I would and I have brought copies for the Chairman and Members to peruse.
At the outset I wish to put on record the authority's welcome for the report. It would be of great value at any time but it is of particular benefit and relevance to us in our current strategic planning for the 2000-2006 national roads programme.
Before addressing the detail and conclusions of the report, I would like to draw attention to some specific recent developments and initiatives in the authority which are of relevance, in an organisational planning and policy context, to the matters under consideration.
During 1998 management consultants undertook a review of management and financial control systems in the authority. The findings identified a need for a more proactive approach to the management of national road projects undertaken by local authorities and for an integrated management information system, as well as more reliable cost information and reporting.
The review recommended a new management structure including the creation of a head of project management and engineering position with responsibility, among other matters, for establishing a project management approach and support systems and ensuring management of national roads projects undertaken by local authorities based on best modern practice, including risk assessment. Further recommendations included the appointment of a senior project manager with responsibility for project planning and reporting These have been implemented.
The authority commissioned a national roads needs study which was completed in July 1998 and which identified the road types appropriate for each segment of the inter-urban road system to cater for projected traffic flows over a 20 year horizon to the year 2019 and to achieve an average inter-urban speed of at least 80 kilometres per hour. It costs the improvement works at £6.1 billion - at 1996 prices - over a 20 year period with a significant element of front loading. The study provides a comprehensive basis for policy decisions on the development of the network.
The national development plan, published recently, provides for a total allocation of £4.7 billion for national roads in the 2000-06 period and indicates a strategy of development, in their entirety, of key interurban routes by 2006 to motorway or dual carriageway standard. The routes are from Dublin to the Border, Galway, Cork, Limerick and Waterford. Improvements are also identified on routes to the north west, on the western corridor, in the south and east. Completion of the Dublin C ring and the Dublin Port Access Tunnel is also indicated. Likewise, a selection of national secondary routes are identified for improvement.
I turn specifically to the detail and conclusions of the VFM report. The Committee will be aware that the NRA was established in 1994. Its assigned primary task is the provision of an efficient and safe network of national roads - for the most part the work is actually carried out by local authorities under the supervision of the NRA. Chapter 2 of the report deals with the impacts of the National Roads Development Programme 1994-1999 and with the achievement of the impact targets resulting from the expenditure. As the Comptroller and Auditor General said, bearing in mind the timing of the report, it concentrates mainly on the period 1994-97. To briefly set the 1994-99 roads development programme in context, it provided a total funding of £1,099 million in 1994 prices for national primary roads and £114 million for national secondary roads.
Seventy per cent of the improvement on national primary roads was to be concentrated on four strategic corridors linking the main centres of population. On the national secondary routes concentration was on a small number of routes which were important for economic development. The detail of the programme of work, including identification of specific road schemes and output indicators, such as time savings, were agreed between the Government and the European Commission and set out in the Operational Programme for Transport, 1994-1999. Finalisation of the programme coincided roughly with the establishment of the NRA in January 1994. The programme was of particular significance to the authority in that it established the policy to be pursued over the next six years in relation to the development of national roads - in other words our work plan up the end of 1999. As regards the various expenditure targets set in the programme, we met them all in full.
We accept the analysis of draw down of EU funds in the report. In essence and for the reasons stated, all available EU funding was drawn down. However, the proportion of resources actually provided by the Exchequer was higher than estimated when the operational programme was originally prepared in 1993-4. At that time the Government expected to receive over 70% of funding from the EU, but in the event, only 60% was obtained. A factor in this regard was the Commission's decision to increase the proportion of Cohesion Fund assistance for environmental projects from what had been expected to be 40% to 50% and that was at the expense of the funding available for transport in general, including national road projects. The principal outputs identified were (a) an increase in the extent of the network delivering a target level of service which corresponds to an average interurban speed of at least 80 kph and is referred to as level of service D, and (b) specified journey times savings arising, obviously, from the completion of individual projects on the network.
As far as level of service is concerned the report mentions the road needs study finding that in 1995 91% of primary roads and 94% of secondary roads were found to provide the target level of service D or better. However, the study also concluded that, without investment and with increasing traffic volumes, around 20% of the primary road network would fall below level of service D by 1999. The report recognises that the needs study has provided a methodology for monitoring improvement in level of service achieved by expenditure. The point is correctly made that because traffic is currently growing faster than anticipated - indeed by an average of some 8% each year between 1995 and 1998 compared with the 3% anticipated in the operational programme - improvements in level of service may not be as great as predicted. A comprehensive IT database of the national road network was developed and as it is updated for ongoing improvements and annual traffic counts it will track improvements over the network.
The target journey time reduction for the 1994-99 programme on the four strategic corridors was 204 minutes. A recent examination has updated the VFM report prediction of 175 minutes and indicates that 189.4 minutes of time savings were achieved by the end of 1999, or about 93% of target, with the full 204 minutes to be achieved early in the new programme. The principal output from expenditure on the next programme will most likely be kilometres of motorway/dual carriageway to be provided on the key interurban routes and the extent of improvements to the remainder of the national road network. Specific outputs and performance indicators in this regard will be determined by Government in the context of the forthcoming economic and social infrastructure operational programme which will be agreed with the European Commission. The authority commits itself to the adaptation of an appropriate methodology to monitor the relevant output and performance indicators.
In Chapter 3, concerning evaluation of road improvement projects, the report points out that priority should be given to road investment proposals likely to yield the greatest economic benefit, which is principally a function of time savings and scheme cost. The authority accepts this comment, particularly in the context of prioritising multiple disparate schemes. We reiterate that the NDP specifically requires end-to-end completion of certain key interurban routes and identifies a significant number of other national roads for substantial improvement. In the circumstances we have a primary responsibility to deliver on those elements of Government policy for the development of the network of national roads.
The NRA will carry out an economic evaluation of all major new schemes and our methodology will be kept in line with current best practice. However, we see no internationally recognised means for including environmental costs and benefits within this exercise, as suggested in the report. However, we will monitor international trends in this area and introduce changes as and when appropriate and possible. We confirm adherence to the Department of Finance benchmark rate of 5% as a threshold level of internal rate of return which, apart from exceptional circumstances, projects must reach. The NRA is in the course of establishing and will maintain a database of expected benefits from individual projects and will monitor and evaluate project outturns.
As regards prioritisation by economic ranking we point out that it needs to be weighed in conjunction with other factors, including specifically regional development and access considerations. Finally on this issue, we acknowledge the requirement for a system which will record project economic indicators and monitor changes as the scheme progresses. Such a system is substantially in place and it will be fully operational by May 2000.
The report outlines the phases and timescales involved in getting a major road project from concept to start of construction, including completion of relevant statutory consultation and approval procedures. We recognise that the current five to eight year initiation to site timescale mentioned in the report must be reduced significantly. Through effective project management, risk management and in anticipation of early enactment of the Planning and Development Bill, 1999, we have set ourselves an objective of reducing this timescale to three and a half years. Apart from significant implications for our level of service and time saving targets, this improved timescale for delivery has obvious implications for project specific efficiencies.
The report draws specific attention to a number of agencies involved in the decision making stages of road projects. In this context we issued in 1998 national roads project management guidelines, which identify the stages and streamline the processes involved in scheme development and also ensure earliest possible consultation with the public, relevant agencies and other bodies as part of our strategy to achieve greater efficiency in our procedures and those of our local authority partners. The objective is to reduce the value for money risk mentioned in the report.
The report next turns to the issue of control of project costs and duration. It points out, correctly, that as far as possible the NRA arranges for local authorities to implement improvement and maintenance works and it emphasises the need for the authority's systems to monitor the extent to which its projects are delivered within the expected budgets and time frames. The report mentions steps taken since 1997 to improve such systems and I advise the Committee of a further upgrade of our procedures to a full project management system, taking account of experience elsewhere, particularly in Scotland and Denmark. This system is to be used by local authorities, design offices, site offices and the authority itself.
Some relevant features of the system are that it will allow the NRA to issue an agreed brief for a specific project with overall time and money indicated in line with NRA multi-annual programme budget. Progress and costs will be updated against base lines. Progress on the NRA programme will be updated by the system. Historical data will be used to form templates for costs and programme for future schemes. Unit costs and typical implementation times will be generated by the system. It will be proactive in alerting management to the current state of a project and flag where corrective action is necessary. In 1999 the authority also appointed two audit technicians who check the integrity of the financial information supplied to us by local authorities.
Chapter 5 of the report deals with strategic planning for roads development and the key influences are identified. These include the importance of the establishment of the NRA, in 1994, to the strategic development of the network, the NRA needs study, faster than anticipated traffic growths, lower levels of EU funding and the advent of public/private partnerships. In addition, the recent national development plan has set the framework for the operational programme for economic and social infrastructure and the NRA plan which is now being prepared will reflect the strategy outlined in the NDP.
Our intention to pilot design/build schemes for project procurement is mentioned in the report and I wish to confirm that two such schemes are now under way at the N25 at Kilmacthomas, County Waterford, and the N9 at Moone/Timolin, County Kildare. A third scheme, the N25 Youghal by-pass, which is being progressed in a similar manner, is currently out to tender. The advantage seen for design/build over traditional procurement is greater certainty of outturn costs albeit balanced against higher initial tenders.
Turning to the appendices to the report, we accept the comments in appendix A regarding the concept of journey time savings and we are now geared to capture statistics of the type suggested. With regard to appendix B, we confirm that the needs study data base, continuously updated to take account of new improvements and increasing traffic, will allow us monitor the extent of improvements on the network and their implications for traffic. Appendix C describes and deals with the methodology used for economic evaluation. As I have already said, we will seek to keep our methodology in line with current best practice having regard to my earlier comment in relation to environmental costs and benefits.
Appendix D deals with project costs. There is a slight note of criticism here. The report itself refers to unit kilometre costs ranging from £1.6 million to £6.8 million for dual carriageways. The two projects upon which these costings are based are the Naas Road project which emerges as costing £1.6 million per kilometre which entailed widening of the existing carriageways and the North Road Finglas project which emerges as costing £6.8 million per kilometre which evolved the construction of a completely new dual carriageway in an urban environment with high land costs, accommodation works, difficult working conditions and so on. Clearly there is a great disparity between the two schemes as regards the scale and nature of the work undertaken and this accounts for the difference in unit costs. In this context I would point to our new integrated project management system, which will give a database of unit costs reflecting different conditions encountered on our schemes.
In conclusion, I wish to assure the committee that the report's observations and conclusions are being dealt with in a serious and committed manner. We hope that the steps already taken, which I have described, as well as those currently in train, will reassure the committee and the Comptroller and Auditor General as to the authority's determination and ability to apply strengthened project management procedures. These will be used to good effect in the context of our planning and delivery of the national road policy objectives of the National Development Plan, 2000-2006.
