Issues

Infrastructure: ‘not fit for purpose’ system in need of reform

As the Executive adopts a fresh emphasis to deliver major capital projects across Northern Ireland, failures to implement the necessary reforms, which have seen major flaws in even the projects of greatest priority, threaten to hamper ambitions.

While much has been made of the perceived underfunding by the UK Treasury in delivering on the ambitions of the New Decade, New Approach deal and the implications of this underinvestment in Northern Ireland’s infrastructure requirements, a report by the Northern Ireland Audit Office, completed prior to the Executive and Assembly’s return, has highlighted a poor track record by the public sector in delivering against its major capital projects portfolio and described the current commissioning and delivery arrangements in Northern Ireland as “not fit for purpose”.

New Decade, New Approach outlines ambitions to “turbocharge” infrastructure delivery in Northern Ireland, describing how the Executive will drive the delivery of essential infrastructure projects in order to build a “Northern Ireland that is equipped for a prosperous shared future”. However, such lofty ambitions appear ignorant of evidenced need for reform of Northern Ireland’s delivery system.

In 2013, a review by the Procurement Board (undertaken by SIB) of the commissioning and delivery of major infrastructure projects in Northern Ireland found that in the commissioning and delivery of major infrastructure projects “the system as a whole is not fit for purpose and works against…best endeavours to deliver”.

The review recommended change to all parts of the current system, adding that “the system needs to be overhauled and reformed in order to enhance its efficiency and effectiveness, and to ensure that it delivers better value for money for taxpayers”. The report received limited support and while some actions were progressed by the Department of Finance, reform largely stalled with the Comptroller and Auditor General (C&AG) noting that “some of the improvements to the commissioning and delivery of infrastructure are not being realised”.

In the same year, the CBI advised that changes were required to Northern Ireland arrangements to enhance the ability of the public sector to deliver value for money. Suggestions included: more intelligence-led commissioning of infrastructure; moving away from the process-driven culture; more realistic budgets; and prioritisation of turnkey solutions. It also suggested a move towards the Scottish and Irish model where there exists a centralised procurement and delivery agency, primarily for education and health capital building projects.

However, many of these changes have yet to be adopted, as evidenced by the C&AG’s review of major infrastructure projects and further recommendations have been made for consideration to be given to “the potential benefits of alternative commissioning and delivery models”, crucial given the likely increase in capital expenditure available to Northern Ireland through UK infrastructure priorities and a funding commitment for infrastructure by the Irish Government.

The C&AG endorsed the recommendations of the previous reviews, adding that while it notes a fundamental change in the relevant part of the Health Estates Investment Group to the Department of Finance’s (DoF) Construction and Procurement Delivery (CPD) in 2014, “it’s disappointing that further progress in transforming and delivery arrangements in Northern Ireland has not been made”.

Lack of reform

By way of analysing the impact the lack of reform has had on major capital project delivery, the C&AG’s report analysed the public sector major capital projects portfolio and in particular, progress in delivering 11 major projects (seven flagship and four identified as having experienced problems). Between 2011 to 2019 departments in Northern Ireland managed 54 major capital projects, with a total estimated cost of £5.5 billion, the majority of which were managed by the Department for Infrastructure and the Department of Health.

Historically, delays in large capital projects, as reported by the departments, are encountered at the preconstruction stage, particularly in the case of major road projects as a result of funding issues, legal challenges, planning issues or due to limited interest in the project from the construction industry. However, the 2015 identification of flagship projects by the Executive, seen as an effective way of addressing funding issues by protecting budgets on projects over a five-year period, had aimed to address some of the challenges.

Existing, cumbersome governance and delivery structures within the Northern Ireland public sector are not conducive to maximising the achievement of value for money.

— Kieran Donnelly, Comptroller and Auditor General

Despite this, the C&AG reported that of the 11 major capital projects it examined, each of them suffered time delays and/or cost overruns when compared against original timescales and budgets.

As examples of some of the projects with the most significant problems, the A5 project, a flagship project of the previous Executive, is expected to be delivered 10 years later than originally planned. The Critical Care Centre is now expected to be completed and occupied eight years later than previously planned and the Ulster University, Greater Belfast Development now needs to attract substantial additional external finance to bridge a major funding gap.

Estimates are that the A5 will exceed costs by 38 per cent, the Regional Children’s Hospital will cost 59 per cent more than the original business case and Casement Park, which was expected to be completed three years ago, is expected to exceed its original estimate by some 42 per cent.

Other projects, none of which were delivered to the expected timescale, have also incurred cost increases. The Critical Care Centre is now expected to cost 60 per cent in excess of the original business case estimate, Ulster University, Greater Belfast Development is expected to cost 27 per cent in excess of the original budget and the Strule Shared Education Campus is expected to run 27 per cent in excess of the original budget.

“While accepting that project delivery problems are not unique to Northern Ireland, it is disappointing that, in the 11 high profile projects considered in this report, costs and timescales envisaged at the outset of projects, were not achieved. Even flagship projects, identified as the Northern Ireland Executive’s highest priority and with funding secured over a longer period, have suffered time delays and/or cost overruns. Inevitably, where projects suffer substantial cost overruns, this impacts on the delivery of other projects,” says the C&AG.

Notably, some of these projects have been name checked in New Decade, New Approach as areas of priority delivery including the A5/A6 roads, Casement Park and the sub regional stadia.

However, the Northern Ireland public sector continues to face significant challenges in delivering against its major capital projects portfolio. These challenges, such as funding uncertainty, legal challenges, planning delays and a lack of appetite from the local construction industry to take on public sector work, are likely to remain into the new Executive’s delivery plan until reform is delivered.

“Existing, cumbersome governance and delivery structures within the Northern Ireland public sector are not conducive to maximising the achievement of value for money,” the C&AG says.

“We do not wish to be prescriptive about future structures, but we consider that there is considerable merit in considering how alternative models, resourced with sufficient, highly skilled staff might improve future infrastructure delivery.”

The report concluded that, given the importance of major capital projects to the economy of Northern Ireland, the C&AG will revisit the area through future studies. One on the efficiency and effectiveness of the Northern Ireland planning system at central and local government level, and another on identifying the lessons arising from Judicial Reviews.

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