Mr. Seamus McCarthy:

I have a few points to pick up on. For a number of years, my predecessor and I have reported on PPPs. As Mr. Murphy stated, from as early as 2003 we have been making the point that there is a need for more information in the public domain on what delivers value for money in respect of PPPs. This also applies to capital projects in general and what makes them work. Sponsoring Departments have an obligation to account publicly for their performances and the achievement of value for money. The Fact That my office can consider the details of an individual project is not a substitute for accountability. The importance of putting good information into the public domain still stands.

Deputy Murphy asked how we account for updated information. I made the point last week that there is a distinction between what the NDFA does in examining a project and what is referred to as value-for-money testing in that context. It is about trying to decide what is the better way to procure a project rather than considering value for money, which has another meaning in the sense of determining whether we need to be engaging in one project rather than another. In this regard, I refer to cost-benefit analysis. As Mr. Cahillane said, there are various technicalities that arise in regard to the assessments in both contexts, but the departmental guidelines on capital projects emphasise that where significant developments happen in the course of developing a project, there is a need to revisit the earlier decision – the cost–benefit decision – in the light of the later information.

The National Audit Office has made a point on the visibility of returns, to which Mr. Murphy referred in the context of financial models. Certainly, one can see the level of return expected for a project if it runs according to a model’s projection. However, the outturn is not known. I do not believe there are structures in place to do so. PF2 in the United Kingdom is making suggestions about trying to have more visibility on the actual returns achieved by private sector partners rather than projected returns suggested by the model.

With regard to the projected returns, Mr. Murphy mentioned a return of 13% to 15%, which may reasonably be expected in a risk-bearing commercial venture. That would be a central expectation but the outturn could be higher or lower. Typically in these projects, there are limiting constraints built in so that any excess benefit would be shared between the public and private sector partners. Alternatively, if a project does not turn out to be as lucrative as projected, there is a floor below which the private sector partner will not incur a loss. This is the case with roads projects. It is a very technical and difficult area. If the Committee of Public Accounts is to be given a presentation by the NDFA, I would certainly like to attend and hear a little more.