West=On=Track - News

Cost of our national roads programme overruns by euro9.4bn

Irish Independent 30th June 2004

by Treacy Hogan Environment Correspondent

Taxpayers will have to fork out euro9.4bn extra for the national roads programme - because it was not properly costed.

There was a systematic failure by the State's National Roads Authority (NRA) to fully price the plan, a damning official probe reveals.

The ambitious new network of highways and improved roads was initially priced at euro7bn by the authority. But it will now cost as much as euro16.4bn, an investigation by the Comptroller and Auditor General investigation discloses.

Original estimates were understated by more than 40pc because of "a systematic failure to fully cost certain project elements and a failure to take full account of construction inflation".

The report will be closely scrutinised by Finance Minister Charlie McCreevy and Transport Minister Seamus Brennan.

It highlights a litany of costly overruns and delays and also reveals that consultants on multi-million euro road projects are making a fortune. They automatically get 4pc of the final cost, even if this has rocketed, and they earn a flat fee of euro162,000 for contracts over euro25.4m on top of that.

While 40pc of the overspend is due to inflation, about one-quarter has been linked to underestimation of prices when the roads programme began.

"A further 16pc of the increase was due to a systematic failure to cost certain elements of schemes at the planning stage," says the report. "This only became apparent when the NRA adopted a new standard costing approach in mid-2000."

The report finds:

• A lack of costing expertise in the National Roads Authority, since remedied. New projects added on and changes which accounted for 20pc of the increase.
• Huge increases in the costs of the Dublin Port Tunnel, the South Eastern Motorway and other major national roads projects rocketted in just two years. The Port Tunnel was expected to cost euro220m in 2000, euro580m in 2002 while the current estimate is euro715m, more than triple the initial projected bill.
• Half the roads programme originally due to be completed by 2006 will not now be finished in time.
• The cost of acquiring land for road improvements is soaring, eating up 14pc of the budgets. The cost of building every kilometre of standard dual carriageway or motorway has risen from euro6.29m in 1999 to euro8.28m in 2000 and euro10.2m two years later.

The chairman of the Public Accounts Committee, John Perry, expressed "serious alarm and concern" at the report and revealed he would be calling both the NRA and the Department of Transport before the committee " to account for the serious shortcomings.

The Comptroller says there may be scope for renegotiating professional fee levels "to better reflect the purchasing power of the State".

As far back as 1998 the need to adjust the cost of the roads programme was signalled in a series of reports prepared in association with the National Roads Needs Study.

These alerted the NRA that extra costs would arise because of the provision of roundabouts to upgrade existing junctions, new junctions linking existing roads with new motorways and dual carriageways and major river or other difficult crossings.

But the State's financial watchdog, John Purcell, says he was informed by the NRA that these adjustments were not made.

This alone resulted in an underestimation of euro1.4bn of the programme.

Michael Egan, NRA corporate affairs manager, said yesterday that their cost estimates and cost trends at the end of the 1990s were based on a limited amount of road building activity. These were largely confined to town bypasses rather than large stretches of new national roads linking urban centres.

Mr Egan pointed out that many major new projects had been added on to the roads programme, including the Dublin-Waterford dual carriageway and the Slane bypass.