Thursday, 20 June 2019

Questions (17)

Joan Burton

Question:

17. Deputy Joan Burton asked the Minister for Public Expenditure and Reform his plans to ensure robust and credible cost-benefit analysis reports by third parties are provided when assessing costs of projects and other costs; and if he will make a statement on the matter. [25685/19]

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Written answers (Question to Public)

The Public Spending Code is the set of rules and procedures that are in place to support public bodies in achieving value for money as they implement all projects, including major projects, through the course of the project’s lifecycle. Each project works through a lifecycle from project identification, appraisal/business case, planning & design, procurement, implementation, to review. 

The project is assessed by the Sponsoring Agency, i.e. the body delivering the project, throughout to ensure it represents value for money. At key designated stages in the lifecycle, the body funding the project, i.e. the Sanctioning Authority, is responsible for approving whether or not the project can move to the next stage.

For projects estimated to cost over €20 million, the Public Spending Code requires that the Sponsoring Agencies prepare an economic appraisal such as a cost benefit analysis or cost effectiveness analysis to inform their own consideration and the consideration of the project by the Sanctioning Authorities. The Public Spending Code also requires that the economic appraisals for such projects are submitted to the Department of Public Expenditure &Reform for technical review.

The Investment Projects & Programmes Office (IPPO) was set up in my Department to support the implementation of Project Ireland 2040. The IPPO conducts technical reviews as a further input for the Sanctioning Authorities. The review is policy neutral and its purpose is to support consistency in the application of the Public Spending Code.

As part of the ongoing reform of Ireland’s capital management systems, the Department of Public Expenditure and Reform is reviewing the Public Spending Code.  The purpose of this review is to strengthen the existing guidance to better align with the realities of project delivery and with a particular focus on improved appraisal, cost estimation and management.  The Office of Government Procurement is conducting a review of construction procurement which will align with the updated Public Spending Code.

The following reforms will be considered and implemented as part of the review:

- Strengthen and harmonise capital appraisal guidance;

- Greater clarity on governance  and roles and responsibilities, particular in terms of who is the Sanctioning Authority and who is the Sponsoring Agency for major projects;

- Introduce new mechanisms to improve the accuracy of cost estimates;

- Improve project life cycle to better reflect the realities of project delivery; and

- Complement the Project Ireland 2040 Capital Tracker in monitoring projects and costs. 

The revised central elements of the Public Spending Code relating to the appraisal and management of public capital projects will be published this summer.  Further technical guidance building upon these central elements will follow in the second half of 2019 and in 2020.