Wednesday, 10 February 2021

Questions (294)

Eoin Ó Broin

Question:

294. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage his views on the recent significant rise in tender prices for social housing developments in Dublin City Council; and if he will examine the use of multi-annual framework agreements and breaking up larger development sites into tenders for enabling works and sub-lots of social housing within the social housing developments to increase competition and ensure value for money for the taxpayer in the delivery of social housing. [6512/21]

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Written answers (Question to Housing)

My Department assesses, approves and records local authority social housing delivery costs for each project submitted for funding approval. As part of the process submitted costs are reviewed, taking cognisance of the particular circumstances of each project and the context of the overall housing need. On occasion, tender approval has been withheld by my Department or only a reduced budget approved, where costs were at a level which could not be justified.

There have been two recent reports on the costs of construction, ‘The Real Costs of New Apartment Delivery’ published by the Society of Chartered Surveyors Ireland (SCSI) and ‘Construction costs for direct-build Dublin City Council residential developments’, a report to the DCC Housing SPC by DCC.

The SCSI report ‘The Real Costs of New Apartment Delivery’, is an analysis based on real market data on the typical overall cost of development for apartments in the Dublin area.

This report is an update on a similar study/report published in 2017 and its findings are based upon market conditions on the costs of 2-bedroom apartments. The data was collected from 49 apartment schemes (comprising c. 9,500 units in total). As there is a large variance in the type and size of apartment schemes being developed, the data collected was classified into four types - Suburban (low-rise); Suburban (medium-rise); Urban (medium rise 5-8 storeys); and Urban (medium-rise 9-15 storeys).

The report sets out a range of development costs across the above four categories as follows:

Category 1 (suburban low-rise): €315k to €365k per unit (ex.VAT).

Category 2 (suburban medium-rise): €361k to €467k per unit (ex. VAT).

Category 3 (urban medium-rise; 5-8 storeys): €435k to €518k per unit (ex.VAT).

Category 4 (urban medium-rise; 9-15 storeys): €455k to €551k per unit (ex. VAT).

The report outlines that:

- Total development costs of developing low rise apartments in Dublin suburbs range from €315k to 365k ex. VAT (or €359k to €413k including VAT on sales) - an increase of 8% and 7% respectively on the 2017 report.

- Total development costs of delivering medium-rise apartments in Dublin city and suburbs category 2, 3 and 4) have fallen by between 2% and 9% since 2017 - the total development costs of medium-rise apartments now range from €361k to €551 ex. VAT (or €411k to €619k including VAT on sales).

These cost savings are largely due to the introduction of new apartment design guidelines in 2018 by the Department of Housing, Local Government & Heritage.

The DCC management report ‘Construction costs for direct-build Dublin City Council residential developments’ provides cost data for seven social housing projects tendered between 2017 and 2019. One of these projects consisted of houses only. The report shows a range of average all-in costs (per unit) for these seven projects to be between €288,011 (an all house development) to €494,441 with an average all-in cost of €429,271 per unit. My Department is currently working with DCC to validate and reconcile the costs detailed in their report. This reconciliation will ensure that the costs used for analysis and reporting align with the latest amounts reported by DCC to my Department for funding approval.

My Department intends to engage with the SCSI to further review issues raised in the recently published SCSI report on apartment delivery costs.

Local authorities currently use a number of frameworks when tendering for design and professional services and public works construction contracts for social housing construction.

DCC currently have a number of frameworks available to them, including.

- DCC Volumetric framework for projects > €15m, in existence since 2019; (in use with four projects on-site delivering 260 new units);

- DCC Volumetric framework for projects < €15m, (about to go to tender);

- National OGP framework of rapid delivery contractors up to 50 dwellings in place since 2017

about to expire

to be replaced by the National OGP framework of design & build contractors (about to go to Market)

- National OGP Framework of design team consultants available since 2016 (various sub lots for different value of works). This is due to expire in Q1 2021. Tenders for replacement frameworks are currently under evaluation.

In addition it is understood that DCC use

- Dublin Authorities Framework for individual design team members;

- Various Dublin Authority frameworks for specific works – i.e. renovation works.

Local authorities have the ability to proceed with enabling works on sites in advance of tendering for the construction of apartments and houses and my Department are willing to work with LAs to advance large projects in phases where a project lends itself to this approach and where value for money can be achieved without unduly impacting on overall project delivery timelines.