Mairead Farrell (Galway West, Sinn Fein)
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54. To ask the Minister for Public Expenditure and Reform if he will report on the issue of value for money in large capital projects; and if he will make a statement on the matter. [11731/22]

Mairead Farrell (Galway West, Sinn Fein)
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The question relates to value for money on large capital projects. Will the Minister for Public Expenditure and Reform report on that with respect to the new national children's hospital and the national maternity hospital, for example?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy very much for her question and wish the Leas-Cheann Comhairle a good evening. The Government has committed to €165 billion in capital investment through the national development plan, NDP, published last October. Our annual capital investment budget as a percentage of national income is now among the largest in the EU. In 2022, almost €12 billion is available to spend on vital infrastructure in areas such as housing, transport, education, enterprise, sport and climate action. There are at least 50 proposals in the Exchequer-funded element of the NDP that would be considered major public capital projects, that is, Exchequer-funded projects with an estimated cost in excess of €100 million.

It is vital that value for money is achieved in implementing this ambitious public capital investment programme. The revised NDP pledges to restructure the oversight and implementation of capital projects to strengthen scrutiny of major public investment proposals and drive improved project performance and value for money. The first step in ensuring value for money was taken in the NDP itself. The programmes included in the plan have been subject to high-level prioritisation and assessment of compatibility with critical Government priorities such as housing, climate action and balanced regional prosperity. In addition, the work my Department is engaged in through the construction sector group will help develop the capacity of the industry and improve value for money in contracting.

My Department is responsible for the public spending code, PSC, that sets the value for money requirements and guidance for evaluating, planning and managing Exchequer-funded capital projects. Management and delivery of investment projects and public services within allocation and the national frameworks is a key responsibility of every Department and Minister.

The Deputy will be familiar with some key reforms that I have introduced to the oversight of major capital projects, for example, the new external assurance process, which is now up and running, and the new major projects advisory group, which I am pleased to report is also up and running and contributing to the assessment of projects.

Mairead Farrell (Galway West, Sinn Fein)
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Value for money is important and many people have concerns when there are large capital overruns. When the Secretary General of the Department of Health appeared before the Committee of Public Accounts recently, he would not be drawn on the final cost of the children's hospital. One member of the committee suggested that it could be close to €2.2 billion. The Minister will be aware that this is an issue of major concern to people. Is that suggested figure much closer to the final one than the official figure of €1.7 billion that we have been hearing about for some time? Last month, the Irish Examiner revealed that almost 1,000 legal claims with a value of €542 million had been taken by the main contractor. It is time that the public were aware of the revised estimate of the final cost for the children's hospital. Will the Minister update the House with a more accurate figure?

Michael McGrath (Cork South Central, Fianna Fail)
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It is important to underline what my role is as Minister for Public Expenditure and Reform in capital budgets. I am responsible for setting the overall multi-annual capital expenditure ceilings for each ministerial Vote group as set out in the national development plan, NDP, and Project Ireland 2040. We are also responsible for maintaining the national frameworks that Departments operate in to ensure appropriate accounting for, and value for money in, public expenditure, for example, under the public spending code. Individual Ministers and the relevant Accounting Officers retain direct line responsibility for individual projects.

Regarding the national children's hospital, as a result of the lessons from that project and the PwC review into the escalation of costs therein, a number of key reforms that I have referenced have been put in place. I am pleased that those reforms are being put into practice in the assessment of major capital projects under the NDP.

Mairead Farrell (Galway West, Sinn Fein)
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I welcome the reforms that the Minister has introduced and I understand his role in this matter, but as he can imagine, people look at him as the Minister for Public Expenditure and Reform and query such issues, which are of considerable concern to many. We have seen cost overruns for quite some time. There are a number of examples: the national road improvement works had an estimated cost of €7 billion but its final cost was €15.5 billion, representing a cost overrun of approximately 125% while the Luas green line cross-city extension had an estimated cost of €358 million but its final cost was €991 million, representing a cost overrun of 176%.

The Minister stated that lessons had been learned and reforms had been put in place. While that is important, this is an issue of significant concern to people and particular focus needs to be given to it. The cost of the national maternity hospital has increased from €400 million to something much higher.

Michael McGrath (Cork South Central, Fianna Fail)
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I have been in my current role for the past 20 months. In that time, I have instituted significant reforms in the management and oversight of major public capital investment projects. This has been necessary because we have a record budget this year of approximately €12 billion for the NDP and new procedures are essential. They have been introduced to improve project outturns, avoid cost overruns and avoid schedule delays.

The Deputy will be aware that, when it came to putting the major projects advisory group in place, I put it out to an open public competition. I am pleased with the calibre of people who have come through the process and are now directly involved in advising my Department. They are doing so quickly – a short number of weeks – in respect of key projects.

Investing these resources up front in the rigorous assessment of projects will prevent problems down the line. I have put those reforms in place.