Proposed improvements to capital investment and delivery under the National Development Plan

The PSC is the Government’s framework for spending public funds. The capital spending version of the PSC is a set of rules and guidelines that seek to successfully deliver projects which provide benefits and outcomes aligned with government policy and offer value for money. For example, if the objective is to reduce carbon emissions in transport, one way would be to increase public transport provision through more buses, trains, trams and improved infrastructure. Each of these measures requires Government investment—that’s where the PSC comes in.

In broad terms, a business case is produced that estimates the costs and benefits associated with a project and recommends a preferred course of action. This preferred course of action is then progressed to delivery (e.g. via the procurement of a contractor and/or operator).

In the past, business cases were treated by many as a box-ticking exercise. Little heed was given to them or their projections, as the focus was mainly on getting the project going. This worked in some instances and helped quicker delivery. However, in other cases, there were significant issues with delayed projects, running over budget or failing to achieve the intended benefits. The most high-profile case is the New Children’s Hospital. In 2019, PwC concluded an independent report for the Government on the escalation of costs on that project. It found a perfect storm of issues associated with the project including poor forecasting, a lack of understanding of the risk profile associated with the project, a lack of commercial capability and accountability gaps in governance.

The recommendations in this report informed the 2019 update to the PSC, which sought to address the failings at the New Children’s Hospital and ensure lessons are learnt for future projects. These updates brought more up-front thinking to capital project appraisals. This welcome development meant that Government Departments and agencies tasked with delivering capital projects would have to do more work up-front to understand costs, risks and benefits to apprise projects robustly. It also focused on improved governance, increasing accountability in departments and at cabinet, as well as detailed analysis of procurement approaches before a project is approved.

These changes made sense on paper. However, they created challenges when rolled out across the public sector. The changes were not dramatic for some departments and agencies as they had applied similar rigour in the past. For others, it was a dramatic shift and a number are still getting to grips with the changes. In addition, heightened levels of assurance and review were introduced for major projects (i.e. those over €100m). This added robustness (see the Major Projects Advisory notes to date) but also lengthened the time taken to commence delivery. In the period since 2019, Government capital expenditure allocations have increased by 70%—from €7.3bn in 2019 to €12.4bn allocated for 2023.

Delays are costly; the longer it takes to deliver capital projects, the less chance we have of achieving our policy targets and further dis-benefits or costs start to emanate. This is most acutely felt in housing and health but is also evident in energy and transport, where we are now at risk of not decarbonising quickly enough.

In 2023, we have the policy direction through the NDP and the Climate Action Plan. We have the framework to deliver through the PSC, and we have the funding allocations from the Government as well as private finance for areas such as renewables. So why aren’t we delivering?