Infrastructure and Construction Report eolas issue 50

Emerging trends in infrastructure

Infrastructure and construction report

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infrastructure and construction report

Emerging trends in infrastructure

Minister Michael McGrath TD: National Development Plan priorities for 2022 The National Development Plan (NDP) published in October 2021 represented the largest such plan in the history of the State. The initial period of its rollout will be pivotal in consolidating the progress already made, and most importantly, in delivering the infrastructure to support our future climate, social, and economic requirements, writes Minister for Public Expenditure and Reform Michael McGrath TD. Effectively delivering on investment of this magnitude requires the necessary capacity in our construction sector, delivery-focused oversight and governance structures, the adoption of technology and sound public policy.

Reforms We have already put in place numerous reforms to support delivery, governance, and the implementation of capital projects and programmes. We have included professionals from industry early in the project lifecycle process to provide additional insight to support a rigorous decision-making process.

In December 2021, I announced the introduction of the new External Assurance Process (EAP) for major capital projects which allows independent external experts to scrutinise investment projects. To support the EAP, I have also established a new Major Projects Advisory Group (MPAG). The first meeting of the MPAG took place in January and will bring on board independent experts to further strengthen project management and support my department in its project assurance role.

The Project Ireland 2040 Delivery Board, the core function of which is to track the delivery of projects, is comprised of the secretaries general of the main capital spending departments. There will almost certainly be delivery challenges as we ramp up investment. To respond to these challenges, the Board will focus on the delivery

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of infrastructure projects on time and on budget. The Government also provided in the NDP for the addition of up to five external members to the Board to bring additional expert knowledge and an enhanced challenge function to the deliberations of the Board.

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Along with these reforms, we will continue to report on project delivery through the work of the National Investment Office (NIO) in my department. The NIO will collate data on the planning and delivery of projects through the MyProjectIreland investment tracker. Our publicly available and detailed tracker provides information on over 350 major capital projects across all regions and highlights the pipeline and progress of such projects. This monitoring is intended to show taxpayers that we are achieving value for money and improving project delivery.

Capacity and digital adoption Strengthening our governance and oversight structures is only one part of the measures we need to take. Ensuring that capacity in the construction sector is available to meet demands is one of our primary objectives for 2022. A competitive,

“The revised NDP published by the Government is a robust and ambitious plan that will have a transformative impact on this country’s climate, economic and social development.”

Minister for Public Expenditure and Reform Michael McGrath TD

dynamic, and sustainable construction sector is needed to build the infrastructure promised by our ambitious NDP. The Innovation and Digital Adoption Subgroup, as part of the wider Construction Sector Group (CSG), will play an active role in promoting this necessary initiative.

Following consultation with members of the CSG, several cross-cutting issues will be tackled in 2022. These include the improvement of procurement, the supporting of innovation and digital adoption through the Build Digital Project and the better engaging with government departments to put in place the required skills and expertise.

Innovation and digital adoption within the construction sector are being supported with a range of actions to be delivered using the Government’s collaborative approach and through continued engagement with industry representatives via the CSG. One such action is to improve delivery using digital technologies. In November 2021, I announced that a consortium led by TU Dublin would be awarded €2.5 million in grant funding over a five-year period to deliver the Build Digital Project. This project will provide guidance and leadership on the digital tools, standards and training required across the construction sector to increase productivity and sustainability.

The Disruptive Technology Innovation Fund (DTIF) is a €500 million fund being rolled out over the 10-year period of the NDP. A total of €235 million has been allocated to 72 projects over the three DTIF calls to date. The deadline for applications for a fourth call was 10 February 2022.

Enterprise Ireland, through the actions of the CSG Innovation and Digital Adoption Subgroup, will also establish a Construction Technology Centre in 2022 to identify the optimal consortium of research performing organisations in the Irish ecosystem that will deliver productivity and sustainability for the Irish construction sector.

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Emerging trends in infrastructure

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In addition, the Supporting Excellence Action Team (SEAT) report, published alongside the NDP, examined the capability of the public service to deliver a largescale capital programme. The 34 actions included in the report will all be progressed in 2022 with the aim of boosting delivery capability in individual sectors, supporting excellence from the centre and improving coordination to support excellence on a system wide basis. Examples of measures include the development of the Office of Government Procurement’s Commercial Skills Academy, the further enhancement of our public procurement framework, as well as the introduction of new legal and planning reforms.

Conclusion The revised NDP published by the Government is a robust and ambitious plan that will have a transformative impact on this country’s climate, economic and social development. Our focus now must be on effective delivery of this investment. 2022 is a pivotal year in bringing forward critical reforms to remove bottlenecks in the system and to build capacity in both the public sector and private industry.

An innovative, dynamic, and responsive construction sector will be crucial in the delivery of the NDP. I will continue to support and engage with the sector to sharpen our focus on delivery throughout 2022 and help ensure success in our common endeavour. I am confident that working together we will meet the needs of our citizens in a way that supports our climate ambitions and our economic recovery from the Covid-19 pandemic.

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Digital twins: A digitally assured future for our infrastructure

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Infrastructure organisations are renewing their efforts to digitalise. We are seeing data, analytics and new technologies being used to dramatically improve the planning cycle. We are seeing infrastructure owners and operators starting to build digital into their operations, from integrated asset management systems through to new payment systems, writes Jenna Davis, Associate Director of Infrastructure and Government at KPMG Ireland.

KPMG in collaboration with Centre for Digitally Built Britain produced a report

on the value of information in the construction sector that estimated the capex BIM savings to be 1.5 per cent-3 per cent and 7.5 per cent-14 per cent operational savings. These enabling benefits in an industry with slim margins are too great to be dismissed in the context of time, cost and risk.

support platform that need to be aligned

In developing a blueprint for a digital twin, organisations should be asking themselves what their role is, what decisions they need to make, what data capabilities do I need to achieve this, what organisational capabilities do I need to do this and then lastly what type of Digital Twin do I really need? What is key to any form of digital twin, as with any technology, is the capability of the people, supported by the necessary systems and controls, that need to use it. This applies to the end users and those who will manage the data processes.

only as good as the underpinning data

to business outcomes and any investment will need to be mindful of the pace technology development moves so organisations should develop a nimble approach that they can flex as new technologies come to market. And as with any digital tool, the digital twin is and information management framework; don’t just buy the shiny tech, invest in the people and data to truly

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Talk of digital twins is becoming common place however confusion remains over what a digital twin is and therefore what is the right route for organisations to develop their digital twin capability. This is unsurprising as the answer is that a digital twin is a digital representation of your assets or network and representation is just that.

Whilst it could be a fully digitally interactive or even virtual reality multidimensional physical model embedded with IoT sensors and asset service history, it may also be a performance simulation of how your infrastructure, or just critical parts of it performs that is modelled on entirely different parameters than the physical design. It may encompass other forms of digital planning or decision support tools across key aspects of the business such as capital portfolio planning and management based on project data.

enable a digital future.

E: jenna.davis@kpmg.ie W: www.kpmg.ie

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Emerging trends in infrastructure

Achieving sustainable infrastructure through asset management infrastructure – at least as it may have been conceived or indeed approved only a short time ago.

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The good news is that the principles that define asset management are key to making the necessary decisions but changes from the traditional approaches and decision support tools are needed.

The principles of asset management are key to making the necessary investment decisions to transition to sustainable infrastructure but changes from traditional to whole life costing approaches and agility to cope with short- and long-term changes are needed, writes Matthew King, Head of Infrastructure Asset Management, Director Infrastructure and Government at KPMG Ireland.

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Asset management has long been the practice of balancing investment decisions across the creation of infrastructure assets and the management of existing ones to achieve the best value over the life of the assets.

Historically there have often been competing outcomes that require value and outcome objectives to be balanced against cost. However, whilst some industries have long had environmental performance objectives, the imperative to consider the full suite of ESG is now clear to all. Environmental factors and governance practices have long been discussed by the infrastructure sector.

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It is the social focus where the balance of economics and engineering now come to the fore; how do we appraise the social benefits of investment in tandem with the asset lifecycle? Asset management principles aid this dynamic by setting the strategic objectives so that the line of sight to specific assets in operation is clear and aligned. As such, asset management becomes a tool to deliver sustainable infrastructure, with the societal benefits as a key measure.

Furthermore, we are in a period of seismic change driven by climate change, the pandemic and global political and economic patterns. How we live, work, travel has changed and whilst we do not know how much of the change will stay for the long term, the demand on our existing infrastructure has changed and questions are raised on the investment case for new

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Our infrastructure systems are more connected than ever, and these connections are fundamental to achieving sustainable infrastructure.

At the national level, strategies and government policy are needed to foster collaboration across industries and joined up planning and decision making.

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Whole lifecycle costing to inform the capital injections needed to achieve sustainability targets.

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Asset policies to deliver on sustainable strategies consistently across sectors.

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The balance between opex and capex – how to use existing infrastructure effectively in the circular economy.

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What is the return on investment on capex vs opex funding? How benefits are defined and measured is key and needs to be consistent.

Capex could need longer term incentives to drive the right behaviours and decisions in construction.

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Future proofing – integration of new assets and manage asset obsolesce proactively and responsibly.

Ireland has a maturing asset management capability complimented by the growing capital projects capability to deliver the Project Ireland 2040. With these skills and ambition, the infrastructure sector will be an important catalyst, and needs to be ready to take on the challenge and lead the change at the most senior level in our infrastructure organisations.

E: matthew.king@kpmg.ie W: www.kpmg.ie

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Beyond the business case: The transition to delivery needed to bridge the skills gap. Public entities will also need to review their internal capability to evolve from planning teams to capital project managers leading the execution stages.

Intelligent KPIs

Complex and major projects can take over a decade to cycle through inception, detailed design, and delivery to get to the operational phases.

Societal needs, uncertainty of future demand as climate change progresses, and significant world events such as a pandemic add layers of challenge to large scale infrastructure projects as these drive changes in need over that time. The ability to manage change and remain agile as projects transition from design to delivery will be the differentiating factor for successful infrastructure investment going forward.

To achieve the ambitions of Project Ireland 2040, as detailed in the National Planning Framework (NPF) and the National Development Plan (NDP), there are three key aspects to consider to ensure appropriate governance yet enable agility:

Complex capital projects require a multitude of resource and expertise with the sector. Procurement strategies developed as part of the initial business case stages should be regularly reviewed to identify gaps and opportunities to further align with the current supply chain environment and updated NDP. There is also a need to ensure an external assurance process (Update of the Public Spending Code: Guidelines for the External Assurance Process for Major Public Investment Projects; effective 17 November 2021) is included as part of any contracting arrangements.

Public and private engagement Public entities at a national and local level, such as government departments, local authorities, state agencies, devolved agencies, semi-state companies and approved independent bodies are all responsible for the delivery of capital programmes. These entities need to work with the supply chain to communicate the increased capability and capacity needs with realistic timetables to allow enough time to plan, upskill and respond to project tenders without potential delay to execution. A strategic procurement strategy that engages the private sector early at home and abroad will be

The overriding theme for publicly funded major capital projects will be managing transition and change. Transition from planning to execution will see change in terms of what was planned, sector change in the demand for more skills and people; and change in what is actually needed now. Smart procurement, clear communication and meaningful measures will allow the ability to anticipate change and react effectively to manage the outcomes.

These changes could manifest as scope variations or amendments to government policy or new regulation.

Infrastructure projects are long term investments delivered often over decades. We must be agile to avoid under delivery on the outcomes that Ireland needs from its infrastructure and at the same time exercise appropriate governance and change processes to oversee them.

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The Public Spending Code also brought in significant changes to the governance over project development and project delivery. That will delay project development, but it is making sure projects being brought to market will have more developed scopes and more realistic cost estimates. We need to ensure that it also allows projects to remain agile and responsive to societal changes. Governance needs to be made to work effectively for the project and be seen as a positive agent for change for the better.

Strategic procurement

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The Public Spending Code (PSC) was first published in 2013 as a structure to ensure value for money in public expenditure particularly in major infrastructure projects, writes Jenna Davis, Associate Director of Infrastructure and Government at KPMG Ireland.

Key performance measures form the structure of effective governance in project delivery. To understand the actual status and performance of a delivery team, KPI measures on schedule, costs and risk are needed but measures that reflect progress towards meeting the ultimate objective of the project will maintain clarity for decision making, particularly at board level. You can have a project delivered on time and on budget, but we also need a stand back to make sure it has met the need identified in the first place. These measures need to be incorporated at procurement stages so that external assurance throughout can be applied effectively to add insight during delivery and as part of a post execution review.

E: jenna.davis@kpmg.ie W: www.kpmg.ie

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Emerging trends in infrastructure

Accelerating the delivery of new affordable homes John Coleman, Chief Executive of the Land Development Agency (LDA), speaks to eolas about the LDA’s growth, its plans for 2022 and the hopes of building over 5,000 new affordable and cost rental homes under Project Tosaigh.

Coleman begins by tracking the progress of the LDA since its foundation on an interim basis in 2018: “We started off with no staff, no office, no infrastructure, and we have built a reasonably good platform now where we have advanced to 60 staff, and we have advanced sites through the various stages of the development process with the aim of starting construction for 862 homes in 2022.”

With a broader portfolio of roughly 5,000 homes, the LDA are advancing their process on state and local authority lands in partnership with local authorities. They have also targeted a separate 5,000 homes through Project Tosaigh, which “expands and accelerates our ambitions in the affordable space”, Coleman says.

“We have increased the site portfolio significantly; at launch we had promises of sites that could yield around 3,000 homes, and between Project Tosaigh, 38

our current developments and land transfers under Housing for All (HfA), we think that site capacity is now around 25,000,” Coleman says. “The LDA was set up in the first place as a land assembler longer-term and between HfA land transfer announcements and active areas, which are focused on design, master planning and problem solving around infrastructure, we have three strategic areas in our portfolio: Limerick Colbert Station, Sandy Road in Galway, and the Digital Hub in Dublin, with more planned in the future.”

In the short term, the LDA is focused on the delivery of affordable and cost rental housing on state lands; their longer-term plans consist of land assembly and the coherent delivery of larger scale strategic areas for sustainable development and regeneration. Coleman details their 2022 plans, where it is hoped that two development projects will progress to site, and five planning

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Planning activity in Dundrum, Balbriggan, Skerries and Devoy covers roughly 2,400 homes, once lodged this will be followed by St Theresa’s Gardens. Design teams are at work on Cherry Orchard and Cromcastle, to be built in partnership with Dublin City Council, and Dyke Road in partnership with Galway City Council.

“This is an emerging theme; we have very close working relationships with local authorities which are critical to the LDA’s work,” Coleman says.

Work in Shanganagh in south Dublin “should” commence later this year, with construction tender returns being evaluated at the moment. When completed, the project will deliver 597 social and affordable BER A-rated homes, 306 of which will be cost rental.

The St Kevin’s site in Cork, currently going through prequalification for the construction tender, will commence enabling work this year on a scheme that will deliver 264 homes.

These are not the only projects in the LDA’s sights: “There are 10 sites that are that can yield about 5,000 homes across Dublin, Mullingar, Naas, Galway, Limerick and Cork, depending on what we can get through the planning system,” Coleman says.

Delivering these houses comes with a total focus on affordable housing, Coleman says, a focus that has been a significant shift since the current government took office. “What that looks like to us is that we are trying to roughly land at one-third of a person’s net income,” he says. “In terms of the market in a place like Shanganagh, that means a 25-30 per cent reduction on market rates. There are good discounts compared to the market, but we are focused on affordability rather than pegging ourselves to the market.

“We think about this in terms of deciles of income; we are not there to target the ninth and tenth deciles, we think they

can cover their own costs, and we are not targeting those who qualify for social housing either, it is those that are squeezed in the middle that do not qualify for anything.”

With its mandate on state lands, Coleman estimates that the LDA could deliver 2,500 homes by 2026, but instead is looking to treble this target by engaging in Project Tosaigh and leveraging the private sector to bring its land into the affordable housing net. “In Housing for All, we had a number of empowerments, including increased spending capacity because of the increased debt ceiling that has been allocated to the LDA, we have a number of additional lands that will look at the land assembly section of the LDA, but most significant was the launch of Project Tosaigh,” Coleman says.

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applications to deliver almost 3,000 homes will be lodged. The LDA’s hope is that some of these plans will have started construction by 2024. It plans on commencing two strategic area masterplans, in Inchicore and the Digital Hub, which has been transferred to the LDA, later this year. Through Project Tosaigh strategic partnerships, the LDA plans to deliver “about” 5,000 homes over the term of the initiative, from 2022 to 2026.

“We are targeting working in partnership with house builders that have the ability to deliver at scale and that have access to land by way of funding arrangements and contracting arrangements to secure 5,000 homes over a four-year period. We are targeting delivery as early as 2022.

5,000 over four years is possible; we think we will have a bias towards cost rental and when the dust settles on the various proposals that is where a lot of them will land. The current process is based on forward purchase agreements, which is a commitment to purchase at a certain price point in the future, but we will be interested in the future in bringing forward more innovative procurement methodologies to facilitate other types of arrangements with builders and delivery partners.”

Concluding, Coleman focuses on the LDA’s strengths and how they can work with other partners in affordable housing delivery: “The strengths of the LDA are delivery, capability, and a project management platform. We have the legislative mandate to open up state lands. Typically, state lands are under some other use such as train stations etcetera, but local authorities have land for housing and that is why they are such a critical partner in our delivery trajectory. The LDA has no track record in operating or delivering to the client aside from the emerging construction side of things, the AHBs have a credibility and trust in terms of that delivery and there is really strong potential for that to be levered to everyone’s benefit into the future.”

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Affordable purchase and cost rental: The role of The Housing Agency infrastructure and construction report

two new options are summarised in Figure 1.

Housing Agency CEO, Bob Jordan.

Significant work is underway to deliver affordable housing at scale. The Affordable Housing Act 2021 represents the first standalone affordable housing legislation in Ireland, while Housing for All, the Government's new housing plan for Ireland, outlines a commitment to supporting homeownership and increasing affordability. Bob Jordan, CEO of The Housing Agency, discusses two key means by which these objectives will be achieved: affordable purchase and cost rental.

Government policy is committed to making available housing that is affordable for households across a wide range of income groups. The Affordable Housing Act 2021 provides for two affordable purchase schemes. These

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Figure 1

seek to address the affordability gap that exists for moderate income households who are constrained from accessing sufficient finance to purchase homes at open market prices.

Primarily aimed at first time buyers, the

The Local Authority-led Affordable Dwelling Purchase Arrangement will allow local authorities with affordability issues to offer homes for sale.

Affordable homes will be developed by local authorities or in partnership with approved housing bodies (housing associations), the Land Development Agency and housing developers. The discount from the open market value will be achieved by a combination of lowcost land and other specific State funding. The local authority will hold an equity share equal to the percentage discount on the open market value and the affordable homes will be offered for sale to eligible households.

“We know that the current mortgage lending rules, three-and-a-half times an individual or couple’s gross annual income, does not bring some people far enough up to be able to buy a property on the open market, so the idea of the equity share is to bridge that gap,” Jordan says. “The idea is to enable firsttime buyers to enter the market and to enable local authorities to produce homes at a price people can afford in their own area, at least 15 per cent below the purchase price on the open market.”

The First Home national shared equity scheme will be operated in cooperation with participating banks. Eligible purchasers will be able to buy new homes for sale on the open market that are below the relevant location-based price caps. An equity share will be available to an eligible purchaser where there is a shortfall between their mortgage capacity and the new home price. The equity share will be owned by a special purpose vehicle jointly funded and overseen by the participating banks and the State. The equity share can be bought out at any time and an annual charge will apply after year five to the equity share value.

An example of how the shared equity schemes will work can be seen in Figure 2.

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Cost rental

“Cost rental is hugely important, as it might well represent a once in a generation oppportunity to introduce a new form of tenure in Ireland,” Jordan says. “Back in 2004, NESC recommended the introduction of cost rental in Ireland, so this has been a long journey. What makes cost rental different is that it’s about rents based on the costs of construction, management and maintenance of the house. The idea is obviously that those rents would be far less than the market rents and would certainly be starting out at 25 per cent below market.

The overall aim is to have homes available for rent at levels that are substantially below market rent while sufficient to meet the financing and ongoing management and maintenance costs for the owner. The Minister for

Overview of the Enniskerry Road Cost Rental housing scheme. In September 2021 the applications process began for 50 purpose-built cost rental homes at Enniskerry Road, Stepaside, Dublin. These cost rental homes will be managed by Respond and Tuath Housing and are being delivered on land provided by The Housing Agency under the land aggregation scheme.

Figure 2

Housing has approved Cost Rental Equity Loan (CREL) funding for the initial cost rental homes to be delivered by approved housing bodies over the next year. The Housing Agency is playing a key role here by providing the CREL funding as a secondary loan for 30 per cent of the capital cost, with the Housing Finance Agency funding the balance of 70 per cent. The Housing Agency is also facilitating the delivery of cost rental homes by two approved housing bodies, Respond and Tuath, on public land, in partnership with Dún Laoghaire-Rathdown County Council.

Homes must be designated as cost rental dwellings for a minimum period of 40 years with rents calculated to cover the cost of housing delivery, finance, management and long-term maintenance.

income eligibility criteria. They will be provided unfurnished, although they will be comparable to private rental homes in all other respects.

The new legislation now in place will drive the delivery of affordable homes for purchase and to rent.

Jordan concludes: “There is a strong government commitment to increasing capacity and expertise in the housing sector. We’re building public confidence and understanding, bringing in new providers. We at The Housing Agency are excited to be playing our part in this journey.”

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“It’s a success story all over Europe.

The idea is that delivering cost rental at scale will have a moderating effect on overall market rents. Recently the Housing Agency and Housing Europe produced a study of three countries where it has been very successful: Austria, Denmark, and Finland. In those countries there’s a very large stock of cost rental accommodation: 17 per cent in Austria, and 20 per cent in both Denmark and Finland. These are very successful examples from which we have a lot to learn.”

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Home ownership can often be the focus for affordable housing. However, a key element of achieving affordable housing in many countries is the development of a cost rental sector. Over time, this approach can provide a significant amount of housing that offers a more affordable option to many households. It is a more sustainable rental model where homes and rental income flows can be used to leverage further investment. The Act contains provisions to facilitate delivery of cost rental housing which will be developed mainly by local authorities, approved housing bodies and the Land Development Agency. The establishment of the cost rental model is intended to promote an increased supply of affordable rental homes in areas where there is a high demand for housing. The Housing Agency has been central to developing a vision for cost rental in Ireland. We promoted the concept to policymakers in the Irish housing sector when we cohosted an exhibition on the Vienna model of cost rental with Dublin City Council in 2019.

T: 01 656 4100 E: communications@housingagency.ie W: www.housingagency.ie

Cost rental homes will be available for rent to households who meet specific 41

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Credit: Réseau de Transport d’Électricité

Emerging trends in infrastructure

The major projects of the National Development Plan The revised National Development Plan (NDP) published in October 2021 will invest €165 billion in Irish infrastructure over its lifetime. eolas outlines the major projects within the plan, and what is expected to be delivered in 2022.

In 2022, Ireland’s total capital expenditure will rise to €14 billion from 2021’s €12.7 billion. Core exchequer investment as a share of GNI* will rise to 4.8 per cent from 2021’s level of 4.5 per cent, totalling €11.1 billion, with non-exchequer funding accounting for the remaining €2.9 billion. This rise in exchequer funding represents an increase of €1.3 billion from 2021. Housing, transport, and health will be the bestfunded sectors of the year, receiving €3.4 billion, €2.5 billion, and €1.01 billion in gross voted capital allocations respectively.

Cost categories for projects within the NDP range from A (€20 million-€50 million) to F (over €1 billion). There are five projects mentioned in the revised NDP with cost category F status: the protection and renewal of national roads; the National Broadband Plan; MetroLink; the Celtic Interconnector; and the Western Supply Project – Eastern and Midlands Region.

National Broadband Plan The rollout of the National Broadband Plan (NBP) commenced in 2020, with delivery planned to be completed by 2027. The plan seeks to connect over 544,000 premises not covered by commercial operators with high-speed broadband, including almost 100,000 businesses and farms and 700 schools. In the 2010s, it was mooted that the NDP would cost an estimated €500 million but by 2019 National Broadband Ireland won the tender for a €3 billion contract.

In its winter update on the rollout of the NBP, issued on 22 December 2021, the Government said that the Covid 42

pandemic had “impacted the rollout of the NBP in the first half of the year”, but that rollout had “picked up the pace in the second half of 2021 and some 54,000 premises will be available for order or pre-order at year end”. More than 1,200 orders had been placed, with premises pending connection, at the time of the update. 4,600 premises had been connected to the network up to that point.

282,000 premises have also been surveyed, with 232,000 designs received and construction begun on 150,000 premises. While localities wait for broadband to be delivered to their homes, 262 Broadband Connection Points (BCPs), wireless connectivity hubs in communities awaiting rollout, have been installed and are ready for connection, with 234 of these live on the high-speed network.

Celtic Interconnector The Celtic Interconnector is the proposed 700MW electricity interconnector between Brittany, France and east Cork, which will have an annual transmission capacity of 6.1 TWh. The project, which is being developed by Ireland’s Transmission System Operator, EirGrid and France’s Réseau de Transporte d’Électricité, is expected to be completed in 2026 and will be Ireland’s largest electricity interconnector.

Following on from Brexit, the successful connection of the project will allow Ireland to once again have direct electricity interconnection with the remainder of the EU Internal Energy Market and enhance “market competition and security of electricity supply, to the benefit of Irish and French

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Water Supply Project – Eastern and Midlands Region The Water Supply Project – Eastern and Midlands Region (WSP-EMR) will abstract water from the lower River Shannon at Parteen Basin in Tipperary, with water treatment at Birdhill, and carry the water to a reservoir in Peamount, Dublin in order to connect water supply to the Greater Dublin Area and other areas such as Newport, Borrisokane, Mullingar, Portlaoise, Navan, Drogheda and more.

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electricity customers”. It will also allow Ireland to provide direct export of its surplus renewable energy to Europe, along with a reduction in curtailment of wind generation in Ireland.

The project is currently in the pre-planning and design stage, with both the over €1 billion estimated cost and the estimated completion date of 2030 offered with the caveats that they are preliminary and will be “reviewed and refreshed as the project progresses through the planning and procurement processes”.

The project, which will “meet the future water supply needs for housing, commercial and industrial growth in an area comprising 40 per cent of Ireland’s population”, is said in the NDP to have already gone through non-statutory public consultation, with further statutory public consultation to take place before it is submitted to An Bord Pleanála for planning permission.

NDP actions due for completion in 2022 •

Finalisation of recommendations by Public Private Partnership Steering Group on existing treatment of PPPs by end of Q2

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Development of a new National Cycling Network Strategy by year-end

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Opening of greenways financed under the Strategy for the Future Development of National and Regional Greenways to begin and continue until 2024

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Issuance of the final report of the Strategic Rail Review

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Construction of the N5 Westport to Turlough road, to be completed in Q4

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Fishery development projects in Castletownbere, Howth and Killybegs all “to be complete in early 2022”

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New Seafood Development Programme 2021-2027 to launch with €142 million EU funding

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New specialist marine vessel commissioned by the Marine Institute to be fully operational by autumn

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The majority of the 200 school building projects built under the Department of Education’s school building programme to be completed

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Announcement of successful projects under the Energy Efficiency and Decarbonisation Pathfinder Programme, due in Q1

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The entering into service of the new Dublin Airport runway

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Capacity extension at Shannon Foynes and completion of the Alexander Basin redevelopment

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€202 million of carbon tax revenue to fund the SEAI’s residential and community retrofit schemes 43

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Sustainability and climate action at the heart of key NDP-funded OPW projects resourcing project delivery under the NDP, the organisation has also taken a number of important initiatives to “gearup” for this challenge. Within the overall framework of the Civil Service Renewal Programme (CSR 2030), the OPW has streamlined its organisational structures, improved its project governance arrangements, invested in upskilling its workforce and embraced a number of ICT initiatives to improve organisational productivity.

The Office of Public Works (OPW) has one of the largest and most diverse property portfolios in the State, including over 2,000 buildings that range from some of the most recognisable properties in the country, such as Dublin Castle or Leinster House, to Garda stations and government offices. The OPW also has a lead role in managing flood risk and providing project management expertise to a number of client departments and agencies.

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The breadth of the organisation’s responsibilities is reflected in the number, nature and scale of the projects that fall to it to deliver under the National Development Plan (NDP) covering the period 2021-2030.

When the NDP was published last autumn, Minister of State with responsibility for the Office of Public Works Patrick O’Donovan TD noted that the OPW would be managing projects and programmes to the value of €4 billion through its own vote and on an agency basis on behalf of clients. The Minister also highlighted the OPW’s evolving role as a leader in the transition 44

to a sustainable, low-carbon, resourceefficient economy. He noted that a key objective for the OPW, in delivering important public infrastructure under the NDP, was to “advance sustainable solutions that mitigate against the effects of climate change”.

The investment of some €4 billion represents a doubling in value of the existing level of capital investments within the remit of the OPW. This will present a significant challenge to the organisation’s capacity and Minister O’Donovan explained that, as well as actively engaging with the Department of Public Expenditure and Reform on

As a result, the Minister has expressed his full confidence that the OPW is wellpositioned to deliver on its commitments under the NDP, in a manner that is fully aligned with the Government’s policies on climate action and sustainability. In this context, the overall purpose of the €1 billion investment earmarked for the Flood Risk Management area involves works to protect communities across Ireland from the impacts of climate change through future-proofed, adaptable flood risk management schemes.

The OPW will be investing a further €1.4 billion in State properties that will support key climate action targets by increasing the energy efficiency of the State’s office accommodation portfolio. Office accommodation investment will also involve the creation of more agile, digitally enabled, and predominantly open plan working environments. They will incorporate more collaborative spaces and significantly reduce the use of cellular offices so as to facilitate the evolving operational requirements of government departments.

This investment includes works to heritage sites nationwide to protect and promote the State’s built and archaeological heritage through sensitive conservation, refurbishment and animation for the enjoyment of current and future generations.

The balance of around €1.6 billion will involve the OPW in managing a wide range of projects for client departments and agencies. Investment will include

works to major cultural institutions, a large infrastructure project at Rosslare Europort, and a new Forensic Science Laboratory in the Backweston Campus in County Kildare. Under the Garda Capital Programme a significant number of projects will be delivered, including the Military Road complex in Dublin.

Investment in some heritage sites will be co-funded by the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media, through Fáilte Ireland.

future-proofed

Flood Relief Schemes

from flood risk in 150 schemes

The largest flood relief investment project ever proposed in Ireland is the Lower Lee Flood Relief Scheme, representing over €140 million of investment for Cork City. It will protect 2,100 properties from tidal and fluvial flooding.

Investment in the OPW Estate (€1.4 billion) The investment will: •

•

fit-out of accommodation (€100 million);

•

meet a range of complementary objectives within the Heritage Estate (€200 million) for the conservation and presentation of historic buildings and sites, including collaboration with Fáilte Ireland for co-funding of particular projects under the Tourism Investment Programme;

€40m invested in the Tourism Investment Programme to improve

River Lee scheme is the largest flood relief investment project ever proposed in Ireland

€986 million

€300 million on new build projects including Hawkins House, Leeson Lane and Backweston Data Centre €100 million on office fit-outs

€840 million

•

meet obligations under the Convention Centre Dublin Public Private Partnership Agreement (€250 million); and

•

facilitate property acquisitions and disbursement of grants (€80 million).

The OPW will oversee the construction of major new energy efficient office developments on the site of the old Hawkins House, on Leeson Lane and a shared Government Data Centre at the Backweston Campus in County Kildare.

The shared Government Data Centre will be fitted with connections that will allow it to be powered by renewable energy from a potential future solar farm on site, and will facilitate the decommissioning of existing facilities that are much less energy efficient and are no longer fit for purpose.

A flagship project under the Energy Retrofit Programme is the refurbishment of Tom Johnson House in Dublin, which was constructed in the 1970s. The works undertaken will extend the useful life of the building and transform it into an exemplary, energy-efficient headquarters for the Department of the Environment, Climate and Communications. A 75 per cent reduction of annual energy use will be achieved and most of the cost of around €50 million will be met from the EU’s National Recovery and Resilience Fund (NRRP).

Investment in the Heritage Estate will enable the OPW to commence the implementation of Master Plans for the Phoenix Park and Dublin Castle to meet the twin objectives of improving accessibility to, and enhancing the visitor

the State owned heritage estate with €40m for the Phoenix Park and €20m in Dublin Castle for the benefit of visitors

€200 million

experience at both locations. Some of the key infrastructural works to improve accessibility to the park include creating new and upgrading existing cycling and walking routes and road improvement works.

Restoration and upgrade works at the Magazine Fort and Phoenix Park Visitor Centre will also be undertaken to further improve the visitor experience at the park.

Investment in Dublin Castle will build on the recent redevelopment of the medieval Record Tower and the planned refurbishment of the visitor reception.

Some of the key elements of the Masterplan for Dublin Castle will include: •

a new interpretation space, in the East Cross-Block, will tell the story of the building during the revolutionary period, from 1916 to 1922;

•

upgrading the public realm, particularly the Lower Castle Yard to enhance the accessibility of the site to all visitors; and

•

a new museum space will tell the 800-year history of Dublin Castle through objects in the OPW’s collection, archaeological finds from the site and long-term loans from other national cultural institutions.

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address EU and Government climate change obligations to significantly reduce the estate’s carbon footprint through investment in new builds (€300 million), Property Obsolescence Programme, covering building fabric, energy and systems upgrades (€440 million);

€440 million to decarbonise and increase energy efficiency of State offices by 50%

conserving our

Built and Natural Heritage

visitor infrastructure and by the Lower Lee Flood Relief Scheme with an investment of over €140m

Communities threatened from river and coastal flood risk will see investment in some 150 flood relief schemes progressed over the lifetime of the NDP, protecting approximately 23,000 properties.

All flood relief schemes are designed to be adaptable to the impacts of climate change scenarios, including identifying locations in the scheme’s contributing catchment where there may be opportunities to implement Natural Water Retention Measures. These can comprise a broad range of multifunctioning measures that use natural processes and features to reduce flood risk, improve water quality and create habitats.

State’s Property

infrastructure and construction report

Flood risk management schemes (€1 billion)

Increasing the energy efficiency of the

T: (046) 942 2000 E: info@opw.ie W: www.gov.ie/opw

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Emerging trends in infrastructure

infrastructure and construction report

Transport and the National Development Plan Transport is the sector that will receive the second highest amount of gross voted capital allocation over the first five years of the newly revised National Development Plan (NDP), receiving €13 billion from 2021 to 2025. eolas examines the projects that this central finance will fund.

Of the five projects within the newly revised NDP stated as having an estimated cost category of F (over €1 billion), two fall within the transport sector: the programme for regional and local road protection and renewal and the delivery of the MetroLink mass rapid transit rail line.

The renewal and protection of regional and local roads is an annual programme of works whose estimated cost category of over €1 billion is given for the period 2021-2025. The NDP states that the highest priority for this investment is to “maintain the asset through the protection and renewal of the network of some 96,000km”. The investment is to be delivered through targeted Department of Transport funding to local authorities covering areas such as: restoration maintenance; restoration improvement; discretionary works such as repairs and routine maintenance; drainage works; climate adaptation and resilience works; safety related works; training; and winter maintenance.

In addition to maintenance works, the improvement of the local and regional road network is also said to be a priority of the NDP, with projects completed

46

thus far including the Sallins Bypass, the Bettystown to Laytown regional road, the Portlaoise Southern Distributor Road and the Daingean Uí Chúis Relief Road. The Carrigaline Western Relief Road and the Coonagh to Knockalisheen project are currently under construction, while construction is due to begin on a number of projects such as the Tralee Northern Relief Road, the Shannon Crossing/Killaloe Bypass and the Athy Southern Distributor Road.

The National Roads Programme contains 39 road-building projects, some of which are currently under construction, some still awaiting further approvals. These include projects the length and width of the State such as the N56 from An Clochán Liath to Glenties, the N22 from Baile Bhúirne to Macroom, the M20 Cork to Limerick, the N6 Galway City Ring Road, the N4 Mullingar to Longford, the M4 Leixlip to Maynooth, the M11 capacity enhancement and the N11/N25 Oilgate to Rosslare Harbour.

The second of the category F transport projects, the MetroLink, is less clear in the plans included in the NDP. Its current status is given as being in the

Find out more www.kpmg.ie/infrastructure

The NDP states that once completed, the MetroLink “will provide a sustainable, safe, efficient, integrated and accessible public transport service between Swords, Dublin Airport and Dublin City Centre” and that the project will “support approximately 8,000 direct construction jobs” and “carry around 53 million passengers in its opening year and create new connections between 127 schools, three third-level institutions and five hospitals”.

In related commuter rail plans, the plan’s investment in public transport

of a new Limerick commuter rail network”. Major upgrade works over the lifetime of the NDP will also take place in Ceannt and Colbert stations, along with the building of a new train station and transport hub in Waterford.

infrastructure and construction report

preliminary business case, with an estimated completion date simply left as TBC, meaning that its completion before 2030 seemed unlikely upon the publication of the new NDP, a feeling that was then confirmed by the publication of the National Transport Authority’s (NTA) draft strategy in November 2021. The project, whose cost estimates are now as high as €10 billion, is not set to be complete until at least 2035 “at best” according to Fianna Fáil TD Paul McAuliffe.

From a sustainability point of view, one of the more notable transport projects within the NDP is the ongoing implementation of greener and cleaner bus fleets, which began rollout in 2021 and is due to last until 2025, with an estimate cost of €500 million-€1 billion.

The NDP states that the NTA has “commenced the transition of the urban PSO bus fleet from diesel only vehicles to lower emission vehicles”.

Actions taken since July 2021 include: ordering 280 hybrid electric buses, 89 of which were in service at the time of the NDP’s publication; procurement of a framework for the delivery of up to 200 single deck electric buses with the intention of converting Athlone’s entire urban bus fleet to electric by Q2 2022; the delivery of a framework for up to 800 double deck electric buses, which

MetroLink, the cost estimates of which are now as high as €10 billion is not set to be complete until at least 2035. includes the Cork Commuter Rail Programme, which will run from Mallow to Midleton and Cobh, targeting a 10minute all-day frequency on electrified rail services. Phase one of the project is due to be completed in 2026 and is due to cost €185 million to “address the existing bottleneck in the city centre by enabling the creating of a suburban rail network”. Phase two of the programme is due to commence this year with early development, with delivery scheduled for the “latter period” of the NDP, i.e., post-2026.

Further regional city commuter rail programmes are planned for Galway and Limerick, with “significant track and station works proposed for Oranmore and Athenry as well as the development

are to enter operation in 2023; and the procurement of three hydrogen fuel cell double deck buses to be used in a hydrogen pilot. By 2025, it is “expected that over 50 per cent of the urban PSO bus fleet will be converted from diesel to low and zero emission vehicles, with 30 per cent of the bus fleet being zero emission”.

Indeed, the transport plans within the NDP will play a significant role in Ireland’s decarbonisation, with every major programme other than the National Roads Programme (given a C) given a climate and environmental assessment grade of A, meaning that they are “likely to have, on balance, a favourable impact on climate and environmental outcomes”.

47

Price volatility in construction contracts: No topping out in sight

infrastructure and construction report

highest ever levels of tender prices.

AECOM (Ireland Annual Review 2022) expects an average tender inflation price of 5 per cent for 2022, while Deloitte (Q2 Industry Review 2021) states that the uncertainty of costs is making it increasingly harder for the industry to forecast developments.

While the recent increases in the cost of materials have been “unprecedented”, managing price fluctuations in a contractual context is not a new concept. To mitigate these challenges in public works contracts, the Office of Government Procurement has recently published an interim suite of amendments, including:

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As 2022 unfolds, there is cautious optimism in the construction industry that the resilience displayed over the last two years will manifest in a strong recovery, with output projected by AECOM to grow by 18.5 per cent this year, from €27 billion to €32 billion.

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Despite falling to an eight-month low of 53.7 in December 2021, the Ulster Bank Construction PMI still indicates growth, albeit at a much slower rate. A more balanced increase this year is welcome, to prevent marginal projects from becoming unviable.

•

Optimism is tempered by increased demands on the industry to expand and deliver on the ambitious targets set out in the National Development Plan while battling the pre-pandemic pressure points exacerbated by Covid-19 and Brexit:

From 1 February 2022, new minimum rates of pay will come into force under SEO 703/2021 (Electrical Contracting Sector) and SEO 598/2021 (amending SEO 234/2019) (Construction Sector).

Industry analysts have predicted that these factors will lead to some of the

the significant increase in the cost of materials;

•

supply chain constraints;

•

lack of skilled labour; and

•

a fall in registrations for apprenticeships.

•

an indexation mechanism for PWCF1 to PW-CF6; and

•

amendments to the price variation clauses in PW-CF1 to PW-CF5 to reduce the Base Date from 30 to 24 months and to adjust the threshold for exceptional material price increases from 50 per cent to 15 per cent.

In the private sector, collaboration remains key.

Our key takeaways for projects already underway are for parties to maintain an open dialogue and to have a thorough understanding of your existing contract to proactively mitigate the impact of material price increases. We are seeing more negotiation in the industry around price volatility clauses and the building of long lead orders into the contract structure. In the pre-contract stage, parties should clarify how long and to what extent a contractor’s tender should be considered binding.

For further information or advice, please contact Matheson’s Construction and Engineering team: www.matheson.com/services/construc tion-and-engineering

infrastructure and construction report

Emerging trends in infrastructure

NDP: Capital expenditure Published in October 2021, the new National Development Plan (NDP) is heralded as proof of the Government’s commitment to Ireland’s mediumterm infrastructure and investment requirements.

Review to Renew, a review of the NDP was undertaken with the aim of ensuring optimal alignment with the new Programme for Government, the new Climate Action Plan, and the National Planning Framework (NPF).

As a component of Project Ireland 2040, the NDP outlines €165 billion in capital expenditure for the next decade, seeking to match the demand for public investment across all sectors, particularly in terms of enhanced delivery of infrastructure projects in housing, health, and the environment and climate. In parallel, the NPF establishes the national spatial strategy for the next two decades.

Overall, there will be a 14 per cent increase (€1.3 billion) on voted capital expenditure in 2022, including €0.2 billion for National Recovery and Resilience Plan (NRRP) projects, when compared with 2021. In total, Budget 50

2022 indicates that it will make available €11.1 billion through the NDP, alongside additional non-Exchequer investment.

As such, budgeted capital expenditure is set to more than double in 2022 when compared with the €4.6 billion pre-NDP position in 2017. Annual capital expenditure is projected to exceed €16 billion by 2030 and from 2021 to 2030, total Exchequer investment through the NDP will be €136 billion.

Initiating an increase in voted capital expenditure to 5 per cent of GNI* by 2025, core capital expenditure in 2022 will increase by 11.1 per cent (€1.1 billion) on the 2021 allocation (€9.8 billion) as outlined in the July 2021 MidYear Expenditure Report.

Previously, in 2021, 75 per cent of the €10.8 billion capital allocation was concentrated in four sectors:

•

27.4 per cent (€2,766 million) in housing;

•

25.1 per cent (€2,528 million) in transport;

•

12.3 per cent (€1,241 million) in education; and

•

10.4 per cent (€1,048 million) in health.

The Shared Island Initiative will also receive capital funding totalling €500 million over five years. This allocation is intended to “foster new investment and development opportunities on a North/South basis” and deliver crossborder objectives included in the Programme for Government. As such, in 2022, €50 million will be allocated to departments and agencies to facilitate cross-border projects. Meanwhile, capital allocations for 2022 also include €206 million via the NRRP.

Find out more www.kpmg.ie/infrastructure “The revised NDP will deliver the largest and greenest capital investment plan in the history of the State.”

“The new NDP is somewhat hard to distinguish from the old one.”

The ESRI’s COre Structural MOdel of the Irish economy (COSMO) projects that the planned increase in capital expenditure from 2021 onwards, as contained in the NDP, will result in GDP increasing by 1.6 per cent by 2030, employment increasing by 3.0 per cent by 2030, and wages to increase by 3.1 per cent.

Launching the NDP, Public Expenditure and Reform Minister Michael McGrath

Sinn Féin spokesperson on Public Expenditure and Reform, Mairéad Farrell TD

TD asserted: “The revised NDP will deliver the largest and greenest capital investment plan in the history of the State,” adding: “An employment impact analysis, carried out by my department estimates that an annual average of up to 81,000 direct and indirect construction jobs will be sustained as a result of the public investment in this NDP over the next decade.”

Meanwhile, Sinn Féin’s spokesperson

infrastructure and construction report

Minister for Public Expenditure and Reform, Michael McGrath TD

on Public Expenditure and Reform, Mairéad Farrell TD, warned: “The new NDP is somewhat hard to distinguish from the old one. Yes, there are the increased departmental capital ceilings, arising from the increase in the total amount of funding that will come from the exchequer, but there is a distinct lack of details on costs, timelines and completion dates for the projects outlined therein.”

Departmental allocations in 2022 Education:

Housing:

Capital expenditure provision for Education will increase by 7 per cent (€52 million) on the 2021 allocation to a total of €792 million, with the goal of ensuring that the Department can deliver new buildings and equipment, as well as furnishing primary and post-primary schools.

Of the 200 school building projects currently under construction, the majority will be completed in 2022, ultimately delivering 30,000 additional and replacement school places.

The Department of Housing, Local Government, and Heritage will receive the highest capital expenditure allocation of all departments, totalling €3.4 billion. Increasing by 23 per cent (€634 million) when compared with 2021, this additional support is intended to support the delivery of Housing for All. For instance, of €1.7 billion and €224 million will be allocated to the provision of 9,000 social housing units and 4,100 affordable housing units in 2022.

Environment, Climate, and Communications: Capital funding for the Department of the Environment, Climate, and Communications will increase by 21 per cent (€121 million) above the 2021 allocation, totalling €700 million in 2022. It is intended that this additional investment will help meet the objectives of Climate Action Plan 2021, as well as the continued roll out of the National Broadband Plan. The allocation for 2022 will mark the beginning of enhanced direct capital investment by the Department, amounting to €12.9 billion over the lifetime of the NDP.

Transport: Totalling €2.6 billion, the Department of Transport will receive the second highest capital allocation of any department. These resources are proposed to deliver the maintenance, active travel, public transports, and road priorities contained within the new NDP. For example, this includes the delivery of 41 additional InterCity Railcar carriages in 2022, and progress on BusConnects, MetroLink, and DART+.

Health: Capital funding for the Department of Health in will total €1,010 million in 2022, representing a 12 per cent (€105 million) increase on the revised 2021 allocation. Additional expenditure is earmarked for the delivery of the National Children’s Hospital at St James’s, as well as priority projects in primary care, community nursing units, ambulance bases, mental health, and acute services.

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infrastructure and construction report

Building a limitless Ireland TJ Malone, head of the build programme for the National Broadband Plan and Chief Executive Officer of National Broadband Ireland Deployment, discusses progress on the State’s “biggest investment in rural Ireland ever”.

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Connectivity has quickly become a vital part of our lives. For work, education, entertainment, and even socialising, we all have a growing demand for reliable, high speed broadband services. In most urban areas, this is taken for granted, but for over 1.1 million people living in more rural parts of Ireland – myself included – it can be an everyday struggle.

We’re not alone. Indeed, across Europe the European Commission is on a mission to ensure every household has gigabit connectivity by 2030. It’s a bold and transformational move, but one that 52

will propel every nation in the right direction to take on everything the future holds.

Ireland’s National Broadband Plan is the Government’s ambitious policy to meet this European-wide goal, and it sets us on a path to be the leading country in the provision of high-speed broadband to 100 per cent of the population, providing equal access and equal opportunity to every home, farm, school, and business.

In November 2019, our team at NBI proudly signed contracts with the

Government to deliver this highly anticipated plan. Recognised as one of the biggest and most ambitious telecoms infrastructure projects of its kind globally, it has been heralded as “the biggest investment in rural Ireland ever”.

Fast-forward to today and the Covid-19 pandemic has underlined the criticality of reliable, high-speed connectivity, which has become essential for so many aspects of our lives. Such is the demand for bandwidth, that internet usage has grown by over 40 per cent compared with pre-pandemic levels.

A project like no other Taking on the challenge, our team at NBI is deploying fibre on approximately 1.5 million poles; many of them new, over 15,000km of underground ducts, using up to 142,000km of new fibre cable, and will run along almost 100,000km of the road network.

Conveying the size, scale, and complexity of an infrastructure project of this nature can be challenging to articulate. It can only be likened to rural

electrification, but with arguably far more complexities.

Stretching across 96 per cent of the country’s land mass, we’re laying enough fibre to go around the world nearly four times. This is about radically changing the broadband landscape across the country to ensure every single person has access to high-speed broadband, no matter where they live or work.

infrastructure and construction report

In two years, our team has grown to have over 1,200 people working on the rollout of the National Broadband Plan, either directly with NBI or through our network of specialist contractors. We have the best team in the world working to deliver this complex project, with experience of financing, building, and operating some of the biggest infrastructure assets in the world.

Rolling out the National Broadband Plan, we’re not alone. Collaboration is one of the most important aspects of the project, with a vast amount of specialist subcontractors providing support across every county in the country, and vitally, local authorities providing critical support with licences that are required, such as for the erection of new telegraph poles and road opening licences.

work. Collectively, these are critical components which pave the way for fast and effective construction work.

As of today, construction work is underway for over 150,000 premises

Visit www.nbi.ie for more information, including to find out if you’re in the intervention area and to receive Eircode specific updates on the rollout progress.

across the country and over 55,000

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A huge amount of credit must be given to these local authorities and the national agencies, particularly the Local Government Management Agency (LGMA), the County and City Management Association (CCMA), and the Road Management Office (RMO), for their roles in supporting NBI and the introduction of a new national framework that was introduced in May last year to provide centrally agreed mechanisms for the application of licences that will support the effective rollout of the National Broadband Plan. With over 1.5 million poles in our build programme, the size of the task for local authorities cannot be understated and the agility to create a new national framework is testament to all parties collaborating and innovating in the national interest.

“Taking on the challenge, our team at NBI is deploying fibre on approximately 1.5 million poles; many of them new, over 15,000km of underground ducts, using up to 142,000km of new fibre cable, and will run along almost 100,000km of the road network.”

premises are now able to order services via retail service providers (RSPs), with

Rollout progress

minimum speeds of 500 megabits per

The solution is well underway. Work on the National Broadband Plan continues apace with our teams working in every county across Ireland. Over 293,000 premises have now been surveyed nationwide, which involves NBI crews physically walking the routes where fibre will be laid. Over 252,000 of these premises are already designed or progressing through detailed design

second on offer. With around 50 RSPs ready to sell services on the NBI network, this is going to be gamechanger, bringing significant benefits directly to consumers and businesses where competition between RSPs will ensure quality bundled packages offer choice around voice, broadband, TV, and mobile at competitive prices.

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Emerging trends in infrastructure

infrastructure and construction report

Building the shared island Taoiseach Micheál Martin marked one year of the Shared Island Initiative in December 2021 with a week of events surveying the work that has been done and is to be done on government investment in a more connected Ireland.

Key to the building of a more connected Ireland are the infrastructure projects being undertaken with funding from the Government’s Shared Island Fund and other sources. Allisland investment was one of the more notable revisions within the revised National Development Plan (NDP) published in October 2021, where a commitment to allocating ring-fenced capital resourcing for all-Ireland investment to 2030 “at least at the current level of the Shared Island Fund”.

Shared island investment priorities in the NDP include: the creation of an Ireland-wide greenway network; the enhancement of rail connectivity; coordinated investment in the rollout of electric vehicle charging networks; funding allisland climate actions; enhancing support for all-Ireland enterprise development; the creation of new all-island research centres; the further development of third-level education infrastructure in the north west; and new cross-border infrastructure built and natural heritage initiatives.

Thus far, the Shared Island Fund has been allocated to numerous infrastructure projects, chief among them the revitalisation of the Ulster Canal, which runs through counties Armagh, Fermanagh, Monaghan, and Tyrone. More than €12 million was allocated to the project in April 2021 from the Shared Island Fund and the rural Regeneration Fund for phase two of the project, and a further €1 million from the Shared

54

Island Fund for phase three. The project is due for completion in 2023.

Also funded is the Narrow Water Bridge project, brought to tender by a July 2021 allocation of €3 million from the Shared Island Fund. The Taoiseach has committed to providing further funding once final costs for the project are determined.

One of the more significant allocations from the Shared Island Fund has been the €40 million pledged to the North-South Research Programme in July 2021. The programme will “support the deepening of links between higher education institutions, researchers, and research communities on the island of Ireland, delivering all-island approaches to research and innovation, and open to all disciplines and research areas”. This comprehensive approach to research has already borne fruit with the National Economic and Social Council (NESC) having published a series of secretariat papers on the shared island concept as well as a report on collaboration on climate and biodiversity; the Economic and Social Research Institute (ESRI) has also published research on increasing cooperation, cross-border trade in services and foreign direct investment on both sides of the border. The NESC and ESRI plan to publish a comprehensive report to government on the Shared Island initiative and a report on education and healthcare respectively in 2022.

Governmental failures in infrastructural investment

long-term growth lies firmly on the shoulders of this government.

The National Planning Framework 2040, with a potential spend of €116 billion, and the newly unveiled plans to pump €165 billion into infrastructure by 2030 should put some certainty back into the construction and the civil engineering market for the long-term but it won’t due to the boom-and-bust cyclical nature of our governmental policies which are clearly outlined in this wish list, it’s certainly not a defined plan that would give me long-term comfort.

From a governmental point of view investment in infrastructure has a high rate of return, Ibec estimates that all road improvements carried out between 2006 and 2010 led to an annual beneficial contribution in GDP of €525 million and, in present value terms, over a 30-year period this would equate to €9.5 billion. If the Government was to address many of the road projects listed in the 2040 NPF, then not only would that alleviate congestion, but it would encourage investment in other regions and give the State a decent return on that investment over a 10-to-20-year period.

Infrastructure lasts lifetimes and while interest rates on government borrowing are at an all-time low it seems like a no brainer to make a decision to invest in Ireland’s future now, not continuously kick the can down the road as successive governments have done.

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To add to this positivity, the construction industry is continuing to expand due to expenditure on foreign direct investment projects and by continued activity in the commercial office sector. The residential sector is catching up, the required volume of 36,000 units per annum are far from being met with around 24,000 units to be completed in 2022, there is still massive scope for growth. The missing piece of the jigsaw is investment in infrastructure, there is huge scope for projects in civil engineering, which is currently posting the weakest activity of all construction sectors.

infrastructure and construction report

I don’t want to seem overly pessimistic, writes Colm McGrath, Managing Director of Surety Bonds. A number of multinational IT and fund management companies continue to see Ireland as a hub for their European operations and have invested accordingly, but the missing piece is investment in infrastructure.

T: +353 868 189 702 E: colm@suretybonds.ie W: www.suretybonds.ie

The Irish Government is completely in control of its own investment decisions and is at fault when it comes to the lack of investment in infrastructure in Ireland.

To support Ireland’s, not just Dublin’s, 55

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Emerging trends in infrastructure

Enhanced major capital investment scrutiny Major capital investment projects are now subject to a new External Assurance Process, undertaken by independent external experts, for review and scrutiny. At the same time, to support the Department of Public Expenditure and Reform (DPER) in undertaking this role, a new four-member Major Projects Advisory Group (MPAG) has been established.

Published in October 2021, the new €65 billion National Development Plan (NDP) committed to restructuring oversight and implementation of capital projects, as well as enhanced scrutiny of major public investment proposals.

As such, to strengthen the assurance process for major public investment, two new elements have been introduced: 1. an External Assurance Process; and 2. the establishment of a Major Projects Advisory Group.

External Assurances Process Implemented by DPER, the External Assurances Process is intended to provide independent project scrutiny and key decision gates. Ultimately, the process is aimed at delivering better value for taxpayers’ money through independent expert insight into project risk and delivery feasibility, alongside robust costings, governance, and procurement.

While NDP investment projects are required to adhere to the Public Spending Code (PSC), which requires the employment of best practice at all stages of the

56

Find out more www.kpmg.ie/infrastructure Major Projects Advisory Group: Michael Nolan •

Chair of the Major Projects Advisory Group.

•

Previously appointed the first chief executive of Transport Infrastructure Ireland (TII) upon the merger of the National Roads Authority (NRA) and Railway Procurement Agency, retiring in 2020.

•

Prior to this, held the head of major projects

•

Chartered engineer and a fellow of Engineers Ireland.

•

Currently chairs the Western Development Commission’s Project Working Group to develop a Rural Town Mobility Index and is an external member of the NTA’s BusConnects programme board.

Jerry Grant •

Background in engineering and law.

•

Over 25 years of experience at director and executive advisor level in the utilities and construction sectors.

•

Held roles as managing director, head of asset

Applicable to projects exceeding €100 million in cost, the mandatory External Assurances Process will consider cost, risk, and delivery during both the approval in principle and the pre-tender approval stages of the project lifecycle. Currently, there are at least 50 major public investment proposals in the Exchequer-funded component of the NDP. Any delays and cost overruns can have a negative knock-on effect on the entire capital programme.

Through better analysis of cost and risk in the initial stage, projects should receive more considered decisions and better outcomes. Likewise, external review can ensure better project and investment governance. As such, the External Assurance Process should furnish government with comprehensive information on cost, risk, governance, and delivery feasibility before a decision to proceed is taken.

infrastructure and construction report

position in the NRA between 2007 and 2015.

expenditure lifecycle, DPER has indicated that the new process “goes one step further” in ensuring timely and on-budget project delivery.

MPAG Currently, DPER undertakes the scrutiny and challenge role on major public investment proposals in advance of government consideration. This includes technical reviews of business cases, with regard to the PSC, as well as a focus on strategic alignment with core government policies and the quality and rigor of the economic appraisal.

Supported by a secretariat supplied by DPER’S National Investment Office (NIO), the newly established Major Projects Advisory Group (MPAG) will assist DPER in its

management, and specialist advisor with Irish Water between 2013 and late 2018.

•

Currently chairs Dublin Port Company and holds active leadership roles in State sectors engaged in infrastructure services and investment.

Alison Hardiman •

A planning and development law expert with extensive experience in the development of strategic infrastructure projects in both the public and private sectors.

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Experience in Irish procurement law and processes as a tendering consultant.

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Previously worked as the in-housing planning lawyer of the Railway Procurement Agency, working on projects and proposals including Metro

“The implementation of the External Assurance Process and the establishment of Major Projects Advisory Group will help deliver on our commitment in the National Development Plan to reform the oversight and implementation of public infrastructure projects…”

Minister for Public Expenditure and Reform Michael McGrath TD

North PPP, Luas Cross City, and Citywest, between 2006 and 2011.

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Currently a PhD candidate, in association with EirGrid plc, undertaking research into the gaps in law and policy inhibiting delivery of regally required renewable energy infrastructure projects.

Barry O’Driscoll •

A chartered civil engineer with more than 25 years of experience in the national roads and public transport sectors.

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Extensive experience in senior positions in the planning, managing, and delivery of major public investment projects, including as director for WSP, director for Highways England’s Smart Motorway

project assurance role and advise the Minister for Public Expenditure and Reform.

The MPAG will scrutinise project proposals and external reviews in advance of government consideration, supporting DPER’s role in in quality assuring the new External Assurances Process. It is expected that the MPAG will also advise on future reforms to the PSC. Combined, these developments ensure that Ireland is aligned with international exemplars and fulfils a recommendation made by the IMF’s Public Investment Management Assessment of Ireland.

Announcing the introduction of the new process and the establishment of the MPAG, Minister for Public Expenditure and Reform Michael McGrath TD stated: “The implementation of the External Assurance Process and the establishment of Major Projects Advisory Group will help deliver on our commitment in the National Development Plan to reform the oversight and implementation of public infrastructure projects to achieve better value for money.”

Programme, and project director for a series of major projects, most recently including the M4 smart motorway.

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Currently a member of the Independent Investment Programme Advisory Group (IIPAG) which provides assurance and advice to the Mayor of London for major Transport for London projects.

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infrastructure and construction report

Emerging trends in infrastructure

Rebuilding health infrastructure for a post-Covid world Jim Curran, National Director of Estates for the Health Service Executive (HSE) outlines how the Covid-19 pandemic has forced the health sector into fast-tracking infrastructure projects and how it will inform the rebuilding of that infrastructure in a post-pandemic world.

“There was quite a stark ask in relation to what was needed at the beginning of the pandemic,” Curran recounts. “Up to 10,000 beds were needed, we knew that we could not provide these overnight but that we had to act as quickly as possible to bring all our capacity into use. A lot of work was undertaken over a very short period in order to bring facilities back into use. A total of €240 million was invested in establishing some new facilities, such as test centres and swabbing centres.”

Field hospital plans were put in place should the worst have come to worst, with the Citywest Convention Centre and Hotel among the sites acquired on a licensed basis for this possibility. Thankfully, while the health system was under significant pressure, it did not result in the utilisation of field hospitals, Curran emphasises.

“Ultimately, we delivered capacity for circa 600 additional beds if required and that was achieved very quickly,” he says. “Thankfully we did not have to use the beds in Citywest but we are using the facility for other things such as outpatient clinics, test centres and vaccination centres. Our testing centres have been established nationally, with different models attempted. The most effective is the drive-through model where people drive into large car parking areas.”

Along with pressure on niche aspects of health infrastructure such as medical gas

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Find out more www.kpmg.ie/infrastructure supply, crucial amid increasing numbers of patients requiring ventilators, the pandemic also served to emphasise the need to modernise the HSE’s buildings and internal capacity. These processes were underway before the pandemic but fasttracked when the extent of the Covid crisis became clear.

“Limerick had particularly low bed numbers, so we undertook two projects there to increase capacity, one in the university hospital itself, and another in Croom,” Curran offers as an example. “Our building partners in Clancy Construction brought the project onstream in about 14 weeks, which was remarkable given that it usually requires an average of 14 months.”

infrastructure and construction report

Reflecting on the lessons from the Covid crisis, Curran says: “Looking at what we have learned, additional capacity has been a necessity during the pandemic. One of the reasons we have had to have lockdown measures is that the capacity in our health system was being stretched to the limit, so there is a need to create additional bed capacity both in hospitals and in critical care because that is where we are lagging in relation to international norms. We now have a programme to almost double that capacity in hospitals.”

Enhancing capacity in elective only hospitals in Cork, Galway, and Dublin is a component of the National Development Plan, with an emphasis on outpatient care.

The objective is to mitigate record waiting lists. Curran expresses the hope that these projects can be fast-tracked and operational within three years. Consolidating additional primary care centres and community diagnostic facilities also aligns with the Sláintecare priority of bringing care closer to home, while ensuring additional mental health facilities and services for people with disabilities.

The rollout of national strategies such as the National Maternity Strategy, which involves the relocation of all standalone maternity hospitals onto hospital sites, are ongoing. The National Cancer Strategy’s radiation oncology programme has seen completion of one centre in Cork, with one in Galway currently under construction and the next phase of expansion into the Dublin centres ongoing.

HSE’s National Director of Estates, Jim Curran.

“Our primary centre construction programme continues,” Curran says, adding: “That is a mix of state investment through the NDP and developer-led operation lease model where the developers construct to our specifications, and we lease from them.

That is rolling out at pace, and we hope to have developed a total of 80 centres in 2021.

“Our replacement and refurbishment of existing Community Nursing Units, is a big focus of our next stage of development. The decongregation programme is focused on people with disabilities and mental health issues who were living in secluded residential settings, congregated together in some facilities and we are now realising that for the quality of life of these people, it is better that they are living in the community. We are now moving away from having those congregated settings to providing dwellings for no more than four people living together in the wider community.”

Again, these actions are concurrent with the health system infrastructure needs and the Sláintecare priorities, with the Trauma Strategy set to provide centres that will cover all major traumas in Cork, Dublin, and Galway. The HSE also faces a challenge in meeting its climate objectives with its infrastructure.

“The government mandate is to get down to near zero energy and the health sector, given the 24/7 usage of its buildings, is critical to the success of Ireland delivering on its climate action requirements,” he says. “Investment in infrastructure to meet these requirements will be essential. This will involve replacing a lot of our facilities and we have identified a significant number that we will require.”

Curran concludes: “Some projects to increase capacity that are currently underway include Mater Hospital and Mallow General Hospital, which were highlighted in response to Covid-19 and the deficit in those areas. We will be continuing our ward replacement programme and I think it is fair to say that every hospital in the country has ambitions of becoming a building site over the next few years as we gear up to deliver on the EU healthcare strategies.”

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Emerging trends in infrastructure

infrastructure and construction report

Infrastructure for the future The cities of the future will be tasked with the gargantuan task of tackling the complex issues within the economy, society, and the environment in a rapidly evolving world of constant new technology.

McKinsey and Company identifies three key factors in delivering the “promise of technology in urban infrastructure” in the cities of the future: renewing outdated infrastructure; getting more out of existing capacity; and reducing the cost to build new.

The idea of renewing outdated infrastructure involves the building of smart features and technology, such as sensors and management system, into new projects that utilise old infrastructure in order to modernise said infrastructure and fit it with intelligent capabilities. While McKinsey and Co notes that retrofitting has typically been deemed too expensive, “several technologies have advanced dramatically over the past few years, making infrastructure renewal far more feasible today”.

An example given by McKinsey is the connection of a smart thermometer as the beginnings of a smart building, whereby for a small amount of money and negligible use of power, “WiFi communication allows devices to send intermittent streams of data… in a way that prolongs battery life” and “the evolution of both solar panels and batteries means buildings can harness more power at a lower cost”.

To get more from existing capacity, McKinsey recommends that digital information be used to reveal opportunities to turn waste into value, such as digital monitoring of car parks showing them to be underused, allowing cities to create

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parking networks across multiple car parks that would “increase real supply, free up land for productive development and remove street parking”.

In power generation, this approach can take the form of socalled virtual power plants that can be created through demand-response and actual microgeneration units. The city of Oakland is given as an example of a city that has embraced this idea, having created a virtual microgrid that operates directly to the consumer.

Newer technologies such as artificial intelligence and machine learning will improve both performance and economics in urban site planning, McKinsey says, reducing the oftenprohibitive costs of constructing new urban projects.

Machine-learning-based planning tools can “help developers find additional usable space on a given parcel while improving… access to light and open space”, meaning that urban construction is now “likely to be disrupted by standardisation and automation”.

The example of companies such as the Boring Company, which has “demonstrated how to [reduce] tunnelling costs” through use of robotics, is one to be followed say McKinsey if cities are to reduce the costs in constructing the infrastructure of the future.