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Racing into the red ... and nobody shouted stop

Moore McDowell

IF anyone thinks that bureaucrats never earn their salaries, or that bureaucrats never tell it how it is (attitudes to which, mea maxima culpa, I have given vent in this column from time to time) they should read the report of the Comptroller and Auditor General (C&AG) on the unbelievable roads cost fiasco.

Of course, I suspect that the staff of the C&AG will be about as popular among ordinary bureaucrats after this as Internal Affairs are among New York's finest.

This is whistle blowing at the highest level. It suggests a problem the cost of which is at least as serious as that of the Ansbacher accounts, although in no sense based on any illegality.

We all knew that the costs of the ambitious roads programme element in the famous National Development Plan had escalated dramatically since its inception back in 1999.

What the C&AG has made clear is that a substantial proportion of the cost over-run (and the delays in delivery) are due to what is in one case described as "systematic failure" among the bureaucrats and to the malevolent interplay of political machinations and the activities of the environmental lobbies. What price Carrickmines Castle after these revelations?

Item 1: The Government managed to increase the cost of the original set of proposals from the National Roads Authority (NRA) by euro2bn by what are described as "prioritisation" and "amendments and expansion".

In other words, the political process added to the costs, largely by demanding that some things be done more quickly, and other things be added. Cost? about euro1.8bn at today's prices.

Item 2: What are coyly described as cost increases arising from "project specific increases" related to "non-standard" projects added extra euro2bn to the final bill. These turn out to be largely due to problems that arose in relation to the extension of the M50 south east from Tallaght and the wretched Port Tunnel that will now be too small to accommodate a significant percentage of the trucks rumbling through the streets of central Dublin. Another euro2bn has to be added to the final bill.

Item 3: It now turns out that when the NRA did its preliminary costings that formed the basis for the proposals launched by the Government, the output was based on a woeful lack of in-house ability to estimate costs accurately, something that has added about euro1.5bn to the final bill.

Item 4: There was a "systematic failure" to cost certain elements in the projects at the planning stage. Unless I have mis-interpreted this, it means they simply didn't include certain cost items. According to the C&AG, this accounted for 16pc of the difference between the basic cost estimate and the current projected cost, which amounts to about euro1.4bn.

Of the total increase in the final bill (or, rather, the bill as it stood at the end of 2003), only 30pc appears to be due to cost inflation. But even that begs a question: how come that when prices in general rose by less than 20pc the costs here rose by about 30pc. Some of this, it turns out, is due to some rather undesirable aspects of the procurements policy adopted, that had the effect of reducing the incentive of contractors to contain costs.

Let us leave the matter of what it costs and ask what we are getting. In 2000 we were told that 80pc of the programme would be completed by the end of 2006. Now it appears that by the end of 2008 we will not have been delivered even 70pc of the programme (however these percentages are measured).

How the NRA can stand over all this is beyond me. I do not believe that in any private sector organisation this outcome would have left those in charge still in charge. Of course, there were events outside their control . . . but if the C&AG have done their sums correctly, those events account to about half of the cost over-run.

What really concerns me is that this is not a unique phenomenon. We have been treated to a similar vision of bureaucratic insouciance where the taxpayer is concerned in the case of the Rail Procurement Agency (RPA).

Today the Luas trams start rolling. The cost of that project has turned out to be well over 100pc more than originally estimated . . . but we don't even get a joined up service. Indeed, we now know that the Harcourt Street trams can't run on the Tallaght line, even if ever we were to see the two being joined.

Leaving aside the question as to what Luas will contribute to solving the city's congestion problem (and it looks like very little) it will have costed more than twice what we were told. But no one shouted stop.

You will remember that the RPA produced an estimate for the Metro plan: this was a demand for taxpayers' money to finance a project. It was horrific. When a bunch of Spaniards had the impertinence to suggest that they could do it for a fraction of what the RPA were looking for, the RPA promptly cut their estimate by a third.

What in God's name is going on here? Was the original estimate a good one? If so, what are we to understand about the amended one? And if the amended one is what the RPA believes it could do the job for, where was the additional money in the original estimate to be spent.

And then there is the question of the procurements procedure. The C&AG makes it clear that the road contract procedures and terms failed adequately to incentivise contractors to stay within budget. That means that they allowed contractors to accept higher costs secure in the knowledge that these could be passed on via the NRA to the taxpayer.

No one in his right mind signing a contract for an extension to his house would say to a builder that he would pay the builder whatever it cost him plus a margin. It appears that the net effect of the procedures adopted by the NRA was to create something not too far from this where road contracts were concerned. But, then, it was only taxpayers' money.








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