LAST UPDATE | 26 Sep
IN RECENT TIMES, public attention has been drawn to the exorbitant costs associated with government infrastructure projects.
One such case, involving the construction of a security hut at Government Buildings, revealed a cost of more than €1.4 million. This has sparked public outcry, prompting comments from Tánaiste Micheál Martin, who described the figure as “ridiculous.”
Similarly, the much-debated €336,000 bike shelter at Leinster House raised eyebrows. These cases reveal underlying failures in the management of public projects, and they point to deeper systemic issues in how government infrastructure projects are developed, approved, and executed.
At the heart of these issues lies the splitting of three key roles in the lifecycle of such projects: the approval of the business case, the procurement process and project management. Each of these steps comes with distinct responsibilities, and failures in any of these areas can lead to spiralling costs, as demonstrated by these cases.
The first step in any public infrastructure project is the approval of the business case. This involves determining whether a project is needed, how much it will cost and what benefits it will bring. In theory, this is a critical step that ensures that taxpayers’ money is spent wisely. However, in both the case of the security hut and the National Children’s Hospital, it seems this process was either insufficient or poorly executed.
In the case of the security hut, while the Office of Public Works (OPW) chairman John Conlon has defended the costs due to hidden security and communications requirements, one has to question whether the original business case was robust enough to justify a price tag of €1.4 million for what essentially functions as a glorified security booth.
Did the business case properly weigh up the real needs against the proposed cost? Furthermore, was there a detailed analysis of alternatives, such as using less expensive materials or designs?
Similarly, the cost of the National Children’s Hospital has ballooned far beyond initial estimates, revealing a striking failure in the business case. The initial budget for the hospital was significantly underestimated, resulting in a total cost that could exceed €2 billion. This failure points to a systemic problem in how business cases for public projects are evaluated, particularly in terms of cost forecasting and risk assessment.
When the foundational step of approving the business case is flawed, it sets the stage for future problems down the line.
The second key role in the process is procurement and tendering. Once a business case is approved, the next step is to secure a contractor who can complete the project at an agreed price. This step is supposed to ensure transparency and value for money, as contractors bid on the project, ideally leading to a fair and competitive process. However, problems frequently arise in this area.
Procurement failures often stem from inadequate planning or from contractors bidding low to secure the contract, only to add on costs later through change orders. A more transparent and rigorous tendering process could help avoid these pitfalls, but that is only possible if the business case and project requirements are clearly defined from the outset.
In many public projects, including the National Children’s Hospital and, perhaps to a lesser extent, the security hut, the procurement process failed to keep costs in check. The OPW, in the case of the security hut, claimed that hidden costs related to security and networking justified the high price. Yet, such costs should have been accounted for during the tendering process, and the price should have been fixed once the contractor was chosen.
If the price inflates after the tender has been awarded, it suggests that the procurement process was not robust enough to capture all the necessary details. The same issue has been central to the escalating costs of the National Children’s Hospital, where post-tender cost increases have contributed significantly to the project’s financial woes.
The third and final step is project management, which is responsible for overseeing the execution of the project and ensuring that it stays within the agreed budget and timeline. Even with a solid business case and a fair procurement process, poor project management can lead to unnecessary delays, cost overruns and compromised quality.
The OPW has defended the cost of the security hut by emphasising the complexity of the project, noting that extensive mechanical, electrical and security systems were involved. However, regardless of the complexity, effective project management should ensure that such systems are installed efficiently and within budget.
Project managers should act as the watchdogs of the process, ensuring that contractors are held accountable and that any potential issues are addressed before they lead to cost increases.
Again, the National Children’s Hospital provides a cautionary tale. Poor project management has resulted in numerous delays and unforeseen costs. One major issue is that the project’s scope has continually expanded, with changes being made long after construction began.
Such scope creep is a common problem in poorly managed projects, and is often a sign that the original planning phases (the business case and procurement) were not thorough enough. Project managers must maintain strict control over the build to avoid such issues, but they can only do so if they are equipped with clear, realistic goals from the outset.
Both the security hut and the National Children’s Hospital serve as reminders that public projects need greater accountability across all phases of development. The splitting of roles in the process — business case approval, procurement and project management — can work well when each role is executed effectively.
However, when there is a failure in even one of these areas, the entire project suffers. In both cases mentioned above, it is clear that more rigorous scrutiny was needed at the business case approval stage and stronger management was required throughout the project’s lifecycle.
Public infrastructure projects will always be complex, but the public has a right to expect that their money is spent wisely. To avoid future scandals, there needs to be greater transparency, more detailed planning, and stronger oversight in the management of these projects.
Whether it’s a bike shelter, a security hut, or a children’s hospital, the process of delivering public infrastructure must be streamlined and held to higher standards to ensure that costs are kept in check and that projects are completed efficiently and effectively.
Dr Paul Davis is a lecturer at Dublin City University Business School. He specialises in supply chain management and procurement.
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