Racing into the red ...
and nobody shouted stop
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
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
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
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
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
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
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'