Today we are meeting representatives of the National Development Finance Agency, NDFA, for an engagement on the financial, advisory and project procurement services available to the State authorities for major public infrastructure projects. Today, I am pleased to welcome from the NDFA: Mr. Andrew O'Flanagan, director; Mr. Damian Duffy, deputy director, head of design, planning and procurement; Mr. Eamonn Halpin, deputy director, head of financial advisory; and Ms Susanne Fitzpatrick, deputy director, head of operations.

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 the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.

I remind members they will be afforded six-minute speaking slots for questions and answers, with a second chance to contribute, if they so wish. I invite Mr. Andrew O'Flanagan to make the opening statement.

I thank the Chair and members of the committee for the invitation to appear today. By way of introduction, the NDFA is a business unit within the National Treasury Management Agency, NTMA.

The NDFA was established in 2003 and provides project delivery, financial advisory services and contract management services to State authorities on public infrastructure projects. We have a multidisciplinary team with professionals from a range of construction and finance-related areas. This team is supported by the NTMA’s corporate functions. Our delivery role relates to public-private partnerships, PPPs, and Exchequer-funded public infrastructure projects. A PPP is a long-term contract between a public authority and a private sector consortium to design, build, finance, operate and maintain a public infrastructure asset.

We have delivered a number of significant projects on behalf of State authorities across the education, healthcare, housing and justice sectors. Our financial advisory role relates to public infrastructure projects that are referred to us by State authorities. Generally, these projects have a capital value of at least €75 million but we can and do advise on projects below this threshold in certain circumstances. The NDFA also provides contract management services on operational PPP projects, which have an ongoing operations and maintenance requirement over the lifetime of a PPP contract, which is typically for 25 years.

The budget and funding of projects is the responsibility of the relevant Department or Government agency. For clarity, the NDFA’s remit does not include providing funding for public infrastructure projects.

Turning to project delivery, since 2015, the NDFA has delivered 12 large-scale programmes - eight PPPs and four Exchequer-funded programmes - in the education, health, housing and justice sectors. This involved the delivery of 69 projects across 19 counties. The NDFA supports State authorities throughout the project delivery process. We manage the design and planning permission processes. In the past five years, we have progressed 47 sites through the planning process across 16 local authority areas, primarily in the education and housing sectors.

Once a project is approved and formally handed over to the NDFA to deliver, we manage the public procurement process. We undertake market engagement to ensure sufficient and healthy market interest in the projects. Over the past four years, for example, we have met over 50 Irish and international construction contractors and market participants.

During the construction phase of a project, we oversee construction on behalf of State authorities, including the active monitoring through regular site visits to assess progress against budget and timeline, quality, health and safety and other relevant aspects of construction.

Turning to financial advisory, the NDFA provides a range of financial advisory services on both PPP and Exchequer-funded projects. On PPPs, the NDFA provides advisory services relating to the preparation of the public sector benchmark, PSB, and associated value-for-money tests, as well as financial and commercial input into the contract documentation. Our work on Exchequer-funded infrastructure projects includes advising on climate action, education, health and transport projects. This includes advising on financial elements of tender competitions and monitoring the financial robustness of construction contractors and counterparties. The NDFA has provided financial advisory services on all PPPs in the State since the early 2000s, which includes: 11 PPP projects delivered directly by the NDFA; 15 roads PPP projects delivered by Transport Infrastructure Ireland, formerly the National Roads Authority; the Convention Centre Dublin, delivered by the Office of Public Works; the Criminal Courts of Justice, delivered by the Courts Service; and the Dublin waste to energy project, delivered by Dublin City Council. Outside of its role on specific projects, the NDFA also engages with the European Investment Bank, EIB, to source funding for Irish infrastructure generally. Some €1.5 billion of loans from the EIB have been arranged in the past ten years in the education, health, water and wastewater sectors. These loans are entered into between Ireland, acting through the NTMA, the relevant Departments and the EIB. The proceeds from EIB borrowings are paid into the Exchequer.

In terms of contract management, the NDFA provides contract management for Departments and agencies on 13 operational PPP projects, which equates to 58 facilities or sites across Ireland, in the education, higher education, housing and tourism sectors. In delivering these services, we monitor the delivery of services in accordance with contracted obligations and if relevant apply relevant deductions, in the case of service and availability shortfalls, to the monthly payment invoice.

To provide an overview of public-private partnerships, in a PPP, the private partner takes responsibility for delivering and financing the project and is paid over time, which as stated earlier is typically for 25 years after construction. In general, PPP costs include the design and construction costs in addition to the finance, operations, maintenance such as, for example, planned and reactive maintenance, grounds maintenance, cleaning, caretaking, security, waste management and lifecycle costs. No payments are made by the State until construction is complete and the asset is available for use. At the end of the 25-year contract term, the assets are handed back to the State in a predefined condition. Since the early 2000s, over 30 PPP projects have been delivered in Ireland across a range of sectors including education, health, housing, justice and roads.

On challenges, in recent years, infrastructure delivery in Ireland has been impacted by events such as the Covid-19 pandemic and the war in Ukraine resulting in significant construction price inflation and supply chain disruption with costs remaining high. The NDFA continuously monitors the impact of such events on project delivery. At present, we are monitoring for potential impacts of the current geopolitical situation in the Middle East and we are looking at construction price inflation due to higher energy costs, supply chain disruption and the higher costs of materials.

On broadening the NDFA’s remit, the Government’s recent Accelerating Infrastructure Report and Action Plan included an action, number 24, to broaden the remit of the NDFA to provide centralised support and expert assistance for major projects through the infrastructure guidelines and Government approvals process. The sub-actions arising from this action, such as the issuance of ministerial guidelines and the delivery of support to projects, have been progressed in accordance with the timelines in the report. When the NDFA’s new role was announced in January, the GPO and the National Concert Hall were referenced as projects that the NDFA could provide assistance on. The NDFA has had initial engagement with the Office of Public Works in relation to these projects. The NDFA has commenced work with Dublin City Council on its Exchequer-funded home building programme where we will work in partnership with Dublin City Council to deliver approximately 4,000 homes across 28 sites via design and build frameworks.

I hope this has given an insight into the work the NDFA carries out and our track record in public infrastructure delivery. My colleagues and I will do our best to answer any questions members may have.

I thank Mr. O’Flanagan. Deputy Tóibín was first to indicate but before I call him will Mr. O’Flanagan tell us the biggest project the NDFA has handled in recent years?

We have a delivery service and an advisory one. Regarding delivery, I think the Grangegorman HQ – the quad buildings in TU Dublin-----

Will Mr. O’Flanagan explain to the public what is Grangegorman?

Technological University Dublin, TU Dublin, has its headquarters in Grangegorman, Dublin 7. It was an old historic campus with lots of heritage buildings. It was decided to build a centrepiece of the campus, which were called quads. These were two large, big, brand new buildings. They were delivered via the PPP model. We also advise and for example, we are currently advising on the PPP element of MetroLink. It is a division between what we deliver ourselves and what we advise upon.

Therefore the NDFA has a lot of experience. The question is did the national children’s hospital come to the NDFA or if not, why not?

The decision at the time was to create a separate statutory body, a bespoke agency, to deliver that project. We were not involved in the delivery of that project although we had a role at the margins.

Thank you. Deputy Tóibín was first to indicate.

Gabhaim míle buíochas leis na finnéithe as ucht teacht anseo. Who makes a decision to take a PPP?

We can go through the PPP guidelines. In terms of policy-----

Grangegorman was a PPP. Who decided that would be a PPP?

Does Mr. Halpin want to talk us through the guidelines and decision-making process quickly?

The PPP guidelines are the Department of public expenditure’s framework and guide for running the PPP-----

Did it decide that Grangegorman would be a PPP?

No. Within those guidelines there is a series of stages set out for decision-making. With respect to any particular project, it is up to the Department that would make a decision at a point in time.

It is just because PPPs are very dear. They cost the State more than if the State built these projects themselves and while there is an argument for when the State is skint, for example when the crash happened, that PPPs would be used because the State did not have that funding, there is no argument at the moment for PPPs. I am looking at some figures here. The Dublin Criminal Court complex will cost €132 million to build. The final cost to the State will be €633 million. The M50 upgrade cost to build is €219 million with a final cost of €1.1 billion to the State. Look at all the schools. Obviously PPPs are a private profit system. The reason why we invite the private element in is because it takes out a chunk of money for themselves. It costs the State more to run a PPP than to build it itself.

Perhaps we can discuss PPPs first then, because it is pretty important. In 2019 a very good report was carried out. It was interdepartmental agency report. I think the Department of public expenditure and reform took the lead on it but it was all Departments and agencies and looked at PPPs. We can refer the Deputy to that report. It was updated in 2021. What was good about the report was its very honest appraisal of PPPs and their pros and cons. I will speak quickly on the pros; I will not dwell on this. First, it is off-balance sheet for the Government and the Deputy hit on this. It is basically private finance that does not constitute Government borrowing. Particularly in times of fiscal constraint and so on, that can be very useful but that is not the only advantage. The transfer of risk to the private sector is real. We have seen it in action and it works.

It is a costly transfer.

We will come to that in a minute. In addition, effectively no payments are made to the private sector consortium until the assets are delivered. We can go through this but we have found, by and large, when we have entered a contract it comes in on budget or maybe a fraction over it.

More so than public projects?

I am not going to start comparing it with other projects but we have a list. I can be corrected if I am wrong but on the ones we have delivered directly I think it is fair to say they were either on budget or within 5% or 3% of budget. There were a couple of exceptions during Covid when there were some exceptional payments made. However it did not arise to anywhere like 10%. Leave that aside and I will come back to that in a minute. The other advantage is effectively the private sector consortium is on the hook for 25 years. If anything goes wrong in a school, courthouse, etc., the private sector must fix the problem. The assets remain in State ownership all throughout this process. At the end of the 25 years, the asset must be handed back to the State in a predefined condition. Therefore it has been maintained and is in a very good condition at the end of the 25 years.

I have only about two minutes left. I have a heap of other questions.

Sorry. Just coming to the cost, perhaps the one misconception is that we are not comparing apples with apples because a lot of the costs we are talking about is the nominal cost whereas the actual real cost is the net present value – in other words, what you would pay now to 25 years later and that is significantly different. We can talk about the cost of debt. Generally speaking, with the private sector debt the delta is usually 1% over the cost of Government debt. The issue really is – and this is where the test comes in – is whether they represent value for money vis-à-vis Exchequer-funded projects.

I would say most people would not build their own home in a PPP. I would say most people would buy their own home and get a mortgage for it.

But-----

I have just one minute.

Okay. Sorry.

Mr. O’Flanagan is a member of the general construction contracts committee, is that right?

Yes.

We had representatives from the Construction Industry Federation in here. They spoke about the slow progression of projects, withdrawn tenders and how project bottleneck impacts on their ability to deliver them. We have had others in here who said we have the slowest tendering and procurement in the whole of Europe. Will Mr. O’Flanagan tell us why that is the case in Ireland?

I am not going to reinvent the wheel. One of the reasons we are here is the infrastructure action plan. That references 12 barriers that exist and the action plan is designed as part of the package to alleviate that.

The four pillars of the action plan are legal reform, regulatory reform and simplification, co-ordination and delivery of reform and public acceptance. If the first three in particular can be fixed, it would go a long way to solving a lot of problems. We deal with contractors and the CIF, etc., but at the other side our job is to maintain value for money. Some of the contracts can be quite onerous but they protect the State on the other side. We have managed on nearly all of our contracts to bring in the contract at the contract price, which is important. There are pluses and minuses to those contracts.

The National Development Finance Agency is involved in financial advisory services for MetroLink, is that right?

Yes; we have a role in the PPP element.

I am told the budget is either going to be €7.1 billion or €12.25 billion. There is a big gap between those two figures. The NDFA has a team who will write the tender, etc. How can we go into a project with such a yawning gap in the potential prices?

Mr. Halpin might comment on our role and the costs.

Our role is as an adviser on financial aspects of the MetroLink project. The projects is being delivered by Transport Infrastructure Ireland. It has overall responsibility for that project. Our role is mainly focused on the PPP element. There are two other major contracts as part of the programme. When it comes to costs, we are looking at building up the public sector benchmark for the PPP part of the contract. That will take place over the next number of months.

Mr. Halpin has not addressed the fact that there is pretty much €5 billion between the two potential prices.

The prices in the preliminary business case represent different probabilities for the outcomes of the project. It gives the variants. It is a large and complex project which gives rise to quite a large variation.

Will Mr. Halpin explain the variations? It is vague. What kind of problems is Mr. Halpin talking about?

There is a probability-based approach to estimating costs. I think the reference the Deputy made is to the P50 which is the 50% outcome, 80% certainty or 90% certainty. That was the range in the preliminary business case. It looks at the risks that may materialise under those scenarios. A 90% probability of the costs coming in at a certain amount covers most of the risk.

When will the NDFA be able to finalise an estimated cost - at what stage of the process?

The costs are being updated and going through a detailed business case at the moment which TII will bring to the Department of Transport and the Government over the coming months. That is the stage it is at currently.

The NDFA will not publish that before a company tenders for it, per se.

Will not publish what?

The estimated cost. If the NDFA estimates the cost will be €9 billion, a company has to tender it for €9 billion.

There is a requirement under public procurement to issue a contract notice with some estimated costs and that is standard for all projects we undertake. Transport Infrastructure Ireland will have to do that as well.

I thank Mr. Halpin. I will call members in the following sequence: Deputies Sheehan and McCormack, Senator Flynn and Deputies Clendennen, Cronin and Neville. I call Deputy Sheehan.

Will the NDFA talk us through the change in its remit that came with the accelerating infrastructure task force report? How is that unfolding?

It is contained in action 24 of the accelerating infrastructure plan. I think there were three sub-actions in that with a timeline. The timeline effectively ended in quarter 1 of this year. Effectively, they are all in place. It was a Government decision. Ministerial guidelines had to be issued to us to enshrine the new role in the guidelines we work towards. In conjunction with that a circular was sent to all relevant Departments and agencies outlining the service we offer. It started from then.

Is that so Departments and agencies would be able to turn to the National Development Finance Agency as opposed to being so dependent on external consultants?

Yes. The way it has happened so far is the circular contains a phone number and email. People can literally pick up the phone and call us. So far most of the projects we are in discussions about are the result of existing relationships with Departments because we have worked with so many of them and agencies over the years. We intend to go to every relevant Department and agency to make sure they are fully informed of what we can do. We are already looking at a certain number of projects. There is a co-ordination committee as well with officials from the Department of public expenditure, the Department of Finance and us. The purpose is when projects come in, we have to make sure we can add value to the projects. Not all projects might be suitable for our assistance. Once that is done, we will agree terms of reference - nothing too bureaucratic, just to make sure it is clear what we are doing for that Department or agency and on we go. It might be helpful to outline how we set out the type of services we might do. To recap, the NDFA when it was established traditionally advised on PPPs. That was its core mandate. It was then given the power to enter into PPPs to deliver PPPs directly, which we have done. Then we began to manage PPPs over 25 years for a number of Departments and agencies and then it was decided we could deliver non-PPP, Exchequer-funded projects, which we have begun to do. Finally, the evolution is the advisory piece spans not just financial but the whole gamut. Ms Fitzpatrick might set out how we approached the services we can potentially offer the Departments and agencies.

At the moment, the Critical Infrastructure Bill is going through the Dáil. There are a number of aspects to that. I am fairly with familiar with the infrastructure task force report. What does the NDFA see as the biggest and most immediate blockage that needs to be tackled in critical infrastructure? Is it at the legal end, is it to do with consenting and regulation or how we interpret environmental law?

When we started talking about this and what we could bring to infrastructure projects, we looked first at the infrastructure guidelines and the stages of the project life cycle as it is delivered through that. We could see in the experience we gained in delivering the projects Mr. O'Flanagan referred to that from the initiation stage we could help establishing corporate governance structures, setting out realistic plans to deliver projects, moving through the approval gates where we could provide assistance in preparation of business cases. We saw that going through all the stages - procurement, input into procurement documentation, helping out in procurement processes right through to the construction stage. When Mr. O'Flanagan spoke about the ministerial guidelines, it is on all those key areas and stages in which we have experience that we are happy to work in supporting Departments and agencies.

It is hard to pick out any particular key blockage. I may ask Mr. Duffy to talk about it. On Grangegorman, TU Dublin, which we discussed, that project was delayed by a lawsuit challenging the procurement decision to award the contract. That delayed it by 18 months, for example.

It is hard to isolate one from the others but the barriers that have been identified are certainly pertinent. Mr. Duffy might give a sense of the type of issues that arise in a typical project.

Infrastructure and its delivery path is complex. You can get disruptions and blockages at all stages in the life cycle. You set yourself up best when you start off from a strong position. The endeavour in any project is to understand its constraints, to understand the brief and what the requirement is, and to make sure that fits into its new environment. You have to advance the designs, the plannings, the consents, the procurements and all of those things. There are complexities in several dimensions of this.

In relation to design and development, you need your stakeholders to understand what the needs are. There is a process of developing design. Sometimes that might not match a budget and there is optimisation required to get the right concept and endeavour to meet a user's needs. That is the design element but, then again, you need to be working through your planning and consent processes. You need stakeholder engagement. We have all heard about the challenges with various infrastructure and utility elements and we all know there are constraints across all that system. Your project is not defined until you are making those collaborations across the system and understanding those constraints. Often you find some of those constraints impacting on your project and you need workarounds or you need to build enabling capacity. Those things require time and additional budgets.

In the consenting and planning process, you recognise from the planning authorities' perspective where those constraints are happening, whether it be transport or wastewater. That consultation process involves always needing to check the due diligence of the process. You have to deal with these as you move towards making a project reality. If you conduct due diligence through that process, you bring more certainty to the project delivery lines. You can build appropriate procurement strategies around that. Then you get more certainty. You have to build the documents, build your briefs, build your budgets and bring stakeholders with you. In most of the projects referred to, we are working in collaboration with partners. They all have to input. There are constraints and complexities. Planning and consents have not got any easier in recent years either. There is a lot of due diligence to prove where the viabilities or the constraints are and work through. It is a challenge.

In procurement, you are procuring from the market. That is a two-way equation. The market has to have an appetite for delivering the project, and the skills and capabilities; the procurement strategy needs to suit as well. There is a collaborative environment all through that. The wider impact of the environment or the economic cycles can impact hugely, as we have seen. There is a number of facets. The key is that when you award a contract, you have robust due diligence done along the way, you have got through your approvals, there is strong governance and strong approvals, and you are set up for success.

Construction is not easy either. You have to get through that process, you have to monitor, you have to make sure the plans are being followed and the quality is there. All of that takes partnership with everybody involved. At every step, there are complexities and you can get disruptions, but you have to weave them all together efficiently.

I thank Mr. O'Flanagan and his team for coming in to us today and for the opening statement. Infrastructure delivery is central to housing, health, education and economic growth and it is essential these projects are delivered on time, in budget and with full value for the taxpayer.

The NDFA has delivered 69 projects across 19 counties since 2015. How many of these were delivered on time and within original budget projections? The witnesses have referenced ongoing pressures from inflation, energy costs and supply-chain disruption. What impact are these factors currently having on the delivery timelines for major public infrastructure projects?

In relation to the 4,000-home programme with Dublin City Council, what is the expected timeline for commencement and completion? How confident are the witnesses these targets will be met? What lessons have been learned from previous PPP projects to ensure better value for money and stronger oversight for the taxpayer?

Those are effectively the 12 projects - eight PPPs and four Exchequer-funded - that we delivered directly. Does Ms Fitzpatrick have the details?

Yes.

It will only take a few minutes but we can-----

Before Ms Fitzpatrick comes in, the Dáil Chamber has, unfortunately, called a vote.

That will give the witnesses loads of time to get that.

We will give you a very good answer now.

Deputy McCormack was speaking before the suspension.

I had finished.

We have the Deputy's four questions and will run through them. Ms Fitzpatrick will answer the first question, which was about cost overruns and delays on those 69, which translate as 12 projects.

From the supporting information we sent in, those projects were delivered in 12 contracts. I will start with the four Exchequer-funded contracts and can say that all the sites in those projects were delivered on time and on budget. I turn to the eight PPPs. Three of them are the same story and were delivered on time and on budget. We then had three sites in construction during Covid-19. Those sites were impacted by the delays, the shutdowns and the additional costs. There were overruns in time and additional costs, but they were less than less than 5% on each of the three contracts. We then had one project where, due to the complex nature of the facilities involved, there were time and cost overruns. Again, the cost overruns were less than 5% on that project. The last PPP was delivered on budget with some time overruns.

The bottom line is that we are here to ask questions because the people we represent want to get value for money and want to see that is happening. From what Ms Fitzpatrick has said, it is reasonable to expect delays and overruns on certain projects. The ones we get thrown at us constantly are the children's hospital and the OPW projects we are all aware of like the bike shed and the security hut. It is unfair because they are picked out. However, when the NDFA is looking after the financing of the projects, most of them come in on time, and that needs to be heard loud and strong because it is unfair to only reflect on the bad ones.

I thank the Deputy. We are incredibly conscious of value for money. On the corporate governance of a project, we inform stakeholders at all junctures if there are any problems coming down the line. It is something we are really conscious of. Mr. Duffy will answer the next two questions. I think the first was on the impact of higher energy prices and the current crisis in the Middle East. The second question he will answer is about the Dublin City Council housing programme and indicative timelines.

I turn first to the Middle East crisis and the impact on inflation.

We probably saw a lot of how it might resonate in previous experience post-Covid and after the war in Ukraine. Energy is an input factor in a lot of construction materials and in the delivery of the construction itself. Last time around, we saw the impacts on concrete, cement, steel, aluminium and copper. There is the commodity pricing of the raw materials themselves and there is also making them into materials. All of this adds to the inflation and we have seen its impact. We are monitoring all of the indices and we will continue to do so. A lot revolves around the term of the volatility we may be facing. When we worked our way through it, a lot of steps were taken, although costs increased significantly and remain high. We now have some flexibility in public works contracts and understanding of how to work it. It has got more robust with better Central Statistics Office, CSO, indices to track building materials and understanding of how to put them into public works contracts.

In all of this, we consult with the Department of public expenditure and the Government contracts committee, GCC, because these are system-wide issues that affect not only the State when it is developing contracts, but also the private sector. We are very conscious of this. Mr. Duffy will respond to the question on timelines.

The project programme kicked off in recent weeks. We are a long way down the road as a lot of design and development work has been done and a lot of planning consents are already in place, so we can get off to a quick start. We will go to market in the next month and this will bring us through a pre-qualification process and tender process before we get to site. I believe we will be on site in the next ten to 12 months.

With regard to the structure of how we will procure it, there are some big numbers for the numbers and sites. There are 28 sites and 4,000 units. The procurement strategy has been well developed. We are thinking about setting up frameworks for various panels of design and build contractors and other arrangements. We have shown it to the market, and there seemed to be very strong and positive interest in it at the launch event we had in March. We will not deliver them all at one time; there is likely to be a rolling package of bundles of sites and they will be staggered to suit the market capacity.

It will start in about ten to 12 months and then it will roll on.

Yes, and the delivery will depend on the site itself. Typically, we find that we get through construction between 15 and 30 months, depending on the scale.

And with modern methods of construction.

That has been a very strong focus for us. We have done a lot of work with the Department of housing and other stakeholders to try to customise what designs should look like so that standardisation and repetition can be achieved and there is good design practice that is suitable for off-site construction and modern methods. When we can do things at scale and present a pipeline, it means the market can see it and invest, which is also important.

I asked a question about lessons learned and I would like a brief response, as I am over time.

After each project, we look back and consider what we could do differently. I will give a few examples of what we have done on public-private partnerships over time. We get planning consents up front before going to procurement because we find this brings the projects to a greater state of readiness for the market and they can move through quicker. We also have a fairly standard contract for the public-private partnership model but we consider changes to it as appropriate. It goes through a dialogue process with bidders to bring in better ideas to make sure the contract delivers what services and facilities are required. A particular area where we have made changes is construction inflation, which Mr. Duffy mentioned. We work with the Department of public expenditure and the Government contracts committee to look at how contracts evolve. With regard to construction inflation, we made changes to be consistent with other State contracts. We are bringing in a risk-sharing mechanism for construction prices to make sure a project is set up in a fair way. The first risk of construction inflation is with the private sector but we have brought in a risk-sharing mechanism above a certain level.

We are also conscious of the competitive environment for our projects and of making sure we have enough participants to bring to bear competitive procurement in any project we look at. We engage consistently with the market. We did a particular exercise in recent months in respect of housing projects and over previous years we engaged with contractors and developers who might be interested in projects. We spoke to more than 50 Irish and international contractors. It is about trying to make the market as wide as possible for our projects.

The opening statement mentioned that infrastructure delivery had been impacted by events such as Covid and the war in Ukraine, and now there is the war in the Middle East. Every country in the world has faced these same delays. This is being monitored but what mitigation are we looking at? How do we compare with other European countries? I do not know whether the witnesses saw the graph from Sinéad O'Sullivan over the weekend on how Ireland, as a very wealthy country, compared on infrastructure delivery. Ireland is in a league of its own, the little red dot at the very bottom of the líne. I would appreciate hearing any comment the witnesses have on this. She is a highly respected researcher.

Reference was made to the Government's plan to broaden the remit of the NDFA to provide centralised support. Have formal requests been made to the Government on resources and money? Do the witnesses have any comment on the Critical Infrastructure Bill, which we debated in the Dáil last night? There are concerns about the climate Act and the NDFA has responsibilities with regard to that Act. Do the witnesses think this will act as a silver bullet? From meetings we have had with several people, we know it is not always judicial reviews that cause the delays. Often, it is the decision-making.

As there is a vote in the Dáil we will suspend.

Deputy Réada Cronin had put some questions immediately before we suspended.

We will answer those. I will handle them, although not in the exact order they were asked. On resources, just to explain, the NDFA sits within the NTMA. Unlike other agencies, the mechanism for securing extra resources is that we have a CEO and a board and, if the need arises, whether under this service or-----

Which board is that the CEO of?

I am talking about the CEO of the NTMA. The NDFA sits within the NTMA.

Does the NDFA have a board?

No. We used to have one. It is confusing.

Does the NDFA have to go to the NTMA?

Yes, we are fully a part of it. In respect of this or any other new activity or revised or increased mandate, management makes a proposal to the board of the NTMA. If it is acceptable to the board, it forms part of the budgetary process. The Minister for Finance effectively decides directly whether to approve the budget. The overall budget for the NTMA includes these resources and costs. With regard to our approach in respect of this updated mandated, it is obviously just kicking off now. In the first instance, we have to assess the number, scale and complexity of the projects. We want to leverage our existing workforce and see what we can do with them. As the need arises, we can make a case for additional resources. The channel is through the NTMA board to approval by the Minister for Finance. It is not like other agencies, where you need to get sanction for certain roles. To be clear, the NTMA approaches things in a very prudent manner. At the moment, we have to wait to see what demand for this service will be. We have some additional hires in the pipeline. However, as I have said, it is a prudent approach that involves waiting, although not for too long, to see how it all pans out.

Where Mr. O'Flanagan sees process, the people who vote for us may see delays.

I know but it would also not be right to rush out to hire hundreds of people. There is balance to be struck. I totally agree. We are taking these questions in a certain order. The next one is on our reaction to events and issues that arise and whether we look to other countries. Mr. Halpin might talk about that quickly.

I thank the Deputy for that question. She is right. We obviously encounter challenges, a lot of which are common to other countries. We engage through the European body expertise centre to understand what is happening in other markets. We are members of that and we share experiences and learn from what other countries are doing. To go back to the topical examples of cost inflation and increases, we have talked to the centre about that. We are also engaged with bodies in the UK, in England, Scotland and Wales, about what they are doing. We see common challenges. We work with them to share our-----

Those challenges include Covid, wars and global------

Yes, exactly. We engage with procuring bodies outside of the Irish market to compare notes, to learn lessons and to share our experiences.

How do infrastructure delays in Ireland compare with those elsewhere? Every country was affected by Covid, the oil crisis and the war in Ukraine.

With respect to those particular events, the challenges were probably quite similar. It is a question of how we responded to them and made changes to move forward and to manage similar risks in the future. This includes making those changes to our contracts as a result of the experience of inflation after the beginning of the war in Ukraine. That has given some level of protection but, as we work through the most recent geopolitical events, we will have to give it further consideration.

Did the witnesses see the graph from Sinéad O'Sullivan that went viral?

I will take that question as well. We recognise the history of infrastructure in Ireland. We obviously hope to be part of the solution. The NDP shows a step change in how infrastructure is going to be delivered over the next ten years. We represent one action within the Accelerating Infrastructure report and action plan but we acknowledge that all of those actions need to come together to make that change and bring Ireland up the curve on infrastructure.

In fairness, at the back of the Accelerating Infrastructure report are a few pages outlining all of the various countries that are bringing in legislation to do roughly the exact same thing as we are doing.

That is legislation similar to our critical infrastructure Bill.

It varies. Obviously, there are books in America, including Abundance by Ezra Klein, about the need to completely reform the public's views on objecting to housing, planning and so on and how the dial can be turned. It is a global movement. We are bound up in that. With regard to the critical infrastructure Bill and climate, I will ask Mr. Duffy to comment.

There are obvious benefits to aligning priorities across government, along with certain disadvantages.

I do not want to say too much. It is still moving through. In terms of prioritisation as a concept, it is very important and a central part of the national development plan, the sectoral investment plans and that framework of prioritising the focus. Taking that together with what is in Accelerating Infrastructure, it is the package in total where we will see most benefit across the wider system.

The Deputy mentioned climate. Regarding our approach to that in the buildings and those elements, we think a lot about it. Climate and sustainability are woven into all of the delivery cycle over the period.

I am also a member of the climate committee. We really have to get that culture into us, so we do not have to be so reliant on fossil fuels.

In taking that through the design process, we are weaving in the benefits of sustainable decisions in regard to the selection of materials, energy monitoring, the kinds of energy, the standards of the fabric and even the whole-life benefits of what materials are going to be used and where they are sourced, as well as the energy usage during use. We specify a lot of that in our contracts with regard to use and the behavioural element of things. All of that is very important. As we do that, we work very much with the stakeholders for whatever project we are working on. Through that, we assemble a green procurement plan for every project that we do before we procure it, and that is reflected in the specification, the marking and the process. It is important, and it is a whole-life objective.

I was in a queue for petrol at the petrol station last week. A woman in front of me was giving out about the price of fuel, the carbon tax and all of that. She said that the world is burning. The carbon release that has happened in Gaza and Lebanon is horrendous. We need to have this bred into us to change the culture. I have to go to another meeting now. I thank the witnesses for the replies.

I will come in with a few general questions. Since the NDFA was established, and given that PPPs run for a number of years, have any of those projects run their full course and been handed back to the State? The witnesses might talk me through the projects, whether schools, roads, motorways or otherwise, the experience of handing back and the condition of the project when it was handed back.

That is very topical. I am not sure who is best to handle it because we have not had any yet on our watch.

The first of the PPPs in Ireland, the accommodation PPPs that we are responsible for and have a role in, have not been handed back yet. That is going to happen-----

Are they accommodation PPPs?

These are non-road PPPs. There are a number of education projects that are due to be handed back next year and the following year. We are in preparation for that with the Department of education and the Department of further and higher education. We will know in due course. There is a rigorous process in the stage before hand-back to make sure you get back the asset in the state that was set out in the contract. It is part of the whole-life contract that the pre-defined state that the asset needs to be in is actually realised when you come to the end of the contract. We will be able to come back in due course, but at this stage, we have not got to that point.

There could be okay news or maybe not okay news.

I do not think so. We monitor the projects constantly over the 25 years.

I am from County Laois, which has the M7 motorway. It has a toll and is a PPP. From a close observation of that stretch of the motorway, I have always felt that the level of maintenance is probably better than for one that is in State ownership. That is my general observation from driving the roads.

Mr. Duffy might talk about the level of monitoring that we do to ensure that our projects are maintained.

That goes for schools as well.

The contract sets out the monitoring requirement over the life cycle. First, there are specifications that require certain tests and audits, and there is ongoing monitoring of that. There are performance deductions if it is not adhered to in the contract over its course. That is reported on monthly, and it aligns with how you pay on a monthly basis. As for the fund management, the private sector has to retain the ability to service that contract all the way to the end in order to pay down its debt.

To take a simple example, say, a school project, there are some in Portlaoise that go back a long time. If the windows went in 25 years ago, is it expected that they will be renewed or will the NDFA be handed back the 25-year-old windows? It is a simple, obvious example.

Again, there is a schedule in the contract that sets out the residual life that any of those building elements and components need to have.

That is in the original contract.

All of that is part of the test as you run up to the end of the contract, and it must be adhered to.

On the face of it, PPPs are much more expensive than a direct build by the State, and that is because there is a 25-year contract. The NDFA has done a lot of schools and some motorways. From its point of view, how much of the total life cost to the NDFA is the original construction cost versus the 25-year management cost? Where does it fall?

Mr. Halpin will talk about the rough ranges.

Broadly speaking, on our most recent projects, the construction cost is of the order of 40% or 50%, so probably under 50% of the total cost of the project in nominal terms, and then the residual amount is for the operation and maintenance, and the funding of that.

Is it similar for schools?

Broadly speaking, yes. We have not done schools for a number of years, but I would expect that.

When it comes to the site acquisition for schools, that is not for the NDFA. It is presented with a site, so the site cost does not come into it.

That is correct. There are no site costs.

I have a question about the national development plan. The witnesses know the overall shape of it. What percentage of the overall value of the NDP does the NDFA expect to be involved in? The NDFA probably knows what projects or areas it is going to be involved in. Is it involved in 2%, 5% or 20%?

Regarding the projects that we have in the current pipeline, we have provided that detail in the supporting information pack. The Chair will have seen the Dublin family courts.

It is hard to quantify a percentage. We can revert with that.

The witnesses know what I am getting at. The NDFA is supposed to have State expertise. The infrastructure Bill is before the committee next week. The NDFA will be relied on to provide a lot of services to various agencies as part of that. In the overall scheme of things, how significant is the role of the NDFA?

We will look at that. I can give one metric, and it is not in the national development plan.

I am just looking for rough figures.

This is a different metric, but it is interesting. It is the proportion of PPPs to capital spend. Traditionally, it has been between 5% and 10%, and that can vary. My point is that, historically at least, for all capital projects, if the PPPs represented 5%, 10% or otherwise, we would have been involved in either advising or delivering that percentage.

All of the PPPs.

To be clear, there are over 30 PPPs being delivered in the State. The only ones that we did not have a role in were the very early ones - the M50, the East Link and the model schools.

The pilot schools, that is, the Cork School of Music and the National Maritime College.

That is just one metric.

That was back in the day. By and large, the NDFA is involved in all the PPPs.

Since we were established, effectively. We have advised on the roads. In fairness, they were delivered by the National Roads Authority, now TII, but we advised on the financing aspect or else we delivered them.

The non-roads are called accommodation PPP - social accommodation, which involves courts, universities, etc. That is just one metric but we can certainly revert on the other.

In terms of the PPPs the NDFA is currently managing, a PPP can be design and build or design, build and operate. Do most of the agency's projects include the management of the project overnight or does it just involve building and handing over to the core services?

We do support the management of a number of them. We do not need to do that in every sense. The Exchequer-funded design and build projects are just design and build, that is, for the length of the development and construction. They are two different categories.

Is the NDFA involved in both sides?

Yes, we are involved in both.

With regard to all the projects the NDFA is involved in, what percentage of the project cost would go towards Irish-based companies rather than non-Irish-based? The agency wants to support Irish industry and projects like this are very mobile in terms of contractors all over Europe but can Mr. Duffy give us a feel? Do most of the big contracts go to companies from outside the State? I know they might subcontract a lot of the work here but give me a feel for that topic.

Projects we have procured directly ourselves on the social accommodation involve predominantly the Irish companies.

They are the smaller projects. Could Mr. Duffy give an example?

Certainly the schools PPPs.

Grangegorman was a project where the main contractor along with a Spanish-----

FCC.

Rhatigan would be-----

Rhatigan and Equitix would be other examples. It is a gambit and it depends who wins as well. There there will be international involvement, there is always a very strong main Irish anchor contractor and a supply chain because it is an indigenous endeavour to build-----

Has the NDFA a role in projects like MetroLink?

We are advising on the PPP element of that. It is obviously much wider. There are the tunneling contracts, which are obviously a different aspect.

The NDFA is not handling the tunnelling contracts.

No.

Does the NDFA have an involvement in the Shannon to Dublin water project? Has it started yet?

That is run by Uisce Éireann so that is separate.

Why is it run by Uisce Éireann?

In terms of the contractors on the projects we deliver, we advise on most of them. Metrolink might be an exception because it is a mega project. It would mainly involve either an Irish contractor or occasionally Irish with a European joint venture partner but it mainly involves Irish contractors.

A lot of the projects listed in the document given to the committee by the NDFA in advance of the meeting go back to 2015. Could Mr. O'Flanagan list one current project on the schedule the NDFA gave us? Most of them seem to be in education. Has that been the NDFA's main area of activity versus its original-----

It depends on the delivery and the advisory. In the early years, it is fair to say the roads PPPs working with the NRA would have constituted a huge amount of our work. At one stage, one third of Ireland's motorway and dual carriage network was delivered via PPP. That is in the review of the PPPs report.

When was that report produced?

It was in 2019 updated to 2021. Apart from a couple of road projects such as the M50 that predated our existence, we advised on nearly all of them. It is fair to say that there are no PPPs in the roads area for a number of reasons. The road network is built out to a large degree in terms of the major roads. Picking one particular project that is a PPP, the Dublin family courts project is in live procurement. We have received tenders for that and it is due to begin construction next year and be finished in 2029.

Could Mr. O'Flanagan come back to us with an indication of-----

Is that of what we could be involved in, etc., and the NDP?

The value of what the NDFA is involved in. We all remember that the agency was more active when the roads projects were going because they were big and we were seeing them everywhere. It is just a personal observation of the schools it did - some in Portlaoise - over the years so we are conscious of those type of things. I have not heard that much about the NDFA in recent years. Have things been quieter in the organisation?

I would not have thought so. During the financial crisis, there were a number of cancellations of PPP projects. There was then the stimulus PPP package and we delivered all of those. That was a mixture of the court houses, schools, primary care centres and Grangegorman so that was quite a busy period. We will certainly come back to the Cathaoirleach on that.

They are general questions I had. I apologise for the interruption but it is out of our control. It made the meeting a little less free-flowing than it would normally be but it was outside our control. If the NDFA is supplying the committee with any information as a result of today's meeting, could it try to do so within two weeks? I do not think that is unreasonable. We set the two-week timescale because it is a case of "how long is a piece of string?" if a time limit is not set.

Of course.

If any issues arise, the agency can come back to the secretariat on them.