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

Appendix I

Reports from Departments on capital expenditure appraisal and management applied by them

Department of Finance

Western Development Fund (1985 PCP £0.5 million)

1. Projects (which are usually small-scale investments) assisted from the Western Development Fund are, in general, initially examined by the County Development Officer in the County concerned. The criteria used for assessing Western Development Fund projects are similar to those used by the IDA, e.g. viability, employment creation, value to the local economy and the use of local resources and finally, of course, conformity of the project with existing Government policy.

2. Projects are then examined by the County Development Teams concerned bringing to bear, for example, on project appraisal the experience of the County Engineer (in relation to construction costs etc) and that of the IDA Regional Manager in regard to the overall viability of the project.

3. If a project is approved by a Team it is then submitted to the Central Development Committee Secretariat which has experience in project appraisal and accounts analysis. The Secretariat also consults at that stage with national agencies (such as the IDA, the Department of Agriculture, etc.) who assess the project from their Agencies’ point of view.

4. Finally the project is put to the Central Development Committee for examination. This Committee is representative of all the major national economic development departments and agencies as well as six Chairmen of County Development Teams (County Managers).

5. In relation to building costs in particular, some concern was expressed in the course of 1984 that the present control system might not be fully adequate, leading to cost over-runs. An examination of this by the Secretariat suggested that the problem was not major and generally arose because of time-lags between initial project submission and final decision. In order to minimise the danger of lack of control in this area it has been agreed that where a project involves construction costs the grant offer will be based on up-to-date estimates, validated to the greatest extent possible by, for example, consultation with the relevant County Engineer and IDA Regional Officer. Also the conditions attaching to the grant offer will specify that the grant in relation to construction costs is the absolute maximum grant that will be paid and if any cost over-runs do occur the balance will have to be made up by the promoter.

Special Border Areas Programme Fund (1985 PCP £5.5 million)

1. Capital projects undertaken under the Special Border Areas Programme are implemented by various Departments and agencies with funds allocated to them by the Department of Finance from the Special Border Areas Programme Fund usually on a block grant basis.

2. Block grant allocations are made to (1) Bord Failte for the provision of accommodation and for tourism related amenities (2) Department of the Environment for minor road improvements and the provision of tourism related amenities e.g. car park, access to lakes, picnic areas etc. The individual projects are approved by Bord Failte and Department of the Environment without reference to the Department of Finance. In the case of the Department of the Environment the viability of the projects and the cost are assessed by the planning officer. All projects approved must be eligible for ERDF aid under the Council Regulation governing the Programme.

3. With the exception of the foregoing, projects approved for funding from the Fund are subject to the following procedures:

(i)The responsible Department submits a proposal for a project giving the estimated cost and the time scale for its implementation.

(ii)the proposal is examined by the Department of Finance by reference to the cost, the profile of expenditure and the contribution which it will make to the objective of the Programme and its eligibility for ERDF aid under the Council Regulation governing the Programme.

(iii)Approval is then given for the financing of the project subject to a fixed amount and the completion of the project within the duration of the programme.

4. Projects coming under this programme tend to be on a relatively small scale with the Fund assistance generally in the range. £10,000-£15,000 and representing about half the total project cost.

OPW Public Works and Buildings - New Works (1985 PCP £24.956 million)

1. By and large the procedures followed conform to the guide lines set out in Circular 1/83 and, up to the stage of invitation of tenders, are broadly those laid down in the Foras Forbartha booklet mentioned in the circular. These include the preparation of Standard Building Elements cost plans. In the case of all projects costing over £1 million when the cost plan figure is available, specific Department of Finance sanction is sought to the total expenditure, including fees, fitting out and furnishings. In recent times, it has also become the practice to consult further with the Department of Finance at the stage when contract documents are ready for invitation of tenders or, in any event, before a contract is placed. Works in progress are closely supervised and procedures are laid down where additional expenditure arises because of variations or extras on the contract. These involve careful consideration of the need for such extra expenditure and the obtaining of prior approval either within the Office or, if over certain defined limits, from the Department of Finance.

2. The programme covers building works costing from as little as £1,000 to many millions. The procedures described above, would be too elaborate and time-consuming to be followed in the case of the smaller projects, in the execution of which, however, similar regard is had to cost efficiency.

3. Building projects undertaken on its own account by OPW e.g. office accommodation, are usually decided on in the light of the needs to be satisfied and the resources available. In the occasional case where investment alternatives have had to be evaluated, the assistance and advice of the Department of Finance has normally been sought.

4. In the case of building works undertaken for other Departments, the OPW’s role is generally to draw up suitable plans for approval and, once approved, to have those plans implemented. How the investment in any particular case fits into larger policy decisions, or how the return on the investment is assessed, is primarily a matter for the sponsoring Departments.

5. The basic criteria which the OPW use, relate, not to investment appraisal, but to design and cost. Insofar as cost is concerned the Office has established criteria to which it refers both in the preparation of plans and in the examination of tenders.

6. In summary, OPW’s procedures conform with the Circular 1/83 guidelines as fully as is practicable. Following issue of circular 1/83, it was decided by the Office to set up formal Committees for any projects costing over £10 million.

OPW Arterial Drainage (1985 PCP £12.85 million)

1.The basic procedures are in accordance with statutory requirements and are followed for all schemes. Every catchment for which a scheme is to be prepared is subjected to detailed engineering and valuation surveys. Each scheme is designed in detail before being costed. Since 1970 a full cost benefit analysis is undertaken for each scheme. There is, thus, as complete information as possible available on costs and benefits before draft schemes are submitted to the Minister for Finance who has final responsibility for giving or withholding approval. There is a system of management accounting in operation which ensures that expenditure is monitored throughout the duration of each scheme. There is also now a cost control committee for new schemes costing over £10 million.

2.Benefit/cost ratios are calculated for all schemes. Prior to the issue of the Department of Finance guidelines, the test discount rate in use was 3½% but this has now been revised to 3-5% No new arterial drainage projects have been sanctioned since April 1984.

3.The statutory authority for deciding whether an arterial drainage scheme goes ahead or not rests with the Minister for Finance.

4.Summarising, insofar as they are applicable Circular 1/83 procedures have been applied. (Up to now arterial drainage has been proceeding in accordance with a well established programme based on a priority list of catchments drawn up to enable the Commissioners of Public Works to discharge their obligations under the Arterial Drainage Act 1945).

Department of Justice

Prisons, Probation Services and Courthouses (1985 PCP Prisons £12.13 million; Probation Services £0.35 million; Courthouses £1.1 million)

Background note

1. The planning etc., for the new place of Detention for Juveniles at Wheatfield was virtually completed before Circular 1/83 issued. Three other new prisons were also planned and designed before the circular issued but actual building of them has not been commenced, although substantial expenditure on design fees has been incurred.

2. New prison building: About three-quarters of the capital allocation for prisons in 1985 and in the years immediately ahead will go on new Prison building. The balance will be spent on jobs aimed at modernising the existing stock of prison buildings or for security. Procedures are as follows:

(i)The need for the project must be clearly established.

(ii)alternative means of achievement are considered e.g. can an existing building be purchased/adapted or must a new one be built?

(iii)if the decision is to construct new buildings, suitable sites must be located

(iv)Finance sanction to purchase site is sought together with “approval in principle” to proceed with planning

(v)when “sanction in principle” has been given, OPW appoints a team of professional consultants (i.e. architect, structural engineers, mechanical/electrical engineer and quantity surveyor)

(vi)the team is briefed by Department of Justice

(vii)design prepared and costed

(viii)Finance sanction sought to proceed to tender

(ix)tenders received and examined by OPW

(x)Finance sanction sought to proceed with contract

(xi)project manager and monitoring committee appointed to oversee project in accordance with detailed instructions in Circular 1/1983.

3. Only new prison building projects would be evaluated precisely in accordance with above procedures. The essentials (i.e. establishing of need, appointment of professional consultants, invitation of tenders and obtaining Finance approval) would be followed in all cases but monitoring committees would not be appointed (because the value of the contract would not warrant this).

4. Quantitative evaluations involving calculating rates of return, payback period etc., are not relevant in the case of prisons.

5. In summary, existing plans for new prisons were prepared before Circular 1/1983 issued. The provisions of the circular are being fully applied in relation to the monitoring of the only ongoing new prison project. They will, where applicable, be fully applied to future new prison projects.

6. Much of the Probation Services’ capital expenditure goes on the purchase of existing buildings for conversion to use as hostels for offenders on probation. Circular 1/83 would not generally be applicable to this expenditure.

7. Courthouses capital comprises repayable advances from the Local Loans Fund to local authorities for repair and renovation of courthouses and, occasionally, the building of new courthouses. The Department of Justice is concerned only with the provision of funds in these cases; the actual contracts are handled by the local authorities who are statutorily obliged to provide and maintain courthouse buildings outside Dublin.

Department of the Environment

Local Authority Housing (1985 PCP £205.75 million)

1. It is a matter for each housing authority to plan and initiate housing schemes in their area having regard to established needs and to the capital allocation available for their house building programme.

2. The system in operation for the provision of local authority dwellings (as set out in the Department of the Environment’s Circular Letter N8/82, N7/83 and N8/83)^* embodies cost planning and review by the Department of larger schemes from initial design to final completion. The system emphasises the need to have costing details associated with each stage in the planning and implementation of schemes so that a budget evolves for the scheme and cost/financial controls are operated through a defined sequence from the initial brief to the completion of the scheme.

The sequence is:

Within this framework each stage of housing schemes has a corresponding cost estimate or actual outturn so that cost variances can be identified and acted upon.

3. For smaller schemes i.e. 6 to 59 houses a simplified system of cost planning and analysis is permitted. This simplified procedure is, nevertheless, subject to the same Departmental scrutiny as outlined in paragraph 2 above.

4. Except in exceptional cases cost planning and cost analysis are not operated in schemes of 5 houses or less. However, in such schemes housing authorities are required:-

(1)to use house plans approved by the Department,

(2)to obtain approval to the scheme’s site plan and specification at local level from the Department’s Inspector, and

(3)have a Departmental unit cost ceiling approval which allows for the acceptance of tenders up to that level subject to the most economically advantageous tender being accepted. (Where no such unit cost approval exists or where the cost exceeds the approved ceiling housing authorities are required to obtain the Minister’s approval to the tender in each case).

5. Quantitative evaluations are not applied to the local authority housing programme but design cost control is carried out so as to ensure that the best value for money is being obtained from each particular building element.

6. Formal investment appraisal procedures were in place prior to issue of Circular 1/1983. In April 1982 the Department of the Environment issued a Circular Letter N8/82* to the housing authorities setting out the procedures to be followed and the standards to be applied in providing local authority dwellings. Besides, increasing attention is being devoted to compiling building programmes for a few years ahead and to the assembly of cost data for the country as a whole.

Roads (1985 PCP £125 million)

1. The document “Policy and Planning Framework for Roads,” recently published by Department of the Environment, provides the basis for capital investment in national and major urban route improvements. This Roads Planning framework and the selection of individual projects take account of the Road Needs Study; the National Roads Inventory which provides data on road condition; land use, transportation and traffic studies, including the Dublin Transportation Study, the Cork Land Use Transportation Study and studies of other urban areas; traffic surveys; projections of future traffic volume and distribution and vehicle numbers and road accident data. Since such projects are 100% State financed, the Department of the Environment in consultation with local authorities determines which projects are to go ahead.

To assist in determining priorities the Department is developing a cost benefit analysis system which is suitable for major route realignments and small town by-passes. This is being pilot tested at present and it is intended to apply it to suitable projects costing over £5 million. The evaluation will, in addition to considering quantifiable costs and benefits (including time and fuel savings), also take qualitative costs and benefits into account. These include on the benefit side the contribution of the project to industrial, regional and tourism development, environmental benefits etc., and on the cost side environmental matters such as increased pollution, visual intrusion etc. Certain projects have been the subject of cost benefit analysis e.g. Naas By-Pass, Newry-Dundalk Road, Bray-Shankill Road. The Road Needs Study was the subject of an economic evaluation as were the packages of transport investment proposed in the Dublin and Cork studies.

2. The pilot cost benefit studies being developed by the Department of the Environment provide for (a) determining an internal rate of return and (b) a payback period at a test discount rate of 5%. Qualitative benefits of projects also form part of any overall evaluation. These studies will be of critical importance in deciding on road investment priorities in the future.

Sanitary Services (1985 PCP £91.108 million)

1. Each sanitary authority draws up a list of projects which is submitted to the Department of the Environment at intervals. These lists are prepared on the basis of an assessment of water and sewerage service requirements for particular areas within the functional area of the sanitary authority and take into account industrial and residential development, physical planning, environmental and public health considerations. The overall national priority of these projects is centrally determined in the light of the objectives of the sanitary services programme, indiviual local priorities and the level of available resources. However the advancement of specific projects at the various stages of planning does not allow for the scheduling of projects on a priority basis. Projects are appraised in detail by both the local authorities concerned and the Department of the Environment to ensure that the overall programme targets are met and that services are available to meet the needs of the area in question especially those areas earmarked for urgent and special development. As the normal lead time from initiation of a project to actual construction can take a number of years the appraisal procedures adopt service requirements sufficient to meet the expected demands of 7 years ahead.

2. Detailed guidelines of the consideration of the planning for individual projects are set out in the Department of the Environment’s circular letter L. 1/74.^* They cover:-

(i)Preliminary Reports: these are comprehensive reports covering all aspects of the proposed development including needs, objectives, design and costing.

(ii)Contract documents preparation and tender invitation.

(iii)Tender appraisal, approval and loan sanction for the project.

Increases in costings during the implementation of a project are subject to detailed scrutiny by local authorities and in the Department before a decision is made to approve the expenditure for loan financing.

3. The above procedures are not applied to small schemes i.e. schemes not exceeding £50,000 in cost. These are the fully devolved responsibility of individual local authorities who are required to submit brief technical description and estimates of costings of schemes for which they require capital funding. Submissions are examined to ensure that the schemes are appropriate to the programme. The conditions of this programme do not allow local authorities deviate from the estimates originally submitted without the prior approval of the Department of the Environment.

4. Quantitative evaluations showing rates of return, payback period etc, are not carried out but it is hoped to develop a more precise framework for planning investment programmes and determining priorities. The main overall determinants of project approval at present are its overall priority, cost, design etc., and the availability of capital to finance it. In addition to these determinants the overall beneficial effect of a project on the physical environment is also taken into account.

Department of Education

Primary and Second Level (1985 PCP £67.33 million)

1. The Department of Education has traditionally had responsibility for appraisal, design and monitoring of second level capital projects. In regard to primary level its role has, up to recently, been confined to appraisal with OPW having responsibility for design and monitoring. Responsibility for design and monitoring is being transferred from OPW to Education.

2. Appraisal of the need for school accommodation at first and second level is based primarily on the demographic trends in an area. The action to be taken is based on an assessment of the most economic way of providing the required accommodation (e.g. new school, extension, amalgamation).

3. As regards design and monitoring, the Department of Education (in relation to second level capital)

(i)approves a schedule of accommodation

(ii)decides on cost limits

(iii)approves a specification for the project (including site report), detailed scheme and drawings, and quantities and costs drawn up by the design team appointed by, or with the approval of, the Department of Education

(iv)decides to seek tenders which are examined by the design team

(v)decides on which tender to accept

(vi)monitors costs during construction; this involves the submission by the design team of a monthly financial review and progress report to the Department of Education.

Third Level (1985 PCP £26.9 million)

4. The appraisal of third level requirements is made initially by the HEA or the Department of Education (for the non-HEA sector). Each major project requires Department of Finance sanction in principle before design work commences and again before going to tender. Projects may be proposed because of a number of factors e.g. replacement of obsolete or unsuitable accommodation, estimated manpower requirements, demand for third-level education etc. Decisions on each project are made within the framework of policy in relation to the provision of third-level education.

5. The design and monitoring procedures followed at third level are generally the same as those for second level with necessary adaptation to take account of the various institutions involved.

6. The extent of appraisal, design and monitoring is the same for all projects. No differentiation is made on the basis of cost.

7. The formal investment criteria contained in Circular 1/83 e.g. Internal Rate of Return or Benefit /Cost ratio are largely irrelevant to the Education sector in that no payback or return from a project can be calculated from standard methods.

Impact of Circular 1/83

8. Since the Circular was issued appraisal procedures have been improved and the Circular contributed to this. Changes made at first and second level are given in the following extract from “Programme for Action” published in January 1984.

“2.25Recent studies within the Department relating to Primary and Post-Primary school building have disclosed the need for more positive steps to be taken with a view to taking account of the “peaking” of enrolments and subsequent decline in urban areas. In future a proportion of new accommodation will be provided by way of permanent building and the remainder by way of good temporary accommodation. Complementary to this a working party of Architects and Inspectors has been set up to report urgently on the question of planning primary and post-primary accommodation on the one site to allow for phasing of use as between the two sectors. New accommodation, in particular new schools in urban areas, will not be provided where it is evident that sufficient suitable accommodation is available in existing schools within a reasonable distance”.

At third-level, a capital programme has been prepared by the Department of Education taking account of the appraisal procedures in the Circular and is at present under consideration.

9. Design and monitoring procedures at second level are considered to be satisfactory. The Department of Education’s Building Unit has a history of success behind it in this area. Its procedures are based on the Foras Forbartha booklet “National Standard Building Elements and Design Cost Control procedures”. The Building Unit’s procedures have been extended in recent years to cover all third level projects. With the transfer of full responsibility for first level building to Education, these procedures will be applied here also.

Department of Fisheries and Forestry

Harbours (1985 PCP £2.2 million)

PRELIMINARY SURVEY

1. Before each proposed project or programme is formulated for a fishery harbour or local landing place a preliminary survey of the

-needs

-objectives and

-means of achievement

involved is carried out by the Department of Fisheries and Forestry which takes into account the existing and projected level of fishing activity.

DETAILED APPRAISAL

REVIEW OF A CASE FOR THE PROJECT

2. If on foot of the preliminary survey the proposal is considered by the Department of Fisheries and Forestry to be worth proceeding with, the Department outlines the proposed project and its objectives to the Office of Public Works (OPW) and requests that Office to provide a detailed plan - which would include any necessary civil engineering investigations, OPW recommendations, estimate of cost and time-scale for carrying out the project. Consultation between the Department and OPW and any bodies concerned occurs as necessary at this stage.

3. When the detailed plan and estimate of cost are received from OPW by the Department of Fisheries and Forestry, the case for the project is reviewed afresh in detail by that Department having regard to:

(a)the present condition of the harbour facilities available

(b)the extent of the fishing activities of the area

(c)the need to improve the harbour facilities in order to make working conditions of fishermen safe and efficient as well as providing a secure berthage for fishing boats;

(d)the present and prospective fish processing activities carried on in the area;

(e)the present and prospective fish landings at the harbour;

(f)the availability of support services generally at ports in the area for fishermen e.g. ice plants, cold stores, auction halls, oil storage, boat repair facilities, syncrolifts, etc;

(g)the extent to which the port or harbour may be used for other purposes;

(h)the economic and social conditions of the area or region served by the harbour;

(i)the detailed plan and estimated capital cost of the project; and

(j)the economic contribution to improved fishery output and employment likely to result from the project, quantified as far as possible.

APPROVAL IN PRINCIPLE

4. If the appraisal produces a favourable outcome, approval in principle follows:

-if the estimated cost of the project lies within the current range of the Department’s delegated authority to incur capital expenditure, the Department of Fisheries and Forestry decides whether to approve the project and, if so, its order of priority vis-a-vis available funds;

-if the estimated cost of the project exceeds the current financial range of the delegated authority mentioned above, the Department of Fisheries and Forestry submits full details of the project to the Department of Finance for approval to execute it on the basis of the estimated cost.

ACTION FOLLOWING APPROVAL IN PRINCIPLE - COST LIMITS

5. In the case of projects lying within the scope of the Department’s delegated authority to incur capital expenditure, the Department of Fisheries and Forestry refers the project stating the estimated cost limits approved, to the Office of Public Works or the local authority or the Harbour Commissioners concerned, as appropriate, for execution by them;

6. In the case of projects outside the scope of the Department’s delegated authority to incur capital expenditure, the project as approved in principle and stating its estimated cost limits, is referred by the Department of Fisheries and Forestry to the Office of Public Works for the seeking of tenders and subsequent execution of the project as appropriate. If the tenders received are greater than the approved estimated cost of the project, the Department of Fisheries and Forestry reconsiders the project in consultation as necessary with the Department of Finance.

PROCEDURES TO BE FOLLOWED ONCE FINAL APPROVAL IS SECURED

7. OPW either

-do the project themselves by direct labour, or

-put the project out to public tender and place the contract in accordance with prescribed procedure.

It is a matter for OPW to advise the Department about any increases in cost or any additional works arising so that these may be appraised by the Department and the approval of the Department of Finance sought for them.

Position prior to Circular 1/83

8. The project appraisal procedures as described above were in operation prior to Circular 1/83 and they are not altogether in line with the guidelines in that Circular. To that end the Department of Fisheries and Forestry is arranging to meet the Office of Public Works with a view to introducing a procedure more in line with Circular 1/83 than is now in operation.

Bord Iascaigh Mhara (1985 PCP £0.215 million)

1. Projects related to the Development Plans for Sea Fisheries and Mariculture, covering periods of three to five years are drawn up by BIM for Government approval. Evaluation of projects are undertaken as follows:

2. Investment criteria such as Internal Rate of Return, Benefit/cost ratio, net present value and payback period are not used and neither is a test discount rate. Criteria taken into consideration include (i) socio-economic, (ii) capacity of the fleet; (iii) stock availability and (iv) arrears situation, (e.g. it is now unlikely, in view of the overcapacity in the pelagic section of the fleet and the pressure on mackerel stocks, that BIM funds would be made available for projects involving pelagic boats).

3. The procedures described at 1 above were in force prior to Circular 1/83.

Forest Development (1985 PCP £15.7 million)

Introduction

1. The State forest development programme is currently aimed at the planting (including reforestation) of 7,500 hectares per annum.

Purchase/hirage of machinery

2. Proposals for purchasing machinery for forest operations are monitored by a Forest Wildlife Service group representative of Senior Management, both Administrative and Technical, with Civil and Mechanical Engineers, Work Study/Method Study Inspectorate and others as appropriate. The Group meets monthly, its main function being to advise on policy regarding the purchase and utilisation of machinery. Its recommendations for the purchase of machinery are subject to approval by the Principal Officer with responsibility for financial control in this area.

3. It recommends priorities for the on-going purchasing programme having regard to the activities for which new and/or replacement machinery is required, taking into account the funding available. It reviews on an on-going basis, the general mechanisation of forestry operations and arranges for inspection and testing of new types of (forestry) machinery which might have potential for Irish forestry conditions.

Forest amenity development

4. This consists primarily of the operation and management of 11 existing Forest Parks and some 400 minor “Open Forest” areas throughout the country. Labour content is high and amounts to about 90% of expenditure. The benefits are of a social and tourism nature and not readily quantifiable in cash terms. Public demand has been the main factor in deciding to embark on major amenity projects. Virtually no expenditure is incurred nowadays on new developments.

Forest road construction

5. Appraisal of forest road costs has been based on average costs per kilometre of roads completed annually. Insofar as these average costs have been broadly in line with the annual level of inflation they are regarded as confirming satisfactory operational productivity.

6. There are no formal procedures operating at present for the appraisal of expenditure on road construction on an individual job basis. Procedures, involving the Central Data Processing Service (CDPS) were formulated for the introduction of a full computerised roads programme but the latter were unable to arrange for the necessary programmes to be processed. As an interim measure it has been decided, until CDPS difficulties are resolved, to introduce a manual costing system on an experimental basis.

Land Acquisition (1985 PCP £4.25 million)

1. Lands on offer to the Forest and Wildlife Service for afforestation are rated as to anticipated yield class viz. potential rate of tree growth or capacity to produce timber (expressed in cubic metres per hectare per annum averaged over a rotation or crop). This capacity is a function of soils, elevation, aspect and exposure and from it can be calculated the potential revenues from the site.

2. There will be costs to be incurred in developing the site and in establishing and managing the crop and in constructing harvest roads. Some of these costs - supply of plants, fertiliser etc. - are standard. Others - cleaning, ploughing, fencing, roading - will vary with the site and require calculation.

3. Anticipated revenues (from thinnings as well as ultimate clearfell) and costs over the rotation are currently discounted to the present using a discount rate of 4% and thus is derived a present commercial worth (or, rather a Net Discounted Revenue - NDR) of the site for afforestation.

Purchase of land for wildlife conservation

4. In connection with the acquisition of sites (habitats) for conservation - normally with a view to establishment and management of a nature reserve - such sites are initially inspected as to suitability and, if found suitable, negotiations are authorised. The valuation criterion is market value which has up to now been assessed by a Land Commission Inspector on behalf of FWS. If purchase negotiations are successful, possession of the property is taken and an Order made under Section 15 of the Wildlife Act, establishing the area as a nature reserve. A management prescription is drawn up for each reserve and permits on-going monitoring of the resource. As funds for land purchases for conservation purposes are extremely limited such purchases are very selective - and rare.

Roinn na Gaeltachta

Gaeltacht (1985 PCP £1.815 million)

1. Capital projects undertaken by Roinn na Gaeltachta are generaly too small to warrant use of rigorous appraisal techniques. All projects are however carefully evaluated qualitatively, with regard to social and economic needs. Local based Departmental officers do much of this work.

Department of Agriculture

Farm Development Service (FDS) (1985 PCP £34 million)

1. F.D.S. expenditure largely consists of payment of grants under the Farm Modernisation and Western Drainage Schemes and the Western Package. Each grant is paid in respect of a separate on-farm investment. (The normal rates of grant payable are relatively small e.g. 1984 average rate of grants under Western Drainage Scheme was £2,535 and under the Western Package £970). The large number of individual projects and the small amount of grant in each individual project make it impractical for these Schemes to conform to the terms of Circular 1/83. Planning under the F.D.S. is looked after by ACOT staff while individual project approval and monitoring is undertaken by the Department’s local officers. Approval to commence works under the Western Drainage Scheme and Western Package is given by the Department of Agriculture local officers who also carry out subsequent inspections during the course of the project.

2. As regards output and rates of return by development farmers under the Farm Modernisation Scheme, a study on output under that scheme, undertaken by the Department of Agriculture in 1977-1978 showed that development plans generally aim for a 50% increase in output. In addition ACOT studies have shown that, as well as putting their enterprises on a more viable footing, participants generally expand their scale of operation by about 5% for each year of their plan. The increased output resulting from investment under development plans would therefore lie in the 5% to 7% range.

Bord na gCon (1985 PCP £0.026 million)

1. Due to cutbacks, no works of a capital nature have been carried out in recent years and none is envisaged in the immediate future. In fact, there is a freeze on such items. In all of its capital programmes to date, the Board has followed set procedures in regard to effective planning and control of expenditure. These procedures were more or less in line with Circular 1/83.

Department of Labour

AnCO (1985 PCP £4.9 million)

In brief outline a typical new AnCO project would run generally as follows:-

The cost plan shows:-

A)Basic building costs including basic services, heat, light and fire alarm etc.

B)Basic site costs.

C)Special site costs/services etc., including landscaping.

D)Special services requirements unique to particular training centre and range of courses to be installed

As soon as the cost plan etc., is approved the consultants update the cost report sheets including estimates for inflation etc., projecting all project costs forward to estimated final completion.

Recreational Facilities (1985 PCP £1.93 million)

1.Capital grants under this programme are allocated to various bodies (i.e. community groups, local authorities, sports bodies etc.) to enable them to employ contractors to undertake the construction of community/ recreational facilities on their behalf. A substantial local contribution is required. Projects are approved by the Minister of State at the Department of Labour. Before sanctioning grant-aid, groups must fulfil certain criteria in relation to site, local contribution, plans, planning permission, construction of project, management and maintenance of project and guarantee of community access and continued usage. Officials of the Department of Labour inspect the project during construction and a final inspection is carried out when the project is completed. Grant payments are issued in instalments as building work progresses.

2.Quantitative evaluations are not applicable. Projects are undertaken by private sponsors and are community/recreational facilities only.

Department of Industry, Trade, Commerce and Tourism

IIRS (1985 PCP £0.2 million)

1. No major projects have been initiated since 1978. Therefore no evaluations have been made since the issue of Circular 1/83. Any future major capital projects will be subject to 1/83. Informal procedures were in use prior to Circular 1/83.

SFADCo: grants and building operations (1985 PCP £12.5 million)

A. Grants

SFADCo gives grants to industrialists on the Shannon Industrial Estate on its own account and grants to small industry in the mid-West region and West and South West Offaly as agent of the IDA.

In the case of grants, average rates of grant and grant cost per job, as approved by IDA for similar projects are used by SFADCo to guide decisions. Main procedures are as follows:

1. Project evaluation

(a) Assessment of capital investment per job against norms for industry. Also environment and electricity requirements. Business plan assessment under the headings: principals, business outputs, markets, environment, location, buildings, finance and profitability.

(b) Preparation of Board Document including grants and incentives recommendations.

(c) After Board approval, follow-up re-operating licence, tax cert etc. with relevant Government Departments.

(d) Settle in project, involve client in liaison with buildings, planning group etc.

No cost-benefit analysis as such is carried out at present, but this situation is currently under review.

B. Building operations

SFADCo decide on which projects to proceed with on the basis of need as perceived by their Industrial Promotion Division and demands from industralists for special factories and modifications. No quantitative analysis is carried out to decide which building projects yield the highest financial return. These operations are considered part of their industrial promotion strategy. Procedures are as follows:

(a) Appointment of Consultants

A document is prepared by Construction and Maintenance Division to seek permission from the Executive Committee to appoint consultants for the project.

(b) Letter of Appointment to Consultant

A very detailed letter of appointment is issued to consultants, the acceptance of which requires the consultant to comply with detailed cost reporting on each contract. This acceptance must be unequivocal on the part of the consultant.

(c) Cost Plan

A cost plan is prepared for each project. The cost plan is detailed and presented by the consultant in a format adapted from An Foras Forbartha Cost Plan.

(d) Tenders

Permission is sought from the Executive Committee to seek tenders for the project. The document gives details of all costs involved and an estimated total final cost for the project.

(e) Tender/Contract Report

The consultant’s report on the tenders and the analysis of the contract amount is directly compared with the cost plan.

(f) Executive Document to Award Contract

A document seeking permission from the Executive Committee to award the contract, is prepared by Construction and Maintenance Division and shows the revised total final cost of the project, based on tender results.

(g) Cash Flow Forecasts

Directly prior to award of contract, the consultant submits a cash flow forecast. This forecast is updated monthly (see monthly report). Reports are presented to the Contracts Manager and the Finance and Administration Officer.

(h) Pre-contract meeting

The purpose of the meeting is to acquaint consultant and contractor with details of going on site, tax situation, signing of contract documents, bond and lodgement, etc.

(i) Monthly Report

The report is divided into three basic sections as follows:-

-A write-up outlining status of design and construction.

-A write-up covering all cost variances and exposures.

-A cost analysis spread sheet. This analysis is in summary elemental format providing the required cost information.

-Cash flow forecast. This is an update of the cash flow provided at the pre-contract stage. The amount for the following month is as per the payment certificate. The forward forecast is adjusted to take account of completion date and estimated final account.

(j) Final Account

This report is in the same format as the Cost Plan and tender/contract report.

National Enterprise Agency (1985 PCP £3 million)

1. Capital expenditure is related to investments made in suitable projects. The Department of Industry, Trade, Commerce and Tourism closely monitors and examines all requests from the NEA to draw down funds from their capital allocation in respect of such investments. Funds are only advanced to the agency in respect of immediate expenditure requirements. The draw down of funds well in advance of such requirements is not permitted.

2. Possible projects are assessed and evaluated in detail by the NEA staff and the ultimate investment decision is a matter for the Board of the Agency on which the Department of Industry, Trade, Commerce and Tourism is represented. Departmental control/vetting does not extend to “second guessing” this assessment and evaluation procedure and the Department does not involve itself in the day-to-day running of the agency.

National Microelectronics Research Centre (1985 PCP £0.422 million)

1. The capital grant-in-aid issued by the Department of Industry, Trade, Commerce and Tourism to the NMRC is used only to furnish the Centre with the sophisticated equipment used in the Centre’s work.

2. In order to ensure that this equipment is appropriate, all invoices are passed to the National Board for Science and Technology for examination before being paid. The disbursement of the grant-in-aid is monitored by the Department and matched against invoices to ensure it adheres to the monthly profile, does not exceed the years allocation, and is spent on the most appropriate equipment.

Bord Failte (1985 PCP £2.066 million)

1. Bord Failte’s capital expenditure is classified under two headings’ direct capital expenditure and grants for capital development. Direct capital expenditure is confined to the purchase of office furniture, equipment and vehicles. Annual expenditure patterns are monitored by the appropriate Departmental Division and any significant deviations from year to year are queried with the Bord. In 1983 the net expenditure in this area amounted to £120,000.

2. Bord Failte’s capital grant allocations are utilised, not on capital projects undertaken by themselves, but on the provision of grant aid aimed at encouraging the private sector and in some instances local authorities to provide tourist accommodation and amenities of a suitable standard.

3. In addition to its ongoing appraisal and monitoring of Bord Failte’s expenditure plans, the Department of Industry, Trade, Commerce and Tourism carries out occasional major appraisals of the operation and success, or otherwise, of grant schemes. This serves not only as a check on past expenditure but provides a basis on which future policy in tourist accommodation and amenity development can be formulated.

IDA grants (1985 PCP £155 million)

IDA evaluates all projects using the following system

2. All projects are subject to a full commercial appraisal. In addition, all large projects or projects with a high cost per job are subject to full cost-benefit and Exchequer payback analysis. In the case of small projects, the Irish economy value added associated with the project in its first year of full production is calculated. If this exceeds the total cost of the project to the State (i.e. all grants, incl. training, tax foregone on leasing etc.) by a factor 2 to 1 or more, then no further analysis is undertaken as all required payback conditions are met. If the ratio is less than 2 to 1, then a full cost-benefit and Exchequer payback analysis is undertaken. IDA looks for a minimum ratio of benefits (added value) to cost of 4 to 1 over a ten year life.

3. A detailed system for the economic appraisal of projects has been used by IDA for a number of years. In light of the stress being put on value for state investment in recent years (including Circular 1/83) IDA has developed and extended its system of economic appraisal. All projects being considered by the IDA board now require an economic appraisal.

4. Economic appraisal is only one part of the IDA project, evaluation process. The commercial viability of the project the level of international competition for overseas projects, the proposed location of projects within Ireland, technology content etc., must also be taken into consideration in project appraisal.

5. The IDA system has been developed with specific reference to industrial projects and reflects fully the need for a full evaluation of all projects which involve State expenditure.

IDA Building Operations (1985 PCP £22 million)

1. IDA advance factories are provided in regional locations to further the industrialisation of rural areas in accordance with the policy declared in the Regional Industrial Plans 1972-1977 and 1977-1982 which were approved by Government. Such factories are provided in areas of the country where private financiers are not prepared to build and also where there is a need to tackle local unemployment situations.

IDA Procedures

2. Before any building programme of factory construction or site acquisition/development is formulated, the following procedures apply:-

i)Building site acquisition and site development needs are assessed on two levels

(a)related to ensuring the success of a programme e.g. Small Industry, Enterprise Development etc.

(b)having established overall needs for a programme these needs are then assessed on a regional basis having regard to existing availability of sites and buildings suitable to the programme being implemented. All factors are considered at this stage including the feasibility of converting existing space to meet the needs of the programme being promoted. Regional dispersal of industry is as required by Government Policy over the years and strongly repeated in the recent White Paper on Industrial Policy.

(c)each regional manager submits his considered proposals as a result of the study as set out in (b) above.

ii) These proposals are evaluated in detail in Building Operations Department having regard to the available budgetary allocation. After consultation with the Regional Managers a final agreed programme of new works is submitted to IDA Executive Committee and Authority for approval. When approved the details are transmitted to the Department of Industry, Trade, Commerce and Tourism for approval.

Factory building programme

3. The factory building programme is agreed every year, having regard to the demands for space in the marketplace and the needs of the individual local areas. IDA has in the past constructed two main types of factory e.g.

(i)Advance Factories - built speculatively and;

(ii)Special Factories - built to meet the needs of special clients

Advance Factories

4. Having established the need for new space, plans for a factory are prepared and invitations to tender are issued.

5. Tendering Procedures: Selective tendering procedures are normally used by IDA with the general assessment of the available contractors being left to the design team. A limited number of suitable contractors would be interviewed for the project. A final list of approximately six contractors would be compiled by the design team and submitted to IDA for final approval. The final tender list will be approved by the Building Operations Division of the IDA.

6. Tenders are submitted to IDA following the agreed tender period and opened by IDA for registration. Tender documents are then forwarded to the design team for reporting. If a significant variation occurs between the cost plan and tender, then IDA staff, in conjunction with the design team would endeavour to produce a “Bill of Reduction” in order to achieve budget limits.

7. Cost Control: The following work is carried out between the design team and the qualified member of the IDA staff who is monitoring the project:

(i)IDA normally request that elemental Bills of Quantities be used in all cases. Occasionally Standard Method of Measurement bills have been used.

(ii)An initial elemental cost plan is requested with all projects at design stage. Prior to tender this cost plan should be updated, particularly if there has been any delay since the original submission date.

(iii)Upon receipt of tenders, a cost report is requested analysing the successful tender on an elemental basis. Any variation between the cost plan and tender should be explained on an elemental basis and queried if the difference is outstanding.

(iv)Monthly cost reports are supplied by the team of consultants which refer to the original elemental cost plan and highlight any changes/variations in any elements of the project.

(v)It is requested that, where possible, all variations be submitted to IDA with full details and a breakdown of costs prior to the commencement of work. Variations should not be carried out without IDA agreement.

Cost Escalation Clauses

(i)Clause 36 of the R.I.A.I. form of contract 1977, is normally enforced in the majority of IDA projects and counter-checked by IDA staff.

(ii)Fixed price contracts have only been used at the request of clients.

Penalty Clauses

(i) The “Liquidated and Ascertained Damages” clause, 29 (A), is used in all IDA projects and an agreed sum of money is inserted in all appendices.

(ii) A Bond is requested on any projects exceeding £50,000 in value.

Return on investment

8. To date, IDA has operated on the basis of seeking to recover all costs incurred on Advance Factories in the selling price or in fixing the level of rents.

9. From March 1980, rents have been based on the investment or yield method which is used in the private sector. The initial rent is calculated on the basis of a 10% approximate yield, which has been the yield sought by investors in the private sector.

10. Terms and conditions of IDA leases are in line with leases in the private sector which, inter alia, provide for 5-year rent reviews.

11. Quantitative evaluations are used in choosing the location of particular factories in regard to levels of local unemployment and availability of vacant factory space.

12. The procedures outlined above have been used by IDA for a number of years.

Special Factories

13. Special Factories are only constructed at the request of a particular client and where it is necessary to secure the project. All costs are eventually recovered from the client.

14. Tendering procedures, cost control, cost escalation and penalty clauses etc., are all applied to special factories in the same manner as described in the case of Advance Factories.

Department of Communications

Regional/Local Airports (1985 PCP £0.75 million)

1.The provision/improvement of regional/local airports is not a function of the public sector but Exchequer grants have been given towards the funding of a number of such projects.

2.The following procedures are employed in relation to applications for grant aid. (i) Expert advice on the need for the proposed facility is sought. (ii) The Department ensures before any payment was made that at least three tenders were sought, that the project had been completed satisfactorily and that the requests for payment of grant aid had been duly certified.

The preparation of specifications and the monitoring of projects would be a matter for the project promoters.

3.Since the issue of Circular 1/83 only one new project was approved, namely, the Carnmore (Galway) airport development project. The total estimated cost of the project is £1.25 million. An analysis was undertaken in this case comprising three financial evaluations, namely a real return on the capital investment, a discounted cash return to the Exchequer and a net benefit to the whole Irish economy.

4.Formal investment appraisal procedures have not hitherto been a prerequisite to the approval of applications. The ultimate decision to go ahead on these projects is usually made at Ministerial or Government level. In some cases consultants were commissioned to examine the proposals and report accordingly.

5.In relation to new projects present procedures conform fully with Circular 1/83 guidelines.

State Airports (1985 PCP £4.287 million)

1. Each year prior to the formulation of the Estimates, a package of proposed projects is prepared by Aer Rianta and submitted for analysis and approval by officials of the Department of Communications in consultation with Aer Rianta. When officials of the Department are satisfied in regard to the items required to be undertaken, the agreed package is then put forward as part of the overall Departmental Estimates package for agreement by the Minister and in turn by the Government. Therefore, the overall package is accepted in principle at that stage, subject to review throughout the year to cater for urgent essential items arising at the State airports.

2. Each project in the overall approved package has to have the approval of the Department of Communications and the sanction of the Department of Finance before it can be undertaken. When Aer Rianta propose to undertake an item listed in the overall package the proposal is vetted by a special committee within Aer Rianta comprising of heads of the Financial and Technical Departments as well as the Company Secretary, and only after satisfying that Committee as to the feasibility/viability of the project it is submitted to the Board of Aer Rianta for approval. When finally agreed by the Board the project is then submitted to the parent Department for the necessary sanction of expenditure by the Airports Construction Committee. The Airports Construction Committee (ACC) consists of representatives from the Department of Communications, the Department of Finance, the Department of Defence, Aer Rianta and Aer Lingus and meets on a monthly basis. Its function is to sanction expenditure on airport capital projects and in turn monitor their progress until completed and paid for.

3. Prior to placing an item on the ACC agenda the Department of Communications analyses each proposal and if satisfied that the project is essential/viable, it in turn submits the proposal to the Department of Finance, who if satisfied give sanction at the following ACC meeting to incur the necessary expenditure thereon. Monthly reports on the progress of each project are made by Aer Rianta to the Committee.

On the question of preparation of specification, this is undertaken by Aer Rianta engineers and architects with the assistance of consultants where further expertise is required.

4. Most of the projects undertaken each year by Aer Rianta are necessary either from a safety, security or operational point of view and/or are also necessary to conform with standards/requirements of the International Civil Aviation Organisation (ICAO) which sets down world-wide aviation standards/requirements.

5. In the case of commercial projects the submission put forward by Aer Rianta to the Department includes a statement of the expected return from the proposed investments.

6. Most of the projects undertaken each year by Aer Rianta are small in scale and cost less than £500,000. Aer Rianta have however, been engaged in planning for the construction of a new runway and related works at Dublin Airport for some years past. This proposal is about to be put to Government for approval and the submission to Government will include a feasibility study and financial appraisal in accordance with Circular 1/83.

Meteorological Service (1985 PCP £0.287 million)

1. Capital expenditure by the Meteorological Service consists almost entirely of the purchase of computer equipment, technical equipment and office machines. Evaluation of the need for such purchases is part of the on-going development of the Meteorological Service, and is carried out by the Directorate and Senior Officers of the Service. Apart from the exceptions given in 3, below, sanction for each purchase is sought in a written submission to the appropriate authority.

2. Sanction for the purchase of computer equipment is obtained from the CDPS; sanction for technical equipment is obtained from D/Finance while permission to purchase office equipment is sought from D/Public Service; in the case of technical equipment for use at any of the airports sanction is obtained through the Airports Construction Committee.

3. The Meteorological Service has delegated authority to purchase technical equipment to the value of £3,000 for any individual item without specific sanction up to a maximum of £30,000 in any one year. The Service also has delegated authority to purchase individual items of a value less than £200 without specific sanction.

4. Almost all the equipment purchased by the Meteorological Service is required for operational work by the Service. The requirement comes from the necessity of complying with standards and recommendations laid down by international agreement, the need to ensure as far as possible the safety of air navigation and other activities, and the desirability of maintaining and improving both the quality of weather forecasts for the public and special interests, and the capability of collecting and archiving meteorological data. Where applicable and appropriate Circular 1/83 guidelines are applied.

Port Development (1985 PCP £13.029 million)

1. Harbour Authorities usually take the initiative for new projects and in most cases seek full cost State assistance. Evaluation has for many years proceeded on the basis of:-

(i)need, e.g. for new industry in the area;

(ii)scope for local financing, i.e. from own resources; from port users (port dues paid in advance)

(iii)commercial borrowings or advances from the Local Loans Fund (LLF).

2. Prior to 1983 where the Department was satisfied as to need and that State assistance by way of LLF or grant was necessary ad hoc appraisal was undertaken. Since the issue of Circular 1/83 such appraisals have been done on the basis set out in that Circular.

3. Basically, all projects involving State assistance are subject to consideration and appraisal as above. The degree of application varies depending on the nature and size of the project involved.

4. Investment criteria are taken into account either formally or informally. Social and economic factors are also taken into account. In general however, only commercially viable projects are given State assistance.

5. Formal appraisal was a uniform feature prior to Department of Finance Circular 1/83 but the techniques involved have been standardised and up-dated since then.

Bus Priority Schemes (1985 PCP £0.42 million)

It is not considered that the guidelines should be applied in full to the bus priority programme as the schemes cost, on average, less than £10,000. However, each scheme is evaluated, prior to implementation, by an inter-Departmental Task Force representative of Government Departments, local authorities, the Gardai and CIE and this evaluation includes a detailed cost benefit analysis (monetary benefits, expressed in terms of vehicle operating costs, crew time costs and passenger time costs, are estimated).

Air Navigation Services Office (ANSO) (1985 PCP £2.5 million)

One of the primary functions of ANSO is to ensure the safety and regularity of the air traffic in Irish airspace. ANSO’s capital expenditure arises almost entirely on the replacement of aviation electronic equipment (navigation aids and facilities) on an ongoing basis at Dublin, Cork and Shannon Airports and associated stations.

The purchase of replacement equipment and facilities is carried out on a priority basis. The assessment of the need to replace a particular facility takes into account the following factors:

(a)safety aspects and considerations arising from international obligations, regulations and requirements

(b)the age and condition of the existing facility

(c)the operational need to replace the facility

(d)capital costs involved including recoupment and return on such costs.

Department of Defence

Defence building (1985 PCP £5 million)

Preliminary Survey

1. The military authorities are required to make a detailed case for any new building project proposed by them. In assessing the case, the Department of Defence has regard to criteria such as military efficiency, security etc. Investment analysis criteria do not appear to be appropriate in the case of most building works required for military purposes. In the case of married quarters, due regard is paid to housing provided by local authorities.

Detailed Appraisal

2. Most of the projects undertaken by the Department of Defence are to meet military needs which are well established by the procedure at 1. and which cannot, because of their nature, be met in any other way. The Department of Defence considers that appraisal studies are required only in the case of very major projects.

Review of Case for Project

3. Where an appraisal study is carried out the Department will, of course, review the case for the proposed project in the light of the results of the appraisal. Considerations of military or naval need must, as far as the Department of Defence is concerned, be the dominant factor in such a review. Economic and social returns do not normally arise except in the sense that the Defence Forces contribute to the security which is vital to the economic and social life of the country.

Approval in principle

4. Where an appraisal study in regard to a project has been carried out the sanction of the Minister for Finance will be sought before proceeding with the planning of the project.

Action following approval in principle - cost limits and design

5. If approval in principle is secured, the subsequent action as outlined in Circular 1/83 is followed.

Tenders

6. Tenders are generally invited by the Department of Defence on the basis of the standard Government conditions of contract. Consideration is being given to the feasibility of seeking fixed price tenders.

The Department of Defence uses the Government contracts price variation clause.

Final review of Case for Project/Programme

7. Where the sanction in principle of the Minister for Finance has been obtained for a project, the Department of Defence seeks definitive sanction after tender prices have been received and before a contract is placed.

Procedures to be followed once contract is placed

8. Individual officers of the Contracts Branch of the Department of Defence are responsible for ensuring that the terms of a contract are complied with and individual officers of the Corps of Engineers are responsible for overseeing the physical execution of the contract. All concerned are required to ensure that costs are minimised and that the project is completed within the budget cost. This will continue to do done.

9. The procedure in regard to design changes in Circular 1/83 is that normally followed by the Department.

10. Clause 30 of the Conditions of Contract for Building Work for use by Government Departments etc., indicates the procedure to be followed in regard to delay and extension of time. These Conditions will continue to be strictly adhered to by the Department.

Department of Health

Hospital Building (1985 PCP £58 million)

1. Expenditure on all projects is subject to the following qualifications:

(a)expenditure being met from within the approved capital allocation for the Department of Health;

(b)where a major health capital project involves the replacement of an existing health institution/s proposals for the disposal or alternative use of the institution/s being replaced to be agreed with the Department of Finance before sanction can be given under 2(c) following.

2. For all projects estimated to cost £3 million or over (exclusive of professional fees and furnishing and equipment) and for projects below this figure which involve new principles of construction or tendering or are of a novel character, or imply exceptional consequential current outlay, the following procedures are followed.

2(a) Professional fees

The Department of Finance’s sanction is sought before work is commenced on Stage 2 (Development Control Plan).

2(b) Where planning does not lead to construction and constructive losses of over £100,000 are incurred these losses should be noted in the Appropriation Accounts.

2(c) Acceptance of Tenders

Further sanction is obtained from the Department of Finance after tenders have been received and before any commitments are entered into.

2(d) Contract Additions

The Department of Finance’s sanction is sought for additions to the contract works over those included in the approved tender where such additions (in total) exceed 10% of the contract price.

Excesses in accordance with the standard price variation clause do not require sanction, whatever their size.

Report on completion of Projects costing over £3 million

3. An overall report is furnished to the Department of Finance on completion of each project indicating the final cost thereof attributable to the tender as sanctioned at 2 (c), additions as at 2 (d), and other extras and variations arising in course of the contract.

Purchase of Premises and Sites

4. The Department of Finance’s sanction is required only for the purchase of sites and premises where the cost is in excess of £2 million excluding fees.

5. The above procedures and controls were decided prior to 1983 and are considered sufficient not to need any alterations following the issue of Circular 1/83.

Energy (1985 PCP £3.806 million)

1. The Private Bog Development Scheme, Western Aid Electrification Programme, and the Alternative Energy Programme comprise those capital expenditure programmes provided for in the Department of Energy’s vote. These three schemes were in operation prior to the issue of Circular 1/83. The Private Bog Development Scheme is now under comprehensive review in the Departments of Finance and Energy. The Western Aid Electrification Programme is part of a wider EEC-Backed package and is largely a social measure; as such it is unlikely to and would not be expected to match the rates of return envisaged in the circular. The Alternative Energy Programme is basically a Research and Development Programme and is not at this stage a commercially orientated investment.

* Available on request.

* Available on request.

* Available on request.