Transport Infrastructure Ireland (TII) has defended its use of the same type of contract blamed for much of the overspend at the national children's hospital, for the €100 million Dunkettle interchange project outside Cork city.
The Dunkettle interchange project is the only other scheme in the State which has been given approval from the Government to use a so-called “two-stage contract”, rare in Irish public sector procurement.
Under a two-stage process, preliminary works such as design are completed before a final decision to proceed with the contract is made.
Fears have emerged about budget overruns and time delays at the Cork scheme following warnings from TII in recent weeks.
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However, TII defended its use of the contentious procurement process, which was criticised by the secretaries general of the Department of Health and the Department of Public Expenditure and Reform following the children’s hospital controversy.
Complexity
A spokesman for TII said the two-stage approach was used “due to the complexity of the Dunkettle interchange project”.
Up to 100,000 cars pass through the interchange every day.
Investigation works and design development are being undertaken at stage one, TII said.
“Executing this type of contract for complex projects protects TII from being locked into excessive construction costs. Currently TII awaits a final submission from the contractor before deciding on whether to proceed or retender.”
A two-stage procurement seeks to “de-risk” and can accelerate project timelines. However, it comes with risks of its own.
The PwC review of the national children's hospital project found that "the necessary controls required to mitigate the associated risks were not put in place in this instance", and that understanding of the risks as well as contracting strategy "was poor at all levels of the governance structure".
Sinn Féin Cork North Central TD Jonathan O’Brien, who obtained records relating to the Dunkettle project under Freedom of Information legislation, said the Government “has used the same flawed approach as that used for the national children’s hospital”.
“And now Cork is at risk of suffering from a repeat of the same mistake. That isn’t good enough,” he said.
However, TII may ultimately be faced with a scenario where it has to either accept cost overruns or lengthy delays to the project.
Overruns
The prospect of overruns at the Cork project was recently flagged by TII in a warning to Minister for Transport Shane Ross. Following the submission of cost estimates by John Sisk, the contractor for the Dunkettle project, Mr Ross was told late last month that "at this early stage of assessment, there are areas of significant differences with the contractor in relation to prices".
It is understood that negotiations with the contractor are ongoing, but no conclusion to that process is expected for at least two weeks. However, if an agreement cannot be reached, the project could be delayed by several months.
According to a briefing for Tánaiste Simon Coveney, if a target cost is not agreed during stage one, the second stage will collapse, and the final construction of the process will then be the subject of a new procurement process.
"This will delay the completion by some 12-18 months," Peter Walsh, the TII director of capital programmes warned.
It is understood that issues relating to the relocation of utilities and services are among the factors driving the significant differences with the contractor over price.
