Mr. Robert Watt:

On the potential of a party being liquidated, that could impact on a project whether it is a PPP or traditional project. In terms of the most recent case, the State incurred some cost in regard to clearing the site and so on but the private financier incurred the capital cost of building the school. We have not made any unitary payments yet and we will not do so until the school is handed over. This is an example of where risk transfer is working. In the case of a PPP, they have very clear incentives to complete works and hand over the schools because they will not get any payments until they do so.

In the case of traditional procurement, the implications of a company going bust could be even more severe because we have made substantial capital payments during the course of the construction stage.

That could be more difficult for the State as we would have to get a new contractor to finish when we had invested a significant amount of Exchequer funds in the project. With a PPP, we have not invested the bulk of the funds which come rather from private finance. It is an interesting example of how the risk transfer provisions with a PPP work and should be seen to work. To answer the Deputy's question it is implicitly the case that within the comparator the risk is taken into account. Whether we do it traditionally or by PPP, there is always a risk the developer could go bust. I think of O'Devaney Gardens a number of years ago where the project did not happen. One must then get a new contractor and there could be a delay where people who were relying on that housing may have to be housed elsewhere. That is a cost or risk associated with any project, whether it is a PPP or official. The point the Deputy makes is valid and those potential costs are inherent in all projects we do.