Road upgrade costs up by 200% in two years

POOR cost planning and delays in implementing a major road improvements programme by the National Roads Authority have been blamed for an almost 200% increase to €15.6 billion in the cost of the project over a two-year period.

A report by the Comptroller and Auditor General has attributed large-scale overruns on original budgets by the NRA to a combination of factors, including inflation.

The report by the CAG, John Purcell, was published yesterday following concerns raised by the Dáil Public Accounts Committee into the escalating cost of the programme. It includes the development of five major inter-city routes, the completion of the M50 motorway and Dublin Port Tunnel, as well as other road improvements.

Under the National Development Plan, the NRA originally proposed a €5.6 billion investment over the period 2000-2006 in these improvements to the national road network.

However, this figure subsequently rose to €7bn after elements of the programme were prioritised and accelerated. The estimated cost of the total project had reached e15.8bn by 2002 and €16.4bn by the end of last year.

Although the CAG judged that inflation accounted for 40% of the total increase, he pointed out that one quarter of the escalation had been due to the NRA’s underestimation of costs.

A further fifth of the cost was attributed to changes in the scope of individual projects and another 16% was due to a failure to cost certain elements of schemes at the planning stage.

“At the time of the adoption of the NDP, cost estimation was not well developed in the NRA and as a consequence, the estimates formulated were too low,” said Mr Purcell.

Fine Gael transport spokesperson Denis Naughten said the CAG’s report highlighted how the Government had to take immediate measures to stamp out a loophole which allowed contractors to cream vast sums of money from taxpayers.

“It has finally revealed the vast profits that external consultants are making on road projects, because they are paid on a percentage basis,” said Mr Naughten.

However, Mr Purcell acknowledged that the NRA had a more accurate method of estimation in place since last year which recognises the variable elements of a specific road scheme.

The report found that the extent of the soaring costs had also meant that only around half of the programme will be delivered by the target date of December 2006, compared to the original estimate of 80%. Just less than 30% of the road improvement schemes will not be delivered until December 2008.

Mr Purcell also expressed reservations about the traditional type of road project contract based on the lowest tender.

His report established that this type of contract resulted on average in a 42% increase over the agreed tender price.

The report recommends the NRA ensures a closer alignment between funding provision and planned outputs for future road programmes to achieve better value for money. It also suggests there could be greater room for renegotiating fee levels for professional services.

But Mr Purcell noted that Finance Minister Charlie McCreevey announced changes last month which will see the responsibility for managing and controlling identified risks of cost overruns shifting to contractors. No spokesperson for the NRA was available for comment last night.