Iarnrod Eireann made far more progress on rail safety last year than in 1999, according to a new audit. But the company's projected cost of the five-year project is now likely to rise to £566 million (#719 million) from £430 million.

The company is understood to have spent about £100 million on safety last year. Its 1999 annual report cited expenditure of £76 million.

Seen by The Irish Times, the draft audit by British group International Risk Management Services (IRMS) said a seachange in safety management culture had taken place at the State-owned company.

The group, which is monitoring the 1999-2004 safety programme for the Department of Public Enterprise, added that this was causing stress among managers and staff. It said interunion tension between drivers after strikes last year could pose a safety hazard.

IRMS produced a highly critical audit last year, which the Minister for Public Enterprise, Ms O'Rourke, sought to link to the resignation of CIE's then chairman, Mr Brian Joyce. Mr Joyce rejected the publication of the audit a day after his resignation as a "smoke-screen" designed to deflect attention from questions he had raised about the transport group's autonomy.

The latest report, which was commissioned last November, said the speed of improvement had increased since the previous audit in late 1999. While a "handful" of important recommendations had not been implemented, all but three previously identified unreasonable risks had been addressed. Of the eight new risks that emerged last year, four were cleared and the others were "being managed".

The authors said: "The hard issues of life-expired infrastructure are being tackled effectively and the result should be a reliable and maintainable railway in the long term.

"Very real progress has been made in the InterCity and suburban operations and in the chief mechanical engineer function, in the implementation of systems at ground level, and in developing a robust safety culture through good communications systems, hazard management, regular safety committee meetings and safety tours and the training and involvement of staff safety representatives."

Yet much remained to be done, particularly on the part of managers. "There is no doubt that there is a much better understanding of what is needed to achieve this objective, even if Iarnrod Eireann is struggling to get there. There is self-evidently a shortage of people within Iarnrod Eireann who have the necessary attributes in the area of management systems development.

"Only by tackling these management issues can Iarnrod Eireann become self-sustaining when dealing with infrastructure issues. It needs a culture change that has commenced but is not yet fully in place."

IRMS added: "Iarnrod Eireann could be described as in a stage of change, although whether it will emerge changed is not certain at this stage. If the funding tap were to be turned off, it is not certain what would happen."

The consultants said the company attributed the rising cost of the project to increased unit costs and the large amount of investment needed in cutting and embankment work. The £136 million increase in the likely cost of the programme was significant and would require detailed justification to Government.

"Iarnrod Eireann believes that the railway infrastructure is currently well below a minimum acceptable and that it would not be possible to choose between competing investments if all the requested £566 million were not available. IRMS has some sympathy with this viewpoint."

However, it says the company needs to implement systems of investment appraisal.