We are meeting today with Dr. Paul Davis, representatives of the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation on behalf of the Office of Government Procurement and with the Construction Industry Federation, to discuss the importance of best practice in procurement policy, specifically in support of the objectives contained in the national development plan.

Today I am pleased to welcome from Dublin City University, Dr. Paul Davis, associate professor in procurement and supply chain management; from the Construction Industry Federation, Mr. Paul Sheridan, main contracting and civil engineering services; and from the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, on behalf of the Office of Government Procurement and Government procurement itself, Ms Anne Stewart, assistant secretary, public sector policy services, delivery and digitalisation; Mr. Fergal Grogan, assistant principal officer; and Mr. David O'Brien, principal officer, construction sector capacity and procurement infrastructure division.

Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore, if witnesses' statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. I remind members that they will be afforded a six-minute speaking slot for questions and answers, with a second chance to contribute at the end, if people so wish.

We will take the three opening statements first and then we will take questions subsequently. I invite the witnesses to make their opening statements.

I thank the Cathaoirleach and members of the committee for the invitation. Ireland is committing €102 billion in Exchequer capital to public infrastructure between now and 2030. That is an historic commitment. The question I want to address this afternoon is not whether we are spending enough, but whether our procurement architecture is capable of converting that spending into delivered infrastructure.

The evidence suggests we face a significant capability gap, and that it is costing us. The Irish Fiscal Advisory Council documented last year that actual capital spending in 2023 ran over a percentage point of national income below plan, not because of funding shortfalls, but because the system could not absorb the investment. Ireland's productive capital stock remains roughly 25% below the average for comparable European economies. The construction industry tells us that over 60% of Ireland's top contractors are now exporting their services, preferring markets in the UK, Scandinavia and the US to Irish public procurement. These are rational market responses to a procurement environment that contractors experience as commercially unattractive.

This is not a regulatory problem. Ireland has transposed the EU procurement directives in full. Every tool we need, whether that is competitive dialogue, negotiated procedures, quality-weighted evaluation, life-cycle costing or dispute resolution boards, is available under existing law. The evidence suggests these tools are not yet being used to their full strategic potential because our institutions lack the confidence, capability, and specialist expertise to apply them.

International research is unambiguous on what drives infrastructure delivery failure. Professor Bent Flyvbjerg's analysis of over 16,000 projects across 136 countries shows that more than 90% of megaprojects exceed budget, schedule or both. The causes are consistent: optimism bias at approval stage, where costs are systematically underestimated; risk misallocation at tender stage, where the lowest price becomes a proxy for certainty in environments characterised by complexity; and weak post-award governance, where performance deviations compound undetected until they become crises.

The Government's own accelerating infrastructure task force named rigid procurement as one of 12 barriers to delivery. The OECD's dedicated study of Irish procurement found limited capacity to measure outcomes and a fragmented digital infrastructure across the procurement lifecycle. The Comptroller and Auditor General has documented recurring patterns including inadequate cost estimation, scope drift and governance failures year after year across different sectors and project types. This is a system problem, and it requires a system response.

I am putting five practical recommendations to this committee today. The first is to establish a major projects procurement unit. This would be a central specialist body with embedded commercial, legal, risk modelling, and contract management expertise, modelled on the UK's Infrastructure and Projects Authority and New Zealand's Te Waihanga. This unit would provide specialist capability reinforcement to contracting authorities for all major NDP projects. It would maintain institutional memory across project cycles and publish delivery confidence assessments. The second would be to mandate a delivery readiness assessment before any major project goes to tender, including independent cost benchmarking, structured risk modelling, market capacity analysis and confirmed contract management resourcing. Projects should not be allowed to proceed to procurement without these foundations in place.

The third recommendation is to reform how we evaluate tenders for complex infrastructure. The EU framework explicitly allows, and in complex cases strongly supports, qualitative evaluation of delivery capability, key personnel, track record and lifecycle cost. We should use these tools. The current default is price-dominant scoring in complex environments. This is not prudent fiscal management; it is deferred fiscal risk. The fourth recommendation is to treat post-award contract management as what it is: the primary fiscal risk management stage of infrastructure delivery. This means dedicated contract governance teams, digital performance dashboards, milestone-based independent reviews and a formal contract manager profession within the public service.

The fifth recommendation is to mandate structured dispute avoidance boards on major NDP contracts from the outset. International evidence shows these mechanisms prevent almost half of all potential disputes completely, at a cost of a fraction of a percent of project value. Compared with the legal costs of adversarial escalation, this is an exceptional investment.

None of these recommendations require EU legislative change, nor do they require primary legislation in its initial phase. They simply require institutional prioritisation, capability investment and political commitment to treat procurement as a strategic State function, rather than a procedural safeguard. Ireland has the fiscal capacity to fund the NDP. The question this committee must help answer is whether we have the institutional capacity to deliver it. I believe we can, but it will require the reforms I have outlined today. I am happy to take any questions the committee may have.

On behalf of the Construction Industry Federation, CIF, I thank the committee for the opportunity to address the importance of best practice in procurement policy to support the objectives in the national development plan and the accelerating infrastructure plan.

First, the CIF acknowledges the recent and ongoing reforms to the construction works management framework, CWMF, and the public works contract over the past several years, such as price variation mechanisms; limited liability; professional indemnity insurance; alternative dispute resolution mechanisms; and early collaboration and contractor involvement. Unfortunately, these and further reforms must be accelerated. This is critical to attracting contractors to public works, lowering embedded carbon and delivering complex infrastructure. Our analysis and regular outlook reports continue to show that almost 70% of contractors are doing none or low levels of public works. The European Union has commenced the process to reform its public procurement rules on the back of its own audit report. This report concluded that the rules have failed and have led to less competition for public works.

The CIF has set out its recommendations for the reform of public procurement in its Strategy for the Improved Delivery of Public Infrastructure, which we have enclosed. The main pillars of reform are related to multi-annual funding and project trackers, administrative costs and bureaucracy, quality in award, design, risk management and collaboration. I will discuss these concepts briefly.

With regard to multi-annual funding and project trackers, in the accelerated infrastructure action plan the Government has provided policy intent to provide multi-annual funding for the projects under the NDP, together with sectoral plans detailing what projects will be delivered by different departments. This is critical for business continuity and certainty, which support business planning, resourcing, skills, innovation, productivity and investment by the sector.

Unfortunately, the sectoral plans published by the Departments do not provide the necessary detail to help contractors to align their business plans for public projects. In fact, the industry is currently operating well below capacity and is accelerating the export of its services. However, we welcome the commitment of the construction sector group to publish a more detailed 24-month tracker in early quarter 2.

Regarding administrative costs and bureaucracy, we welcome the transfer of the OGP's construction policy unit into the Department of public expenditure, which now recognises the huge distinction between the procurement of construction works and general public procurement. Construction is about the complex long-term stakeholder, design, construction, logistical, risk and operational management of constructed assets. To attract SMEs, who are also critical to the NDP, there must be a reduction in the administrative cost and bureaucratic burdens involved in tendering for public projects. We therefore support the rapid implementation of the proposed new digital profile platform being developed by PER and the GCCC.

For most projects, quality, embedded carbon and life cycle costs should be the most important factors in determining who is awarded the contract. We must move away from the concept of lowest price, which according to the Idiro Analytics report provided to the committee leads to extreme price competition, poor value for money and costly disputes. While legislation is in place to allow projects to be awarded based on quality criteria, to do so requires the reform of EU procurement rules in order that public clients be allowed name the specific materials, systems and products they want; the proportion allocated to quality should be determined by the nature of the project within a range of a minimum of 40%; two-stage tendering and the non-subjective assessment of multi-criteria; digitalisation and the leveraging of AI; and adequate and skilled resourcing of public procurement authorities.

The Government is making headway on this through the BIM mandate, carbon budgeting, the agreed rules of measurement 5, the relaunched commercial skills academy and the international construction measurement standards, with which the CIF is fully engaged and which it is supportive of. The CIF also supports the quality in public procurement Bill being brought forward by Senator Higgins and Deputy Gibney.

The design process is a critical part of the construction of infrastructure. It needs to be valued, given the necessary time to be done well, and the political recognition that it is essential work. The better the design, the better the construction and the operation of the asset. More and more design is being carried out by contractors due to technological advancement, changes within the design profession, liability and off-site manufacturing. This requires early collaboration and contractor involvement, which the Government construction contracts committee is advancing and which the CIF supports. While contractors are willing to take responsibility for design, they require full transparency and sufficient time to understand whether they are competent to undertake it; their professional indemnity insurance covers it; and, most important, that they can measure and price the design and the subsequent construction works. It is extremely difficult for a contractor to price for the construction of works if significant levels of design, including detailed integration of works elements, is not complete or, worse, if design teams include nebulous and ambiguous catch-all phrases hidden deep within their procurement documents. The use of design and build should only be used for complex projects where the final solution is not known at the start. It is best suited to transport, energy, water and healthcare-type projects where the expertise of contractors can be leveraged early. Standardised housing is better delivered through employer-designed contracts.

Poor risk management leads to adversarial relationships, generating project delivery issues and financial stress within the industry. Unfortunately, the first manifestation of the public works contract, PWC, unique to Ireland, was designed to simply transfer as much risk as possible to the contractor, whether they were best able to manage it or not. Improving risk management requires early collaboration and contractor engagement and increased use of reserved specialists; reform of contractual clauses within the PWC as set out in the CIF strategy document; and continuing to allow the adoption of more flexible and balanced standard forms of contract such as the NEC and the RIAI form of contract. All projects should have a risk profile and register where information on risk is developed and assessed prior to the transfer to those best able to manage it. Finally, similar to quality, it is recommended that risk should be evaluated separate to the price of actually building the project. More details on the risk management are outlined in the appendix attached to the opening statement but I will not be covering that today.

To drive collaboration in construction involves reforming procurement processes, conditions of contract, and behaviour and culture. I have already mentioned some of the necessary reforms to procurement and the contract to support better collaboration. Changing behaviours will require giving contractual parties more powers to negotiate solutions before entering the claims and dispute processes. The CIF supports the proposed GCCC amendments to the alternative dispute resolution mechanisms in the public works contract. These are designed to create a form of early warning system which is expected to promote problem solving and avoid costs. The increasing use in Ireland of the NEC standard form of contract is welcome as it contains performance incentives which promote collaboration and problem solving.

Collaboration also requires mutual respect among all parties. This is built on a collective responsibility to the project's success, underpinned by leadership, incentives and the competence of both the client and the contractor. As referred to in the accelerating infrastructure plan, systems like integrated project delivery combined with lean and last planner thinking brings all three factors of process, conditions and culture together under one framework and could form the basis for the future of how public procurement is delivered in Ireland. In summary, while reform is happening, it must be accelerated if the taxpayer is to extract as much value as possible from the national development plan.

I am joined today by my colleagues, Mr. David O'Brien, principal officer, and Mr. Fergal Grogan, assistant principal officer. I thank the Cathaoirleach and members of the committee for the invitation to assist them in their consideration of how best practice in procurement policy can support the objectives contained within the national development plan review and the work of the Office of Government Procurement.

The Office of Government Procurement, which comprises two divisions of the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, acts as the strategic adviser to Government on all matters related to public procurement. The OGP has the following main functions: the responsibility for overarching public procurement policy and legislation in the State; management of the national electronic tendering platform eTenders, which is used by public bodies to publish tender opportunities and manage procurement processes in a compliant, transparent, and standardised manner; and quality procurement data and analysis. The OGP is also a central purchasing body. Together with the sectoral public procurement bodies in health, local government, education and defence, the OGP has established central buying solutions that serve the needs of public service bodies across the civil and public service. The OGP also leads on increasing commercial and procurement capabilities across the public service.

It may be beneficial at this point to set out the legislative regime that underpins public procurement. Public procurement is rules based and is governed by EU public procurement directives, which set out the common rules when purchasing goods, services and works. The EU directives were transposed into national law in 2016 and these regulations govern how public procurement is conducted nationally. The legal regime codifies the principles of non-discrimination, transparency, proportionality and equal treatment. It also provides legal remedies through the Irish and EU courts to affected parties who believe these obligations have been breached. Within this legal regime, public procurement is also governed by Government policy, which is implemented typically through circulars and supporting guidelines. The EU public procurement directives are currently under review by the European Commission. It is anticipated that the draft legal proposal for revision of the directives will be published in July and, therefore, Ireland will be responsible for progressing negotiations on the proposal during Ireland's Presidency of the Council of the European Union from July through to December 2026.

We are currently developing Ireland's first overarching national public procurement strategy. The Department is in the final stages of drafting Ireland's first national procurement strategy, which will set out the strategic direction of public procurement in Ireland for the next five years. This strategy is due to be brought to Cabinet for approval in the coming weeks. The strategy has been in the pipeline since 2024 and it delivers on a key commitment in the Programme for Government 2025: Securing Ireland's Future to review the public procurement process to make it more transparent and work to ensure greater participation from SMEs. Drawing on the feedback received as part of the review, which included extensive consultation with suppliers, the public sector and the wider public, and informed by wider national and EU priorities, the strategy aims to deliver a transformative shift in both mindset and practice in how public procurement is approached right across the public sector. It sets out, for the first time, a unified and coherent national approach for how the State will use public procurement strategically to strengthen our enterprise base, deliver better public services, drive value for money, and generate wider societal, environmental, and economic benefits. This expanded focus is reflected in the strategy's vision, to deliver strategic, innovative, sustainable and transparent public procurement that supports SMEs, competition and better public services. This strategy also supports the Accelerating Infrastructure Report and Action Plan and the desired outcomes to remove obstacles and foster a culture of delivery through simplifying and streamlining Government procurement.

To achieve this, it lays out an integrated framework of core values, shared enablers, objectives and actions for public procurement in Ireland and managing regulatory change.

The four core values that underpin the vision of this strategy are transparency, procuring for impact, value for money and efficiency. These were informed by feedback from the public consultation as part of the overall review process.

These values are supported by five key enablers that will translate ambition into practice: simplification; focusing on key long-term strategic priorities and risk; communicating effectively and engaging collaboratively and constructively; use of central procurement arrangements; and aligning with data and digital initiatives.

Across its five pillars, the strategy contains targeted objectives, each with supporting actions and key performance indicators, KPIs. While I cannot go into details yet as the strategy is still being finalised, I will share with the committee the following overarching objectives for each pillar.

Pillar 1 commits to investing in our enterprise base and sets out the ambition to optimise the use of public procurement as an investment tool, through making it easier for SMEs, particularly start-ups, micro-enterprises and social enterprises, to participate, thereby driving competition and value for money and delivering better public services.

Pillar 2 commits to procuring for our future and sets out the ambition for a public procurement system that supports a greener, more socially inclusive and prosperous future by embedding sustainability, innovation and resilience considerations into policy and practice.

Pillar 3 commits to safeguarding public trust and sets out the ambition for a procurement system that is transparent, fair and legally certain and that earns and maintains public trust by ensuring that public money is spent in an efficient and responsible way.

Pillar 4 commits to building capability to help the public sector deliver and sets out the ambition for a public procurement system that fosters collaboration, problem solving and shared learning, where all public buyers have the skills, knowledge, professionalism and supports to deliver the strategy's vision, values and key objectives.

Pillar 5 commits to managing complexity and sets out the ambition for a public procurement system that is fully equipped to navigate and manage the increasing legislative and policy complexity by focusing on the needs and experiences of policymakers, public buyers and suppliers, enabling greater simplification and harnessing digital and emerging technologies.

The national public procurement strategy will play a role in achieving the national development plan projects.

The programme for Government set out the clear prioritisation for the NDP review to ensure that investment can be maximised in the coming five years for strategic infrastructure. This includes the key energy, water and transport networks which all future development relies on. This is critical to allow the Government to meet the additional 300,000 homes target and to support competitiveness and future commercial opportunities.

Reform of procurement is specifically called out under action 25 of the Accelerating Infrastructure Report and Action Plan. There are also a number of actions focused on improving the visibility of the pipeline and providing greater certainty around the timing of the delivery stage of critical infrastructure.

Government policy with regard to public works procurement continues to require comprehensive definition of the brief and detailed description of the scope as this represents the most efficient means of delivery. There has been a significant move to rebalance the level of risk that consultants and contractors are expected to bear when engaged on public works contracts. Liability caps and index-based price adjustment mechanisms have been introduced in the consultancy and construction contracts.

Further reforms that are called out in the action plan include formalising dispute avoidance and early warning provisions, the development of an early engagement model to enable collaboration at the earliest point to drive efficiencies, the introduction of lean principles, and further adoption and promotion of digital technologies.

There is also a focus on training and supports for contracting authorities engaged in works delivery through the commercial skills academy. Through the construction sector group, there is ongoing engagement between the Government and the industry on building the capacity of the sector itself through a range of supports and productivity measures.

This strategy aims to support the delivery of strategic, innovative, sustainable and transparent public procurement that promotes competition and value for money. Combined with the reform work under way within the infrastructure division on works procurement, it will support the delivery of critical infrastructure and the implementation of the national development plan.

I thank the committee. We look forward to members' questions.

Thank you for those three presentations. They were presented very clearly and coherently.

Cuirim fáilte roimh na bhfinnéithe. I thank the witnesses for their presentations. The State is suffering significantly in terms of infrastructural development. It is fraying the very fabric of Irish society in many ways. I refer to people waiting for the national children's hospital, people suffering from the lack of flood defences, people going without a house, and transport infrastructure. I mentioned this before, but the Navan-to-Dublin rail line was promised in 1994; at the very earliest it will happen in 2036. Someone who started work in 1994 will be retired by the time it finishes. A lot of that is the Dáil's fault. A big chunk of it is a political fault. However, we also have some of the slowest planning, permitting, licensing, procurement, tendering and judicial review systems in the whole of the European Union, and that is a real difficulty for us.

The questions I will ask are open. I spoke to a builder this week about the building of houses. He said they are being pre-qualified out of the building sector. He said only four companies are operating because the contracts are far too big and, as a result, they are all subcontracting these builders and they are charging, let us say, €200, with each subcontractor getting a smaller bite of the cherry, etc. He said most of the builders in Meath are not building at the moment as a result of that. How do we fix that?

I will defer to my colleague, Mr. O'Brien. He is on the construction team.

That is one instance. I am not here to represent the Department of housing, but the delivery mechanisms for housing, in particular, from what I am aware, are reasonably diverse. We have large developments, which have been absent, really, in the public sector delivery model until now, through the Land Development Agency, but we also have much smaller schemes. I was engaged with Monaghan County Council recently on a couple of schemes it is doing, looking for advice in general terms. Its scheme sizes range from ten to 20 to, I think, a maximum of 60 units, so across the country there is quite a diversity in terms of delivery. There is also a range of direct acquisitions, which would traditionally be acquired from smaller contractors as well, but we do need scale because we have such a large quantum of housing to deliver in both the social sector and the private sector. A target of 300,000 units is a sizeable one to achieve. Efficiencies are necessary in terms of-----

Would it be possible for us to get some quantification of those different sizes of scheme, maybe not right now but in the future, to say there is this number of large schemes, this number of medium-sized schemes and this number of smaller schemes, just so we understand how those units make up the whole system?

Deputy, are you talking about public sector contracts or private sector contracts?

Public sector contracts.

You would not have the private sector ones, but through local authorities and AHBs.

Yes, public sector.

We could certainly liaise with our colleagues in the Department of housing.

This is a debate about the lowest price. I think there was mention of the creation of forward risk to a certain extent. Was lowest price used in the past to prevent corruption in order that there were not cases where particular contracts with far higher prices were taken on? Why has the lowest price been used as a tool here?

Expediency is probably the simplest answer. It is expedient to go for the lowest price because, from the point of view of risk management of the internal person awarding the contract, there is less chance of being challenged by either the Comptroller and Auditor General or anybody else because you have literally gone for the lowest price.

It is the clearest rule.

Yes, so, from that perspective, there is less challenge on it. The question afterwards in the contract management becomes, can we proceed to actually manage it to the lowest price? If we look at Flyvbjerg's review of about 16,000 projects, the simple rule is "No". Major infrastructure projects have what they call a fat tail. The majority of them, 90% or 95%, overrun because we have been optimistic on our price and not built the risk assessment in at the start. That is the purpose - and the OGP has mentioned it, as have, I think, the Construction Industry Federation - of using the likes of life-cycle costing and balancing that upfront. Expediency is probably the simplest answer.

Scope drift is mentioned in Dr. Davis's opening statement. The national children's hospital is probably an example of scope drift. Does that mean that the mistake was that the scope was not front-ended enough?

I do not know whether anybody mentioned accountability. We want to get to a system whereby people are free to make mistakes, because if a mistake cannot be made, a decision cannot be made, but we also need a system wherein there is some penalty for mistakes that should not have happened.

The UK Department has set up structures that include a gateway system to plan through and devise, with a requirement to have those structures and plans in place before proceeding. That is really key. The national children's hospital is a project about which there has been an immense amount of commentary. When we look back at it, the problem with the decision-making process was that we did not quite have everything in place that should have been there. The risk with a post-contract award is that if it is down to the contract management, it is going to show drift because of the design changes. The latter is precisely what happened in that case. It is something we need to manage.

I wish to respond to that question and the previous one. With a construction project, it often happens that as developers get to site, they may hit constructability issues such that the original design might not actually be workable once the project starts to move forward. Every standard form of construction contract in the world, whether it is a new engineering contract, a public works contract or a contract with the RIAI, allows mechanisms by which to make changes. Those changes could lead to reductions in costs or increases in cost because they will have an impact on the programme costs, which are third-party costs, that is, subcontractor costs, and that can lead to increases in the original contract. That does not mean the project is going above budget; what it means is that the original contract sum would have been higher if this had been foreseen in the first place. That can lead to changes and each contract allows that to happen. There are checks and balances by which the contractor or a designer can be punished if they are not performing. The standard forms of contracts reflect that.

In terms of lowest price and the focus on that, a lot of it is to do with administrative processing and probably cultural views in terms of a construction project, namely, that the lowest price is the best price, rather than looking at what is the best value. It is probably a cultural phenomenon but it is also about getting through the system to get approval to build. The metrics might not have been in place to measure quality upstream at the time the project was actually priced.

Regarding pre-qualification issues, what contractors, including small contractors, find frustrating is that sometimes contracting authorities will interpret guidance rules around financial thresholds at the extreme end, demanding that X must have been in place for the past three years. They might look at experience for specific projects and might specifically state the type of project in which experience is required, instead of requiring equivalent experience. They might look back longer than three years because, in Ireland, we are only now starting to scale up our infrastructure projects. There are a lot of types of projects we have not built in a while, which means a lot of Irish contractors that are well capable of building some of these things will not be able to qualify because they have not done it in the past three to five years. In fairness to Uisce Éireann, it is going back ten years because it has recognised that issue. Irish Rail is also going back ten years for the metro. These companies recognise that a lot of similar projects were done previously by many of our Irish indigenous contractors.

We should encourage joint ventures and make it easier to engage in them. We need to be proportionate in terms of how projects are procured. Can they be procured in lots without increasing the risk? The metro is going to come out in lots in relation to the enabling works. That will allow local indigenous contractors to get access. Uisce Éireann is doing something similar.

Another point relates to the move to design and build. It appears expedient for local authorities because it is about getting the contractor to manage everything and it looks like construction is starting immediately. However, what this does is exclude a huge number of small to medium contractors that do not have the balance sheets to take the liability on for design. That liability is normally taken on by the design teams. The contractors are handed the design up to a certain level and their job is to build it. That is what contractors do; they build. However, when they are asked to do build and design, they must pull together the design teams and manage the liability not only for the construction but also the design. That becomes quite difficult for smaller contractors.

I thank the witnesses for their opening statements. I have raised previously at this committee the question of whether the State has the capacity and the systems required to deliver the scale of investment we are planning, with more than €102 billion due to be spent under the national development plan. That represents a major delivery challenge and we need to be aware of the risks, especially around procurement capability, cost overruns and delays. At the same time, while reform is needed, we also have to be careful about what a complete overhaul of the systems could do in the short term. Large structural changes can create delays and disruption. What we need are quick, effective and achievable improvements. In many respects, time is now our greatest enemy when it comes to delivering infrastructure.

In that context, we should be focusing on SMART goals for reform, that is, goals that are specific, measurable, achievable, relevant and time bound, so that we can clearly track whether changes are improving delivery. Equally, we must avoid the situation of the old man in the woods trying to cut down a tree with a blunt saw. When someone tells him he should sharpen the saw, he replies that he does not have the time to do so. If we do not improve the tools and the systems we are using, we risk continuing to struggle with delivery.

I listened to Dr. Davis talking about a new system and I heard the CIF representative talking about the issues his member have. Then I listened to the Department officials robustly defending the systems that are in place. We really need to look at those systems and think outside the box. Obviously, we must operate within the European parameters but we need to get this right. We are in a situation that we know at times is not working. The system slows down the process and it takes a lot of people out of the process. We need to change that.

With that in mind, Dr. Davis might address a few questions. The first is in regard to major project procurement under the SMART goals. He referred to establishing a major project procurement unit. If such a unit were introduced, how could it help to ensure reforms are delivered through SMART goals in order that we can clearly measure improvements in how major projects are prepared and procured? I would appreciate if he could answer as quickly as he can because we are under a time constraint.

We are looking at spending €100 billion over the next five years. If we were to give a proportionate spend to put in a department with proper contract managers and with the experience to manage, we would probably save at least the 1% that will be overspent anyway, which will be at least €1 billion out of that expenditure. The simple fact is that we do not have the capability or capacity within the public sector to deliver these projects at the contract management stage. We are very good at category management and at delivering projects piecemeal across different sectors, but we do not have an internal skill set of contract managers who can go out and deliver.

Regarding SMART deliverables, the simple one is that if we can bring in a 1% saving over the €100 billion we have to spend, that would be a smart deliverable everybody could see. It would be €1 billion saved. That is a very clear indication of what can be done. The UK and New Zealand have done this and they have been successful at it. We can learn from international practice, and there is no reason we cannot do that.

Dr. Davis mentioned the UK and New Zealand. From the data and experience available, how do those countries perform compared with Ireland and the EU when it comes to delivering major infrastructure on time and within budget? What are the key structural differences that explain that performance?

It is about building the capacity at the planning stage. I have to use the word "planning" here in a very different way. It is not planning in terms of going out to get local authority approvals. It is about the planning and design stage that is done upfront and the contract management post the tender process that is actually carried out. Those two parts are the ones those countries have focused on. They are the pieces around which they have built the skill sets and the pieces that have actually delivered the value back out.

Are they successful with every project? No, they are not. It is very clear from the Bloomberg review of 16,000 projects that they are not always successful. The fat tail is still there, but they are improving the way they are doing it. They have taken ownership of the design process at the very start and then taken ownership of the contract management part right at the very end. We do not have a role for serious contract managers in place in our Departments at this point. That needs to be recognised.

Going back to Deputy Tóibín's question about who is responsible, if there is a contract manager role, there very clearly is somebody responsible for actually managing the delivery of projects. That needs to be defined and put in place.

If we look at the impact on timelines and budgets, major infrastructure project delays often translate directly into increased costs. We could name a lot of projects that we have done in Ireland where that has happened, the children's hospital being the major one. If we were to adopt Dr. Davis's recommendations, how would they affect project timelines and would he expect the changes ultimately to improve cost control by reducing delays later in the delivery process?

Yes, not only would they do that, but by pausing at this point and looking at those infrastructure plans to make sure the designs are in place, you will take account of what offers are in the market, who is in the market and designing for the marketplace, rather than going out and seeing what the market will react to. We are doing really good work in the planning Act and in what the NDP is doing. The Minister, Deputy Chambers, has done a good job in bringing that together. Let us acknowledge that, rather than saying it is not happening. It is happening but it is not the part that needs speeding up. The processes that need speeding up include contract management and the delivery of the projects. However, you need to get the design processes in place and right up-front and before you go to market.

I take my colleague's point that not everything will be known but if you have done a proper design process up-front in the planning before you go to the market, it mitigates risk in a major way. People in the marketplace are assured as to what they are bidding for, which is a key factor in building confidence back into the marketplace.

I thank Dr. Davis.

I thank all of the witnesses. This is certainly a fascinating conversation. They alluded to the fact that several measures have been introduced to get the momentum going. We need to maintain and build on that momentum. What we have done with infrastructure development on many levels is allocate an element of delivery to the national level and then delegated an element of delivery to local authorities. There are many different levels in-between. Do the witnesses see any gaping holes among the different stakeholders with accountability for delivery that really need attention? Are there any in particular that stand out?

The accelerating infrastructure reports identified a number of those areas. On Dr. Davis's comments on centres of excellence and reinforcing project management and contract management, we have had-----

I appreciate all of that but is there anyone Mr. O'Brien has a concern about, right now?

Certainly, there are. We know there are sectors where there is a degree of devolved authority but that is appropriate for trying to deliver at a local level. There is huge investment in people taking place in rail and related areas. Irish Rail has made significant investment in building up its delivery team in anticipation of the DART+ projects. With the MetroLink project, there is a huge amount of investment-----

That is about resources, as such, but if-----

That is the key, however. From a procurement perspective, as Dr. Davis outlined, it is about having that expertise to be able to properly plan. The capital works management framework, which I have responsibility for, sets out all of that in great detail in terms of the project planning that happens pre-construction.

Contract management is essentially a resourcing issue.

In places, yes, it is. We have centres of excellence and we have looked at this, to speak to the previous Deputy's comments, in terms of being agile about putting in these supports. The National Development Finance Agency has been identified as an entity that will provide support to contracting authorities that are facing large delivery challenges. The NDFA will come in and provide support at a tactical level for those. At the same time, we are building up that capacity more steadily. There are many actions in the action plan that address some of these issues.

When you look at the authorities that deliver major infrastructure, if we put aside the mega-infrastructure projects we are doing, such as MetroLink, and look at which bodies deliver general infrastructure, for example, Irish Water and the ESB, all of these organisations have very experienced procurement teams. They are very experienced not only on the tendering and market engagement side but also on the contracting side. In general, across those organisations, there is very good expertise that is capable of managing projects.

Is that replicated at local authority level?

To a certain degree.

Okay.

With mega projects, there is a heavy reliance on external parties, such as large contractors and consultants, to support the design and tender phase as well as the contract management phase.

Is there now an acceptance that we need to use more consultants in these processes?

It is quite the contrary. The thought process is that we would rather try to move back from using consultants as much as possible and have as much of that knowledge internally.

There would be a standardised approach to plans and design.

Absolutely.

I will not name specific contractors but I will give a sense of it. Many members would have preferential clients who they will work with on the public side, and others they will not work with. That is reflective of their experiences of working with those clients. In the case of an authority like TII and the NTA, which have huge experience at that core level, they then cascade projects down for delivery by a local authority. The quality of understanding of potentially using a new engineering contract, NEC, form of contract or a public works contract for certain kinds of project might not necessarily be bedded into that local authority. Therefore, you are looking for that strengthening of the knowledge to come from the centre. The infrastructure plan has pinpointed the National Development Finance Agency as the unit that will potentially do exactly what Dr. Davis said.

To give exemplars of really good procurement approaches, Uisce Éireann's water supply project, the greater Dublin drainage project, is a recent one based on the extent of the market engagement and the company's approach to risk transfer. Contractors will never be happy but at least they will look at the project and decide that it looks commercially attractive and they will tender for it. Irish Rail, the DAA and the LDA have taken a different approach to how they procure. The market is feeding back to us that they are clients that companies are looking for. It is more a case of looking for what is good and raising everything up to that point, rather than saying who is not so good because a lot of it is down to many years of underinvestment in infrastructure, as the Deputy mentioned.

My perspective is that we need to identify where the weakness is so we can highlight and address it. Is there a cultural issue in this country with large infrastructure development and delivery? I cannot remember who said that delivery is one of our key challenges here, along with contract management. Maybe it is a political issue because if there is an overspend on a project or it takes too long, we will hear about it in the Dáil Chamber. How do we give a bit of breathing space or look at this on a cumulative rather than case-by-case basis? We hear how it took too long to build a wall or about the bike shed - God forbid I mention that. That has a consequential impact on so many other successful projects. How do we overcome that? Do the witnesses have any thoughts on the cultural piece we all need to instill?

The accelerating infrastructure report addresses a lot of that. There are a number of actions but there are 12 key consolidated actions that come out of that. It really is about driving a mindset of creating space for failure and addressing some of those barriers. As the Deputy knows, the barriers to infrastructure are part of that report as well. A lot of that will involve addressing those particular issues. There can be a nervousness around delivering infrastructure and people can get caught up in aspects of that. When projects are difficult or there is a lot of risk involved, you move a little more cautiously. The report addresses that in a good way in terms of making that space.

Is that changing at industry level?

In fairness, the infrastructure plan has called out public perception as a problem. Unfortunately, projects gets hammered. Maybe it because it is clickbait that generates advertising revenue or it is of political use, but projects are dragged out to show the country cannot deliver. However, we can go back and look at the Luas and the school programmes that are being delivered every year to cope with new homes and population growth. The road network is another example. We are building sophisticated data centres, pharmaceutical plants and high-tech manufacturing facilities, all of which are in Ireland, and some of those manufacturing facilities cost €1 billion. We are delivering them. We can delivery as a country.

We have challenges with understanding the complexity of mega projects. Dr. Sean Sweeney, who is leading out on MetroLink, has highlighted that this will have a major impact but the outcomes will benefit our society for 200 years. By its very nature, major infrastructure, such as hospitals, cannot be fully designed when you go to the market because changing technology and clinical practice dictates change right through the construction phase. We have to recognise that, as a country, if we want to build and succeed over the next 200 years, there are risks and we have to have an appetite for them. That is the cultural piece. It is about risk and perception.

I am just over a year as a TD. Would Mr. Sheridan say the cultural issues have lessened in the past year?

I have no measurement in terms of how it was before.

That is from the federation's members and so on.

Not that I perceive. We still see cynicism regarding whether this will be delivered. From an industry perspective, we have been promised a lot of what is coming. A lot of members had heard from different contracting authorities they were getting budgets only to find out at the end of the year that the budgets were gone. Projects that were supposed to be going to pre-qualification have been shifted to three years. PPP projects for housing have been cancelled. That sends a signal to the market that there is a lot of uncertainty. They question whether they should allocate their resources to that market or this market. That unfortunately is reflective of the current situation. We need to see action. We know the plan is there but it is all about delivery.

On that word "culture", I would like to park it because it is not a cultural issue. It is a systemic issue and it is a governance issue. It is literally that we have to get our systems right and develop the capacity to be able to deliver; it is not a cultural issue. A lot of people in the public sector are doing a fantastic job. The problem is they do not necessarily have the capacity or capability to deliver on what we are asking. What we are asking them to do over the next five years is take a major step forward. We need to be able to develop the capacity to be able to do that. I humbly have reservations on the term "culture" because it is easy to use, but the issue is not that; it is capacity. I think the OGP will agree a tremendous amount of work goes on. The issue is the capacity to deliver. It is a systems problem. A systems problem is one that keeps breaking and we keep seeing the effects of that break when we fail to deliver on either smaller or larger projects.

When we talk about capacity, we are looking at the system as a whole. From an infrastructural delivery perspective, the CIF's position has been clear. We were here last year. The industry has the capacity to deliver if the pipeline is visible and real and it is coming. Members will gear up and shift their businesses into the spaces to deliver. We have also commented on the fact that the Government needs to create policy based on the sectors within the industry. There is infrastructure and new homes, built places and FDI, and separate to that are microscale industries, including retrofitting, home improvements and extensions. It is a different sector. Therefore, when we are making predictions about the labour force, we need to look at it in those buckets. It cannot be looked as one whole. It is not the same. Infrastructure delivery is usually dependent on plant and machinery. It is not as labour intensive as building 50 houses, 50 extensions or doing 50 retrofits. It is not the same model; it is a different business model. That also goes for new homes. Once you have scalability, you can deliver off-site much quicker.

I apologise for not being here for all of the opening statements but I had an infrastructure problem in my constituency where a school was promised a new building 19 years ago and its current building is being held together with duct tape. The school was closed with the children being sent home and told not to go in tomorrow. We see it all the time. I do not know if procurement is the problem or judicial reviews. Every excuse is thrown at us for causes and delays. I have to think it is ineptitude. This school building has been promised for 19 years and the current building is falling apart while the school community waits for the permanent building. We are told procurement is a cause of delays and Ms. Stewart mentioned the procurement directive that is currently under review. While we are told procurement rules are slowing things down, what is the main reason? Is it risk aversion as was discussed? Is it sign-off or is it the State hollowing out of its own in-house expertise over many years, and the pressure that is on resources, both public and private?

The narrative about procurement process being slow is something we hear all the time. The reality about procurement process is it is divided into essentially three pieces. There is the actual strategic procurement, which is the upfront planning, market engagement, drawing up of specifications, ensuring one has the right contractual terms, insurance and those types of things. That is where the lion's share of the work goes in. Unfortunately, it is a case of: "How long is a piece of string?" It depends what you are buying. If it is a very complex project, the more effort and time you invest in this piece, the better the outcome you will get.

The actual tender process itself-----

Is there anything in particular the Department is expecting or hoping for from this review?

Is there anything we are hoping for from the EU directives? A number of reports have come out from the European Court of Auditors. We had the Letta report and the Draghi report, which talked about the lack of competition from the previous directives. We hope they will be addressed as part of the new set of rules. There is also a very strong emphasis on the simplification agenda for EU directives. My EU team has been spending a lot of time with the Commission, along with like-minded states, getting Ireland’s position and a general consensus around the changes which are required to try to streamline and make those procedures easier to navigate.

While they are being done, the OGP is not sitting back. What we are trying to do is navigate around them. We are building the digital systems and tools around what will be coming to say that while we do not know what will be in those directives, whatever it is, we will at least have the eTenders platform and some bespoke bolt-on platforms which will help any public practitioner, public buyer practitioner or supplier to be able to navigate the system a lot more easily than today. That work is fully in place. We have some things already launched and others in testing. That is just the system piece and to make it simple for people to be able to navigate the system. That will speed up that piece of it. At the end, we have the contracting piece that Dr. Davis mentioned. It is absolutely critical to the ongoing outcomes of the project to have the proper contracts and KPIs in place and managed.

On speed versus standards, what kinds of changes would Ms Stewart like to see?

More flexibility within the procedures themselves. We would certainly like to see some of the thresholds increasing. Right now there is the classic directive and the utilities directive, as well as defence and concessions directives. They all have different thresholds. The higher the thresholds go, the more ability and flexibility we have as a State to set our own way of working in doing procurement below those thresholds. That would be advantageous and that is something we are looking for.

We hear a lot about red tape around how the State delivers its infrastructure. Is the State relying on consultants and private contractors because it no longer has the internal capacity to design, plan and project manage itself?

It depends on how we look at it. For our standard infrastructure projects we have very good, solid procurement teams. They have been there a long time. They are in place. I am ex-Uisce Éireann myself, and I headed up its sourcing function for a number of years. There are very good, experienced buyers there and in Gas Networks Ireland, ESB and all of those large companies. The resourcing is in place. When it comes to those large or as I tend to call them, megaprojects, a certain expertise is required that may not be available. However, something we could improve upon is if we need that expertise for a period of time, we shadow it so that we retain that knowledge ourselves and therefore have it the next time we are running a similar project. That is quite important. Some organisations do that very well. We need more of it.

We had a meeting of the Oireachtas Joint Committee on Climate, Environment and Energy earlier on, and we were talking about the deficit in skilled workers, engineers, etc. Somebody mentioned we are short approximately 60,000 workers in construction.

In the construction industry there is a deficit of approximately 80,000 workers.

We were talking about the private wires bill.

It is an interesting question for us because one of the things we are looking at is the prefabrication - and Mr. Sheridan is very familiar with this - and we have met with a number of companies that build off-site. Many of them have delivered zero-emission schools, which is absolutely phenomenal.

I could do with one in Celbridge today.

These products are outstanding because not only can they be built very quickly, but they can also be dismantled.

A very simple example is that we will need accommodation for anyone who is going to come in and support the MetroLink. A way to provide accommodation for them would be to use prefabricated buildings and then take them apart and use them for student accommodation, for example.

We could do something like that for homeless people as well.

Absolutely.

Some of the hostels that are being used at the moment are appalling. They could also be used for older people, in particular those who have retired. I know it is not ideal. We do not want to be creating a kind of American trailer park, but we need something that would give people dignity. We cannot ask a pensioner to share room in a hostel.

I totally agree. It is very doable. It is not like the prefabs that we had years ago. They are absolutely not like that. These are fantastic, really livable buildings. From a sustainability standpoint, they can be dismantled.

The point Mr. Sheridan made about having businesses in Ireland that do this type of work and that are exporting these products is correct. We have met those companies. We are trying to work across the system to ensure that these opportunities are being taken up and that we continue to grow the industry in Ireland. The OGP is making a big push at the moment. In light of the geopolitical landscape we are working in, we totally appreciate that if corporate tax were to fall off a cliff, we need to ensure that our SMEs and indigenous industry are built up. Obviously, we have to do that within the guide rails set down in EU directives. We are very conscious of that, but we are super focused on it. Hopefully, when the strategy is published, we will see that there is a huge emphasis on SMEs, particularly micro-industries and social enterprises, because we have got to ensure that we accommodate society as a whole.

We are seeing greater need, especially in the areas of special needs and apprenticeships, and we want to make sure that we build capacity through the strategy. That was the reason we had a huge Government supply expo in November that was attended by about 3,000 companies. It was specifically targeted at SMEs for that reason, namely to get them educated and to give them an oversight of the projects that are coming up. We are seeing that more and more from contracting authorities. The HSE was one of the leaders in that. It has now started to publish its category plans. Part of the strategy is that strategic category plans have to be published going forward in order that suppliers can see what is coming up and can start to plan. That is extremely important.

We really want to see more off-site construction happening to fill the gap in terms of the 80,000 construction workers that are required. One of the reasons people do not go into construction is because it is done in all weathers. Who wants to build in the 90 days of rain we have just had? It means you can get people trained up and they can work in factories.

I know. Women work in the factories as well.

They can operate 24-7. This is a huge for us. It is definitely in our minds as to how we drive it forward. That is kind of where we come in. We are a little challenged because, obviously, it goes into each of the individual contracting authorities, they take ownership of it and the Accounting Officers are ultimately responsible for doing the procurement and the delivery. From our perspective, our big push is to ensure we put that guidance and supports in place.

We do not deal with legislation on this committee, but we would be interested to hear what comes up when this review is completed.

I will speak very briefly about the public procurement process. Speaking solely from a contract perspective, when they first engage with the contracting authority, what is frustrating them is that while the delays are getting shorter, they are still there. They tender for a job and then they are waiting months to be told whether it is going to be awarded and actually start. What is happening is that they are trying to hold their teams together. They have let other tenders go on the basis that they might get certain tenders, but then there are successive delays. They lose confidence in public procurement as a result because they cannot manage their businesses. What we are seeing is that a tender goes out and the prices come back in, but they suddenly realise that the prices that reflect the market are not within their budgets. That could be one thing, and then they have to go back into a cycle. Sometimes contracting authorities go out just to test the market, but they are never going to award it. They might not actually have planning for something or there might not be a licence in place yet. That goes back to Dr. Davis's point that you have got to have it ready to go because that means you give confidence to the market and you can start quicker. That is how you speed up the procurement process from a constructor's perspective.

The CIF is fully behind off-site manufacturing. I fully agree with what Ms Stewart said. Unfortunately, what is very disturbing right now is that there are members of the Smart Off-site Association within the CIF that are considering laying off staff because they have no work coming through. That means if we do not have a pipeline based on standardised designs, we cannot keep that sector of the industry going to keep that steady supply. They are just going to look for work elsewhere and they are going to allocate their resource to other clients. Unfortunately, there is a big delay in terms of the almost surreal situation whereby we have such potential but the industry is so subdued because the Government, for all its statements, is not actually spending.

We must remember that construction is not just about boots on the ground. There are huge opportunities in digital in terms of building information modelling, quality management, health and safety, quantity surveying and construction management. The important thing is that it is not all about boots on the ground.

I am substituting for Senator Flynn. I want to focus on the issue of quality. There was a reference earlier to speed versus standards. I would make the case for standards effectively leading to more speed and better delivery.

Dr. Davis stated that the EU framework explicitly allows and supports qualitative evaluation and the fact that a default to price dominant scoring is not prudent fiscal management, but deferred financial risk. In the Idiro Analytics report and in Mr. Sheridan's presentation, the proportion of the allocation to quality is a key factor and gives rise to a key question. Perhaps this is also a question for Ms Stewart. Previously, I introduced a quality in public procurement Bill. I thank the Construction Industry Federation and the Royal Institute of the Architects of Ireland and many others who supported this Bill. The Bill highlighted the fact that the elements are already there. Ms Stewart talked about the EU framework. Could she confirm that the regulatory framework within the EU allows for a choice within the frame of most economically advantageous tender or value for money to either go to the lowest price only effectively or to go through a price-quality ratio where both price and quality are evaluated in a decision. That is one choice that is there. Then of course there is the choice of what the weighting would be in the case of the price-quality ratio.

My Bill previously had the full support of the Government. In that context, I was quite surprised that it was opposed two weeks ago. It was supported and indeed spoken in favour of by Government Members. It was based on the very simple premise that price quality would be the default unless there is a reason not to go it, and that would be explained. In the case of the large NDP projects that we are talking about here - that we do not want to get wrong - we would have a minimum of 50% quality criteria. The Royal Institute of the Architects of Ireland looked for 70%. The construction industry talked about 40% to 80%. The key point is that there would be a weighting that ensures we are tackling and identifying issues early on. That is important.

I do not want to drag up examples, but the children's hospital was based on 75% weighting in respect of price. We have had many other examples that have been price only. I acknowledge that there has been some shift to a degree in practice because of circulars that were issued by a former Minister at the time when my Bill was passing through the Seanad. The Minister in question then said we would start by doing circulars in relation to more use of price quality. There was some improvement in the use of price quality. I simply do not understand why there is resistance to that.

What is the witnesses' perspective on that? Do they agree with the current application of the price-quality ratio? Do they think 50% is not a reasonable level of quality weighting to be giving in respect of national development projects?

There is a deep misunderstanding across many areas about the lowest price ratio. Ireland is in the top three countries across the EU in terms of our use of the price-quality ratio. This means that for 88% of the tenders we run, we do it based on quality, not lowest price.

Is it done on the basis of both price and quality?

Yes, but it is done on quality criteria. It is based on quality. A total of 88% of our tenders are run on quality.

Is it done on a price-quality ratio whereby both price and quality are considered?

Yes, but winning out on quality. It is not about the lowest price.

Is Ms Stewart referring to current expenditure or capital expenditure?

I am talking about all expenditure.

Does that include, for example, buying stationery?

I can provide some numbers if it helps. In 2025, the eTenders platform registered close to 16,500 tenders above threshold. That is important to note. Of those 16,500 tenders, approximately 2,000 were what we consider works contracts, of which 700 or so came off a qualitative system, QS, or a dynamic purchasing system, DPS. Therefore, they were already pre-qualified. Of the remainder, what we just cannot determine is whether they involved a two-stage process. In a two-stage process, which is what happens with most construction projects, the first part is where we qualify the supplier on the quality of what it has done before, whether it can meet the criteria and whether it has the expertise to build whatever it is we need to build. The second stage is where we are looking at the price. I think that is where the misunderstanding comes that we are going for the lowest price, when, in fact, the contractors have already been pre-qualified.

With respect, we are talking about slightly different things. Ms Stewart is referring to the question of who can bid. What I am talking about is, in relation to a project that is being putting out to tender, how the Department decides to whom to award it, leaving aside the fact we know exclusions are extremely difficult in procurement language and pre-qualification basically is a matter of weighting. In the case of CervicalCheck, for instance, it was a case of lowest price only. Whatever about the pre-screening of the contractors who got in, it was a matter of lowest price only between those bids. With the national children's hospital, the weighting was given and the qualifying bids were considered.

This matters because when quality criteria are put in the mix, it is not a matter of good guys coming in the room or bad guys coming in the room. The simplification aspect has been bigged up quite a lot but we know that on that other pillar, focusing on key long-term strategic priorities and risk, the report of the European Court of Auditors showed that countries are not making proper use of systems to deliver social and environmental objectives for the long term. Getting the most for your money should be about getting more from a quality perspective for how the money is spent. The Netherlands has made price quality the default. It is quite a different thing to say that is the case here because the pre-qualification requirement means we only have quality bidders. In determining projects, it is a matter of considering that we want them to be good from an environmental perspective and we want them to deliver well.

That is important because it is not just about selecting contractors we have worked with previously. We have talked about SMEs and new entrants, particularly in the environmental area. Having quality criteria allows us to reward somebody who comes in and has the capability to deliver a project better than was even imagined, who can bring something really good to the table, who can deliver, for example, in terms of supporting innovation, who has better practices in terms of the cement that will be used and who can deliver more in terms of sustainability. There tends to be a better outcome from doing that. We have seen again and again that if quality criteria are not put in at the beginning, problems are more likely down the line. Dr. Davis and Mr. Sheridan might come in on this because they are indicating that they understand what I am talking about here.

I understand. The vast majority of the projects that go through the eTenders platform are weighted on their quality as opposed to their price. A lot of our projects are done on a 60:40 basis.

I have acknowledged the improvement there has been in that regard. If we look at the figures between 2020 and 2024, I understand we went from 24% lowest price only to 12% lowest price only. That happened as a result of circulars that were put out following formal engagement with the OGP in relation to my Bill in the Seanad. The Government supported that Bill. The Minister of State at the time was Ossian Smyth. However, we have now had a switch in position, and that is why I am a little concerned, especially if Ireland is in a key position for the negotiations on the new EU procurement directive. I am worried that the quality component may actually end up being less.

The Senator has initiated an interesting debate. She is asking about the pre-qualification award criteria and the two-stage process. If the award criteria are weighted above a certain weight, then it becomes a price-dominant competition. The question then becomes what the percentage of weighting needs to be to ensure it is not a price-dominant competition. If there is a 90% weighting for price versus 10% for quality, it still qualifies under the most economically advantageous tender but it is very clearly a lowest price competition because price is the dominant factor.

Even a 40-60 split will still be dominated by price competition purely because of the way individuals mark on a consensus scoring. As a consequence of qualitative criteria being marked generally in a consensus scoring with a panel of people, the marking tends to be to a bell curve. What happens is that where people are scoring between one and five, they will score a three or four, which means that, qualitatively, most projects probably will score fairly similarly unless there is something structurally different. Where a 40% weighting is in place, it means the price then becomes the dominant feature.

The other part to consider is what makes up the 60% and why price is suddenly quoted. Price is one factor. When talking about quality, we could be looking at environmental, social, governance and a range of different factors, and each of them might only be worth 10%. Suddenly, the price is still the dominant feature but the rhetoric is phrased to claim it is not the dominant feature and we should look at all these qualitative criteria that add up to 60%, with price at only 40%. The reality is that price is the dominant characteristic in place. The other criteria, although they add up to 60%, are not dominant. The natural process in terms of the way people mark means they tend to coalesce around the same scores.

Will Dr. Davis comment on the consequences of that?

The consequence is we have a statement that we are moving away from price-only competition and the statistics might show that, but if we do the analysis underneath, we probably will find we are not actually moving that far away from it. If we want to see price becoming the lesser factor, we must go below 30%. When we go below the 30% marking and weighting for price, then the other factors start taking over and dominating.

Does Dr. Davis see benefits to that?

It is purely statistical in terms of looking at the weighting of the factors and looking back on the way tenders go. In the past two years, one Department went out for a range of contracts. A dominant player came in from the UK and there were about 28 players in the market that were all locally delivered. If that Department had gone with a price-dominant competition, the player from the UK would have won the marketplace and we would have created a tier 2 set of suppliers from among the local players. The Department balanced it out, reduced the price weighting down to 20% and took account of all the other criteria, including the local conditions and, as the Senator put it, the delivery on the ground. This proved that local suppliers were able to win contracts. They had the capability and capacity to deliver, and that was very clearly indicated.

We know we have the capacity and capability to do this in the public sector and we know we can do it well.

And we are allowed to do so under the EU rules.

We are allowed to do it, even now at this point in time. The national children's hospital is a good example of a two-stage process. We pre-qualify and then we run a price-only competition. If you look back, it is a most economically advantageous tender, given that 75% is price and 25% is other criteria. However, it is a price-dominant competition; therefore, the one with the lowest price will be the one that wins. That is the natural way these things work out. We need to understand the dynamics of it. It depends on the type of project we are doing, whether we are looking at construction and whether we are looking at material buying. The OGP has huge experience in category management. Our chair made the point that when it is stationary, price competition may be the most appropriate thing to be by. When it is infrastructure, price may not be the most appropriate thing to be by. We have to distinguish between the two and be able to manage both. It is clear that at 60:40, the chances are that price is still the dominant player in there.

If the specification, that is, what is being put out to tender, is not correct to begin with, no amount of change to the evaluation criteria will avoid a bad outcome. If you have a bad spec and put 80% quality and 20% price, you will not necessarily get a good outcome, because the spec is wrong to begin with. That is an important factor. Putting a restriction on quality across standardised goods and services as a blanket approach only ends up costing more money - yes, for infrastructure, but maybe for others not so much.

It was a matter of either implementing it or explaining why the choice was made not to do so. It was not a requirement but it was about moving towards a preference for that. Technical specification is quite different in that you cannot capture and anticipate every piece, whereas if you look to quality, you can look at the best outcome from, say, a fire safety perspective, rather than just the technical specifics. You cannot be expected to capture every single ingredient that should be used in a piece of infrastructure. In the Netherlands example, 2.4 times the benefit was gained by putting 3% more investment in the procurement process at the beginning. That 3% is not on the contract. There seemed to be a misunderstanding in the Dáil about this. It is giving this two days instead of one day, in terms of the work being done on a piece. That simple shift of giving more time at the beginning led to 2.4 times the benefit. That is where the extra focus on quality comes in. We might be looking at some of this infrastructure for 200 years.

As I indicated in my opening statement, the CIF is supportive of the Bill and the default towards quality first because that starts the conversation about why we should move away from it. That is a shift that can drive different types of behaviour and processes. I think we have all acknowledged that implementing quality award is challenging. We have mentioned some of the things that have to be done to make it easier. Digitalisation is big. Certain types of projects are more suited to a heavier weighting of quality than others. That is all acknowledged. My members tell me that even when they introduce quality criteria, they know their competitors will score pretty much the same as them across those criteria and that they will end up competing on price anyway. I would be interested in seeing data on the scores within projects procured on a quality basis, in the spread of scores differentiating the competitors within the tender process and in whether quality was a defining factor or whether it all led to price. Those would be interesting data to see.

The Senator is right that for a really good project with strong, lifelong operational performance, it is in the design and the specs. The pre-qualification is supposed to identify contractors capable of delivering it. It is not supposed to be used to assess how the contractor builds it and prices it. That is in the second stage, where they say they can build it in a certain way looking at constructability, methodology, carbon counting and lifecycle costs. All that is done and then they price it. They look at how they will do it and price it. When they finish pricing it, they ask, "What are the risks of this going wrong? What risks are we being asked to take? Have we accounted for them in our pricing?" They then add on whether they have the money to cover administrative costs arising from the tender, and operational supervision, management, overheads and office management costs have to go on top of that, as does the management of risk if it happens in contract management. That is how the job is priced. The only way to manage all that effectively and deliver those things is through early contractor involvement, early collaboration and reform of the contract.

There is a false intuition that the more tenders you have on a project, the better value you are getting. If 30 people are competing for a job, you are highly likely to get abnormally low tenders or you will get contractors tendering for it just to show interest, and they add premiums on because they do not want the job. They know they will not be able to compete with the person who is going to win it. That is when you get really low prices and that is why two-stage tendering is really important, to enhance quality in award.

Mr. Sheridan spoke of people tendering for jobs they do not really want. Is he suggesting there is a chat in a back room, such as "You put in for that; I'll underbid", or "I'll put in a higher price, you'll get it, and the next job that comes up, you overprice so I'll get it"?

No. I did not say that and I did not imply it.

You did not, but I am asking. It is open to interpretation. Why would a guy put in a thing that he-----

A couple of tenders came out last year-----

I am not suggesting it. It is a comment.

They will have a certain amount of resources available to tender for work in the year and they will target a certain number of projects. If a project comes out to tender for a framework that states 30 people will be invited to tender, they will ask which is more likely, the one in 30 chance of winning this or the one in five chance of winning another one. They will get phone calls from the contracting authority saying, "Please tender, please tender, please tender." They want to maintain the relationship with the authority so they put in a tender. Will they realistically win, however, considering they are in Dublin and the project is in Mayo? They will not compete for that but the authority wants them in on it so they may as well compete to get onto the framework. That distorts the tendering competitions. Somebody will say, "Well, there's 30 in it. I've got to go in really tight to win this because it's in my local area." That distorts the market. You are not getting good behaviour there. With two-stage tendering, you invite people in and eight or nine will pre-qualify; then you shortlist that to four to six and have a really good competition.

We have to remember when we are delivering infrastructure that we are not just delivering something that is built. We are delivering something that delivers outcomes. Therefore, the assessment that takes place needs to be on the basis of outcomes, that is, what we will deliver over the lifetime. I like the fact the Senator said it could be around for 200 years. That is the important part of what we are doing. The outcome is one whereby we will build something and it will deliver on its facilities for 200 years.

People probably know I am a major critic of the national children's hospital and the way it was procured. I am very public about it and do not hide it but I also understand that, if I stood back and looked at it, the total cost, whether that is €2 billion or €3 billion, will probably only be 2% to 3% of the total operational cost over the 100 years it will run. We argue in some cases over the way it was designed and put in and whether we should have done it better. My argument is not over the €2.4 billion; it is that we should have seen it would be €2.4 billion when we went to the marketplace. It is clear we went without being prepared. The cost of it is probably reflective of a very low cost for an infrastructure build over 100 years. When doing our estimates for building infrastructure, we have to look at the total cost and total outcome and not assume, as we have seen, that the lowest price is the outcome. That will not deliver the outcomes we want for society. That is the important point we sometimes miss when doing these infrastructure projects.

We have to move on to other speakers.

That is fine.

I have one last question. Will Ms Stewart comment on the negotiations on the new EU procurement directives that are coming through? I am concerned because there was much emphasis on the simplification piece, which I know is one of the pillars proposed. Is Ireland planning to push forward on the recommendations from the European Court of Auditors on more effective use of procurement for delivering more social and environmental co-benefits, as well as that question of quality? I acknowledge that Ireland has some of the quality, with some of it linked into formal engagements I have had. Is Ireland going to be promoting those things within its position, and how will they be done effectively?

100%. We have it in our strategy. We spend a lot of time with social enterprises and talk to them about the businesses they have, for example, at our recent procurement officers network presentation and when they came to our Government supply expo. Those areas are very important to us. We also have our green public procurement, GPP, tool, which we encourage the public authorities to use. When they are putting their tenders together, it gives them the criteria for the green aspects they should enter as part of their tenders.

It is a pillar under our strategy, and is a big area under the EU directives even now, that social should be included-----

It is a huge part now but it is not fully implemented. I am concerned about the dilution of it in the new round of directives.

I would not anticipate it being diluted; I anticipate it will grow. I will get too technical now talking about e-forms, but within every e-tender platform, each member state must have an ability to report certain metrics directly into the EU system. Every few months, those metrics will change. It is a reporting mechanism. In the past two revisions, there was a huge increase in the amount of metadata that was required on green, social and similar areas. It is certainly a growing area of interest for the EU but also for ourselves. We want to be able to deliver sustainably.

There is work happening with building information modelling, BIM, and we mentioned digital earlier. As buildings are being built, BIM will identify the emissions from the materials, what materials are being used and their longevity. All of those considerations are coming in under building and will be tracked through BIM.

I am sorry I was not here - I had another meeting on - but I am delighted that we have had this session. It is one of the very important pieces for the whole picture. Obviously, our aim here is to see what the challenges have been to infrastructure delivery and how we can streamline them, and this is a critical component of that.

Going back to quality and procurement, there are environmental standards that can be gained in that regard. We had the Disability Federation of Ireland in last week, and we have had the Irish Wheelchair Association. I was very upset to hear the extent to which they had not been consulted on the new accelerating task force plans and the NDP, and how they feel the issue of disability, disability access and inclusion is chronically missing from many Government procurement and tendering processes. Will the witnesses comment on that and on whether they believe we are walking ourselves off a cliff with new buildings not sufficiently taking disability inclusion issues into consideration during procurement? Are we seeing a gap in that regard?

The consultation process for identifying barriers was focused on the delivery barriers and the issues that delayed projects. Fundamentally, disability access falls into the category of design, design consideration and public realm, which are broadly covered by the building regulations. Each design, particularly for public buildings delivering public services, should strive to go well beyond the minimum standards that are set out, and most do.

Is striving for that a legislative or statutory-----

No. The building regulations set out the minimum requirements, but public buildings are expected to achieve higher. The work that was undertaken as part of developing the report and action plan was focused on the big-ticket, broader items that were slowing down delivery, such as legal issues, regulatory issues, including simplification, procurement as part of that and public acceptance. It is not that it was ignored.

I get that, but I suppose the danger is if it is not taken into consideration, we will still get a situation where things are being built, even big-ticket items, that do not have those designs. Quality in procurement ties into this. The Irish Human Rights and Equality Commission, IHREC, has talked about the public duty to ensure disability and human rights in procurement processes. While it might seem peripheral, it is fundamental in delivering design that works in an inclusive way.

Absolutely. We spoke about the longevity of these projects, particularly transport systems and so on. The Luas is a good example of that, where we have infrastructure challenges. While the Luas itself might have accessible platforms and so forth, if you look at some of the stations on the older infrastructure side, lifts are out of action much of the time.

Or there is no lift at all.

Some. Most have a lift, but it will be out of action periodically.

Some of the smaller stations, like my local station in Muine Bheag in Bagenalstown, County Carlow, does not have a lift.

On the main line.

To get to the platform, you are just crossing over.

We spoke about how long ago that rail line was built. Some of the infrastructure underlying the mainline rail, even parts of the DART, was delivered in the 1800s. They were very different times and it is very challenging sometimes to retrofit the sort of facilities that are needed.

That is why we need to focus on that area in the new infrastructure we are putting together.

That is what I was coming to. By its very nature, MetroLink is going to be underground for large sections. The accessibility there will be of key importance and will certainly be front and centre, but it is in the design stage where there are many facets to be considered, not simply accessibility. That is not what the focus was here with this report.

Bringing strategy into this context, we have been working closely with the National Disability Authority, NDA, to inform the development of this strategy. We are going to include an action, with the NDA and OGP collaborating, to enhance public buyers' understanding of their legal requirement to incorporate accessibility into public procurement and, going beyond that, to include the application of the universal design approach.

On public procurement, I know we are talking about public buildings, but when we talk about a percentage of social and affordable housing having a requirement, is that inclusive of what Mr. Grogan is describing?

Yes. The strategy might not be as prescriptive in terms of specific sectors in the action itself, but we are looking to promote awareness and understanding of what those legal obligations in those certain sectors are. It may come to that as well.

If the witnesses have the chance, it would be great if they went back to the session we had with the Irish Wheelchair Association and the disability federation. They gave the example of the UK, which has three standards around disability inclusion, predominantly in house building. I know we are not the housing committee and we are talking about bigger infrastructural projects, but it is still something that would be very interesting to go back to. Perhaps the witnesses might consider reaching out to them off the back of that session.

For full disclosure, I am on the audit and finance risk committee of the Irish Wheelchair Association, and I am also on the board of a very large charity that deals with mental disabilities, so as head of the OGP, I am very aware of that matter.

I thank Ms Stewart for letting us know that.

Sorry. That was just for full disclosure.

It is good practice, and we encourage it.

The witnesses may have already answered this, but there are challenges around competitiveness in terms of the number of construction companies bidding on big projects. We have spoken in previous sessions about the various reasons behind that. How can we better use procurement to increase competitiveness and construction companies' desire to build in Ireland? There are labour issues around skilled construction workers leaving Ireland and going elsewhere because of better housing conditions. It is a cyclical challenge. Can we use the procurement process in any way to bring that expertise back home?

There are two ways of thinking of procurement. You can think of it as a transactional element, which is quite a lot of the spend that we do. On the infrastructure plan and the national development plan, it is about capability.

It is about shaping the marketplace. Over the course of today, my colleagues have made it very clear that this engagement with the marketplace is really upfront. When we are doing design or going out to investigate what we actually need to do, we create opportunities for people to participate. I have to be careful in saying that because, when we get into €100 billion, we are looking at an infrastructure plan involving megaprojects and the capacity and capability to deliver that may not always be present in our own industry. We may have to look at joint ventures with local partners or with international partners coming in. Our procurement people need the confidence to do that, to go out and look at joint ventures and allow that to happen. There is sometimes a reticence or nervousness or we would prefer a single contract but it is the responsibility of our procurement section to manage the marketplace. Ultimately, that section delivers the policy the politicians have set. How do we deliver on policy? We deliver it through procurement. That enacts it.

With regard to the joint ventures Dr. Davis mentioned, that involves building capacity within our native construction groups.

Absolutely, yes.

I presume there is a double benefit to that.

I will let Mr. Sheridan from the CIF talk but his organisation would be looking at that with some of the major projects coming in at the moment.

It comes down to the very nature of some of these projects. For example, with the metro, we do not have specialist tunnelling expertise in Ireland or some of the geospatial consultancy required to understand the soil and so on, which informs the design that follows. A lot of these international operators bring in the equipment and a team of brains but they want to engage with the local industry because we understand the building regulations, employment law and everything else that comes along with public procurement in Ireland. We have that pot of expertise. We are fully supportive of those joint ventures.

Unfortunately, the scale of some projects can prohibit indigenous contractors from competing. They may not be able to get into a joint venture and may therefore be excluded completely. From speaking to contracting authorities delivering megaprojects, including the authority delivering the metro, I know they are trying to ensure access for the SME market. That is critical for our industry because, as the Senator mentioned, that is how we scale up, improve, build more exports and grow our economy, supporting the broader economy in other sectors. It is important.

With regard to increasing competition, the most critical thing is a clear pipeline of work. Companies need to know when they can tender for a project and when it is going to start. That allows them to line up their plant, materials, equipment and people. When they get into a contract, it must be collaborative and they must know they can make a margin. There is nothing wrong with contractors making a healthy margin on projects. We need to ensure that contractors are earning such margins but that the taxpayer is also getting value for money. That is what the contract is there to do. It provides for checks and balances to ensure that nobody is profiteering, although they are earning enough to reinvest in their businesses. You have to be able to make enough of a margin for it to be worth doing the project.

Collaboration and early contractor involvement creates possibilities for dialogue on the risks associated with a project, how they can be understood and mitigated and if they can be mitigated, who is best placed to control them. That can then be priced into the job. That is the best approach to dealing with this. It means putting a bit more time into the public procurement process rather than jumping straight into the tender. The approach of quickly getting a design done, going to straight to tender and seeking a price unfortunately does not work. Even if the contractor put in a bid double what they thought necessary to cover unknown risks, when issues arise on the site six months down the line, they may realise they actually cannot do the project. That is the problem. It is not a case of throwing a price at something. It is a case of being able to deliver when issues manifest themselves. It is about collaboration and early contractor involvement.

Performance should also be incentivised. It should be the case that, if contractors come in under the target price, they can share in the benefits. That means that nobody will wait for problems to manifest themselves. They will deal with them upfront because they will get a share of the savings.

Further to that point on incentivising performance, it is really important that construction companies that have delivered quality projects very well benefit from that in how their beds are scored in the tendering process. That means that people will want to do better and achieve all of those things. On Mr. Sheridan's point regarding costs going up six months later, the negativity around some of the larger projects has been driven by a feeling that somebody has failed and is to blame. I am not saying it is any particular individual's fault but that undermines public trust in the process. In Ireland, we are chronically suffering from public perceptions when projects are delivered successfully or unsuccessfully. It creates a lot of tension. The more collaborative approach to project procurement and management that Mr. Sheridan has described is really important.

I do not know the answer to this next question. I am sorry for taking up so much time. I hope the Chair does not mind given that no one else is here. The Department of public expenditure controls the funds but when projects such as the national children's hospital are outsourced to Departments, is the project management expertise in place to engage with the construction companies and with the Department, which will have expectations are regards delivery timelines? Is such expertise there across the board? I am sure it is there in some instances but is it consistent? Could the Government be doing more in that regard?

In fairness, huge lessons have been learned from the children's hospital.

I do not want to haver on about it. I know it has been well-covered.

It was a little bit of a unicorn in some respects. I can certainly see it in some of the questions being asked about MetroLink. People are asking how governance will be managed, how we can avoid repeating the same mistakes as regards layering or moving accountability outside the appropriate Department, and how we can ensure that accountability lies squarely with the contracting authority. While those lessons were very challenging, we are using them for the benefit of future projects. We can never anticipate what is going to happen but I certainly expect that those improvements will be made.

This relates to one of the advantages of establishing a major projects procurement unit. It is not just about the design. It is about having skilled contract managers who will stay with these projects and have full responsibility to manage them. The UK has done this. Through its Cabinet Office and HM Treasury, it put in place an infrastructure and projects authority, which has been successful in delivery. We need to do the same. People think we are adding a layer of bureaucracy. We are not. We are building the skills and capability to deliver €100 billion in national development projects. That is what we are doing. We need to focus on building and retaining that capacity. Questions have been asked throughout the day as to whether we should bring those skills in from outside or shadow those with the skills. We do not have time to do either. We need to build now. We have already brought some people across from the National Development Finance Agency. These are people who have successfully delivered major projects across the country. We have access to these people. We now just need to pull them together into a unit that will deliver the required infrastructure.

I think what Dr. Davis is saying is that the client is critical to the delivery of the project. We need a much more proactive and engaged client on the public side sitting in meetings and asking what is going on and why people are not talking to each other to solve problems rather than leaving it to the design team and the contractor to fight over who made the mistake. You need that leadership. Early contractor involvement, collaboration and all of that provides for that. It is to be hoped the amendments to the dispute resolution mechanism being proposed by the GCCC will improve that as well. Each project has a project board designed to manage the relationships so there is active involvement there. We have to acknowledge that you cannot fully design a modern construction project. There are going to be elements left to be designed. Issues then arise and the contract must deal with these issues. Does it cost more or less to design the project as it now needs to be? It could be more or it could be less. If you have ten of something and decide you want ten more, that means you are doubling the amount. It is not just ten more of those things; it is every wire, cable, tap, light and room. It is the materials and the labour. It is undoing previous work and going back to the designers to get approval. It is getting certificates. It just keeps adding up. Unfortunately, the public does not understand. They think it is profiteering when it is actually third-party costs and administration to manage it.

It can escalate very quickly on a construction project. Anybody pricing an extension to their home at the moment will probably be floored by the price of it. It is just that the cost of materials keeps going up, and the standards required keep going up.

I have a comment rather than a question, because the witnesses have been here such a long time. I have been listening intently, pretty much from the beginning. They were highly informative presentations across the board. I am probably overstepping the mark here, but I think a presentation in the audiovisual room for Members of both Houses would be hugely informative. The amount of misinformation and the ballyragging that goes on does not help the delivery. Everybody wants the right product in the right place at the right time, within budget, and everything else. If that were possible, as a non-member of the committee, I would put that suggestion forward. I have been enthralled. I thank the witnesses for the quality of the information.

What often gets lost, particularly when dealing with the mega projects and projects that are over a long period of time - say, ten years, and MetroLink could even be 15 years - besides a general creep in scope, such as the need for an extra platform or whatever, is that the legislation changes. For example, when we look at the children's hospital, the medical requirements will change, and that will increase the cost quite substantially. Unfortunately, some of that gets lost in the messaging. It is just inevitable. During the procurement process, and even during the funding process, which Mr. O'Brien will be very familiar with, contingencies are added in. When you are looking at something for such a long period of time, it is inevitable that it is going to go over. Managing that messaging is quite difficult.

There is one project that illustrates that better than any. The Dublin Port tunnel started out as a single-bore tunnel project because that is what the standards permitted at the time. Midway through the design process of that project, not the tendering process, after cost estimates had been finalised for the single bore, there was a fire in a road tunnel in the Alps. It was an awful tragedy, although I cannot recall the name of the tunnel. As a result of that, international or European standards for tunnel design changed to a twin bore for traffic travelling in opposite directions. That is completely forgotten in the dialogue and debate about the cost overruns on that project. We were not comparing the same projects at all. They were completely different. In addition, the extent of the tunnelling increased by about half a mile to address issues of noise and disturbance in and around Whitehall.

A lot of that gets lost. It is this public acceptance piece that we need to work hard on. The procurement part is challenging enough, but in getting the project to procurement, people often forget the journey that the project has to go through. Ms Stewart raised the very important issue that the policy and legislative changes that govern infrastructure delivery can change in that period of time. That is also true of medical facilities. Clinical practices change, improve and enhance on a regular basis. We have to take that on board, sometimes in the middle of the job. That can be expensive.

I have not mentioned the name, but I will now. With regard to the hospital, Covid pretty much shut down the industry for the guts of two years. Even when we were open, there were major productivity impacts because of social distancing. Then the Ukraine war came on the back of the Covid manufacturing crisis, so there was massive hyperinflation and massive delays to productivity and construction on the site. It impacted everything. That was completely out of the control of the Government, the contractor, the design team, the architects and the manufacturers. That is the reality of construction. With big projects, this happens.

I say this tongue in cheek, but Mr. Sheridan is softening us up for cost increases, given what is happening at the moment.

In fairness to the OGP, it has put in a fairly robust set of mechanisms to deal with that.

We do not have to worry about energy across the public system until quarter 2 of 2027. We are okay.

I will ask some quick questions. Some of it may be information that can be forwarded to us. Each of the witnesses will have a chance to wrap up.

The national development plan runs to 2035. Do the witnesses have an idea of what is expected to be completed by 2035? As they said, some projects will take longer. Can they send us some indication? People would like to know. If we have a plan to 2035, what is going to be done? We understand that some of the big projects just mentioned will extend beyond that. Nonetheless, people should be able to say that X number of projects will be completed.

The witnesses might give us the definition of what they mean regarding the size of the projects, given they have used words like “mega”, “big” and “large”. The witnesses know what they mean. What is the level? They might send us a note on that.

There is a comment that is always made, and Mr. O’Brien partly answered it in his last point on the Dublin tunnel. There is the original estimate for a project, the tender cost and then the final cost. There is often an indication that if people come in with a high cost at the beginning, they might not get on the list - "lowballing" is how I would put it. People know that in eight years’ time, what we are talking about today is certainly not going to be the same. Is it possible that if a project is going to last eight years, the estimated final cost in eight years’ time, on the basis of 2% inflation or whatever-----

I will come in on that. We have moved a long way in terms of cost estimating and forecasting, particularly for those mega projects. Dr. Davis mentioned Professor Bent Flyvbjerg, who has done a lot of work on reference class forecasting. This is where there is some confusion. When we are quoting for these large projects, there is a range, and it is to do with the level of certainty at a particular point in the project’s development. As we get closer to tender, we expect that certainty to increase because we have resolved a lot of the issues. That is where we will start to see the range, which we might quote very early doors, with large infrastructure projects being between, say, €6 million and €20 million, or between €6 billion and €15 billion. That range will narrow down as we get closer to the tender stage. There is a much more sophisticated approach being applied, particularly on-----

In general, I get what Mr. O'Brien is saying, but the public have a simple view of life. They hear one figure, and then they see another figure. For example, I think what Mr. O'Brien said about the tunnel is lost on 99% of the public when it is explained that there is a cost overrun. A bit of selling is needed.

Yes, there is a lot of work to be done.

It has to be simple, so the public get it. They understand two tunnels versus one, end of story. It is good to hear some of those reasons.

There is a big issue with regard to the construction industry. It concerns the number of Irish workers working abroad on contracts and the number of non-Irish workers who are working here. What is the net loss? We all know that people go away on construction contracts, perhaps Monday to Friday in England, or they may be gone for a month here and a month there. It is a two-way street. On Monday, I was on a construction site where every worker was Irish, whereas I was on a construction site two weeks earlier where less than half the workers were. It depends on the nature of the job. This is a big issue. We are talking about capacity. Until we have a handle on the number of construction workers, we cannot talk about competing. The witnesses can come back to me with the information. I am just throwing out these questions as we approach 6 p.m. The CIF or the Department might have that information. I am just curious, and I would like the public to know.

With regard to the major capital projects, how much will be public versus private over the coming years? It might be 60:40, but I do not know the figure. We are all talking about Government contracts, but there are a lot of private sector contracts. It would be useful for this committee to have a feel for the percentage of public versus private.

The Department mentioned indexation. Its opening statement stated: “Liability caps and index-based price adjustment mechanisms have been introduced in the consultancy and construction contracts.” Is that a price index?

Yes.

The point on Covid reminds me of this. We know of contractors who were given a contract, but they got delayed due to Covid and the project took two years longer. Costs had gone up, and they were fighting with various Government Departments because inflation had gone up.

If a contract is at a price now, will this deal with that type of issue? Will the Department send us a note on this so we can get a handle on it?

Certainly, we are happy to do that. During the course of that hyperinflation period, it is probably fair to say that most construction contracts would really have struggled with that in terms of the adjustment unless they were very loose. We had fixed-price contracts entering into that which meant that inflation was very limited in terms of recovery. We introduced a co-operation framework to address that because it was absolutely at the extreme end. Steel increased by 600% over a period of time. Other materials were also way out of control. We introduced a co-operative framework to address this and used priced indices for input costs which would drive prices higher. The new amendments to the contracts include a range of published CSO indices all based on input costs. As fluctuations arise in those, there is a possibility to recover and the same applies with the consultancy costs.

I get what Mr. O'Brien is saying. Will he give us all of this in a note because this is what the committee will review later?

I will, of course.

I am not finished at all yet. One of the witnesses mentioned Uisce Éireann. Will they send us out information on it? The witnesses might collaborate and send us out information so that they are all not answering the same question. Will the Department lead? However, if something is more appropriate for the other witnesses to answer, it might get their advice.

One of the witnesses mentioned that some State agencies look back at what contractors have done in the past three years. That is very important. Will the Department give us the areas where that is now happening? I know lots of contractors who have been brilliant at building ten, 20 or 30 houses, but they might not have done them in the last three years. They built hundreds of houses not long ago for different local authorities. Will the Department give us a note on that topic, so we understand what is coming in there?

Will the Department give us a bit of good news? For example, will it list any major projects that have been finished under cost and on time? I have often seen press releases about projects that have been completed on time and under budget. Will the Department flesh these examples out a bit for us? Will the Department pick what it thinks are good examples of that? It is important because we only hear bad news. People only like to hear bad news some of the time, or people only like to broadcast bad news. It is important that even people like the witnesses have a balance because we know the other side of it.

My final question is mainly for the CIF. Does there tend to be more overruns on public contracts versus private contracts? If a contractor is doing a job for an American multinational and there is a price and it is doing a similar sized job for a Government Department, which is most likely to have an overrun? This is important for us to know. Based on the assumption that the private sector is tighter, are there lessons the public sector could learn? I do not know the answer.

I am sad to say that I am almost 40 years in procurement, and I spent 30-odd years of that in the private sector doing large projects. I can tell the Cathaoirleach from experience that they are probably there or thereabouts the same. That is just off the top of my head. They are not exactly, but-----

I know the witnesses have no statistics, but will they give us a view on it?

I will give the Cathaoirleach a view. I do not have data to give him because there is no way my members are going to give it to me, and their clients will not give it to me either. It all dials down to what you define as a overrun. A private client knows they have to get a project completed because they are either renting it or they have to produce a product. It may be a pharma plant or a chip plant. They are in a much more flexible position to throw money at a problem and solve it quickly through collaborative mechanisms. The public sector does not have that facility within public works contracts. That is probably the difference between the two.

Will Mr. Sheridan give us a note based on his instincts?

I will.

It cannot be scientific, but it is useful information. We hear about public contracts because they are taxpayers' money.

The key difference here-----

I am trying to be fair.

I hear the Cathaoirleach, but the key difference here is transparency. We have an obligation to be transparent whereas there is not any in the private sector.

In the private sector, God knows.

Exactly. They obviously have a duty to their shareholders and that is fine, but it is a different beast. We-----

Does the CIF believe that there is no discernible difference? It is easy to blame the public service for everything. A big housing development was being built in Portlaoise last summer and everyone went mad that the ESB connections were not there. We checked with the builder who lives in the Isle of Man. The houses sold quicker than he ever expected, so they were built quicker, and he had not asked the ESB in time when he moved on to the next 50 houses. Who got blamed? The ESB, the semi-State agency. It was not its fault but try telling that to the public. I want to be fair to all sides.

Dr. Davis said that we will not have the capacity in the next five years for some of this. Will he flesh that out in his final comment? As we are doing a report, it will be helpful for us to know what the estimated level of capital investment by the State will be between 2020 and 2035. It is okay saying €275 billion in the next ten years, but, assuming revenues hold up, there must be some plan regarding how that will shape up. Let us hope it is not all loaded for the last three years of it. I know there is a lead-in time on things like that.

The national children's hospital was mentioned a few times. I think the site works and enabling works were done before the construction contract was finalised. How many credible bids were submitted for its actual construction?

There were four.

That is okay. Ms Stewart has answered the question.

I was going reading into it because there was an issue-----

That is okay. Ms Stewart has answered because there is a myth out there that there were not many. There was only-----

There were eight to begin with and it was shortlisted to four.

Were these bids for the construction?

Yes, the construction of the actual hospital.

Will the Department put that in writing to us for the record? How often does the public sector put out a tender and then pull back from it? It could be because the price frightened it off, or for other reasons. Does that happen often? Will one of the witnesses give us the reasons this happens when something goes to tender? Perhaps the design or the standards changed, or the spec is not what is was going to be. Does it happen often? I am talking about big projects. Does it happen often across the board?

It can happen for positive reasons as well. The market may be confused. There may be something in the tender that has caused confusion to the market in relation to a turnover requirement or insurance levels, so there can be positive reasons for it.

Will the Department give us a note on that so we have it on the record?

Communication is key going forward - perhaps there should be a communications strategy - because €102 billion, or whatever the overall figure is, is a massive amount of money. It is nearly anticipated that predators will pick holes in it and criticise it before a shovel ever goes in the ground. It will help if a clear communication strategy, which gives information that is easily read, runs in tandem with it. As I said, I found today very informative. It is important that people are informed, and they can see progress being made on the delivery of projects for the future, whether it is 20, 50 or 100 years hence. My background was in healthcare. Half the time, bringing people to concordance is about communicating clearly with them and telling them what we hope to achieve and how we are going to go about it. It is a huge part of the job as less time is then spent on defending things because the explanation has been built in along the way.

I am giving each witness an opportunity to discuss anything they did not get to respond to.

There are two things I want to add. First, large-scale infrastructure procurement, which is what we are addressing in many ways today, is a specialist set of skills. It is not something that comes out of generic procurement. These are legal skills and contract management skills. These are major projects. It is not the case that somebody went out and bought some stationery and was very good at it. These are major infrastructure projects, and we need to resource them effectively. If we are spending €100 billion, we need to ensure we put the right people in place to be able to do that.

The second thing is to leave a thought in everyone's head. We are not inventing anything new. These have all been built around the world previously. There is an idea that every time we go and have a conversation, it is as if it is new and never been done before. It may never have been done in an Irish context, but it has been done.

That means the lessons have been learned. Our job is to find out where those lessons are and to work with those people to ensure we do not make the same mistakes again.

Does Mr Sheridan have any further comments?

When looking at the initial barriers to infrastructure delivery, it was identified that there were 22,904 Irish construction workers leaving Ireland on an annual basis. I would need to check the figure again but that data is in the infrastructure reports. The Department might have had the data when it was analysing it.

I understand the people who have left. I am talking about the people who are working on projects. They officially have not left and are back here at weekends or once a month. They are kind of-----

Is the Cathaoirleach asking about construction workers-----

I am asking about people who are working.

-----who have actually been seconded abroad?

No, not seconded. I am talking about the guys leaving every week and coming back.

The actual labour coming in.

That might be hard to capture, but a lot of Irish construction workers are heading to jobs in England and elsewhere. Technically they still live here. They have not upped-----

It is a very mobile workforce. That has been a practice for years.

It always has been. It has been mentioned that we have a deficit of manpower to carry out the work. I am just asking if there is anything we can do.

I will talk to my colleagues on this and-----

It is not an exact science but it will give people a feel for it. Can the people leaving the country every week be attracted to make up for the shortage of capacity here? I know there might be better wages or more lucrative contracts abroad. That is all I am asking for. I accept there are no definitive CSO figures on this.

Rosslare Europort has just been completed on time and in budget, and delivered by the public purse. That was a €400 million mega project. That is the type of project.

The Irish people do not hear that. We only hear the bad news. Bad news makes headlines.

We want to try to-----

Mr. Sheridan can use this platform.

The OGP focus is on driving best use of public funding. Everything we do is focused on how we use our strategy, guidelines or whatever - even when we are having those back-and-forth negotiations with the EU - to get the best from an Ireland perspective and get our position known. We are very focused on the future. That is why, in the last few years, we have zoned in on SMEs, on micro and, in particular, on social because we understand that everybody needs to be involved in society. We want to make sure we utilise our procurement processes for that good and also to have a backfill should anything happen on the corporation tax front, so that we have built up our own Irish industry, provided employment and taken any tax revenue. That is a really big focus for us.

I thank all the witnesses for their contributions. We have been here for two and a half hours, which is a good sign in its own way. Eight or nine members contributed from this side of the house.