Debacle of €83m bill: Project costs face increase

THE costs for specialised building projects will be raised after legal wrangling over a Limerick sewerage scheme landed taxpayers with an €83 million bill, the Environment Minister has been warned in a private report.

Fears over disagreements with construction firms leading to huge compensation payouts, have led to local authorities being ordered to restrict companies applying for future projects.

The unpublished report obtained by the Irish Examiner makes a number of recommendations to avoid taxpayers facing such a big compensation bill again.

Uniform Construction Ltd was wrongfully fired from the €9.5m sewerage scheme in 2001. After years of legal wrangling and the employment of another company to finish the job, the exchequer has been landed with a bill of €73m more than the original cost. No official has ever been fired or sanctioned after the simple 2.6km sewage scheme under Limerick city left taxpayers stung.

Tom Considine, the Department of Finance’s former secretary-general, carried out the independent review of the drainage scheme and the wrongful dismissal of Uniform Construction for Environment Minister John Gormley.

The Department of Environment is now ordering local authorities advertising for engineering projects involving tunnelling to use a “restricted tendering approach” after the debacle.

Mr Considine, in his report handed to Mr Gormley, says this move is “likely to increase the initial contract price” but is expected to “reduce the risk of a repeat of the difficulties” that arose with the Limerick drainage scheme.

The report recommends that future advisers to local authorities be fully independent when disputes arise over contracts. In addition, it highlights the need for local authorities to seek conciliation before a company is fired for slow progress or failing to carry out a job.

Mr Considine backs the methods used to defend claims by the wrongfully fired Limerick drainage firm. The proper course of action was followed, he said.

He warned that, no matter how many staff, legal advisers or protections were in place on hiring building firms, the possibility of a huge compensation debacle like the Limerick drainage scandal happening again could not be ruled out.

The public accounts committee last week heard from the Department of Environment’s secretary general who defended how the legal wrangling had played out. Ms Geraldine Tallon said she saw no basis for following different procedures if a similar dispute arose over firing a company again.

The PAC was told about €70 million in damages, legal costs and money for the actual pipe work has been paid out so far.

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