Soaring cost of steel threatens future of roads projects
Transport Infrastructure Ireland CEO Peter Walsh said: “No work can happen on [the Galway ring road] at the moment.” Artist Impression
It would be “optimistic” to suggest that the Galway City Ring Road could be built within five years, even if all of the judicial reviews lodged against it were to fail, an Oireachtas Committee has heard.
Transport Infrastructure Ireland CEO Peter Walsh said reforms are urgently needed to the contracts used for major road projects as well as more resources for the planning and regulatory processes to face the “significant and systemic threats” such projects are facing.
“No work can happen on [the Galway ring road] at the moment,” he said. “Having cleared the planning process, we’d have to develop contract documents, tender it and construct it.” But, he said, the judicial review proceedings against the road could mean that the process drags on a lot longer and that, even if the road gets the green light in court, it could take longer than five years for the road to be built.
He used the example of the N28 Cork to Ringaskiddy road, which saw plans first lodged in 2017. Judicial review proceedings concluded in March 2021, only then clearing the way for that project to be progressed.
He said that inflation is having a huge effect on the sector and that the contracts whereby contractors would take on most of the risk are no longer suitable when prices are climbing so much.
For example, he said the price of steel had trebled since last December. And oil has increased by 40% in recent times. Mr Walsh was asked if the capital budget of €1.1 billion for new roads to 2025 won’t go as far with such inflation, and he agreed with this suggestion.
As the contracts agreed between the State and contractors would be fixed, it would mean contractors take on significantly higher costs to deliver a project, according to Mr Walsh.
He said that where some projects would have as many as nine contractors bidding at the tender process in 2017, that can be as little as two or three now.
“I’d see that as illustrative of how the industry sees that risk transfer,” he said. “If we could move towards a more collaborative one where risks are shared, it’d be a much better outcome.” Committee members expressed alarm at the prospect of delays to major road projects.
Chair Kieran O’Donnell TD said that the consequences for the rollout of the National Development Plan are “so grave” that they require urgent attention, and pledged to contact the Department of Transport and Office for Public Works to address the issues.
