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Capital Projects.

Dáil Éireann Debate, Tuesday - 1 February 2005

Tuesday, 1 February 2005

Questions (85)

Damien English

Question:

83 Mr. English asked the Minister for Finance if he has satisfied himself with the effectiveness of the process whereby different funding options are being assessed for capital projects; and if he will make a statement on the matter. [2581/05]

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Written answers

Capital projects are procured primarily by the traditional means of Exchequer capital or by public private partnership, PPP. In both cases, projects are subject to appraisal for value for money in accordance with the relevant guidelines laid down by my Department. It is a matter for the sponsoring Department or agency with the approval of the relevant sanctioning Department to determine which project option represents best value for money.

Under the general conditions of sanction for the multi-annual capital envelopes introduced in budget 2004, Departments are required to comply in all cases with my Department's guidelines for the appraisal and management of capital projects. Consultations with Departments on revising these guidelines are now complete and I will be submitting the revised guidelines to Government for approval to publish shortly.

To assist State authorities in determining the optimal means of financing public investment projects, the Government established the National Development Finance Agency, NDFA, on 1 January 2003. The NDFA's role includes advising on the financing and risk evaluation of Ireland's public-private partnership procurement projects and raising or arranging finance for appropriate capital projects. In this respect it provides a centralised expert service to Departments and certain other State authorities.

The PPP procurement option should be available to Departments and State authorities for application to appropriate projects where there is the right scale, risk and operational profile to harness the benefits of this new approach.

As the Deputy will be aware, there are also reforms planned in the area of public sector contracts for construction and construction related services. The reforms will involve the amendment and introduction of new standard forms of construction contracts which will transfer appropriate risks to contractors where they are best placed to manage them. These initiatives seek to reduce the potential for project cost overruns and provide better value for money for the State. Consultation with the construction industry on the contract-related material will commence shortly.

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