Updated Public Spending Code aims to avoid cost overuns

The Minister for Finance, Public Expenditure and Reform has today launched a revised Public Spending Code, which aims to ensure a tighter hold is kept on costs of large public capital projects.

It replaces the first version of the code, published in 2013. 

Since then a number of significant overruns on spending on projects, including the National Children's Hospital, has raised questions about whether the guidelines were fit for purpose. 

As a result the Department of Public Expenditure and Reform has reviewed and updated the document and included what has been learned from capital projects here, including the NCH. 

The main changes include more phases for evaluating the risk to government during the project. 

There will be a new strategic assessment of considerable projects before they move into the business case in order to identify risks. 

Then in the preliminary business case phase key costs and the economic impact will be examined.

Once the tender is complete, the costs must then be presented in a final business case for Government decision. 

An independent external appraisal process will also be applied to projects larger than €100m. 

Minister Donohoe said the new code will come into effect in January and will be fully operational by mid-2020 on all major projects going through Government. 

He said that he does not expect that the new requirements will lead to greater delays on key large projects. 

The Finance Minister said the state still has the ability to deliver projects on budget and has done so with many in recent years.

But he added that more clarity is required on what the costs will be.

He also said that future costs of building in the coming years here will depend on Brexit and the effect it has on the Irish and British economies.

Paschal Donohoe also said today that it is likely that it will be next year before the final costs of the National Children's Hospital are known to the Government.

Mr Donohoe said currently the Government is working on the basis of the figures it currently has available to it that indicate the cost to be €1.7 billion. 

"We have always said that when the board of the National Children's Hospital and Mr (Fred) Barry are able to form a final view as to what those final costs are going to be they will inform the Department of Health and then we will be informed at the same time and we will make those figures clear," he said. 

"I think Mr Barry in his appearance before the...Oireachtas Committee outlined some of the genuine challenges in relation to inflation and in relation to engagement that we are having on that project. " 

He added that all the costs in relation to the NCH that have already been shared with the Government have been factored into the spending plans for 2020 and beyond. 

"When the board of the National Children's Hospital have a final view in relation to the final cost, that will be shared with us and then we will make that information publicly available to the Oireachtas and explain how it will be accounted for and how it will be dealt with in our spending plans," he said.