N5 - Ballaghaderreen to Scramoge [construction to commence shortly]

Interesting but rather whiney article about the potential impact of the new road on local businesses, from shop owner in Ballaghaderreen.

I think there is some truth in something I heard said that any town/village that dies after a bypass was dying anyway. Most places adapt and take advantage in whatever way they can.

Heard the same that Wills have the contract, with a tender around the €250 million mark.

I believe this will be one of if not the biggest job they’ve undertaken themselves, as its not a JV.

It's a 25% increase versus the original tendered price. That's a big increase, but I can see how contractors would be wary.

Hopefully there's some kind of reward for coming in under budget built in to that pricing..

And I thought the re-tender amount was around €194m?

Nearly double now.

Add that 250m to what was paid out on preliminary works, design and land acquisition and the 450m bandied about in the media the other week makes more sense.

The preliminary works, design and land acquisition were all paid for several years ago, therefore fixed, and before the recent rapid inflation. They might amount to half the original tendered sum, retendering costs would be small beer, in the tens of thousands.

If €250m new tender price, plus lets generously say €100m for design/planning/land, there's still €100m in the difference. Some of that must be the public realm works but there would still be a fair chunk left after that.

Just after reading this article in the Business Post from the end of September. Interesting to read the part where TII has recommended that the government move away from fixed price contracts to reduce project costs. Can someone explain this to me? What system could they move to that would control the costs better?

Transport Infrastructure Ireland, which is delivering the new project with Roscommon county council, has previously called on the government to move away from the fixed price contracts for roads like the N5 Ballaghaderreen to Scramoge road. Peter Walsh, its chief executive, told the Oireachtas Transport committee last year that fixed price contracts could only work in times of low inflation.

“We had a decade of low inflation and in those circumstances it worked. Where we have inflation volatility the way we have right now, it will not work,” he said.

(The full article can be read for free by registering an email account)

https://www.businesspost.ie/article/cost-of-west-of-ireland-road-upgrade-soars-by-eye-watering-e250-million-in-three-years/

The inflation issue is that under the Irish government contracts, it is extremely difficult for the contractor to get more money due to price changes in labour or materials. Tenderers are expected to price in possible inflation for the duration of the project. This means tenderers have to take a punt but for large projects taking multiple years in particular, the current situation means that contractors are assuming continued high inflation so that they don't get stung. They have to price based on what they know today but it could be six months later before the contract is awarded and the prices hold until the works are completed.

The fixed price nature of the contracts means that the state doesn't get anything back if the assumed level of inflation doesn't materialise, or if prices drop during the project. There are options for price variations in the government contracts but they are complicated and become a battle to get anything.

Fixed price contracts are not weighed in favour of the contractor - they take on the risk. If the project proceeds as expected or if inflation is lower than expected, they will make additional profit. If the project costs more than expected, they make less profit or a loss. The state knows exactly how much it must pay so there is no risk but potentially it will overpay.

Don't know why this scheme isn't a dual carriageway like the Dromod/Rooskey scheme or Castlebaldwin/Collooney road

It's eastern start point is Scramogue outside Strokestown, so Tarmonbarry doesn't come into it.

That petrol station is always busy lol