Thursday, 14 October 2021
Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
5. To ask the Minister for Rural and Community Development the measures she will put in place to increase funding already allocated under the rural regeneration and development fund to projects in which the costs have increased substantially due to the unprecedented rise in the cost of materials; and if she will make a statement on the matter. [49400/21]
My question relates to the current problem in regard to costs for projects for which money has been already allocated. Costs are rising. Funding has been already been allocated. What measures are being put in place to top up the grants already provided to meet rising costs or is such a facility already in place?
I thank the Deputy for the question. The rural regeneration and development fund has to date approved funding of €252 million for 164 projects nationwide costing over €343 million. Projects initially approved for funding in principle progress through a comprehensive due diligence process before final confirmation of funding is provided by my Department. At each stage of this approval process, the project is reviewed by my Department to ensure it continues to meet its stated objectives, including financial sustainability. This review includes an assessment by an independent quantity surveyor to ensure all costs and contingencies have been included by the lead party.
In line with best practice project management, all applicants to the fund are asked to put in place a contingency budget at a level appropriate for the type of project being undertaken. While I recognise the challenges currently faced by capital projects in terms of rising construction costs, a carefully calculated contingency budget will meet most of these challenges. Notwithstanding this, it is open to project lead parties to make a case to the Department for additional funding if the cost of an approved project significantly increases once the procurement process has been completed and the final cost of the project is confirmed.
However, any such case must be supported by a detailed justification from the lead party setting out the reasons for the increased cost, detailing exactly where the additional costs arose and outlining what was attributable to construction inflation. As the project would have been approved based upon the original budget, a full value for money review with an updated business plan must be provided by the lead party before any additional funding could be considered.
I thank the Minister for that very comprehensive reply. I am glad to see she is using the quantity surveying profession, of which I am member, to help her to keep the costs in check. I welcome her clarification that these costs are open for review because normally what happens on projects is when the application is made, applicants perhaps do not have the full design in place or the details done right, in the sense that they are not done fully. The contingency sum that would be built in would reflect that type of scenario. Given the unprecedented nature of the situation at the moment, there are unreal costs, especially for older buildings such as Loughrea Town Hall in my constituency. It will need a huge amount of insulation, and insulation costs are going through the roof. We also have other projects like that in the county where we find that costs have increased since the applications were first submitted and moneys granted two years ago. It is important we recognise that.
I have visited some of the really good projects in the Deputy's constituency, including the Athenry regeneration scheme and the Bia Innovator Project, which is an absolutely fantastic project that is going to make a huge difference. I was delighted it secured €3.5 million from the rural regeneration and redevelopment fund. There are a number of other projects, including Portumna Courthouse, which is another really good project. To be clear, we look at them on a case-by-case basis. If it is a matter of genuine construction inflation affecting costs, we can all understand that. However, I do not want requests coming in which expect us to cover costs raised by poor initial estimates - and that can happen - or by change in scope or a failure to factor in elements of the project identified as necessary later. I do not want half-baked stuff coming in and then applicants coming back looking for more money because it causes problems. I would rather see the money going to good projects that can be delivered. Sometimes if there is an overrun, there are delays and it holds the whole thing up.
Absolutely. I hope and trust the projects she mentioned in Athenry and Portumna, as well as those in Loughrea and Tuam, are not half-baked and the figures are correct, inasmuch as they could have been at the time. It is a picture of a cost at a particular time. I welcome the fact that it is being recognised by the Department that costs rise. I compliment its staff for all the work they have done right through Covid in working with the local authorities. I also compliment the Minister's predecessor, my great friend and colleague, Deputy Ring, who initiated a significant number of these schemes when he was in the Department. It is great to see that the Department is still thriving in what it is doing for rural Ireland. I congratulate the Minister for getting increased funding for towns and villages via LEADER in the budget. That is a lifeline for rural areas.
I thank the Deputy. I appreciate I am working from a very strong base. I inherited a great Department. Deputy Canney and Deputy Ring did a great deal of hard work and it is my honour to build on that work as I deliver more projects for rural Ireland.
To go back to Deputy Canney's original question, to date we have provided additional funding totalling €6.3 million for 20 projects, which are listed on the Department's website. When they find that projects are going to cost more than initially thought, applicants put in detailed submissions showing exactly why they need more money. I am happy to support that and my officials, in fairness to them, have worked extremely hard with a number of project promoters to try to ensure these projects are delivered if they need that bit of extra money. Deputies understand that this is taxpayers' money. We must ensure that it is spent properly and well and that there is good value for the taxpayer at the end of the day.