[Article] Roads: Showdown on soaring costs

Roads : Showdown on soaring costs
02/11/03
By Niamh Connolly

It devours the greatest amount of taxpayers' money after the health service, yet the National Roads Authority, which oversees the country's national roads network, is arguably the least accountable of any state-funded organisation.

The NRA's yearly budget of €1.25 billion is the source of envy of other state agencies pleading for funds from the exchequer.

The NRA has a commanding position over the country's infrastructural budget, but only recently became subject to disclosures under the Freedom of Information Act. It is reluctant to discuss projected road costs or deal with the toll operator National Toll Roads, citing commercial sensitivities.

This ensures its supreme authority when handing out construction contracts to competing tenderers for its lucrative roads contracts.

It also explains the unwillingness of many construction and engineering companies and transport specialists to review publicly the NRA's estimates.

The NRA blames massive escalations in the cost of road projects primarily on construction price inflation, yet there is still little independent monitoring and verification of its spending patterns.

In the light of its latest request for an additional €300 million to upgrade the M50 motor way in Dublin, the workings of the NRA are due to come under scrutiny.

Such an increase would bring the authority's annual budget to €1.7 billion, roughly three times the budget for public transport. A report issued last week by the Economic and Social Research Institute warned that further hikes to the national roads budget could not be justified.

It argued that sections of the existing primary route network were constructed to specifications well in excess of needs.

The independent think tank was critical of the NRA's upgrade of sections of the N8 and N9 roads under the National Roads Programme. The report said, "no economic analysis has been offered to our knowledge to justify the design inflation which has occurred."

Defending its decisions, the NRA said the government had examined its entire network and felt that "there was a good argument on the basis of consistency and road safety that these roads [N8 and N9] should be converted to dual carriageway".

The authority's lack of cost controls has long been a subject of concern to members of the Public Accounts Committee, who asked the NRA to account for a €10 million overrun in what was initially a €6 million NDP plan. On this basis, opposition parties are asking whether the estimated €300 million for the M50 upgrade will escalate to twice or three times that figure.

A review of the NRA's spending policy by the Minister for Transport, Seamus Brennan, is finally being undertaken by accountancy firm PricewaterhouseCoopers.

The report's remit will "review the authority's operational procedures and structures, including its relationship with local authorities with a view to maximising efficiency in the delivery of the national roads programme, and value for money", according to the NRA's spokesman Michael Egan.

But the NRA's cost estimations and control procedures have already received a severe lashing in a previous study by Fitzpatrick Associates.

That study revealed a worrying picture of the NRA's financial control over infrastructural projects.

* M7 Nenagh-Limerick was underestimated by 95 per cent. The cost for the 38-kilo- metre motorway escalated to €236 million from €121 million.
* M4 Kilcock-Enfield- Kinnegad motorway costs increased by 42 per cent, from €203 million to €288 million.
* Dublin Port Tunnel's costs have risen from €165 million to €625 million.

According to the NRA, its estimates were based on a 1997-1998 Road Needs Study, which did not anticipate the extent of the boom in car sales.

The authority said that construction inflation, which it estimated to be around 45 per cent between 1999 and 2002 also contributed to escalating costs. It stressed that the parameters of many projects were changed during this construction period.

The NRA no longer operates contracts that allow contractors to claim a percentage of the final price based on the amount and quality of materials used, which effectively offered carte blanche to builders to name their price.

Its move to fixed-cost contracts is seen by many as coming too late in the National Roads Programme to save taxpayers millions of euro.

But inflationary pressures did not account for all overruns. The study by Fitzpatrick Associates expressed concern that the NRA's initial estimates were also worryingly inaccurate.

A study of five national road projects found that cost estimates ranged from 58 per cent too low to 48 per cent too high. The report found that the final costs averaged 38 per cent higher than initial tender prices.

"Outturns of this scale beyond estimates must cause concern about control of cumulative cost at project level, however valid the individual explanations," the report stated.

Jim Power, Friends First chief economist, said: "It has been a case of not enough rigid control exerted on overall projects by state agencies.

"There is an attitude that this is state money and does not need the same amount of constraint as private companies engaged in a similar amount of expenditure. There has been a high level of mismanagement in the way the projects have been overseen by official agencies."

Indecon consultants, charged with carrying out a half-year review of the National Development Plan, expressed concern that the authority was unable to make available timesavings for the new roads to include in its report.

The time savings targeted by the NRA by end 2003 were: the M1 - approximately 23 minutes; the N7 - approximately 12 minutes; the N8 - approximately ten minutes.

The transport minister told the Dáil, in response to a question from Green PartyTD Eamon Ryan, that it was too early to provide timesavings, but they would be identified "on completion of the entire interurban route".

He said the relief roads provided at Enfield and Kinnegad on the N4-N6 had achieved journey timesavings, but provided no further details.

There are now growing concerns that a high specification inter-urban motorway is beyond current requirements and is being financed at the expense of desperately-needed relief schemes for local bottlenecks, such as the Ennis bypass.

The NRA has so far completed 26 schemes covering 187km between 2000 and 2002. A further 19 schemes involving 155km are under construction from the start of 2003.

But basic errors were made by the agency in drawing up plans for what it claims are state-of-the-art motorways - most notably a failure to comply with EU motorway standards.

Only after several high-profile accidents resulting in deaths on motorways, did the NRA decide to erect physical barriers between lanes of high speed traffic travelling in opposition directions, which is standard across the EU.

It has also disregarded the need for rest stops or service stations in the design of the new motorways. These are required for the haulage industry by EU law.

Thousands of lorries using the M1 are still entering provincial towns to take rest stops, defeating the purpose of town bypasses.

In keeping with EU standards on safety, the NRA has failed to ban tractors from using motorways. It is also coming under fire for designing roundabouts considered too narrow for national primary routes.

Who holds the purse strings

The 14-member board of the National Roads Authority is remarkable for its absence of direct transport, roads or engineering expertise. It includes two hoteliers, a teacher, an auctioneer and a health officer. It is also remarkable for the absence of any safety authority representative, or road hauliers who have experience of thousands of miles of road use through Ireland and Europe.

The majority of appointments were made by the former minister for transport, Mary O'Rourke. Transport Minister Seamus Brennan has made three appointments.

Chairman Peter Malone, former hotelier with Jury's Group. Appointed 2002 by O'Rourke. Term of office expires February 2007.
Bernard McNamara, McNamara Construction. Appointed 2003 by Brennan.
Connie Ni Fhatharta, teacher in Galway and Galway County Council member. Appointed 2003 by Brennan. Term expires March 2006.
Brendan O'Mara, chartered surveyor and principal partner in Bruce Shaw Partnership, a construction consultancy company. Appointed 2003 by Brennan. Term expires April 2006.
Niall Sweeney, Offaly County Council manager. Appointed 1999 by O'Rourke. Term expires June 2004.
Risteard O'Lionaird, Civil Engineer, private practice. Appointed 1999 by O'Rourke. Term expires June 2004.
John Murphy, assistant secretary, Roads Division, Department of Transport. Appointed 2001 by O'Rourke. Term expires August 2006.
Jimmy Farrelly, former secretary general, Department of Environment and Local Government. Appointed 2001 by O'Rourke. Term expires October 2004.
Ted Murphy, Cork Council official and civil engineer. Appointed 2001 by O'Rourke. Term expires October 2004.
Jenny Kent, hotelier, Abbeyleix. Appointed 2002 by O'Rourke. Term expires February 2007.
Raymond Potterton, auctioneer, Co Meath. Appointed 2002 by O'Rourke. Term expires February 2007.
Frances Boyle, elected member of Thurles Town Council. Appointed 2002 by O'Rourke. Term expires March 2007.
Frank Convery, UCD Department of Environment. Appointed 2002 by O'Rourke. Term expires March, 2007.
Eimear McCauliffe, health board officer. Appointed 2002 by O'Rourke. Term expires March, 2007.