The Minister for Transport, Mr Brennan, has insisted that recent changes in the financial management of major projects will help eliminate cost over-runs such as those highlighted yesterday in the national road-building programme.
His remarks follow the report of the State's public spending watchdog, the Comptroller and Auditor General, looking into why a roads programme, originally estimated at €7 billion, is now expected to cost €16.4 billion just over three years later.
The comptroller began his review after the Dáil Public Accounts Committee expressed concern about the cost over-run.
The report found substantial delays in the completion of projects and major cost over-runs, many due to a lack of expertise in the National Roads Authority (NRA) in the early years of the roads programme.
Mr Brennan told reporters yesterday that he believed the NRA would confess that it was on "a learning curve" at the start of the process. Back in 1999 the NRA had used a "rough ball park, back of the envelope cost" when costing the national roads programme, and came up with €7 billion, he said.
But since the Comptroller and Auditor General began work on his report, major projects had moved to fixed price contracts, thus reducing the danger of major cost over-runs. There was also a five-year "financial envelope" of €8 billion for such projects.
These two changes "have brought about a situation that all the projects out there, virtually all the projects out there are on cost and on time".
An original €5.6 billion estimated cost, for roads programmes in the November 1999 National Development Plan (NDP) for 2000 - 2006, rose to €7 billion when adjusted by the NRA to take account of certain changes. By 2002 the estimate of the measures being undertaken had risen to €15.8 billion, and it had risen to €16.4 billion by the end of 2003.
The report found that more than 40 per cent of the increase was due to inflation, with a quarter due to underestimation of prices at the beginning of the building programme.
A further 16 per cent of the increase was due to a failure to cost certain elements of schemes at the planning stage and 20 per cent was due to changes in the scope of projects and the introduction of new works. The rest was due to increases in costs of specific projects, such as the Dublin Port tunnel and the section of the M50 near Carrickmines Castle.
The report says that when the NDP was adopted, the practice of cost estimation was "not well developed".
This has largely been rectified since the NRA set up a cost estimation function in 2000.
In his report the comptroller, Mr John Purcell, says that despite the lack of costing expertise in the NRA, action was only taken to redress this after the road-building programme started.
He said it was acknowledged in 2000 that the complete roads programme would not be delivered by 2006.
However, "it could have been expected that, at the proposed funding levels and the then estimated cost, around 80 per cent of the proposed programme would have been delivered by that date".
Instead, however, and despite the proposed increases in funding, around half of the programme will not have been delivered by that date, while just under 30 per cent will not be delivered by the end of 2008.
It says the cost of acquiring land for road improvement represents 14 per cent of programme costs. It also says there is scope for renegotiating fees for professional services because of the scale of the road improvement programme and the consequent rise in the NRA's purchasing power.
The system whereby consultants receive a fixed percentage of project costs, no matter how high they rise, is also criticised.