Wednesday 26 June 2019

Editorial: 'Scandalous cost of State projects'

The cost of developing the new National Children’s Hospital at the St James’s Hospital in Dublin has escalated.
The cost of developing the new National Children’s Hospital at the St James’s Hospital in Dublin has escalated.


The scandalous overrun in the National Children's Hospital is the latest example of the cost of such major State capital projects spiralling out of control. Now heading for €1.73bn, when IT and other ancillary costs are included, the total cost will be a minimum €400m more than the stated cost even this time last year.

The new children's hospital was supposed to have been completed in 2016, but now it will be 2022 at the earliest before it is functional. Notwithstanding the issues of public consultation and due process, the delay and consequent massive cost overrun on the children's hospital is the latest indictment of how the State conducts its business.

Take the rollout of the national broadband plan as another example. Its stated essential nature makes it a high government priority, yet it has been meandering for six years and is still no nearer getting started. As of now, the Government might or might not be about to sign a contract with the one and only tender left in the "race". Today it is estimated the project could cost anything between €1.5bn and €3bn rather than the original estimate of €500m.

Such cost overruns have been manifest in the public system for years, if not decades. The Red and Green Luas lines, the Cross-city line, which was said in 2010 to cost €170m (less than half of what it finally came in at), the Port Tunnel and the M50 widening all cost well in excess of the figures on which the political go-ahead was based. We shudder to anticipate what the proposed - and questionable - MetroLink project to the airport in Dublin, which was first proposed in 2005, will actually cost whenever it is completed.

The Public Spending Code requires that a full cost-benefit analysis be prepared for all publicly financed projects costing €20m or more. This requirement is being enforced, at considerable cost and inconvenience, for some of the smaller projects but seems to be ignored for the larger ones.

The Government recently announced, to great fanfare, an exceptionally ambitious capital spending project after years of stalled national development. Many of these projects are essential. But the cost must not be allowed to spiral out of control as is evidentially the case in several major projects to date.

There is one way to ensure that some control is maintained on such projects. As our columnist, the economist Colm McCarthy, argues today, the Public Spending Code should either be formally withdrawn, or placed on a statutory basis, with defined accountability for cost estimation and consequences for misleading the Government. Otherwise, the signal from Government, yet again, is that misleading cost estimates have no personal consequences for anybody.

Sunday Independent

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