Minister’s Gaffe increases pressure on Irish Government to deliver NDP

CIF Director General, Tom Parlon chats to Irish Environment Minister John Gormley and CIF President, Hank Fogarty at the FIEC conference in Dublin Castle


Judging by the commentary in newspapers over the weekend Stephen Staunton can relax, as there is a new ‘Gaffer’ in town. Minister for Finance Brian Lenihan’s somewhat undiplomatic proclamation that the Irish economy has come to a “shuddering stop” was greeted with unease by the delegates gathered for the FIEC European Construction Conference held in Dublin last weekend.

Addressing the conference in Dublin Castle, Construction Industry Federation (CIF) president Hank Fogarty argued that reducing infrastructure spending would be a very negative reaction. He said: “Across Europe the best solution has been to invest in infrastructure and planning to ensure future economic success.”

There is growing pressure on the Irish Government to deliver creative solutions in maintaining momentum on the €184bn National Development Plan (NDP) as opposed slamming the till shut. With the levels of employment in the Irish Construction industry still very high, it will be difficult to re-establish some level of momentum once overall market conditions improve if cutbacks in spending is the only solution the Government can present.

Hank Fogarty also challenged the Irish and other European governments to lead by example in the drive to reduce carbon emissions in the built environment.

He said: “There are a range of issues that should be used by the government to help bring about more reductions in our energy consumption. The most recent report from Sustainable Energy Ireland added to the record price for crude oil, should serve as a wake up call to all sectors of the economy with regard to tackling climate change. With the introduction of new building energy regulations from 1 July, which set out improvements in energy efficiencies of new residential buildings, there is an ideal opportunity for the Government to lead by example in the battle on energy usage. The Government, through Local Authorities, State Agencies and Government Departments has the largest property folio in the country and there is a ready-made opportunity for them to lead by example with regard to energy saving initiatives. By spearheading a programme aimed at the stock of exiting buildings the Government can reduce greenhouse gas emissions and improve our environment in the most efficient and cost effective way possible.”

Also speaking at the conference CIF director general Tom Parlon said that house building needed to return to a sustainable level of about 50,000 new homes a year saying “house building is a big contributor to the exchequer and these revenues would dry up if the industry stalls.” He said that trick was to get to a sustainable level of production that will keep people employed.

Job opportunities in Education roll-out

One building sub sector that struggled to keep up during the property boom of the past few years was the Education. Listening to Ministerial announcements you might have believed that year on year there was a massive roll out of new schools. But disproportionate fund allocation, poorly planned infrastructure in Rapid Population Growth areas and inflated land prices combined to hinder those charged with delivering schools in achieving their goals.
With the slowdown in Irish residential output this year and probably next year, the Department of Education and Science (DES) Planning and Building Unit has been afforded the opportunity to catch up.

In 2008 €600m of Exchequer funding will be spent on school development, with 200 projects ranging from new school buildings to roof repairs planned for completion before year's end. Another 350 projects are scheduled to start between now and early next year. The works will be carried out primarily in the Eastern Region of Ireland (Dublin, Kildare, Meath, Wicklow and Louth) in areas of Rapid Population Growth, where it will take at least two to three years to meet the school requirements for the current level of new housing stock. Parts of Cork, Galway and Limerick have also been highlighted as areas that will experience large-scale Education infrastructure development in the next 18 months.

In 2005 the Irish Government announced a plan to provide 23 new post-primary schools and four primary schools as bundle projects through Public Private Partnership from 2006 to 2009. Plans are now at an advanced stage on three of these bundles. The first – a bundle of four schools (Two in Laois, two in Offaly) – will be built by the Macquarie Partnership for Ireland (MPFI), a consortium that includes Pierse Contracting. Work is expected to start on these in early summer. Another scheme is scheduled to begin later this year with the other penciled in for early 2009. Further projects are planned for 2009.

From a construction jobs perspective, this is all good news. School building presents an opportunity for those looking to migrate from residential development to a sector that requires similar skills.

The DES Planning and Building Unit says that the slowdown in housing has had the effect of making tenders and land prices more cost effective. In this scenario, once funding can be maintained, Education roll out should provide sustainable construction job opportunities for a wide variety of construction trades people and construction professionals in the coming years.

Public Contracts Opportunity

In a radio report last week one Irish union representative suggested the Government should bring forward more public contracts in the National Development Plan (NDP) in an effort to replace job losses in the housing sector, even if this means borrowing heavily.
However with the Irish civil engineering sector performing so well in recent times, the Government should be looking at the feasibility of bringing forward more NDP projects to take full advantage of the unprecedented output abilities of Irish civil engineers at this point in time.

Because of the huge housing output of the past few years, infrastructure such as schools, healthcare and water treatment are now playing catch up. While there will be many construction job opportunities in these areas in the coming years a golden opportunity is being lost at the moment because projects aren't coming through the system quickly enough.

The Irish Government stumbled earlier this year when it announced that there would be delays in getting a number of high profile Transport 21 Plan projects to site. Coincidently, there is a Transport 21 billboard campaign running at the moment, which highlights the Irish Government's €34bn investment in road and rail infrastructure as part of the €184bn budgeted National Development Plan 2007 - 2013.

While there is no shortage of activity in the civils sector, when you consider the productivity of those in civils jobs over the past two years you would have to say never before have Irish civil engineering firms been better placed to handle more work. They regularly deliver major roads projects below budget and ahead of schedule and many in the sector believe there is capacity for even greater output.

Last year, former CECA (Civil Engineering Contractors Association) president John Craddock said that while he was delighted with the success of the sector to date, he believed that Irish civil engineering contractors and their construction teams were capable of handling even more projects. It is just a matter of those projects coming on line.

So maybe it is time to revisit the NDP roll out schedule before the opportunity is lost.

Record PPP starts in 2008 can deliver construction jobs boost

So it's bye bye, Bertie, hello, Brian! It can be a daunting task to understand Minister speak in any country. In Ireland one strategically placed, or misplaced, phrase can have a myriad of meanings. And Bertie was a master of the political soundbyte, in many instances more by accident than intention. Over the years of the many quotes that baffled the nation, one that he will never be let forget was his 2004 comment on conspiracies, “There are kebabs plotting against us”.

But now it is time to close the Bertie speak book and open a new one for Taoiseach in waiting, Brian Cowen, who famously referred to the Department of Health as “Angola” during his tenure there. Known for not holding back, we can expect the Offaly TD to at least entertain during his jousts with opposition leaders.

With recent falling Exchequer income in Ireland Irish ministers have been going to great lengths to carefully phrase the Government’s commitment to the National Development Plan 2007 – 2013 (NDP). Transport Minister Noel Dempsey said if there are to be cutbacks the NDP will the last area to suffer. If this is the case the NDP will be a major source of construction jobs over the next five years, with infrastructure roll out and public contracts being the backbone of the Irish construction industry.

One method that has been very effective in delivering timely public works is the Public Private Partnership Programme (PPP). PPPs are schemes where the private sector takes responsibility for the design, construction, financing and operation of an asset for a set period of time. The private sector is typically not paid until the asset is operational and performing to the contracted standard.

Since 2003 in Ireland a total of 73 PPP projects have been completed, started or are in planning. Projects operating under the PPP mechanic include roads, rail, schools, health, prisons, wastewater management and social housing.

Of the 73 projects in the system, to date 13 have been completed and as of March 08 of the remaining 67 projects, 14 are currently under construction.

If all goes to plan, according to the latest report (March 2008) from the Irish Government’s Central PPP Policy Unit (www.ppp.gov.ie), 2008 will be a record year for PPP schemes getting off the ground. It is planned that a large majority of the remaining projects will go to tender or start on site. The goal is to start construction on a record 28 schemes before the end of the year. A further eight projects are scheduled to go to construction during 2009. Because of the scale of these projects – many of the planned projects having indicative values of €250m plus – it can be expected that demand for construction professionals in Ireland will continue to be strong over the coming 18months.

Of the 28 schemes scheduled to go on site this year, projects of interest include a bundle of three new motorway service areas (Indicative value €50m - €€100) and a bundle of three decentalized Government offices in Portlaise, Mullingar and Carlow (Indicative value €100– €250m).

In the summer the relocation of Mountjoy Prison to Thornton Hall in North Dublin is expected to get under way. The contract was awarded to a consortium that includes Michael McNamara & Co and Barclays Bank. It has an indicative value of €250m plus.

The majority of project starts planned for this year will be carried out under the Department of Environment, Housing and Local Government (DEHLG). Projects ranging from housing to waste and wastewater management are scheduled to begin construction. These include the controversial Dublin Waste to Energy scheme (Indicative value €100 – €250m), scheduled for a summer start. Indicative values on DEHLG projects start at about €10m and rise to €250m for a number of the social housing projects.

So on the basis of the Government’s PPP ambitions for this year and with a further eight projects to go on site next year, several billion euros will be pumped into the Irish economy over the coming years through PPP, with completion dates spreading from 2009 to 2013.