Tuesday, 13 December 2005

Questions (79)

Trevor Sargent


110 Mr. Sargent asked the Minister for Finance the way in which the Office of Public Works processes have been reformed in order that the type of waste outlined in a programme (details supplied) in May 2005 cannot recur; and if he will make a statement on the matter. [38911/05]

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Written answers (Question to Minister for Finance)

The Office of Public Works is conscious of the requirement to provide value for money in all activities in the property acquisition and construction areas of its remit. The Office of Public Works has reviewed all of its property procedures in recent years and has introduced measures to ensure greater co-ordination where a number of State bodies, including the OPW, are involved in specific property transactions. Underlying these revisions is the requirement to achieve full value for money in the acquisition and refurbishment of leased properties, for example, since 2000 there is improved co-ordination between State agencies involved in the implementation of the strategy for providing accommodation for asylum seekers.

The management of construction projects undertaken by the Office of Public Works is governed by the office's project management plan. The Commissioners of Public Works are satisfied that the procedures and control mechanisms in place ensure that the risk of project overruns is minimised and, where they arise, that an assessment of the impact of the overrun is made. This is borne out by an examination of capital projects undertaken from the Vote of the Office of Public Works which showed that, for seven years up to 2003, the total value of close on 1,000 capital projects undertaken was approximately €985 million. In that period the over-run on some 11 listed projects costing in excess of €1 million each, and for which contractor's final accounts have been processed, amounted to 0.003% of the total expenditure.

In addition to its existing procedures, the Office of Public Works is a member of the Government contracts committee for construction which is currently involved with the Department of Finance in the development of an integrated ongoing programme to deliver value for money in both current and capital expenditures in line with Government policy in that regard. The proposals involve the introduction of fixed price lump sum contracts as the norm. This development will be fundamental to protecting taxpayers from cost over-runs.

The aim is to ensure that there is a fair risk sharing and that contractors take on those risks that they are able to manage and control. The optimum transfer of risk will ensure that taxpayers are protected from the financial consequences of unnecessary delays and, in turn, cost over-runs. This should apply to service or consultancy contracts as well as infrastructure projects.

Value for money concerns are also being dealt with by the introduction of ex ante evaluations, including economic cost-benefit appraisal, for all projects valued above €30 million. This approach will include identification and carefully quantified analysis of all the relevant project costs and benefits, including indirect costs, as well as the identification of any risks of cost escalation.