Iarnrod Eireann's projects director warned about significant cost overrun last June

Iarnrod Eireann's projects director, Mr Joe Leahy, warned at a meeting last June that the Heuston Station development project would cost significantly more than initial estimates, the sub-committee heard.

When Mr Pat Rabbitte raised Mr Leahy's warning yesterday - which was set out in a document discovered to the subcommittee by the Department of Public Enterprise - he was told that the cost of the Heuston project could be some £12 million more than originally estimated.

Mr Leahy said that if the mini-CTC project had been completed on time, it would have been within budget. However, this did not happen.

The Heuston project had been initiated in 1997 and was to run for two years. He said it was £12 million over budget and had gone over four years. There had been discussions with the contractor, Westinghouse.

The executive chairman of CIE, Mr John Lynch, said he did not know whether there was a similar situation in relation to other projects. Mr Leahy had been brought back from eastern Europe to look at other projects where CIE might be in a difficult position. He said he had not discussed the Heuston project with the Minister for Public Enterprise.

Mr Gerry Dalton, manager of the CIE infrastructural division from 1994 to 1996, said the Heuston project had been expanded from the original and there were consequent cost implications. He understood the original contract was for £17.5 million.

Mr Dalton has presented a detailed 30-page statement to the sub-committee in relation to the mini-CTC and Knockroghery resignalling and Esat projects.

In the statement, Mr Dalton said the figure of £14 million was arrived at based on the in-house cost of completing the mini-CTC project and was derived from a knowledge of the cost of other previous work and from the then current cost of the signalling on the Belfast line. He said the attraction of 85 per cent EU funding was the vital component which enabled the project to finally proceed.

However, when a deadline of December 1999 was placed on completion of the project, in order to secure the funding it was decided to put it out to tender. He said turnkey-type contracts (design and build contracts) were commonly used where project deadlines were paramount, but these placed a high reliance on the contractor to deliver.

Mr Dalton said that he was not directly involved in the preparation of the contract documents. He outlined in detail the differences between the tenders offered and said the contract was eventually offered to Sasib/Modern Networks Ltd in July 1997. There was never a question that every detail would be resolved at the time of tender acceptance.

The statement also dealt with the deal agreed between Esat and CIE for construction of a new telecoms network on its railway, parallel to the new signalling system.

Mr Dalton told the sub-committee he had given Mr Leahy total support in relation to advancing the mini-CTC project. Mr Leahy agreed that Mr Dalton had been supportive of him.