Government introduces new rules on spending on capital projects
In the future, a final decision on a large public investment project will only be made by the government when the cost of the tender is known and figures are available for all associated risks, the government said. Minister of Public Expenses Paschal Donohoe.
The minister on Wednesday launched an update to the public expenditure code that takes into account the lessons learned from the major overrun of the new national children’s hospital.
The public expenditure code is a set of rules, procedures and guidelines aimed at ensuring value for money in major public projects.
The revised public expenditure code will provide for additional phases of project appraisal. This is intended to allow more opportunities for risks to be identified and presented to government or to individual departments.
Mr Donohoe said that as part of the key changes to the existing code, a strategic assessment of projects will now be required before developing a business case to capture the risks involved.
There will also be a preliminary business case phase which, according to the minister, will look at all key costs and consider the economic impact of the project and not just the financial risks.
He said that a final business case would also be made once the bidding process is complete, which would give another chance for the government or a government department to decide how or if the particular project went through. before.
For very large projects of more than 100 million euros, there will now be an additional assessment step: an independent assessment carried out with experts or specialists who did not participate in the development of the previous business case.
Mr Donohoe said the updated expenditure code will be needed in the future as the government faces both cost inflation in the construction industry and a number of one-off projects, costly and complex, especially in the areas of transport and climate change.
However, he did not believe that the new requirements would cause delays in the investment projects set out in the government’s Ireland 2040 national plan.
âLarge projects are complex businesses. They take many years to develop and build, involve multiple public and private actors and the management of complex challenges, including physical, technological, legal and environmental. Rigorous application of the updated public expenditure code will enable public bodies to anticipate, plan and overcome these problems. The application of this code will make it possible to pursue the promise of public investment in a sustainable financial framework, âhe declared.
He said the requirements of the updated public expenditure code would apply from January 1, 2020.
The Ministry of Public Expenditure and Reform said all elements of the updated public expenditure code were designed to strengthen Ireland’s public investment management systems. He said that the application of the principles of the code would reflect best practices in this area at the international level.
âThe code brings renewed attention to: acquiring a more developed view of costs, risks and deadlines before committing to continue a project; tighter governance of key decision points during project preparation and delivery; Continuous updating of a project’s business case throughout the design and planning phases; and careful consideration of affordability throughout the process.