Bernard Durkan (Kildare North, Fine Gael)
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Question 215: To ask the Minister for Agriculture and Food the number of contracts or procurements funded directly or indirectly by his Department during the past seven years in respect of which cost overruns have occurred; the full extent of such overruns; the cause or causes of same; the action taken to prevent a reoccurrence; and if he will make a statement on the matter. [4542/04]

Joe Walsh (Cork South West, Fianna Fail)
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There have been no cost overruns on contracts or procurements in the strict sense during the past seven years. However on occasion my Department has approved some additional costs mainly arising from changes in specifications. These relate in particular to IT projects and the Punchestown event and exhibition centre.

In relation to IT projects, it is the practice when outsourcing bespoke software development to do so on the basis of a fixed price for the specified work. To this extent the cost of the work set out in the request for tender does not vary. However in such tenders the supplier is normally asked to quote a daily rate for additional work or changes that arise during the duration of the contract. The option of having additional work carried out at these rates is included the contract. Any such additional work or changes to existing work is controlled under and must be approved by the Department before being carried out by the supplier.

With bespoke software development, no matter how well business functionality is specified, it is likely that some new functionality requirements will arise during development. The extent to which this will arise depends both on the duration and scale of the development. Where the supplier through no fault of the Department requires more effort to complete a task, the additional effort is normally at their own loss.

An exception to this was the NASA project, my Department's new accounting system. It became clear that the software delivered did not meet the Department's requirements especially in relation to Government cash accounting. My Department had to renegotiate the contract to have a suitable solution delivered.

Because of the extended implementation timescale, there were increased costs for external management consulting. The total external costs of the project came to €6.4 million excluding VAT. The total overrun on the original contract together with consequential costs in additional contracts for management consultancy comes to €3.3 million excluding VAT.

Major IT projects carry inherent risks that some specified functionality may not be deliverable by the solution providers. In order to minimise these risks the Department has revised its policy on such projects and current policy includes: minimising the customisation of packaged software solutions; and segmenting of major projects into smaller phases, each of which is signed off and delivered before proceeding with further phases.

On 1 August 2000 the Punchestown event and exhibition centre was provided with funding which would not exceed €13.3 million. This was increased by €1.5 million on 3 October 2001 to meet local authority planning requirements regarding sewage treatment and additional car parking. In the end a total of €14.6 million was paid for the project.