Political Q+A: Kevin Humphreys: What are the costs to capital projects of (Amendment) Regulation (SI.9 of 2014)?

by bregs blog admin team

Kevin Humphreys (Dublin South East, Labour)

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71. To ask the Minister for Jobs, Enterprise and Innovation in relation to capital building projects currently under way under the remit of his Department, and the building programmes planned for 2014, if he will outline the impact the new Building Control Regulations 2013 which will come into effect on 1 March will have on the costs of each specific project; if he will list the projects under way; the extra costs that will be incurred on each due to increase professional fees due to the increased supervision; and if he will make a statement on the matter. [4369/14]

Richard Bruton (Minister, Department of Jobs, Enterprise and Innovation; Dublin North Central, Fine Gael)

In my Department the following Programme for Research in Third Level Institutions (PRTLI) capital building projects are underway:

Project-  Estimated Exchequer capital building cost (€) -Status of project at 30/09/2013 (see note below)

Dublin Institute of Technology (DIT) – Environmental Health Sciences Institute (EHSI)- €8.29m- Planning stage

Dublin City University (DCU) Nano-BioAnalytical Research Facility (NRF-TRH)- €9.29m- Under construction

National University of Ireland Maynooth (NUIM) – ICT Infrastructure- €4.27m- Under construction

Project- Estimated Exchequer capital building cost (€)- Status of project at 30/09/2013 (see note below)

National University of Ireland Maynooth (NUIM) – Innovation Value Institute (IVI) – Phase II- €1.12m- Under construction

University College Cork (UCC) – Environmental Research Institute at the Maritime & Energy Cluster, Ireland (ERI @ MeRC)- €7.5m- At tender stage

UCC – Food & Health- €0.45m (refurbishment)- At tender stage

University College Dublin (UCD) – Science Centre- €34.3m- 3 buildings; 2 complete; 1 at planning stage

University of Limerick (UL – National Centre for Applied Materials Research (NCAMR)- €8.2m- Under construction

Note: Quarterly Financial Reports (QFRs) to end December 2013 will not be available until end February 2014).

Enterprise Ireland is expecting building works to take place works in two locations in 2014; the National University of Ireland Maynoooth (NUIM) and the DIT Grangegorman Campus. The building works being undertaken at NUIM includes an Enterprise Ireland Incubator Unit with a budgeted cost of €1.25 million.

It is not possible for me to comment on the impacts of the Building Control regulations 2013 which have yet to take effect or to give detail of extra costs, if any, that might be incurred on projects as a result of the legislation. It should be noted, however, that Exchequer liability on all PRTLI capital projects is limited to the formal approved amounts. Any subsequent costs additional to those approved are borne by the Higher Education Institution (HEI) to whom the funding has been awarded. Likewise, in the case of building works relating to Enterprise Ireland, any changes in Building Control regulations and any associated cost will be borne by the college with no increase in award amount being provided by Enterprise Ireland.

In so far as IDA Ireland is concerned, consultant appointments are awarded based on a competitive tender on a fixed fee basis which include in the scope of service a requirement to address all and any regulatory requirements. At present IDA Ireland has two capital projects for Athlone and Waterford which are in the final phase of tender and it is expected that commencement notices will issue in advance of 1 March 1 2014.

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Comment:

In response to recent questions by Kevin Humphreys TD on the costs of the impending SI.9 on capital projects we note the Regulatory Impact Assessment (RIA on SI.80) quoted in a response by Minister Phil Hogan dated from 2012 and contained little detail on extra costs to the industry, taxpayer or consumer.  There was no RIA completed for the 2013 versions (SI.80) or the signed regulation SI.9.

Current industry estimates place the direct additional cost of SI.9 for non-residential projects up to 1% of the construction  cost of a project.  The indirect costs such as delays, other additional professional costs, defensive specifications and duplications of roles may well be a multiple of this. Some of these costs have been mentioned in the preceeding opinion piece. For example some healthcare projects may have two sets of design teams already in place and the application of SI.9 could create  duplication of roles and conflicts in duties on site. These in turn may lead to contractual issues and delays/ claims. Depending on who one consults the extra costs for SI.9 on non-residential projects, based on type and level of complexity, could be up to 5% with some estimates above this level.

Completion of stalled or part-completed projects such as ghost estates or part-completed buildings (such as the Anglo-Irish Bank office building in Dublin’s Docklands) may be complicated and costly as a result of SI.9. Part-completed projects may well involve newly appointed professionals assuming liability for unfinished works by others. There does not appear to be provision for exclusions of this nature in SI.9- certifiers guarantee compliance for entire buildings. Newly appointed design teams and contractors may need to price-in this risk. This apparent oversight in SI.9  may have cost implications for the commissioning bodies involved and also result in delays in build-timescales as a result.

The direct costs attributed to residential can be reasonably assessed due to numbers of house completions per annum. The direct and indirect costs of SI.9 (which does not appear to have been scenario tested) on non-residential and government capital projects that are already underway in particular is far more difficult. We assume the additional costs, up to and possibly exceeding 5% of the construction cost, will be funded out of each department’s annual budget.

The above opinion piece was submitted by Maoilíosa Mel Reynolds on 31st January 2014.

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