Dáil Éireann díospóireacht -
Tuesday, 25 Feb 2003

Vol. 562 No. 1

Written Answers - Public Capital Projects.

Michael Ring

Ceist:

142 Mr. Ring asked the Minister for Finance the guidelines from his Department which are in place governing the planning, costing, execution and management of over-runs of public capital projects; and if he has satisfied himself that these guidelines are being faithfully observed. [5430/03]

Minister for Finance (Mr. McCreevy)

In accordance with the principles underlying the strategic management initiative, my Department has been for some time pursuing an active policy of maximum delegation to Departments. In relation to large capital programmes, responsibility for individual projects is, therefore, generally delegated to the relevant Department.

The role of my Department is to set out a clear framework in relation to the management of capital investment. In managing capital projects, Departments are required to comply with my Department's Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector.

These guidelines, which are currently under review by my Department, set out four main stages of project appraisal and management. First, the appraisal stage aims to provide a basis for a decision on whether to approve a project in principle. This stage includes an assessment of uncertainty and risk.

Second, the planning stage involves the establishment of a project management structure, preparation of a design brief, detailed planning and design of the project and a review of costings. If changes are proposed to the project in the course of the planning stage, the guidelines make it clear that the cost implications should be fully appraised and the approval of the sanctioning authority should be sought before proceeding. On receipt of a tender price and other relevant information, the case for proceeding with the proposal is again subject to review. Where it is proposed, following such re-appraisal, to go ahead with a project at a price higher than that originally proposed, a decision will again be required by the sanctioning authority to proceed.

Third, the implementation stage begins once the final approval for the award of a contract has been secured. If adverse developments occur, including unforeseen costs increases, which call into question the desirability or viability of the project, the sponsoring agency should consider necessary measures to rectify the situation. Where, despite these measures, increased costs are likely to arise, the approval of the sanctioning authority for the extra expenditure should be obtained before any commitment is made to accept cost increases. The viability of the project, given the changed circumstances, should also be reported.

Fourth, the final stage following the completion of a project, is post project review. Such a review is recommended to evaluate both the outturn and the effectiveness of appraisal and management procedures.

I am confident that the steps outlined in the guidelines provide sufficient guidance to Departments and agencies for the re-evaluation of projects at key points in the decision making process and that accounting officers are fully aware of the need for ensuring value for money in the consideration of all capital projects.

As part of the new expenditure management and control arrangements put in place with effect from this year, I intend to agree five-year multi-annual capital investment envelopes with my ministerial colleagues. This arrangement will provide a more secure framework for Departments and implementing agencies in the planning and delivery of capital projects. The arrangement will also see an more explicit link between resources provided and outputs to be achieved and will incorporate a requirement for an adequate contingency provision to cover cost increases likely to impact on capital projects.