Dáil Éireann Debate, Thursday - 6 May 2004
99 Mr. Durkan asked the Minister for Agriculture and Food the number of State contracts, projects or procurements in respect of which cost overruns have occurred in the past five years; and if he will make a statement on the matter. [13206/04]
View answerThere have been no cost overruns on contracts or procurements in the strict sense during the past five years. However, on occasion my Department has approved some additional costs, mainly arising from changes in specifications. These relate in particular to IT projects and the Punchestown event and exhibition centre.
On IT projects, it is the practice when outsourcing bespoke software development to do so on the basis of a fixed price for the specified work. To this extent, the cost of the work set out in the request for tender does not vary. However, in such tenders the supplier is normally asked to quote a daily rate for additional work or changes that arise during the duration of the contract. The option of having additional work carried out at these rates is included in the contract. Any such additional work or changes to existing work is controlled under and must be approved by my Department before being carried out by the supplier.
An exception to this practice, was the new accounts system for agriculture projects, my Department's new accounting system. It became clear that the software delivered did not meet the Department's requirements, especially regarding Government cash accounting. My Department had to renegotiate the contract to have a suitable solution delivered. As a result of the extended implementation timescale, there were increased costs for external management consulting. The total external costs of the project came to €6.4 million excluding VAT. The total overrun on the original contract together with consequential costs in additional contracts for management consultancy comes to €3.3 million excluding VAT.
Major IT projects carry inherent risks that some specified functionality may not be deliverable by the solution providers. In order to minimise these risks, my Department has revised its policy on such projects and current policy includes the following: minimising the customisation of packaged software solutions; and the segmenting of major projects into smaller phases, each of which is signed off and delivered before proceeding with further phases.
On 1 August 2000, the Punchestown event and exhibition centre was provided with funding which would not exceed €13.3 million. This was increased by €1.5 million on 3 October 2001 to meet local authority planning requirements — sewage treatment and additional car parking. In the end, a total of €14.6 million was paid for the project.
