Oireachtas Joint and Select Committees
Wednesday, 12 November 2025
Committee on Infrastructure and National Development Plan Delivery
Role of Private Sector Construction Industry in Delivering High-Quality National Infrastructure: Discussion
2:00 am
Seán Fleming (Laois, Fianna Fail)
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The purpose of today's meeting is to discuss the role of the private sector construction industry, including international comparisons, in delivering high-quality national infrastructure. I am pleased to welcome Mr. Andrew Brownlee, who was with us previously, Construction Industry Federation, CIF; Mr. Paul Sheridan, main contracting and civil engineering director, Murphy Ireland; Mr. John G. Murphy, managing director, John Paul Construction; Mr. Liam Kenny, managing director; and Mr. Micheál O’Connor, group managing director, Dornan Group.
Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
I remind members that they are allocated a six-minute speaking slot that includes questions and answers. Everybody who wishes can come in for a second round of questions.
I invite Mr. Brownlee to make the opening statement on behalf of his group. When witnesses are called individually, will they give a quick pen picture for the public watching and for the benefit of committee members of their company, what scale of activity it is involved in and the type of projects? We had housing the last time. They are in a different sector of the construction industry. Will they outline their experience both outside of and in Ireland? That is important us. While we are an island, we have to learn a lot from outside the country as well.
Mr. Andrew Brownlee:
On behalf of the CIF and my industry colleagues, I thank the committee for the opportunity to meet members to address the extreme economic and social importance of the delivery of infrastructure under the national development plan, NDP, and propose how to accelerate its delivery to support housing, foreign direct investment, FDI, and economic competitiveness. The CIF is the representative body for the entire construction industry. The CIF's key sectoral associations are involved in the construction of infrastructure like water, energy, transport, education, health and public housing. The CIF has a well-established policy committee whose work is focused on the NDP and the interrelated national planning framework. The CIF made several submissions as part of the recent stakeholder consultation by the Government’s infrastructure division. We note the preliminary report from this process sets out 12 obstacles to industry delivery. Much of this statement and our submissions align with the division’s report. However, what is now critical is the publication and implementation of the action plan to address these obstacles, which must be driven by all of Government and underpinned by political will.
It is important to start by assuring the Government that Ireland’s construction sector has the capacity to deliver major infrastructure of the scale set out in the NDP but consistent roadblocks mean that for many companies, a reliable pipeline of work is not available in Ireland. The real capacity constraints experienced and reported by large construction firms are related to planning and legal issues, delays to enabling infrastructure, lack of multi-annual funding to support project pipelines and the unattractiveness of public procurement. This undermines industry confidence, business continuity and certainty. As a result, companies are shifting their focus towards private clients or redirecting their surplus capacity, including skilled workers, to international markets simply because there is not enough domestic work to sustain them. For example, over 60% of the top 50 Irish construction companies export their services to the UK, Scandinavia, central and southern Europe, the US and Canada. Between 2024 and 2025, there was a 33% increase in exports compared to just an 8% increase in domestic business. CIF quarterly outlook surveys have consistently shown a fall in civil engineering activity over the past two years.
What needs to be done to accelerate the delivery of public infrastructure? First, the centralisation of Government communication, co-ordination and prioritisation of multi-annual infrastructure investment are essential to provide certainty for Irish construction firms. It is incumbent on the Government and all political parties to communicate to the public the importance of infrastructure to everyday life and Ireland's economic and social prosperity. The CIF believes that improving the understanding and co-ordination among Departments on how infrastructure, housing, FDI and economic growth are interrelated can he helped by visually mapping out the processes involved. This will help to identify bottlenecks, critical activities and key stakeholders in infrastructural delivery. We need to remove steps that add no value to the process and only delay it.
State bodies involved in planning, consents and certification should be mandated to engage earlier with each other as well as collaborate, advise and support other stakeholders in the delivery of infrastructure. These bodies must be required to take into account the commercial, technical and programmatic impacts of their decisions on projects. The Commission for Regulation of Utilities, CRU, must play a central role in facilitating this with a clear plan for prioritisation linked to the NPF and NDP and where zoned and serviced land are aligned for residential developments. This should include environmental considerations being addressed by mitigating against environmental impact rather than no harm criteria, which is almost impossible and therefore very difficult to get over in planning and consents processes. Second, there is a need for clear commitment to multi-annual investment and a project pipeline. This provides business continuity and confidence to invest in innovation and people which in turn drives greater productivity. Research by the IGEES which looked at labour intensity of public investment relating to the public capital programme 2021 to 2030 showed that the number of direct construction jobs per €1 million of investment reduced by 35%, from 12 to 7.8, between 2015 and 2021.
It also highlighted that productivity in the industry has increased significantly and the potential is there to improve even more through multi-annual funding and fewer bottlenecks.
Third, inefficient and misaligned planning and consents must be addressed. To speed up the delivery of public energy, water and wastewater infrastructure, several consents and exemptions from planning and regulations should be considered, like ensuring that consent processes run concurrently rather than sequentially. More streamlining, clearer guidelines, faster assessment timelines and a more co-ordinated approach between planning and consent processes and associated agencies should be pursued. There should be an expansion in the scope of works exempted from planning, such as the maintenance, repair and improvement of existing infrastructure by utilities, ports and transport agencies. The Department of housing has issued a consultation paper on this, which the CIF welcomes. The Minister for Housing, Local Government and Heritage should use his power to create regulations exempting certain types of development from planning permission based on their size, nature or limited impact. For example, create exemptions for larger water and wastewater infrastructure projects by classifying them as strategic infrastructure development. The Government should develop national policy statements or Acts of the Dáil specifically for public energy, water and transport infrastructure. These would set out the national need and priorities, potentially influencing planning decisions in favour of these projects.
Fourth, the accelerated reform of public procurement and construction contracts is critical to making public projects more commercially attractive. Almost 67% of Irish construction contractors are engaging in low or no levels of public procurement due to administrative costs, bureaucracy, delays, risk transfer, poor quality design, lack of dialogue and uncertainty of pipeline. As set out in the CIF’s report, Strategy for the Improved Delivery of Public Infrastructure, the core areas of reform relate to quality in award, collaboration, effective risk management, design quality and sustainability, and liability. The key is to make reforms that increase early contractor involvement, which supports better quality design, lowers embedded carbon, mitigates risk, reduces disputes, supports collaboration and digital adoption and leads to better project outcomes.
Fifth, the Government must adequately resource the bodies that deliver public infrastructure with the necessary skills and competencies in delivery of such infrastructure. Secondments of experienced contracting authorities and the commercial skills academy set up by the OGP could help achieve this. The approach should be based on effective risk management where risk is well defined and allocated to the parties best capable of managing it. This means that the procurement of complex assets must consider the timelines involved in delivering them and the changes in geopolitics, design, technology, logistics, supply chains and legislation that may occur along the way. The only way to achieve this is through collaboration, underpinned by knowledge, engagement, leadership, systems, processes and incentives to perform. A step in the right direction would be for public contracting authorities to engage with the Enterprise Ireland build to innovate programme, which supports lean construction and last planner thinking. A further example of good practice is the construction playbook commissioned by the UK Government’s Cabinet Office, which provides guidance on sourcing and contracting public works projects and programmes.
These five actions are essential to addressing the many obstacles that blight infrastructure development in Ireland. Without them, we will not deliver the housing targets. We will risk our utilities being unable to meet the demands of our population. We will undermine our economic competitiveness. We will make Ireland unattractive to investors and damage domestic growth, ultimately lowering living standards. The construction sector is critical to Ireland’s economic future and the conditions need to be put in place to ensure it is commercially viable and sustainable for the businesses within it, or we risk losing the capacity we need to build the infrastructure, housing and future our growing country needs.
To conclude, the Government must implement its action plan around prioritised multi-annual funding at sufficient levels, exemptions to planning for infrastructure, reform of the statutory consents and reform of public procurement and contracts. Ireland’s construction industry has the workforce, skills and proven ability to deliver. A stable project pipeline and a predictable planning environment, underpinned by zoned and serviced land availability, planning exemptions, removal of consents, faster approvals and multi-annual funding, are essential to attracting construction firms to scale up in Ireland and deliver vital public infrastructure and housing. I thank the committee for its time today and look forward to further discussion on the matter.
Seán Fleming (Laois, Fianna Fail)
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I thank Mr. Brownlee. I have several questions. I will just put one and come back later. People will be amazed to hear that over 60% of the top 50 Irish contractors are exporting their construction services to the UK, Scandinavia, central and southern Europe, the US and Canada and that between 2024 and 2025 there was a 33% increase in exports, compared to just an 8% increase in domestic business. We heard at the last meeting that there are about 170,000 employed in the construction industry and to achieve what we need, including housing, which we did not speak about specifically, it would take an extra 80,000 workers. Mr. Brownlee is saying we have the workforce to do all that in Ireland, only construction companies are bringing them abroad. Will they recruit from abroad? Will he fill me in on where the workers we are told are needed will come from? He seems to be saying we have enough and that we are exporting more than we are doing at home.
Seán Fleming (Laois, Fianna Fail)
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Sorry, I ask each witness when addressing the committee to tell us their company and give a snapshot of the business they do so people get a quick feel for the business and construction projects involved at home or, especially, abroad. We want to hear about the abroad - just a quick pen picture.
Mr. Paul Sheridan:
I will take the broad picture. The industry does have capacity. We stand over that. The Cathaoirleach mentioned a couple of reports which the CIF has publicly pushed back on. We believe some of the modelling does not reflect the industry in its various segments. We are here to talk about the positivity around delivering the national development plan, which is necessary to support FDI and housing delivery. There are three distinct sectors: new homes, commercial buildings like pharmaceutical plants and data centres, and infrastructure - that is, water, energy and so forth. There absolutely is capacity. My colleagues will tell the committee of their personal experiences with their businesses, why they are exporting and the rationale for that.
The Irish Government Economic and Evaluation Service has shown that from 2015 to 2021 the industry dropped the labour required on sites from 12 to 7.8 jobs per €1 million. That is a 33% increase in productivity. The Department of Finance did an analysis of a recent further skills and education programme, which all the ESRI figures come from. That report stated we needed 17,500 extra workers to build 33,000 houses by 2025. We only had to increase the numbers by 9,500 and we did it in 2023. The modelling is not correct.
We see retrofitting and the small domestic sector as an important area. It is very difficult to scale up that area. In that regard, we have to treat each segment with its own constraints. Right now, the constraints undermining these guys from building in Ireland are related to what we said in our statement: the bottlenecks in planning, the lack of consents and the cross-cutting policies that force agencies to restrict the process. My colleagues have more personal examples.
Seán Fleming (Laois, Fianna Fail)
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Mr. Sheridan said the modelling was not valid, or whatever word he used.
Seán Fleming (Laois, Fianna Fail)
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No, but it is not accurate.
Mr. Paul Sheridan:
-----it is not treating the industry as a heterogeneous industry. It is treating it as one whole. There are four distinct groups. The Construction Leadership Council in the UK is now treating the industry as four distinct segments and looking at the challenges in each of those to deliver outputs.
Seán Fleming (Laois, Fianna Fail)
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Who is producing this? Which Government Department produces this?
Seán Fleming (Laois, Fianna Fail)
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Mr. Sheridan said the information was provided by the ESRI. Is it the ESRI that publishes these reports? I do not know what report he is talking about. Help us here.
Mr. Paul Sheridan:
The ESRI produced a statement. Where that 80,000 has come from has actually been in the media for about five years. It constantly gets churned out because when you employ consultants they do the research and come out with the same reports. The Department responsible for further education and skills will look at the industry as a whole and decide how much is needed.
What we are saying is that the valid models should look at the industry in segments.
Seán Fleming (Laois, Fianna Fail)
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Okay, and that is why we have separated the witnesses from the house construction group we had here the last day, specifically, in consideration of what the witnesses are saying. What they are saying is that some of the figures we are taking as granted are not necessarily-----
Mr. Paul Sheridan:
We do not believe they are reflected. My understanding is that the Minister for housing stated that there are 190,000 working in the industry. That is up on last year when it was 174,000. The industry has demonstrated that when it has a clear line of sight with work and certainty and confidence, it can attract the talent to come in and deliver because it can commit the resources to it. Right now, there is no certainty. It is too unpredictable. The whole system is not offering that stable pipeline of certainty for businesses to invest in. My colleagues are probably better-----
Seán Fleming (Laois, Fianna Fail)
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Okay. Maybe each of the companies will make a quick comment and then we will go to Deputy McCormack.
Mr. Liam Kenny:
I am the managing director John Paul Construction. We are an Irish-owned and operated business headquartered here in Dublin. We work across Ireland as well as the UK and Germany. We work across most sectors of the industry, from residential infrastructure to data centres and life sciences, mainly funded through foreign direct investment here in Ireland over the past number of years. We employ 700 people across those geographies. We are a diversified, privately-owned business and we have had to diversify. If you go back and look at the construction industry and the cycle that has occurred over the past 20 years, we were boom-bust and started to climb again.
As a private business, to be sustainable, move forward and grow our business, we had to look abroad, particularly so in the past number of years where we saw a decline in foreign direct investment in the country - life sciences, data centres and technology projects. We had a gap to fill. We thought that gap would be filled by infrastructure and residential projects here in Ireland. That drove us to look further afield to make up for that revenue. That is what has driven us to look further afield for work to fill our pipeline.
In response to the question around resources and the number of people it will take to fulfil the ambition of the national development plan, I do not think anyone can dispute the reports the Central Bank or the ESRI have published. I am not in a position to do that. In the here and now, those reports may be correct but I do not think any contractor is going to have a stock of people waiting in the wings hoping that a project will start. What is the spend going to be next year? What is the detail of the project? Will there be projects in 2027, 2028 and 2029? If that information was available to us in a structured fashion, we could plan and resource. We are in a world where our businesses are defined by projects. Projects start and finish. People come back from abroad. We want to be working here in Ireland but definitely, over the past number of years, that growth in the Irish market just has not happened. If we could get visibility - it is all about visibility - on a pipeline and the types of projects and spend, I would not be worried about the resources.
Seán Fleming (Laois, Fianna Fail)
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I have one question I will put to each of the witnesses. Could they say how much, approximately, of their turnover is in Ireland versus abroad, so we have a feel for where their activity currently is?
Mr. John G. Murphy:
I am the managing director of Murphy Group Ireland. We would export about 25%. The other 75% is probably broken down into 15% private and the rest is public. The public side would be water, gas and power. It is probably a lot of what we need at the moment and a certain amount of roads as well. We would have grown, the same as Mr. Kenny said, our export recently simply because of the ups and downs. Opportunities in water have slowed down so we had to go and put those people to work in the UK otherwise we would have lost them. Next year, I think, our turnover will be higher in export than it will be locally. We are part of a major group so we would have operations in the US, Canada, Australia and Great Britain.
To give the Chair an idea of the Irish business, I joined it in 2015. The business has grown about 20% a year every year. We are a direct-delivery organisation. This year, we passed 1,000 direct employees. We try to do as much in-house as possible. If you ask about the ability of the industry, I can certainly talk from the perspective of our own business. We have managed that growth every year through good and bad. If 20% of the 190,000 we employ at the moment is applied every year for the next four or five years we will easily pass out what is required.
The Chair asked where the people are going to come from. Some of them will be people returning home but we will have to attract people from abroad as well, which is going to be difficult because Germany and Australia are looking for people. Most western economies are spending on their infrastructure. The penny has dropped on how that is how we are going to sustain our growth in the future. All I can say is we have managed it in the past and we will continue to manage it on a yearly basis. While we have confidence, we will continue to that.
Mr. Micheál O'Connor:
I am the group managing director for the Dornan Group. It is an Irish company headquartered in Cork. It will be 60 years old next year. We changed the ownership of the business in the past 12 months. We are now owned by a US company, Turner Construction Company, but we are still very much an Irish company and the way we have been.
We are a mechanical and electrical specialist contractor. We work primarily in the data centre and life sciences fields. This year, we will deliver revenues in excess of €1.2 billion. We have grown our workforce in the past two years from 1,000 to 1,500 direct employees. This year, we will deliver only 8% of our business in Ireland, with 92% of our business overseas. We work in the UK, Germany, Denmark, Belgium, Switzerland and the Netherlands.
For me, it is as simple as this: construction is a nomadic industry. You follow the work and go to where it is. We have done that since the recession. We went overseas. If we take our business in the UK, for example, it has grown tenfold over the past four years. That is primarily on the back of the UK Government designating data centres as critical infrastructure. We are delivering three hyperscale data centres in the UK at the moment, which is something we were not doing before but that was a Government decision that has considerably changed the market there for us.
On our capacity to deliver in Ireland, we are sending people overseas every week, a number of people who would like to be working in Ireland, who would like to see their families every week and so forth. We are headquartered in Cork where we have about 300 permanent employees. In Ireland, across various projects, I would say that maybe 40% to 50% of our people are Irish based but the rest of them are overseas. On the earlier points made, we are satisfied that if the pipeline of projects is here, we will deliver work in Ireland and we are capable of growing. We have grown considerably over the past two years and we are well capable of continuing to grow and meet the demand.
I have said this publicly in the past but the industry in Ireland is one of the best construction industries globally. I do not say that lightly. I say it because I have had the privilege and the opportunity to work with a number of international clients and companies and the Irish construction industry is well recognised for that.
We are fortunate in Ireland that we have had an FDI sector here for the last six or seven decades, and that FDI sector has trained companies like us and our contemporaries in a skill set around life sciences projects. That skill set that we take for granted in Ireland is actually not repeated in too many other countries. The proof of that is in the success that companies like us and others see when we go overseas and work in Europe and so forth and we deliver projects for multinational blue chip clients. One of the things that makes Ireland such a successful construction industry in our sector is that we have developed a skill set to deliver high-technology projects. We have developed the skill set to design them and we have designed the skill set to operate them. One of the things that really attracts those blue chip international clients to Ireland is reliability around delivery and reliability around certainty. We and our fellow companies deliver multibillion euro projects in Ireland annually. We do it on time, within budget and to the highest safety and quality standards. That is why our clients keep coming back. As a company, 90% of our business is repeat business. As an Irish company, when we deliver for those international clients, they see the benefit of our delivery and they continue to ask us to work for them.
Seán Fleming (Laois, Fianna Fail)
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I will make one small point. Mr. O'Connor mentioned that, in the UK, data centres were designated critical infrastructure.
Seán Fleming (Laois, Fianna Fail)
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He cannot be an expert, but is that done by legislation or how is that done? We will follow that point up ourselves.
Seán Fleming (Laois, Fianna Fail)
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We will make our own inquiries. I just noted Mr. O'Connor saying that. We will make our own inquiries for comparison purposes. I thank Mr. O'Connor very much.
I call Deputy McCormack.
Tony McCormack (Offaly, Fianna Fail)
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I thank the gentlemen very much for coming in today and for giving their opening statements and information on all of their individual companies.
From our point of view, we realise that infrastructure is a critical part of providing the services that we require for building houses. We need to have our roads, our water and our power. The only people who can build that are the guest organisations, so we have to listen to them. Businesspeople in general are normally very positive, so I am very disappointed or surprised to hear the witnesses being so negative. Obviously, there are a lot of things that are wrong that need to be corrected in order to make the landscape here in Ireland efficient and effective enough that the witnesses can come back in here and, critically, have a pipeline on which they can rely. When we talk about the pipeline, if we look at the last term of the previous Government, there was probably about €6 billion spent on infrastructure. This time, we have €19 billion to be spent over the next four years. This is my first question. Do the witnesses think €19 billion is enough? Have we got enough projects in the pipeline? Where do they see the falldown in the pipeline? The pipeline was mentioned hugely here by everybody as they made their statements.
Seán Fleming (Laois, Fianna Fail)
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Whoever wishes to reply may do so. We will leave it to the witnesses.
Mr. Andrew Brownlee:
I will come in at the start and then the other guys can chip in. The problem is that the scale of it sounds three times what it was, and much better. We have the €275 billion set out on a multiannual basis in the national development plan, but unless we see what that means in terms of projects when they are being established-----
Tony McCormack (Offaly, Fianna Fail)
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The witnesses have not seen the projects yet. One of the biggest projects we are going to do over the next while will be the Shannon pipeline and bringing the water up. That is a big project. Then, we obviously have road projects that are there-----
Tony McCormack (Offaly, Fianna Fail)
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-----so Mr. Brownlee is talking about the other critical infrastructure, such as EirGrid providing more grid infrastructure to be able to take the load we are providing, say, from our wind farms and solar panels. That is not there at the moment, so the witnesses do not know. Is that it? Am I understanding that right?
Mr. Andrew Brownlee:
Yes, exactly. There is a promise that we will start to see these sectoral plans, which is what I think the Government is calling them, where we will see all the wastewater projects scheduled over the next five years and all the energy and transport projects. That is the promise, but we have not seen that yet and we have not translated it into the project pipeline.
Tony McCormack (Offaly, Fianna Fail)
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Then, if we take that a step further and look at the other countries the witnesses are operating in, whether it be Germany, the UK or Scandinavian countries, what are they doing differently? The witnesses talked about how the likes of the UK have made data centres critical infrastructure. What are they doing differently that we are not doing? Is it all to do with planning or are there other issues as well?
Tony McCormack (Offaly, Fianna Fail)
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Mostly, and with the delays in planning.
Mr. John G. Murphy:
The Deputy mentioned projects. If we look at the greater Dublin drainage project, the prequalification documents came out for that in about 2019, so money was spent by the industry prequalifying for a project, but it never happened. The Deputy talked about water from the Shannon. The planning has to be started, so it is talking about it and knowing where it is. We know where an intention for it to be is but, as Mr. Kenny said, we cannot really hire people with an intention that a project is going to start. Generally in the UK, certainly on waterways and water projects, when they do an asset management plan, AMP, they have a list of projects. All of those projects happen and they do not take forever to start because they are done with early contractor involvement. Literally, the day the AMP starts, they start working on those projects.
Tony McCormack (Offaly, Fianna Fail)
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I suppose the Construction Industry Federation would be a stakeholder with the Government, talking at higher levels than the committee we sit on today. Are the witnesses hopeful that we have grasped the nettle and now see the urgency and know we have to make changes to legislation in order for this to work?
Tony McCormack (Offaly, Fianna Fail)
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It was not there before.
Mr. Andrew Brownlee:
Yes, but now that translates into asking what is going to happen and when is it going to happen. As to whether we are around the table with the Government, we are. When this accelerating infrastructure task force reports - I think 2 December will be the official date - and these sectoral plans are out, we will need to be around the table at the implementation group so that the Government can hold us to account for delivering the projects, but also so that we can hold the Government to account in terms of saying it said that a project was happening on this day and asking where that is and at what stage it is at. That kind of partnership approach is critical to success here.
Tony McCormack (Offaly, Fianna Fail)
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Back in the noughties, we used to build roads in half the time that we build roads now. Where do the witnesses see the issues or problems arising? What has happened in the meantime for it to take double the time?
Tony McCormack (Offaly, Fianna Fail)
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No, I know. It is all the rest of the bits and pieces-----
Tony McCormack (Offaly, Fianna Fail)
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-----and that is what we need to take it past. It is those bottlenecks.
Mr. Liam Kenny:
At the end of the day, we are general contractors or specialist contractors. When it is put in front of us, we will build it. There is a process to go through in terms of competitive tension and all the rest, but the industry wants to get its hands on a project and is well capable of building it. It is what is in front of that is the issue. These projects are being held up a lot longer than it actually takes to construct them.
Tony McCormack (Offaly, Fianna Fail)
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Reports have to be commissioned for this, that and the other.
Tony McCormack (Offaly, Fianna Fail)
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It is time, and a lot of money as well.
Mr. Liam Kenny:
-----we have to be hopeful as an industry. It is great to see capital allocation both in the national development plan and in the budget and the new housing plan, which I believe is to be unveiled tomorrow. We just need to see action. We need to get certainty. We could talk here all day about all the constituent parts of this, but it is all about certainty.
Tony McCormack (Offaly, Fianna Fail)
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I hear you. I suppose what all the witnesses have said is that it is about certainty.
Tony McCormack (Offaly, Fianna Fail)
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It is certainty of the pipeline, but also that the whole construction stage is not being held up because of bottlenecks or things that are just holding it back. I certainly will, as a Government Member, be pushing to make sure we do that because the critical infrastructure we need for everything in this country, whether it be FDI companies coming in, housing or whatever, needs to happen quickly. We cannot drag our feet on this one. We have to work very hard.
I thank the witnesses again for coming in. I appreciate it. My time is up, so I will hand over to somebody else.
Mr. Micheál O'Connor:
To answer the Deputy's initial question about overseas and what other things we see, with the clients we deal with, it is about certainty overseas in comparison to Ireland. The FDI sector has underpinned the Irish economy for decades. One of the things we are really good at here is giving them certainty around delivery and planning. Over the last ten years, I do not think we have been able to give them that certainty to the same degree that we could previously. There is a bit of a question mark now about how quickly we can get them to planning or even whether we can get planning in certain sites.
Internationally, the other factor is energy. Ireland is on a competitive stage with other countries in terms of attracting these companies to our shores. Unfortunately, we are losing that competitiveness and losing that industry to other parts of Europe where clients are satisfied that they can get through planning quickly and are satisfied there will be an energy supply there when they actually construct their plants. That is something we have to work on collectively.
Tony McCormack (Offaly, Fianna Fail)
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It is one thing not attracting the jobs to Ireland, but losing jobs from here to another jurisdiction because we do not have that supply is the bigger worry.
Mr. Micheál O'Connor:
Unfortunately, that is happening. As Mr. Kenny said, we are general and specialist contractors. We have a responsibility towards the environment and to be sustainable. There is a real opportunity for Ireland to deliver environmentally friendly energy and to work on that. Unfortunately, that is not happening at the moment.
The private wires Bill, which is due to come in and will hopefully come in, may well be a game-changer for some of those sectors. It remains to be seen if and when it will be passed and how quickly those energy centres will get through planning when it actually comes to it. It is really important for us as an economy for us to play our role in our industry and sector and to make sure we are delivering confidence and reliability to those clients.
Seán Fleming (Laois, Fianna Fail)
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I know Mr. Sheridan from the CIF wants to come in, but just before that, I wish to advise people present that we announced at the previous meeting that each Department would be announcing its section of the national development plan rather than it all being one big announcement. Each Department will announce it over the coming weeks. Today, the Minister, Deputy O'Brien, has announced the publication of his Department's NDP sectoral capital plan 2026 to 2030. According to its headline, the plan will support investment of over €5.6 billion by the Department in key Government priorities, plus €14 billion by the ESB and EirGrid in Ireland's electricity grid infrastructure. From today on, there will be further announcements coming line Department by line Department over the next couple of weeks. Coincidentally, that capital plan was out today.
Before I go to Senator Stephenson, Mr. Sheridan wanted to say something.
Seán Fleming (Laois, Fianna Fail)
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I have not yet read the document yet.
Joe Neville (Kildare North, Fine Gael)
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Could we try to stick to the six minutes and go around to get us all in?
Seán Fleming (Laois, Fianna Fail)
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Yes. We have gone over our time. The Deputy will get back in.
Joe Neville (Kildare North, Fine Gael)
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We have gone time over a lot in all different areas. I am just saying that because I want to get in and other people have to come and go.
Seán Fleming (Laois, Fianna Fail)
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Okay. Senator Stephenson is next.
Patricia Stephenson (Social Democrats)
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I want to pick up on one of those threads. Mr. O'Connor said a lot of companies were leaving Ireland. To which companies was he referring?
Patricia Stephenson (Social Democrats)
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Okay, that is good. It is good to clarify that.
Patricia Stephenson (Social Democrats)
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Can Mr. O'Connor name them?
Patricia Stephenson (Social Democrats)
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That is fair enough. If we can be, it is good to be specific about these matters.
The witnesses spoke a lot about FDI. What is the percentage of State capital projects they would be doing versus FDI clients in the overall portfolio within Ireland?
Mr. Liam Kenny:
In our portfolio in Ireland, approximately 10% of our projects are State projects. That includes the HSE, the OPW and so on.
Patricia Stephenson (Social Democrats)
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That is interesting. I am particularly interested in what I would call "critical infrastructure", such as water, electricity, roads, rail, transport in general and hospitals. Data centres are important and have an important role to play. We have 89 data centres in Ireland, 11 are under development and 30 have planning permission approved and will go ahead. While the data centre industry is here, there are also concerns that we focus too much on it in terms of overall prioritisation. The bigger thing is to do with our growing population and how to address those needs - we will not talk about housing today because I know we spoke about it last week - and all the other elements that come with a growing population and developing housing.
Obviously, BAM and the national children's hospital is an ongoing, big story. From a perspective of implementing Government contracts or applying for the tendering process, where is that competition challenge? It is my understanding that quite a high deposit has to be made by construction companies when applying for a public tender. Correct me if I am wrong. Is there anything like that?
Patricia Stephenson (Social Democrats)
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Do the witnesses feel there is enough competition when applying for capital projects like hospitals?
Mr. John G. Murphy:
We operate across all those sectors. It depends on what the Senator means by "competition". If you take the project none of us wants to talk about, I believe there were two contractors on that. Generally, it depends. If it is an open tender, you could get ten, 15 or 20 contractors tendering. That is not-----
Patricia Stephenson (Social Democrats)
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In the national children's hospital example, that was not an open contract. People were invited to apply.
Mr. John G. Murphy:
It was not involved in that. We have one particular public client who was ringing around trying to get people to tender for a project. It put 27 tenderers on the list. The cost of tendering a project is probably about 1%. The economy, the country, Ireland Inc. has spent 27% of the value of that project on a tender, with just one contractor ending up with it. You can be fairly sure-----
Seán Fleming (Laois, Fianna Fail)
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Explain that again. Who pays the 1% to each tenderer?
Seán Fleming (Laois, Fianna Fail)
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If they win, well and good. If they lose, tough.
Tony McCormack (Offaly, Fianna Fail)
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Is it built into the prices?
Tony McCormack (Offaly, Fianna Fail)
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Your 27% is coming out of it.
Patricia Stephenson (Social Democrats)
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Can I get some extra time?
Patricia Stephenson (Social Democrats)
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May I jump back in? There is a lot of public interest in the national children's hospital. Hopefully, we will reach the end of that day soon and it will be delivered but there is a bit of a perception of a pay-as-you-go model in terms of change orders and how that has materialised. I am not blaming the CIF for that. I think the issue was with the design process. What is the witnesses' perception of that? There is a challenge if you get a contract and you are asked to deliver something and the costing does not relate to the actual specification.
Mr. John G. Murphy:
It is very difficult to talk about a project that none of us here was involved in. I can give an example of a project we tendered this morning for a UK water company. I was not that close to it. As a director, I came in to sit on an adjudication panel for it before we submitted the tender. What surprised me was that we had already constructed about 25% of it. The contractor, trying to get the project up and going, started the project on an early contractor involvement, ECI, model. While we were building it, we were developing the design and pricing it. We are 25% of the way through the project before we have actually agreed the price.
That is not a sort of "whatever you want". It is scrutinised. It is open book and they can examine every cost we have in there. You end up with a target cost. You get to share if you can come under that and you get punished if you go above it. It still has a cap and a collar. You still end up making a margin, no matter what happens. They are lowish risk but the project proceeds. Most of the projects we do would be on that ECI basis. This one is a little unusual in that we are actually 25% of the way through the project before we have even agreed the price. It is a very successful model. It means we are working the day we are awarded the project as opposed to sitting around-----
Patricia Stephenson (Social Democrats)
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How does that differ to the Irish model?
Patricia Stephenson (Social Democrats)
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I actually want to drill down into that point. The perception is that the lowest bid is the greatest value for money. That is not necessarily how things materialise in implementation.
Mr. Paul Sheridan:
Following the awarding, it should be based on life cycle costing and the whole life cycle value. The Government construction contracts committee, GCCC, is looking to introduce ECI on a broader basis to deal with complex projects. It is not a deposit. It is the tendering costs and the overheads of actually sitting down and pricing a job. If it is complex and you are involved in design and build, it will be more complex and it will cost more to be involved in that process.
It has to be commercially attractive to contractors. Depending on how the procurement process is set up by the client, which is usually the public client, it makes it attractive or unattractive. That is why we see variances in people going for different jobs. We are really talking about procurement reform. If we look at successful projects like the Dunkettle roundabout, the large pharmaceutical plants and data centres that are built here that go unseen, the huge amount of the capital budget that goes on building new schools all year around that nobody hears about, the Luas, and the Europort, which some of my colleagues here have delivered, they were all done on time and within budget, so it can be done. It all depends on how we set out the procurement process and early contractor involvement, ECI, is the solution. That is why we have called for reform of public procurement, to avoid situations where parties get into dispute. What we need them to be doing is actually problem solving. There is an idea that it is pay-as-you-go but it is not. The new engineering contract, NEC, contract for BusConnects, for example, is a highly rigorous contract. Parties have to have an open book and show the costs. They are getting paid for the actual costs. This is not profiteering because what parties do is look at the actual cost of something. It costs that to build it.
Patricia Stephenson (Social Democrats)
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I am actually in agreement with Mr. Sheridan but I might need some extra time-----
Seán Fleming (Laois, Fianna Fail)
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You will get a second chance to come in later but you can ask one last question now.
Patricia Stephenson (Social Democrats)
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I know there is a perception that it is pay-as-you-go and that is not the case. It is just the cost of whatever the item is to install it and I am with Mr. Sheridan on that. I am interested in how we can improve that procurement piece. I know there is a procurement plan coming from the Department. Has the CIF been consulted on that?
Mr. Paul Sheridan:
Yes, we are highly involved with the general conditions of contract, GCC, consultation in trying to shape what is best for the taxpayer and the industry to make it work for both. The public works contract is the only one of its kind in the world. That was a Government decision about 15 years ago. There is no jurisprudence on it. Nobody knows what each of the clauses actually means from a legal perspective. Ultimately, what it is designed to do is make contractors legally and contractually obligated to notify that there could be a delay or a change to the contract value. That could be down to design changes, legislative changes or even down to war. We have all had them. We have had pandemics in the last six years. Everybody forgets the massive impact that shutting down the construction sector had on productivity. If the contract is designed to be adversarial, it puts people into a position where they are constantly notifying and making arguments as to why there are delays, whereas an NEC and other forms of contract encourage and incentivise the parties to sit down and problem solve. It is in everybody's interest to solve the problem. Contractors are more profitable when they are off site as quickly as possible. They do not make money getting strung out on sites because they get into disputes, especially as legal costs are so high.
Patricia Stephenson (Social Democrats)
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Absolutely, and we need to scale that up for the level of delivery that we want to see.
Seán Fleming (Laois, Fianna Fail)
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Sorry, Senator, but we must move on to Deputy Cronin now.
Réada Cronin (Kildare North, Sinn Fein)
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I thank the witnesses for their presentations which provided a good outline of what they believe is causing the delays. I hope their staff are listening to how great they are and that they will notice it in their Christmas bonus. The exemption that was given around critical infrastructure and data centres by the British Government was done in the context of the national security of their own data centres rather than private data centres. I say that just in case we think we are in competition and we start building even more data centres to the detriment of delivering on housing, hospitals, bridges and all of that kind of infrastructure.
The opening statement refers to environmental considerations being addressed by "mitigating against environmental impact rather than no harm criteria, which is almost impossible and therefore very difficult to get over". Will the witnesses explain the difference between mitigating against environmental impact and no harm criteria? I do not want us to go down a slippery slope. I attended a meeting of the climate committee earlier today. I do not know if the Healy-Raes are diversifying from tar but they were dead keen on cutting down every tree in the country, which would be like throwing the baby out with the bathwater when it comes to climate action. Will the witnesses to explain what they mean by that statement?
Mr. Paul Sheridan:
I will take that question. Right now, when you are looking for planning permission, there is such a high bar to demonstrate that you will actually cause no harm to the environment whatsoever. It is a very difficult hurdle to get over. What you really need to do is to take a sustainability approach over the whole life cycle of a project and ask what impact it will have on the environment and then mitigate and manage that risk through the process. We cannot build roads, data centres or pharmaceutical plants without turning sod. That is just the reality. The industry is totally supportive of sustainability approaches but what we need is predictability in the process. We need it to be timebound, to be able to get in early with these things, and for each of the bodies associated with a consent related to the environment to be aligned and working together. What happens right now is parties look for consent from a particular agency that is set up by the State. The agency is happy with A but not happy with B. The parties go off and make the relevant change, but when they go to the next State body, it is not happy with A and they have to go back again. They get into this loop. The idea is that we need to mitigate and comply with the law and environmental standards but we cannot get over bars that are esoteric. We have to deliver.
Réada Cronin (Kildare North, Sinn Fein)
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I understand that. On exemptions to planning for infrastructure and reform of the statutory consents, will the witnesses outline some of the planning exemptions they would like to see sped up for infrastructure delivery? We need to be careful about environmental impacts when it comes to planning and building. What do the witnesses mean when they say exemptions because the term terrifies me, as it does many members of the climate committee?
Mr. Paul Sheridan:
In the last couple of decades the EU has really started bringing in significant directives and regulations so the likes of a pumping station, built underground that nobody can see, now requires planning permission. That pumping station and a pipe in the ground could open up land to connect 50 houses but, right now, it has to go through planning and it takes time to go through the planning process. That was not the case previously. The Department of housing released a paper and a proposal to exempt certain elements of that type of development. Those are the types of things that can speed up the delivery of homes around the country. We can broaden that out. When we legislate for something like the metro or the greater Dublin main drainage scheme, we do so because if we have 1 million extra people over the next 30 years, they have to have jobs and homes. This brings in the whole concept of data centres as well. Data centres are not a nice-to-have thing for the private sector. They are going to be the backbone of every modern economy in the world, and if we do not maintain our competitiveness, we are going to lose it and then we will lose jobs. Those jobs are important because they help to support the economy, which generates the tax revenue which is then available to the Government to continue to invest in public infrastructure like bridges. We cannot look at these things in isolation. What we are asking for is predictability. We should exempt what is critical infrastructure to support development. Housing is connected to FDI, to bridges and to schools. They are all together. We are looking at infrastructure and we are the enablers. Gives us the predictability in the process
Réada Cronin (Kildare North, Sinn Fein)
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I understand that. The witnesses were talking about multi-annual planning so that we can see far ahead. Local authorities, for example, want to know how much money they will be getting when they are planning things like ring roads, bridges and so on. That is really important. The construction industry has its job to do. Our job is to make sure not just that we have infrastructure for FDI but also that we are building the homes, the hospitals, bridges, roads and so on. FDI and economic competitiveness cannot be the only lens through which we view our national infrastructure.
There is an awful lot of talk about judicial reviews and the delays caused by them. Last week I saw an item on the greater Dublin drainage scheme which suggested that it had been delayed by judicial reviews but that was not actually the case. Judicial reviews had only delayed it by six months while the planning process and the rigmarole involved in meetings of An Bord Pleanála, now An Coimisiún Pleanála, and the different local authorities had taken something like 16 years. They tried to blame it on judicial reviews. Do the witnesses believe that An Coimisiún Pleanála and the Courts Service need more staff to deal with judicial reviews more efficiently, for example?
Mr. Paul Sheridan:
A few of my colleagues will come in on this. It is a systemic approach. The JRs are a problem. They are being weaponised and are delaying projects. People are terrified. They are taking so long to dot the i's and cross the t's because they are afraid one administrative error will lead to a critical project not going ahead. That is the issue. What we are asking for as an industry is that the Government create the conditions to enable us to deliver for it. To do that, you create predictability. Nobody is saying that we do not want JRs. We are saying that JRs have to have rules and have to be much more predictable.
Réada Cronin (Kildare North, Sinn Fein)
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They are part of the planning process-----
Réada Cronin (Kildare North, Sinn Fein)
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Officials from it were in with us a few months ago and they said their staffing levels are adequate.
Mr. Micheál O'Connor:
Can I return to the environmental question? It is not as if we are looking to be irresponsible from an environmental perspective. We work extensively across Europe, including in some of the most environmentally responsible countries, such as the Scandinavian and Nordic states, which are renowned for their environmental responsibility. What we are really talking about is having a planning system and a structure that gives certainty and clarity around projects, the pipeline of projects and how projects can be delivered.
Réada Cronin (Kildare North, Sinn Fein)
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The main message I am getting concerns the needs regarding the pipeline.
Joe Neville (Kildare North, Fine Gael)
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I thank the witnesses. My main questions are for all of them. I am conscious of time, so I ask for short answers so I can get through as many questions as possible. What has been the single biggest reason the Government has not been able to deliver the infrastructure required over the past ten years?
Joe Neville (Kildare North, Fine Gael)
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Mr. Murphy used the word “planning”. We should be careful using that word because people get confused. The planning process itself can be quite quick. It only takes a couple of months to put in an application for planning permission and for it to go through. People get confused between the two. Is it a case of a lack of will or an inability to deliver? Is there a lack of ability to draw together groups, including local authorities and large-scale utility providers and State providers? What is the problem? It is definitely not just the planning process.
Joe Neville (Kildare North, Fine Gael)
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That is what I am saying. The planning process through the local authority can be straightforward.
Joe Neville (Kildare North, Fine Gael)
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That is what I am talking about. That is not planning; it is something else. I do not mind the use of the word "planning" because when people talk about planning, they use it holistically.
Joe Neville (Kildare North, Fine Gael)
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So, it is Government bureaucracy. Is it people’s inability to make a decision?
Mr. Paul Sheridan:
If the Government follows through on the mood music and the changes that are supposedly coming with this action plan, then it will shift us considerably into a position where we can deliver. However, in the broader context, there was no money to build infrastructure for a long time in this country. It has taken the Government and the industry time to turn around. After the recession, there was no money to invest, and unfortunately time has been lost.
Joe Neville (Kildare North, Fine Gael)
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Sorry to cut across Mr. Sheridan but I am talking about the period from 2016 and 2017. There has been seven or eight years of a boom.
Joe Neville (Kildare North, Fine Gael)
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That is what I am saying.
Joe Neville (Kildare North, Fine Gael)
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I am asking questions, if Mr. Sheridan does not mind. Is Mr. Kenny also involved in the construction of apartments and housing?
Joe Neville (Kildare North, Fine Gael)
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Does Mr. Kenny think the change in the VAT regime will help?
Joe Neville (Kildare North, Fine Gael)
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How does Mr. Kenny feel about the developer-led infrastructure discussion? I always use local examples because it is easier for me. In the local area plan of 2017 for Celbridge, there was a proposal to build 2,000 houses in Simmonstown. To do so, we need to build a bridge. Eight years later, the compulsory purchase order for the land has only gone in. The bridge will be State funded and the cost of the rest of the mobility corridor will be met by developers. Ultimately, will the cost of the development be reflected in the prices of the houses themselves?
Mr. Paul Sheridan:
It is important to state we are here as construction contractors. We are enablers. We will consider what work is in the pipeline and decide whether we want to build. Whether developer-led infrastructure will work for the Government is a question for developers and the Government agencies supporting it.
Joe Neville (Kildare North, Fine Gael)
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At the same time, it is a question of whether it will work and whether people are happy to provide it.
Joe Neville (Kildare North, Fine Gael)
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Would they do it themselves or use others?
Mr. Liam Kenny:
We work for a number of developers and for the Land Development Agency. Let me go back one step. The Deputy referred to infrastructure. We recently delivered Rosslare Europort, which a Brexit adjustment reserve fund project funded by the EU. It was a very positive experience. It was built utilising the public works contract, which we have all discussed here, but there was a willingness and a can-do attitude adopted by the OPW to get it done when the funding was available. It happened. There is a lot to be said for willingness and a can-do attitude. Using available funding within a certain period definitely pushes the building of infrastructure and residential accommodation.
Joe Neville (Kildare North, Fine Gael)
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Yes. I am conscious of my time because it has elapsed. I am concerned if we are relying on willingness and a can-do attitude. I mean no disrespect to Mr. Kenny because he is actually saying what he thinks. Willingness and a can-do attitude are the first things anyone with an important job in a State body, be it a local authority or public utility, should have when they get up in the morning. If it is the case that people have not had such an attitude and we are changing this only now, it is a concern in itself.
Joe Neville (Kildare North, Fine Gael)
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There is no doubt that it can. It has done so in the past, but not enough.
Seán Fleming (Laois, Fianna Fail)
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Is Deputy Neville finished?
Patricia Stephenson (Social Democrats)
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Was the EU funding time limited?
Patricia Stephenson (Social Democrats)
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So, maybe the can-do attitude is related to the time limit before funding runs out.
Mr. Paul Sheridan:
The can-do attitude is employed every day in the private sector for billion euro projects, because there is a need and a focus to deliver. The important thing is that the action plan from the infrastructure division of the task force comes with a co-ordinated, central approach that pushes cultural change down through the system such that it is acceptable to take risks and make decisions.
The system in place at the moment has to shift. People have to feel confident that they can work with the industry and make decisions to solve problems.
Patricia Stephenson (Social Democrats)
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In the private sector context, there is more risk appetite to delivery, presumably, compared with the public sector.
Joe Neville (Kildare North, Fine Gael)
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I will finish that point by saying that people are not willing to make a decision. They are using consultants and reports and getting the likes of third-party consultants to go in and do a report to verify what they already know, all at a big expense to the State and taxpayer. That is what I see.
Réada Cronin (Kildare North, Sinn Fein)
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The Government is putting statutory timelines on itself as well around making sure it is on time.
Seán Fleming (Laois, Fianna Fail)
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When it comes to the construction industry – every aspect of it – what percentage of construction activity in Ireland last year came from the private sector compared with the public sector? The witnesses might not know the answer. Maybe we should have the answer on this side of the room.
Seán Fleming (Laois, Fianna Fail)
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That includes approved housing bodies and everything else on the State side.
Mr. Paul Sheridan:
It includes public housing and infrastructure, but it could also involve road maintenance, laptops and Department wages. That is the point I was trying to make with regard to the figure of €19 million. That €19 million covers everything, including overheads for the Department and everything.
Mr. Paul Sheridan:
-----that we are actually going to build? What is the name of the project? When will it go out to tender? Who will be awarded that tender? When does the Government want the project finished? We do not have that granularity. Progress is being achieved in the UK because it is more digitalised and centralised than us when it comes to taking the data from all the various bodies that deliver projects and putting them into a central database. That database is shown to the contractors, who will then choose specific projects and plan accordingly. Unfortunately, in Ireland, we have a project tracker that does not track. It is not in real time.
Seán Fleming (Laois, Fianna Fail)
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Who makes this project tracker?
Seán Fleming (Laois, Fianna Fail)
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Let me ask another question. The vast majority of construction activity is done by the private sector in Ireland and there is no tracker for that. Each company makes its own decisions. It seems to be able to work. Mr. Sheridan is complaining about the Government’s lack of a tracker-----
Mr. Paul Sheridan:
The Government is the biggest client in the market. Some 40% of the market is one client, namely, the Government. The Government has an obligation to the country to show what it wants to build for the country. We just want the Government to show it so that we can plan it.
On the private side, big corporations will set out their plans for five years. They will be tapping and engaging with the market, seeing whether contractors are interested and then they build. Unfortunately, they do not have to compete with EU procurement rules. Those rules make it very difficult for public bodies to procure. It is highly inflexible. The EU has now decided that the rules do not work. To sum up an audit it carried out, essentially, it wanted to make more competition but it went the wrong way. It is looking at reform. There is this parallel process where we are trying to get reform in Ireland while, at a macro level, the European Union has decided it needs to reform. We must build more flexibility and give less fear for a contracting authority. We have got to get rid of public contracting authorities being dragged into courts for injunctions or whatever because they might have broken an EU procurement law. We must get back to a point where public officials are trusted to make decisions and get on with projects.
Mr. Michael O'Connor:
Multinational clients engage with companies. They are regular vis-à-vis, business-to-business engagements where they outline their pipeline. Not dissimilar to today's conversation, they engage with us and others and inquire about our supply chain, availability and so forth in order to make sure that, when a project begins, there is capacity in the industry to deliver it.
Seán Fleming (Laois, Fianna Fail)
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Give us a simple example. Where a private sector client, be it a multinational or someone else, is involved in a contract costing €200 million at the end of the day, who does the design, planning and all of that? Is that carried out by the company first before it approaches the contractor? What way does it work?
Mr. Michael O'Connor:
They retain professional consultants to do so. They retain an engineering house to do their design and cost consultants to manage the cost. The scrutiny is every bit the same as a public sector project. It is the very same and every bit as thorough. It is planned really well. They engage with the contractors and the supply chain really well. There is often an element of early contractor engagement where contractors work with the client in terms of planning the sequencing of the project and working on the early engineering of the project so that it is understood how and when the project will be delivered. That allows problems to be solved in advance when they cost less or, in other words, before they go to site. It gives all parties the maximum opportunity to be successful so that when the project goes out to site, it can be delivered on time and within budget in a safe manner.
Seán Fleming (Laois, Fianna Fail)
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That probably only happens with a very small number of potential contractors. They are not going to have that conversation with six or eight people. They probably know who they worked with previously and they go-----
Patricia Stephenson (Social Democrats)
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My question is about the threshold. What is the threshold for getting on the framework for a construction company?
Patricia Stephenson (Social Democrats)
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No, for capital projects in Ireland. Is there a framework? Is it done like that?
Patricia Stephenson (Social Democrats)
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Does Mr. Kenny think frameworks are more successful?
Patricia Stephenson (Social Democrats)
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I wish to ask for the perspective of Mr. Kenny in this regard. He has implemented in different jurisdictions-----
Patricia Stephenson (Social Democrats)
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That is for the private sector. When it comes to the capital, State sector-----
Mr. John G. Murphy:
In the public sector, Uisce Éireann and ESB Networks have moved more towards frameworks in recent years. Certainly, frameworks are bog standard in the UK. Probably one difference between Ireland and the UK is that, for a project of €100 million, clients would insist that the contractor has a multiple of that figure in turnover so that such a project does not impact the contractor. They do not want a contractor with a turnover of €100 million attempting to do a project of €100 million because they would need to double their resources to do it. In Ireland, it tends to be less selective than that. In one project with a framework of €200 million, the bar was set at €8 million. That would be unheard of in other jurisdictions.
Seán Fleming (Laois, Fianna Fail)
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To bid for a €200 million contract.
Seán Fleming (Laois, Fianna Fail)
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Everyone knows that is daft.
Seán Fleming (Laois, Fianna Fail)
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It would be over a number of years, but still. That contractor becomes totally beholden to that one contract because it becomes such a big part of the business. If something goes wrong, the whole project goes down with it. There is greater risk.
Seán Fleming (Laois, Fianna Fail)
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Yes. They have gone through them.
Joe Neville (Kildare North, Fine Gael)
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I have a question that is probably directed more at Mr. Sheridan and Mr. Brownlee. I do not want to be overly specific, but I am thinking of the likes of the children's hospital, although I am not really.
Seán Fleming (Laois, Fianna Fail)
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We are not holding the witnesses responsible for that. There is as much fault in this building as there is on site for that project.
Joe Neville (Kildare North, Fine Gael)
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I am only thinking of that in context because there is a bit of a fear with a lot of public bodies, State organisations and the general public. There are question marks as to how public infrastructure is delivered. The question I always wonder about and come back to is whether the tenders are done wrong. Are they underspecified or overspecified? Are there specification changes in the process? What typically leads fundamentally to the gap between the initial and final quotes? I do not want to use that one example specifically, but I am just saying there is a huge, broad frame. If there were a mistake in a project that was being started now that the witnesses felt would lead to a gap in its future delivery, what would be the main issue that could lead to that?
Mr. Paul Sheridan:
The critical factor is the design process and how it is managed and delivered. That is when you get into its design. You can either do a design and build or go employer-designed. Design and build is when a contractor is brought in and helps to facilitate the design process. In large, complex projects, ones where you really do not know what the solution is going to look like in five years' time, which is what we are talking about, you need to look at early contractor involvement.
Then, you get the constructability - whether that design can actually be constructed - which means getting in the experience of a good contractor early in the process during that design phase. That is a good approach for dealing with complexity. The design process needs to be recognised as the most critical point in a construction project to deliver success on site and get off site as quickly as possible. Unfortunately, design is not valued as much as it used to be. We have to value that and give it the time. As Flyvbjerg would say, you think slow and you act fast. That is what has to be done. Get all the stakeholders involved in that space, narrow down the risk as much as possible and then it is priced more effectively. That is how to proceed for large, complex projects, using contracts that are flexible, allow incentivisation, are balanced and allow the parties to problem-solve and work together.
Joe Neville (Kildare North, Fine Gael)
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I am not sure who spoke about the breadth of his company's experience, having worked in the FDI sector for the past 60 years. Was it Mr. O'Connor? I apologise. He talked about that experience. That spoke to me as much as anything else that was said today - that knowledge of working out, being able to go to the UK and have all this knowledge. I am thinking of Intel. It delivered a huge project in Leixlip. I live in Leixlip so I am using what is familiar to me. Would those projects be delivered as Mr. Sheridan just described? Is the design part something the companies work through at that stage? Is there a difference with the FDI approach? I do not want Mr. O'Connor to contradict Mr. Sheridan; it is not about that and I am not questioning one over the other. If it is successful there, is the State using a different model?
Joe Neville (Kildare North, Fine Gael)
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We are obviously very good. They would not be coming here.
Mr. Micheál O'Connor:
Private multinational clients do engage the contractors, as I outlined, with early contractor involvement and so forth. It is all about trying to iron out problems when they cost the least, which is before they go to site. One also has to recognise that public sector projects undergo public scrutiny. All projects encounter problems. In the private sector, a group of people can get around a table and solve a problem. That is our job. That is why we are employed - to solve problems. It is not as easy in the public sector because it undergoes a lot more scrutiny. If one is making decisions in that environment, it is probably a lot more difficult to make those decisions because there is a much greater public spectacle on you in doing so. There is a different type of accountability.
Joe Neville (Kildare North, Fine Gael)
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Does that lead to the inertia and the fear that Mr. Murphy and Mr. Kenny spoke about?
Joe Neville (Kildare North, Fine Gael)
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I am on the Committee of Public Accounts as well.
Mr. Micheál O'Connor:
One might operate differently. Value for money has been mentioned a couple of times. Something we see working in the private sector is that all clients, or certainly the clients we work for, will try to get to the point of making sure the price is right for the project. That is critical. There has to be a level of certainty that the contractor in question can deliver that project for the price agreed. That is not necessarily the price that is bid because there is a clarification process. These are very complex documents. There can be a clarification process in terms of making sure the contractor has interpreted the documents correctly and it has priced for all of the scope and risk associated with those documents. The bottom line is, you have to get to the right price because then there is a level of certainty that the project can be delivered for that price and the contractor and client can be successful. You never want to find yourself in a situation where the price is wrong and then you run the risk of a contractor falling over as it tries to deliver that project. That just leads to delays and a whole lot of peripheral problems around legalities and so forth. The private sector puts a huge emphasis on and a huge amount of the workload is making sure prices are appropriate for the projects being delivered.
Patricia Stephenson (Social Democrats)
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My question is about design and the difference between - I cannot recall the terminology - when the construction companies co-design with the Department responsible. How does that differ with the private sector? Is it standard to potentially tender out to a different design or get the construction company design for the specifications from the initial stage? Is there a difference in private versus public sector in co-design?
Mr. Micheál O'Connor:
It can be both. Mr. Kenny would have experience of that. Private clients can go on a design and build basis where a company like John Paul Construction designs and builds that scope or private clients go to engineering houses and cost consultants to develop the design and pricing document, scrutinise it and submit it to the market to tender.
Patricia Stephenson (Social Democrats)
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The reason I asked is, on the design skill, there will be a range of public sector projects across society and there is a challenge, which was pointed out, in Departments not having the in-house expertise.
Mr. Liam Kenny:
The design expertise is available in this country and has proven to be able to deliver large projects through the years. What we are talking about is de-risking public projects. There always has to be a competitive process to get a contractor to the table - that is accepted - but it is about getting that contractor to the table early, and working with the designers and the public sector client to de-risk the design before it hits the ground and de-risk the project. That is what we are talking about. There are various models available to do that. Internationally, there is a well-recognised procurement route.
Patricia Stephenson (Social Democrats)
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Will the witnesses send us some examples?
Mr. John G. Murphy:
Most of the projects we do are design-build for public and private. A difference between Ireland and the rest of the world is at tender stage in Ireland, you are expected you to do a design whereas, in the rest of the world, the design happens after you have won the project. The detailed design happens afterwards whereas there is an expectation in Ireland that you do the design before you start the project which makes it very costly for tendering. If you get five tenders, somebody effectively pays for five designs even though only one will be used.
Mr. Paul Sheridan:
That was the original intention of the public works contract - a lump sum, fixed price to deliver certainty - but to get certainty you have to have fixed information. Unfortunately, in complex construction, you cannot fix the information. Every form of contract in the world has a mechanism to deal with change. It is part of the industry. These projects go on for ten years from inception right to delivery. You need that flexibility. You want to make sure you eliminate dispute and increase collaboration when dealing with those issues. To mitigate them happening, you get the design right.
Réada Cronin (Kildare North, Sinn Fein)
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The witness mentioned that 60% of top Irish contractors are exporting construction services. Scandinavia was also mentioned. Only Norway is not a member of the EU. What is attractive about those countries? They are still subject to EU law, regulation and procurement. Do the witnesses know the answer to that?
Réada Cronin (Kildare North, Sinn Fein)
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They are just building faster than us.
Réada Cronin (Kildare North, Sinn Fein)
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There should be a lot of building going on here as well.
Réada Cronin (Kildare North, Sinn Fein)
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Is there a difference in how they do business? They are still subject to EU law and regulations. Why are they going there rather than staying here? As Mr. O'Connor said, people like to stay at home. People want to work in Ireland.
Mr. John G. Murphy:
We spoke about multi-annual funding. There is one public body we did a lot of work for this year and we will be doing little or nothing for it next year. With the specialisation we have, we had a need to go and recreate that business abroad.
We would have won a load of projects in the UK and kept all those people busy because we could not wait. That is a five-year commitment. It is multi-annual because they do them on asset management plan, AMP, periods over there. Those people would be committed to the UK for five years. It was not really our choice but we had nothing else to do with the people unless you went and found the work somewhere else.
Joe Neville (Kildare North, Fine Gael)
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Mr. Murphy is talking about the term lengths, that last year they had work for him and this year they did not. I know Mr. Murphy would love to have a ten-year rolling plan of different projects and he would love to be able to stay in Ireland. That is not going to happen. In an ideal world, to juggle his teams, how far ahead is Mr. Murphy looking? Is he looking at three years?
Joe Neville (Kildare North, Fine Gael)
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So now we are turning on these taps and they are going, "Hold that, you are killing us because in two years' time-----
Mr. John G. Murphy:
What tap is being turned on? Nothing has happened this year. This year has been very quiet in the industry. We are talking about a tap. If you start everything in 2026, you have a problem. If you spread it out over the years and try to build something by a certain date, that is okay. If we are were doing a project, we would not try to do everything on day one or day 50; we would build a programme and we would build a thing over a period of time.
Joe Neville (Kildare North, Fine Gael)
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I will ask one last question and part of me does not want to know the answer. I fear the answer. Have they been engaging with the Department of public expenditure across the board? I will not direct this at any individual company. More broadly, are they aware that the Department has been in discussions with all of the large Irish construction companies about potential projects in scale over the next three years?
Mr. Andrew Brownlee:
At a general level, they are talking to us. There is a construction sector group where all the industry bodies talk to the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation directly. Going back to the point, there is an intent. There is an NDP multi-annual commitment but now we need to see those plans.
Seán Fleming (Laois, Fianna Fail)
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On the infrastructure task force committee, were you engaged?
Joe Neville (Kildare North, Fine Gael)
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It is now November and they are looking towards their budgets which are done for next year.
Mr. Paul Sheridan:
I will make a point on the multi-annual funding. We are hearing "multi-annual funding", but what we are hearing from the Departments is that yes, they are saying it, but we still have to go cap in hand at the end of the year and see what we are going to get for next year. What does that send to the market?
Seán Fleming (Laois, Fianna Fail)
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Surely the ESB and some of those-----
Seán Fleming (Laois, Fianna Fail)
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That is the point I am coming at. There is a difference between public bodies. Uisce Éireann-----
Seán Fleming (Laois, Fianna Fail)
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-----has to go through the annual Estimates. ESB is independent statutorily and it can do a five-year plan.
Seán Fleming (Laois, Fianna Fail)
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It does not have to come for an Estimates meeting here. There is a difference.
Seán Fleming (Laois, Fianna Fail)
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They still have the same Estimates that we inherited 100 years ago.
Joe Neville (Kildare North, Fine Gael)
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Is it the likes of TII?
Joe Neville (Kildare North, Fine Gael)
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That is what I am saying. That is what we are talking about. They need to know the light is on.
Seán Fleming (Laois, Fianna Fail)
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It is the Estimates process in the Oireachtas that has that that way. If it is spent by a Department, it must go through year by year whereas if it is done by the ESB, which is outside the Department, it can borrow and it does not have to come back, year by year.
Joe Neville (Kildare North, Fine Gael)
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We increased their ability to borrow last-----
Seán Fleming (Laois, Fianna Fail)
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Of course and it can borrow externally, etc.
Mr. Paul Sheridan:
It is important to point out what Mr. Murphy said there about the sequencing and prioritisation. We met with the national competitiveness council and we tried to explain to it that all contractors have estimating teams that compete for work. What we do not need is 60 projects all wanting to be tendered in January next year.
Mr. Paul Sheridan:
The capacity is there to tender and do the work. What you need to do is sequence the projects so the tendering teams have the time to go in. What we are asking is to be commonsensical and understand that these projects to be tendered for have a significant overhead on the industry and if a contractor is going to expend that money, it is a sunk cost. It has to be on the basis that that project is going to be awarded and delivered. It has to be.
Seán Fleming (Laois, Fianna Fail)
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Okay, we get you. We can conclude. I thank the witnesses for their assistance to the committee on this issue. It is an issue that will continue for a while yet in terms of other people we want to meet in relation to this particular topic.
Information was requested, once or twice there. It will probably come back through the CIF. I ask the CIF to try to get it into us within a fortnight.
There being no other business the committee stands adjourned until 19 November.