The Government has conceded that its ambitious €6 billion (£4.73 billion) road-building plan may be stalled.

The Department of the Environment said yesterday it did not contest an analysis by the Construction Industry Federation (CIF) indicating no new roads projects would commence this year because the National Roads Authority (NRA) was being starved of funds. The €1 billion allocated in the budget for national and non-national roads will be sufficient only to provide the cash flow needed to complete jobs already under way, according to the CIF.

The federation has identified four projects, costing around €300 million in total, that are ready to proceed but are effectively stalled due to lack of funds. They are proposed bypasses for Monasterevin, Ennis, Cashel and Carrickmacross. The projects have gone out to tender but "have not been given the green light due to lack of funds", according to Mr Don O'Sullivan, director of the CIF.

A spokeswoman for the NRA refused to comment on the analysis, adding that the Government would not formally announce the authority's 2002 budget until the end of this month.

A spokesman for the Minister for the Environment, Mr Dempsey, said yesterday that his department did not challenge the federation analysis, but it was ultimately up to the NRA to decide how the budget allocation is distributed.

The spokesman stressed that €2.7 million a day would be spent on roads this year, including projects such as the €300 million Dublin Port Tunnel and upgrading the Dublin to Belfast road.

The CIF claims evidence is now emerging of a general funding problem with the €50 billion National Development Plan and the roads programme in particular.

"We don't see any momentum for its implementation. The plan will not be delivered," according to Mr Liam Kelleher, the chief executive of the federation.

He blamed the funding shortfall on the addition of new projects to the plan, the decision to set higher design specifications and the need to pay higher-than-expected sums in compensation to land owners. Inflation in construction prices was a significant factor in many cost overruns, but price pressures were now easing, according to the federation.

The slowdown in the private construction sector has removed many of the capacity problems that were pushing up prices, Mr Kelleher said. The number of people working in the industry was set to fall by 10,000 this year, he said. The actual numbers leaving the sector would be closer to 16,000 but this would be offset by a significant intake of apprentices and trainees.

Mr Kelleher said the Government should not be afraid to borrow money to take advantage of the spare capacity in the industry and deliver on road and other infrastructure products. The Minister for Finance, Mr McCreevy went to considerable lengths to avoid having to borrow when framing his budget last December. The move surprised most economic commentators, who expected a certain amount of borrowing to pay for infrastructural projects.

"We are now beginning the third year of the seven-year National Development Plan," said Mr Kelleher.

"Controlling current expenditure and investing heavily in infrastructure are the keys to reducing our infrastructural deficit," according to Mr Kelleher.

The construction industry grew by just 2 per cent last year, but was still worth €19.5 billion or 20 per cent of Gross Domestic Product. The private construction sector was worse hit, shrinking by 4 per cent to €8.9 billion. This year the federation expects output to fall by 3 per cent overall, with private sector output falling by 10 per cent.

The number of people employed in industry last year fell from a peak of 186,000 to 180,000 by the end of the year. It is predicted to fall to a low of 170,000.