I welcome Mr. Michael Tobin, Mr. Michael Egan, Mr. Eugene O'Connor and Mr. Gerry Murphy from the National Roads Authority. I pay tribute to them for accepting our invitation at very short notice. We appreciate that, while they could not facilitate us yesterday because of their board meeting, they have attended this morning. Members of the committee have absolute privilege, but this same privilege does not extend to witnesses appearing before it.
National Roads Authority: Presentation.
Mr. Michael Tobin
Subject to the agreement of the committee, we will make a presentation on the position at the end of 2003 and on what we hope to deliver in 2004. Mr. Michael Egan will make the presentation.
Mr. Michael Egan
Members will be aware that the NRA's policy framework was set out in the national development plan published in 1999 and the Economic and Social Infrastructure Operational Programme. Key objectives of those documents were the completion of five major interurban routes: Dublin to Northern Ireland, namely the M1 corridor to Belfast; Dublin to Cork; Dublin to Galway; Dublin to Limerick; and Dublin to Waterford.
The Minister for Transport, Deputy Brennan, recently advised the authority to consider the possibility of completing the Dublin to Cork and Dublin to Galway routes as a matter of priority, possibly by the end of 2007. We anticipate that the other routes may take until 2010, depending on the funding available. If we receive an increase in our allocation, they might be fully completed by 2008. Other key objectives in the Dublin area are the completion of the M50 upgrade and the Dublin Port tunnel, a key piece of infrastructure.
We also have an ambitious public private partnership programme to secure private sector investment in excess of €1 billion. We are conscious of the commitment in the national development plan where the Government gave indicative targets on the proportion of spend in the BMW, southern and eastern regions. Our overall objective, as set out by the Government, is to achieve a level of service equivalent to an average speed of 80 kph or 50 mph on the national primary network.
During 2000-03, the Exchequer provision to the authority for national roads investment was almost €3.8 billion, compared to a target set in the national development plan of approximately €3 billion. Funding has outstripped the initial indications in terms of the Exchequer commitment for the roads programme, a clear indication of the importance the Government attaches to an effective transport system that can benefit not just private, but commercial and public transport.
The estimated costs of the road programme, taking account of some changes in the scope of the programme and the impact of inflation was, in 2002 prices, €15.8 billion. We anticipate that the five key inter-urban routes, with a continuing annual allocation from Government of €1.2 billion, can be complete by 2010, with the bulk completed much sooner if we get additional funding.
The Government decision, announced by the Minister for Finance, to adopt the multi-annual framework arrangement for a range of public programmes, including the national roads programme, was an important development. The National Roads Authority had actively canvassed for this move. Important benefits will flow from it with greater confidence in planning road schemes and moving ahead to tender stage, and the public will be more certain of commencement and completion dates. We now have an indicative funding commitment from Government of €6.867 billion in Exchequer funding, to be supplemented by private sector investment through the public private partnership programme and tolling over approximately €1 billion that covers the period 2004-08.
The framework will set out specifics for schemes that are to be advanced over that five year period. We will identify the costs and expenditure in future years, commencement and completion dates, and we will give a commitment to comply with standard public sector procurement requirements laid down by the Department of Finance and the European Union. A key element of the multi-annual framework will be that the Department of Finance will lay down the extent to which future year funding commitments can be entered into in the current year. They will decline as we move ahead over a number of years. The Government and the Minister for Finance, therefore, will retain reasonable discretion when framing the annual budget while giving us greater certainty about what we can spend. We will be required by the Department of Finance to provide for a contingency sum to guard against unforeseen circumstances that could affect scheme outturn costs.
We welcome the Government's intention that there will be a mechanism allowing for an unexpended balance of up to 10% to be carried forward into future years. This is a difficulty we have faced in the programme, where we had to come in exactly on the button in terms of total provision and when we are talking about an annual provision from Government in excess of €1 billion, it is extremely difficult to manage a programme of that scale so that the last cent is spent. This again gives an element of flexibility that reflects the reality of the roads programme and other public sector programmes. The commitments in terms of future year expenditure will roll forward in the 2004-08 period.
This year, we have €1.22 billion for improvement work and a maintenance provision of approximately €53 million. That is more than last year. It is part of the overall funding envelope covering the five years as part of this multi-annual framework and the individual elements flagged by Government in the Exchequer allocation up to 2008 are expressed in 2002 prices with a built-in mechanism to take inflation into account. We do not expect any real increase above €1.2 billion for road improvement works over the five years and that gives us a high degree of confidence in planning the programme. We receive, therefore, €7 billion from the Exchequer.
At present, the authority is working on the specifics of that multi-annual programme up to 2008 - the schemes that will proceed, the timetable for commencing work and similar issues. We will present that to the Minister for Transport and we aim to complete that work by April 2004. We will then await decisions from the Minister about our proposals.
Looking at the current scale of activity, on 1 January 2004, the authority had 17 programmes under construction throughout the State - 149 km of road, much of it motorway or dual carriageway standard. This year we anticipate that 12 schemes, with a regional spread, will be completed, representing 80 km of road. In addition to these schemes, the authority is also contributing to the N7 Naas Road-Kingswood interchange scheme to link with work being done by South Dublin County Council. It is a regional road, but the interchange is linked to the Naas Road and we are funding part of it. We also anticipate completion of the N26, which was omitted from the material we supplied to the committee. The Ballina-Bahola scheme phase one, some 5 km of road, should be completed this year.
Looking ahead, the scale of work we anticipate commencing in conjunction with local authorities is unprecedented. Up to 17 schemes throughout the country, 155 km of road, will start construction by the end of December. We have been actively working to increase the scale of activity in the BMW region and of the 17 projects that are likely to start construction, nine will be in that region. That will restore greater balance to the funding expenditure.
Many of the other projects are well advanced in the tender or tender award process. There is a good mix between traditionally procured and schemes that are being delivered through the public private partnership programme, including the Dundalk western bypass. The contract for that was signed in recent days and we expect almost immediate construction activity. The Waterford city and Fermoy bypasses will also go to construction under the PPP programme this year.
A number of schemes will remain under review. It should be possible to start them depending on programme activity, the level of expenditure and the progress we are making. We will confirm during the year if they will commence construction. Currently, 17 major schemes are under construction involving 149 km of road.
As I indicated, 17 projects are likely to start, covering a further 155 km. With the increased activity in the BMW region, there have been 12 completions in the current year. We will also be undertaking a major programme of work dealing with road surface, or road pavement, rehabilitation on national primary and secondary networks. This will translate into much improved and more comfortable driving conditions throughout the country.
We will spend just under €100 million in the current year on advancing further schemes through planning and design work and property acquisition, land compensation payments and site investigation work, including archaeological activities. In the course of the year we will complete the work on finalising and publishing compulsory purchase orders, motorway schemes and environmental impact statements in respect of any outstanding sections of the five major inter-urban routes. This is a key milestone in advancing these projects to a point at which they are under construction or have approval from An Bord Pleanála or at which we have submitted the proposals to An Bord Pleanála for early decision.
We will be expending just over €17 million on road safety measures, which is an increase on the current and previous years' activity in this area. This is a key element of the authority's work programme. In addition, we will be spending just over €5 million on a retro-fitting programme for crash barriers on the central medians of motorways and dual carriages. These barriers are currently being constructed on the M1 and the Kilcullen bypass and we will roll out the programme more extensively in the course of the year in areas where the central median is 15 m wide or less. Where it exceeds 15 m, we believe the median is an effective safety mechanism in itself. A further feature of this year's programme, which has received some publicity in the last few days, is the allocation of €5 million to change the speed limit signs as part of an initiative by the Department of Transport to move to metrification. Ireland is required to move in that direction to take account of EU requirements.
Moving on to the major inter-urban routes, substantial sections of the Dublin-Border route are already completed. As I said, we will shortly be commencing construction of the Dundalk western bypass scheme, which is being funded from tolls collected at the Drogheda bypass. There will be no direct Exchequer funding requirement. In addition, the scheme itself, the contract for which we signed in the past few days, provides for substantial sections of the M1 to be maintained, not just the Dundalk western bypass, but an additional 45 or 46 km over a 30 year period. This is very good value for the Exchequer and the taxpayer. We also hope to start construction this year on the final section of the M1, north of the Dundalk bypass, which will take us across the Border and on to Newry. We are advancing that in conjunction with the Northern Ireland roads service.
In the case of the Dublin-Galway road, CPO documentation is being prepared and we are working to complete publication of the documentation and present the proposals to An Bord Pleanála for decision. The statutory documentation will be published in the course of this year. Contracts for the Kilcock-Kinnegad route, a public private partnership scheme, were signed in March of last year and the project is making excellent progress. Apart from the PPP mechanism, there is a real incentive for the successful bidder to complete the project as quickly as possible and commence the process of collecting tolls. Revenues flow to the consortium at that point.
On the Dublin-Limerick route, we expect to begin work shortly on upgrading the Naas road from Rathcoole to the commencement of the Naas motorway bypass. That work will entail the construction of a third lane along the entire length and a number of grade-separated interchanges, including those at Kill and Johnstown, where traffic is being delayed at present because of the operation of traffic lights, which simply cannot cope with the volume. The project will take two to two and a half years and will bring significant benefits. The Monasterevin bypass is under construction and is not scheduled, based on the contract completion date, to open until October 2005. However, we hope it may be completed by the end of this year. This will bring substantial benefits to traffic in terms of access to the Limerick and Cork areas. The outstanding CPO documentation will be published by the end of the year. We expect the Limerick southern ring road - the bypass of Limerick city to the west - to be completed by April of this year. We are awaiting an oral hearing by An Bord Pleanála into the continuation of that scheme under the Shannon estuary. The project will incorporate a significant tunnel under the Shannon. We anticipate a favourable response from An Bord Pleanála.
Moving on to the Cork-Portlaoise section of the N8, with the N7 taking traffic from Portlaoise to Dublin, all outstanding statutory documentation is to be published by the end of this year. The Cashel bypass is under construction and, with luck, it will be completed ahead of schedule, by the end of this year. We are working to finalise the contract award on the Fermoy-Watergrasshill PPP scheme. This should link in with the Watergrasshill dual carriageway, which was completed in September of last year, leading directly to the Jack Lynch tunnel and the ring road in Cork city.
The CPO documentation for the northern section of the Dublin-Waterford road, which will take us from Kilcullen to a point south of Carlow at Powerstown, was published towards the end of last year. An Bord Pleanála has scheduled an oral hearing for next week, which is an important development. This is happening in consultation with the local authorities, which are finalising the planning, route selection process and CPO documentation for the southern section. That should be published this year also. The Waterford city bypass is one of our PPP schemes. It should be possible to place the contract and start work on this project this year.
The Dublin Port tunnel is under construction and should be completed in the first half of 2005. The West Link was opened to traffic in September of last year. We are finalising the statutory documentation for the M50 upgrade. I gave details of this when I spoke to the committee in October of last year. At that time, we had an initial proposal for expenditure of just over €300 million, focusing on the Red Cow interchange, the Palmerstown interchange on the Galway road, the construction of a third lane between those two points and a third lane moving up to the airport interchange on the M1, and a significant upgrade to the M1. This was to cost €316 million plus €15 million for access to the park and ride facility at the Red Cow for Luas. At that time we flagged our intention to keep open the possibility of further upgrades to interchanges with the N2 and the N3 and at Ballymount as well as extending the third lane further south from the Red Cow roundabout. We have continued to work on this aspect. Our current proposal entails expenditure of €570 million to €580 million in total. That includes the two packages I mentioned: the priority section from the Red Cow to the Galway road and the further interchanges. We have been actively working with the National Development Finance Agency to package this and exploit the potential for securing funding from the financial sector under a mechanism that will succeed in keeping it off the Government's balance sheet. We are optimistic about this matter. The statutory documentation for the entire M50 strategy will be published shortly.
The subject of the south-eastern section of the motorway is unfortunately topical and controversial, as committee members will know. The Carrickmines situation has dominated proceedings. Until 8 December 2003 there was a Supreme Court injunction preventing work in the environs of Carrickmines. Further legal action was initiated before Christmas in the High Court and its decision was appealed in the Supreme Court and, as a result, amending legislation is required. The High Court held in January that the legal mechanism allowing for joint consent to be issued by the Minister for the Environment, Heritage and Local Government, in conjunction with Dún Laoghaire-Rathdown Council, is allowed but a further requirement that the joint consent be approved separately by the Minister was found to be unconstitutional. We are now waiting for amending legislation to be introduced to address the legal difficulties that have emerged and we understand the Minister is working on it.
The legal situation affecting the south eastern motorway is not unique to national road building. Based on the High Court judgment, there is no legal mechanism to obtain the necessary authorisations or legal approvals to carry out any development, public or private, that could affect or interfere with a national monument. We are in the unfortunate situation of testing the water as a result of the ongoing challenges. Hopefully the Minister and the Government's consideration of what has arisen from these challenges will put in place a new mechanism to assist the NRA and other developers which find they cannot prevent some impact on a national monument.
We thank Mr. Egan for his clear presentation on the NRA. How cost effective are public private partnerships compared to the old system? How much cheaper will the N4 be per kilometre than under the old system? Are the longer sections more cost effective? Should any other legislation be introduced that could ensure that the problems that have been encountered do not arise again?
Mr. Tobin
PPPs are more cost effective. Before agreeing to accept a consortium to undertake a PPP, we prepare an estimate of what the project would cost if the NRA and local authority delivered it in the traditional way. So far we have found that the bids under PPP are much better value. A major advantage of PPPs is that all construction risk is transferred to the consortium. The committee knows about slippage, where a contractor is awarded work at a particular price and the system of contracts allows for certain claims and price variation so the final amount paid can differ significantly from the bid price. That is removed from the public sector under PPPs. No matter how well we estimate the cost, we are always worried that something will come from out of the blue and sting us but PPP eliminates that possibility.
Carrickmines is a particular situation. One of our most high profile projects is being held up and we are anxiously looking to the Oireachtas to solve the problem. We are aware that Ministers are going to introduce Bills for high profile infrastructure projects. We are in favour of legislation that allows our projects to go through statutory processes quickly. We would love at some point along the way, after the statutory process and public inquiries are complete, if a line could be drawn and the project would no longer be subject to challenge. Unfortunately, the legal system means that it is not easy to solve that problem. We are well ahead in moving projects into the statutory process and acknowledge that An Bord Pleanála is handling them effectively but, because of the legal situation, there is no certainty that all objections have been overcome and progress can be made. That is a major problem and I cannot solve it. It is the reality under the Constitution and the legal system.
Mr. Egan
The establishment of a national infrastructure board might help us to move towards the one stop shop approach. These are issues for the Government to address. There are issues related to national monuments and road construction that merit consideration. The legislation dealing with road building dates back to 1930 and is not in tune with modern expectations for national infrastructure. The Minister for the Environment, Heritage and Local Government is reviewing that legislation. At present, however, there is an official record of 120,000 sites and features but no distinction is made between significance or status of those items. There is no higher category of national monuments; they are all of equal standing.
That presents a major difficulty for the NRA and local authorities when planning roads. The country is rich with archaeological sites and this is the tip of the iceberg. When we take away the top layer to build a road, we inevitably reveal many more previously unknown archaeological features. Under the law at present, however, the only way to determine what is and what is not a national monument is through the courts. That is slow and cumbersome. The situation should clearly be addressed in the new legislation and it may be a role that someone like the Minister for the Environment, Heritage and Local Government could undertake to give a clear determination on the status and significance of features, particularly newly discovered features.
The mechanism that applied to obtain this joint consent and have it approved incorporated what we thought was the ultimate safeguard, whereby the Minister's order approving of the giving of the joint consent had to be laid before the Houses of the Oireachtas and a period of 21 sitting days allowed within which a motion could be moved. That order was made on 3 or 4 July and what with the summer recess and other reasons, the 21 sitting days did not expire until early December. That is another element that needs to be addressed to bring about greater efficiency in the decision making process. We are optimistic that this would be taken into account in the legislation on which the Minister is currently working.
There are also elements of the licensing regime as operated by the Department of the Environment, Heritage and Local Government that would merit having an explicit statutory process laid down, along with timeframes for decision making. In our experience, the Department of the Environment, Heritage and Local Government has so far delivered on licensing, and has a very prompt turnaround in that regard, but it is a standard feature whether it relates to An Bord Pleanála or other aspects to have a timeframe mapped out. It would bring clarity to the process. Those are a number of issues which would benefit not just roads, but development generally.
I suggest that the committee sends a copy of the submission made by Mr. Egan to the Minister and asks him to consider it in the context of legislation. Is that agreed? Agreed.
I thank the witnesses for attending at such short notice. Regarding the multi-annual budgeting, when does the NRA hope to publish that strategy and what percentage of savings does the NRA envisage being made by it? For example, the N4 Hughestown-Meera project has been continuing for three or four years. To have a multi-annual budget and have that quickly completed must involve savings related to the rental of safety equipment, warning signs and so on. The witnesses might comment on that aspect.
Regarding the design of bridges on motorways, we all notice from travelling on motorways that the specification for each of these bridges seems to be slightly different. Would it make more sense to have a flat-bottomed bridge, with a particular specification, right across the country for all motorways? They are not ornaments and building functional rather than decorative bridges could reduce the cost.
Design contracts are currently based on the overall percentage cost of the project. There is a vested interest for people designing such contracts, especially if consultants are engaged, to go for a high cost project. Could the NRA look, or has it looked, at fixed price contracts, or perhaps at incorporating cost-reducing incentives, all of which would seem to make projects much more effective?
Regarding safety barriers, has the NRA looked at the French system, where on wide medians and on the edges of roads they have put in very wide hedges to reduce traffic speeds? Rather than setting up crash barriers on wide medians, that could be a preferred mechanism. Regarding the Shannon tunnel clearance, the NRA might give us an outline of a comparison it did between a PPP and an ordinary State-funded project and the cost savings made. It might supply that information to the committee later.
I thank the witnesses for the presentation and I commend them on the huge programme currently under way. I know the agency is very stretched in attempting to deliver the full programme. Has it had an opportunity to do any further work on costs since the agency representatives last came before the committee? I recall that when the witnesses appeared with representatives of the Northern Ireland road service, we were anxious to get some comparative figures regarding the costs of a kilometre of road in this State and in Northern Ireland. In light of public concern and the concern expressed by the committee about major road projects and other infrastructural projects with escalating costs, we are anxious to see if the NRA is able to produce an average cost per kilometre for motorways, along with the comparative figures for other European countries.
The witnesses have made very positive comments on the extended use of PPPs. I am a little concerned that the NRA favours these. Obviously, they get the NRA off the hook regarding the many difficulties with contracts, unforeseen circumstances and so on, and to a large extent they remove the element of risk. The difficulty is that, in the long term, we as taxpayers end up paying more for projects, particularly in a situation where PPPs are combined with the use of tolls. We have seen how the existing two toll bridges have turned into cash cows for their owners. Has the NRA been able to do any work on tightening up contracts, using performance-related contracts, looking at better tendering in respect of projects, looking at material costs - I am thinking of cement in particular - and other ways of reducing and controlling costs? Surely it makes sense that through State involvement, whether it be a pension fund or the NTMA; State funds invested in major road projects involving toll booths would be a sound investment for the taxpayer because the revenue would return to the public coffers. I would like the NRA representatives to comment on that issue.
My final point relates to the Dublin Port tunnel and the public controversy and debate that has been going on, largely generated by the Minister for Transport, about the height of the tunnel. We should proceed as quickly as possible with the completion of the tunnel and should ban super-cubes, which are not allowed throughout most of Europe. In light of the promise made by the Minister for Transport to reintroduce height restriction, can the NRA say what is the situation now and when we can expect a final decision, so that the project can be completed?
Mr. Tobin
I will deal with a number of the questions and then my colleagues will join in. We might go in reverse order so as to touch on the last point made by Deputy Shortall. The Minister is still involved with the Dublin Port tunnel height issue and at his request we have now sought from the contractor some estimate of the cost of allowing vehicles higher than those first planned for to use the tunnel.
Is that the Minister's initiative?
Mr. Tobin
Yes. The NRA believes that the tunnel as designed, and as being built, is adequate for the traffic that will need to use it. We see the tunnel as another element of an overall network of public roads. It is not a stand-alone, isolated piece of infrastructure. That being the case, one has to look at the generality of our network and what height of vehicle is appropriate for using it. Leaving aside the tunnel, our modern bridge stock is designed so that we maintain a clearance from road surface to underside of bridges of 5.03 m. For reasons we will not go into, we do not currently have a vehicle height restriction, any more than do our counterparts in the UK or in Spain. The rest of Europe and indeed most of the rest of the world has such a restriction.
Leaving that aside, despite not having any restriction on vehicle heights, the maintained height that we have for our modern bridge structures is, at 5.03 m, exactly the same as that in the UK. It is a fixed height throughout the network. Let us look across the world at what countries do generally. They allow some gap between the underside of bridges and the top of vehicles for safety reasons, since in winter one can have a build-up of snow, one can find something flapping at the top of the vehicle, or something such as a piece of timber can be on the road, causing the vehicle to hop and rise in height. In international practice, the minimum expected in countries around the world would be close to 500 mm between the top of a vehicle and the underside of a bridge. In parts of the United States, that rises to around 800 mm. Let us return to the minimum of 500 mm. If one wishes to step one's vehicles back 500 mm from the undersides of our bridges, one is looking at a vehicle height of approximately 4.53 m. That is no problem whatsoever going through our tunnel. As an authority, our view is that we should examine the network in its totality together with what vehicle heights are reasonable on that network. We believe that the vehicle heights appropriate to the network generally will cause no difficulty in the tunnel. That is our present position.
Deputy Shortall rightly posed the question of whether PPPs are cash cows. Without fear of contradiction, I can say that our recent deals have been anything but that. The early deals for West Link and East Link - while not directly involved, I was in the Department of the Environment and Local Government when those deals were struck - were concluded at a time when the State was not able to make the investments needed to deliver those elements of infrastructure. A private sector interest undertook to provide them literally for nothing, and it was welcomed. Whether we like to admit it, those people took a risk regarding whether volumes would arise to make their investment worthwhile. In the event, they made a hell of a good deal. Those sorts of deals are no longer available. We are happy on the basis of the advice we receive in each case that the profits available to any of the consortia getting those deals are fairly well capped and that any question of windfall profits will simply not arise.
Another significant difference between current deals and the East Link and West Link projects would be that there are now service requirements. In other words, the concessionaire must ensure that traffic passes through without delay. In Drogheda, for example, with northbound traffic, on average no more than six vehicles can be there at a time, or else one must open the gates and let the queue through. People can be kept in a queue for no longer than 29 seconds. We are putting in those types of service requirements. The Deputy also posed the question of whether the NTMA might invest its funding. We have no difficulty with that; if the NTMA wishes to come on board as part of a consortium investing in projects, that is fine. However, up to now there has been no difficulty in getting private sector interests to put the funding in place on the basis that there is no windfall or enormous profit making involved.
I am not sure whether the Deputy or committee is aware, but quite recently our project at Kilcock-Kinnegad was awarded the title of top PPP deal in Europe, Africa and Asia last year. We do not want to say that too loudly. We know that people on the private sector side are screaming a little that the deal was tough. People will squeal, but we are not paying too much attention, believing that we have struck a good deal for the public sector, as reflected in the judgment of the group that made the award. If the NTMA or any other funding source wishes to come on board, it is quite welcome to do so, but it is also fair to say that, if the NTMA or NDFA is investing money, it wishes to make a return. I am not sure that the returns available under our PPP programmes are at the level they would like. I will ask my colleague Eugene O'Connor to address several technical issues regarding such matters as bridge designs and motorway barriers.
Mr. Eugene O’Connor
I will deal in the first instance with Deputy Naughten's questions. The multi-annual programme will certainly create greater efficiency in the delivery of road schemes. It allows us to go through the planning and statutory processes to the detailed design, award of contract and the opening of the scheme within a short period. While we no longer see much of it, we hope that the process of drip-feeding funding to road schemes is now a thing of the past. Hughestown-Meera was mentioned in particular. The contract was awarded for that some time during or even late last year, and we anticipate its opening in April.
No, since the completion of the Curlews bypass, work has been ongoing on the Hughestown-Meera scheme. It was not last year or either of the years before. Warning signs have been up during that entire period. I would like to clarify the record in that regard.
Mr. O’Connor
I am clearer now as to the overall scheme to which the Deputy refers. I was dealing specifically with the off-line contract that is happening at the moment. That will open in April to complete that scheme.
As far as the design of bridges is concerned, I acknowledge that in the past we saw different designs for bridges on single road schemes. That is also a thing of the past, since we have now entered an era of "design and build" contracts whereby the contractor is responsible for the design. We can be assured of the most efficient designs possible in that regard. We are unlikely to see different bridges again. On the question of design fees, we operate under Department of Finance circulars, which we implement. The scheme is split into several stages with a fixed fee based on the estimated cost of the work agreed between the National Roads Authority and the consultant for the preliminary stage. There is then a fee based on the tender sum, which is once again fixed and closed out once the tender is in. That brings us up to a total of 70% of the fees available. There is a fee based on the outturn cost which picks up the remaining 30% of the overall fee. The design and management of contracts by consultants is very closely policed by the National Roads Authority and by the regional design office staff, and there is no indication of the scheme being increased in scope or size - that does not happen under our management - to reflect additional fees.
I did not quite understand the issue regarding safety barriers and the use of wide hedges. I have seen them used in traffic-calming situations where there is an intention to reduce speed. I am not sure what is being referred to.
I am open to correction, but my understanding is that it is also used throughout France, not so much on the medians of roads, but on the margins where one would have a wide growth of hedges that would reduce the speed of a vehicle that went off the road rather than grass, which is currently the case in this country.
Mr. O’Connor
We do not have that situation here. We use earthen mounds in some cases, and the design standards themselves call for the use of barriers, which, I suggest, are a better and safer protection than hedges, although I acknowledge that hedges look better.
I know, but we have heard comments on the specific width at which one puts the barrier in. Mr. Egan has made several comments in that regard. I am talking about where the NRA is not putting in crash barriers. Has the feasibility been examined? Does it have an impact? It seems to have one in France.
Mr. O’Connor
The short answer to that is No. It is unlikely to be guaranteed to be effective, but I will undertake to examine the situation.
It is much more effective than grass.
Mr. O’Connor
We are not relying solely on grass, unless it is wider than 15 metres at which distance we are confident the vehicle can recover itself in any case. The current standard requires that a median barrier must be provided at less than 15 metres. That is being provided on all new schemes and being retrospectively applied to existing schemes.
It must be ensured that leaves from hedges do not make the road into a skating rink.
Mr. O’Connor
My final point concerns the average cost per kilometre of motorways. We publish figures on this - for wide motorways average costs run at €10.7 million per kilometre and for the standard motorways it is €8.09 million per kilometre. I must emphasise these costs can vary significantly because they include two significant elements, construction and land costs. Construction costs can vary, depending on the location of the scheme: the costs can escalate significantly in an urban growth scheme where there are retaining walls, accommodation works etc. Land costs in urban schemes can also be very high. These are standard costs. Each scheme must be assessed on its merits. The costs compare favourably with costs in the UK and elsewhere.
Perhaps Mr. O'Connor could provide the committee with figures to support that. Members have not seen the figures.
Mr. O’Connor
Certainly.
What is the cost per kilometre for the contract for the M4 motorway, Kilcock to Kinnegad?
Mr. Tobin
There is a building element within the consortium. There are road builders in there but we are not privy to the deal that has been struck.
What is the cost to the NRA?
Mr. Tobin
As regards the cost to the NRA, we are making three payments of about €60 million during the construction phase and some minor payments over and above that while the scheme is operational.
The cost is €60 million. That will cover 30 years, not just for the building of the motorway, but to operate and maintain it and reinvest in it at the end of that time to give a further ten years. Money will be coming back, too, from the NRA share in revenues. Our estimation of the cost per kilometre of that scheme, looked at in the round over the 30 year cycle, would be approximately €1.5 million per kilometre. That is the cost to the State.
That is the cost to the State for providing that standard of road. It proves that much better value for money is available from the bigger projects and I do not say that to get at anyone.
That is because of the toll revenues inherent in the scheme.
We accept that.
The net cost of that scheme is €1.5 million because of the availability of toll revenues.
That is accepted. I say this because there are many parts of the country where people would be prepared to have the same type of scheme in place if the volume of traffic existed, even if they had to pay tolls.
I raised this issue before when the NRA appeared before the committee. On the M50 upgrade, it surprises me now that the entry is to be provided from land requirements - the CPO aspect - and that the interchange is not being included in the upgrade, given the volume of traffic at that point vis-à-vis the Red Cow junction. The level of traffic hitting the N3-M50 is higher at any point of the day than that hitting the N7 at the M50, yet there is much talk about the latter. The NRA is saying it might do this with the N3 in years to come but it should be examined now, given the level of traffic.
The N2 upgrade was postponed and I see in the NRA presentation that it will start this year. What is the completion date for the N2? Is it being done from the M50, beyond Ashbourne and will it be a complete scheme? On the Monasterevin bypass, the NRA mentioned it was envisaged it would be completed in 2005, but it might be finished 12 months earlier. Why precisely is that happening? Is it down to the contractor and who makes the savings? Will the lessons learned from this be replicated elsewhere? Is it because of extra long days or whatever? The position as regards PPPs has been clarified for me. On the M1 and tolling, it was mentioned that a 30-year maintenance programme was included and the money coming from it would be invested in some other scheme the NRA is completing in that direction. Many people would say - and Deputy Ellis has alluded to this as well - they should have toll roads in their areas if these are the costs. I appreciate what Deputy Shortall is saying and I am delighted to hear what the NRA representatives have to say about the current PPPs. It must be remembered that the PPP entered into with National Toll Roads plc was in 1985 when there was 19% unemployment and 19% inflation. The company took the risk and is now taking the benefit. That is the essence of a PPP.
There are now better forecasting techniques as people embark on PPPs and we know where the economies of scale can be employed. We know what interest rates are throughout Europe and the vagaries of the marketplace. That, presumably, is why PPPs are justifiable on the world stage. I think the NRA is to be congratulated on that award.
I have a few relatively minor questions. I notice that the average length of project completed in 2003 was 8.76 km and there is a projection for 2004 of 9.12 km. It is fair to assume that the longer the project, the better the value for money. Is there an optimum length of project and, if so, what is it in the view of the NRA? As regards speed limits and signage in particular, on the longer stretches the requirements are minimal, and there has been a marked improvement in the observance of speed limits. However, at interchanges, particularly off the M50 and the one I frequent daily, the M1-M50, there is major difficulty as regards signage at the approaches and the variation in speed limits at different areas. As the M1 approaches the M50 interchange there is a 70 mph, a 60 mph, a 50 mph and further along, due to roadworks, a 40 mph limit. The signage leaves much to be desired.
What plans, if any, does the NRA have for improving the signage? Does it intend to make greater use of the banner-type signs across the roadway, combined with directional signs? What is the attitude generally to visibility and awareness on the part of the motorist, as regards speed limit signage? I welcome the work being done on the installation of the median crash barriers. I welcome the work being done on the installation of the median crash barriers. How long will it take to have the retroactive work dealt with and will median crash barriers be a basic constituent element of all future projects?
Since the toll bridge opened in Drogheda, trucks have boycotted it. Meanwhile, Drogheda Borough Council brought in a new by-law where they will not allow heavy-goods vehicles, or through traffic, to use the town. This solves one problem but creates a bigger problem. In order for a road to be tolled, there must be an alternative route. This is now blocked off by Drogheda Borough Council. I am interested in the views of the NRA on the issue. I understand the frustration of the borough council with the traffic congestion, which has led to this decision.
On archaeological digs, Deputy John Bruton recently received a reply to a question after two months telling him that 6,700 excavations were carried out between 1997 and 2002. Of these, the reports of more than 1,500 excavations have not yet been filed. There seems to be little scrutiny of these reports. Are those who query such reports genuine, or are they a part of a money-making racket on behalf of certain archaeologists? One can cite the example of Carrickmines.
Is it possible to remove sections of the crash barrier so that if a crash occurs it would be possible to move a mini-section of the crash barrier away to allow traffic to move around it rather than creating a massive tailback? This happens in other countries.
My last question is more parochial. Has the design route been finalised for the Kilcullen-Waterford road? Why did the NRA accept objections from the Department of Communications, Marine and Natural Resources on the Roadstone quarry at Bennettsbridge without having a full independent scrutiny of the same quarry?
Mr. Tobin
I will first address the issues raised by Deputy Glennon. It is hard to know what is the ideal project size. If pressed, we would perhaps suggest something in the range of 20 to 35 kilometres. Many different factors exist, such as the project itself, the capacity of the industry to do the work and what other works are ongoing. We are keen to get best value on our work. There is no rule of thumb where one claims absolute wisdom and says what should be done in all cases. There are economies of scale and situations occur where one asks whether the contracting industry has the resources to carry out a project beyond a particular size. One asks whether they can obtain bonding, insurance and so on. Balances must be struck.
There is some good news on the issue of speed limits. The Minister for Transport has indicated a general review of speed limits in the context of speed limits going metric in September or October of this year. He is aware of situations where the speed limit is perhaps too high or too low. In the context of introducing metric speed limits, he has asked that a general review be undertaken of all speed limits. That is ongoing and we have set aside approximately €5 million this year for the NRA, for re-signing of speed limits in metric figures. In that context, we will look at increasing the number of signs and putting in repeater signs along roads. This is an issue I understand and agree with. Sometimes drivers are not quite sure what is the speed limit. We intend to increase the number of repeater signs.
Has the NRA looked at the illuminated signs used in some places where people are warned they are exceeding the speed limit as they approach?
Mr. Tobin
We have indeed. A number of these have been erected by the AA at its own expense. It is a mechanism to recognise and flash up the speed of the approaching vehicle. If a driver sees the figure of 75 when he or she knows it should not exceed 70——
Flashing blue lights are usually very effective as well.
Mr. Tobin
We have not used these to any great extent but will use them more and more on roads where there are three or more lanes.
We expect the retro-fit of crash barriers to be completed by the end of next year. In all cases of new dual carriageways, where the median is less than 15 metres, installation of crash barriers will happen as part of the project itself.
I should have taken Senator Morrissey's questions first. We have come a considerable distance since Mr. Egan last spoke to the committee. The N3 and N2 interchanges are now part of the overall package for the M50 upgrade. Our proposals are being finalised. A consulting engineer is working with the hope of having an EIS-motorway scheme in the system by the middle of the year. If we get through the first phase of that upgrade - the Red Cow roundabout, the N4 Lucan road interchange at King's Hospital and the intervening "three plus three" - we hope to have a contractor in place by the middle of next year.
The remaining phases will then follow. I do not wish to be specific as to time as a funding issue exists tying in with how we might leverage funds in the future such as tolling on the M50. We expect to see the first phase up and running by mid-year. The N2 and N3 interchanges are to be upgraded as part of the package we are now dealing with.
Is the plan on the M50 tolling to increase the numbers and bring it back from its present location? Is that part of the original scheme?
Mr. Tobin
No, it is not. A deal exists whereby MTR has tolls. The NDFA is looking at that with us and the present arrangement runs to 2020. There is an income stream beyond that which can be looked at and we hope funding can be ratcheted up even at this remove to enable us to meet some of the costs of the M50 upgrade. We are examining this at the moment and we hope it will go a considerable way towards meeting the cost of M50 upgrade.
My specific question is whether the re-location of the current toll booths will come up for discussion.
Mr. Tobin
Not at the moment. With modern technology, we hope there is scope to improve the through-put at West Link. I do not rule out the move of which the Senator speaks. It is one option but there are others such as increasing the extent to which electronic tolling is used. All of these will be considered but we have an incumbent with certain rights with which we must deal.
On the question of Monasterevin, one should credit the contractor who is a very good operator and credit the good weather conditions we had right through last year, with the exception of July. We are considering a deal that we hope to finalise that will allow for its completion by the year's end. The contractor is very efficient and takes advantage of the good weather.
When Mr. Tobin says the contractor is very efficient, does that mean longer working hours or better working methods?
Mr. Tobin
I would say better working methods. I do not know if the Senator has seen that site. I have been there on a number of occasions and I admit to being highly impressed by the degree of organisation, the extent of plant and so forth. It is really worth going down to see the efficiency of the operation.
We might take up Mr. Tobin's offer and visit some of the projects.
Mr. Tobin
If the secretariat contacts us, we would be delighted to arrange that.
The bad news is that traffic volumes at Monasterevin are fairly high and that is a critical factor in the success or otherwise of a public private partnership operation. The private sector will buy in only when it sees serious cash flow from sizeable volumes. We are obviously looking for every possible opportunity to use that system and remunerate the work through tolls paid by the users, but there is a limit to it and we are conscious of that as well.
In response to Senator Browne, Drogheda is carrying approximately 19,000 vehicles a day, somewhere between 1,000 and 1,500 trucks are included in that figure. I would have to be blind not to acknowledge there are indications that some truckers are deciding not to pay a toll which for the largest truck, with a discount for prepaying 20 journeys and excluding VAT, is less than €4 per journey.
I think there is an element of cutting off your nose to spite your face. When one considers the costs associated with a heavy truck, how long does it take to run up €4? I suggest not very long at all.
If one joins the route south of Dundalk, there is a run of more than 70 kilometres of high quality motorway. One can travel at the speed limit in comfort and in safety, which I regularly do on that route. I do not think the toll charge at the bridge in Drogheda is unreasonable. I would argue that it is very good value. I recall that in the past travelling through Drogheda on a Friday afternoon would at a minimum take three quarters of an hour to one hour. It is surely worth paying to get around that. The Senator is right that there has to be an alternative route. I too have heard that the local authority in Drogheda is making moves to make life a bit more difficult for truckers coming through the town. I do not have a problem with that as long as there is an alternative route. Dublin is the same. People will have seen that in the past week Dublin City Council has developed a traffic management plan which it expects to implement when the port tunnel opens. With the option of a tunnel to take trucks to the port, the city council will make it more difficult for traffic to the port to use the quays. I do not have a difficulty with that.
There is a clear case that before a road could be tolled, an alternative route should be provided. I am questioning the implications of Drogheda Borough Council's decision as it could have severe implications right around the country. While I think Drogheda Borough Council is correct, I wonder how one would deal with the implications of that decision. Does it now mean there is no need to provide an alternative route to a toll road? Is there a legal basis for this?
Mr. Tobin
It is not based on law but it was always our understanding and always our intention that there would be an alternative route where there is a toll along the network. People will still be able to drive through Drogheda but not, I suspect, with the same ease. I believe the charges being levied at Drogheda represent very good value. In my view those truckers who are avoiding paying that money are effectively cutting off their nose to spite their face.
To return to a question I asked earlier on multi-annual funding, when is it hoped to publish that plan? It is my understanding that under an EU directive, there must be an alternative to a tolled road. Perhaps Mr. Tobin might clarify that. Mr. Tobin suggests that the award winning Kilcock to Kinnegad road was good value for money. I presume that award was for the State's role. The Kilcock to Kinnegad road was a build, operate and maintain project. Are there plans for a private public partnership on the basis of project design, build, operate and maintain? Many of the design specifications are agreed prior to the contractor coming in and tendering for the project. The route selection, the environmental impact study and conditions are laid down before a project goes for public contract.
This is a critical element - are there incentives in State funded projects for cost reductions regarding design? Mr. O'Connor pointed out that in the past contractors and consultants who were involved in design would draw up a different design for the bridges, which would increase the cost of the project, giving consultants a bigger slice of the cake. The tender price would be higher and the outturn price would be higher, representing a significant portion of the overall design fees that would be collected. Does Mr. Tobin envisage that incentives will be in place to produce a cost effective design? Have any discussions taken place between the National Roads Authority and the National Treasury Management Agency? I am not an expert on economics, but I cannot see how there is not a return to National Treasury Management Agency. Mr. Tobin states that the Kilcock to Kinnegad project was a good deal. The contractor and the operator had to get a loan from somewhere. No matter what rate of interest was charged, it would be more expensive than the rate at which the State could buy money. The National Treasury Management Agency would get a much higher return from lending to such contractors than from the State, which pays a lower interest rate, or from the Stock Market.
I wish to comment on a point raised by Deputy Naughten. I am concerned at the over emphasis on public private partnerships and the fact that he is singing their praises so strongly. Private investors are not known to behave in a benevolent way, they are in it to make a profit. They are not doing the taxpayers any favours. Quite clearly, they see it as a sound investment and if it is a sound investment for the private sector, why is it not a sound investment for the National Treasury Management Agency?
The cost of doing it for the private sector is much lower than it would be going through the old system.
The implication of that statement is that the public sector is not capable of delivering projects on time and within budget. There are fundamental problems. Rather than just walking away and handing everything to the private sector, some attempt should be made - this does not apply just to road schemes - to examine the underlying reasons for the absence of any kind of cost control.
We considered this matter in some detail the last time the NRA came before the committee. We discussed types of contracts, that engineering consultants were paid on a percentage basis so there was no incentive to control the cost of the project, that the type of contracts used by the NRA were set down by the Department of Finance, that there did not seem to be a mechanism for changing those contracts or having any kind of input into them, and that the cost of the raw materials has gone through the roof.
The committee has concerns in this regard. The NRA may have taken the view that the way to deliver these projects was through PPP, which is the easiest way in the long term. However, there are many other major transport projects in which this committee is interested, whether the building of schools or otherwise. It is somewhat defeatist to say the public sector is not capable of delivering projects on time and on budget. There is an onus on the NRA as a major organisation working in this area to consider some of the underlying problems in respect of the tendering process, contracts, raw materials and otherwise. Has the NRA carried out any work in that regard since it was last before the committee? Is it simply throwing its hands in the air in respect of the public sector and saying the way forward is through PPPs?
Regarding the height of the Dublin Port tunnel, an issue on which I appreciate and agree with the NRA position, when does the NRA believe this ridiculous debate will be brought to a conclusion to allow the project to proceed?
Regarding the NRA programme for road building, and the plans for the upgrade of the M50 and an alternative route to a tolled road, what discussions, if any, are taking place between the various local authorities in Dublin and adjoining counties, for example, County Meath, on the famous orbital outer ring road? South Dublin County Council's development plan suggests that it is continuing with the old design of the orbital ring road. However, Fingal County Council deleted the orbital ring road plan by a vote of 23 to one; I was the one who wanted it retained when the question arose five years ago.
Has anyone from the NRA or the various local authorities even lifted a telephone to discuss putting an alternative ring road in place? Will a situation arise whereby all the traffic from the hinterland outside the M50 will be attracted into the high grade, upgraded, three lane carriageway but there will not be an alternative filter road? If negotiations do not begin regarding an outer ring road, I fear the volume of traffic will increase by more than 30%, bringing it to approximately 130,000 cars per day. I wonder what effect this would have on traffic on the various roads leading to Dublin. Should an attempt not be made to filter some of that traffic further out? While it was always the plan that there should be an outer ring road outside the M50 to filter some traffic, that seems to have been discounted by some of the local authorities which have not made any attempts in this regard.
What of my question regarding the Waterford to Kilcullen road?
Mr. Tobin
The Senator raised two points and I am sorry I did not deal with them. I was asked whether the crash barriers could be taken down to allow for vehicles to cross over in the case of emergencies etc. The old barriers tended to stop at crossovers to allow ambulances, fire brigades or otherwise to cross at that point. The wire barrier which tends to be used currently continues through crossovers but is readily dropped to the ground to allow emergency vehicles to cross over, so that should not be an issue.
I have difficulty with the question about Roadstone quarry. The Senator asked why we did not challenge the view of another Department when it told us there was an issue regarding minerals on the line of the road. To be blunt, it is not be normal practice for a State body such as the NRA to more or less tell a Department we do not believe it. If a Department outlines a position to us, we tend to believe it. As the question has been raised, I will reconsider it in order to be reassured that what is represented to us as an issue, and a potential cost in terms of delivering a project, stacks up. We would expect to have our multi-annual programme by April next.
I will now deal with some of the comments made. The NRA is not hell-bent on carrying out all projects through PPP. The driving force for our current programme is the national development plan, which was published in 1999 and laid out priorities and a general direction for our programme to travel. By way of increasing the programme over and above what the public coffers could allow, the plan stated that at least £1 billion would be found by way of private sector investment, remunerated by toll. That is the Government and national development plan objective on which we are trying to deliver. There is no hell-bent notion of wanting PPPs everywhere.
That said, the NRA recognises that, apart from that aspect of bringing forward private sector funding to allow us to get projects under way quicker than we could otherwise, there is the added bonus that, because of the mechanism used in PPP, we are managing to divest ourselves of all the risks that tend under the various forms of contracts to lead to claims, extra payments and so on. There is no point pretending this is not a plus for us because it is, although it is a plus which we have failed so far to fully bring to bear on other forms of contract.
However, that is at a long-term cost to drivers and taxpayers.
Mr. Tobin
I assure the Deputy that the NRA is satisfied it is getting exceedingly good value in the PPP programme, and the advice received confirms that. While there is a view that the private sector is paying "significantly" more for borrowing, this is not the case. Banks obviously take a view in regard to PPP programmes and in the case of the two programmes we have now concluded, they are taking a fairly bullish view as to the direction of the economy and how traffic volumes will increase. They see this as a sound, solid investment. If the NDFA or the NTMA wish to become involved and make investments, that is fine and we would be delighted with that. However, so far, the availability of private sector funding has not been an issue. If the NTMA can align itself with some consortium in this bidding process and, through that, make that consortium more attractive in terms of the offer available, the NRA would be glad of that.
While I am not sure whether it was simply a throwaway comment that the cost of raw materials is escalating, this is not our understanding. Materials costs have not increased greatly. The biggest influence on the cost of our projects over recent years has been the cost of labour. On one particular day, employees in the construction industry ended up with a pay increase of 23%. As labour represents about half of the cost of our road projects, one can understand the meaning of such an increase. I am not saying that the cost of raw materials has remained static but the movement in their price has been quite small; the greatest movement has been in regard to labour costs.
The materials are much more expensive than in other European countries.
Mr. Tobin
I am not sure I can agree with that either.
I am not suggesting there is substantial movement in costs but over a long period raw materials have been more expensive here.
Mr. Tobin
I am not sure I can agree with that.
Can I get confirmation on that because this is an important point? Information from the RPA in connection with the Dublin metro, on which this committee is currently working, suggests that materials in Ireland are 246% dearer than in Madrid.
Mr. Tobin
To what materials does the Senator refer?
I am taking it that rolling stock can be bought on the telephone today. Rolling stock is rolling stock. I take it that materials comprise concrete——
Mr. Tobin
Which would not be a big input into our roads and bridges.
I am talking about concrete and steel.
This is an argument that should be left to others involved in the business. If one looks at the tender prices for local authorities, it is clear they have changed very little over the past couple of years.
Mr. Tobin
On the materials side, that would be our understanding as well. A question that has been raised before, and has re-emerged is what we are doing about structures and bridges, in particular. Are we a victim of the temptation to gild the lily? Under the form of contract we are now using most, which is design and build, the bridge design and obviously the cost arising therefrom is part of the tender process. Therefore, if there are three or four bidders, contractors, consortia, bidding for a project under design-build, clearly it is up to them to temper their fancy notions about the design of their bridges, in so far as that will reflect on the price they can offer and whether they might win the tender.
We are moving towards design-build which to date has had a significant effect on the extent of drift between tender price and outturn price. We would take the view, and international practice would bear this out, that under design-build, there is a tendency for the initial price to be higher than under traditional contracting but that the drift between bid and outturn is less. We are trying at all times to ensure that drift is kept to a minimum. I have to admit that we have not yet managed to entice anybody to come on board for a contract, such as clearly happens between two elements of the private sector on the PPP side, but we are working towards it. My suspicion is that in that instance, the contractors are buying into a lump sum contract; in other words, come what may they will deliver at a particular price. Our objective at all times is to know the outturn cost at the earliest possible time. We are going a fair bit of the road with that on design-build. We are also engaging in something that would be generally recognised as a right thing to do - soon after a contractor settles on site and has a better idea of what the conditions are there, we seek to do a deal to buy out the risks. Through that, we know the overall outturn cost.
When one is in civil engineering, it is difficult to know exactly what is in the ground. If a contractor is asked to carry all the risks, they will price for them whether they crop up or not. One may end up paying for risks that may never emerge. There is a balance to be struck. It is an ongoing battle. Contractors are there to make money. We are there to mind, as best we can, the funds we are spending on behalf of the general public.
What about the outer ring road?
Mr. Tobin
I am not sure I can give any great satisfaction on that. The outer ring, as the committee would think of it as it appeared on maps in the old Dublin County Council, is not something we would wish to be involved in at present. We are considering and think there may be scope for an outer ring somewhat further out. We have looked at this in a preliminary way and will probably continue to do that in the coming years. It could be 15 or 20 kilometres out.
Is that in the Sligo-Galway area?
Is one talking about the distance to Navan?
Mr. Tobin
Yes, roughly that distance. If one looks at traffic movement on the M50, approximately 20% of it is traffic that arises outside the M50, comes on to it, moves along it, and moves out again. If one could find out where that traffic is starting, it could be that a link would take all of that away from the M50 and help to make it less congested.
The alternative is that we will bring it in and those motorists will have no choice.
I suggest we leave that to another day.
Perhaps the NRA would respond to the committee on two issues, the first being a comparison between a PPP project and a State funded project. On the issue of the tendering system and contracts, will the NRA suggest what changes can and should be made to make the State side of funding more competitive with the PPP side so that there will be active competition between State and PPP funding?
Perhaps Mr. Tobin would comment on why he appears to be going in the opposite direction to the authorities in the UK, whose representatives we met recently, where they are moving away from PPPs.
Mr. Tobin
It was asked why we do not get the PPPs at an earlier stage - one could say that for any form of contracting - where a contractor has greater scope to bring innovation to bear. The short answer is simply that the private sector is not willing so far as we can establish - I am reasonably satisfied on this - to take that risk in view of the statutory procedures. In other words, if they came on board and we set a deal with them before anyone had made a CPO, they would run the risk that they would not succeed.
They could not do that.
Mr. Tobin
There is a timeframe which can be considerable. They are not prepared to buy into that risk. That is the short answer. We are looking outside of the PPP area to get a form of contract which we would refer to as "early contractor involvement" where we are hoping the contractors will come in and look at a project which is still on the drawing board that will then be geared towards a design that can be delivered and is more "build friendly". There is a problem in some cases. When we have gone through the statutory process and a line has been established, one has limited the scope for innovation. One cannot suddenly decide to move it a little bit here and a little bit there as one does not have the land. The Deputy is correct. There are constraints in the system. Our clear understanding is that without that certainty of having completed the statutory process, the private sector will not buy into PPPs. We are looking at all of these matters to see how best we can get value for one's tax euro.
Perhaps Mr. Tobin will come back to us on that.
Mr. Tobin
Certainly.
On behalf of the committee I thank Mr. Tobin, Mr. Egan, Mr. O'Connor and Mr. Murphy for coming in this morning. We appreciate the presentation given to us and appreciate also that the NRA's work and effort is starting to come to fruition. The committee looks forward to the NRA representatives reporting to it on a six or nine monthly basis. The major benefit for the NRA is that it now knows where it stands in terms of funding.
The joint committee adjourned at 11.50 a.m. until 9.30 a.m. on Wednesday, 25 February 2004.