Committee Reports > List of Committees > Dáil > 1985 > Committee on Public Expenditure > Report - Control of Capital Projects

APPENDIX 8.4

THE OFFICE OF PUBLIC WORKS

I refer to your letter dated 23 November, 1984, regarding the material sought by the sub-Committee in relation to the Howth Harbour project.

I enclose replies to the queries raised by the sub-Committee at the hearing on 15 November, and I trust that these cover all of the points raised by the members. A separate summary of the queries is also enclosed. As regards Query No 6 in relation to the boring surveys, you will recall that I spoke to you about this and we agreed that a drawing giving information as to the rock levels would be acceptable.

Yours sincerely

P. McCabe

Commissioner

21 December, 1984.

Summary of queries raised by the Committee on Public Expenditure.

Estimated costs of scheme.

Query No. 1: What were the total estimated costs of the scheme (Stages I and II) in 1969 and 1979 and how do they compare with the latest estimate of the cost of the scheme? What contingency provisions were included?

Comptroller and Auditor General’s Report, 1982

Query No. 2: The Comptroller and Auditor General’s report relating to 1982 referred to the fact that expenditure had exceeded the sanctioned amount by £3m. As the total amount paid over the entire contract in respect of increases under the Price Variation Clause was £2.25m, what works had been undertaken for which there was no sanction?

Cost of additional works

Query No. 3: The final estimated costs only of the additional works (the syncrolift and works in Appendix 2) are given. What were the original estimates and when were sanctions sought and obtained?

Increase in the estimate from £10.35m to £12.1m.

Query No. 4: In June, 1983 the estimate of cost was £10.35m and, fifteen months later, it was increased to £12.1m. Why was such a large increase necessary?

Delay in providing information to the Dept. of Fisheries

Query No. 5: Why did the Dept. of Fisheries have to wait two years for information on costs from O.P.W.?

Boring Surveys

Query No. 6: In what proportion of boreholes was rock met at the depths indicated by the boring surveys?

Estimated costs of scheme

Query No. I: What were the total estimated costs of the scheme (Stages I and II) in 1969 and 1979 and how do they compare with the latest estimate of the cost of the scheme? What contingency provisions were included?

The 1969 Bjuke report did not give estimates of cost of the two stages of the scheme. His report, which was an overall development plan for the harbour, set out the initial works which should be undertaken and added that “when fishing activities require additional landing and berthing facilities, extension can be made on the lines shown by the alternative general plans”.

The initial works which he envisaged were:-

His report added “no attempt has been made to give an order of cost for the re-design of the harbour entrance as this will depend on the model findings”. The report did not include an order of cost for Stage II.

As mentioned in the memorandum (with OPW letter dated 13 November, 1984) further consultation and investigation of Mr. Bjuke’s report followed prior to OPW’s preparing a sketch plan and report which was forwarded to the Dept. of Fisheries in August, I974. The estimated costs included in this report (at prices applicable in April, I974) were:

The yacht mooring basin was not included in these estimates as there had not been, at that stage, any decision as to whether such a facility should be provided.

When the project had reached the stage where Dept. of Finance sanction was necessary to proceed with detailed planning, OPW provided up-dated estimates of the costs. These costs (at prices ruling in January, I977) were:

Again, the yacht mooring basin was not included. (Sanction to the amount of £3.034m was obtained in September, I977).

Dept. of Finance sanction to bring forward, from Stage II, the reclamation of the area outside the West Pier (£2I2,000) was obtained in January, I978. Sanction to install a larger syncrolift and, consequently, to incur expenditure on purchase of tenants’ interests and on demolition was obtained in December, I978 which totalled £406,000, at October, I978 prices, which is equivalent to £333,000 at January, I977 prices. These sanctions brought the total cost of Stage I to £3,579,000. These decisions together with the later one not to demolish other properties on the West Pier had the effect of reducing the cost of Stage II to £986,000 (at January, I977 prices) and of giving an overall estimated cost of Stages I and II of £4,565,000, excluding the yacht mooring basin but including a contingency provision of £340,000.

Stage II, at that time, would have consisted of construction of additional berthage along the face of the rubble core of the Trawler Breakwater and the surfacing and public lighting of the additional areas provided by the berthage space. Approximately 35% of the berthage space was not undertaken, subsequently, in Stage I. The proportion of the cost of Stage II appropriate to that percentage of the work and to a similar percentage of the cost of surfacing and lighting amounts to £3I5,000. The effect of this is that the cost of Stage I is increased by £67I,000 (i.e. £986,000 less £3I5,000) to £4,250,000.

The estimate of £4,250,000 represents the estimated cost of the scheme being undertaken at Howth based on the prices ruling in January, I977 when the detailed estimates were first prepared. Department of Finance sanction to the project was also based on those prices. The Dept. of the Environment House Building Costs Index stood at I34.5 in January, I977 and at 34I.0 in July, I983, the date on which the civil engineering contract works were substantially completed. Application of the percentage increase in costs disclosed by the Index would increase the January, I977 estimated cost of £4,250,000 to £I0,775,000. To this would have to be added the cost of the yacht mooring basin (£I,25I,000) and the cost of items which were unforeseen, e.g. West Pier sewerage scheme (£45,000), lighthouse (£4I,000) and sundry works (£I65,000) bringing the total cost of the scheme to £I2,300,000 approx. based on the estimates provided by OPW in January, I977.

Purely on the basis of indexing, the original estimate provided to the Dept. of Fisheries should end out at £I2.3m. The highest estimate given was £I2. Im which included £200,000 for acquisitions of property which will not now be necessary and £80,000 for contingencies. If these are deducted from the £I2.Im, one arrives at the current estimate of £II.8m.

Comptroller and Auditor General’s Report, 1982.

Query No. 2 : The Comptroller & Auditor General’s report relating to 1982 referred to the fact that expenditure had exceeded the sanctioned amount by £3 m. As the total amount paid over the entire contract in respect of increases under the Price Variation Clause was £2.25m, what works had been undertaken for which there was no sanction ?

In the report in respect of the year ended 31 December, 1982, it was stated that the amount expended in respect of the Howth Harbour Project was £7,957,977 whereas the Department of Finance sanctions amounted to £4,988,200. The difference of £2,969,777 is made up as follows:

The balance is made up of the cost of sundry works which had to be undertaken in order to complete the scheme satisfactorily.

tracks, etc. installed in the boatyard - this equipment was purchased along with materials for the syncrolift proper. Work on the installation continues and should be completed early next year. Revised estimated costs were furnished to the Dept. of Fisheries in March, I983 and February, I984.

(b) Included in the overall estimate of £II.8m. are works which have not yet been done. Items such as the surfacing of the West Pier, fencing, fog alarm have already been referred to. The remaining items are the Auction Hall, Net and Gear Stores and boatyard wall. Sanction to the provision of the boatyard wall (£50,000) was obtained in April, I984. An amount of £I36,000 (at January, I977 prices) was sanctioned in September, I977, which would be the equivalent of £386,000 at today’s prices, in respect of harbour buildings. Preliminary planning of both the Auction Hall and Net and Gear Stores is in hands. A revised sanction would be necessary prior to committing expenditure on these buildings - revised estimates of cost have been furnished to the Dept. of Fisheries.

Cost of Additional Works.

Query No. 3: The final estimated costs only of the additional works (the syncrolift and works in Appendix 2) are given. What were the original estimates and when were sanctions sought and obtained ?

The position in regard to the items listed in Appendix 2 and the other works is as follows;

(i) Major structural alterations to West Pier (£220,000);

The necessity for the immediate execution of this work has been given in previous submissions and is also referred to in Query No. 2 “Comptroller and Auditor General’s Report, I982”. The estimate of cost, when the defect arose in I98I, was £I60,000 but the difficulties in achieving the necessary stability in the construction work which had to be undertaken led to the increase in cost. The estimate of cost was furnished to the Department of Fisheries in March, I983.

(ii) Boatyard/transfer pit (£II2,000);

When estimates of the individual items were given to the Dept. of Fisheries in I977 - prices having been updated to January, I977 at that stage - provision of the boatyard was incorporated in the works scheduled in stage II and was covered by the item “Reclamation of foreshore at back of West Pier to provide site for boat repair yard, fish processing premises net making and other ancillary facilities”. The then estimated cost of the item was £2I2,000 which updated to October, I978 (by reference to the Dept. of the Environment House Building Cost Index) would be £258,000. The cost of the reclamation work alone (without ancillary development work) is estimated to be £II2,000 (see Item (ii) of Appendix One), a difference of £I46,000. We must also state that the cost of supplying rail tracks, etc. in the boatyard (which was of the order of £50,000) has been included in the costs of the Syncrolift installation as the work was arranged through our Central Engineering Workshops. We should point out however that the original estimate for the boatyard envisaged a smaller boatyard than that provided, the reason being that the syncrolift proposed when OPW prepared its report in I974 would have had a nominal lifting capacity of 230 tons as against the capacity of 580 tons provided at the direction of the Dept. of Fisheries. In the event, the price agreed with the contractor was £I09,000. Some small variations brought the final cost to £II2,000. Sanction to this item was obtained in January, I978.

(iii) West Pier Sewerage Scheme (£45,000);

The reasons for having to install this system have been given in earlier submissions. An estimate of cost of £30,000 was furnished to the Department of Fisheries in March, I983 and work commenced in June, I983. However, Dublin Corporation have insisted that they would connect the system to the public sewer and a charge of £I5,000 is being made by the Corporation which had not been anticipated. The revised cost was furnished to the Department of Fisheries in February, I984 but, to date, sanction has not been received.

(iv) Sub-station for ESB (£27,000);

The necessity for this work has been outlined previously - in short the ESB insisted on a sub-station having regard to the extra load generated by the syncrolift and boatyard, etc. The original estimate was £24,000 and the work was carried out by the Contractor in I983. The estimate of cost was furnished to the Department of Fisheries in March, I983, but, to date, sanction has not been received.

(v) Purchase of leasehold interests and demolition (£93,000);

The cost of this item was sanctioned on I2 December, I978.

(vi) Lighthouse and generator (£4I,000);

An initial sanction of £37,000 was obtained in July, I980 prior to the work being carried out. A revised sanction to cover the actual cost of the work was obtained in July, I984.

(vii) Provision of roundheads (£I07,000);

Sanction to expenditure of £95,000 was obtained in I980. The work was completed in 1982 and a revised sanction was obtained in July, I984.

(viii) Quay face to Trawler Pier breakwater (£700,000);

Sanction to expenditure of £600,000 was obtained in September, I980. However, on the basis of the Bill of Quantities subsequently prepared for the work and the amounts of the quantities actually used, the final estimated cost is £700,000. A revised sanction has not yet been obtained. The estimated cost of executing the work “in the wet” as a separate job was £950,000.

(ix) Surfacing of West Pier, etc. (£I80,000);

Sanction to expenditure of £I50,000 was obtained in April, I984. The work has not yet been undertaken and the increase in the estimate has been made to allow for increased costs since the date of the estimate.

(x) Landscaping; Nil

(xi) Sundry works (£I65,000);

The cost represents less than 2% of the overall estimated cost of the project. As mentioned previously, they include fencing, fog alarm, navigation aids, temporary lighting, extension of water hydrants and these items have been sanctioned.

Other Works:

(a) Syncrolift: The final estimated cost of this item is £905,000 inclusive of increased costs incurred during the course of the work. In October, I978, the estimated cost of the installation was £4II,000 for which sanction was obtained. The increase in the Dept. of the Environment House Building Costs Index since the date of the estimate is I33%.

The figure of £905,000 includes the sum of £50,000 in respect of the cost of the rail

Increase in the estimates from £10.35m. to £12.1m.

Query No. 4: In June, 1983 the estimate of cost was £10.35m. and, fifteen months later, it was increased to £12.1m. Why was such a large increase necessary?

The estimate of £10.35m. referred to was supplied by O.P.W. to the Department of Fisheries in March, 1983. The letter conveying this estimate also referred to the fact that the contractor had lodged additional claims with O.P.W. and that, pending investigation of these claims, it would be prudent to provide an amount of £0.5m. to settle the claims. The estimate cost of the project supplied by O.P.W. at that time was in effect £10.85m.

Although a subsequent estimate of cost of £12.1 m. was supplied in early 1984, a revi of costs has been completed since then and as a result the estimate of final cost is now put at £11.8m. (see Appendix 4, with O.P.W. letter dated 1 October, 1984). The difference is, therefore, £950,000 which is accounted for as follows:-

We would comment on these headings as follows:-

(i)Up to 31 December, 1982, an amount of £1.672 m. had been paid to the contractor under the terms of the Price Variation Clause and on the basis of the claims then made it was estimated that the final figure would be £2 m. The contract had not been completed at that time and, together with the submission by the contractor of further documentary evidence in support of his claims made under the Clause, it was necessary to revise the estimate given in March, 1983.

(ii)The major items are: Net & Gear Stores (£200,000); fees for a Quantity Surveyor (£11,000); Boatyard wall (£50,000); fencing of part of the area reclaimed outside the West Pier (£20,000) and fog alarm (£10,000). The principal item is the Net & Gear Stores in respect of which a brief of requirements was supplied by the Department of Fisheries in 1983 on which the estimate was based. The other items are referred to in previous submissions.

(iii)(a) The syncrolift is expected to be in operation early in 1985. When the previous estimate was supplied in March, 1983, work on the fabrication of the equipment was in progress and, in accordance with normal practice, the estimate reflected costs ruling at that time. Since then, work has continued on the installatio. The increased estimate takes account of the changes in costs since then and a general revision of the cost of the installation having regard to the amount of the costs incurred on the sections of the work then completed.

(iii)(b) The extra amount in respect of the Auction Hall reflects the general increase in costs since the previous estimate.

(iii)(c) The extra amount of £50,000, in addition to reflecting the general increase in costs since the previous estimate, was assessed following a detailed survey of the West Pier for the purpose of preparing a plan and Bill of Quantities on which tenders could be obtained.

(iii)(d) The work of dredging continued into 1983 and as the necessity for removal of extra rock continued to arise, it was necessary to increase the estimate by £85,000.

In relation to the four main items, we would comment as follows:

(i)The work of dredging formed part of the main contract and was sanctioned by the Department of Finance, the amount of the sanction being £1,506m. The final cost of dredging work is estimated to be £2.764m, the increase being due to the extra rock which had to be removed in order to reach the design depth of flotation in the Fishery Harbour and to provide the yacht mooring basin. At 31 December, 1982 the extra cost was £993,000.

(ii)The amount of £1,672,000 is that paid to the Contractor prior to 31 December, 1982, the total estimated cost of the increases under the Price Variation Clause being £2.25m. O.P.W. has a standing delegated authority from the Dept. of Finance to pay increases under Price Variation Clauses in contracts since they are contractual commitments. When the final cost of a contract is known, the facts are reported to the Dept. of Finance.

(iii)The reasons for having to undertake this work have been outlined previously. The responsibility for management and control of Howth Harbour is vested in the Commissioners of Public Works and, in pursuanoe of that responsibility, works to protect and reinstate the facility had to be carried out. The seriousness of the defect in the West Pier demanded that it be put right immediately and, in the normal course, the cost of the work would be met from the funds in the Vote for Public Works and Buildings without the necessity of obtaining formal Dept. of Finance sanction. In this instance, the remedial works arose from the necessity to deepen the harbour to cater for the large fishing vessels and it was deemed proper to charge the cost of the necessary works to the Dept. of Fisheries.

(iv)The amount of VAT included in the contractor’s tender price was calculated on the net price of the works at the date of tender. As a consequence of the extra works undertaken and increases in costs, generally, the amount of VAT payable to the Contractor increased.

Delay in providing information to the Dept. of Fisheries

Query No. 5: Why did the Dept. of Fisheries have to wait two years for information on costs from O.P.W.?

In October, 1980, a revised estimate of cost amounting to £7.5m was given to the Dept. of Fisheries. This estimate included extra works previously sanctioned such as the ‘facing’ of the Trawler Pier breakwater and the dredging of the yacht mooring basin. A that time, the amount paid to the contractor was £3.2m approx.

In January, 1981, a considerable number of queries relative to the revised estimate were raised. Investigation of these queries necessarily took time from the engineering point of view and when this information was to hand, a comprehensive statement in a particular format had to be prepared for the Department. In this format, estimates of costs had to be related to both the items of work described in the reports made prior to the placing of the contract and the sanctions then obtained whereas costs incurred under the contract were controlled relative to the elements of work, e.g. dredging, concreting, described in the Bill of Quantities on which tenders had been obtained. The reply was issued in March, 1983 and it included a revised estimated cost of the scheme together with explanatory notes.

This task was difficult and time consuming but we would have to agree that it was unfortunate that the exercise took so long. In explanation we would point out that the executive staff in the Marine Division consisted of four Executive Officers and one Higher Executive Officer. In addition to the Howth project, the staff had to deal with major projects at two other major Fishery Harbour Centres, namely Killybegs and Castletownbere, up to 15 other marine projects ranging from £500,000 downwards sponsored by the Dept. of Fisheries and Roinn na Gaeltachta, the ongoing management of the three State Harbours, Howth, Dunmore East and Dun Laoghaire, the coast protection service under the Coast Protection Act, 1963 and the provision of advice on engineering aspects of harbour projects spons red by the Dept. of Communications and the monitoring of progress on such projects for that Department.

In addition there was a large volume of other marine projects at preliminary stages for the Dept. of Fisheries, Roinn na Gaeltachta and the Dept. of Defence. In this context, an order of priority had to be established. Attention to ongoing works, management of the State harbours, advice on ongoing projects sponsored by the Department of Communications and Parliamentary Questions had to take precedence over other matters.

For the future, we would hope to devise a system whereby Departments are kept fully informed of the progress of projects on a regular basis. This, however, will be difficult to implement as long as the number of staff remains at the existing level.