Joan Burton (Dublin West, Labour)
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Question 234: To ask the Minister for Finance the procedures for the assessment of major public projects; the way they are decided upon; the methodology of the cost benefit analysis; the time taken in deciding on the projects; the financial thresholds for deeper analysis; the reporting and dialogue mechanisms within the various Departments and his Department for major capital projects; the level of seniority and qualifications in economics, finance and so on of those who make the final decisions; the length of time after decisions have been made on these analyses, which are important in ensuring value for money in the public service for large capital sums, before publication; and if he will make a statement on the matter. [39629/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Revised guidelines for the appraisal and management of capital expenditure were issued by the Department of Finance in February 2005 to encourage a better approach to appraisal and management of capital programmes and projects and to reflect best practice. These guidelines were further supplemented by the Department of Finance VFM circular of 25 January 2006 and the May 2007 letter revising the test discount Rate and issuing procedures for carrying out spot-checks of compliance with the General Conditions of Sanction for Multi-Annual Capital Envelopes. This comprehensive framework for capital expenditure is intended to reflect changes in evaluation, project appraisal and management best practice; to provide for greater clarity and greater understanding in relation to the roles of all those approving capital expenditure, including Government and Ministers; and to secure best Value for Money.

The responsibility for applying the guidelines for particular projects lies with the relevant Government Departments. The guidelines set out a variety of financial thresholds, including the requirement that projects over €30 million undergo a full cost benefit analysis at detailed appraisal stage. Economic cost-benefit analysis is a method which considers the various direct and indirect costs and benefits of investment proposals. Given the diversity of the types of investment proposals across the range of Government Departments and State Agencies, the precise costs and benefits considered will obviously vary across sectors and between projects. My Department has issued a set of working rules for cost-benefit analysis to assist Departments and Agencies in carrying out rigorous and objective cost-benefit analyses of investment proposals and to standardise and bring consistency to key parameter values used. A number of Departments and Agencies have also developed detailed cost-benefit analysis models for use in appraising capital projects. Publication of these is a matter for each relevant Department, but I understand they have been made publicly available in some instances. The guidelines also require Departments and Agencies to put in place systems to report regularly to their management on the evaluation of projects prior to approval and progress on the management of capital projects and capital programmes. They must also arrange to carry out spot-checks for compliance with the capital appraisal guidelines and report on these and on progress generally under their capital envelopes to the Department of Finance.

Decisions on projects are generally a matter for the relevant Department and it is the responsibility of the individual Departments to ensure that decisions are taken at the appropriate level, within the framework of the guidelines, and that the necessary and relevant expertise is brought to bear on the decision-making process. The time taken for assessment and decision-making will vary according to the circumstances of individual projects. It has not been the practice to publish capital appraisals as they generally contain commercially sensitive information, the publication of which could be prejudicial to the State's capacity to get best value for money in procurement of capital projects. My Department can supply the Deputy on request with the February 2005 Guidelines and the Department of Finance letters of January 2006 and May 2007 or alternatively they are available on my Department's website.