The Government has been told the roads programme in the National Development Plan could cost €22 billion, or more, unless "immediate and, if necessary, radical measures" are taken to recast it.
All options, including "rescheduling of projects and reconsideration of some priorities, in terms of the level and standard at which they are to be undertaken, will need to be considered in this regard", according to Department of Finance documents.
Though several documents sought by The Irish Times under the Freedom of Information Act were partly blacked out or withheld altogether, one of the options being considered is likely to involve scaling down the motorway programme.
Among the key principles of the Department's appraisal guidelines for capital projects is a provision that "reappraisal of projects must take place if the cost increases, and that the option of not proceeding must always be considered".
Noting that the estimated cost of the roads programme had soared from €5.9 billion in 1999 to €15.8 billion in 2002, Mr Michael Scanlan, assistant secretary at the Department, warned this "holding estimate" would inevitably increase.
He quoted findings by consultants Fitzpatrick and Associates that the out-turn costs on almost 100 recent road projects had exceeded tender prices by an average of 38 per cent. The Fitzpatrick report attributed this to construction cost inflation, design changes, additional land acquisition costs, under-estimation of project prices and the National Roads Authority's management of costs.
According to Mr Adrian Finneran, of the Department of Finance, the report identified financial and cost management issues as "the main weakness in programme delivery", with the initial budget treated merely as a "contribution" to its real cost.
"There is a need to change the traditional contracting culture, where cost escalations were regarded as virtually automatic and which may have contributed to under-estimation at the outset," Mr Finneran wrote.
According to Mr Scanlan, the budgetary position had "deteriorated significantly and increases in expenditure which occurred in recent years cannot be sustained, even if desired . . . Immediate and, if necessary, radical measures must be taken at this stage to address the findings of the Fitzpatrick report."
While the Department "would wish to see infrastructure programmes delivered within agreed multi-annual funding allocations", the delivery of the roads programme "has not been done in a manner consistent with such a prudent approach to expenditure planning".
