Ivor Callely (Dublin North Central, Fianna Fail)
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Question 211: To ask the Minister for Finance the progress with procurement of PPP projects; the areas that have been identified as most suitable for PPP; and if he will make a statement on the matter. [39323/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The PPP approach has the potential to offer value for money and timely delivery of infrastructure when applied to projects of the right scale, risk and operational profile. There has been good progress on PPPs overall since the first group of pilot projects were announced in 1999 notwithstanding the challenges involved in adopting this relatively complex form of procurement. The process is demanding up front: it involves identification of whole life costs of delivering the asset involved and the negotiation of a contract which typically will be of 25 to 30 years duration. Under current guidelines issued by the Minister for Finance, the advice of the National Development Finance Agency must be sought for major projects and grouped projects with a capital cost in excess of the limit set by the Department of Finance (set at €20 million initially and under review as of July 2006). After a decision has been taken to procure a project as a PPP, the lead time involved in reaching construction stage is typically 18 to 24 months. Overall delivery times have been impressive to date. Also, projects procured by means of PPP can be subject to the factors that can cause delays on other capital projects, such as planning and legal challenges.

A review of the PPP process was undertaken by my Department in 2005, in consultation with a range of stakeholders. At that stage, deal flow was established in the roads and environment areas but had been slower in the area of PPP projects funded by unitary payments from Departments'/Agencies' Votes. The need for skills and capacity to manage the procurement process in this area was identified. The Government therefore decided to establish a Centre of Expertise for PPP procurement in the National Development Finance Agency to undertake the procurement of PPP projects on behalf of Departments/Agencies in the Central Government area. The Centre of Expertise is to undertake the procurement after the setting of project budgets, output specifications and other service requirements — initially concentrating on projects brought forward by the justice, education and health areas. There are now PPP projects at various stages of procurement in the area of PPPs funded by unitary payments from Votes.

A list of projects of over €20m which have reached the stage of the appointment of client advisers, as advised by members of the Interdepartmental Group on PPPs, is available on my Department's PPP website at: www.ppp.gov.ie.