Major reforms to tackle cost over-runs

FINANCE Minister Brian Cowen last night unveiled sweeping reforms to tackle cost over-runs on major Government projects.

Mr Cowen announced a 12-point package of tough new rules that he said would prevent costs escalating way beyond their original estimates in the future.

The initiative, outlined during a speech to the Dublin Chamber of Commerce, came on the eve of the Fianna Fáil Ard Fheis.

Politically, it will also be seen as the Government’s response to the damage inflicted by the PPARS debacle and the revelation that consultants fees had run to €60 million.

Under the new rules, the minister will now insist that lump-sum (or fixed-price) contracts be the norm in the public sector.

The value of projects subject to full-scale cost benefit appraisal will reduce from 50m to €30m.

Another rule will require all projects over €30m to be reviewed on an ongoing basis. There will also be a requirement that any extension of the contract that exceeds €250,000 will have to be put out to tender.

One of the difficulties that arose from the PPARS project was that its scope was expanded without such controls in place.

Three other rules stem from the PPARS controversy. It is believed the review of the project concluded that no one individual was to blame for the over-runs. Now the Government will allocate “single individual responsibility for all major IT and capital projects.”

And to reduce the necessity for expensive consultancy contracts, the Government will also recruit a number of full-time specialists to the public sector in IT procurement and project management. It will also facilitate the secondment of IT specialists between the public and private sectors.

Mr Cowen also intends to introduce a performance table for Government departments, to ensure they deliver projects on time and within budget.

Mr Cowen said: “It is important to recognise the principle of making sure that every euro is appropriately spent.”