Committee Reports > List of Committees > Dáil > 1988 > Committee of Public Accounts > Report - Review of the Procedures Followed by the Office of Public Works in the Management and Control of its Capital Projects

APPENDIX

REVIEW OF PROJECT CONTROL PROCEDURES IN THE OFFICE OF PUBLIC WORKS

SUMMARY

1. GENERAL

ESB International were retained by the Committee of Public Accounts to examine and review the procedures followed by the Office of Public Works in the management and control of capital projects.

The present Office of Public Works procedures were drawn up to summarise the guidelines under which control and management of projects have been operating for some time.

The review of the procedures was carried out in three phases as follows:-

-Examination of background material

-Examination of the Office of Public Works’ “Construction Projects Procedures”

-Discussion with the Office of Public Works and examination of their draft “Government Building Construction Work Management Plan”.

2. EVALUATION

The examination of the background material indicated that the absence of project control procedures had in the past resulted in overexpenditure on certain capital projects undertaken by the Office of Public Works. Adequate management and cost controls during project design and construction were not in operation on these projects.

The examination of the Office of Public Works “Construction Projects Procedures” (1988) indicated that the document did not provide for adequate project control due to the following shortcomings:

-There was a lack of specific instruction and direction to enable practical implementation.

-There was insufficient emphasis placed on the planning phase of projects.

-There was a lack of adequate cost control and other systems.

The examination of the Office of Public Works’ draft “Government Building Construction Work Management Plan” (1987) indicated that the document contained most of the items applicable to a comprehensive set of control procedures. There were shortcomings and omissions that need to be addressed in the final document.

3. RECOMMENDATIONS

The following are comments and recommendations relating to each of the two Office of Public Works project control documents reviewed.

Construction Projects Procedures Document

The “Construction Projects Procedures” do not provide sufficient specific instructions necessary to ensure the implementation of a comprehensive set of control procedures.

Recommendations:

-The “Construction Projects Procedures” is not adequate in itself for the management or control of capital projects and should be re-written in more positive terms to ensure imposition of the required discipline.

-The guidelines, mentioned in the “Construction Projects Procedures”, which the Office of Public Works have undertaken to prepare in relation to the nature of Project briefing required by them from Sponsoring Departments should be prepared as soon as possible. Sponsoring Departments should be instructed to comply fully with these guidelines.

Draft Government Building Construction Work Management Plan Document

The draft “Government Building Construction Work Management Plan” is regarded as a working document and contains the type of controls necessary for successful project management but needs further refinement before being issued as an official procedural document.

Recommendations:

-The draft “Government Building Construction Work Management Plan” should be finalised without delay and adopted as the official Office of Public Works Procedures for the management and control of capital projects.

-The cost control duties and responsibilities of the nominated Project Co-ordinator should be more strongly emphasised by stressing that the Project Co-ordinator is ultimately solely responsible for all project costs.

-Computerised cost control, programme monitoring and work management systems should be introduced as soon as possible to provide speedily available current information for project control.

-The delegated authorities and responsibilities of all parties involved in a project, both within the Office of Public Works and Government Departments, should be more clearly defined to ensure an efficient and co-ordinated management structure.

The above recommendations should be implemented as soon as possible and it is recommended that progress towards implementation be monitored by the Committee of Public Accounts.

1. INTRODUCTION

1.1 Brief

ESB International were retained by Chairman and members of the Dail Eireann Committee of Public Accounts to examine and review the procedures followed by the Office of Public Works in the management and control of capital projects.

ESB International recommended, and it was accepted, that the purpose of the brief would best be served on the basis of a staged report. This first stage Report takes the form of a general overview and comments on the adequacy or otherwise of the procedures covering various management systems for the feasibility, design and supervision of major capital construction projects.

1.2 Documents Reviewed

1.2.1The following documents were reviewed and are included in the Appendices to this report:

1.2.2The following documents were also reviewed but are not included in this report:

1.3 Existing Procedures

The procedures for dealing with capital expenditure in the public sector are governed by the terms of the Department of Finance circular 1/1983. The appendix to the circular gives in outline form standard steps which should be followed in relation to the planning and control of public expenditure. The standard steps are intended as guidelines and it is a matter for each Department to design and implement detailed operating procedures consistent with the guidelines.

In 1984 the Government decided to establish a Working-Group to examine the systems for awarding public contracts. The deliberations of the Working-Group resulted in the publication of a booklet, “An Outline of Government Contract Procedures”, which codified the procedures which apply to the award of public contracts. The booklet was intended to bring home to contracting officers the need for a greater consciousness of the importance of forward planning, of critical assessment of the feasibility of various alternatives, of monitoring projects during their execution, and of taking the necessary steps in good time to ensure the avoidance of cost overruns on public construction contracts. The booklet takes account of the relevant recommendations of the Cost Overruns Committee Report and the recommendations of the Report on Capital Projects prepared by the Oireachtas Public Expenditure Committee.

The Office of Public Works have operated to guidelines based on the instructions and recommendations contained in the above documents which are summarised in an Internal Office Notice 6/88 entitled “Construction projects Procedures” issued in March 1988. Also in December 1987 the Office of Public Works prepared a document in draft form entitled “Government Building Construction Work Management Plan”. This is now being finalised on the basis of Internal Office Notice 6/88 referred to above.

It is these two latter documents that are the main subject of this review.

1.4 Method of Review

1.4.1 First Phase

_ _ _ _ _ _

The first phase of the examination, while awaiting a written copy of the Office of Public Works Technical and Expenditure Procedures, consisted of a review of the Appropriation Accounts together with the Report of the Comptroller and Auditor General and the Report of the Committee of Public Accounts on the Appropriation Accounts for the years 1980 to 1984 inclusive. The review focused on the details of ten separate projects which had been identified by the Committee of Public Accounts as warranting investigation.

Following this review, six projects were identified for further study and the Minutes of Evidence to the Committee of Public Accounts in relation to those projects were requested and examined.

The reasons which caused expenditure to exceed the original authorisation for individual projects were noted. However, the main purpose was to determine the environment in which the Office of Public Works procedures are designed to operate and also to gather information on the inter-relationships between the Office of Public Works, the sponsoring Departments and the Department of Finance.

1.4.2 Second Phase

_ _ _ _ _ _

The second phase of the examination was carried out upon receipt of a written copy of the Office of Public Works Internal Notice 6/88, “Construction Projects Procedures”. The procedures were taken to comply with instructions and recommendations contained in the Department of Finance Circular 1/1983 and An Outline of Government Contracts Procedures (1986). The thrust of the examination was to investigate whether the procedures fulfilled the objectives of providing a systematic approach to the appraisal of capital expenditure projects, employing effective planning and monitoring systems, and improving the quality of information available to decision-makers.

1.4.3 Third Phase

_ _ _ _ _ _

The third phase of this review took the form of discussions with the Office of Public Works at which the following additional documents were presented:

The review of the procedures took a critical look at the content of each of the two Office of Public Works project control documents to highlight possible shortcomings. To that end general comments on the overall scope and thrust of the documents were made with additional specific comments on individual points.

2. EVALUATION

2.1 Construction Projects Procedures Document

2.1.1 General Comments

Any shortcomings in the procedures highlighted herein must be taken in the context of the possible interpretation of the procedures by their users. If that interpretation leads to a situation where adequate control of projects is exercised the procedures can be considered as satisfactory.

The overall tone of the “Construction Projects Procedures” takes the form of advice rather than specific instructions. It is therefore necessary to introduce detailed procedures to ensure adequate forward planning and to optimise the utilisation of resources by imposing greater discipline on technical and administrative staff alike.

While identification of the origins of various guidelines may be warranted in an introduction to the procedures, their inclusion in the body of the document leads to unnecessary complexity.

The “Construction Projects Procedures” are not presented in a sequence which identifies or reflects the staged development of the project.

The guidelines which the Office of Public Works have undertaken to prepare in relation to the nature of briefing required by them should help to resolve the two specific problems in relation to briefing which were highlighted by the Public Expenditure Committee and are mentioned in the “Construction Projects Procedures”.

Insufficient detail has been applied in the “Construction Projects Procedures” to the planning and budget preparation stage of the project. It is this stage which largely determines the ultimate quality and value for money of the project. The practical procedures necessary to obtain the optimum solution in terms of engineering, cost and value are not identified.

The Management Control Document, Appendix A to the “Construction Projects Procedures”, is not of any real value in the controlling process for a project. It is prepared only after the contract has been awarded, at which time such information as “Brief Due” and “Brief Received” are of historical interest only. In the format indicated it provides only a record of the progressive reappraisal of the projected ultimate cost of the project. Such reappraisal is necessary to ensure budget adequacy but project control requires progress monitoring against programmes and expenditure monitoring against progress.

Throughout the procedures, the individuals and authority levels responsible for decision making and to whom certain discretionary powers are entrusted are not identified. This represents a fundamental weakness in controlling the project, particularly if difficulties arise.

The type of expenditure and the maximum financial limits below which the various authority levels are authorised to take decisions are incorporated in Office Notice 10/80, Delegation of Financial Authorities and Revision to Delegated Financial Authorities - August 1987. These documents are not referenced.

2.1.2 Specific Comments

The following are seen as shortcomings and omissions in the document and when corrected should be reflected in the final version of the “Government Building Construction Work Management Plan”:

-The achievability or otherwise of the sponsoring Department’s objectives is not communicated.

-The sponsoring Department’s brief is not confirmed nor is the sponsor informed when the particular stage of the project has been reached beyond which further variations and additions cannot be accommodated.

-Site investigations costs are not mentioned in estimates nor are mechanisms for initiating site investigation specified.

-Changes which involve extra cost may be made without prior administrative approval in cases of absolute urgency but the individuals or authority levels entitled to such discretionary powers are not identified.

-Significant departures from the approved scheme, even when no additional costs are involved, are required to be cleared beforehand but the individuals or authority levels from whom such clearance should be sought are not identified.

-The necessity to involve the sponsoring Department in the examination of the project when reducing costs or reallocating resources is not mentioned.

-The Architect/Engineer is required to clear any actions involving increased costs with the project head beforehand but the project head is not identified.

-Variations in the design programme are allowed only with the agreement of the relevant Division but there is no mention of evaluation of financial impact of such variations.

-There is no obligation on the contractor to provide a cash flow prediction. If required, the best method of obtaining same is to make it a condition for a responsive tender.

-No procedures other than normal final approval are mentioned in situations where tenders exceed the contract cost estimate.

2.2 Draft Government Building Construction Work Management Plan Document

2.2.1 General Comments

The draft “Government Building Construction Work Management Plan” is intended to provide the small print to the Construction Projects Procedures and when finalised should address any shortcomings or weaknesses in the latter document.

The draft Management Plan does identify the various stages in the evolution of a project, the targets to be achieved at each stage and the procedures and principles to be associated with each stage.

The need for and type of liaison with the sponsoring Departments at the various stages of a project is given insufficient attention. At the briefing stage the necessity to involve the sponsor in the series of decisions to be taken as the cost implications of the different design options become apparent is not mentioned. The general implication of the document is that all communication with the sponsor is sponsor originated, specifically in providing the initial brief and seeking additions and variations.

The need for an individual to act in an overseeing capacity on the project is stressed but the need to identify, within the sponsoring Department, an individual with whom all liaison and communication should take place should be underlined. It is understood from the discussions held with the Office of Public Works that this is in fact the practice but it has not been highlighted in the document.

While the elements relevant to the production of realistic cost estimates are identified, the general thrust of the estimating exercise appears to be towards ensuring adequate budget authorisation. In reality, the production of increasingly detailed and accurate estimates at the various pre contract stages of a project should form part of the criteria by which the case for the project is examined and re-examined and on which a decision as to whether or not to proceed to the next stage of the project is taken.

Under current arrangements, while consultants’ fees are included in estimates and therefore form part of the project cost, internal Office of Public Works costs are not taken into account. In circumstances where adequate inhouse design capacity exists and external consultants need not be engaged, the project cost on which the cost benefit analysis of the project is based does not indicate the full design cost of the project. Two separate project costs are possible, dependent on whether or not inhouse design capacity is available at that time. There is an inconsistency in such a situation and consideration should be given to including in project costs the expenditure associated with inhouse Design Team members.

Under current arrangements, expenditure incurred on a project up to the time when Department of Finance or internal Office of Public Works sanction to award a contract is sought are not subject to control. This expenditure is essentially consultants’ fees and Office of Public Works inhouse costs. They are likely to be relatively small compared to the construction cost of the project but never the less represent a distinct phase of the project which should be subject to financial as well as administrative control.

Interest during construction is not currently charged as project expenditure since interest on capital is accounted for by the Department of Finance, the provider of funds. Under such arrangements the true financial impact of project delays is not fully reflected in project costs. If interest during construction were charged to the project it would increase the emphasis on project completion within programme and would encourage timely occupation of completed premises by sponsors.

It is considered that certain aspects of projects such as fee competition, general insurances, policy on settlement of claims, mediation and arbitration, quality control and standards of site supervision, which could have major cost implications are rightly excluded from the scope of the control systems and are therefore not commented upon.

2.2.2 Specific Comments

This document, if implemented in its present form, would be the basis for an acceptable management and control system.

However, there are significant shortcomings and omissions that need to be addressed as follows:

-Positive instructions as to the specific actions to be taken at each stage of the project are not provided.

-The need to identify the responsible individual within the sponsoring Department with whom liaison should take place is not highlighted.

-The lines of communication between all parties involved in the project i.e. Sponsoring Department, Projects Division, Design Team, Contracts Division, Department of Finance etc. are not specified

-The need to continuously review the case for the project and its underlying assumptions prior to contract award is not stressed.

-Office of Public Works in-house Design Team overheads are not included in estimates which form the basis for project evaluation.

-The costs associated with taking the project to the contract award stage are not estimated separately nor are they subject to separate approval.

-Detailed instruction as to the method of exercising project control by monitoring percentage completed, expenditure, earned value, time ahead or behind programme, remaining duration and expected completion date is not provided.

-Decision-makers and the extent of their powers are not identified.

-References to documents dealing with expenditure limits for various authority levels are not provided.

-A programme for design work to be carried out during the post contract award phase when the design has not been 100% completed at tender stage is not prepared.

-The production of a guideline programme for tenderers on which the payment of liquidated damages for non-achievement of specific partial and full completion dates is based is not mentioned.

-The production of an acceptable construction programme is not mentioned as being a condition for contract award.

-Specific procedures for the administration of dayworks are not mentioned.

-References to and a comprehensive list of all documents/circulars which deal with cost related aspects of projects, e.g. consultants fees, are not provided.

-The document title does not reflect its applicability to all stages of a project rather than to the construction phase only.

2.3 Discussions with Office of Public Works

During discussions with the Office of Public Works it was evident that there is a keen awareness of the need to exercise strict control of projects. It was pointed out that while the “Construction Projects Procedures” have only been codified since March 1988, the principles behind then have been in operation for some time and have been found to work well. The satisfactory operation of procedures is the true measure of their success or otherwise.

The discussions held with the Office of Public Works indicated that, in addition to the Department of Finance’s role as the provider of funds, they considered that there are three principle parties involved in projects commissioned from outside its own organisation. These are the sponsoring Department, the Projects Organisation of the Office of Public Works which on receipt of a commission and fund allocation then considers itself to be the client and the Design Team. An understanding of the roles and responsibilities of the various parties is vital to the establishment of proper and adequate lines of communication and, unless they are already clearly understood, a description of the interrelationships between the parties is warranted.

The Office of Public Works highlighted what they see as a constraint on their operations. They have a passive rather than a directive role regarding the provision and occupation of buildings. They do not have powers to modify the brief when the sponsoring Department clearly overstates its requirements nor to insist on building occupation when construction has been completed.

3. RECOMMENDATIONS

The following are comments and recommendations relating to each of the two Office of Public Works project control documents reviewed.

3.1 Construction Projects Procedures Document

The “Construction Projects Procedures” do not provide sufficient specific instructions necessary to ensure the implementation of a comprehensive set of control procedures.

Recommendations:

-The “Construction Projects Procedures” is not adequate in itself for the management or control of capital projects and should be re-written in more positive terms to ensure imposition of the required discipline.

-The guidelines, mentioned in the “Construction Projects Procedures”, which the Office of Public Works have undertaken to prepare in relation to the nature of project briefing required by them from Sponsoring Department should be prepared as soon as possible. Sponsoring Departments should be instructed to comply fully with these guidelines.

3.2 Draft Government Building Construction Work Management Plan Document

The draft “Government Building Construction Work Management Plan” is regarded as a working document and contains the type of controls necessary for successful project management but needs further refinement before being issued as an official procedural document.

Recommendations:

-The draft “Government Building Construction Work Management Plan” should be finalised without delay and adopted as the official Office of Public Works Procedures for the management and control of capital projects.

-The cost control duties and responsibilities of the nominated Project Co-ordinator should be more strongly emphasised by stressing that the Project Co-ordinator is ultimately solely responsible for all project costs.

-Computerised cost control, programme monitoring and work management systems should be introduced as soon as possible to provide speedily available current information for project control.

-The delegated authorities and responsibilities of all parties involved in a project, both within the Office of Public Works and Government Departments, should be more clearly defined to ensure an efficient and co-ordinated management structure.

The above recommendations should be implemented as soon as possible and it is recommended that progress towards implementation be monitored by the Committee of Public Accounts.

ACKNOWLEDGEMENTS

ESB International wishes to acknowledge the assistance received in the preparation of this report from Mr. P. Donlon, Clerk to the Committee of Public Accounts, Mr. T. Nelson, Comptroller and Auditor General’s Office and Mr. D.C. Ó Griofa, Assistant Secretary, Office of Public Works.

Appendices to Report by ESB International

APPENDIX A

‘CONSTRUCTION PROJECTS PROCEDURES’ OFFICE OF PUBLIC WORKS 1988

OFFICE NOTICE 6/88

Memo to:- ________________________

CONSTRUCTION PROJECTS PROCEDURES

Arising from recommendations in reports issued by the Dail Committee on Public Expenditure, guidelines issued by the Department of Finance and the report of the Working Group on Cost Over-runs on Public Construction Contracts it is necessary to outline the procedures to be followed within the Office of Public Works in dealing with construction projects. These procedures have largely been operative for some time and in the light of experience in their operation they are now formally circulated.

1. APPRAISAL:

The first stage of any construction project is to determine a need and then by appraisal establish how best to meet that need. These operations would normally take place outside the Office of Public Works since most of the construction projects undertaken by this Office are initiated by another Department e.g. Revenue Commissioners (Customs Posts), Department of Social Welfare (Employment Exchanges), Department of the Marine (Harbour Works), Department of Justice (Garda Stations), etc. Other

projects (mainly provision of new office accommodation or refurbishment of existing accommodation) would either be initiated in this Office or be co-sponsored with another Department. In such cases the appraisal would be carried out by the relevant Division in this Office (Accommodation Division in the case of provision of office accommodation). In the process of determining the best method of meeting the need it may be necessary to consult the Department of Finance to establish the cost effectiveness of building as opposed to renting or purchase and to consult the relevant Projects Branch to obtain an order of cost estimate based on average building costs for the approximate area of accommodation found to be necessary (see 3 re estimates). Account should also be taken of the possibility of disposing of surplus property following the execution of the project.

On completion of the appraisal, administrative approval in principle to the project should be sought, if the estimate is within the delegated limits. Otherwise, Department of Finance approval in principle is necessary.

2. BRIEF:

Two specific problems in relation to briefing have been high-lighted by the Public Expenditure Committee:-

(a)delay on the part of sponsoring Departments in furnishing briefing material;

(b)an all too frequent tendency in sponsoring Departments to change their minds about requirements, sometimes more than once, during the planning process.

With regard to (a), apart from the disruption to programmes which can result from excessive delay, there can be financial implications especially in the case of rented buildings which can lie idle and be subject to rent while we wait for a fitting-out brief. In all cases where a need is to be met by renting space, details of requirements should be sought by Accommodation Division even before a building is identified as likely to be suitable. In those and other cases, sponsoring Departments when being asked for requirements should be given a time limit within which to furnish them. There should be follow-up action by the Accommodation Division or Project Co-ordinator as appropriate if the time limit is not met.

With regard to (b), a change of mind means a change of plan and that costs both time and money. Change to more elaborate or over ambitious demands can lead to abandonment or, at best, deferral of a scheme on grounds of cost. When seeking details of requirements, sponsoring Departments should be exhorted to keep demands to the minimum necessary to meet their needs. They should also be exhorted to get it right first time as we will not entertain subsequent requests for change. Guidelines in relation to nature of briefing required will be prepared.

3. ESTIMATES:

One of the factors which undoubtedly gave rise to what were loosely called cost over-runs was the method of preparing estimates. In the past we usually quoted costs in “constant” or “real” terms (i.e. cost at a specified fixed date) and it was not the practice to include in the estimates all the elements that went to make up the total cost of a job.

All estimates should now be expressed in what the Department of Finance call “current” or “cash” terms. This means current at the time of actual expenditure or in other works including for inflation up to completion of the job.

The elements to be included in estimates are:-

(a)Building cost.

(b)Inflation. (related to building costs)

(c)Consultants’ Fees

(d)V.A.T.

(e)Contingency Sum. (Not to be included in contract documents)

(f)Fitting out excluding furniture and floor covering.

It may be appropriate at appraisal stage to include site costs, if any, but at later stages it may not be appropriate to do so. It has been suggested that internal O.P.W. costs should be included in estimates. It has not yet been decided whether to do so or on what basis.

Should a revision of an estimate become necessary at any stage and for whatever reason, consideration should be given, as soon as the need for revision becomes apparent, to the necessity to obtain additional approval or sanction.

There are no hard and fast rules governing the amount of the contingency sum to be provided. Experience on previous contracts should be used as a guide. Some Quantity Surveyors consider 2.5% of estimated building cost to be appropriate for a reasonably straightforward building project. A consultant engaged by the Public Expenditure Committee used 3.5% in a sample case. Obviously in a Civil Engineering project involving underwater work the amount would be somewhat higher. A contingency sum should not be included in any of the contract documents.

4. EXTRAS AND VARIATIONS:

Extras and variations have been identified as major factors in cost over-runs on contracts. It is questionable whether it is correct to describe the additional expenditure incurred as a result of extra work or variations in the design as cost over-runs, nevertheless since they are a major factor in excesses on estimates, they are to be avoided if at all possible. The incidence of extras and variations can be reduced by good site investigation, thorough and well thought out briefing and the fullest possible design prior to tendering. The Report of the Working Group on Cost over-runs mentions “a thorough investigation of the site conditions”. It states too that “an inadequate brief will entail problems for the future involving design changes with extra costs as an inevitable consequence”. It also states that designers “should be requested to complete the design before the tender stage”.

It is acknowledged that much of the design of detail elements in a project is appropriate to post contract stage. Such design would not be expected to affect costs. what it is desired to emphasise is that all basic or major design work which would have a bearing on cost should be completed before tender stage, even if this means prolonging the design period.

Circular 1/83 states that “any extra costs on design changes found necessary should be offset by cost reducing changes in other areas”. Extensions of the contract period should be agreed only “for most exceptional and unforeseeable circumstances outside the control of the Contractor”.

Design changes, the need for which becomes apparent only during the course of the work, are usually accepted as a feature of building work but any such changes which involve extra cost except cases of absolute urgency, must have prior administrative approval. Such exceptional cases must be reported without delay. Any significant departure from the approved scheme, even where no additional cost is involved, should also be cleared beforehand.

The Department of Finance outline of procedures states “In any case where it appears that increased costs may arise, the project should be examined immediately by the design team in conjunction with the project head with a view to reducing costs or reallocating resources elsewhere in order to ensure that there is no overall increase in the cost of the project. Qualitative factors should not be neglected in any such reallocation. The architect/engineer should be required to clear any actions involving increased costs with the project head beforehand. No responsibility should be accepted for increased costs not so cleared beforehand:. Changes in the scope of the project, usually at the request of the Department(s) for whom the building is being provided, are less acceptable. They should not be necessary if the briefing had been given sufficient care and thought. Invariably, such changes involve extra cost not only in themselves but in other areas of the project as well which they affect. They can also produce a delay factor. Scope changes should never be implemented without first being processed by the Secretariat who will, if necessary, require the sponsoring Department to obtain Department of Finance sanction to any extra expenditure involved before the work is undertaken and before there is any commitment to it.

5. PROGRAMMES:

In the past, the design process has frequently proved to be a prolonged exercise, usually through no fault of the design team. There can be a variety of reasons for this e.g. a change of mind by the sponsoring Department with fundamental changes in the brief; delay on the part of the sponsoring Department in stating requirements; diversion of design staff to other more urgent work; uncertainty about availability of funds for the project. Any of these factors can affect the commitment of the design team to the project. Once a project has been approved in principle and the brief has been established, the design team should be asked to prepare a programme for the design period up to production of full contract documents.

That programme should not be varied except with the formal agreement of the relevant Division. All disciplines with an input into the project should be represented on the design team from the outset.

When a contract has been placed, the contractor should be required to produce a programme indicating his expected progress through the project. Side by side with this he should produce another programme, indicating the likely progress of expenditure over the duration of the project. The Q.S. should be asked for an independent assessment of that expenditure.

Copies of these programmes should be passed to the Project Co-ordinator to be used for regular reviews of progress right through the contract period. In that way and slippage can be identified when it occurs and corrective action, or adjustment if necessary applied.

6. CONTROLS:

It was in the area of control of projects that the Committee on Public Expenditure was most critical of this Office. In their report they pointed out that the main financial control exercised was on the basis that the actual outturn of the vote should be at or below the estimate for the year. They observed that “no basic Project Data Document is prepared for use in control procedures” and that “no regular and routine Management Controls are operated on projects which would facilitate control during design and construction”. Further they said that “there is no system within the O.P.W. at the moment to set out and routinely review the overall costs of projects including fit-out costs, extras, fees, rent on unoccupied space, inflation”, etc.

The programmes mentioned in 5 will play a significant part in the exercise of control on projects.

We are required by Department of Finance circular 1/83 to seek the final approval of the appropriate sanctioning authority (Board, Department of Finance or other Department as the case may be) to proceed with a project when a suitable tender has been identified but before a contract is placed. The approval to be sought at that stage will be for the estimated overall cost of the project. Excluded from that overall figure are costs associated with the project but which will not be a charge on the subhead of the Vote (be it that of O.P.W. or another Department) against which the actual project will be a charge. For example, interest charges or site costs will not be charged against the project subhead but will be accounted for elsewhere.

The estimated overall cost will, therefore, comprise the following items:-

Building cost (i.e. lowest suitable tender)

Inflation

Fees (including those already paid)

V.A.T.

Fitting out (whatever amount is not included in building cost)

Contingencies (3.5% building cost for the present)

In accordance with Department of Finance Circular 3.87 furniture and floor covering will be paid for by sponsoring Departments.

Following receipt of final approval and the placing of a contract, the Project Co-ordinator will prepare a Management Control Document setting out the estimated total cost under the headings listed above together with the construction commencement date, projected construction completion date and projected ready-for-occupation date, etc. (Sample at Appendix A). The total cost estimate and the progress of the project should be reviewed by the Design Team and Project Co-ordinator (or by the Cost Control Committee if there is one) at regular intervals of at least once every three months. Before such review and to facilitate it, the Quantity Surveyor should be asked to produce a detailed statement of expenditure to date, indicating variations and containing his assessment of the likely final cost. In the event of variations or extras giving rise to extra cost which cannot be saved elsewhere in the contract, the additional cost should be added separately to the Management Control Document and a corresponding reduction should be made in the contingency sum.

Should supplementary approval become necessary it should be sought when the need for it becomes apparent rather than at the end of the job. The Management control Document should be adjusted on receipt of supplementary approval.

There is now a firm instruction from the Department of Finance that all concerned with projects “should be required to proceed on the basis that proper management of the contract must ensure that costs are minimised and that the project will be completed within the budget cost”. There is also an instruction that changes should be adopted only in exceptional circumstances and that any extra cost involved should be offset by savings (see 4) and “if this is not possible the approval of the sanctioning authority for the design changes and the extra costs should be sought before any commitment is entered into with the contract or/ consultants in relation to such changes”. Such approvals

should be sought throught the Project Co-ordinator who will advise the Architect of them. Form as per appendix B should be used for this purpose.

Separate records of all changes and variations with cost implications, and also of all approvals and sanctions (by Board and Department of Finance or other Departments) should be kept by the Project Co-ordinator and should prove to be of considerable help when a final account is being prepared.

7. PROJECT CO-ORDINATOR:

In the reports and circular already referred to in this document and in a new booklet published by the Department of Finance called “An Outline of Government Contract Procedures”, the need for an official of the Departments/ Office carrying out a project to act in an overseeing capacity on the project is stressed. The activities of this official are not intended to lessen “the primary responsibility of the Architect/Engineer” in relation to the project. The Project Co-Ordinator’s concern would be with the administration of the project including progress and with cost control.

The Committee on Public Expenditure in their report envisage the Project co-ordinator as having responsibility “to ensure the overall achievement of cost and programme targets”.

The Co-ordinator must be seen as the representative of the Board in its capacity as the Client and should act in co-operation with the Design Team as their link with the Board. In order effectively to carry out his/her duties the Project Co-ordinator must be in possession of all relevant information relating to the project as it proceeds, and be in a position to relate that information to the basic data in the Management Control Document mentioned in 6 and be able to identify any deviation from target when it occurs.

Securing relevant information can best be done by regular meetings between the Co-ordinator and the Design Team at which progress and expenditure would be reviewed and by occasional visits to the site by the Co-ordinator by arrangement with the Architect/Engineer concerned. In addition relevant information should be passed on by the Architect/Engineer in the normal course.

The Project Co-ordinator working in co-operation with the Design Team is intended to secure the twin goals of completing the project on time and within budget.

8. CONCLUSION: A recent Government decision permits Departments to make their own arrangements for works where they can show that it is more economical to do so. Co-operation between all sections and disciplines involved in building projects is essential in order to demonstrate by performance that this Office is capable of giving a service of the highest standard.

UNA REDMOND

PERSONNEL OFFICER

APPENDIX A

Management Control Document

Project

Brief Due

Brief Received

Sketch Scheme and Cost Plan

Complete design by

Funds provided - amount

Invite tenders

Place contract

Building Work complete by

Fitting out complete by

Estimated Cost

APPENDIX B

PROJECT CHANGE SHEET (EXTRAS AND VARIATIONS)

Project Description:

Nature of Proposed Change:

Overall Cost of Proposed Change at Current prices: £

Proposed cost reducing changes elsewhere to meet additional cost:

Project Architect:

Date:

Project Architect:

The approval of the appropriate sanctioning authority has/has not been obtained to the changes outlined above at a net cost of

_____________________

Project Co-ordinator

/    /19 .

APPENDIX B

GOVERNMENT BUILDING CONSTRUCTION WORK

MANAGEMENT PLAN

PROJECTS MANAGEMENT PLAN

Contents

Part One

Preamble

Part Two

Identification of the

(i)Various stages in the evolution of project working

(ii)Targets to be achieved at each stage, and

(iii)More important procedures/principles associated with each stage.

Part Three

A series of exercises designed as a plan of action to help achieve more effective management of individual projects. This part includes an appendix containing copies of certificates for payment.

OFFICE OF PUBLIC WORKS

Projects Working

The collaboration of administrative Managerial and Specialist personnel assigned to

is necessary to undertake the Government approved programme for new building work.

Indeed the assistance and understanding of the staff support units such as Personnel and Organisation are necessary to achieve the stated aim and to demonstrate a capability “to provide services comparable in quality and efficiency with those obtainable elsewhere”.

MANAGEMENT PLAN

The Plan is basically the assembling and presentation of available information on the more important policies, practices and procedures of project construction working so that this body of information can more readily be interpreted and applied, by way of a series of control exercises, to the management of individual projects.

It will be recognised that the building construction work undertaken by the Board is varied and relies heavily on the organisation and management of various skills and personnel both within and outside the direct employment of the Board. In these circumstances the management of each and every project to a common Plan is essential. Without the operation of a common Plan it is more difficult for management skills to be improved and there can be less contribution to the shared aims of the publication ‘An Outline of Government Contracts Procedures’. These aims are:

-conformity with the official procedures laid down for Government contracts

-savings in the administration of contracts

-re emphasising the need for a greater consciousness of the importance of forward planning

-critical assessment of the feasibility of various alternatives

-monitoring projects during their execution, and

-taking the necessary steps in good time to ensure the avoidance of cost over-runs on public construction contracts

In short to help in the work of more efficient and effective management of projects working.

MANAGEMENT PLAN

for use by the

PROJECT CO-ORDINATOR

There is a need then for a formal management system to help the project co-ordinator in the work of management. The purpose of the Plan is to provide the central framework within which this need can best be met.

This is done by

-listing the various stages in the development of a project from inception to completion, and identifying the different elements or procedures connected with each stage - Part Two of the Plan

-providing the basis for a systematic and formal approach to the task of reviewing the effectiveness of the application of policy and procedure relating to each project at defined intervals - Part Three of the Plan.

The application of the Plan is intended to accord with

-the management system envisaged by paragraph 22 of the booklet An Outline of Government Contracts Procedures, issued July 1986, which says, inter alia, “it is essential that ONE experienced official should be designated with overall responsibility for the project”

-the emphasis on the exercise of greater personal responsibility as outlined on the White Paper, Serving the Country Better.

-the concept of better financial management, specifically the assignment of financial responsibility to managers, set out in the Guidelines for Fianancial Management issued by the Department of Fianance in 1985.

-Internal Management Procedures and Regualtions, specifically Office Notice      /87 - Building Projects Procedures.

METHODOLOGY

-Each new project becomes the subject of a Plan.

-The custody and completion of each Plan is the personal responsibility of the project co-ordinator and/or his nominee.

-The official files remain of course the repository of all documentation relating to the project.

-The plan identifies stages in the development of the project and sets out what has to be achieved at each stage. It records some of the options available and the procedures laid down to achieve progress.

-The Co-ordinator will exercise (and develop) his own management technique in appraising the suitability of the options chosen and the effectiveness of the procedures applied.

-Some of the tasks identified may seem to be trivial. They nevertheless serve as a reminder that some time must be allowed to complete them.

-There is nothing to stop a team member from thinking about his work in activities which have not yet been reached: but he does risk abortive work if he proceeds to an activity ahead of the team.

SUMMARY OF STAGES

1.PREPARATORY STAGE

1.RECEIPT OF DEMAND TO BUILD

2.IDENTIFICATION OF CLIENT

3.INCEPTION

4.FEASIBILITY

1. PREPARATORY STAGE

1.1 Receipt of Demand to build

The Planning Unit of the Property Branch should receive all requests for new accommodation, and decide on response, i.e.

If Property Branch decide that the demand should be met by building, an outline brief to build will be given to Projects Branch. (If the work is of a minor nature the relevant regional office will underake the work.)

Close liaison between the Property and Projects Branches is vital on such matters as:

1.2 IDENTIFICATION OF CLIENT

Projects Working in this office exists to carry out the government sponsored O.P.W. building programme and all decisions relating to the implementation of this programme will reflect the civil service system of management. The nature of this system however does not provide for the clear identification and exercise of the client management role in the same way as obtains in private practice.

Accepting there is overall Ministerial legal and constititional responsibility, in practical terms the client management role is exercised in our Projects Working for the Commissioners by different groups within the corporate framework. For instance in the main elements that go to make up project working the client management role may be exercised/delegated as follows:-

Another ‘project team member’ would likely be a representative from the user Department and invariably so if the funds for the work arise from that Departments Vote. In any case the client function is exercisable through the Project Co-ordinator.

The Contract is a legal agreement between an Employer and a Contractor and as far as this Office is concerned the Employer is always the Commissioners. The condition of a Contract provide that the Contractor shall carry out and complete certain WORKS in accordance with the contract documents and with the directions and to the reasonable satisfaction of the Architect. It is important, particularly for the Architect in carrying out this fundamental role, that the client management role is readily identifiable and there is an understanding of how it functions in Government contract working.

Fitting-Out:

Under Depart. of Finance Circular 3/87 effective from 1 January 1988 provision for the first fitting out of new accommodation built by O.P.W. and funded by that office will continue to be made in the O.P.W. Vote. The new Procedures outlined in the Circular include that we will

-approve specifications for the fitting out of premises (including obtaining the consent of a landlord where appropriate) and, if a Department wishes, undertake the fitting-out as agents of the Department on a repayment basis (including a charge for overheads)

-act in a supervisory capacity in relation to fitting-out of premises where OPW are not being employed on an agency basis.

1.3 INCEPTION

The early appointment by Senior Management of the Project Co-ordinator is essential

The co-ordinator is to be seen as the direct representative of the Commissioners. His/her responsibility is to ensure the overall achievement of cost and programme targets and to act in co-operation with the design team and as their link with the Board. To carry our his/her duties he must be in possession of all relevant information relating to the project as it proceeds. He/She must of course have the authority required to discharge his/her responsibilities.

Consideration of requirements

Consultants other than Architects who might be required:-

(i)Mechanical and Electrical Engineer - for design of electrical heating and plumbing services.

(ii)Quantity Surveyor - for preparation of cost plan bills of quantity.

(iii)Structural Engineer - for advice on and design of structural elements.

(iv)Archaeologist - for advice on conducting arch. excavation.

In all cases Consultants are only appointed when O.P.W. staff are declared to be unavailable and then only through the process of the in-house committees.

NOTE: Where an Officer is assigned to work to a project co-ordinator of a different speciality a formal relationship should continue with his specialist Branch with regard to training, assessment and specialist advice. In this context a person with a background in administration is also a specialist.

The design process has frequently proved to be a long exercise. The reasons for this can be (i) a change of mind by the sponsoring Dept. with fundamental changes in the brief (ii) delay on the part of the sponsoring Dept. in stating requirements (iii) diversion of design staff to other more urgent work and (iv) uncertainty about availability of funds. Once a project has been approved in principle and the brief has been established, the design team should be asked to prepare a programme for the design period up to production of full contract documents. That programme should be adhered to even in the face of uncertainty about the future of the project. If at the end of that period the project cannot proceed further for whatever reason, at least it will be ready to go to tender when whatever obstacle was hindering further progress has been removed.

1.4 FEASIBILITY

Carry out studies of user requirements, planning, design and cost etc. as necessary to reach decisions

Design considerations

In general the procedures set out in the Foras Forbartha Booklet: “National Standard Building Elements and Design Cost Control Procedures” (currently being revised) or the similar publication, “National Standard Control Procedures for House Construction Costs”, for housing construction should be followed. Good design standards and finish consistent with the need for financial constraints and economy, should always be sought. Extravagance in design should be avoided.

Where consultants are employed, they should be told at the outset the cost-limit for the job, which should be related to a specified brief. Where a design exceeds the cost-limits for the works, the matter should be referred back to the consultants for revisions so as to ensure compliance with the cost-limits.

In addition to user, cost and planning studies at feasibility stage, a through site investigation should be undertaken to establish the nature of ground conditions and the adequacy, capacity and location of existing piped and electrical services. Methods of dealings with ground conditions and improving or connecting to the existing services should be clearly specified in the tender documents. The unnecessary use of provisional sums or provisional quantities for dealing with this work, should be actively discouraged.

2. SKETCH PLAN STAGE

2.2. SCHEME DESIGN

-Final development of the brief.

-Full design of the project by Architect.

-Preliminary design by engineers.

-Preparation of cost plan and full explanatory report.

Every aspect of the design should be completed before the project goes for tender, so as to avoid increased costs later due to incomplete design at the pre-contract stage; any resultant delay arising therefrom tends to be offset by the avoidance of increased design costs later.

Much of the design of detail elements is appropriate to post contract stage. Such design would not be expected to affect costs.

Experience of previous contracts should be used as a guide in determining the amount of the contingency sum to be provided. A reasonably straight forward building project might attract 3½% of estimated building cost - obviously a Civil Engineering project involving underwater work would be somewhat higher. A contingency sum should not be included in any of the contract documents

BRIEF SHOULD NOT BE MODIFIED

AFTER THIS POINT

2.3 Planning Consent

Under the Local Government (Planning and Development) Act 1963 the Commissioners of Public Works must consult the appropriate local authority before undertaking the construction or extension of any building (other than a building to be constructed or extended in connection with State afforestation) and that if any objections raised are not resolved, the Minister for Local Government must be consulted.

Generally copies of the site map, ground plan and main elevation should suffice and the most suitable time to furnish these to the planning authority would be after agreement has been reached with the client on the sketch plans. The planning authority will have six weeks in which to consider them and if no observations are received within this period it will be assumed that they have no objections.

Staff involved in projects of building construction should familiarise themselves with the contents of Office Notice 2/77 dealing with the Local Government (Planning and Development) Act, 1963 and Office Notice 19/76 (Restriction in Distribution of Maps, Plans etc. of Public Buildings on account of security requirements).

3. WORKING DRAWINGS STAGE

3.1. DETAIL DESIGN

Detailed design of every part of the building by collaboration of all concerned.

Complete cost checking of designs

ANY FURTHER CHANGE IN LOCATION, SIZE, SHAPE OR COST WILL RESULT IN ABORTIVE WORK.

3.2 PRODUCTION INFORMATION

-Preparation of final production information, i.e.,

It is essential that there be complete satisfaction with every aspect of the design before tenders are invited. There should be no question of client-inspired design, etc. changes which would involve increased costs after a contract is signed.

Please refer to stage 4.5 - Awarding of Contract

Project Co-ordinator is required to conduct Periodic reviews of progress and to issue as necessary formal authority to proceed.

3.3 SPECIFICATIONS AND BILLS OF QUANTITIES

Paragraphs 8 (Contract Specification), 10 (Fixed Price Contract) and 18 (Bills of Quantity) of ‘An Outline of Government Contracts Procedures’ (OGCP) must be observed.

-The Bill of Quantity and Specification should contain a provision that the Board reserve the right to open all or any Bill of Quantity.

-Indicate method of dealing with errors in the Bill of Quantities - see para 19 of OGCP.

-Use wording of OPW Standard Preliminary Clauses; architect may alter or adopt in consultation with Contracts Division.

-Use of fixed Price Contract - para 10 of OGCP refers.

4. CONTRACT STAGE

4.1 CONDITIONS OF CONTRACT

Paragraph 9 (Conditions of Contract) et seq of OGCP to be consulted

-Conditions of Contract (GDLA 82) for public construction contracts or OPW minor works tender form and conditions

-For public sector civil engineering works - Institution of Engineers of Ireland or OPW minor works form.

-“One-off” conditions of contract suitable to a particular project subject to Department of Finance approval.

-Tenders not to be on a “time and materials” basis without prior Department of Finance approval.

-Fixed Price Contracts - para. 10, OGCP refers.

4.2 COMPETITION AND ADVERTISING

The procedures outlined in paragraphs 2 to 10 of the OGCP should be adhered to

-Except in exceptional circumstances and then only with the approval of the Department of Finance is the absence of competitive tendering permissable.

-The aim is to obtain at least five but in any event not less than three tenders.

-Restricted tendering procedures are outlined paragraph 3 of OGCP

-Additional information given to a tenderer in response to a query must be sent simultaneously to all the other tenderers.

-Specify tax etc. clearence in invitation to tender, paragraph 16 of OGCP. Also see 4.4.

-Tenders invited by advertising - E.E.C. Journal, National and/or Local Press as appropriate.

-International Obligations (E.E.C. Works Directives) - paragraph 6 OGCP refer.

-Use of Fixed Price Contracts particularly in times of decline in inflation levels - paragraph 10 OGCP.

4.3 RECEIPT AND OPENING OF TENDERS

-Attendance of person acting directly for Project Co-ordinator

-Disqualification of tenders (Late tenders not to be opened)

-Opening of Bills of Quantity and examination by Quantity Surveyor - normally only the Bill of lowest suitable tenderer is opened - paragraph 19 of OGCP to be consulted.

4.4 EVALUATION OF TENDERS

Paragraph 20 (Evaluation of Tenders) of the OGCP to be consulted

SUITABILITY refers to capacity, organisation, experience, quality of previous work, financial standing relative to the contract and compliance with any specifications or quality standards laid down for the contract.

In considering the most ECONOMICALLY ADVANTAGEOUS tender factors such as period for completion, maintenance costs, technical merit, cost effectiveness, etc. may be taken into account if particular circumstances warrant it.

-All tender prices in foreign currencies should be converted to Irish pounds at the time of adjudication for the purpose of assessing tender prices.

-Performance Bonds may be required.

-Evidence that a contractor or sub contractor is up-to-date with PAYE, PRSI, VAT and corporate taxes to be obtained before a contract is awarded under the terms of the tax clearance certification scheme - para. 16, OGCD.

-Dealing with qualifications to tender - see para. 17, OGCP.

4.5 AWARDING OF CONTRACT

-Final approval of the appropriate sanctioning authority (Bord, Department of Finance or other Department as the case may be) to proceed with the project is required when a suitable tender has been identified but before a contract is placed. - Department of Finance Circ. 1/83

-G.C.C. approval if single tender or pass over of a tender is involved. Contracts of £20,000 and upwards.

-The approval to be sought at this stage is for the estimated overall cost of the project. Excluded are costs associated with the project but which will not be a charge on the Subhead of the Vote (whether O.P.W. or another Department) against which the actual project will be a charge. For example, interest charges or site cost will not be charged against the project subhead but will be accounted for elsewhere.

-Preparation of documents for execution of formal Deed of Contract by Contractor and Employer. Articles of Agreement to be executed within ten days of their issue to Contractor.

-The estimated overall cost will, therefore, comprise the following items:

Building Cost (i.e. lowest suitable tender)

Inflation - increases in cost of wages, materials and expenses

Fees (Including those already paid)

V.A.T.

Fitting out (whatever amount is not included in building cost)

Floor Covering

Furniture

Contingencies (3½% of building cost for the present, August 1987)

5. PAYMENTS STAGE

5.1. AUTHORITY TO SPEND

-provision in the estimates for a project does not imply Department of Finance sanction and does not of itself convey authority to spend monies on that project unless Department of Finance has so specified.

-unless otherwise stated the Department of Finance sanction is to the total cost of the project including fees and expenses of Consultants employed on the project. See Stage 4.5.

-increases in accordance with the standard Price Variation Clause do not require sanction whatever their size.

-if the amount to be spent is likely to exceed the limit of the sanction (whether specific or delegated) then specific sanction to the expected total cost should be obtained in good time to enable claims to be paid promptly.

The Board has delegated sanction from Department of Finance as follows:-

Construction Work

Expenditure on individual construction projects require Department of Finance sanction only when the estimated cost of the project exceeds £2 million.

Increases on Construction Work

Extras and variations to a project which itself costs over £1 million require Finance sanction where the increase is over 10% of the contract price. Sanction for extras is not required where total project cost does not exceed £1 million - but increases over 10% of the contract price to be brought to the attention of Department of Finance.

On receipt of the Dept. of Finance sanction it is essential that a note on the project with an estimate of possible expenditure in the current and following years be made in the Estimates. If money is not provided for a project in the Estimates it will not be possible to go ahead with it.

5.2 CERTIFICATION OF CLAIMS

-interim certification to be executed as set out in paragraph 35(a) of the Conditions of contract.

-the Architect or Consultant Architect to forward all interim certificates through the Administrative Division who will authorise payment.

-when the certified total approaches the aggregate of the Contract amount plus approved extra expenditure, the Architect when submitting each further certificate to explicitly confirm in writing that the uncertified balance remaining is sufficient to complete the works and meet any other liabilities of the contractor after allowing for any credits that might arise in the final account. This is to avoid over certification.

-Retentions are intended as a safeguard to secure the proper completion of the contract and to provide a reserve which may be available for making good any defects which may appear before the expiry of the prescribed period after retention.

-payments direct to sub-contractors under assignments and to nominated sub-contractors in default of payment by the main contractor to be dealt with as outlined in paragraph 9, O.N. 3/87.

-all certifications of claims should include VAT as necessary and at the appropriate rate.

-retention of income tax at the standard rate on fees paid.

THE SUBHEAD OF CHARGE TO BE DECIDED BEFORE ORDER OR CONTRACTS ARE PLACED AND SHOULD BE CLEARLY INDICATED WHEN SENDING CLAIM FOR PAYMENT.

5.3 PAYMENT OF CLAIMS

-if Claims have queries on an account they will forward all of them at one instance.

-the necessary supporting documentation to be furnished to accounts (e.g. sanctions, approvals, contract documents, tax cards, etc.)

-all officers should avoid making forecasts/promises to contractors as to date or payment of an account.

6. SITE OPERATIONS STAGE

6.1 PROJECT PLANNING

All public contracts should be monitored carefully during execution.

The contractor to be required to produce a programme indicating his expected progress through the project. Side by side with this to produce another programme indicating the likely progress of expenditure over the duration of the project. The Q.S. to be asked for an independent assessment of that expenditure. These programmes to be used for regular reviews of progress and corrective action, or adjustment if necessary, applied.

Arrangements should be made to carry out the necessary and sufficient supervision of the works during construction to ensure that the works are being carried out as required under the specifications and within the time and cost limits for the contract.

In any case where it appears that increased costs may arise, the project should be examined immediately by the design team in conjunction with the project coordinator with a view to reducing costs or reallocating resources elsewhere in order to ensure that there is no overall increase in the cost of the project. Qualitative factors should not be neglected in any such reallocation. The architect/engineer should be required to clear any acitons involving increased costs with the project coordinator beforehand. No responsibility should be accepted for increased costs not so cleared beforehand.

Where, despite these measures, increased costs do arise, the approval of the Department of Finance for extra costs (excluding legitimately payable increases under the conditions of contract) should be obtained. Any application for such approval should outline the reasons for the excess, along with a detailed explanation of why it was not possible to take appropriate measures to offset the increased cost.

6.2 OPERATIONS ON SITE

- The project architect or engineer as the case may be should be required to carry our the necessary and sufficient supervision of the works during construction to ensure that the works are being carried out as required under the specifications and within the time and cost limits for the contract. The allocation of experienced staff to co-ordinate and oversee overall strategy does not of course lessen the primary responsibility of the architect/engineer in this regard.

- The total cost estimate - see stage 4.5. - and the progress of the work should be reviewed at regular intervals of at least once every three months.

- Before each such review the Quantity Surveyor to supply a detailed statement of expenditure to date, indicating variations and containing his assessment of the likely final cost. Please refer to previous stage - 6.1.

- In the event of variations or extras giving rise to extra cost which cannot be saved elsewhere in the contract, the additional cost to be added separately to PMP-form 10 and a corresponding reduction made in the contingency sum.

- Should supplementary approval become necessary it should be sought when the need for it becomes apparent rather than at the end of the job.

- Proper management of the contract should ensure that costs are minimised and the project is completed within the budget cost. Changes should be adopted only in exceptional circumstances and any extra costs involved should be offset by savings. if this is not possible the approval of the sanctioning authority for the design changes and the extra costs should be sought before any commitment is entered into with the contractor or consultant in relation to such changes. PMP - form 11 to be used for this purpose.

6.3 COMPLETION

-The fitting out and furnishing arrangements should be as set out in Department of Finance Circular 3/87, referred to previously at stage 1.2

-The Property Branch will be aware in advance of the date when new accomodation is occupied so as to ensure that we are not left with surplus rented accommodation.

-The final certificate to be completed only when all outstanding items of work remaining after the “Practical Completion” stage and all work postponed on the written instructions of the Architect have been finished and all defects, shrinkages and other faults for which the contractor is liable have been made good.

7. REVIEW STAGE

7.1 PERFORMANCE ANALYSIS

-Analysis of job records

-Inspections of completed building

-Studies of building in use

-Cost over-runs

-Performance of Consultants

Management Plan

Part Three

A series of exercises designed as a plan of action to help achieve more effective management and based on -

-the setting of target dates to promote the practice of forward planning.

-the appraisal of targets and the recording of dates when target levels are achieved.

-the recording of dates, and in some cases brief details, relating to decisions taken which are critical to the management of the project.

-the management of budgetary and expenditure information so as to avoid cost over-runs particularly those for which personal responsibility cannot be established.

If the exercises are to be effective as a plan of action they must be undertaken at the appropriate time. They must also have regard for the notes in the preamble (part one) and be applied within the guidelines set out in part two.

Part Three has an appendix containing copies of a number of certificate of payment forms which have been re designed and will come into general use as part of these exercises.

Project Management Plan

PMP - Form 1

Appointment of Coordinator

Title of Project:

........................................................

........................................................

........................................................

........................................................

You are hereby designed with overall responsibility for the above project and you will have the title ‘Project Coordinator’. The duties of coordinator should be approached as set out in the guidelines of the preamble (part one) and undertaken in accordance with the procedures as set down in Part Two.

The duties of coordinator also require that the plan of action in Part Three be duly completed.

The plan of action is based on the setting of target dates where applicable and on the recording of actual dates of achievement of target levels. Otherwise the plan of action requires the recording and advising of precise information critical to the management of the project.

As a first step you should complete the target dates as shown in the plan of action up to pre-contract stage. We can then discuss and agree them.

This Management Plan document is your personal responsibility to the extent that it should remain always in your custody throughout the duration of the project unless you are assigned other full time duties meanwhile. At the completion of this project or your reassignment the Plan should be returned with a report. Sight of the document may be requested by me from time to time.

_________________________________

PRINCIPAL OFFICER

PMP - Form 2

Preparation of Outline Brief:

(Stage 1.1 refers)

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

PMP - Form 3

Appointment of Architect and other Consultants

(Stage 1.3 refers)

1.Appointment of Architect/Consultant Architect

Target Date ................................................................................

Actual Date ................................................................................

2.O.P.W. Architects (name) .......................................................

If not possible for O.P.W. Architect to undertake the design Consultant Architect appointed from panel of Consultant Architects.

...................................................................................................

...................................................................................................

O.P.W. (monitoring) Architect .....................................................

Details of commission agreed with Consultant Architect.

3.Electrical and Mechanical appointments

O.P.W. Electrical & Heating Engineer (name) .............................

Consultant: ...............................................................................

Details of Commission agreed with Electrical & Heating Consultant

...................................................................................................

...................................................................................................

...................................................................................................

4.Appointment of Structural Engineer (if any)

Details (name and details of commission agreed)

...................................................................................................

...................................................................................................

5.Appointment of a Q.S. as authorised by Contracts Division.

Details (name and details of commission agree if our own Q.S. section cannot undertake the work)

...................................................................................................

...................................................................................................

6.Client/user Department to appoint Liaison Officer to provide the information required for planning

Name .................................................. Tel No ..........................

7.Arrangements for meeting to brief Architect; preparation of briefing information.

Date of initial meeting ..........................

Project Co-ordinator to arrange for attendance and the taking of minutes.

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

Feasibility Studies

(Stage 1.4 & 1.5 refers)

PMP - Form

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

PMP- Form 5

Completion of Brief

(Stages 2.1 and 2.2 refers)

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

PMP - Form 6

PMP - Form 7

Completion of Contract Documents

(Stages 3.1, 3.2 and 3.3 refer)

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

PMP - Form 8

Department of Finance Sanctions

PMP-FORM 9

RECEIPT OF PLANNING APPROVAL

(Stage 2.3 refers)

PMP - Form 10

Total Estimated Cost

Project: ...................................................................................................

...................................................................................................

Completion date ....................................................................................

File No ...............................

Project Architect

Final approval has been obtained under Department of Finance/Board sanction date .............. for an estimate overall cost of £ .............. for the above project. The breakdown of the total estimated cost is comprised as follows. All sums are inclusive of VAT

PMP Form - 11

Project Change Sheet (Extras and Variations)

Project Description: ...................................................................................................

..................................................................................................................................

Nature of Proposed Change: .....................................................................................

..................................................................................................................................

..................................................................................................................................

PMP Form - 1

Expenditure Control

Monthly summary of Payments

The co-ordinators initials and date placed against each entry indicates that the necessary programmes and reviews specifically those referred to at stages 6.1 and 6.2 have been undertaken and the expenditure levels are being maintained in accordance with the time and cost limits for the job.

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

PMP - Form 13

Operation of Contract

(Stages 6.1, 6.2, refer.)

PMP - Form 14

Final Stage

(Stages 6.3 & 7.1 refer)

NOTES

(PMP forms issued/due back/received back. reports due/received/reminders issued.)

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

...................................................................................................

Telephone numbers, names.

APPENDIX

Issue of Certificates for Payment

The issue of certificates for payment as determined by the architect/engineer are central to any exercises for controlling the cost and time limits for the job. The forms used for certifying payments to contractors have now been redesigned to take more fully into account the requirments of section 35 of the Conditions of Contract. The forms will come into general use as part of the exercises of the management plan.

Copies of these forms, titled as below, are attached.

1Interim Certificate for Payment

2Appendix to Interim Certificate

3Certificate of Practical Completion and for payment of 1st Half/Final retentions on Contract

4Appendix to Practical Completion/Retention Certificate.

Interim Certificate for Payment

Title of Project (including location)

Contractors name and address

I hereby CERTIFY that up to ________ day of _______________ 19 _____ the Contractor named above executed work and delivered materials on foot of the above contract to my satisfaction to the full value stated at A above and that less retentions as provided in the Contract and including V.A.T. he is now entitled to the sum of £______________ being the 2nd payment on account on this contract.

I confirm that the uncertified balance is sufficient to cover any credits that may arise in the final account.

A list of the amounts included in respect of Nominated Sub-Contractors is Appended.

Signed ________________________ Architect/Engineer

Date __________________________

Appendix to Interim Certificate

Certificate of Practical Completion and for

Payment of 1st. Half/Final Retentions on Contract

Title of Project including location

Contractors name and address

I hereby CERTIFY that the WORKS under the above contract reached practical completion on the _____________ day of __________________ 19 _____, and that the period of maintenance began on that day,

amounting to _________________________________________________________________ pounds _____________________ pence may now be paid.

A list of the amounts included in respect of nominated sub-contractors is appended herewith.

Signed ____________________________________ Architect/Engineer

Date ______________________________________

Appendix to Practical Completion/Retention Certificate

APPENDIX C - PROJECTS REVIEWED

C.1 PROJECTS

Nature of Project

Decoration and internal adaptation works by the Office of Public Works for the Department of Foreign Affairs.

Vote for Public Works and Buildings.

Reasons for Increased Expenditure

1.Extras decided upon when work had commenced (work that would have been necessary over the following few years)

2.Unusual circumstances in which work was carried out, i.e outside of normal working hours and at weekends.

Comments by Committee of Public Accounts

There was an apparent lack of planning for the renovation works.

The practice of entering into a contract for a certain sum knowing that in all probability that the sum would be greatly exceeded should not be condoned.

Nature of Project

Improvement works by the Office of Public Works for the Department of Foreign Affairs.

Vote for Public Works and Buildings.

Reasons for Increased Expenditure

Extra works were found to be necessary during the course of the contract.

Comments by Committee of Public Accounts

There was an apparent lack of planning for the renovation works.

Nature of Project

Extension, by the Office of Public Works for the Department of Posts and Telegraphs, to telephone exchange.

Vote for Public Works and Buildings.

Financial Details

November 1979 Contract awarded.

Additional remedial works cost £118,000

Reasons for Increased Expenditure

Proposed upward extension of building could not be supported on the existing structure despite a specification to this effect in the construction of the original building.

Comments by Committee of Public Accounts

Problems were due to faulty workmanship in construction of the original roof basic design and specification for which were prepared by the Office of Public Works with the specialist contractor completing the design. There was a lack of supervision during construction. Procedures have since been changed in that consulting structural engineers are now employed on such jobs which was not the case during the original contract.

Nature of Project

Design of new embassy by the Office of Public Works for the Department of Foreign Affairs.

Vote for Public Works and Buildings.

Financial Details

Expenditure on consultant’s fees of £472,374.

Reasons for Increased Expenditure

Approval was sought in 1982 for expenditure of £6.0m on the project. Plans were subsequently revised to a more modest layout and size of building, the cost of which was estimated at £2.85m.

Comments by Committee of Public Accounts

A more expensive original plan was agreed and subsequently revised with the result that excessive fees based on the original plans were paid to the consultants involved.

Nature of Project

Restoration works and construction of a new conference hall (not proceeded with) by the Office of Public Works.

Vote for Public Works and Buildings.

Reasons for Increased Expenditure

1.Delays caused by strikes, bad weather, extent of additional work and general rate of progress.

2. Price variations (£4.31m).

3. Contingencies, i.e. payments arising from unforeseen circumstances.

Comments by Committee of Public Accounts

Inadequate allowances were made for inflation. It should have been evident to the consultants involved that special circumstances and/or problems would arise in a 300 year old building and due allowances should have been made.

Nature of Project

Extension to Valentia Island Radio Station by the Office of Public Works for the Department of Tourism and Transport.

Vote for Public Works and Buildings and Vote for Communications.

Reasons for Increased Expenditure

1.Extra works ordered by Department of Communications.

2. Additional works found to be necessary during the contract.

3. Impact of price variation and provisional sums.

Comments by Committee of Public Accounts

Additional work was undertaken outside of normal tendering procedures. Similar work elsewhere was carried out at a considerably lower cost. There was a serious breakdown of liaison between the Office of Public Works and the Department of Communications.

Nature of Project

Provision by the Office of Public Works for the Department of Justice of 60 three bedroom houses for married prison officers and a building to provide accommodation for 60 single officers.

Vote for Prisons.

Reasons for Increased Expenditures

1.Price variation and increases (£1,375,266).

2.Variations (£142,626, of which £87,231 arose from strengthening of substructures due to boggy site conditions) and extra requirements (£535,590, of which £376,300 was due to changes in the heating system).

3.Increased preliminaries due to extension of the contract period (£62,000) with resultant increase in fees.

Comments by Committee of Public Accounts

Department of Justice decided to build houses on a site which proved to be unsuitable and required unforeseen additional surveys and preparatory works.

There are doubts that the heating system chosen was the only alternative in the circumstances.

Nature of Project

Procurement of 132 electrically operated custom engineered steel doors.

Vote for Prisons.

Financial Details

£395,000 spent on doors for a proposed high security prison which has been deferred indefinitely.

Reason For Expenditure

The project could only proceed as planned by placing the order for the doors before the commencement of the main building due to long delivery period.

Comments by Committee of Public Accounts

Considerable expenditure took place while there is no evidence that the proposed high security prison building project will be undertaken in the foreseeable future.

Nature of Project

A major scheme of development, by the Office of Public Works for the Department of Fisheries, at Howth Harbour.

Vote for Fisheries.

Financial Details

Reasons for Increased Expenditures

1. Changes in the original plans.

2. Additional boring and excavation works.

3. Price inflation.

Comments by Committee of Public Accounts

Provisions for inflation were not built into the cost estimates although they were built into the contract.

Additional works were included by the Department of Fisheries as the work progressed.

The original plan and preparatory work was not fully carried out.

Nature of Project

Erection by the Office of Public Works for the Department of Justice of a prefabricated building to meet the short-term acommodattion needs of the staff.

Vote for Prisons.

Financial Details

Reasons for Increased Expenditures

Delays in tenders occurred due to a policy decision to upgrad the heating and safety requirements leading to additional and more expensive work. Other delays arose from defective work and building was not available until May 1983.

Comments by Committee of Public Accounts

A four year delay in completion of the project is unacceptable. There was a serious lack of planning and control, and liaison between the Department of Justice and the Office of Public Works left a lot to be desired.

C.2 SUMMARY OF REASONS FOR INCREASED EXPENDITURE

1.Inadequate briefing by Client Departments.

2.Changes in brief when contracts have already been awarded.

3.Inadequate allowances for inflation, variations, fees, VAT and contingencies.

4.Inadequate costing of prime cost items.

5.Impact of provisional sums.

6.Lack of planning and control.

7.Inadequate planning and preparatory work.

8.Scope of work not sufficiently investigated prior to contract award.

9.Inadequate site investigations.

10.General rates of contractors’ progress.

11.Contract extensions granted on the basis of bad weather.

12.Fee expenditure on projects either reduced in scope or abandoned.

13.Increased fee expenditure due to increased contract prices.

14.Poor liaison between OPW and client.

15.Delays by OPW in providing cost information to client.

* Reduce building cost or contingencies by similar amounts.