volumes and operation costs are carried by the concessionaire while risks in relation to statutory procedures – environmental impact statements and compulsory purchase order approvals – are retained by the NRA. In assessing value for money, the NRA prepares a financial comparator, representing the cost under traditional procurement, which is compared to the cost to the public sector under a PPP arrangement to assess which offers better value for money. This value for money comparison is undertaken at different stages of the PPP procurement process. At the final stage, the best and final offer submission which has been judged most economically advantageous is compared against the financial comparator to confirm that a toll-based PPP offers better value for money. The financial comparator includes an estimated cost for risks that would remain with the public sector if the project was procured under traditional procurement procedures.

I am arranging to place a copy of the standard conditions used in national PPP contracts in the Oireachtas Library, together with outline details of the Kilcock/Kinnegad concession. Outline details of other concluded concessions will also be placed in the Oireachtas Library in due course.