Upgrade of the Dunkettle Interchange in Cork: Transport Infrastructure Ireland

We will move now to our second session today. We will discuss the current position regarding the upgrade of the Dunkettle interchange in Cork. I welcome Mr. Michael Nolan, chief executive, Mr. Peter Walsh, Ms Geraldine Fitzpatrick and Mr. Paul Moran from Transport Infrastructure Ireland, TII

Before we continue, in accordance with procedure I am required to read the following note. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if you are directed by the committee to cease giving evidence on a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of you evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Michael Nolan, CEO of Transport Infrastructure Ireland, TII, to make his opening statement.

Mr. Michael Nolan

I thank the committee for the invitation to attend. I am joined by my colleagues, Mr. Peter Walsh, director of capital programme, Ms Geraldine Fitzpatrick, head of roads capital programme, and Mr. Paul Moran, regional manager. I understand the committee wishes to receive an update on the current position regarding the upgrade of the Dunkettle interchange, County Cork. I am happy to provide this update insofar as is appropriate at this time and to provide context about the overall scheme and its procurement. However, I must emphasise the need to avoid straying into specific areas which might prejudice the outcome of the deliberations concerning the contract. I am sure the committee will understand and appreciate the position in this regard. In recent weeks, there has been speculation in the media on the cost of the Dunkettle interchange project. As we are in an ongoing process, TII cannot offer any more clarity relating to cost or budgets until the process has concluded.

The Dunkettle interchange is the most complex interchange project in our roads programme. More than 100,000 vehicles, including cars, buses and HGVs, daily wind their way through the junction. It is located next to the Jack Lynch Tunnel, intersects with one of Irish Rail’s main corridors and provides access to areas of high employment activity, such as Little Island. It also borders a sensitive marsh habitat adjacent to a tidal zone. In addition, there are major utilities traversing the site, including gas, water, power and telecom networks. In recent years, incidents at the Dunkettle junction have caused significant traffic congestion throughout the city. Delays at the junction regularly feature on national traffic reports. The primary objective of the Dunkettle interchange project is to provide safer and more efficient movements through the junction by maximising free-flow traffic movements and reducing the potential for traffic incidents.

On procurement strategy, due to the scale and complexity of this project, TII decided that the risk profile warranted an alternative approach to the standard design and build form of contract used on less complex projects. This decision accords with the recommendation of the Department of Public Expenditure and Reform that consideration should be given to developing forms of contract or adopting standard forms published by bodies such as the Institution of Civil Engineers in the UK or the International Federation of Consulting Engineers for projects where risks cannot be accurately quantified. The contract type selected to de-risk the project is the new engineering contract, NEC, with early contractor involvement. This is a standard form of contract used internationally. Following a review by the Government construction contracts committee, approval was given by the Office of Government Procurement for the use of a non-public works contract. This decision was consistent with the findings of the Department of Public Expenditure and Reform into the use of alternative contract forms for complex and high-risk projects.

This form of contract breaks the project implementation process into two stages. The objective of the first stage is to de-risk the project in advance of the stage 2 mains works construction. At stage 1, TII works with and pays the contractor to develop the detailed design and seek clarity on costs associated with stage 2 construction. Utilising the contractor’s expertise, construction methodologies are developed, including the design of complex traffic management arrangements. The design is developed in detail to assist with reducing risks. Quantities of materials are produced, as well as calculations of labour and machinery requirements. Using these quantities and the tendered rates, the contractor’s forecast of the cost to construct the project is produced. The contractor’s forecast of costs is referred to as the target cost.

On the history of the Dunkettle process, in May 2018, following a competition, stage 1 of the contract was awarded to John Sisk and Son Limited. On the basis of the award for stage 1, the contractor has undertaken additional ground investigations, engaged with utility owners, undertaken environmental surveys, constructed a compound and developed traffic management plans and a construction methodology. The design of the project has also been developed in detail. The contractor commenced the submission of cost details to make up the final target cost in June. These submissions continued into last week.

On the next steps, TII is now assessing these submissions to decide whether the target cost set by the contractor is acceptable. This can only be determined when the submissions have been fully and carefully assessed. It is anticipated that the decision will be made before the end of this month. If TII and the contractor agree the target cost, the business case for the project is updated to reflect the agreed target cost. As required by public spending rules, the updated business case is submitted to the Department of Transport, Tourism and Sport for approval by Government. If TII and the contractor do not agree the target cost, stage 2 will be removed from the contract. TII will then return to the marketplace to seek to achieve better value for the taxpayer. I wish to stress that this decision has not been made. If the target cost is agreed, the process will remain on schedule. However, if TII and the contractor do not agree the target cost, stage 2 will be removed from the contract and TII will return to the marketplace. The construction of the project will then be the subject of a new procurement process. However, I emphasise that the site investigation, planning and design work that has been undertaken by the contractor in stage 1 will be used as TII has retained ownership of this information. A new tender process has the potential to delay project completion by some 12 to 18 months.

Notwithstanding the strategic local and national importance of this project, it is certainly not a question of awarding the contract at any cost. Rather, it is a question of achieving the goal of constructing a fit-for-purpose interchange scheme with the maximum value for taxpayers’ money. TII is committed to ensuring that this goal is achieved. As I stated, we cannot stray into areas which might prejudice the outcome of this stage 1 process. It was for this reason that TII sought to defer this appearance before the committee until such time as the stage 1 process is completed. We did not seek to refuse to appear. As our appearance before the committee comes during an ongoing commercially sensitive and confidential process, answers to certain questions may be perceived to be prejudicial to decisions which TII has yet to make and, for that reason, we must proceed with caution.

I will now open the discussion to the floor. I thank the representatives for appearing before the committee. Mr. Nolan referred to the sensitivity of negotiations with the on-site contractor. As the delegates are aware, this issue has received much coverage in recent weeks, notably in the Dáil Chamber a couple of weeks ago when it was discussed by the Taoiseach and by the leader of my party, Deputy Micheál Martin. Answers were not given. Taxpayers are concerned about the cost of the project and the people of County Cork and the southern region are concerned about when it will be completed.

Mr. Nolan stated that a new engineering contract has been selected for usage because of the risks involved on the site. If TII was aware of the risks and so forth, why were its figures wrong? The project went to public approval in 2015. TII estimated a cost of €100 million for the contract within the past four years. How did it get its figures wrong before the contractor was brought on site? How did it get its figures wrong if it was aware of the impact of risk assessment matters on the budget? Why was the cost underestimated to such a degree before the contractor came on site?

Mr. Nolan referred to the problems with the site, including the rail line, the river to the south, utilities going through the site and trying to operate while maintaining traffic flow. The interchange is on a main arterial route, the M8 to Dublin and the East Cork Parkway of N25 which leads to Waterford and Rosslare. How did TII get its figures wrong before a contractor went on site?

Mr. Michael Nolan

I will defer to my colleagues who will answer some of the Vice Chairman's questions.

I do not understand the Vice Chairman's comments that we got the figures wrong. We are not at the point yet where we have concluded a process and come to a final determination on the cost of delivering the scheme so to say we got our figures wrong is highly premature. Changes have been made since 2015. As he is aware, inflation is a major factor in any increases. In de-risking the project in the past 18 months we have uncovered some additional risks that we would not have known about if we had not gone through this first stage. The Vice Chairman described the regular design and build, D and B, type contract as the old type of contract but it is the new type of contract. The pubic works contract, PWC, has been around since 2008. It is reasonably new. Before that it was re-measurement contracts. If we got into a design and build contract we would have found those risks during the currency of the contracts and would have paid a heavy price for describing those risks during the currency of the works. It would have involved additional moneys, additional time, significant delay and disruption, not only for the contractor but also for the community and all the motorists going through the site. One of the benefits of investing in de-risking the project through stage 1 using the new engineering contract, NEC, was that we would reveal those risks which normally would not be revealed until later during any sub-engineering contract. That was the benefit of stage 1.

What we learned in stage 1 can be mapped into stage 2 if we go to stage 2. If we do not go to stage 2, those learnings and what we uncovered during the first year and a half with the contractor and all the development of the traffic management plans, which has a high value, will be used in any new procurement. Either way, that work would pay dividends, shorten a re-procurement and de-risk the project significantly. That investment was highly valuable.

With regard to the reason we opted for the new engineering type of contract rather than the old type of contract, I will defer to my colleague, Mr. Paul Moran, who is the division manager from the area. He has come from Cork today for the meeting. He has been living with this scheme for the past four or five years and I ask him to address that point.

Mr. Paul Moran

It is worth mentioning how crucial the Dunkettle location is to Cork because it is the key crossing point for everything coming from the north and the east. We were aware from flooding events and so on of the disruption the project would have on the scheme. We deliberately choose the NEC type contract, which is a two-stage contract, because stage 1 allows us get a contractor developed design. It is about traffic management. The way we manage the traffic on a daily basis, with 115,000 cars a day coming through the site, without shutting down Cork city and county for business is crucial. The two-stage process allowed us get that very valuable view from a contractor and de-risk certain aspects. If we did not do that and went out with a conventional type of tender, it could have resulted in significant additional cost. The two-stage process is primarily to take cognisance of the difficulty of the site, which has many constraints. It has major pharmaceutical employers in the area. There is a railway line and many environmental constraints and, as I said, it is a key node into the city.

In terms of the earlier work we had done on that interchange, we have funded work on the N40 previously. We had two interchanges - Bandon Road and Sarsfield Road - upgraded to grade separated junctions with side roads and difficult ground conditions. The costs we incurred on those fed into earlier estimates and we had good experience on that but in terms of getting a contractor's view on what is required, that is where the two-stage process pays dividends.

I welcome the witnesses. I worked on the Glanmire bypass in the 1980s and subsequently went on do work in Little Island and Carrigtwohill, and tied in with LotusWorks. I am well aware of the challenges. I could almost tell the witnesses where the ESB cables come down to light up the sign heading down to the tunnel.

I want to touch on a few points although much of this is case sensitive. I welcome the two-stage process with a type of safety net. It is thinking outside the box and doing something different in terms of options available to prevent running into a pinch point, which has happened now. The Dunkettle roundabout is a pinch point and we are well aware that something must be done.

I have a number of questions. Mention was made in the opening statement of the target costs, which is an estimated cost. For people watching this meeting, the target cost is an estimated cost. Can Mr. Nolan cap that or are there certain clauses in contracts? Previously, the opposite was the case. A price was given and if a project was finished within time, or short of the time, one got a bonus. That was a very different stage.

I have one or two more questions but I said I would be brief. I welcome the fact that Transport Infrastructure Ireland, TII, has taken ownership of the site investigation and planning and design aspects, which means there will not be any duplications and money will be saved. The plan is in place but who do we get to implement that plan? As Mr. Nolan said, he is waiting for the target costs, which I understand. Has that target cost come anywhere near to being finalised yet? Can he give the public an idea on when the project will start? He also said that, in the worst case scenario, if stage 2 had to go back out for retender, it could be another 12 to 18 months before the initial project might kick off. Is there a possibility that regardless of what happens, some work will start within the next 18 months? We need to let the people know that.

In terms of the worst case scenario, is Mr. Nolan confident in saying that the Dunkettle interchange and associated works will start in 18 months?

To give credit where credit is due, we have been kept updated with what is going on at the site through emails and so on. I compliment everyone involved in that. However, the one issue, which has been mentioned by the Vice Chairman, is the perception of what is going out in the media and whether it is fake or real news. People are confused. The Vice Chairman referred to millions of euro earlier. If the cost targets have not been set yet there are no moneys costed. That is being realistic. Are any of the witnesses in a position to confirm for the public that moneys have not been costed yet and that it will depend on the TII first and then the Department of Transport, Tourism and Sport to sanction that?

The most important point is that it is accepted nationally, and Mr. Nolan said it in his opening statement, that this is the most complex interchange project in his programme. It is a massive project but it has to be done because Cork cannot grow with this pinch point. It will certainly do a great deal of damage to infrastructure. In terms of employment, we need Cork to grow. We have the plans for the future. It will also affect housing and every other area.

We have more than 12,500 km of roads in Cork and it is difficult enough to keep those resurfaced and so on. That is a different story but, realistically, can the witnesses be confident, from the position we are in today, that in 18 months we will not be back here asking the reason work has not started?

Mr. Michael Nolan

The Deputy has asked a few questions. We may share them in terms of giving answers. To go back to the story behind Dunkettle, Dunkettle is a complex area and we recognise it has been complex for some time. TII recognised a finite number of schemes we should have been pushing forward, even during the bad years in 2011 and 2012.

Paul Moran can tell the story of how TII recognises the strategic importance and value of doing this work at the location. I appreciate the Deputy's compliments. We have put a great deal of effort and new thinking into communication with the chamber of commerce, the business community, the Garda, the local authority in the city, the county councils, this committee and all the representatives in Cork. We have gone way beyond what we normally do. We recognise that information is very powerful there and that we must have everybody on board. We appreciate the support of the stakeholders around Cork.

I will hand over to Paul Moran to take the members through that story. It is worth repeating it.

Mr. Paul Moran

Regarding obtaining planning approval from An Bord Pleanála, we made the application in 2012 and got approval in 2013. Getting that was a hurdle. Unfortunately, we had two lean years and we were waiting until the end of 2015 before a programme was announced in which Dunkettle was included. We got going straight away by appointing consultants and thinking about the strategy that would be necessary to deliver this with the minimum disruption. The objective here is minimum disruption to Cork, to deal with vulnerable road users such as cyclists and pedestrians and to try to get it done as efficiently as possible. In terms of developing the strategy to use the NEC, we went back to the Office of Government Procurement, OGP, and the Government contracts committee, GCC, to talk to them about a derogation because we needed that to deviate from the public works contract. We went out to the market. The first thing we did was invite in all the contractors and ask them what they thought. We told them we had this problem and asked what they thought was the best way of dealing with it. That was invaluable because we got a very good idea of what the hurdles would be as we proceeded through procurement to get stage 2 up and running.

Communications have been foremost in our minds because of the number of people who go through it and the delays it causes. The communication groups are utilising the chambers of commerce and developing a dedicated traffic application that will give users a visual idea of the delay there and, hopefully, help users perhaps change the times they leave or go to work, if that is possible. We are also launching a traffic website to help people understand. Once we start building this, there will be three years of construction. There is all of that along with the work that has been done in the last 12 months. We should talk about that further. Stage 1 has allowed us to de-risk it, as I mentioned, and to do many enabling works. The public has seen the yellow jackets there for diversions, getting rid of the archaeology and the resolution that is needed there and dealing with some of the environmental constraints, rather than leaving it for construction. A huge amount has been done from that point of view to date.

Mr. Michael Nolan

The Deputy mentioned that people are confused. As Paul Moran said, there have been many yellow jackets on site over the last 18 months doing all the advance works and investigations. That has all finished in the last few months. That was part of stage 1 - gathering all the new information and de-risking the site. People will have seen a great deal of activity and then a lull in activity. That might have given the impression that things had stopped and the money had dried up. That is unfortunate, but that is the nature of stage 2. Usually on a major infrastructure project of this type, when people go away work is happening behind the hedgerow and nobody sees it. However, this is a highly visible location so people see the activity and then they see no activity. That, perhaps, gives rise to additional confusion and speculation in the area.

The Deputy asked about what will happen over the next 18 months and whether we can give guarantees. In the next 18 months we have a decision to make on whether to go to stage 2. If we do not go to stage 2, we are not going to spend the next 18 months going through a tendering process without doing any work. We will do as much work as we can there. We will continue with the service and utility diversions. We will do some slip lanes that help cycling and walking there and get that out of the way. It will be a benefit to have that out of the way before the main works start. We will do a great deal of work over the next 18 months. It is not as if we are just going to do paperwork and go through the tendering process, advertising and evaluating tenders. Much more than that will happen. Paul Moran can speak on that as well.

Mr. Paul Moran

In terms of de-risking the site and getting as much as possible out of the way, a number of big service diversions are needed and there are windows of opportunity available to do that. Given the pharmaceutical sector there, any disturbance must be offset. We would hope in the next number of months to start work on water and gas mains diversions. There is a large amount of work that can go ahead in the next 12 months.

Mr. Michael Nolan

That work can go ahead through a stage 2 contract or if it is not stage 2, it will go through as a series of mini-contracts.

Mr. Moran referred to when TII starts building this with an air of confidence. He gave a rough timeframe of three years. That is information for the public. Misinformation seems to swell far more than proper accurate information and there is a perception that nothing has been happening, it is another smokescreen, another election promise and so forth, so I welcome that. I am well aware of the Glashaboy water mains and I have seen them break in Little Island. It is a huge main. People can understand it as a result of us asking these questions. When TII does utility services and all these diversions they are huge undertakings, but nobody realises their importance. It is the same as replacing a footpath in a main street when all utilities and everything are replaced. It makes sense to dig once, and only once.

Mr. Michael Nolan

That is an important point. With regard to the funding, our funding profile for the next number of years has remained unchanged. There has been speculation that it is the reason the decision making is slowing down but that is not the case. The funding the Department voted for us last October remains in place and we are still getting the funding in accordance with the national development plan. We have a ten-year funding profile that remains unaltered as we speak. We went with Dunkettle as a high hot spot with regard to inefficiency and safety. We identified that after the recession. When we were finishing the major inter-urban roads Dunkettle was obviously on our radar because of the number of incidents and the cost to the local economy. It remains very high on our agenda.

I said from the outset that it is the most complex junction we have on our programme. There are huge delays there not just for cars, freight and business but also for public transport. Public transport cannot get through it. Buses are held back like everything else. We will help to unlock all that. I can give an assurance that we remain very much focused on that. We will do everything in the next 18 months, whether that is through a stage 2 contract to get it up and running with the contractor, if we proceed to stage 2 and, if not, we will go back to the market and do everything we can to procure as fast as possible. However, we will also do other works during that 18 months and use that time in a valuable way. I give an assurance that there is no change in the funding profile. People can be reassured about that.

To return to the original procurement process, when TII went to the Department to seek to go to stage 1, how much work had it done? TII had obtained the planning permission. If I sought planning permission to build a little house in the countryside and if I intended to build it where there was a rock formation, I would do some site investigation works. I would know whether I would need a raft base or if a normal foundation would do to get the structure up. TII has had planning permission for many years. Why was there not more due diligence undertaken before stage 1 was awarded? I am not going to dispute the €15 million. I am not worried about that, to be honest, but about the thought of it running to €30 million and €40 million. We could end up with it over the estimated budget.

That is the issue that concerns me. Why was more due diligence not undertaken before stage 1? Transport Infrastructure Ireland put out a tender for stage 1 before moving on to stage 2. Were there many interested parties? Did many potential developers or contractors show an interest? Did many just walk away and say there was no way they would take it on? Were some tenders just not priced low enough?

Mr. Michael Nolan

I will defer to my colleagues shortly but, to start off, one of the benefits of early contractor involvement in new engineering contracts is that contractors are best placed to fill in the gaps designers miss because they are very experienced in civil engineering and de-risking projects. This is not a new form of contract. It is used all over the world. Work on most highways in England makes use of early contractor involvement. It is only when all of the site is exposed that all of the risks are seen. One cannot expose all of the site in the contract. It is not a house; these projects have a massive and very varied footprint. Much of the ground in Cork along the River Lee is made ground and is very sensitive because it is former marshland. The Vice Chairman asked why all of this work was not done before stage 1. The rationale for having this stage and the early involvement of contractors was exactly that. If contractors are involved later in the process claims of disruption can arise during the contract. This process allows us to collaborate. The project is an alliance or collaboration with the contractor. We get the benefits of their experience, expertise and foresight to ensure de-risking. All investment in stage 1 is aimed at de-risking the project. I will hand over to Mr. Walsh to expand on that.

Mr. Peter Walsh

The Vice Chairman said that we went to Government for approval to enter into the contract, but we did not do so for stage 1. The reason we did not, and were not required to, is that stage 1 of a two-stage contract is more accurately considered the design stage. Under normal circumstances, we would bring the contract through to a higher level of detail. The Vice Chairman is quite right in that. We would figure out what risks we might meet with our design and engineering contractors. In this case, it was judged that the construction, the management of traffic and the management of the poor ground would be key. The people best placed to untangle those issues and fully assess the risks are contractors. It would be better and more helpful for everyone to view stage 1 as a continuation of the design process. It is at the end of that stage that we know what the risks are. We then have much greater confidence in assessing the likely cost to the taxpayer of delivering the project. I do not know if that is helpful but it is certainly how I have come to see it. I know we were hiring a contractor, which always gives the impression that one is starting construction, but that is not the case; it is a continuation of the design process.

A number of other questions were asked. I do not know if the Vice Chairman would like me to go back over them. They were about the number of contractors involved.

I am interested in how many contractors showed an initial interest but then walked away because they could not bring the project in at €100 million?

Mr. Paul Moran

Nine contractors showed interest in the project, whether by themselves or with joint venture partners. It was a restricted public procurement procedure so we had to make a shortlist of five. We short-listed from nine contractors to five. We then ran the tender competition, which was based on quality and price. With regard to quality, which accounted for 70% of the marks, there was a strong emphasis on getting the right people and ascertaining their approach to various aspects of the job. Finally, we put bidders through a behavioural assessment. This was new to us, but it is used overseas for collaborative new engineering contract, NEC, types of contract. The five tenderers were put through the wringer from a quality point of view. We came out with the one with which we are working on stage 1.

I thank all the witnesses for coming in. I am sorry I could not be here for their opening statement, but I read their remarks with interest. The Dunkettle project will cost more than €100 million and will, in effect, require Cabinet approval. Over recent years, TII has built up a well-deserved reputation for bringing in projects, especially road projects, on budget. It has developed a sort of mechanism or strategy, which is often cited in other Departments. Will the witnesses walk me through how this was developed? The Luas cross city project undertaken with the National Transport Authority, for example, has been cited over and over as being best in class with regard to the cost of projects. What exactly has happened there? In the 2000s it was a constant that road projects ran over budget. It seems the processes have been refined quite a bit in the intervening period. I am curious about the mechanisms put in place and the lessons learned since then.

Mr. Michael Nolan

The Deputy is 100% right. Most of our schemes come in on time and either on budget or under budget. In the first ten years of the organisation's existence, when we were still called the National Roads Authority, NRA, we were coming from a standing start and a low base. We did not have a stock of learning. We did not have a throughput or a portfolio of schemes to have learned from. By the early 2000s we had turned that around. In the first ten years, from 1994 until 2003 or 2004, we were in tune with international comparators. Our schemes generally ran 15% to 25% over budget. There were many such schemes in those days. Since then we have capitalised on those lessons learned and implemented new processes and ways to do work. We now generally come in approximately 10% under budget. It must be remembered, however, that we carry out schemes in portfolios. We do not insist that every scheme come in under budget. If budgets get too high, we have to keep them down.

We came up with this probabilistic kind of forecasting model for costs and cost ranges. We use outturn costs rather than estimated costs. We have built up a database of outturn costs. We also consider the base costs. Our engineering advisers and local authorities help us with those costs. We carry out a quantitative risk analysis of that and end up with a value of P50. This means that there is a 50% probability that a scheme will come in under budget, but also a 50% probability that it will come in over budget. We then carry out an analysis at P80. This higher figure means that there is an 80% chance of coming in under budget and a 20% change of going over. We test those two scenarios against low growth and high growth in demand. We draw up a matrix of low growth against high cost and high growth against low cost. We do all that when developing the business case. We test it. It is very probabilistic. This is the way such things are done internationally.

We also use a hybrid type of reference task forecasting. This is used in the UK, Australia, Switzerland and Denmark. We use the structured consistent data we have accumulated from previous outcomes. That works well in most cases. We have actually developed confidence curves, again using measures of 50% and 80%. We have used a hybrid form of that process and we are now going to formalise this reference task forecasting over the coming years. This is recognised internationally as another way of looking at projects. We build up the rates from our own inside perspective and then look at it from the outside and take account of all the unknown unknowns we can apply to a project. When one has a long history of delivering projects, one accumulates a large amount of data, which is really valuable.

Bespoke schemes like Dunkettle are complex. This is the only scheme like it we have done, so we do not have a long run of examples to leverage. That results in a higher level of risk. We have had a good run. We do not desire that every scheme come in under budget. If they did, it would mean that we had too much money reserved for those schemes, money which could be used for other projects. We bring it down a bit. We are happy if eight schemes in a portfolio come in on or under budget. The two that run over will be balanced out by the eight.

That is fine in a portfolio situation. That is what is used internationally and what we have been using for a long time with the National Roads Authority and TII and RPS, who all come together.

Am I right in saying that because this is a bespoke scheme it does not really sit into a portfolio?

Mr. Michael Nolan

Yes, it does not fit. We see it as higher risk and we have to apply more diligence. That is why a different contract will come into play. The original point was about our system processes. We learned in the old days that we needed to deal with archaeology before the contract. We learned that we needed to deal with advanced works and services. We learned of the need to do as many investigations as possible. There are some things we cannot do because they have to be done as part of the main works. We get the services out of the way and we have a design-and-build formal contract. The contractor helps us to design. This goes back to Mr. Moran's point. The contractor is good at designing because the firm is good at managing earthworks. Office space engineers and people based in site compounds have different skill sets. If we marry the two skill sets together, we get a better result. We changed to a design-and-build formal contract in the early 2000s. That has served us well. We also standardised our standards. We standardised our bridges. Every bridge used to look different but now many bridges look the same. We now have thousands of bridges all with a design life of approximately 120 years. They are far more easily maintained and constructed. They are not feature statements for designers.

We also do more on the environmental side. We do far more balancing earthworks and use as many of the resources as we can on site. We minimise what is taken off site and minimise the material to be imported on site. That came from a long run of projects and hard lessons learned over many years. We have that now. We have a good deal of corporate memory. I worked with Mr. Walsh on a bypass 25 years ago. We shared the same desk on site. Many people in TII have been there through the bad days and good days. We cannot get everything right. If we did it would be impossible or we would not be trying hard enough. It is hard to get everything right in civil engineering. There are always new risks and things we have to figure out. Things are mapped through a site like services, for example. We try to deal with the services that we find when we do site investigation. To deal with services we have to have them mapped. When we go on site we find services that were neither mapped nor found during site investigation. It is all unseen. It is not like building a house where there is a small footprint. We have a huge linear footprint.

Another thing that is of great benefit to us - I have to acknowledge this - is our partnerships with the local authorities. That has been critical to the success of the work we have done during the past 20 years, as has the work we did with the IFA and the farming community in developing a code of practice. We developed the code of practice with the IFA and agreed it with Government and the IFA. That paid major dividends with co-operation from landowners. They allowed us to go on site to do surveys. They moved cattle when we wanted to do something on site. We got fantastic co-operation from the farming community. Without that I would say the roads programme would have lasted a further two or three years and would have cost a further €200 million or €300 million. I am sure there are other things.

This does not happen overnight. We learn and bring good stuff forward. When we start a big project or venture we start off by going over the lessons learned and how we can apply them. Dunkettle has all the hallmarks of all of these things in one location. There was one slip-up. We had rainfall in November 2015 or 2016. Half a lane got flooded in the tunnel and it brought Cork to a standstill. Public transport could not move. People could not get to the airport. People could not get home from work or schools. When 2 m of road width was removed from the equation on a dual carriageway, it caused chaos. Committee members can see how sensitive the location is. We could rush into this. We could have someone coming on site now but we would find all those problems. It is better not to put in an adversarial non-collaborative way of working. We may save money upfront and a small amount of time mar dhea, but we would pay for it in the long run.

That is understood. The question was to give TII an opportunity to set out its stall with regard to institutional memory. It is a hard-fought reputation in that regard.

Mr. Michael Nolan

In our world it is hard fought. We win it over a long period and we lose it in seconds. We will keep trying. We had a discussion outside in the corridors. We have applied all our energies to this scheme for so long. We are all in it together as a team. It is about more people than those here today.

Judging by the opening statement it is at a delicate time as well.

Mr. Michael Nolan

Our appearance before the committee is at a delicate time. We are limited in what we can say.

There are questions I want to ask but I can understand why I am constrained absolutely from asking them with respect to TII and the process. I presume the TII representatives requested for this session to take place at a later date. Is that the case?

Mr. Michael Nolan

We respectfully suggested to the committee that it would defer the appearance until such time as we had more information.

I think that is a missed opportunity and a shame but I thank the TII representatives for coming in and for their answers.

If it was in Dublin, you would not be saying that, Deputy Rock.

No, Vice Chairman, with the greatest of respect, the TII representatives cannot talk in any detailed terms about this project or about where we are right now. We cannot ask detailed financial questions because the organisations are in the middle of a process. It is not about Dublin or Cork or whatever. I would say the same if TII was appearing about the metro project. TII is also at a sensitive time in that process and, accordingly, we are not having a hearing into the metro right now.

For the record, I have no regrets in asking the TII representatives to come in. I stand over my request.

That is absolutely fair, Vice Chairman. I am not having a personal dig at you or at anyone. It is more that there are types of questions I would like to ask but I cannot ask them right now. They are the types of answers I imagine you would want, Vice Chairman, with the greatest of respect.

As I said earlier, the organisations are in a dilemma and a precarious situation. I have to ask one more question. Why have we gone so late into the year with the negotiations? This topic came up at a meeting of the Committee of Public Accounts on the national children's hospital last January. Some other colleagues raised the matter. Why is TII waiting until now to have the negotiations? I am led to believe that there was stalling on the project. The issues arose back at the beginning of January. Why is it only now that we are at the negotiations stage? I imagine that can be answered.

Mr. Peter Walsh

I am happy to take that question, because I know Mr. Moran is deeply invested in it. I have the opportunity for a little more objectivity.

There is one thing I am keen to clarify. There is no negotiation. It is not a negotiation that is occurring as part of the contract. It is important to point that out. A process is clearly mapped out. The contractors and designers work in collaboration with our people on site to seek to identify a design that meets the employer's requirements. We then develop the methodologies of working and traffic management and we do all the site investigations.

There were several references to statutory undertakers and moving of services. Bord Gáis, Waterways Ireland and Irish Water are involved. When they are faced with discussing with a contractor how to move a particular service, it becomes a far more real conversation. We have to go into the detail of it and what exactly is required has to be fleshed out. That all takes time. A great deal has been achieved in the past year. I would not like to give the impression that there has been any delay in that regard. There has not.

In fairness, the contractor has to get the cost projections right. I can comment without exposing anything in terms of the confidential nature of the contract. Deputy Buckley asked about the target cost and how that works. I can give some explanation on that without breaching any confidentiality clause because it is down to the principle of the contract. Basically, when the target cost is set - it must be set by agreement - that becomes the figure against which the performance of the contractor is measured. The contract requires that the contractor be paid costs plus an overhead. At the original tendering, that overhead was bid. The contractor gets costs and overheads. If the costs are below the target, as agreed, then there is a sharing of the benefit. The sharing in this contract is 80% for the taxpayer and 20% for the contractor. If the costs go above the target, there is a pain element for the contractor set at 60%. There is a guaranteed maximum to the taxpayer. If we go 25% above the target, the contractor carries all the cost. Thus, the contractor must be careful.

In fairness, the contractor is meticulous, as it has to work through every location. I cannot over-emphasise the detail involved. Every location on the job has to be identified, and the contractor has to get crew, materials, and plant into that location, which could then be stuck there until they can be retrieved. How does the contractor price that, or establish what its costs would be? Final figures on that have been coming in over a period of time, and we are not breaching any confidentiality in saying that. I do not know from where the impression that the project is behind time is coming. When we went to the Government contracts committee for construction originally, we were told that this was a four-year, or 210-week, contract and that the first two years were regarded as stage one. We are just over one year into it, so the impression that it is behind schedule is wrong. Granted, we thought we might get it done quicker, but when one gets into the detail, these things cannot be shortcutted.

Mr. Paul Moran

Mr. Walsh mentioned that it was a four-year contract. The idea is that the more planning is done, the quicker one gets in and out of the site in question, and the less disruption is caused. We gave the successful contractor leeway in that. If it felt it could be done in a year, and then spent three years on construction, so be it. The idea was to ensure it was properly planned in order to get in and out of the site as quickly as possible.

Mr. Michael Nolan

We try to invest upfront. If one reads the lessons learned on megaprojects in the UK, for example, a common recommendation is that more upfront planning is required, rather than barrelling into a project, and that is what we are doing by investing in it upfront. It may take a bit more time, but a stitch in time saves nine. If we invest more time at this end, we gain in both value and time in the long run. People may have expected us to get there a bit sooner but we are on target and stage one is where we should be at this point in time. There may have been some confusion as people saw us walking away, or being drawn away, from the site from the first quarter of the year until now, but that was always part of the process. I refer to Deputy Rock's point about what we do right. One of the hard lessons learned is that the more planning is done upfront, the better the outcome in the end. It also means people know what they are getting into, though they can never know everything.

I acknowledge Mr. Nolan's point that it is better to have a two-stage process than a two-footed tackle. It is better to go into a process and spend adequate time mapping out every aspect of the project, rather than to start the project and then to be obliged to revise it repeatedly. That makes sense, and that is why Mr. Nolan is so successful in what he does.

I have two questions for Mr. Walsh. Based on the timelines given, TII is effectively on schedule within the four-year window, provided an agreed cost can be reached. Is that correct?

Mr. Peter Walsh

That is correct.

Once the agreed cost is set, the maximum it can go over that is 25%, in terms of the liability to the taxpayer. Is that correct?

Mr. Peter Walsh

Yes.

When was that practice established?

Mr. Peter Walsh

This form of contract has been around for some time, though I could not tell the Deputy what year it was first introduced.

I see Mr. Nolan has his finger on the buzzer.

Mr. Michael Nolan

There was a series of bad outcomes on several projects in the UK during the 1970s and 1980s, and the Latham and Egan reports were commissioned to look into that. The Institution of Engineers then developed a new form of contract based on those reports. It was a more collaborative form of contract, rather than the old system in which the employer designed a scheme, and the contractor got on with it and priced it, which resulted in adversarial competition and poor outcomes throughout. The new engineering contract was based on those experiences in the UK, and aimed to prevent those poor outcomes and performances on projects. That is my understanding of it.

It is a sensible model, and I was curious as to the ins and outs of it.

Mr. Peter Walsh

I did not know what year it came in.

We will get Mr. Walsh next time. He is the weakest link, so we will go back to Anne Robinson.

I again thank the witnesses for coming in, and thank them for their honesty. Two sayings were always being repeated during my experiences on building sites over the years. It was said that one should always measure twice and cut once. That refers to forward planning. The other thing people would say was that if one ever wanted to make a mistake, one cannot sit into a wheelbarrow and wheel themselves, so they should not even try.

I am becoming grievously worried, because if one contract falls behind, other projects will fall behind as well. In my own region, many projects are pending, including the M22 Macroom bypass and the M28, which is a motorway upgrade from Ringaskiddy to Carrigaline and to the Port of Cork. Looking at the bigger picture, there is also the planned Cork to Limerick M20 motorway, and another ring road will be needed in Cork City somewhere down the road as well. If this project falls behind, will all those other projects fall behind as well? Future Ministers for Transport, Tourism and Sport, or future taoisigh, will not roll all the money to one region in one go. I have meetings coming up in the autumn with the Cork Chamber of Commerce and IBEC, and they will be asking me what we are doing about the infrastructure in Cork. and what is the status of all these projects. The Dunkettle Interchange project will hopefully be fast-tracked again and the rest of them will fall into place but if not, will it have an impact? Could the witnesses see TII doing two projects in Cork in one year?

Mr. Michael Nolan

I will refer this question to Ms Fitzgerald, as she is in charge of the budget.

Ms Geraldine Fitzpatrick

We manage the entire programme but all projects are developed by different teams and different people. They all move independently of each other in that respect. Were a delay to occur on this project, not that it will, it would not delay the other projects. They are all moving ahead at their own pace, as quickly as they can. In fact, two of them are going ahead quicker than we had originally planned. In short, if this project is delayed, it will not impact on the Ballyvourney to Macroom project, as that has already been tendered and the tenders are currently under assessment. They do not impact on one another in that way. We manage the funding as part of a programme and adjust it depending on what is or is not going ahead. As Mr. Nolan previously pointed out, however, we manage it as a programme. Everything is managed within that programme. I hope that answers the question.

Deputy Eamon Ryan has joined us.

I apologise, as I had to run out to take a call. I have a few questions. My understanding is that another project is currently looking at the various potential options for the Limerick to Cork road. One option is to go along the existing N20 road, and another is to run a road to Cahir and into Cork via the N8. Is my understanding correct that, if the N20 is upgraded to an M20 motorway, it would effectively require a southern Cork orbital motorway, which I presume would link into the Dunkettle roundabout? Is that a reasonable assumption?

Mr. Paul Moran

The northern ring road was mentioned as a complementary scheme with the M20 as part of the NDP. The objective of the M20 plan is to develop the Cork to Limerick route, and options for that need to be looked at, including the M8, the N24, and any other links. Everything needs to be assessed.

If it is decided to run along the existing N20, traffic would be coming into Blackpool, which would result in a bottleneck. All the traffic could not be directed into that part of the city or there would be gridlock.

Mr. Paul Moran

We have undertaken to look at the traffic modelling of that plan. The northern ring road is mentioned in CMATS, and that scheme needs to be assessed in its own right.

CMATS is the Cork metropolitan area transport strategy.

That is in real trouble after last Monday. Our Luas is not looking like it is in good shape.

Mr. Peter Walsh

What happened last Monday?

There was a vote in Cork City Council against the first section of a bus corridor on the Wilton Road.

Mr. Peter Walsh

People love Luas. I am quietly confident about it.

If that northern corridor is done, it will fit into the Dunkettle effect, or would have to.

Mr. Paul Moran

It is a complementary scheme in that they sit together. However, they are mutually exclusive. The northern ring road has a set of objectives which are completely different from the M20.

Would Transport Infrastructure Ireland, TII, not change the design or the operation or any other characteristics of the Dunkettle roundabout?

Mr. Paul Moran

We are starting the M20 again. We have to look at alternatives and options. Everything is open for assessment. When we go in front of An Bord Pleanála, we have to be certain that what we are presenting is fit for purpose and serves all the objectives.

If Dunkettle is freeflow and no longer a bottleneck, then the N8 option is an easier route. There would be no need for the northern corridor and the Dunkettle upgrade could be used as planned.

Mr. Paul Moran

The Dunkettle interchange is making freeflow of all of the legs which are heavily trafficked and have heavy delays. It is not just the M8 but the N25, which actually has the largest flow of traffic coming in and out of Cork.

When I was coming out of Cork recently at 8.30 a.m., there was a three-mile tailback to those pharmaceutical plants in Little Island.

Mr. Paul Moran

That is the issue with Dunkettle. Any incident, be it a fender bender or a minor one, has major repercussions. The incident which Mr. Michael Nolan mentioned where we lost one lane of four coming into Dunkettle brought Cork to a standstill. Until 9 o’clock that night there were repercussions in terms of trying to get through it. It is an interchange that is susceptible to anything going wrong.

Has an analysis been done as to what the increased level of traffic will be if the Dunkettle interchange goes ahead as planned? What increased volume of traffic is expected on the southern ring road coming up to the Kinsale Road roundabout and those areas?

Mr. Paul Moran

We have looked at forecasts with growth rates that TII has adopted. The N40 has issues with certain junctions. The idea of CMATS is to take people out of cars. It would be hoped that if that is successful, we should have more space on the N40 and, it is hoped, less congestion.

How does upgrading a freeflow road system lead to fewer cars?

Mr. Paul Moran

Upgrading it leads to minimising the delays and safer passage for vulnerable road users.

How does it lead to fewer cars?

Mr. Paul Moran

It may not.

Mr. Peter Walsh

One of the ambitions of CMATS is to introduce several park-and-ride facilities. Getting people out of cars and into public transport is impossible if the bus will just sit in stationary traffic. If there is not the space to create priority for public transport, that shift cannot be made.

Where is the planned park-and-ride for traffic from the east on the N25?

Mr. Paul Moran

CMATS identified five locations on all of the arteries around the Cork metropolitan area. One is in the Dunkettle area, another on the N28 and another on the N71.

I have a vested interest because we had a family farm in Glounthaune, meaning I know the area. How big an area would one need for a park-and-ride facility?

It is a bit hilly there.

It is, and pretty too.

Mr. Paul Moran

That is something that I cannot answer. What would need to be looked at with the National Transport Authority, NTA, is the type of park-and-ride required. For example, the rail line is going through Dunkettle. There are already several stations there that use such a facility. Bus-based park-and-ride is another.

As part of the stage 1 plans, has the TII details of what the public transport upgrade will be to carry that park-and-ride traffic?

Mr. Paul Moran

We have seen what CMATS proposes.

That is not in stage 1 or in the design of the Dunkettle upgrade. That is purely a road scheme.

Mr. Paul Moran

Yes, it is a road scheme but with facilities.

How will cyclists traverse north-south and east-west? There is no cycling in the Jack Lynch tunnel.

Mr. Paul Moran

Cycling will be facilitated alongside certain links north of the interchange. They will be separated completely from the heavily trafficked areas. There will be an east-west link on the northern part of the junction. This will separate cyclists and pedestrians away from the heavy traffic. Then there is a dumbbell interchange to the east of the Dunkettle freeflow interchange that will cater for the north-south movement of pedestrians.

How will that cross the River Lee?

Mr. Paul Moran

That does not cross the Lee. It just crosses from the Glanmire area into the Little Island area.

Is the same mistake that happened in Dublin being made in Cork where there is no public transport happening and we are investing everything in roads? We say we want to reduce the number of cars and stop sprawl development. Even before the problems last Monday, the light rail for Cork was planned with a 20-year timeframe. This project, if it goes ahead, will have a five-year timeframe. We have a ten to 15-year gap between providing public transport and motorways. The same mistake will be made that was in Dublin, namely, that the outer orbital motorways are developed and then there is a sprawl-based development. Accordingly, Cork continues to become an unsustainable development model.

Mr. Peter Walsh

The policy for public transport is a matter for the NTA and the Department of Transport, Tourism and Sport. It is not what TII creates. We deliver policy. The element of the Dunkettle interchange which contributes greatly to the provision of public transport is the creation of a freeflow circumstance and the separation of the vulnerable road users in a number of areas. Outside of that, it is not that we are avoiding the question. It would be wrong of us to comment on policy relating to public transport in Cork.

I just see an endpoint with the Dunkettle interchange as a freeflow. Like we made the Red Cow roundabout and other M50 roads freeflow, we thought that it would solve the problem but, lo and behold, it did not because the volume of traffic always increases to meet the available road demand. We then have to have another choice about widening the ring road. We will be widening everything until the cows come home.

Mr. Michael Nolan

I am on the record here saying that we cannot keep building out the M50. We are sweating the asset and making it more efficient but we cannot add more lanes. I cannot see that happening in my lifetime. Three lanes in both directions on a ring road for a city of Dublin’s size should be adequate. Investment should be in public transport into urban areas. We help the NTA to execute its vision with regard to public transport in the Dublin area.

We will concentrate on Cork rather than Dublin. We have had discussions previously where we are widening all the approach roads to the M50.

We need to get into Cork.

Mr. Michael Nolan

We are widening two locations. On the N3, the extra lane is to assist with BusConnects. On the N4, it is from junction No. 7 to junction No. 5. I sit in traffic on this piece of motorway. I observe freight traffic, buses, cars and small vans stuck in traffic along that section.

We hope to have a pilot, in conjunction with the NTA, to widen that to facilitate more efficient traffic, safer throughput and a bus lane from junction 7 to junction 5. That would give us a bus lane the whole way from junction 7 to the M50. It would not only provide for cars but also bus lanes. That is a driver for us on the N4. It is something we are working on for the N4. It will be a pilot bus lane with a hard shoulder. I hope in the coming years we will make progress on that. Widening the motorways is not only a car-based proposition. It is multifaceted and we are working with the NTA closely on it.

We are going to conclude. I will make two comments. The first is for Mr. Paul Moran. An Taoiseach has assured those of us in Cork that the M20 is going via Mallow, Buttevant and Charleville to Limerick rather than by the M8 and M24.

I acknowledge the good work of TII. One of the biggest engineering works undertaken without much interruption was at the Red Cow interchange and getting the Luas across it while ensuring that the traffic flowed. It seems like years ago now, but there is no doubt that this was a major engineering achievement at the time. The reason we are here today is to ensure that the Dunkettle interchange project stays on target.

I thank our guests for attending. We will adjourn until September.

The joint committee adjourned at 4.20 p.m. sine die.