Pat Rabbitte (Dublin South West, Labour)
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Question 109: To ask the Minister for the Environment, Heritage and Local Government further to Parliamentary Question No. 2 of 4 April 2010, the action he has taken regarding replacing increased incurred expenditure by local authorities which saw project overspends ranging from 5% to 160%; if bonus payments were made to local authorities staff regarding these projects; and if he will make a statement on the matter. [37439/10]

John Gormley (Dublin South East, Green Party)
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In 2008, in the context of requirements relating to capital funding, my Department, following a competitive tendering process, commissioned Ernst and Young to carry out spot-checks on capital projects under construction in the period 2006 and 2007.

In general, the report found good performance in relation to procurement and that local authorities comply with the relevant guidelines. The report also found that, in a large number of cases where significant capital expenditure was involved, processes adopted by local authorities mirrored the formal appraisal guidelines.

However, the report also records deficiencies in relation to formal appraisals and project briefs, and completion of documentation, as well as delayed submission of final accounts. In particular, the report identified 11 issues relating to appraisal and management of projects and made recommendations to accompany those findings. These included increased expenditure on a range of projects. However, the report also acknowledged that cost increases "were usually attributable to changes in the scope of works to be performed and ... unforeseen circumstances".

In response to the report, my Department wrote to local authorities on 22 March 2010 emphasising the importance of adherence to the Capital Appraisal Guidelines. All project managers were asked to review current arrangements for the management of projects to assure themselves that they are being appraised, managed and monitored sufficiently in line with Department of Finance Guidelines, as well as with relevant Departmental circulars. As far as the specific programme areas are concerned, issues arising from the report are being taken forward by the relevant sections in my Department dealing directly with those areas. In addition, my Department, in conjunction with the Department of Finance, is currently devising a training programme for local authority staff involved in capital projects.

Applications by local authorities for additional funding to meet increased expenditure are considered by my Department in the course of work on projects or at final accounts stage. No additional funding is provided by my Department to meet increased expenditure unless it is satisfied that it is appropriate to do so.

New forms of contracts have been in place for construction projects since May 2008. The new contract arrangements are designed to achieve greater cost certainty and better value for money for the Exchequer. The key difference from the traditional approach to contracts is the transfer of all contract risks (other than archaeology) to the contractor, who prices for that risk in a fixed-price tender bid.

In 2000, the Review Body on Higher Remuneration in the Public Sector recommended the introduction of a performance related awards scheme for County and City Managers, Assistant City Managers and Directors of Service of local authorities. The scheme was introduced in 2003 and awards were made by the local government Committee for Performance Awards on the basis of achievement of approved objectives submitted in advance: it is not possible to attribute any portion of an award to any specific capital project. The scheme has now been suspended and no performance awards have been made since 2007.