Thomas Gould (Cork North Central, Sinn Fein)
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54. To ask the Minister for Housing, Planning, and Local Government if his Department will support local authorities that are encountering increased costs due to construction inflation, particularly in situations in which original central Government grant funding is no longer sufficient. [33133/22]

Darragh O'Brien (Dublin Fingal, Fianna Fail)
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In accordance with Government policy, social housing construction projects (as with all publicly funded construction projects), must be procured in accordance with the Capital Works Management Framework. The Office of Government (OGP) is responsible for implementing national policy on public procurement, particularly in relation to construction procurement.

In January, the OGP introduced the following interim measures to address the impact that the recent price increases in construction materials is having on public works tenders:

- Reduced fixed price period duration to 24 months (previously 30 months minimum).

- Permit mutual cost recovery within the fixed price period for material price changes in excess of 15% (previously 50%).

- Introduction of a new mechanism to address the period between tender submission and award through limited indexation of the tender price.

The above measures related to new Public Works Contracts going forward (contracts with a version date earlier than 7th January 2022).

More recently, in the interest of safeguarding public projects that are already under construction and to mitigate the risks of significant losses being sustained by contractors, the OGP has introduced an ‘Inflation/Supply Chain Delay Co-operation Framework’ for parties engaged under a public works contract. This framework will operate on an ex-gratia basis and includes measures to:

- address delay to the Substantial Completion of the Works, or a Section of the Works, that has occurred since 01 January 2022 where the delay is caused by supply chain disruption

- address recent inflation in the prices of fuel and energy

- address inflation in materials, from 01 January 2022 onwards for those Public Works Contracts with a version date earlier than 7th January 2022

- proactively, and collaboratively, manage the on-going impact of these external factors insofar as is possible within the project’s original delivery parameters

My own Department is collaborating in a broad range of measures to mitigate inflation in construction. These include the Construction Technology Centre, whose role will be enhanced for its first three years of operation to prioritise residential construction. Its rollout will be complemented by an increased focus for the Department of Public Expenditure and Reform-led Construction Sector Group (CSG) on the residential construction sector.

To further support innovation the development of Modern Methods of Construction (MMC) will be broadened, and will include the establishment of a national Centre of Excellence Demonstration Park for MMC.

My Department is also in the process of preparing a study to carry out an analysis for each component of cost of construction (including cost of compliance) of house and apartment development, with a view to reducing cost and increasing standardisation. It will also identify opportunities for cost reduction for consideration by relevant Government Departments and industry.

In summary therefore, my Department is vigorously engaged in, and collaborating in strategies that will support local authorities in their crucially important work, and residential construction in general, in counteracting the effects of construction inflation.