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Wednesday 24 September 2014

Irish Water: Total set up costs will be €180m

Published 14/01/2014 | 14:56

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IRISH Water will cost €180 million in total to establish itself, with €80 million of that going on outside consultants, the Joint Oireachtas Environment Committee has heard.

The additional €30 million splurge on consultants between now and April 2015, when the set up is due to be completed, was revealed in detail to the committee.

"Based on the delivery of the full scope of work we expect the final cost of the work packages to be IBM €44.8 million, Accenture €17.2 million, Ernst & Young €4.6 million and KPMG €2.2 million," the committee heard.

Responding to weekend reports that Government had demanded that existing Bord Gais expertise in the setting up Irish Water, its Managing Director Mr Tierney said that while the core capability to define what was required to establish Irish Water existed within Bord Gais, it would require the use of specialist service providers to help implement this programme.

"From the  very outset Bord Gais advised Government that this type of support was critical to deliver this programme and achieve the targets set in the demanding timeframe," Mr Tierney said.

In its submission, Irish Water also revealed the Department of the Environment authorised expenditure at the agency as far back as December 2012.  Details of the consultants expenditure were provided to the Department in March 2013.

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This statement appear to contradict comments from Junior Minister Fergus O'Dowd that he only learnt of the spend when he heard of the €50 million spend during Irish Water Managing Director John Tierney's interview on RTE Radio last Thursday.

"In the main this required us to specify and implement 5 major utility information systems to set up Irish Water: Customer care and billing systems, Work and asset management system, Financial system, Procurement system and Capital Project Management systems," Mr Tierney told the committee.

All of these were based on existing Bord Gais systems but the specification had to reflect the needs of a water utility as distinct from an energy utility and meet the needs of an organisation approximately 3 times larger than Bord Gais today.

Mr Tierney said it engaged external service providers through a competitive procurement process. They are experts in the building and integration of complex utility information systems.

It added the use of such expertise is standard practice for utilities internationally and is seen as the most efficient practice both in terms of delivery and also of cost management.

The committee heard that the budget as submitted by Bord Gais for the programme was €150m with a project contingency of €30m.  

Mr Tierney said clearly that in March 2013 Bord Gais recieved a cost recovery letter from the Department of the Environment amounting to €60.9 million and granting it permission to enter capital commitments of a further €98.3 million.

The entire programme and associated budget as well as the approach to resourcing and staffing the programme was rigorously examined and approved, by both the internal Bord Gais governance and approval processes, and by the relevant Government departments, Mr Tierney said.

In its opening submission to the committee, Irish Water said it established the Irish Water Programme and assembled a team comprising the best utility expertise of Bord Gais and combined that with the water and wastewater expertise of Local Authorities and the Department of the Environment Community and Local Government. 

That programme of establishing Irish Water is to was to run until April 2015. It said one of the key milestones to ensure that we had all of the systems, processes and capabilities in place to take over €11bn worth of assets from 1st of January 2014. 

By Daniel McConnell, Political Correspondent

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