A depressing litany of cost overruns on major projects has damaged the credibility of public-capital spending in Ireland. In an unconscious acknowledgement, Monday’s relaunch of the National Development Plan (NDP) was broadcast from Cork’s Páirc Uí Chaoimh stadium — where the redevelopment cost €110m, versus the budgeted figure of €70m.
Stripped bare, there are two essentials in the effective oversight of large capital projects. There should be a cost estimate — easy in some cases and harder in others, but an honest shot at the bill for the scheme. No cost estimates were furnished for most of the larger items on Monday, not even the customary over-optimistic guesses.
The second essential is an objective appraisal to check that the benefits exceed the costs. No appraisals for some of the largest projects were offered on Leeside.
The Government is persisting with the MetroLink underground tram project northwards from central Dublin, despite the previous day’s revelation in the Mail on Sunday that the cost had reached an extraordinary €10bn. The figure was just €3bn when political commitment was secured in 2018.
The story has not been denied and the scheme is to go ahead without a completion date. The extra €7bn doesn’t appear to matter.
Since it was good value at €3bn in 2018, at least in the opinion of consultants engaged by the project promoters, the Government must expect another breezy cost-benefit ‘analysis’
will get the benefits up to speed with the costs.
Between design work, consultation, and copious public relations, about €250m has already been spent on the various iterations of MetroLink without a sod turned, enough to replace the entire Dublin Bus fleet.
The overshoot is even worse than it appears. The original €3bn for Metro North was meant to deliver a line, partly new and partly an upgraded Green Line, all the way from Bride’s Glen, 16km south of Dublin city centre, to Swords, about the same distance to the north.
But the rechristened MetroLink goes only from Swords to Charlemont in the south inner city, a little over half the distance. And the upgrading of the existing southern leg in the earlier project has disappeared.
The new €10bn figure cannot be compared with the initial €3bn for a larger project. For the comparable Swords to Charlemont segment, the 2018 estimate must have been well short of €3bn, perhaps down towards €2bn.
In absolute and relative terms, the over-shoot on MetroLink is by a distance an all-time Irish record. The entire State capital programme cost just €4bn, around half the over-shoot, as recently as 2016.
The Government is in denial on MetroLink. The outsourcing of project appraisal to consultants hired by the project promoters has consistently yielded costs which are too low — sometimes by an order of magnitude — paired with fanciful claims about benefits, yielding... hey presto! numbers for benefit-to-cost ratios. The following bromide adorns the NDP presentation at Páirc Uí Chaoimh:
"The plan is underpinned by an updated Public Spending Code which came into effect on January 1, 2020, and sets out the value for money requirements for the evaluation, planning and management of public investment projects in Ireland.”
In the absence of either cost estimates or project appraisals, the claim that the NDP is ‘underpinned’ by the Public Spending Code simply cannot be true.
If MetroLink is to cost €10bn, and the figure has not been denied, the announced rail investments in the Dublin area — under- and over ground Dart lines, more Luas lines, a MetroLink to the city’s southwest — could easily absorb the entire planned allocation for all modes of transport for the entire country.
The central requirement in a serious capital programme is careful project appraisal, since financial and labour resources are limited. The programme should exclude improbable schemes which will never be built, for fear of wasting resources on design and planning — as happened with MetroLink.
The obsession with project ‘delivery’ is an attempt to skip homework by not doing the costing and appraisal properly. There is no other guarantee that the best projects will be chosen. There are no short cuts.
When politicians and public officials focus on ‘delivery’ of projects which have been neither costed nor appraised, they cannot credibly claim to be motivated by the pursuit of value for money.
If €10bn is the figure for MetroLink, everyone knows that the project will never be built. Instead, it is the Government’s intention to apply next year for a Railway Order and the project will be shepherded through the ensuing planning process. That means further direct costs (more engineers, lawyers, planning consultants, PR operatives), but there will be indirect costs too.
It is a fair bet that many Dublin northside politicians, vociferous in support of MetroLink and its various predecessors, will ally themselves with objectors when the detailed Railway Order is sought.
The subsequent odyssey through An Bord Pleanála and judicial review will clog up the system’s capacity, to the exclusion of more urgent proposals for schemes that might actually happen. Housing schemes for example.
During the bubble period leading up to the crash in 2008, the Government boosted the capital programme in the face of unprecedented construction demand in housing and other sectors. In the coinage of former Taoiseach Bertie Ahern, the boom got boomier.
There is, at current levels of demand, a severe shortage of construction workers, especially in the ‘wet’ trades like bricklaying. The Government’s housing ambitions, on top of plans to retrofit the housing stock to cut emissions, have now been augmented with a hugely expanded public-capital programme.
Aside from labour shortage, there can be no guarantee that the finance for future deficits on the scale envisaged will be forthcoming, once the ECB scales back its purchases of government debt. Even if it could be financed, what is the point of trying to spend your way out of a brisk recovery?