FINAL DRAFT – July 2008
Value for Money Review of the Strategic Non-National
(Regional and Local) Roads Programme
Table of Contents
Chapter Title
1.
2.
18
Introduction
1.1
Background and Overview
1.2
Regional and Local Roads
1.3
The Value For Money and Policy Review Initiative
1.4
Steering Committee
1.5
Format of the Report
1
Executive Summary
Terms of Reference
Conclusions
Recommendations
6
Scene Setting
2.0
2.1
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.2.5
2.3
2.3.1
2.3.2
2.3.3
2.3.4
2.3.5
3.
Page
Introduction
The Irish Housing Market
The Factors Driving Supply and Demand
Supply and Demand– Implications for the VFM Review
What Caused Irish House Prices to Rise?
Expanded Housing Supply
The UK Experience – The Barker Report
The Role of Roads in Promoting National and
Regional Development
General (but not Unanimous) Agreement
Ireland‟s Experience
Assessing the Social and Economic Outcomes of
Non National Roads - The Appropriateness of Cost
Benefit Analysis
CBA - Practical and Conceptual Issues for Non National Roads
Assessing Social and Economic Benefits – Conclusions
Reviewing Other Reviews
Efficiency and Effectiveness - Key „Value for Money‟ Concepts
The First VFM Report on Regional and Local Roads
The Use of Guidelines to Achieve Standardisation of Approach
Performance Indicators
Evidence of Progress and Improvement
Methodology
3.1
Introduction
3.2
The Programme Logic Model
3.3
Efficiency and Effectiveness
3.4
The Counterfactual –
What Would Have Happened Without the Programme?
3.5
The Survey Questionnaires – Design and Technical Issues
3.6
Assessing Causality - The Role of Roads Infrastructure
in Delivering Housing and Development Lands
3.7
Assessing Social and Economic Outcomes
3.8
Quality Assessment
3.9
Concluding Comments
i
44
4.
Programme Objectives
4.0.
Introduction
4.1.
The Origins and Objectives of the Programme
4.1.1 The Primary Objective
4.1.2 First Bacon Report
4.1.3 The Second Bacon Report
4.1.4 The Third Bacon Report
4.1.5 Circular RW 13/00 „Non-National Road Grants to Support
Housing and Other Related Developments‟
4.2
The Economic Rationale Behind the Programme
4.2.1 „Market Failure‟ and Non-National Roads
4.2.2 Non-National Roads as „Public Goods‟
4.2.3 Housing Supply and Market Failure
4.3
Conclusions
5.
Current Validity of Objectives
68
5.0
Introduction and Overview
5.1
Concerns about the Sustainability of Housing Development
5.2
The New Hierarchy of Planning Policy and Legislation
5.2.1 The Co-ordination of Housing, Transport and Planning Policy
5.2.2 Translating National Policy into Regional and Local Planning Guidelines
5.2.3 County and City Development Plans
5.2.4 The New Spatial Planning Hierarchy – Implications for the Programme
5.3
Housing Supply and Housing Policy –Current Policy Context
5.3.1 Housing Supply Projections
5.3.2 Land and Zoning
5.3.3 „Delivering Homes Sustaining Communities‟
5.4
Development Levies and their Role in Providing Public Infrastructure
5.5
Conclusions
6.
Programme Outputs
6.1
Introduction – Identifying the Outputs
6.2.1 Aggregate Outputs – Housing and Development Land
6.2.2 Delivered and Potential Outputs
6.3.
Performance of Individual Projects
6.4 Roads Outputs
6.5 Factors Affecting the Delivery of Outputs
6.5.1 Commencement and Completion of Projects
6.5.2 Public Consultation and Environmental Impact Statements
6.5.3 Delays in Land Acquisition
6.5.4 Other Delaying Factors
6.6.
Conclusions and Recommendations
81
7.
Effectiveness
7.1
Introduction
7.2
How the Roads Projects Linked With the Planning Process
7.3
Cases Where Output Data Was Not Available
7.4
Industrial and Commercial Sites
7.5
Case Study - Tramore, County Waterford
7.6
Case Study - Park West, Dublin 12
7.7
Case Study - Naas, Co. Kildare
7.8
The Counter-Factual - What Might Have Happened in the
Absence of the Programme?
7.8.1 Planned Rather than Piecemeal Development
7.9
Conclusions and Recommendations
102
ii
58
8.
Costs and Efficiency
134
8.1
Introduction
8.2
The Level and Trend of Exchequer Funding Over the
Lifetime of the Programme
8.2.1 Why 75% Exchequer Funding?
8.2.2 Expansion of the Original Funding Commitment in December 2000
8.2.3 Project Changes 2000-2008
8.2.4 Increased Grant Allocations 2000-2008
8.3
The Level and Trend of Project Costs Over the Lifetime of the Programme
8.3.1 Headline Trends in Cost Data
8.3.2 What Factors Were Driving Cost Upwards
8.3.3 Land Prices
8.4
The Cost of Achieving Outputs
8.5
Contract or Direct Labour? - How the Works Were Carried Out
8.6
Administration
8.6.1 Departmental Administration
8.6.2 Local Authority Administration
8.7
Maintenance
8.8
Conclusions and Recommendations
9.
Future Public Funding
9.1
Emerging Analysis on the Current Policy Position
9.2
The New Strategic Regional and Local Roads Programme
9.3
Assessing Benefits and Costs
9.4
Stages and Level of Appraisal
9.5
Contracts and Value for Money
9.6
Dealing with the Rising Cost of Land
9.7
Conclusions and Recommendations
173
10.
Performance Indicators
10.1
Introduction
10.2
Performance Management and Current Performance Indicators
10.3
Identifying Gaps in Current Indicators
10.4
Recommendations
192
11.
Concluding Comments and Next Steps
11.1
Issues for Further Consideration Not Addressed in the Review
11.2
Key Findings
11.3
The Next Steps
199
iii
Appendices
Appendix I - Bibliography
Appendix II – Steering Committee
Membership
Dates of Meetings
Appendix III - Questionnaires and Cover Letter
Self-Completion Questionnaire for all projects funded under the programme
Questionnaire for projects that were submitted but not funded
Cover Letter to Local Authorities
Appendix IV - Interviews
Participants and Dates
Appendix V - Original Circular Letters and Application Form
Circular RW 13/00 of 3.7.00, „Non-National Road Grants to Support Housing
and Other Related Development‟ (which invited applications from local
authorities under the programme)
Original Application Form, July 2000
Circular RW 25/00 of 14.12.00, „Non-National Road Grants to Support
Housing and Other Related Development‟ (which formally notified local
authorities of approved projects and grant amounts)
Appendix VI - Output Data
Housing Units, Housing Lands and Industrial / Commercial Lands Reported Outputs
Project Commencement and Completion
iv
List of Tables and Figures
Table
Reference
1.1
1.2
2.1
5.1
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
Figure
Reference
3.1
8.1
8.2
8.3
8.4
8.5
Title
All projects approved under the Strategic Non-national Roads
Programme 2000-2008
Summary of Housing and Land Outputs
Annual House Completions 2001-2007
The Availability of Undeveloped Lands that Were Zoned and
Serviced For Housing at 30 June 2006
Original Output Targets
Headline Outputs – Housing and Development Land
Housing Unit Outputs
Housing Land Outputs (Hectares)
Industrial / Commercial Land Outputs (Hectares)
Relative Performance of Projects - Reported Outputs Compared
to Original Intended Outputs
Roads Outputs
Facilities for Cyclists and Pedestrians
Project Commencement Dates
Project Completion Dates
Length of Public Consultation
Summary Traffic Count Data for the R406 / R407 Kildare
Projects
Tramore - Distance Traveled to Work 2006
Tramore - Distance Traveled to Work 2002
Naas - Distance Traveled to Work 2006
Naas - Distance Traveled to Work 2002
Naas - Distance Traveled to Work 1996
Naas - Labour Force by Social Class - Comparison with the
Greater Dublin Area and the State.
Naas - Highest level of educational attainment, as a percentage
of the Population aged 15 and over.
Naas – Population Classified by Socio Economic Group 1996 –
2006
Applications that were not Selected – Did the Projects Proceed?
Level and Trend of Total Project Costs and Exchequer
Commitment 2000 to 2008
Level and Trend of Grant Allocations – 2000 to 2008
Project Cost Comparison, Original Estimates from 2000 versus
Costs Reported in the Questionnaire Returns 2007/2008
Construction Inflation, 2000-2007
Cost of Land Acquisition, 2000 - 2008 and Unit Cost Per
Hectare
Cost of Achieving Development-Related Outputs
Contract or Direct Labour – How Works Were Carried Out
Estimated Administration Costs 2008
The Programme Logic Model
Breakdown of Grants by Amount Awarded - 2000
Breakdown of Grants by Amount Awarded - 2008
Projects Separated into Cost Bands - 2000
Projects Separated into Cost Bands - 2008
Proportion of projects affected by Land Cost Increases
v
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152
List of Abbreviations
AADT
Annual Average Daily Traffic (measurement used for counting traffic)
CBA
Cost Benefit Analysis
C & AG
Comptroller and Auditor General
CPO
Compulsory Purchase Order
CSO
Central Statistics Office
DEHLG
Department of the Environment, Heritage and Local Government
(also its predecessor, DELG – Department of the Environment and
Local Government)
DoT
Department of Transport
D&MRA
Dublin and Midland Regional Authority
ESRI
Economic and Social Research Institute
HGV
Heavy Goods Vehicle
Ha
Hectare
IDA Ireland
Industrial Development Authority Ireland
IAVI
Irish Auctioneers and Valuers Institute
IMF
International Monetary Fund
KPMG
Consulting Firm (authors of efficiency review of non-national roads)
MIF
Management Information Framework
NDP
National Development Plan
NESC
National Economic and Social Council
NRA
National Roads Authority
NSS
National Spatial Strategy
OECD
Organisation for Economic Co-operation and Development
PI
Performance Indicator
PPP
Public Private Partnership
SDZ
Strategic Development Zone
VFM
Value for Money
vi
Chapter 1
Introduction
1.1. Background and Overview
The Programme was framed in the immediate context of recommendations contained
in the three reports commissioned by the Department of the Environment and Local
Government1, and prepared by Peter Bacon and Associates, Economic Consultants
in 1998, 1999 and 2000. These examined the significant changes occurring in the
housing market in Ireland from the 1990s onwards.
Each of the three reports
identified inadequate infrastructure (including roads), as barriers to the supply of
housing to cater for rising demand. Such constraints on housing supply were seen
as factors leading to a disparity between supply and demand, contributing to rising
house prices and affordability problems for certain sectors of the market. Each report
was accompanied by the publication of a Government-approved policy document.
These policy responses set out the specific measures to address the issues raised in
the respective Bacon reports.
When established in 2000, the Programme was known as „Non-National Roads
Grants to Support Housing and other Related Developments‟. Formal applications
were invited in July 2000 from 15 local authorities in and adjacent to main urban
centres. Allocations for 43 projects were announced in December 2000. The initial
exchequer commitment at this time was €247.6m. A number of alterations have
occurred since then with the addition, removal, subdivision and amalgamation of
individual projects. Upon completion, 44 schemes in total will have been supported.
Table 1.1 contains a full list of the projects selected under the Programme, with
notation to highlight those affected by the alterations described.
The total
commitment of grant aid when all are completed is expected to be €317.334m.
However, in addition to this amount significant funding has been provided by local
authorities. This has been primarily generated through development levies. Based
on data provided by local authorities for this review, the total expenditure on all
projects upon completion is estimated at €584.917m, however this figure is likely to
be higher.
1
The Department of the Environment and Local Government was re-titled the Department of
the Environment, Heritage and Local Government in 2002. Within the review both of these
terms are used. For ease of reference a truncated version „the Department of the
Environment‟ is also commonly used.
1
1.2. Regional and Local Roads
While the specific programme under review has its own definable objectives, it is also
part of a wider scheme of policy and expenditure on roads. Under „The Roads Act,
1993‟, Ireland‟s road system is split into three categories.
„Regional‟ and „Local‟ roads.
These are „National‟,
Regional and Local Roads have traditionally been
described collectively as „Non-National Roads‟. On the other hand, „National‟ Roads
consist of all national primary and national secondary routes (including motorways).
Until June 2007, the Department of the Environment, Heritage and Local
Government had overall policy responsibility for non-national roads. However, this
function and the related funding responsibilities were transferred to the Department
of Transport at this time. The term „Regional and Local Roads‟ is now used in
preference to „Non-National Roads‟. The unit responsible for coordinating policy and
administering the payment of grants in this area is now called the „Regional and
Local Roads Division‟ of the Department of Transport. Within the review, the terms
„Regional and Local Roads‟ and „Non-National Roads‟ are used interchangeably.
Approximately 91,000 kilometres, or 94% of the country‟s road network are in the
„regional and local‟ category. In 2008, state grants totalling €618.714m are being
distributed to local authorities by the Regional and Local Roads Division. The overall
budget of the Department of Transport in 2008 is estimated at €3,226m.
The allocation in 2008 to the strategic programme being reviewed here was
€40.324m, while €45.909m was committed to projects under a newer programme,
established in 2006 to fund strategic roads tied into the National Spatial Strategy.
The remainder is spread across different funding categories. The most significant is
the „Restoration Programme‟, with a budget in 2008 of €310m. It commenced in
1995 following public and political concern about the pot-holed state of the regional
and local roads network.
A study carried out in 1995/1996 identified that some
47,000 kilometres of non-national road was in need of restoration (Ove Arup et
al.,1997). In 2005, that Programme was reviewed and a follow-up study concluded
that the Programme needed to take account of changed road use patterns and
refocus priorities to areas of greatest need (RPS et al., 2005). Up to the end of 2007,
over 46,000 km of roads have been improved under the Programme.
The „Specific Improvement‟ grants scheme, which generally funds smaller scale
projects to support local and regional development has a budget of €101m in 2008.
A further €55.5m is being committed to county council „Discretionary Grants‟, where
2
the local authority decides how the funds are expended. €16.1m in „Block Grants‟
are being given to urban local authorities under similar conditions. There is also a
€17.4m fund for carriageway and footpath repairs and a €15m allocation to the „Local
Improvement Scheme‟ for non-public roads.
In addition there are a number of
allocations towards smaller programmes.
When the Strategic Non-National Roads Programme was established in 2000, the
main policy focus of regional and local roads expenditure was the conservation,
restoration and maintenance of the existing network.
However rapid economic
development from the 1990s onward brought new pressures.
A need began to
emerge, particularly around larger urban areas, for the provision of new roads to
serve housing, and industrial/commercial needs.
By way of a policy response, a
separate targeted scheme of exchequer funding was therefore put in place through
the Programme which is now being reviewed.
1.3. The Value For Money and Policy Review Initiative
The „Value for Money and Policy Review Initiative‟ is a Government-wide framework
to achieve value for money in public expenditure. It commenced in 1997, and was
formerly known as the „Expenditure Review Initiative‟. It was expanded and renamed
in 2006. As a general rule each Department should carry out a series of reviews
covering 10-15% of its expenditure every three years.
The most recent set of
reviews for the period 2006-2008 was announced in June 2006 by the Minister for
Finance.
This VFM review is one of 90 being carried out across Government
Departments and Offices during that period.
At a Governmental level, the review initiative is co-ordinated by a Central Steering
Committee and Central Expenditure Evaluation Unit that operate through the
Department of Finance. Published guidelines set out the processes that should be
followed in undertaking a review. The final report from each VFM review is submitted
to the relevant Oireachtas Select Committee and published.
VFM reviews follow a particular structure, with requirements to examine expenditure,
and the outputs and outcomes that arise as a result.
These requirements lend
themselves to certain analytical approaches which will be examined in detail in the
methodology chapter.
3
1.4. Steering Committee
The guidelines issued by the Department of Finance recommend that a „Steering
Committee‟ be established to direct each review. It has responsibility for the conduct
of the review and oversees the drafting of the final report. The Committee is seen as
an important element in assuring objectivity. The steering committee for this review
reflects the fact that the Programme‟s original objectives combined elements of roads
and housing policy, whilst being delivered by local authorities. Membership of the
committee therefore comprises officials from the Department of the Environment,
Heritage and Local Government, the Department of Transport, and an official from
one of the local authorities involved in the delivery of the Programme. Between July
2007 and April 2008, the Steering Committee met five times.
The draft report was
circulated to the members of the committee and approved in June 2008. A list of
members of the committee, and schedule of meeting dates is set out in Appendix II.
All reviews undertaken as part of the Value for Money and Policy Review Initiative
must be based on „Terms of Reference‟. These are prepared at the outset. There is
also a requirement that they generally comply with a template issued by the
Department of Finance. The steering committee agreed the Terms of Reference in
July 2007.
These were approved by the Secretary General of the Department of
Transport and agreed with the Department of Finance.
1.5. Format of the Report
Each of the seven individual terms of reference is addressed in a separate chapter,
but given the interrelated nature of the issues being examined, there is some overlap
between them.
The review commences with a „Scene Setting‟ chapter, which
examines a number of earlier reports and studies.
These crucially inform the
methodologies used to gather data (which are set out in Chapter 3). The next seven
chapters (4 to 10) address each of the individual terms of reference.
The final
chapter describes the next steps to be taken to implement the recommendations in
the review. A summary of the Conclusions followed by a list of Recommendations
from each chapter is included at the outset in the form of an „Executive Summary‟.
4
Table 1.1. All projects approved under the Programme 2000-2008
Local Authority
Road Project Name
#Cork County
#Cork County
#Cork County
#Dun Laog/ R‟down
1. Carrigaline Western Relief Road
2. Clarkes Hill / Moneygourney Road
3. Midleton Northern Relief Road [Phase 1]
4. Dundrum Main Street Bypass
#Fingal
#Fingal
#Fingal
5. Balbriggan Inner Relief Road [stage 2]: Dublin Road - Skerries Road
6. Lusk Bypass
7. Naul Road Improvement Scheme
#Fingal
#Galway County
8. Ongar Road
9. Oranhill Distributor Road
#Galway County
10. Parkmore Road [Phases I & II]
#Kildare County
#Kildare County
#Kildare County
#Kildare County
#Kildare County
#Kildare County
#Kildare County
11. Barberstown Cross - Maynooth [R407] north of Barberstown cross
12. Barberstown Cross - Maynooth [R407] south of Taghadoe Cross
13. Celbridge Interchange
14. Clane - Kilcock [R407] south of M4
15. Clane - Kilcock [R407] to a point 1500m north of Clane
Clane Inner Relief Road
Enfield - Edenderry [R402] [Carbury to Kishawanny]
#Kildare County
Enfield - Edenderry [R402] [ohnstownbridge to Carbury
#Kildare County
Naas Inner Relief Road [Dublin Road to Tipper Road]
#Kildare County
16. Naas Ring Road - Newbridge Road to Caragh Road
#Kildare County
17. Naas Ring Road - Newbridge Rd to Kilcullen Rd to Craddockstown Rd
#Kildare County
18. Naas Ring Road - Newbridge Road to Industrial Estate [Millennium Park]
#Kildare County
19. Sallins - Clane [R407} south of Blackhall junction
#Kildare County
20. Sallins - Clane [R407] Castlesize estate to Blackhall Stud
New - Kildare County 21. Roads Serving Intel
#Limerick County
22. Castletroy Distributor Roads: Monaleen - Kilbane - N7 Dublin Road
#Meath County
23. Duleek-Julianstown-Laytown
#Meath County
Plattin-Colp [MCC part]
#Meath County
24. R154 Trim Inner Relief Road, phase 2a
#Meath County
R154 Trim - Dublin Improvement Scheme
25. R154 Trim/Dublin [Iffernock]
26. R154 Trim/Dublin [Kiltale/ Scurlogstown]
27. R154 Trim Dublin [Tullaghmedan]
#Meath County
R161 Athlumney
28. R161 Athlumney Phase I (Connaughtons)
29. R161 Athlumney Phase II (Bridge N3)
#Meath County
30. Trim-Kilcock R158
#Meath County
31. Trim-Navan Improvement Scheme [R161]
Commentary
Decommitted Jan 2008
Reallocated to Another
Programme 2006
Reallocated to Another
Programme 2006
Decommitted Jan 2008
Added February 2001
Decommited 2002
Subdivided into 3 projects
Subdivided into 2 projects
#South Dublin
#Waterford County
New - Waterford
County
#Wicklow County
#Wicklow County
32. Outer Ring Road
33. Tramore Ring Road [phase 4]
34. Tramore Ring Road [phase 5]
Added July 2002
35. Wicklow Town Relief Road &
Wicklow Port Access
The two projects originally
selected were merged
#Cork City
#Dublin City
36. Improvement works at Old Whitechurch Road
37. Jamestown Road, Inchicore
#Dublin City
#Galway City
38. Killeen Road, Ballyfermot
39. Parkmore Road Industrial Lands
#Galway City
40. Terryland Valley Access Road
#Limerick City
Corbally Link Road
Subdivided into two Projects
41. Corbally Link Road Phase I
42. Corbally Link Road Phase II
#Waterford City
43. Outer Ring Road
New - Waterford City 44. Ballybeg Road
Added September 2002
Notes on Table 1.1
Projects marked in the first column with the hash symbol (#) denote the 43
originally selected in December 2000.
In the second column, the projects numbered 1 to 44 represent the full list of
projects that currently comprise the Programme.
5
EXECUTIVE SUMMARY
1. TERMS OF REFERENCE
Title and Context
The Strategic Non-National Roads Grants Programme (formerly known as NonNational Roads Grants to Support Housing and other Related Developments)
commenced in December 2000. It was framed in the context of recommendations
contained in the reports „The Housing Market: An Economic Review and
Assessment‟ (March 1999) and „The Housing Market in Ireland: An Economic
Evaluation of Trends and Prospects‟ (June 2000) prepared by Peter Bacon and
Associates, Economic Consultants. The Department, in its policy response, „Action
on Housing‟ (June 2000), recognised the need for targeted investment in nonnational roads schemes crucial to housing and other related development.
Scope
The scope of the review will cover the Programme from its commencement in
2000 to the present, 2007.
A new and separate programme was introduced in 2006, for „strategic nonnational roads that make a significant contribution to the implementation of
the National Spatial Strategy‟. While conclusions and recommendations
arising from the VFM review will be relevant, this new programme is at a very
early stage and does not form part of the immediate scope of the review.
As the implementation of the Programme is largely devolved to local authorities, the
efficiency and effectiveness of the local government system in meeting the objectives
of the Programme will be considered in the assessment.
Terms of Reference:
The VFM Review of the Strategic Non-National Roads Programme will:
1) Identify the Programme‟s objectives,
2) Examine the current validity of those objectives and their compatibility with
overall Government strategy,
3) Define the outputs associated with the Programme activity and identify the
level and trend of those outputs,
4) Examine the extent that the Programme‟s objectives have been achieved,
and comment on the effectiveness with which they have been achieved,
6
5) Identify the level and trend of costs associated with the Strategic NonNational Roads Programme and thus comment on the efficiency with which it
has achieved its objectives,
6) Evaluate the degree to which the objectives warrant the allocation of public
funding on a current and ongoing basis and examine the scope for alternative
policy or organisational approaches to achieving these objectives on a more
efficient and/or effective basis.
7) Specify potential future performance indicators that might be used to better
monitor the performance of the Programme or other specific programmes
related to the grant support of roads infrastructure to facilitate social and
economic development.
2. CONCLUSIONS
Chapter 2 - Scene Setting

The major studies of the Irish housing market in recent years have drawn upon
economic models to estimate the key influences driving supply and demand.
These factors include rising incomes, demographics and interest rates. The use
of such models can inform the review, but are insufficient in their own right in
explaining all of the factors that influence housing supply.

Housing output has expanded hugely in the past decade, assisted by
Government policy measures put in place to stimulate supply.
However, a
problem arises in attempting to disaggregate the influence of any one measure.

The UK experienced broadly similar problems to Ireland in relation to growing
demand, but restricted supply. It responded in a similar fashion (in 2004) with the
establishment of a dedicated transport infrastructure fund to assist in the supply
of housing. This offers a validation of the Irish approach. It also acts as a useful
source of information for the review.

There is a widespread view internationally that infrastructure investment in roads
is beneficial to economic growth.
This view also informs investment policy in
roads infrastructure in Ireland. The mid-term review of the „National Development
Plan 2000-2006‟ noted that the rate of return on non-national roads, although
small was consistent and reliable. The review did however comment on the
difficulties in quantifying benefits.

The appropriateness of using a Cost Benefit Analysis methodology to assess the
Programme was considered. However for technical and conceptual reasons this
was ruled out. CBA can be unreliable when applied in urban areas, and on roads
that experience significant traffic growth.
7

A major study by KPMG in 1997, which examined the efficiency of delivery of
non-national roads, offers a useful building block to commence the review at
hand.
Chapter 3 – Methodology

The overarching methodological structure is built around the „Programme Logic
Model‟. It allows for the systematic analysis of the cause-effect relationships
between the Inputs, Activities, Outputs and Outcomes.

Policy documents, departmental files and interviews with Departmental staff are
used to establish the objectives of the Programme.

A self-completion questionnaire in respect of each project is the main instrument
used for gathering data from local authorities on inputs and outputs.

In examining „Effectiveness‟, comparisons are drawn between the stated
commitments contained on the original application forms, and the actual
performance of the projects.

„Efficiency‟ is assessed by examining the cost of achieving the declared outputs.

In order to attribute outcomes to the Programme it has to be established that the
roads have played a causal role in facilitating new housing and development
lands. A technique called „Contribution Analysis‟ (Mayne 1999) is used. Inherent
in this approach in the use of multiple lines of evidence, and an awareness of
external factors that may have contributed to outcomes. Qualitative interviews
were undertaken with senior officials in each of the 15 relevant local authorities.
These included staff from different areas (engineering, administration, policy and
planning).

To examine „Effectiveness‟ in more detail, three case study areas were selected.
In Tramore (Co. Waterford), two new sections of its ring road were funded in
order to assist housing development. To assess the relationship between the
roads and housing supply, interviews were conducted with two local housing
development companies. The Killeen Road in Ballyfermot, Dublin facilitated the
Park West Business Park. An interview was conducted with the developers of
the park. Economic outcomes are examined with reference to the companies
located there.
Naas in County Kildare had three roads funded under the
Programme. These are examined in relation to their specific role in facilitating
development, and resulting socio-economic impacts on the town.

An important consideration in the effectiveness of a Programme is to examine
what might have happened in its absence. By its nature this can be speculative.
However, it is useful in assessing „deadweight‟, „displacement‟ and „additionality‟.
8
When applications were invited from local authorities under the Programme a
total of 117 were submitted. 43 were approved, leaving a total of 74 projects that
were not selected. These 74 projects are used as a type of „control group‟ to
compare with the projects that were funded under the Programme.
Chapter 4 - Programme Objectives

The immediate objective of the Programme was to enable roads to be built that
would facilitate the opening up of development lands and the construction of
housing. This reflected the rapid economic growth and development pressures
that were prevalent in the late 1990s. The Programme was also to contribute to a
wider goal of increasing housing output in order to stabilise house prices. These
objectives were in line with stated government policy.

There was a justification for the Programme on the grounds of „Market Failure‟,
particularly in relation to the performance of the housing market at the time.
Underinvestment in infrastructure can lead to an undersupply in the housing
market and a loss of benefits to society. There were also wider „market failure‟
grounds based on the position of local and regional roads as „public goods‟, and
in their role of stimulating economic and social development.

The decision to establish the Programme was therefore justified from a policy
perspective.
Chapter 5 - Current Validity of Objectives

Since the Programme commenced, housing output has peaked and since
contracted.
Prices have also peaked, and since 2007 have been falling.
Particular „market failures‟ related to the housing market are no longer
significantly prevalent.

In the medium to long term, demographic projections indicate a requirement to
provide considerable housing output. This can be best achieved through the new
hierarchical planning framework that has been put in place in recent years. This
framework consists of the National Spatial Strategy, Regional Planning
Guidelines, County Development Plans, Strategic Development Zones and Local
Area Plans. Decisions on resource allocation are also now crucially informed by
considerations of sustainability.

While there is no longer a need for a housing-focused roads Programme, there is
still an identified role for regional and local roads in facilitating social and
economic development. This role is recognised in the National Development
Plan 2007-2013.
9
Chapter 6 – Programme Outputs

The Programme was set up to facilitate additional housing units, housing lands
and industrial and commercial lands. In comparison with its original projections,
under all of these headings, the Programme will exceed expectations.

Most projects had a combined focus on both housing and industrial outputs,
although some focused on just one area. Amongst the individual projects, most
either met or exceeded their projected outputs.
26 of the 34 projects with
housing outputs are meeting or exceeded their stated targets on housing lands.
27 are meeting or exceeding their projected outputs for housing units.

In the case of the 30 projects with industrial and commercial land outputs, 19 are
meeting or exceeding targets. 11 have under-delivered, although in a number of
cases this was offset through additional housing-related outputs. However eight
projects did not have quantified deliverables at the outset, or similar current data.
Table 1.2. Summary of Housing and Land Outputs
2
Declared Outputs
based on
Questionnaire Returns
Difference between
Expected and Actual
Performance
Housing Units
65,436
19,412
Housing Hectares
2,281
(+42%)
+490
Industrial / Commercial
Hectares
973.5
(+27.5%)
+14.5
(+1.5%)

At least one third of the housing units have not yet been submitted for planning
permission.
However, most of housing development lands facilitated by the
Programme have been zoned and serviced. Upon completion of the Programme,
the combined anticipated length of all roads outputs will be 104 kilometres, which
is broadly in line with expectations. An additional bonus in terms of sustainability
is the widespread presence of cycle tracks and footpaths.

There was widespread underestimation by local authorities of the time take it
would take to commence and complete projects. Expectations of timescale were
also over-optimistic.
Within its intended lifespan (2001-2004), 32 projects
commenced and 19 were completed. Coming into 2008, 3 projects had yet to
commence, and 13 awaited completion. Delays were caused by longer than
2
Full account is taken in the table of changes in the numbers of projects over the course of
the Programme
10
expected statutory and planning procedures, land acquisition and localised
issues affecting individual projects. Cost increases also resulted in delays as
local authorities sourced additional funding. Delays and cost increases had a
mutually reinforcing effect.
Chapter 7 - Effectiveness

A key determinant of effectiveness involves identifying the causal relationship
between the roads and the development that took place. Based on the combined
data sources referenced in the methodology chapter, the Programme did fulfil this
role. The most compelling supporting evidence came when planning decisions
were predicated on the presence of the road, and were directly linked through
specific development plans in an area.

Some roads have experienced the equivalent of a full generation of traffic-growth
in the space of around four years. In these cases, it is possible to say that the
road upgrades were required with reference to demonstrated need. However the
growth in traffic has implications for sustainability.

The roads played a key role in opening up business park sites, and in attracting
companies to locate there.
accessibility.
Economic benefits accrue through improved
Business have better access to their workforce (current and
potential), customers and suppliers. Increased employment has occurred at the
sites facilitated by the Programme. While it would be inappropriate to attribute all
economic and employment benefits to the Programme, the roads did play a key
role.

The facilitation
of
housing
and
commercial
development
affects local
demographics and the socio-economic profile of areas.

There is also evidence in the case study areas of principles of sustainable
development being followed within local development plans, and in planning
decisions.

The review considered a „counter-factual‟ scenario on what might have happened
without the Programme. Some projects (particularly smaller ones) may have
proceeded, albeit in a more piecemeal fashion.
„Additionality‟ is clearest in
relation to the larger projects, which may not have gone ahead had the
Programme not been in place. The number of other projects that local authorities
supported outside the Programme indicates that exchequer funding wasn‟t used
to „displace‟ local resources. Overall, in terms of outcomes, the Programme can
be considered effective.
11
Chapter 8 – Costs and Efficiency

While the Programme delivered more outputs than projected, costs were greater
than expected. Tackling this issue will be crucial to improving efficiency. There
was a widespread underestimation of costs by local authorities at the outset.
Sufficient attention wasn‟t paid to the potential of costs to increase. When cost
increases began to be felt, the Department was left in the difficult position of
either choosing to curtail the Programme or approve grant increases. In the
main, it chose the latter option.
Changes in costs and the Exchequer
commitment between 2000 to 2008 are outlined below.
Year
Total Estimated
Total Exchequer
Project Costs
Grant Commitment
€385.97m
€247.6m
December 2000
(Announcement of Projects)
January 2008

€584.917m
3
€317.334m
The Department‟s financial commitment increased by 28% over the lifetime of the
Programme. Overall, the estimated cost of delivering the projects increased by
61% (approx), which indicates that proportionately, local authorities took on
additional responsibilities to meet cost increases.
Some projects were
disproportionately affected, 15 had cost increases in excess of 100%.

Increases were caused by a number of factors namely: construction inflation that
was particularly rampant between 2000 and 2002, significant land price rises,
changes in specifications of individual projects, and a range of localised factors.

Increases in land costs largely reflected prevailing market conditions. For 18
projects land now constitutes 20% or more of total costs, which is comparable to
what is seen in motorway construction. 5 now have land costs comprising 50%
or more of their budget, which is largely a reflection of their urban location where
land costs are higher.

Given the substantial number of variables affecting cost, the preparation of data
on the unit costs per square metre of road did not yield useful information that
would facilitate a Programme-wide comparison. The difficulties encountered are
consistent with prior experience of previous reviews.

The use of Competitive Tender for the procurement of design and construction
contracts was the norm across the Programme. This represents a shift from
earlier studies in 1997 and 2002.
3
Some of the individual figures that formed the basis for this aggregate amount are
estimates. This figure is likely to be higher.
12

Administration costs are estimated at 0.2% (approx) of the Programme budget in
2008, and 0.25% over its entirety. This compares favourably with other VFM
reviews and with strategic roads programmes in England and Scotland.
Administration costs within local authorities proved difficult to calculate, but the
introduction of a new system of overhead apportionment should make this easier
in future.

Most of the roads were constructed to have a design-life of 20 years. At that
point, rehabilitation works will be required. As a rough indicative estimate, this
could cost up to €61m (in 2008 terms). These costs will, in the main, fall to be
met by local authorities.
Chapter 9 – Future Public Funding

Pressures on the housing market have significantly eased, and policy priorities
have shifted toward integrated and sustainable development. In line with this
change, the new strategic programme to support regional and local roads that
contribute to the implementation of the National Spatial Strategy was put in place
in 2006. This programme has been endorsed by the „National Development Plan
2007-2013‟, and in the Department of Transport‟s Statement of Strategy (2008).

Experience in relation to cost increases and delays supports the need for a more
formalised framework for project appraisal, approval and monitoring.
Chapter 10 - Performance Indicators

There is already quite a comprehensive system of performance indicators in
operation for regional and local roads. These cover the five different indicator
types as set out in the Department of Finance „Management Information
Framework‟ guidelines (Dept. Finance, 2001), namely: „Strategic‟, „Effectiveness‟,
„Quality‟, „Efficiency‟ and „Activity‟.

Any additional indicators should be informed by the criteria used to appraise
projects under the new programme.
The twin factors of cost increases and
delays can be monitored by the Department through reporting procedures.
Chapter 11 – Concluding Comments and Next Steps

The strategic programmes (both current and new) constitute 14% of the regional
and local roads budget in 2008. It was beyond the scope of the review to say if
strategic roads are more deserving of Exchequer support than the other policy
priorities within the Regional and Local Roads Division.
13

The central conclusion from this review is that strategic roads are worthy of
investment, and the central recommendation is that a revised system of appraisal
is needed to assure value for money.
3. RECOMMENDATIONS
1. When the Programme was established some projects did not have measurable
outputs in the form of housing units and development lands. Notwithstanding the
case that existed for funding these roads, there is a need to have a more uniform
approach to output indicators, which allow a common basis for the comparative
appraisal and evaluation of projects.
2. For future reference, the key benefits and outputs that are anticipated to accrue
from roads programmes should be subject to an estimated timescale for delivery.
This is notwithstanding the fact that some factors affecting delivery may be
outside the direct control of the Department or the local authority.
3. Public consultation procedures for local authority roads, and requirements to
undertake Environmental Impact Assessments are a necessary and important
part of the planning process. While it is difficult to envisage every eventuality,
estimates of time taken to conclude these processes should be based on realistic
assessments.
4. Based on the widely expressed view of local authorities as part of this review,
seeking a Compulsory Purchase Order at an early stage brings greater clarity
and certainty in planning the likely time that land acquisition will take. However,
there are situations where negotiated agreement can be both quick and effective
in securing land from developers at preferential rates. These circumstances can
typically apply where there is a limited group of owners with a vested interest in
co-operating to see that the road project proceeds.
5. Overall, there is a need for greater rigour in the estimation of project timescales.
The probability of delays occurring and their potential impact should be assessed
at the outset in a risk analysis as part of the pre-approval project evaluation
process.
6. Where delays occur and become particularly serious, there is a need for a formal
framework within which their impact can be assessed by the Department.
7. The case study areas in particular identified the importance of good integrated
and sustainable planning.
This manifests itself through linkages with local,
regional and national planning policy objectives. The extent to which project
proposals are consistent with other policies should be a key consideration in the
future appraisal of strategic roads projects.
14
8. The review has found that a good deal of localised traffic count data is generated
by local authorities. When this data is being gathered, it is important that it is
done in a manner that will facilitate its application and use in the future appraisal
of road projects (through multi-criteria and cost benefit analysis).
9. „Additionality‟ in the Programme particularly arose with the larger projects. There
is a case that the new Strategic Regional and Local Roads Programme
(established in 2006) should therefore focus on larger-scale projects that are
consistent with wider strategic development objectives.
10. The Department should not give full and irreversible approval to projects based
on initial cost estimates.
11. Problems related to cost increases and delays should be addressed through a
more formalised structure or framework for project appraisal, approval and
monitoring.
12. Where a proposed road project has the capacity to generate development levies,
there is a case for this to be reflected in the proportion of funding provided by the
Department.
13. Once the remaining €70m in commitments (including for 2008) to existing
projects under the Programme is met, the original Strategic Non-National Roads
Programme should be concluded. While the broader objectives of the original
programme to support residential and economic development are still valid, they
should be subsumed into the new programme to fund strategic regional and local
roads aimed at supporting the objectives of the National Spatial Strategy.
14. Any new system for the appraisal, approval and monitoring of projects should be
based on the Department of Transport‟s „Guidelines on a Common Appraisal
Framework for Transport Projects and Programmes‟ (2007) and Department of
Finance „Capital Appraisal Guidelines‟ (2005). These should be suitably adapted
to reflect the policy priorities of regional and local roads.
15. In the interests of administrative efficiency, an application form should be
developed for the Programme.
The structure of the application should be
consistent with information requirements as set down in the Department of
Transport and Department of Finance appraisal guidelines. This would allow for
the assessment of costs and benefits through the use of a „Project Appraisal
Balance Sheet‟. By implementing a staged approach, as recommended in the
Department of Finance guidelines, the application form could be effectively used
as the basis for „Preliminary‟ appraisal in the case of projects costing more than
€5m. If these larger projects were found to have merit, they could then undertake
15
a more detailed appraisal. The application form could also be simultaneously
used for undertaking a „Single‟ appraisal for projects costing less than €5m.
16. Given the experience of the current programme, there should be a facility for the
Department to review the level of costs and the case for the proposal once full
planning, design and land acquisition issues become clear. In the case of land
acquisition in particular, a final estimate of costs should be provided to the
Department for approval before the „Notice to Treat‟ activating the Compulsory
Purchase Order is served on land owners.
17. Currently, contract documentation must be submitted to the Department for
approval in advance of advertising for tenders.
This procedure should be
retained and incorporated into the new system of appraisal.
18. There is a need to re-state in more detail, the objectives of the new strategic
programme.
These are currently set out in general terms. This will aid the
appraisal of proposed projects, and assist in their monitoring and evaluation.
19. The new strategic programme would benefit from having a defined time frame
within which it is expected to operate. A logical lifespan would be the duration of
the current NDP, up to 2013. In advance of this date, the Programme and its
objectives could be reviewed, before the successor plan to the NDP is agreed.
20. There should be an expectation that some of the „Betterment‟ arising from the
road
development
be
captured,
either
through
„General‟,
„Special‟
or
Supplementary‟ development levies. The capacity of proposed road projects to
facilitate development should be assessed when the project is being appraised
by the Department.
21. In the application form, evaluation documentation and monitoring reports, all cost
estimates should be disaggregated under the four standardised headings of:
„Land‟, „Construction‟, „Design & Supervision‟ and „Other‟. This is already being
done on other regional and local roads programmes.
The format enables
comparisons to be made on the key elements driving the costs of projects.
22. Given its particular significance, disaggregated data should be collected in a
manner that would allow comparative analysis to be regularly carried out on land
costs.
23. Additional output and outcome indicators will be dependent on the final format of
any new system of appraisal, and the relative weighting given to different criteria
in the assessment of projects. It is therefore difficult to be prescriptive at this
point. However, quantifiable indicators should relate to roads outputs, improved
accessibility through journey time savings (where relevant) and levels of
development.
16
24. Using the framework set out in Department of Finance Capital Appraisal
Guidelines (2005), the more complex social and economic outcomes may be
better examined during the „Evaluation‟ stage of the Programme.
17
Chapter 2
Scene Setting
2.0. Introduction
This chapter will consider the theoretical and policy background that informed the
creation of the Programme. While the commitment to establish the Programme was
contained in a specific policy document, it was underpinned by certain analytical
perspectives. In some cases these were explicitly stated while in others they were
implicitly understood.
The chapter draws upon a range of source materials that
includes academic studies, Government policy documents, inter-governmental and
international studies, Departmental files, consultancy reviews and other policy
material.
This chapter is divided into three distinct sections. Section one looks specifically at
the „Irish Housing Market‟.
A key objective of the Programme was to provide
infrastructure to facilitate the supply of housing. Such policy measures are designed
as a stimulus to trigger an anticipated response. Underpinning such interventions
are a series of assumptions about the behaviour of markets. This involves the use of
a variety of terms, some of which are widely understood, other less so.
This
terminology is discussed and explained. The most significant studies of the Irish
Housing Market in the past decade have drawn upon econometric models that use
advanced statistical techniques.
While these types of studies are beneficial in
giving an understanding of the housing market, they have limitations. This is
especially so when it comes to examining the role that infrastructure plays in the
supply of housing. These studies are reviewed and examined. Conclusions are
drawn that influence the methodological approach adopted later in the review.
The other main objective of the Programme was to facilitate the provision of lands for
industrial and commercial development. From an economic perspective, there is a
wide-ranging (but not unanimous) acceptance that the provision of public roads
infrastructure is a key element in promoting economic growth. The „Role of Roads in
Facilitating National and Regional Development‟ is then examined. . It considers a
number of international perspectives, as well as looking at experience here in Ireland.
The assessment of economic benefits associated with regional and local roads
expenditure poses particular challenges. The standard methodological approach in
the economic assessment of roads infrastructure is Cost Benefit Analysis.
The
appropriateness of applying CBA in the current study is examined. This discussion
18
offers a further foundation in selecting the methodological approaches to assess the
social and economic impacts of the Programme.
The third section of this chapter is entitled „Reviewing Other Reviews‟.
This
dissertation follows the template of a „Value For Money Review‟. At the core of such
reviews is the study of „Efficiency‟ and „Effectiveness‟. Since the mid-1990s, these
areas have been scrutinised in some detail in relation to non-national roads
programmes. This has in turn led to the strengthening of quality control regimes
locally and nationally. Developments in recent years are critically examined, and
issues of relevance to the current review are identified. These lessons will also feed
into the methodologies employed in the review, and are also of relevance when
potential future performance indicators are identified later.
2.1. The Irish Housing Market
2.1.1. The Factors Driving Supply and Demand
This section examines the major studies of the Irish housing market in recent years.
One purpose is to explain the key influences driving the market. An understanding of
these influences is crucial in explaining the pressures that necessitated a policy
response. However another reason is to consider the methodological limitations of
some of the techniques described. While many of these techniques explain „biggerpicture‟ issues, they may not be appropriate to a more tightly-focused review like that
being conducted here.
In theory, demand (what buyers want) and supply (what sellers will make available)
determines the quantity of goods produced and the price charged in a market. The
„equilibrium price‟, is the price at which quantity supplied equals the quantity
demanded. Cases can arise where the quantity demanded exceeds the quantity
supplied, a situation described as „Excess Demand‟. When this happens the price
usually goes up and there is unmet demand. In a properly functioning market, supply
should expand to meet this demand and a new „equilibrium price‟ will be set. In fact,
the key question in most policy analyses of housing is whether the market responds
with more supply or higher prices (Malpezzi & Maclennan, 2001).
Demand and supply are influenced by certain factors. These are described as the
„conditions‟ of supply and demand. In the model used by Bacon et. al. (1998), the
principal factors contributing to demand in Ireland were identified as: real income, the
19
cost of finance (which incorporates the interest rate and the capital appreciation of
the asset), demographic patterns and other variables that could not be specified. On
the supply side, the principal factors identified were: price, costs (e.g. land and
construction) and demographics (1998, p.37, p.113). Changes in the „conditions‟ of
demand and supply have a knock on effect.
For example, when real incomes
increase, housing demand increases (all else being equal).
An increase in demand should, in theory, result in an increase in supply. However
because of the time taken to acquire development land, seek planning permission
and undertake construction, there can be a significant time lag before the supply
response kicks in.
Not surprisingly therefore, Bacon et al. found a substantial
difference between the short-run and long-run response of housing supply to
demand. In the short-run a 1% increase in house prices resulted in a 0.92% increase
in house completions (even taking account of a natural time lag of 1 year). However,
in the long-run, the supply response was estimated at 3% (ibid. p. 41). However, of
greater significance was the finding that the corresponding figure for Dublin region
was 1.8%. In other words it was less responsive. This indicated that there were
particular constraints on supply that required a policy response. Bacon concluded
that a shortage of infrastructure to support housing development was one of the main
causes.
This informed the policy response that led to the Programme being
established.
This review is particularly interested in how supply responds to demand, and there
are different methodological models used in the housing market to estimate this. The
most prevalent is the method described above which is based on statistical
techniques. A more recent study by Girouard et. al. (2006) which considered various
studies on house price determination across OECD countries notes that such
econometric studies, although useful, can be unstable. They advise that they be
complimented by other approaches (ibid., p. 10). In the first Bacon report (1998), the
statistical analysis was supplemented by a qualitative survey of practitioners and
professionals active in the housing market. This involved the administration of a
survey to a relatively small group of eight people. For the purposes of the review at
hand, it suggests that the views of those involved in the supply of housing can make
a useful contribution.
20
2.1.2. Supply and Demand– Implications for the VFM Review
The decision to set up the Strategic Non-National Roads programme can be traced
directly from the economic logic of supply and demand.
The Bacon reports
concluded that economic fundamentals had unleashed effective demand in the
market.
The economic factors driving demand were principally: income and
employment growth, an increase in population and low interest rates. A relatively
limited supply response had helped drive up prices, particularly in the Dublin area.
While the availability of suitably serviced land with water services infrastructure was
pinpointed as a more serious constraint on supply, roads were also identified as a
factor.
The message flowing through the three Bacon reports, and the subsequent
Government policy responses was that supply-side constraints had to be tackled
through policy interventions, backed up where necessary with public expenditure.
The decision to provide specific funding for a new scheme to support roads
infrastructure was one of a number of policy measures. On the supply side, the
obvious intention was to increase the supply of suitable development land and
housing. In addition there were a range of demand-side policy measures to dampen
demand in certain segments of the market. The overall intention was “to maximise
and expedite housing supply, secure house price stabilisation, address affordability
and ensure balanced growth of the market in the future” (DELG, 1999, p.1)
This analysis has similarities to conclusions reached by the NESC in its seminal
2004 report entitled „Housing in Ireland‟ (2004). It noted that a key element in the
supply of housing is the availability of suitable land on which to build. Decisions on
planning and infrastructure were identified as major influences on the supply of this
land and its price, and the price of housing.
Looking across the three policy documents launched by the Government in
conjunction with the three Bacon reports, there are approximately 70 different policy
measures or submeasures. These included, for example, changes in stamp duty tax,
the expansion of college courses for planning professionals, changes in capital gains
tax for development lands, new planning guidelines, expanded housing densities and
an increase in staff for Board Pleanála, to mention just some. The approach adopted
by the Government was a broad one. It attempted to understand the dynamics of the
housing market from a wide range of perspectives and respond accordingly.
21
At an aggregate level, the success of policy measures to increase housing supply
can be measured in simple terms by counting the number of houses built. This is a
valid and useful exercise, even if it is difficult to disaggregate the affects of individual
policy measures on the supply of housing. Within this VFM review, the numbers of
housing completions and amount of land made available for development within the
specific areas benefiting from newly funded road infrastructure are treated as
relevant output indicators. However, a key issue here is causality, and assessing the
role played by infrastructure in the delivery of the Programme objectives.
There are also other issues that need to be considered. A core reason for having
policy interventions to increase supply was to help address affordability problems. In
evaluating a single supply-side policy measure (in this case roads investment), one
needs to ask if the house price increases that occurred were justified by prevailing
economic conditions, or if they were caused by supply failures in the market. This is
important in assessing if the policy response was appropriate. An important way of
answering this question is to assess if price increases reflected what are called
„economic fundamentals‟. Ireland was somewhat unusual in that both house prices
and housing supply were expanding simultaneously at rates never previously seen.
In order to understand why the Programme was put in place, it is also important to
consider why the Irish housing market behaved as it did.
2.1.3. What Caused Irish House Prices to Rise?
Between 1995 and 2005 house prices in Ireland roughly tripled in real terms. The
vast majority of developing countries have seen increases in house prices over that
decade. However, Ireland outstripped them all (Girouard et. al., 2006, Honjo et. al.,
2004).
In 2006, the OECD investigated the issue of Irish house prices (Rae & van den
Noord, 2006). They used a variety of different methods to make their assessment.
An econometric model was applied to estimate the „fundamental price‟ – or the price
that houses should be based on demand and supply factors. In theory, if the actual
market price is above this „fundamental‟ price or „long-term equilibrium level‟, then it
would be an indication that houses were overvalued and possibly driven by
unrealistic expectations of capital gains. Using this method, Rae & van den Noord
concluded that between 80% and 90% of house price increases were justified by
fundamentals, namely, rising incomes, lower interest rates and demographic factors.
The remainder, they said was „speculative froth‟ (ibid., p. 13).
22
While this research focused mainly on demand-related conditions, the supply side
response was commented upon favourably. The contribution of relaxed zoning rules
in fueling a major expansion of supply was noted (ibid. p. 9). However, the report
predicts continued long-term demand and cites the fact that the number of people per
dwelling in Ireland is significantly higher that in other OECD countries. If Ireland does
(as expected) converge towards the norm for other developed countries, this would
lead to continued demand for housing (even without taking account of an expected
increase in population). This is obviously an issue for future housing policy in Ireland
and is considered in more detail in Chapter 5.
On the supply side, the OECD analysis echoed that of the Bacon reports in
acknowledging that the sharp increase in prices in the mid-1990s may have reflected
in part relative particular constraints like land, infrastructure and planning (Girouard
et. al., 2006, p. 14). However, there also appears to be a consensus that the supply
side response has been significant. Studies by both the OECD and IMF use the
same language, describing it as “unprecedented by international standards” (Rae &
van den Noord, 2006, p.9, Honjo et. al., 2004, p.22). Similar language has also been
used by the NESC (2004, p. 34).
A reasonable conclusion to draw from all of this is that Irish house prices increases
largely reflected changes in the economic fundamentals, but with an element driven
by speculation. As the NESC noted in its report:
“Given the remarkable strength of demand – driven by unprecedented
growth in incomes and employment and a range of demographic
factors – a significant increase in prices was inevitable. Although the
supply response was delayed, Ireland has displayed a very large
increase by both historical and international standards” (2004, p.1)
The studies of the housing market were generally saying that most of the housing
demand was driven by factors that required a supply-side response. In other words,
more houses needed to be built. Given the established relationship between roads
infrastructure and housing supply, this needed to be a feature of any policy response.
There was therefore a clear justification for the Programme.
23
2.1.4. Expanded Housing Supply
Describing the expansion in Ireland‟s housing supply witnessed over the past decade
as „unprecedented‟, as both the OECD and the IMF have, is certainly not hyperbole.
Over 600,000 new homes and apartments were built between 1997 and 2006, which
represents approximately one third of all housing stock in the State (DEHLG, 2007a,
p.14).
At the time of the launch of the Programme in 2000, annual housing
completions totaled 49,812. By 2006 this figure had risen to 93,019, although it fell
back to 78,027 in 2007 (DEHLG, 2001-2008). The table below sets out the number
of annual house completions in the intervening period. These completions include
private, local authority and voluntary and co-operative housing.
Table 2.1. Annual House Completions 2001-2007
Period
Completions
2000
2001
2002
2003
2004
2005
2006
2007
49,812
52,602
57,695
68,819
76,954
80,957
93,419
78,027
(DEHLG, 2001-2008)
The expansion of supply to meet growing demand can also be seen as a crucial
element in maintaining the affordability of housing.
Increased supply exerts a
significant downward pressure on prices. Going back to the first Bacon report, it was
estimated that a 1 percent increase in housing stock would lead to a decrease in the
price of housing on 2.08% (1998). This figure is broadly consistent with those quoted
in the 2006 OECD Economic Review for Ireland, which estimated the elasticity of real
house prices relative to housing stock supply as –2.0 for new houses for the period
1977 to 20044.
In other words, there is a direct and proven inverse correlation
between housing supply and house prices. The significance of such an observation
for the review is that it provides the conceptual link between policies to increase
supply and those to achieve greater affordability. This was an important objective
that informed the establishment of the Programme.
4
The research notes that this time trend is relative to the population aged between 25 and 44.
24
There is little doubt that public policy has played a crucial role in facilitating the
expansion of supply. Relevant policy measures include, for example, increases in
housing densities, improvements in the processing of planning applications, the
implementation of regional planning guidelines, the preparation of local authority
„Housing Action Plans‟ and the instigation of active land management strategies to
assure sufficient quantities of zoned and serviced land. However the difficulty from
an evaluators perspective is trying to identify the effects of a single intervention like
roads infrastructure on complex housing-market behaviour.
In addition, DiPasquale notes that empirical evidence on the supply side of housing is
far less convincing than on the demand side (1997, p.2). In other words, we know
more about the factors driving demand than we do supply. This is evident in many of
the recent studies of the Irish housing market, where housing supply is seen mainly
as a function of the conditions of demand. Also, a key problem in assessing how
housing supply responds, is the lack of evidence on the behaviour of housing
suppliers. As Di Pasquale notes, “this remarkable lack of information on the major
actors in housing supply presents a significant obstacle to increasing our
understanding of housing supply” (ibid., p.3). What she had in mind was information
of a quantitative nature, but the same holds true for qualitative evidence as well. We
do know that if prices go up, so should supply. But as DiPasquale concluded, price
is not a sufficient statistic in its own right to explain the market response with new
supply, although other indicators are difficult to explain (ibid., p.23).
The VFM review at hand will set out to identify the contribution that roads
infrastructure makes in the supply of housing. The preferred approach in exploring
this relationship is to combine quantitative data on housing supply with qualitative
information using interview and case study techniques. The methodology chapter
provides a fuller explanation of the research instruments used. However, input from
those directly involved in the supply decision (builders, developers and planners) will
be a valuable source.
2.1.5. The UK Experience – The Barker Report
Ireland isn‟t the only country internationally to experience problems with rising house
prices. Many others have also faced recent policy challenges in attempting to match
the supply of housing with demand. In the vast majority of OECD countries, house
prices in real terms steadily increased from the mid 1990‟s up to 2005 (Girouard et.
al., 2006). However, Ireland, the UK, the Netherlands and Spain are identified as
25
having experienced a housing boom in recent years with significant real house price
gains (ibid, p.22). The UK in particular faced a similar situation to that in Ireland,
albeit with differences in specific causes and characteristics. In its case, complex
and inefficient zoning rules and a slow authorisation process were identified among
the reasons for the rigidity of supply (ibid.). These were compounded by widespread
failures to provide supporting infrastructure to enable new houses to be built.
In response, the British Government commissioned Kate Barker, a senior economist
at the Bank of England to undertake a study, which in many respects is similar to the
Bacon Reports in Ireland. An interim report and analysis published in 2003 noted
that between 1971 and 2001 real house price inflation in the UK was around 2.5%, in
comparison with a European average of 1.1%. Between 1996 and 2001 prices were
increasing by an estimated 9% per annum in real terms. While much of the rise was
attributable to factors such as interest rates and economic activity, the weak supply
response was a key factor. Demand was rising, but was being met with higher
prices, rather than increased supply (Barker, 2003, p.5). Kate Barker‟s final report
published in 2004 concluded that physical and social infrastructure shortcomings
constrain development and stated specifically that: “the Government should make
resources available for infrastructure provision to bring forward development”
(Barker, 2004, p.53).
The Government responded by establishing a new „Community Infrastructure Fund‟.
It was announced in July 2004 and earmarked £200m sterling in funding for use in
four „Growth‟ areas that had been identified in an earlier Government policy
document. The objective of the Fund was:
“to support transport infrastructure costs to enable faster housing
development in four growth areas in 2006/07 and 2007/2008. It will
complement not replace mainstream transport funding in these areas”
(ODPM, 2004)
The Barker Report and the decision to establish the „Community Infrastructure Fund‟
is of direct relevance to the review of the Programme on a number of counts. It
offers a validation of the economic analysis and policy approach adopted in Ireland,
specifically in setting up an earmarked transport infrastructure fund.
however there was a narrower focus on roads.
In Ireland
The Barker report in the UK
considered the deeper economic rationale behind government intervention to fund
transport infrastructure to support housing development and concluded that it had a
26
sound basis (2004, p.53). It adopted a targeted approach to focus on a limited
number of areas (similar to Ireland). The existence of such a programme can also
provide a useful basis to examine and compare elements of both schemes that are
similar in nature.
The focus of the scene setting chapter so far has been on the factors influencing the
housing market, and the role played by roads infrastructure. This emphasis now
shifts towards the second major purpose of the Programme.
2.2. The Role of Roads in Promoting National and Regional Development
2.2.1. General (but not Unanimous) Agreement
The Programme was set up to help boost the supply of housing. However, its other
main objective was to facilitate the provision of lands for industrial and commercial
development. This is generally in line with wider national policy objectives as set out
in successive National Development Plans. According to the current NDP which
covers the period 2007-2013, the promotion of regional and national development
through the provision of infrastructure (including roads) are key national priorities.
The importance of the road network to the economic well-being of the country is
specifically highlighted. It notes that currently, 98.3% of internal merchandise trade
is carried on the road network, both national and non-national, (NDP, 2007, p.130).
From an economic perspective, there is a wide-ranging (but not unanimous)
acceptance that public infrastructural provision is a key element in promoting
economic growth (Ter-Minassian & Allen, 2004). However, many of the published
studies focus on larger national-level projects in various countries.
Economist
Andreas Kopp in a paper published as part of a discussion on productivity in Ireland
showed that an increase in road investment improves national productivity growth.
He proposes a more selective approach to projects based on their rate of return. He
suggests that local roads can have higher than expected rates of return, justifying
public investment (Forfás, 2007, p.291).
One of the most influential (and critical) voices in the study of the economic effects of
infrastructure, Edward Gramlich (1994) highlights the importance of distinguishing
between social and economic objectives. He uses roads infrastructure to highlight
how a new motorway might provide a high rate of return if subjected to economic
evaluation like cost benefit analysis. However a rural road might provide a low or
27
even negative rate of return. Its objectives might be more social than economic.
When it comes to evaluating the impact of infrastructure, Gramlich also offers an
important caution in saying that “it will always be difficult to relate infrastructure
investment to its goals or changes in them”. He cautions against overestimating the
economic benefits of public infrastructure in economic development. The need to
consider social as well as economic impacts is something that this review will take on
board.
2.2.2. Ireland‟s Experience
In Ireland, the justification for expenditure on roads is based on both economic and
social grounds. In the case of the larger national roads, their role in driving economic
development is given greater emphasis. However, regional and local roads make an
important contribution to economic and regional development. This was specifically
examined in the mid-term review of the last National Development Plan undertaken
by the ESRI. It noted that the social rate of return for non-national roads projects
may not be as high as other more risky projects, however they did have the
advantage of offering a more certain return (Fitzgerald et. al., 2003, p. 84). The
presence of this lower, but certain rate of return provided a basis for the evaluation‟s
recommendation that funding be increased. A further conclusion is relevant to the
choice of methodological approach for the present VFM review. The report stated
that while it is very difficult to calculate such returns in a formal way, it is important
that they are taken into account in a qualitative fashion (ibid.). This raises particular
questions about the choice of research instrument, and particularly whether or not a
quantitative approach like cost benefit analysis is either feasible or desirable in
assessing non-national roads programmes. These issues are considered further in
the next section.
Investment in roads would appear to confer a competitive advantage on regions in
attracting investment and boosting a local economy.
importance of roads in regional development.
Haughwout highlights the
He provides empirical evidence
showing that infrastructure investments affect the relative attractiveness of places,
potentially redirecting growth from infrastructure-poor areas to those that have
invested more heavily (2000, p.26). Regional development and the redistributive
qualities that are ascribed to road infrastructure in promoting economic growth are
explicitly recognised in Ireland‟s latest NDP (2007, p. 84).
28
A similar rationale underpins regional roads infrastructural investment in Scotland
(Page, 2005). Both countries have comparable population sizes, with a mixture of
dispersed and concentrated settlement patterns. However the Scottish Executive
publishes Transport Appraisal Guidelines, which are more specific than those
available in Ireland. In particular, detailed advice is given on the appraisal of the
„Economic Activity and Location Impacts‟ of transport infrastructure investment.
These recommend that information drawn from the business community, along with
employment and economic data, should be used when appraising the case for
specific project investment. Some useful pointers for the review can be drawn from
these guidelines.
The economic significance of roads investment for national and regional economic
development has informed roads expenditure going back to the 1970s and into the
1980s. Prior to the 1970s roads investment in Ireland lagged considerably behind
the European norm, and the link between economic development and public roads
infrastructure largely hadn‟t been made in public policy. Historically, the national
policy focus of road expenditure had more to do with alleviation of unemployment
through the creation of seasonal jobs, than on the provision of transport
infrastructure (Daly 1997). The idea that roads could play a key role in economic
development wasn‟t taken seriously. This was even the case after Ireland embarked
on its programme of economic expansion following the Whittaker report of the late
1950s (Barrett 1982, Daly 1997, Garvin 2004). This position has now completely
changed, and infrastructural provision linked to economic growth is a fundamental
principle upon which the current and recent National Development Plans have been
based.
Given the Irish economy‟s strong focus on encouraging foreign direct
investment, the development of good quality roads is a justifiable economic
objective. The view of IDA Ireland is that investment in transport infrastructure is
particularly critical for success in attracting foreign direct investment (2007, p. 9).
Whilst investment in roads can encourage economic growth, there is also evidence
that economic growth can in turn lead to a demand for infrastructure, as a review of
research in this area by De Haan et. al. (2007) showed. This observation is relevant
to Ireland, which has seen unprecedented economic growth in recent years. The
accepted assumption on which Irish infrastructural planning is based, is that traffic
volumes tend to increase broadly in line with economic growth (in the absence of
demand reduction measures) (NDP, 2007, p.131).
In the case of Ireland, the
economy has grown by approximately 6% per annum in the past decade (ibid.),
29
although future forecasts are more modest. The economy is expected to contract by
0.4% in 2008, while growth in 2009 forecast to be 2% (ESRI, 2008). Car ownership
rates in Ireland are below the EU average, and are likely to converge in the coming
years putting increasing pressure on roads infrastructure (ESRI, 2006, p.134).
These issues are highly relevant to future policy objectives and interventions to cater
for transport demand. Future traffic forecasts for non-national roads up to the year
2040 predict that volumes of heavy good vehicles will increase by 50% between
2002 and 2040. Car and light-goods vehicle traffic is expected to increase by 43%
(NRA, 2003, p. 3).
The rationale informing the Programme could be seen as a response to the doubleedged effect of infrastructural investment.
The investment was intended to
encourage economic growth, which in turn is contributing to a further need for
infrastructure. A key justification for the Programme‟s establishment was that “rapid
economic development began generating a need for targeted investment in nonnational roads in certain areas” (DELG, 2000b). The investment in regional and local
roads infrastructure can be seen as both a response to economic growth, and a
means to further stimulate it.
2.2.3. Assessing the Social and Economic Outcomes of Non National Roads The Appropriateness of Cost Benefit Analysis
Difficulties in assessing benefits associated with non-national roads investment pose
a particular challenge. A key methodological decision for the review is whether to
apply a specific instrument like cost benefit analysis. The alternative approach would
be to use other quantitative social and economic data, supported by qualitative
sources. As has been noted already, qualitative assessment can offer important
insights that can sometimes be overlooked. However, cost benefit analysis also has
its advantages. A review of roads expenditure under the last NDP acknowledged
that the routine estimation of benefits was not possible on non-national roads
projects. However it did recommend “that a cut-down form of cost benefit analysis
might be applied to a sample of projects each year in order to gain some information
on, and reassurance about, the benefits of expenditure of the relatively large
amounts of money involved” (Fitzpatrick, 2002, p.15c). The threshold for undertaking
Cost Benefit Analysis at project appraisal stage is €30million. While most of the
projects under the Programme were of a much smaller scale, the next section of the
review with examine the feasibility of conducting Cost Benefit Analysis for individual
projects. CBA is widely applied in relation to roads projects in Ireland, albeit for
30
larger national and motorway routes. However it is not currently used as tool for
either ex-post appraisal or ex-ante evaluation of regional and local roads.
As an evaluation technique, CBA is rooted in the principles of „Welfare Economics‟.
It attempts “to evaluate on a common monetary scale the costs and benefits of all
marketed and unmarketed consequences of projects and to estimate the net social
benefits” (Mulreany, 2002, p.1).
Where the benefits exceed the costs over the
lifetime of the project a „net present value‟ or economic surplus accruing to projects
and society can calculated. The form of cost benefit analysis currently applied to
roads projects in Ireland is an adapted version of the UK „COBA‟ computer-based
system5. Guidelines are published by the National Roads Authority (NRA, 2005).
In practice, calculating the costs associated with roads projects are fairly
straightforward. They consist of capital and maintenance expenditure. User benefits
however are calculated based on changes arising in travel times, the operating costs
of vehicles and accident costs (NRA, 2005, p.A4). Travel time changes generally
make up the majority of benefits in Ireland as they do in other countries. In the UK
for example, they represent approximately 75% of quantified benefits for road
schemes and up to 80% for European transport infrastructure projects. These are
broadly consistent with figures in Ireland which have recorded up to 90% of benefits
from travel time-savings (Keegan 1999, ECMT 2001, Wallace 2005). The principle in
valuing these benefits is that shorter journey times from road improvements result in
time-savings.
These are translated into monetary values based on a notional
„willingness to pay‟ on the part of each user. Standardised national parameter values
for time-savings, operating costs and accident savings are applied. These are based
on market values. These parameter values were prepared by Goodbody Economic
Consultants on behalf of the Department of Transport (Goodbody, 2004).
Environmental and other impacts that can‟t be quantified monetarily are assessed
separately.
Notwithstanding the criticism of CBA that it falls short of full social
analysis (something acknowledged in the NRA‟s guidelines), it is the standard tool
used in the assessment of roads projects.
It also forms a central plank of the
Department of Finance‟s Appraisal Guidelines for Capital Projects (2005).
5
The version in current use is „Coba11 (Release 6)‟.
31
Changes in traffic flows form the core basis for assessing benefits through the
„COBA‟ method used in Ireland. However the traffic forecasting process is carried
out separately and input to the computer programme.
A comparison is made
between traffic flows with and without the road development. Crucial issues surface
here in relation to the Programme. These arise at both a conceptual and practical
level. COBA calculations are based on what is called a „Fixed Trip Matrix‟ traffic
pattern. This rests on the assumption that the road improvements will not affect the
overall number of trips made. When road improvements take place, several changes
in trip pattern are possible in principle, and are referenced in the NRA guidelines
(2005, p.A6). These possible changes are summarised and synopsised below:
The re-assignment of traffic from an existing route to a new route,
Trips may be made at a different time of the day,
Traffic may change its origin or destination (going longer distances for
example),
There may be „modal shift‟ with people using a different mode of transport
(e.g. going by car instead of bus, or vice versa),
New trips may be generated. This would include the release of suppressed
demand for travel.
The COBA method operates on the assumption that only the first of the above
reactions occurs and that demand does not increase as a result of the scheme.
These assumptions, which are widely prevalent in cost benefit analyses have been
critiqued by, amongst others, Goodwin (1996), Noland and Lem (2001), and more
recently by Litman (2007). A synopsis of seven major studies on induced traffic
points to generated traffic effects ranging from 10% to 50% in the short term, and up
to 100% in the long term (Litman, 2007, p.7). The consequences when new journeys
are not fully considered in an appraisal were described succinctly in widely quoted
comment from a 1994 report on Trunk Roads for the UK‟s Department of Transport.
It states that: “the economic value of a scheme can be overestimated by the omission
of even a small amount of induced traffic. We consider this matter of profound
importance to the value for money assessment of the roads programme” (SACTRA,
1994).
There are also deeper social impacts that can be difficult to quantify or even monitise
through a cost benefit analysis.
Litman argues for example, that induced traffic
creates car dependent transportation and land use patterns (2007, p.22). A similar
32
conclusion was also reached by Noland & Lem (2001, p.28). Consideration of these
issues is of obvious interest to Government policies on sustainable development and
there is some evidence of these trends emerging in Ireland. These are examined in
more detail in Chapters 4 and 5. Overall, there are a number of emerging issues of
practical and conceptual significance in the use of methodological instruments to
evaluate the outcomes of road infrastructure in general, and the Programme in
particular.
2.2.4. CBA - Practical and Conceptual Issues for Non National Roads
Clearly for the Programme here, a key objective in developing new road
infrastructure was to cater for additional housing. As a consequence it set out to
generate additional traffic and induce new demand. From a practical point of view, a
„Fixed Trip Matrix‟ and conventional CBA as normally applied to National roads
projects would therefore ignore a central purpose of the Programme, which was to
create and facilitate new journeys above and beyond increases that could be
expected. This was precisely the point made by Devlin and Feeney in their paper
6
„Developing an Economic Evaluation Procedure for Road Investments‟ .
They
commented on the general usefulness of CBA as an important instrument in
economic evaluation and in guiding investment decisions. However they noted that:
“Its use in the urban context or for strategic road investment plans is
not advisable because, in such situations traffic levels may be
expected to increase as a result of the investment. For example, in
the urban context, road investments may cause existing road users to
change their journey destinations and may induce additional trip
making which was previously suppressed by road congestion”
(Feeney & Devlin, 1987, p. 248)
The problems associated with using CBA as a tool in making transport decisions that
affect housing development were alluded to in the NESC‟s report on Housing (2004).
It commented that “a narrow cost-benefit approach to public transport investment
decisions, which measured current demand and usage, would miss a fundamental
aspect of urban development: transport not only connects existing places, it makes
new places”, (ibid., p.134).
6
John Devlin was formerly Principal Advisor on Non-National Roads in the Department of the
Environment. He was also centrally involved in setting up the Strategic Non-National Roads
Programme.
33
While there are limitations in its use to appraise certain types of road project,
conventional CBA could be used for investments where induced traffic is not a
significant issue. It is an important tool in assessing the wider economic and social
consequences of a roads project. Reduced journey times and other quantifiable
benefits are an important measure for assessing improvements in economic welfare.
However, initial inquiries suggest gaps in data and practical difficulties. In developing
a traffic model for use in carrying out a CBA, the following items of data are required:
Origin and destination surveys,
Traffic count data,
Journey time surveys. (NRA, 2005, p.B13).
Further data based on longer term surveys are also needed to estimate seasonal
traffic differences, vehicle mix proportions and other factors. Preliminary discussions
with Departmental and local authority personnel at the outset of the VFM review
suggested limitations in the quantity and quality of traffic data for non-national roads.
A national data-set of traffic counts for National Primary Routes is gathered and
published by the National Roads Authority. In contrast with the situation for national
roads, there is no systematic nationwide programme of data collection for nonnational roads. This is not surprising given the dispersed nature of the network and
the potential costs involved. Both electronic and manual traffic counting is expensive
to conduct. If cost benefit or other quantitative analysis based on traffic counts is to
be feasibly used on non-national roads programmes, reliable local data is needed.
The extent to which this might be available will be examined in the review.
Bearing in mind the limitations already outlined in relation to both conceptual and
practical issues, it is not proposed to subject individual projects or the Programme as
a whole a cost benefit analysis.
CBA could contribute useful information in
conducting appraisals of regional and local roads investment in other circumstances.
Its feasibility for future use, and the availability of sufficiently comprehensive data
sources to make this possible will be examined. Where quantitative traffic count data
is available it will be used as an output measure in the review.
2.2.5. Assessing Social and Economic Benefits – Conclusions
At an aggregate level, a clear reason for investing public funds in roads infrastructure
(including regional and local roads) is the promotion of economic development. This
has been the case for many years now, and is a central objective within the latest
34
National Development Plan. This is broadly consistent with international thinking.
Within national-level policy in Ireland, there is a general consensus that investment in
infrastructure is a crucial strategic priority. However, it does not automatically follow
that all roads investment, per se, will have positive benefits. In deciding between
projects at a local level, it is important to consider their individual economic and
social impacts.
The social benefits are particularly difficult to identify and measure. This represents
something of a challenge for the VFM review in developing appropriate approaches
to consider benefits (and indeed disbenefits). Useful pointers have been offered by
the Scottish Transport Appraisal Guidelines, particularly in gathering data about the
impacts on businesses. The social and economic impacts can also be assessed
with reference to demographic, economic and social data drawn from Census figures
and other credible sources. Given that a key purpose of the Programme was to
facilitate housing supply in certain areas, the social and economic impacts caused by
such population increases are worth examining.
These matters will be further
addressed in the methodology chapter.
So far the scene setting chapter has looked at policy and evaluation questions
concerning housing and economic development. These issues informed the main
specific objectives of the Programme. However when public funds are committed to
roads infrastructure, there is also a need to ensure that they deliver the maximum
benefit in terms of the efficiency and effectiveness. This is now explored.
2.3. Reviewing Other Reviews
2.3.1. Efficiency and Effectiveness - Key „Value for Money‟ Concepts
Two of the central questions in a Value for Money Review concern „Efficiency‟ and
„Effectiveness‟. Drawing upon the definitions used in the Department of Finance
Guidelines for carrying out VFM Reviews (2007, p. 33/34), „Efficiency‟ compares the
outcomes that were achieved, against the resources deployed.
„Effectiveness‟
considers the extent to which the Programme‟s objectives are achieved and planned
benefits delivered. These are explained in further detail in Chapter 3, which outlines
the methodologies used to study these concepts.
This section looks at recent developments in assessing the efficiency and
effectiveness of regional and local roads expenditure. The lessons identified from
35
other studies will critically inform the techniques deployed in addressing the „Terms of
Reference‟.
Understandably, when issues around efficiency or effectiveness
measurement are involved, there is some overlap into the area of Performance
Indicators. The discussion in this section will therefore inform the identification of
potential indicators for future use, which the review is also committed to doing.
Since the mid-1990s, regional and local roads programmes have been scrutinised in
some detail from the point of view of efficiency and effectiveness. This has in turn
led to the strengthening of quality control regimes locally and nationally.
At a
practical level, this has manifested itself through the publication of a series of „best
practice‟ guides to achieve greater standardisation of approach across local
authorities. In addition, measurable performance indicators are now routinely applied
in the construction and maintenance of regional and local roads.
The coming
paragraphs will examine general developments across wider non-national roads
expenditure, but with specific reference to the Programme.
Assessing previous
reviews also conveys something of the complexity and diversity involved in the
physical delivery of these roads.
2.3.2. The First VFM Report on Regional and Local Roads
A key catalyst for much of the progress witnessed in recent years was a report
entitled „A Review of the Efficiency of County Council‟s Operations in the NonNational Roads Area‟. It was commissioned by the Department of the Taoiseach as
part of the original Expenditure Review process set in train in 1997 under the
Strategic Management Initiative. The main terms of reference were:
“To examine the efficiency and effectiveness of county councils‟
operations on non-national roads with the aim of securing the best value
for money and maximum outputs from expenditure on public roads by
county councils” (KPMG et al.1997, p1)
In one of its main exercises, the review calculated the unit costs per square metre of
road for the more standardised and comparable works that each local authority
undertakes, namely:
Surface Dressing,
Surface Restoration,
Road Reconstruction.
36
These categories represent three different levels and standards of work, each with
differing cost implications. „Surface Dressing‟ as the name suggests, involves an
overlay of new material on an existing road. „Surface Restoration‟ includes surface
dressing and involves more comprehensive work. „Road Reconstruction‟ involves
the regulation or reconstruction of an existing road. However, some methodological
problems that were experienced are noteworthy.
The consultants also gathered
information on a fourth category of works which are entitled „Road Improvements‟7.
These include, for example, the construction of new roads, the widening or
realignment of an existing road and the construction of roundabouts (DELG, 2001,
p.69). Because of the level of variation in these types of works, there were significant
differences in cost depending on the type of improvement carried out. The review
found that it wasn‟t possible to achieve valid unit cost comparisons under this
category (KPMG, 1997, p. x). This particular difficulty is relevant to the examination
of the Programme. Almost all of the projects contain elements that come within the
definition of these „Other Improvement Works‟. This poses a challenge in developing
appropriate, comparable and meaningful unit-cost indicators.
Based on their analysis of the data gathered, the consultants made a number of
recommendations. It was proposed that the Department should prepare national
standards and guidelines for local authorities in their work on non-national roads
(ibid. p.xvi). A greater strategic focus was also recommended. At local level this was
to be advanced by linking non-national roads programmes with the objectives set out
in local County Development Plans (ibid.).
In carrying out work on roads, local authorities use a combination of „Direct Labour‟
employed by the Councils, and contractors. The report recognised the difficulties in
assessing the optimal levels of direct labour employment. It recommended the use
of private sector practices work practices and competitive market rates in making this
determination (ibid.).
Following publication of the review, a Working Group consisting of representatives
from the Department of the Environment, County Managers and County Engineers
was set up in 1999. It agreed that a series of „Best Work Practices‟ guidelines
documents should be prepared. In drafting these guidelines, work practices across
A comprehensive list of improvement works is included in the „Memorandum on Grants for
Non-National Roads‟ originally published by the Department of the Environment in 2001. This
is the edition currently in use.
7
37
local authorities were surveyed.
The Working Group was also charged with
examining the issue of Performance Indicators. Overall then, the various efficiency
and effectiveness reforms of the past decade provide an important context for the
present review. The methodological approaches used in previous evaluations also
offer some useful pointers.
2.3.3. The Use of Guidelines to Achieve Standardisation of Approach
Flowing directly from the 1997 Efficiency Review, seven „Best Practice‟ documents
have been published to date and are now in use by local authorities. These outline
the appropriate procedures and practices to be followed in order to comply with
standards in relation to both efficiency and effectiveness. The titles and order of
publication of the guidelines were as follows:
Guidelines on the Depth of Overlay to be used on Rural Non-National Roads
(May 1999);
Guidelines on the Rehabilitation of Roads over Peat (May 2000);
The Machinery Yard – A Value for Money Guide (May 2000);
Guidelines and Tender Documentation for Road Marking Materials (July
2000);
Guidelines for the Opening, Backfilling and Reinstatement of Trenches in
Public Roads (April 2002);
Traffic Management Guidelines (May 2003);
Work Methodologies (2004).
The report on „Work Methodologies‟ is illustrative. It sets out clear procedures to be
adopted in relation to tendering (in addition to statutory requirements). The main
objective here is to encourage transparency, greater competition and value for
money (DEHLG, 2004, p.4). This issue had been raised in the 1997 review. Correct
practices to be followed in the planning, design and preparation of works are
detailed. Appropriate levels of management and decision-making responsibilities for
different scales of project are set out.
A significant part of the guidelines concern quality control. The stated objective here
is to assure value for money and effectiveness of road materials through systematic
testing. Technical procedures, parameter values, and recommended frequencies for
testing are outlined. In particular, the recording of testing results is prioritised to
ensure reporting requirement on „effectiveness‟ performance indicators are met.
38
Recording of information also provides a baseline of data that can be consulted in
assessing the future performance of the roads (ibid. p.19). In other words, if the
grade of material used was expected to have a lifespan of 15 years, effectiveness
can be assessed in the future against the original baseline.
These guidelines are relevant to the review at hand insofar as their presence has
impacted on practices within local authorities.
However a relevant observation
concerns their status. Some have clear mandatory effect. For example, all road
works must be carried out in accordance with the „Guidelines on the Depth of
Overlay‟ (DELG, 2001, p. 34). In other cases, elements of the guidelines have been
incorporated into Departmental circulars and are also mandatory. These would apply
to the most significant issues related to tendering, work standards and safety, for
example. Some of the guidelines also appear to act as a form of good practice,
without obligatory effect. While there may be a lack of clarity as to status of some of
the guidelines as a collective body of work, this doesn‟t mean that their effects
haven‟t been positive overall. The general consensus from Department and local
authority officials is that they have been. Where the effects of the Working Group are
particularly prevalent is in the area of Performance Indicators.
2.3.4. Performance Indicators
In advance of the 1997 efficiency review by KPMG, initiatives were already underway
to develop performance indicators within local authorities. The Department of the
Environment and Local Government document „Better Local Government‟ (1996)
included commitments to introduce measurable indicators across the range of local
authority activities (DELG, 1996, p.33).
The KPMG report built upon this, and
recommended a number of actual indicators that should be used by local authorities
to report on progress in the non-national roads area.
These reflected the
methodological approaches adopted in the review, and focused on the quantification
of inputs and outputs, with a particular emphasis on comparative unit costs. The
Working Group set up by the Department to oversee implementation of the review
was charged with putting a system of performance indicators into practice.
It
concluded that a good deal of information already received by the Department could
be collated in a way to enable it to be used as a management tool.
The review of roads programmes undertaken by Fitzpatrick Associates in 2002 as
part of the mid term review of the NDP 2000-2006, also considered performance
indicators for non-national roads. It drew upon the recommendations already made
39
in the 1997 KPMG study. Progress in the implementation of these recommendations
was noted, and the 2002 review expressed agreement with the approach that had
been adopted by the Department‟s Working Group (Fitzpatrick, p.c.15). It went on to
propose a series of specific indicators to be used by local authorities in reporting on
progress in implementing NDP commitments. They proposed indicators were listed
in the report as follows:
1. Kilometres improved under „Specific Grants Scheme‟
2. Kms improved under „Restoration Improvement Grant‟
• Regional Roads-Surface Restoration in Kms
• Regional Roads-Roads Reconstruction in Kms
• Local Roads-Surface Restoration in Kms
• Local Roads-Road Reconstruction in Kms.
3. Kms maintained under „Restoration Maintenance Grant‟
• Regional Roads-Surface dressing in Kms
• Local Roads-Surface dressing in Kms.
4. Number of „Low-Cost Safety‟ and „Regional Traffic Management Grant
Schemes‟.
(ibid., p. c14)
All of the recommended indicators above were put in place and are now routinely
used in local authority reporting mechanisms to the Department of Transport and the
Regional Authorities. Progress is measured against specific targets that have been
put in place under the different categories of grant schemes.
Of particular note is
the practice employed on the specific programme targeted at regional development
(this was until recently co-financed by the EU). The percentage volume of traffic
related to industrial development, tourism, fisheries, forestry, rural development and
agriculture arising from the road investment is estimated. This is used as a form of
outcome indicator to show that the objectives of this scheme are reflected in
estimated traffic usage figures.
Since 2005, performance information is also gathered on the number of schemes
where Environmental Impact Assessments were prepared. The numbers of projects
subject to consultation arrangements under the statutory planning and development
regulations are also assessed.
Such processes provide important safeguards to
assure environmental protection, and public accountability. However, they also have
an important bearing on the speed with which projects are delivered.
Issues
identified in the course of these procedures can also give rise to additional
40
expenditure.
Remedial measures may be necessary to ameliorate particular
negative impacts highlighted in the environmental assessment. If such additional
expenditure
was
unanticipated,
it
will
have
value-for-money
implications.
Environmental and consultative processes are therefore relevant to the current VFM
study.
Of overall significance to the current study is the fact that there is a routine
mechanism in place within local authorities and the Department of Transport for
gathering performance data on regional and local roads, albeit mainly related to
inputs and outputs. There is an existing solid basis on which to recommend future
performance indicators.
2.3.5. Evidence of Progress and Improvement
Non-national roads expenditure represented a major element of the National
Development Plan 2000-2006, accounting for €2.43 billion (based on the original
budget). The Programme having been announced in 2000 (with the first allocations
in 2001), came subsequent to the NDP. It did however feature in the review of roads
investment by Fitzpatrick Associates which covered the period 2000-2001.
It
examined progress, programme management and financial and cost management of
the entire non-national roads programme. It offers a window on the impact of the
various reforms initiated as a result of the 1997 Efficiency study. The 2002 review
did note that significant progress had been made. It concluded that:
“the Non-National Roads Programme is being operated on a
reasonable and efficient basis. We do not see scope or reason for
major changes in how it is operated” (p.c.15)
However, an important issue that overlaps between 1997 KPMG efficiency study and
the 2002 Fitzpatrick review of NDP roads expenditure concerns the issue of „Direct‟
versus „Contract‟ Labour. The NDP review noted that:
“The share of direct labour is at least 50% in all cases. There is no
evidence that direct labour costs are more expensive than
contractors.
However its dominance is not in accordance with
international practice where the trend is away from use of direct
labour by public bodies.” (ibid., p.c29).
41
The current role of Direct Labour, and the extent to which it was used by local
authorities in the delivery of projects under the Programme will be examined in this
review.
The review by Fitzpatrick Associates fed into the overall Mid-term Evaluation of the
NDP by the ESRI. The conclusions here were generally positive, and the comments
on the rate-of-return for regional and local roads projects were noted earlier. Overall,
the review stated that, “progress on non-national roads part of the NDP had been
excellent” (Fitzgerald et al., 2003, p.98). There is a further sub-text to the resulting
recommendation to increase funding for this area under the NDP.
The review
proposed a re-direction of priorities in line with National Spatial Strategy (ibid., p.7).
This is one of many references across key policy documents expressing the
desirability of linking infrastructural expenditure with the National Spatial Strategy.
These issues are considered in more detail in Chapter 5. It is sufficient to note at this
point that there has been a key shift in national policy which has implications for the
future of the Programme.
While the 1997 KPMG review and 2002 Mid-Term NDP Evaluation dealt directly with
non-national roads, there are other reports that have general relevance. In 1996, the
Department of the Environment and Local Government published a series of „Value
for Money Studies on Local Authorities‟. The impetus here was the widening of the
Comptroller and Auditor General‟s remit in 1993 to include economy and efficiency in
the use of resources. At that time, the Department established a „Value For Money
Unit‟ within the Local Government Audit Service, which undertook a series of studies.
Many of the recommendations from these reviews were incorporated into the later
guidelines prepared by the Department, particularly in relation to tendering, contracts
and unit costing / overhead charging. These studies offer further evidence of a
general commitment to the promotion of what could be called a „value for money‟
culture in relation to regional and local roads.
This Scene Setting chapter has looked at the factors driving the housing boom in
Ireland, which commenced in the late 1990‟s and continued until 2006/2007.
Unprecedented demand led to pressures on supply not witnessed in the history of
the state. The Programme was part of the policy response to help meet this demand.
It was also designed as a means to promote economic and regional development.
Investment in roads as a means to promote this objective is a strong feature of
Government policy and planning. This VFM review also takes place in the context of
42
changes in procedures and practices in the management of public expenditure on
regional and local roads.
These have been influenced by other evaluations
undertaken in the past decade. Those studies offer important guidance in how the
current review addresses its own terms of reference. This is now the focus of the
next chapter, which will describe the methodologies that are to be used.
43
Chapter 3
Methodology
3.1. Introduction
The review methodology provides a structured means to address each of the
individual terms of reference. This chapter considers what approaches can best yield
answers to the individual questions that have been set out. All research instruments
have their limitations, and these are acknowledged and discussed.
The review draws upon sources of data that are appropriate to the specific issues
being addressed. In general terms, the three distinct sources can be categorised as
Primary, Secondary and Tertiary. The main secondary sources are Governmental
and other research reports. Statistical data were used as indicators to assess the
operation of the Programme. Examples already used in the scene-setting chapter
include the housing output figures produced by the Department of the Environment,
and social and economic data from Central Statistical Office reports. Given the focus
of the study as a Value for Money Review, financial and administrative data is of
considerable importance.
Departmental records were therefore vital sources.
Tertiary sources mainly comprise existing policy analysis from governmental and
non-governmental sources. Examples of tertiary sources already cited would include
NESC reports, other evaluations and various academic studies relevant to housing
and roads policy.
Given the focus of the review on a specific programme, there are unique questions.
This necessitated the generation of original primary data, particularly to provide
accurate and up-to-date information on inputs and outputs. The data here is of a
quantitative nature and a self-completion survey questionnaire was the preferred
choice of research instrument. The previous chapter has pointed to difficulties when
assessing the contribution made by regional and local roads infrastructure in the
supply of housing, and in the promotion of economic development.
This mainly
concerns the effectiveness of the Programme. In other words - can any changes that
occurred in housing supply be attributed to the Programme? A combined qualitative
and quantitative approach was chosen, using semi-structured interviews triangulated
against quantitative data indicators on housing output.
To examine in greater detail the relationship between roads infrastructure, housing
supply and economic development, a case study approach was adopted. Three
44
projects were selected – one with a housing focus, one with a focus to deliver lands
for commercial development, and one where both objectives were combined. In
each of the three areas, interviews were conducted with private companies involved
in the supply of housing and the development of business parks. The influences
affecting their commercial decisions are identified. The social and economic impacts
of the roads infrastructure were assessed with reference to the most recent census
data. Data within the case study areas is compared against broader regional and
national trends to identify particular impacts. Further local information supplements
these sources. Informing this analysis were the normative policy ideals set down in
national and regional spatial policies.
For the two case-studies with a focus on the delivery of industrial lands, a key
indicator is the numbers of jobs created in the area. The influence of transport
infrastructure on the decisions of businesses to locate in those areas is also
examined. For the case-study area that had a combined focus, the inter-relationship
between the population increases arising from new housing developments and
objectives to promote economic progress are studied.
Of interest here is the
question of synergies that may be present. The essence of the case-study approach
adopted in the review is to build a general and convincing picture of the impacts of
roads investment by drawing upon multiple inter-linking sources.
The overarching methodological framework guiding the research is the Programme
Logic Model. The official guidelines issued by the Department of Finance advise that
this model be used when carrying out VFM reviews (2007, p. 28). While the model
acts as a framework, specific techniques and instruments are deployed to gather and
analyse information. The chapter begins by introducing the Programme Logic Model,
and the central questions of efficiency and effectiveness. The main methodological
instruments used in the review are then examined in greater detail.
3.2. The Programme Logic Model
At its most basic, the model tracks the results arising from the resources made
available. It also asks how those resources were used and what activities were
undertaken. It divides the Programme into a logical sequence. According to the
official guidelines, the advantage of the Programme logic model is that it provides: “a
systematic and visual way to present and share understanding of the cause-effect
relationships between inputs, activities, outputs and outcomes (results and impacts)”
(ibid, p.28). Consequently it is sometimes referred to as the „Input-Output‟ Model.
45
Comparisons are drawn between what the Programme set out to do and the eventual
results. The diagram and descriptions of the various elements in the model (below)
are adapted from the VFM Guidelines (ibid. pp 28-31).
Fig 3.1 The Programme Logic Model
Inputs – In the case of the current review, inputs refer to the exchequer funding
provided through the Programme, as well as resources provided by local
authorities.
Financial resources were also translated into physical inputs for
roads construction, as well as other human inputs to deliver individual projects.
Activities – In the Programme they include the engagement of contractors to
undertake projects, the deployment of staff and resources, as well as the systems
put in place to manage and deliver the projects.
Outputs - this describes what is produced by the Programme. Here, outputs
primarily comprise roads infrastructure and related engineering works. In this
review, there is some overlap between outputs and outcomes, although there is
an important distinction between these two terms. The facilitation of new housing
and other development lands can be seen as both an output and an outcome.
Outcomes (Results) – The key short-term outcome objective of the Programme
was the delivery of housing and facilitation of development lands.
In the
terminology of the VFM Guildeines, these can be seen as the „Intermediate
Outcomes‟.
Outcomes (Impact) – An important issue is the overall impact that the
Programme had on housing supply. Social and economic outcomes are also
likely to result within their respective areas.
46
There is a basic challenge inherent in the model when it comes to conducting an
evaluation, and developing indicators to assess performance. As Schacter notes, the
further you move down the logic model from inputs to outcomes, the further you
move away from results that are within the control of the progamme (2002, p.18).
This is often referred to as the „Attribution Problem‟. As was noted earlier, factors
influencing the housing market are many and complex.
The Programme under
review was one of a substantial number of policy measures introduced over a period
spanning a number of years.
One approach proposed by Boyle in assessing
performance, is to distinguish between “Programme” indicators and “Context‟
indicators (2005). Programme indicators relate to direct effects and can be fairly
clearly attributed to the Programme itself. Context indicators on the other hand,
apply more widely with attribution being less clear.
Boyle outlines the rationale
behind this thinking:
“Because many factors can affect final outcomes, it is often impossible to
directly attribute to a programme or policy the changes that are reflected
in final outcomes. But these changes need to be tracked as they provide
important contextual information for making judgments about the ultimate
success or otherwise of a programme or policy” (2005, p.8).
In the case of this review, the „Programme‟ indicators refer to the roads constructed
and the housing / lands directly facilitated. „Context‟ indicators describe the wider
changes in the housing market and in relevant social and economic indicators. In the
scene-setting chapter, statistics on increased levels of housing output since 2000
were referenced.
This is an example of a „Context‟ indicator‟.
Further context
indicators include changes in commuting patterns arising from local development.
Clearly, context indicators on their own would be of little value is evaluating the
Programme. However, when combined with programme indicators and supported by
a set of reasonable assumptions through the Programme Logic Model, a credible
sequence of cause-and-effect can be developed.
This is the essence of the
approach adopted in Chapter 7, which deals with the question of „Effectiveness‟.
The review methodology draws upon the work of Mayne, who uses what is called
„Contribution Analysis‟ to address the problem of attributing results and impacts to a
programme (1999). Inherent in this approach in the use of multiple lines of evidence,
and an awareness of external factors that may have contributed to outcomes. Mayne
describes
Contribution
Analysis
as
attempting
associations” between activities and outcomes.
47
to
demonstrate
“plausible
He quotes Hendricks (1996) in
stating that the test when attributing outcomes is whether “a reasonable person,
knowing what has occurred in the program and that the intended outcomes actually
occurred, agrees that the program contributed to these outcomes” (Mayne, 1999,
p.7). He advocates building as complete a picture as possible using programme
files, expert opinion, literature reviews of secondary data sources, structured surveys,
as well as other available sources (ibid. p.14). This is the overall approach used
within the review to gather evidence in order to draw conclusions and make
recommendations.
3.3. Efficiency and Effectiveness
These concepts were introduced earlier are of central importance to review. Drawing
upon the official VFM guidelines (D/Finance, 2007) and Mulreany (2002), „Efficiency‟
can be seen as either getting the maximum output from available inputs, or using a
minimum level of inputs to achieve a given level of outputs. Issues of „Economy‟ are
closely related to „Efficiency‟ but focus specifically on securing appropriate quality
inputs at the best price.
„Effectiveness‟ on the other hand compares planned outputs and effects against what
is achieved in reality. In addition, there may be unplanned outcomes that need to be
taken into account. These can be either positive or negative. As Mulreany notes
(2002, p.15), measurement of economy and efficiency are more advanced than
measurements of effectiveness within the public service.
A case in point is the
seminal 1997 KPMG efficiency review, which focused more on the former than the
latter. This observation is also evident in the widespread use of output rather than
outcome-based performance indicators in relation to roads (including regional and
local roads).
Assessing effectiveness represents a particular methodological
challenge, and as has already been outlined, multiple sources and research
instruments are used.
When the Programme was established, local authorities were required to submit
project proposals on a standardised application form. For the purpose of conducting
the VFM Review, the information contained on these forms and their general format,
provided a useful basis to develop evaluation questions. Comparisons can be drawn
between the stated commitments contained on the application form, and the actual
performance of the projects. In other words, did the projects deliver the houses units
and development lands that they said they would? This is assessed at the level of
the individual project and also in aggregate form for the Programme as a whole. In a
48
number of cases, the application form data was incomplete and did not include
measurable outputs. Alternative indicators were therefore identified. This issue is
addressed in more detail in the main body of the analysis.
The original application forms also provide a benchmark to examine the level and
trend of costs, and questions of efficiency.
Comparisons are drawn between
budgeted costs and the actual outturn, taking into account the somewhat volatile
economic and inflationary conditions that have prevailed in the construction industry
over the past decade.
Comparisons across the projects examine questions of
„relative efficiency‟. In other words, were particular projects more efficient than others,
and what were their defining elements and characteristics. This is a „non-parametric‟
approach. However, it must be borne in mind that many of the projects are individual
and unique in character, making comparisons difficult. Some projects required more
costly or complex additional civil engineering works. Land values were also a key
element of costs and vary significantly across the country depending on specific and
often unique location characteristics. This has the potential to skew comparisons.
Some elements of a „Theory-Based‟ approach to evaluation are applied. Drawing
upon the methods advocated by evaluation theorist Ray Pawson (2006), the
particular factors that helped and hindered the success of individual projects are
analysed. The purpose here is to isolate „What Works‟ when it comes to strategic
roads projects, and just as importantly to identify „What Doesn‟t Work‟.
To gather relevant data to assess programme inputs, activities and outputs, a
questionnaire to be completed by local authorities in respect of all funded projects
was prepared. This is a key research instrument in the review. It provides data on
quantifiable inputs and outputs to assess certain aspects of efficiency and
effectiveness. In addition to the main questionnaire, a second shorter questionnaire
was also prepared. Its purpose was to gather data on projects that were submitted
but not selected under the Programme. The next section looks at the reasoning
behind this particular approach. The main survey questionnaire for projects that
were selected will then be described in greater detail.
3.4. The Counterfactual –
What Would Have Happened Without the Programme?
When evaluating a programme, it is important to consider alternative scenarios.
While outputs can be assessed against stated objectives, a „counterfactual‟ scenario
49
should also be referenced - in other words, what would have happened anyway, in
the absence of the Programme. In an ideal situation an „experimental design‟ form of
evaluation could be used. This would involve the implementation a programme in a
particular area or with a particular group. An evaluation would then compare results
against an alternative area or group with similar characteristics (a „control‟ group). In
social and economic research, isolating a control group in order to make
comparisons can prove difficult, with some arguing that it is impossible. In a proper
scientifically-based evaluation, the control group would be selected at random.
Evidentially this is not possible here given the ex-post nature of the review. Also, the
targeted nature of the Programme in local authority areas with specific characteristics
would make comparisons with other areas difficult.
Nevertheless, there are some lessons from the experimental design approach that
can be utilised. When applications were invited from local authorities under the
Programme a total of 117 were submitted. 43 were approved, leaving a total of 74
projects that were not selected. The VFM review examines what happened to these
other projects, treating them as a form of „control group‟.
It establishes if the other
projects went ahead, and if so, when. This represents a form of „quasi-experimental‟
approach that is quite common in evaluation studies (Cook and Campbell, 1979). It
fulfils some of the criteria of experimental-based research, but with limitations. As
applied in this review, it helps identify if „Deadweight‟ and „Displacement‟ were
present.
„Deadweight‟ describes projects that would have happened anyway
irrespective of the Programme.
If unsuccessful projects did go ahead, it would
suggest that those selected might also have gone ahead. „Displacement‟, on the
other hand, occurs when benefits from new programme result in a loss of output
elsewhere.
There are limits to the extent of inferences that can be drawn from this exercise.
Demonstrably, the successful projects were selected on the basis of specific
characteristics and were deemed to satisfy the Programme‟s criteria better than the
unsuccessful ones.
The successful and unsuccessful projects have significant
characteristics that differ. The latter could therefore not be described as a „control‟
group in a strict sense. This affects the „internal validity‟ of conclusions that can be
drawn.
In other words there could be a number of reasons for differences in
outcomes between the two groups, and these could have been caused by other
factors. However there are enough similarities between the two groups to make
some inferences.
50
3.5. The Survey Questionnaires – Design and Technical Issues
Both the main questionnaire in respect of funded projects, and the second
questionnaire for unsuccessful projects were circulated to local authorities in October
2007.
The choice of instrument was based on the type of information being
gathered.
Much of it was project-specific, and financial and technical in nature.
Good practice was followed in the design of the survey questionnaire and in drafting
the individual questions (Bryman, 2004, pp 131-143, Wimmer & Dominic, 1997, pp.
136-166).
The questionnaires were accompanied by a cover letter from the Chairperson of the
VFM review Steering Committee. The questionnaire and cover letter were sent to
the „Director of Service‟ in charge of roads in each of the relevant local authorities,
and copied to the County Manager. The Director was advised to nominate a person
to co-ordinate completion of the questionnaire in their local authority.
The draft questionnaires were proof-read by the Engineering Inspectorate in the
Regional and Local Roads Division of the Department of Transport. This process
checked that the survey questions were properly constructed, and that the questions
would achieve the desired effect of gathering data appropriate to the requirements of
8
the review . The questionnaires were then checked with one of the local authorities
involved in the Programme (Waterford County Council).
Arising from these
exercises, alterations were made to the overall structure of the questionnaires, and
the wording of individual questions.
The main questionnaire was divided into six sections.
Section one consisted of
technical details (road length, width, type of works). These are important details in
assessing output and preparing unit costs. Section two focused on statutory and
procedural matters – the acquisition of land, consultation processes and
environmental impact assessments.
delivery of projects.
All of these issues have an impact on the
They would fall into the category of „Activities‟ under the
Programme Logic Model. Section three establishes when the project commenced
and was completed in order to make comparisons with the original projected
timescales for delivery. Scope was given for respondents to include qualitative
comments explaining reasons for delays where these arose.
8
In research parlance this is known as „measurement validity ‟ and „internal validity‟.
51
Section four sought cost and expenditure details. A breakdown of funding sources
was also sought. The role of development levies in funding public infrastructure was
an issue of specific interest here.
The Department of Finance VFM Guidelines
advise that administration costs be considered in undertaking a review (2007, p.64).
The questionnaire also addresses this issue.
Section five sought information on traffic volumes using the road. The extent of
usage of a given piece of road is an output measure. This was done in order to
assess levels of traffic growth, and development in given areas. The availability of
traffic count and survey data also has implications for the feasibility of undertaking
future cost benefit analysis on regional and local roads projects.
The final part of the questionnaire (section six) measures the key output and
outcome indicators, namely; the area of housing land facilitated by the Programme,
the numbers of houses, and the area of industrial and commercial land. A distinction
is drawn between lands that are at different of stages of development. Lands that
have been fully zoned, serviced and developed clearly represent a more significant
output than those that have not been.
To gather data on the projects not selected from the application process, a second
questionnaire was circulated to local authorities. The data sought here was quite
limited and consisted of three basic questions – if the project went ahead, if so when,
and how it was funded.
There were two reasons for having such a shortened
questionnaire. The first was that the projects in question were obviously not funded
under the Programme, and details available to the local authority at a remove of
almost eight years may be limited.
The second reason was to avoid placing
unrealistic demands on people who would have to complete two different
questionnaires. Copies of both questionnaires, and the cover letter are attached at
Appendix III.
3.6. Assessing Causality - The Role of Roads Infrastructure in Delivering
Housing and Development Lands
A key objective of the Programme was to facilitate new housing and development
lands. The extent to which this was achieved is a vital indicator of effectiveness.
While the main survey questionnaire makes it possible to identify programme outputs
in terms of roads built and housing and lands facilitated, the issue of causality
requires further investigation. Infrastructure plays a key role in the supply of housing
52
and industrial development. However, because of factors already discussed, a multimethod approach is favoured which combines both qualitative and quantitative
techniques. A key methodological instrument used to assess causality is the semistructured interview. Here, the review examines whether the infrastructure was really
a crucial factor in development and zoning decisions.
Qualitative interviews were arranged with senior officials in the Roads section in all
15 local authorities with projects. As well as discussing the issue of causality, there
were other reasons for adopting this approach.
Although there was some scope for qualitative comment in the questionnaire,
this was relatively limited. The interviews allow for more detailed probing of
issues arising from individual questionnaire responses.
The local authorities are considered key stake-holders in the delivery of
regional and local roads programmes. A detailed level of consultation was
therefore considered important.
Typically, the implementation of projects involved input from engineering and
administrative staff. A conscious effort was made to involve multiple participants in
the interviews from these different backgrounds.
The interviews were therefore
conducted as a hybrid form of focus group. Where there were multiple participants,
interaction between them was encouraged. A list of questions was prepared and
used as a discussion guide.
In order to facilitate comparisons across the 15
sessions, common questions and themes were explored. In three particular cases
(Kildare, Dublin City and Dun Laoghaire Rathdown), arrangements were made to
have a member of staff from the Planning Department present9. These particular
groups had four participants each and included at least one engineer, a local
authority planner and an official with an administration and policy background. The
number of participants is at the lower end of the scale in comparison with other
studies that have used focus groups (Bryman, 2004, p.350). However, given the
nature of the topics being discussed, and the requirement to have specific expertise,
the numbers were considered not only sufficient, but optimal in the circumstances.
A further key element in assessing causality and programme effectiveness involved
detailed case-study examinations in a limited number of areas. The Programme
currently consists of 44 geographically dispersed projects spread across 15 local
9
It was originally intended that these would overlap with the three case study areas, but for
practical reasons, this was not possible.
53
authorities. It would not be feasible to examine each in detail. Case studies are a
standard methodological approach used in the appraisal of infrastructural projects in
general, and roads in particular. They were used with some effect in the review of
roads expenditure under the NDP 2000-2006 (Fitzpatrick, 2002). The approach is
also in keeping with the Department of Transport guidelines which advise that postproject appraisal be carried out on a representative sample of 5% of completed
projects (DoT, 2007, p.3). There is a similar recommendation in the Department of
Finance Capital Appraisal Guidelines (2005, p.29).
Three case study areas were selected to reflect geographic location and project
focus. One was selected from County Dublin (i.e. Dublin City, Fingal, Dun Laoghaire
Rathdown, South Dublin), one from Greater Dublin Area hinterland counties of
Kildare, Wicklow and Meath, and one from outside of the Greater Dublin Area (i.e.
Cork, Limerick, Waterford and Galway). The areas selected were neither typical nor
atypical.
In other words specific „good‟ or „bad‟ projects were not particularly
favoured. While the case study areas are broadly representative, limitations do arise
in relation to „external validity‟. They have their own unique features and it does not
automatically follow that findings in one area would be replicated elsewhere.
However this shortcoming can be minimised by cross-referencing data sources from
other areas to check any observations.
Within the case study areas a decision was taken to interview companies involved in
building and development. The first Bacon report points to the usefulness of input
from those with direct experience in the housing market. Research by DiPasquale
(1997, p.3) suggests that information from builders and developers can offer
important insights into housing supply decisions. The case study area of Tramore
(Co. Waterford) looked in particular at housing development.
Interviews were
conducted with the two private companies responsible for building most of the
housing outputs reported by the local authority along the new sections of the ring
road. The Killeen Road in Ballyfermot, Dublin was intended to facilitate the Park West
Business Park. This has since developed into a mixed commercial and residential
district. An interview was conducted with its owners. In Naas in County Kildare, the
developers of a new business park on the ring road funded by the Programme were
interviewed. The approach is also consistent with methods recommended in Scottish
Transport Appraisal Guidance documentation when assessing the impacts of
transport policy decisions on population change and the local economy. It advocates
interviewing those involved in the development and sale of housing (STAG, Ch.
54
8.12.9). There is some overlap here into the area of social and economic effects and
the discussions with local authority personnel were also used to identify and examine
these issues. To explore further the relationship between roads and the facilitation of
industrial development, a meeting was arranged with a senior manager from IDA
Ireland.
The number of interviews in the case study areas was considered sufficient for the
purposes of the review. The first Bacon report included a qualitative survey based on
views from eight professionals with expertise in different aspects of the housing
market. Given the qualitative nature of this part of the VFM review, there would be
no real advantage to increasing the number of interviewees in terms of achieving
external validity or improving a confidence interval (which doesn‟t apply here). The
number and range of interviewees was considered sufficient to provide information in
assessing the impact of the Programme. Details of all interviews and focus group
meetings, with the names of participants and dates on which they were conducted, is
included as Appendix IV.
In undertaking the meetings with the local authorities, a discussion guide with
questions and topics was prepared, tested and refined. The sessions were tape
recorded and transcribed.
Common themes were identified through an iterative
process of comparison between transcripts. This is similar to a „coding‟ process
undertaken in studies involving large numbers of qualitative interviews.
involves the use of quantitative techniques to analyse qualitative data.
„Coding‟
While
recurring themes were sought, individual unique responses were also both
interesting and instructive. Particularly illustrative quotes are used to highlight issues
and supplement other data in the review.
While formal semi-structured interviews were arranged with the four development
companies in the three case study areas, these were not tape-recorded.
Contemporaneous notes were taken instead, and a record of the interviews written
up afterwards.
A second type of qualitative interview technique was also used in the study. When
the review commenced, „Informal Unstructured‟ interviews were used to assist in
establishing the original objectives of the Programme, to gather background
information and identify potential data sources. These typically took the form of
55
extended conversations lasting between half-an-hour and three hours with staff
involved in setting up the Programme.
3.7. Assessing Social and Economic Outcomes
The scene-setting chapter referred to the challenges posed in assessing the social
and economic benefits of non-national roads infrastructure. The mid-term review of
the National Development Plan 2000-2006, noted that while regional and local roads
projects provide a low but fairly consistent rate of return, this was difficult to measure.
The report recommended that in such circumstances, benefits should be considered
in a qualitative manner. The specific evaluation of roads investment undertaken as
part of the NDP mid-term evaluation also acknowledged that that it was not possible
to have any routine estimate of user benefits. However its suggestion of using a form
of cost benefit analysis was considered, and not deemed appropriate in the case of
the Programme.
There were two distinct objectives associated with the Programme – to assist
housing supply and to facilitate the development of industrial and commercial lands.
In the two case-study areas where the facilitation of development lands was an
objective, data on the nature and types of business setting up there was gathered.
This was informed by the Scottish approach to assessing the „Economic Activity and
Location Impacts‟ associated with transport infrastructure investment (STAG, Ch. 8).
However, it should be borne in mind that these guidance papers acknowledge that
such assessment tools are not as well developed as more conventional ones like
cost benefit analysis. In the case study areas the relationship between business
location choices and infrastructural provision is specifically examined.
Direct social and economic impacts are likely to arise as a result of demographic
change. The additional housing provided on foot of individual projects will have
resulted in altered settlement patterns and an increased population in the areas
affected. Changes in levels and types of employment in the case study areas are
also important. A specific possibility is that some occupants of the new housing
facilitated under the Programme may not necessarily work in the area. This has
implications for the wider issue of sustainable development and transport use.
Key data sources in examining these impacts are Census reports from 1996, 2002
and particularly 2006. Changes in the socio-economic profile of areas, drawn from
these reports give important indicators of the nature of the local workforce. This has
56
important implications for the potential of an area to attract industrial development.
The qualitative interviews also provide information for this part of the review. Census
data, when combined with other sources, enables a wider picture to be constructed.
This forms the basis for assessing short and longer-term outcomes arising from the
Programme.
Issues of sustainable development are assessed by comparing planning decisions
and settlement patterns against the normative ideals set down in local, regional and
national spatial planning guidelines. Most of the new framework for spatial planning
now in operation was put in place after the Programme commenced in 2000. This is
the main focus of chapter 5 of the review.
3.8 Quality Assessment
In undertaking a VFM review, there is a requirement that the draft report be assessed
by an independent consultant. Following a tendering process, a Quality Assessor
was selected from the panel of independent evaluation experts established by the
Department of Finance Central Steering Committee, which oversee the Value for
Money and Policy Review Initiative. Following receipt of the assessors report in June
2008, further amendments were made to review.
3.9. Concluding Comments
Earlier,
the
Scene-Setting
chapter
examined
and
discussed
the different
methodological approaches used in the study of the housing market and the role of
infrastructure in facilitating industrial development. Previous studies to assess the
efficiency and effectiveness of non-national roads were also considered. Learning
from these various sources, the methodology chapter has sought to identify a series
of techniques best suited to the research questions being posed. A combination of
quantitative and qualitative methods are applied to generate original data from
different sources. Existing secondary and tertiary sources are also used. These
combine into a coherent body of evidence to assess if value for money was
achieved, and if the Programme can be considered effective. The review will now go
on to address each of the individual terms of reference.
57
Chapter 4
“Identify the Programme‟s Objectives”
4.0. Introduction
This chapter is split into two sections. The first identifies the background to the
Programme and its specific objectives. After identifying its main objective, an historic
narrative describes the origins of the Programme. This provides a vital context in
later chapters when assessing why public funding was expended and, if the stated
objectives have been achieved.
The second section of Chapter 4 looks at the
„Rationale‟ behind the Programme. It draws upon the concept of „Market Failure‟ in
seeking to establish the economic justification for a public policy intervention, and if it
was warranted in this case. The analysis also provides an important foundation in
addressing if the original objectives were valid, and whether they continue to be.
4.1. The Origins and Objectives of the Programme
4.1.1. The Primary Objective
The core policy objective of the Programme is contained in Circular letter RW 13/00
of 3 July 2000, issued by the Department of the Environment and Local Government.
This circular invited 15 selected local authorities to submit proposals for funding
under the Programme:
“The Government recognises that rapid economic development is
generating a need for targeted investment in the non-national roads
area. The key objective of this scheme is to provide grant assistance
to relevant local authorities, particularly in the Greater Dublin Area, for
certain
strategic
non-national
roads
to
support
housing,
industrial/commercial and other developments.”
(DELG, 2000b)
This can be seen as the the primary purpose for which the Programme was
established. This objective was translated into quantified deliverables in the form of
lands and housing units to be facilitated by the projects. While the Programme had
its own distinct focus, it was put in place as part of a wider package of measures to
boost housing supply, stabilise house prices and address housing needs. These can
be seen as the more general goals to which the Programme was to contribute.
While the Programme was put in place in 2000, its genesis can be traced through
each of the three Bacon reports published in 1998, 1999 and 2000.
58
4.1.2. First Bacon Report
The first Bacon report entitled „An Economic Assessment of Recent House Price
Developments‟ was commissioned by the Department of the Environment in
November 1997 on foot of a Government Decision, and published in April 1998.
Some of its wider analysis of supply and demand conditions has already been
considered in the Scene Setting chapter. Concerning specific infrastructural issues,
the report made the following observations and recommendations:
“A number of key constraints on the realisation of housing supply in
Dublin, in terms of water/sewerage and road infrastructure, have been
identified. It is considered that, if the potential of housing land is to be
realised effectively there will have to be a considerable investment
undertaken in the improvement and development of infrastructure”
(1998, p. xiv)
“Where action needs to be taken and cannot be funded within the
current non-national roads programme additional resources should be
made available to local authorities on a similar basis to the existing
Serviced Land Initiative10. ” (ibid, p. xv).
The direct Government policy response was a commitment to provide an additional
IR£5m to help local authorities to target areas where roads infrastructure was a key
constraint to housing development (DELG, 1998, p.1). This was the forerunner to the
Programme under review, and its objectives were carried into the current scheme.
The first Bacon report pointed to examples of infrastructural bottlenecks in the three
Dublin County Council areas.
After analysing the situation, the Department
concluded that infrastructural problems also existed in the wider eastern region
around the greater Dublin area, and around other provincial cities. On this basis, the
scheme was targeted at the 15 local authorities areas located in and around the five
major cities. A key point here is that the 15 local authorities selected for the 1998
scheme were also those selected for the subsequent programme that is being
reviewed.
A point of significance from the 1998 programme was that direct Exchequer funding
was used through a separately voted Exchequer budget subhead. At that time, road
improvements were generally financed through three particular sources:
10
The exchequer would fund 40% of the cost, with the balance provided by local authorities.
59
Earmarked local government roads funding provided by the exchequer;
EU grants;
Local authorities‟ own resources.
There were particular contextual factors that explain why new and separate
exchequer funding was committed.
There was considerable public criticism
throughout the early 1990s about the poor state of non-national roads. „Potholes‟
had a particularly high profile in the public consciousness. A 10-year „Restoration
Programme‟ was launched in 1995. This was a key Departmental and Government
policy priority.
As part of this programme, a study undertaken by Ove Arup &
Partners Ireland identified that some 47,000 kilometres of non-national road was in
need of restoration at an estimated cost of IR£950m (KPMG et al., 1997, p.5). In
effect there were two significant national policy priorities affecting non-national roads
at the same time. The issue of diverting existing resources towards the proposed
new scheme was considered. However, it was felt that a stream of new funding
would be required, and it was on this basis that the Minister decided to establish the
new programme. The same logic informed the decision to fund the subsequent
programme in 2000 that is being reviewed here.
4.1.3. The Second Bacon Report
A second Bacon report was commissioned in November 1998 and published in
March 1999. It recommended that the Department of the Environment and local
authorities identify the road and transport constraints preventing the development of
existing zoned residential lands (Bacon et. al., p. 63) The Government‟s direct policy
response was launched by the Taoiseach and Minister for the Environment in March
1999. It included the following policy measure:
“Arrangements to identify infrastructural constraints in major growth
centres will be put in place in the near future. The Government is
committed to provide additional resources to remove any significant
constraints to housing development with minimum delay.” (DELG,
1999, p.4)
A survey exercise was undertaken by the Department in 2000 to identify roads that
were potentially acting as a constraint to housing and other development.
The
information gathered formed the basis of the decision to set the current programme.
This commitment was then included in the Government‟s policy response to the third
Bacon Report.
60
4.1.4. The Third Bacon Report
The third and final Bacon report was published in June 2000. It reiterated that roads
infrastructure was needed to provide for a major expansion for housing supply
(Bacon et al., 2000, p.83). The Government‟s policy response, entitled „Action on
Housing‟ committed itself to setting up the Programme now under review. It stated:
“The Government recognise the need for targeted investment in nonnational road schemes crucial to housing development, and are
urgently assessing a number of schemes, which will support
development of a significant number of additional housing sites and
other related developments. The overall additional roads investment
involved is some £200 million over the NDP period of which £150
million will be provided by the Exchequer in particular for housing
related roads investment.” (DELG, 2000a, p. 3)11.
4.1.5. Circular RW 13/00 „Non-National Road Grants to Support Housing and
Other Related Developments‟
In July 2000, the Department of the Environment issued Circular RW 13/00 inviting
formal applications from the 15 eligible local authorities. This set out the purpose of
the scheme, based on the Government policy statement. A copy of the circular and
application form is included at Appendix V.
While the main objective of the
Programme was to support the provision of housing and industrial lands, the timely
commencement of schemes and their delivery of housing and development lands
were also considered important. The central premise of the scheme was:
“that a number of roads projects having the ability to support significant
housing and other development could be mobilised quickly if necessary
funding were provided” (DELG, 2000b).
The local authorities were required to submit project proposals on a standardised
application form. A formal weighting or scoring system did not apply in relation to the
specific criteria for the scheme.
However, discussions with officials involved in
reviewing the applications suggest that an important consideration was the speed at
which work could commence. A further important factor was the type and amount of
development served by each scheme.
11
The eventual expenditure committed to the Programme was greater than the figure
originally envisaged (above). These issues are addressed in Chapter 8.
61
Following the assessment of the project proposals submitted, 43 were selected and
approved by the Minister.
Based on the estimates contained in the grant
applications, the 43 projects were to facilitate the provision of 43,659 housing units
and benefit 932 hectares of industrial land (DELG, 2000c). These figures in effect
translated the stated objectives into measurable quantities.
An important
consideration for this review is the extent to which these are being delivered, and the
role played by the roads in their delivery.
4.2. The Economic Rationale Behind the Programme
4.2.1. „Market Failure‟ and Non-National Roads
The Department of Finance guidelines for carrying out Value for Money Reviews
advise that the rationale be established to explain why a public policy intervention is
necessary (2007, p.32). This involves consideration of the economic concept of
„Market Failure‟. Ordinarily, the market is assumed to be in the best position to
respond to demand in the most efficient manner.
However, situations and
circumstances can arise where the market does not produce the optimal level of a
good or service from a societal perspective. „Market Failure‟ describes activities,
goods or services that would not be sufficiently provided in the absence of
government intervention. The ESRI has identified four rationales for public sector
intervention, based on types of Market Failure (ibid, p.40). It notes that this is not an
exhaustive list:
„Public Goods‟ – These are goods or services for which it is not possible or
convenient to charge all beneficiaries. Notably, the typical example cited in the
VFM Guidelines is that of public roads.
„Externalities‟ – These arise when the action of an individual or firm affects
others without appropriate compensation being paid. A common example is
that of pollution.
„Redistribution‟ – This type of spending is intended to deliver what society
considers as being a “fair” distribution of wealth and income among its
members. Typical examples cited in the Guidelines are welfare spending and
regional development programmes.
62
„Merit Goods‟ – Individuals or firms underestimate the personal or private
benefits derived from consuming a good or service. One example mentioned is
compulsory education, which has personal and wider societal benefits.
The „Indecon Review of Local Government Funding‟ published by the Department of
the Environment, also identified the same four headings as providing the justification
for local government expenditure and policy intervention (Indecon, 2005, p.136). In
examining non-national roads in general, and the specific programme that is subject
to this review, it is possible to identify elements of the first three „market failure‟
rationales. However some are more prevalent than others, most notably that of
„Public Goods‟.
Roads also give rise to pollution and congestion, which can be considered as
„Externalities‟.
decisions.
These factors are increasingly incorporated into transport policy
Roads and other infrastructure are also ascribed a crucial role in
promoting national economic development objectives as well as achieving
redistributive regional goals. In other words, they stimulate economic development,
but also attempt to distribute that growth to achieve balanced spatial development
objectives.
In the case of the Programme, it could accurately be described as
providing a „Public Good‟, with the aim of achieving wider economic and social
objectives.
This is consistent with stated Government policy.
The National
Development Plan 2007-2013 sums up the core rationale underpinning public
spending on non-national roads when it states that:
“Regional and local roads serve an important economic role in the
Irish context and also have valuable social and community
functions.
The network of non-national roads provides mobility
within and between local economies and are vital links to the
strategic national road network, ports and airports which are our
links with the wider international economy.
Indeed, 94% of the
country‟s roads are non-national, carrying around 60% of all road
traffic. These roads are often the sole means of access for the local
economy”. (NDP, 2007, p.85)
4.2.2. Non-National Roads as „Public Goods‟
„Public Goods‟ are not just any goods provided for the public or by government
agencies. They have a specific meaning and economic definition that sets them
apart. „Public‟ goods have two particular characteristics:
63
They are „non-excludable‟. In other words, if provided to one person, it is
either very expensive or technically impossible to exclude others.
They are „non-rival‟. Consumption by one person does not affect the quantity
available for consumption by others.
Regional and local roads are a fairly clear example of a public good. As a result, the
2005 Indecon review noted that local authorities in most developed countries
(including Ireland) play a critical role in their provision (2005, p.136). If these roads
were not provided through state intervention, they would not be supplied at optimal
levels (or even at all) by the market.
Regional and local roads have particular characteristics that mark them out as „nonexcludable‟. At the moment, these roads are not subject to any direct charge or toll.
Notwithstanding this, the ESRI in its Ex-ante evaluation of the latest National
Development Plan has advocated a national pay-as-you-go system of charging that
would cover all roads, including non-national roads (2006, p.150).
In economic
terms, such systems are referred to as „Road Pricing‟ where a charge is levied on
drivers based on their level of road usage. Currently there are no plans to introduce
such direct user charges, so in their absence paying for „public goods‟ like regional
and local roads falls on the local authorities and central government.
In theory local roads are also „non-rival‟. One person‟s use of a road has a limited
immediate effect on its use by others. However, the term „non rival‟ only applies up
to the point where congestion occurs. The issue of „induced traffic‟ was examined in
the Scene Setting chapter. When a road reaches capacity, further small increases in
traffic can result in significant and disproportionate disbenefits (Litman 2007, ESRI
2006). This is particularly felt through increased journey times.
Increased road use also places road surfaces under greater pressure, and can
cause significant damage if not addressed. Clear examples are provided by the
„Pavement Condition Studies‟ carried out on the non-national roads network in 1997
and 2005. The 2005 study in particular found that increasing traffic volumes were
having a severely damaging impact. It pinpointed the increased loading of vehicles
as being a significant factor (RPS et. al. 2005). Congestion and other negative
impacts can be considered as „Externalities‟. This is another form of market failure,
and is discussed further in the next section.
64
Regional and local roads are therefore not a „pure‟ public good. They are not fully
„non-excludable‟ or „non-rival‟. This trait is of significance. Because there aren‟t
direct price mechanisms in the supply of public goods, an increase in traffic volumes
or congestion can be seen as a signal of demand, requiring a response through
increased investment in roads.
This has been the traditional and instinctive
response, which in policy terms is described as a „Predict and Provide‟ approach.
However the policy environment has shifted considerably in recent years with a
realisation that there is more than one way to address demand.
The national
strategy set out in „Transport 21‟ (2005), takes a more integrated approach to
investment across different public and private transport modes.
Balancing the
demand for roads against the minimisation of negative side effects, whether in the
form of congestion or pollution is in essence what the principle of „Sustainability‟ is all
about. This concept has come very much to the fore in public policy. It is now a
central concern that informs the „National Spatial Strategy‟ (2002), „Transport 21‟
(2005), the national partnership agreement „Towards 2016‟ (2006), the „National
Development Plan‟ (2007), and the recent draft plan on „Sustainable Travel and
Transport‟ (2008), amongst other significant national policy documents.
Within the recently revised „Statements of Strategy‟ for both government
Departments centrally concerned with the goals of the Programme, sustainability has
central prominence. It is therefore an important question in examining the present
policy context, and wider priorities in the provision of transport infrastructure. This
will be considered in greater detail in Chapter 5.
4.2.3. Housing Supply and Market Failure
The housing market, particularly on the supply side, can be subject to market
failures. The „Barker Report‟ on Housing in the UK examined the implications of
these failures. In a general sense it found that local authorities when assessing
housing development in their areas may not take full account of the full social costs
and benefits of their actions (Barker, 2004 p.53). The costs arising from increased
pressure on local services or disruption during construction tend to be borne locally.
The benefits tend to be spread more widely and felt at a macroeconomic level.
Greater benefits also accrue to incoming homeowners rather than the existing
community. Fears of unsustainable pressure on existing infrastructure and services
can have a powerful disincentive effect for local authorities and communities to
facilitate and encourage development. However in economic terms, there is a net
loss to society when development is hindered. This provides a „market failure‟ basis
65
for offering incentives to local authorities to provide infrastructure to facilitate
development.
Externalities can arise when the social costs and benefits of a housing project
diverge from private costs and benefits. A developer might be reluctant to build
housing where their private benefit does not justify the risk of investment, even
though there may be wider social benefits (ibid, p57).
This particularly affects
brownfield sites and less attractive locations.
Barker also identifies „Co-ordination Failures‟ as being significant. These happen
where “individual private and public sector organisations may not be able to coordinate their actions effectively, giving rise to sub-optimal outcomes” (ibid.).
If
effective co-ordination can‟t be achieved in providing necessary complementary
infrastructure to facilitate development, then the potential benefits to society are lost.
In summary, Barker concluded in her recommendations that “numerous market
failures affecting land assembly, land servicing and infrastructure provision make a
compelling case for government intervention” (2004, p. 53). The same could also be
said in an Irish context. Each of the specific failures mentioned in the Barker report
were also identified in the Bacon reports, and more recently in the NESC analysis of
housing in Ireland.
The first Bacon report identified problems with shortages of
serviced land, lengthy planning processes, and infrastructural deficits, particularly in
the Dublin area (1998, p. iv). Interestingly though, an economic study of housing
land supply could find no evidence of „land banking‟ in Ireland that would result in its
slow release for development use (Goodbody, 2003, p.2).
This was in marked
contrast to the situation in the UK. However, the NESC report particularly identified a
problem with co-ordination between housing supply, and the provision of water and
transport infrastructure (2004, p.79).
It also stated that local authorities were
constrained in granting planning permission for suitable housing densities because of
a lack of such infrastructure. This highlights the importance of co-ordination between
local authorities, developers and the relevant government departments and agencies.
4.3. Conclusions
A major reason for setting up the Programme was that local authorities were not in a
position to bear the full costs of the required roads infrastructure. This view was
confirmed in interviews with officials who were involved in decision-making at that
time. There is a proven link between infrastructural provision and the ability of the
66
housing market to function effectively. At a theoretical level, there is a case for
government intervention to provide infrastructure to support housing development.
At a practical level, the evidence in policy documents and from interviews with
officials point to „market failure‟ conditions that justified public expenditure. There
was an undersupply of suitably serviced development lands in areas of significant
housing demand. If this situation wasn‟t rectified with government intervention, there
would be a sub-optimal supply from an economic perspective. In a situation where
demand was outstripping supply, the consequences were being felt through unmet
demand and increased prices. It can be concluded that the social benefits (at a
macroeconomic level) from increasing housing supply were therefore being
hampered.
At a programme level, public investment was therefore justified on
grounds of „market failure‟. This is notwithstanding the more general and mainstream
rationale for providing funding for local roads based on the widely accepted position
that they are „Public Goods‟ that also contribute to regional development.
It is
increasingly accepted that roads and housing development should be planned in a
way that minimises externalities and that complies with principles of sustainability.
This is where the next chapter commences.
67
Chapter 5
“Examine the current validity of the objectives and
their compatibility with overall Government strategy.”
5.0. Introduction and Overview
The Programme can be seen as an infrastructural policy response designed to link
housing and planning objectives in order to achieve mutually compatible ends. It was
a one-off policy measure, albeit in the context of a larger drive to bring stability to the
housing market, and to facilitate economic development. Since the Programme was
announced in 2000 it is evident that the policy context has shifted considerably. The
housing market has moved on, and supply has expanded hugely. Even since work
on this particular review commenced in 2007, the level of housing supply has
peaked, and subsequently contracted.
Prices have stabilised and fallen. There is
currently a wide variety of opinion about housing output forecasts in the short term.
Whatever about the fluidity of the current position, there is an acceptance that a
significant additional supply of housing will be needed in the long term. This is based
on demographic projections and other contributory factors. Current policy is built
around an estimation of need up to the year 2021. There is also an understanding
that future transport and housing needs should be met in a way that affords people a
good quality of life. Concerns about issues of „sustainability‟, the location of housing,
and the social consequences of development have become important considerations.
These have amplified as housing supply has dramatically expanded.
This chapter looks at some of the criticisms raised over the past decade in relation to
patterns of housing development and transport use.
It then examines the
frameworks and policy mechanisms that have been established to link planning,
infrastructure and development decisions. The original objectives of the Programme
were centrally concerned with the housing market. Policy advances in this area are
therefore relevant to the current validity of the original objectives.
development creates its own need for related infrastructure.
Housing
A significant policy
initiative in recent years has been the formal establishment of a system of
development levies at local government level. Development levies and their role in
funding roads are a recurring issue throughout the review.
68
This chapter concludes by analysing the practical implications arising from significant
changes in the policy environment. It looks at the current strategic objectives of the
two
Government
Departments
centrally
concerned
with
the
Programme.
Observations are made that will particularly inform Chapter 9, which considers the
degree to which the Programme‟s objectives warrant the continued allocation of
public funding.
5.1. Concerns about the Sustainability of Housing Development
While housing output has grown dramatically over the past decade, some questions
have been raised about the environmental sustainability of development patterns,
particularly those in and around Dublin. These concerns have had a major influence,
leading to key policy changes.
Williams et. al. (2007) in their most recent
assessment of the growth of the Greater Dublin Area note that recent housing
demand has been largely absorbed by the outward growth of the commuter belt
which now stretches over 100 kilometres from Dublin. This, they say, “has created a
major sprawl-type settlement trend with new mono-functional housing areas and
transportation patterns with a near-total dependency on the private motorcar” (ibid.,
p.4).
In one of his earlier papers, Williams had identified such patterns of
development as „Leapfrogging‟, where new settlements spring up on the outer
suburbs, and continue this process outwards.
This phenomenon is also described
as a „doughnut‟ pattern of development. As the term suggests, development tends to
occur on the periphery, creating a vacuum or a hole in the centre. Concerns about
so-called urban sprawl have also been raised by the European Environment Agency
(EEA) in relation to Dublin, Cork City and other urban areas (2006). It has even
identified urban-sprawl growth in what were more traditional rural parts of Ireland.
Worry about patterns of urban development and indeed urban sprawl are nothing
new. Public policy was grappling with these issues throughout the 1970s and into
the 1980s (Barrett, 1982, p.181). Arguably, the housing boom of the last ten years
may have exacerbated a situation that was already in existence, particularly in
relation to spatial settlement patterns.
The long held preference of Irish people
towards owner-occupation of their home could also be seen as a key contributory
factor here.
The NESC in its analysis concluded that demographic and economic factors since
the mid 1990s had fuelled an enormous increase in the demand for housing. In such
circumstances not only were significant price increases inevitable but so too “was a
69
significant spread of housing development beyond existing urban areas” (NESC,
2004, p. 76). It came to the view that while better planning could have yielded a
more balanced outcome, there would still have been development on green-field
sites (ibid. p.77). Evidently there are a series of crucial interrelationships between
housing, transport and planning policies, with each influencing and pressurising the
other.
This is increasingly reflected in Government policy, with the strategic
emphasis now on sustainable and co-ordinated development. This has been the
central shift in policy focus at local, regional and national level in the past ten years
and has implications for the current programme.
5.2. The New Hierarchy of Planning Policy and Legislation
5.2.1. The Co-ordination of Housing, Transport and Planning Policy
The key policy document to achieve greater integration of major planning-related
objectives is the National Spatial Strategy (NSS). It was published in 2002 and
operates within a twenty year framework. The NSS sets a national context for spatial
planning which then informs „Regional Planning Guidelines‟ and „County and City
Development Plans‟ (DEHLG, 2002, p.12). These Guidelines and Plans operate on
a statutory basis and direct planning decisions. The NSS envisages the emergence
of spatial clusters “particularly focused around the city regions and other strategic
locations”, with easy access to transport and key infrastructure, (ibid., p.97). The
larger of these strategic locations were titled „Gateways‟, with the smaller clusters
being described as „Hubs‟. The overriding emphasis is on sustainability, which it
defines as matching where people live with where they work in order to be able to:
“sustain a better quality of life for people, a strong competitive economic position and
an environment of the highest quality” (ibid. p.10). The NSS is directly relevant to the
roads programme being reviewed here. The two aims of the Programme were to
facilitate lands for economic use, and housing development. Both of these issues
are addressed. The NSS advocates the continued development of strategic reserves
of lands for enterprise development, stating that this should be linked to the spatial
structure of hubs and gateways (ibid. p.98). In relation to housing, the Strategy
emphasises:
“the importance, particularly in urban areas, of combining the location of
housing with good transport facilities: and the need to ensure that housing
requirements are matched by the supply of zoned and serviced land”
(ibid. p.94)
70
The NSS is only one piece of the jigsaw however. To get a fuller picture it needs to
be placed in its proper context as one of a number of recent inter-linked changes.
The period since the turn of the new millennium has seen the prolific publication of
policies and guidelines across the fields of housing, transport and spatial planning.
There is now considerable overlap between these areas, which in turn has brought
greater clarity to overall national goals. These policy goals have also been backed
up by major public investment in infrastructure, particularly through the National
Development Plan 2000-2006 and its successor covering the period 2007 to 2013.
The impact of these new and co-ordinated policy initiatives in spatial planning has
been assessed positively.
The NESC described what it calls “an evolution of
thinking” since the late 1990s with the adoption of what it refers to as “a new
hierarchy of strategies and plans for spatial development and new instruments to
support the provision of infrastructure” (2004, p.41). The key piece of legislation that
underpins all of this is the „Planning and Development Act 2000‟. It provides the legal
basis under which these reformed planning arrangements operate, particularly at
local and regional level.
5.2.2. Translating National Policy into Regional and Local Planning Guidelines
The „Planning and Development Act 2000‟ required all Regional Authorities
12
to
make Regional Planning Guidelines to provide a long-term strategic planning
framework for the sustainable development of their region. These are intended to act
as a bridge between national and regional planning policy to guide local authority
decision-making. In the Dublin area, the new guidelines replaced earlier ones, which
had been in place since 1999. At that time these were the first such guidelines in
Ireland, which should give an idea of how new such approaches are in Irish planning
policy. The new guidelines were agreed by each of the regions in 2004, and are in
now effect for a twelve-year period.
By way of an example, the Greater Dublin
Regional Planning Guidelines envisage the concentration of development into
identified and sustainable towns separated from each other. The stated long-term
objective is:
“to create self sufficient towns, with only limited commuting to the
Metropolitan Area” (D&MRA, 2004, p.71)
12
The eight Regional Authorities are Dublin, Mid-East, Midlands, South-East, South-West,
Mid-West, West and Border.
71
Later in the review, progress towards the achievement of this objective in the Naas
case study area will be examined.
To achieve an appropriate balance between
development in towns, villages and the rural countryside, different scales of
settlement-type are set out. In the case of Naas, it is defined as a „Primary Dynamic
Cluster‟ or location for major development. In the South East Regional Planning
Guidelines, Tramore (which is also a case study area), it is identified as a large town,
which is to be developed and strengthened. Regional and local roads are specifically
identified as having a role in facilitating development. All local authorities are legally
obliged to reflect the regional planning guidelines in their County and City
Development plans. This is the next step in the hierarchy.
5.2.3. County and City Development Plans
The County / City Development Plan for each of the 34 main local authority areas is
the primary strategic statement on land-use planning at city, town and county level.
In practice, it forms the basis upon which planning applications are assessed by a
local authority. At a strategic level it is the blueprint for the economic and social
development for each area. In June 2007, the Minister for the Environment issued
new guidelines in the preparation of Development Plans. These represent a further
progression towards the co-ordination of policy objectives between housing supply,
the location of development and the provision of transport infrastructure.
They
stipulate that Development Plans should reflect key national policies dealing with
sustainability and infrastructure provision (DEHLG, 2007b, p.3).
Each local authority must now produce “a statement of supporting policies to ensure
that transport and settlement patterns will mutually support each other” (ibid. p.24).
Local authorities are advised to consult with industrial and business development
agencies to achieve the co-ordination of industrial land provision with other essential
infrastructure such as roads and public transport, water services, and energy
communications (ibid, p.26).
The guidelines advocate a „Sequential Approach‟ to development (ibid. p.35). This
means that the zoning of lands would progressively extend outwards from the centre
of the urban areas with “under-developed lands closest to the core and public
transport routes being given preference” (ibid. p.36).
This can be seen as a
response to the problem of „leapfrogging‟ and the „doughnut‟ pattern of development.
72
In the hierarchy of policy there is also a facility for sub-county level planning. The
legislation allows local authorities to prepare „Local Area Plans‟ for areas within their
jurisdiction. In the case of towns and other settlements with a population of over
2,000 people, the preparation of a Local Area Plan is mandatory. The main County
Development Plan acts as the parent document and provides the strategic framework
for these local plans. In the case study areas for the review, the local area plans for
the respective areas offer a key normative template against which patterns of
development facilitated under the Programme can be assessed.
5.2.4. The New Spatial Planning Hierarchy – Implications for the Programme
Significant changes in planning legislation and policy have occurred since 2000.
There is a role for regional and local roads (along with other transport modes) in
providing links between settlements, and facilitating access to services and
employment opportunities. Strategic investment therefore needs to be guided by the
National Spatial Strategy and be compatible with regional as well as local planning
and development objectives. The planning framework as it now exists, provides a
means to do this in a structured fashion.
5.3. Housing Supply and Housing Policy – Current Policy Context
5.3.1. Housing Supply Projections
The Programme was put in place in 2000.
Quite obviously the circumstances that
prevailed then are different now. As has already been established, housing demand
and supply are crucially linked to changes in population, incomes and other
economic factors like interest rates. Housing supply is also affected by house prices,
planning regulation, land zoning and government policy, amongst others things. The
provision of roads and water services also has an impact on supply. The housing
market is constantly changing and any current observations represent a snapshot in
time that will undoubtedly alter. Notwithstanding this caveat it is possible to consider
current trends.
The Department of the Environment is now basing its policies on future housing
requirements on a projected population of 5.3m by 2021 (2007c, p.20). In the 2006
Census, the population was recorded as 4.24 million people.
The Department
estimates that up to one million new homes may be required up to 2021,
necessitating
considerable
investment
in
transport,
economic
and
social
infrastructure (ibid). In fact the most recent detailed projections from the Central
73
Statistics Office now forecast that the population of the state could increase to
5.687m million people by the year 2021 (CSO, 2008, p.2), which suggests an even
greater housing need. Ireland also has significantly more adults per dwelling than
other OECD countries, but is expected to move towards the international norm in the
coming years (Rae & van den Noord, 2006, p. 9). This trend is already being felt,
and as it continues we will see an increase in household formation relative to
population.
occupants.
For example, in 1991 Irish households had an average of 3.34
By 2006 this was 2.81 (CSO, 2006, Vol. 6).
This will contribute to
housing demand in the long run.
The forecast that up to 1 million homes may be needed by 2021 is consistent with
ESRI estimates that suggest housing demand for the period 2007 to 2015 of over
600,000 units (2006, p. 157). However it should be noted that these forecasts predated the serious decline in the housing market witnessed in late 2007 and
throughout 2008.
Iin the short-term the housing market is experiencing some
volatility. Housing output peaked in 2006 with over 93,000 completions and fell back
to around 78,000 units in 2007.
Official forecasts for 2008 estimate 43,000
completions (DKM, 2008, p.10), however this figure could be lower.
Whatever the long-term implications of these trends, they indicate that short-term
pressures on the housing supply have significantly eased. Demand for housing may
still be significant in the long-term, but the urgency which existed when the
Programme was established is no longer a factor.
5.3.2. Land and Zoning
An important factor in the supply of housing is the availability of zoned land. A
shortage of zoned land can create a „scarcity value‟ and drive up prices. Planning
controls, although necessary can also have the effect of increasing this scarcity
value. There was some criticism in the earlier years of the housing boom about
insufficient supplies of suitable zoned lands. Current circumstances are substantially
different. Under Section 95 (1) of the „Planning and Development Act 2000‟, local
authorities are obliged to ensure that sufficient and suitable land is zoned to meet
residential requirements and to ensure that a scarcity of land does not occur.
According to the most recent data, there were a total of 15,877 hectares of
undeveloped zoned serviced land available at June 30th 2006 (DEHLG, 2007a, p.44).
This means land that has the necessary water, sewage, transport or other services
74
required to bring it into development. Based on current density guidelines, this land
has the capacity to deliver 492,219 housing units. This equates to sufficient capacity
nationally for residential development for six years, based on average output (ibid.).
The level of serviced land, and capacity to deliver housing in respect of each of the
local authority areas that were covered by the Programme is set out below.
Table 5.1. The Availability of Undeveloped Lands that Were Zoned and Serviced For
Housing at 30 June 2006
County / City Council Area
Greater Dublin
Dublin City Council
Fingal County Council
South Dublin County Council
Dun Laoghaire Rathdown County
Council
Kildare County Council
Meath County Council
Wicklow County Council
Cork
Cork City Council
Cork County Council
Limerick
Limerick City Council
Limerick County Council
Galway
Galway City Council
Galway County Council
Waterford
Waterford City Council
Waterford County Council
(DEHLG, 2007a, p.44)
Hectares
No. of Housing Units
479
1,161
814
342
58,227
43,863
39,660
20,604
755
270
225
19,381
8,735
7,621
143
1,389
10,158
29,686
113
315
4,382
7,269
123
582
2,983
15,004
173
78
5,661
1,612
Providing sufficient zoned and serviced land whist important, will not ensure that
these lands are developed in a manner that is socially optimal. This calls for a more
proactive policy on land use management. The NESC in its „Housing in Ireland‟
report highlighted the importance of active land management in responding to
housing demand. This involves a more strategic and longer-term approach to landuse policies (2004, p.9).
Following publication of the report, all local authorities
reviewed their approaches in this area and incorporated the results of these reviews
into their statutory local Housing Strategies.
However, it is in the nature of housing supply that the owners of lands zoned for
development can‟t be compelled to actually build upon them. While the 2003 study
by Goodbody Economic Consultants found no evidence that land hoarding was a
75
widespread problem (2003, p.2), it can nevertheless arise. As a policy response
there is now a commitment to introduce legislation “to ensure lands zoned and
serviced for housing purposes are used in a timely fashion” (DEHLG, 2007c, p. 36).
Taken together, the changes on active land management and the zoning and
servicing of land mean that there should be adequate quantities of land available for
housing development in the coming years. The availability of zoned and serviced
land was a constraint on housing supply in the late 1990s. This was a crucial factor
that contributed to the setting up of the Programme. As a key constraint to housing
supply, this is no longer an urgent and pressing issue.
5.3.3. „Delivering Homes Sustaining Communities‟
In February 2007, the Minister for the Environment, Heritage and Local Government
published „Delivering Homes Sustaining Communities‟. This can be seen as the
most current and definitive national policy document on housing. It sees the key
instruments to deliver housing supply as being “Planning, Urban Design,
Infrastructure Investment, Land Management and Public Service Delivery” (DEHLG,
2007c, p.9). There is also consensus on the need to provide significantly expanded
provision for social and affordable housing.
The framework within which housing supply is to be delivered revolves around the
various policy initiatives, systems and mechanisms that have been implemented in
recent years, particularly the National Spatial Strategy and Regional Planning
Guidelines. What „Delivering Homes Sustaining Communities‟ is effectively saying is
that there is a continued role for Government investment in infrastructure to facilitate
housing development.
However, infrastructure should be delivered within the
strategic planning hierarchy that is now in place.
A further crucial question of
relevance to the review concerns how this infrastructure should be funded. The most
significant recent policy change in this area has been the establishment of a new
system of local development levies.
5.4. Development Levies and their Role in Providing Public Infrastructure
Housing development gives rise to greater pressures on existing roads, and can
result in the need to significantly improve infrastructure. In economic terms, this
represents a cost. Unless the cost is met by the developer or house purchaser, it is
transferred onto existing residents in a community. This can be in the form of a
„negative externality‟ manifest through increased congestion and worsening road
76
conditions, or as direct cost when local government has to provide infrastructure from
its own resources. The way that Irish public policy has sought to deal with this is
through a system of development levies. These arrangements evolved since 1963.
Current provisions are set out in Sections 48 and 49 of the „Planning and
Development Act 2000‟.
They were brought into force in March 2002, with a
requirement that local authorities put a new scheme of levies in place by March 2004.
The NESC has suggested that limited forms of development contributions prior to this
legislation resulted in significant costs being imposed on local authorities as a result
of house construction (2004, p.119).
What makes development contributions relevant to the Programme is that they were
an important source of funding in meeting the local authorities‟ required contribution
to individual projects.
The legislation now in place provides for three types of
development contributions, as follows:
General development contributions,
Special development contributions, and
Supplementary development contributions.
Payment is required as part of the planning process and is attached as a condition to
planning permission. Development contributions schemes attempt to strike a difficult
balance. On the one hand there is a clearly a case for ensuring that levies represent
the full additional costs of providing infrastructure. On the other hand, if levies are
too high they could act as a disincentive towards development. This would tally with
Barker‟s identification of a potential market failure when the costs imposed on
development can discourage housing construction and a potential welfare gain for
society. Higher-than-justified development levies could also result in a form of „free
riding‟ on the part of existing residents who may expect developers (and new home
owners) to provide infrastructure that benefits everyone. Whilst not explicitly using
the „market failure‟ terminology, the Guidelines issued by the Department warn of
“negative social and economic costs” that may be caused by unreasonably high
contributions (DEHLG, 2003, p.4)
For the purposes of reviewing programme, the system of levies is of significance
from both a theoretical and practical perspective. The contributions offer a formal
framework to address a specific market failure that was raised by Barker. They can
be seen as a means for the exchequer and local authorities to ensure that the
77
additional cost of infrastructure resulting from development is internalised by
developers. From a practical perspective, the Programme had an expressed aim to
facilitate the zoning of lands and development of housing and other commercial
buildings.
This provided a source of revenue.
The extent to which exchequer
funding was supplemented through development levies is therefore of interest. In
other words, did the developments benefiting from the roads infrastructure pay their
fair share of the costs? Development levies also offer an important future source of
funding for roads infrastructure, particularly in areas that are experiencing
considerable development.
5.5. Conclusions
The purpose of this chapter was to look at the Programme‟s original objectives and
compare them with current Government strategy. This examination of policy and
legislative changes is important in conveying the extent to which Government
strategies has developed since 2000.
When the Programme was conceived,
particular exceptional circumstances prevailed in the housing market. There were
also strong development pressures to provide industrial and commercial lands.
There were specific market failures, particularly with the undersupply of housing.
However, these conditions generally no longer prevail. The supply of zoned and
serviced land is now sufficient to meet needs in the medium term. The urgency to
meet growing housing demand in the short-term is no longer a factor, with output
actually falling in 2007 and expected to fall further in 2008. An entire hierarchy of
planning strategies, guidelines and policies have been put in place to achieve spatial
planning goals, and co-ordination between various policy objectives in the fields of
housing, transport and economic development. In meeting future housing needs,
policy will be crucially informed by the principles of sustainable development.
Nothwithstanding the fall in housing construction output experienced in 2007 and
2008, and the differing forecasts about future output, the underlying social and
demographic factors point to significant housing demand that will need to be met up
to the year 2021. The manner in which this will be achieved is set out in the DEHLG
policy document „Delivering Homes Sustaining Communities‟. There is a role for
regional and local roads in facilitating the provision of development lands and
housing supply.
Whatever policy instruments are used to deliver roads, the new
system of development levies offers an important source of additional funding.
78
There is a stated commitment on the part of the Department of Transport to support
the development and maintenance of the regional and local roads network. This reiterates a commitment in the National Development Plan 2007-2013.
The
Department‟s „Statement of Strategy‟ published in April 2008 states that:
“Significant investment in the network of regional and local roads is
important to complement the investment in the national roads
network….these roads are vital to local enterprise agriculture, forestry
and tourism as well as having a valuable social and economic
function.” (DoT, 2008, p.40)
This entails a commitment to support the economic and social development role
played by regional and local roads. However, it does not automatically follow that
the Programme being reviewed here, which had a dedicated focus on opening-up
development lands, should continue. A core principle underpinning the entire „Value
for Money Policy & Review Initiative‟ is that investment decisions should be guided
by policy priorities as they now stand. Roads policy has substantially shifted its
focus in the direction the National Spatial Strategy, and this is now the guiding
framework.
In 2006 a new and separate funding programme was established to support roads
that make a significant contribution to achieving the objectives of the NSS. This is
described as the „New‟ Strategic Regional and Local Roads Programme.
The
characteristics of the Programme, and the implications for future public expenditure
commitments are examined further in Chapter 9. In policy terms however, this shift
is in line with Governmental strategic priorities, and those of the two Departments
that are directly concerned with roads and spatial planning policy.
The new
programme has been endorsed by the National Development Plan (2007, p.85), and
the recently revised Department of Transport Statement of Strategy (DOT, 2008,
p.40). This is a vital contextual factor influencing the overall recommendations that
can be made about future funding decisions. While the objectives of the Programme
under review are generally compatible with current Government policy, the shift in
strategic priorities calls into question the need for dedicated programme with such a
specific focus on the facilitation of housing and industrial land.
A further development of note was the publication by the Department of Transport in
2007 of „Guidelines on a Common Appraisal Framework for Transport Projects and
Programmes‟ (DoT, 2007). These effectively set down the procedures and rules to
79
be followed when making investment decisions on transport projects.
Their
relevance to any future arrangements for providing regional and local roads will also
be examined in Chapter 9. Before this can be done, the performance of the current
programme must be assessed. The next three chapters constitute the core of the
review. They will evaluate the Programme in terms of its outputs, effectiveness and
efficiency.
80
Chapter 6
“Define the outputs associated with the Programme
activity and identify the level and trend of those
outputs.”
6.1. Introduction – Identifying the Outputs
The significant outputs of the Programme are the roads themselves. However, the
roads were intended as a means to facilitate lands for housing, industrial and
commercial development. These can be seen as both outputs and outcomes. For the
purposes of the review, these are treated as „secondary‟ outputs, or in the standard
terminology used to describe performance indicators, they can be also viewed as
„intermediate‟ outcomes. To avoid confusion, all of the physical roads infrastructure
and the resulting housing and development lands that were facilitated, are simply
referred to as „outputs‟. It was the view of the Quality Assessor who examined the
review, that the lands for housing, industrial and commercial development are more
accurately described as „impacts‟ rather than „outputs‟.
This chapter will provide quantitative details of these deliverables, as reported by the
local authorities in their questionnaire responses. The complexities surrounding the
causal relationship between the roads, the zoning of development land and the supply
of housing, are examined in Chapter 7, which deals in more detail with the question of
„Effectiveness‟. However, when outputs are measured and compared, it is natural that
some preliminary conclusions of programme effectiveness can be drawn.
The approach adopted here for assessing the level and trend of outputs is to use the
commitments in the original project applications as a baseline to make relative
comparisons with what has been delivered. In order to achieve valid comparisons,
appropriate adjustments have been made to take account of data that was not
available in the original application forms back in 2000, and to reflect changes in the
composition of the Programme since then. This quantitative data is augmented with
qualitative contextual detail drawn from the interviews with the local authority
personnel, and from the case study areas.
81
The circular letter and publicity materials which announced projects supported under
the Programme quantified the intended outputs.
These are set out in table 6.1,
overleaf.
Table 6.1. Original Output Targets
Main Projected Deliverables
(per circular 25/00)
Quantities
Number of Houses
43,659 Houses
Length of Road (in kilometres)
123.545 km
Hectares of Housing Land
1,659 Hectares
Hectares of Industrial Land
932 Hectares
The kilometers of road were based on the combined total length of all 43 of the original
selected projects. However, the housing units and development land figures were
based on the 29 application forms that included figures for such quantifiable
deliverables. 14 did not, and were selected on the basis of a general commitment to
the facilitation of development, and their location in areas of Kildare and Meath which
were facing major development pressures.
In the case of the Meath projects,
estimates of the quantified deliverables were subsequently provided.
Of the 44
projects now being examined, 8 do not have original estimates of quantified outputs in
the form of housing units etc. from 2000, or similar current questionnaire data to use
for comparative purposes. These are the six projects involving improvement works
13
along the R406/ R407 regional roads in County Kildare , plus the Celbridge
Interchange and the „Roads Serving Intel‟.
This lack of comparable data has
implications for the assessment of effectiveness in Chapter 7, and alternative
indicators are identified for this purpose. Notwithstanding the validity of the case that
existed for funding these projects, the lack of indicators is something from which
lessons should be learned. It would benefit future programmes if the same types of
indicator were used to appraise all projects at the outset, and to evaluate their
effectiveness upon implementation.
The individual projects are also units of output in their own right, which can be
assessed in terms of commencement and completion against their original intended
timescales. The impact of delays, as well as their causes, will be described and
13
Barberstown to Maynooth (both sections), Clane to Kilcock (both sections) and Sallins to
Clane (both sections).
82
analysed. These delaying factors also have implications for other regional and local
roads programmes.
6.2.1. Aggregate Outputs – Housing and Development Land
Table 6.2, below sets out in aggregate terms the quantitative outputs being delivered
by the Programme, as reported in the questionnaire returns. Column 1 details the
original intended deliverables that have already been given in Table 6.1. Column 2
makes adjustments to this data to account for changes in the Programme and the
submission of output targets for some projects which weren‟t available at the outset.
Direct comparisons can therefore be drawn between columns 2 and 3. Respectively,
these two columns represent the original intended outputs, and the reported outputs
for 36 projects. The eight that have already been mentioned in County Kildare are not
included. The notation underneath explains the origins of the data and any noteworthy
issues to assist in understanding the figures.
Based on the questionnaire returns, it is possible to say that upon completion, the
Programme will have delivered upon, and exceeded its stated commitments in terms
of housing units and development lands for both housing and industrial purposes. The
extent to which this has happened can be gauged from column 4.
Table 6.2. Headline Outputs – Housing and Development Land
1
2
3
Expected Outputs
Original Expected
Declared Outputs
based on Original
Outputs – Revised
based on 2007
(see note 2)
2000 Applications
Questionnaire
(see note 1)
Returns
(see note 3)
Housing Units
43,659
46,024
65,436
4
Difference
between
Expected and
Actual
Performance
19,412
(+42%)
Housing
Hectares
1,659
1,791
2,281
+490
(+27.5%)
Industrial
Commercial
Hectares
/
932
959
973.5
+14.5
(+1.5%)
Notes on the Data in Table 6.2
Note 1
Projected outputs in first column were quoted in Circular 25/2000 notifying local authorities of
the selected projects, and in publicity material for the Programme. Quantifiable deliverables
were not originally provided in respect of 14 projects
83
Note 2
Column 2 is a revised version of Column 1. It reflects changes in the make-up of the
Programme caused by the addition and discontinuation of projects, and the receipt of
outstanding data, as follows:
Two projects were added (Ballybeg Road in Waterford City, and the Tramore Ring
Road Phase 5 in Waterford County). The original deliverables for these projects have
been added.
Deliverables were subsequently submitted in respect of four of the five Meath projects.
The remaining Meath project (Plattin-Colp) was discontinued, and it was therefore not
necessary to include data.
Two Kildare projects were reallocated from the Programme (Enfield-Edenderry), and
one added (Roads Serving Intel). However, these did not have quantifiable housing
and development land outputs.
Two further Kildare projects were discontinued (Naas Inner Relief Road and Clane
Inner Relief Road). Appropriate adjustments have been made.
Parkmore Road crosses the local authority boundary in the Galway city suburbs. It
was undertaken as two separate schemes by Galway City Council and Galway County
Council. The data for columns 2 and 3 have been presented in a way that avoids
double counting of the same outputs.
The subdivision and amalgamation of projects also resulted in a net increase in the
number of projects with quantified outputs, but this had no net impact on the overall
quantity of outputs.
Note 3
A valid comparison can be drawn between columns 2 and 3. These are effectively the beforeand-after output data for 36 projects.
6.2.2. Delivered and Potential Outputs
The aggregate figures, although useful, do not give the full picture. In the case of
housing units and development lands, there is a need to differentiate between outputs
that have been delivered, and those that are projected to be provided in the future.
The local authorities were asked to provide this data through the main questionnaire.
While not all of them did (or could) provide this breakdown, the available figures give a
good indication of the extent of delivery of the key outputs to date.
These are set out in Tables 6.3, 6.4 and 6.5 (overleaf) and deal respectively with
Housing Units, Housing Lands and Commercial Lands.
84
Table 6.3. Housing Unit Outputs
Housing Units constructed, under construction or in the
planning process
Potential housing units on zoned land that are not yet
submitted for planning permission
„Other‟ - Housing Units where aggregate data did not
differentiate between the two categories above
Total
27,379
20,061
17,996
65,436
Table 6.4. Housing Land Outputs (Hectares)
Land that has been zoned, serviced and built upon (including
construction currently underway)
Land that has been zoned and serviced but not developed
959 ha
Land that has been zoned but not serviced or developed
191 ha
„Other‟ - Land where the data provided did not differentiate
between the three categories above
548 ha
Total
583 ha
2,281 ha
Table 6.5. Industrial / Commercial Land Outputs (Hectares)
Land that has been zoned and developed upon (including
construction currently underway)
Land that has been zoned and serviced but not yet developed.
295.5 ha
445.5 ha
Land zoned but not serviced or developed
18 ha
„Other‟ - Land where the data provided did not differentiate
between the three categories above
214.5 ha
Total
973.5 ha
Before analysing these table, some caveats must be sounded. Differentiated data in
the categories requested was not provided for relatively large quantums of the output
data. Up to 17,996 housing units and 548 hectares of housing land fall into the „Other‟
category.
It was not specified whether they had been delivered.
This limits the
inferences that can be drawn.
A general message that can be read from the tables is that a reasonable proportion of
the anticipated outputs have not yet been fully realised. Given that an objective of the
Programme was to respond quickly to housing supply pressures and development
land shortages, this is a criticism. However, the original application process did not
require delivery within a set period.
85
In the case of the Housing Units, nearly one third fall into the category of „potential‟
outputs, but this may not be as significant an issue as it appears. Given the forecasts
for future housing demand as set out in the previous chapter, these are likely to be
required to meet future housing needs, albeit in the medium to long term. It is also
clear from the interviews that the local authorities are anticipating significant need for
housing development going forward.
This is also evident from the detailed
examination of the most recent statutory Development Plans adopted by the local
authorities in the case study areas of Naas (Co. Kildare), Tramore (Co. Waterford).
They are basing their infrastructural planning around the assumption of future
population growth and housing needs, whatever the current situation affecting the
housing market in the short term.
It is noteworthy also that the majority of the housing land outputs declared in the
questionnaires are either developed, or have been serviced for development.
„Serviced‟ lands are those that have access to roads, water, and sewage services.
When required to meet housing demand, these can productively be used within a
relatively short timescale.
One of the purposes in setting up the Programme was to improve the situation being
faced by those seeking social and affordable housing. The questionnaire sought
details on the proportion of housing units that fell into the „Social and Affordable‟
category. However only 9 valid returns were received, which curtailed the use of this
data.
However, almost all of the roads projects have come on stream after the
enactment of Part 5 of the „Planning and Development Act 2000‟, which requires
developers to set aside up to 20% of housing developments for social and affordable
purposes. It is therefore likely that a significant proportion of the housing outputs will
fall into this category, and that the Programme will assist in the delivery of social and
affordable housing. The case study area of Tramore Town would bear this out. The
proportion of social and affordable housing units delivered by phase 4 of the ring road
was 33% (which also includes direct local authority provision). For phase 5, the social
and affordable element is reckoned by the local authority to be 20%. This is in line
with the legislation.
The local authority also appears to be vigorous in forcing
developers to meet their obligations.
The company that developed most of the
housing along the Tramore Ring Road (R. McDonald & Son) raised this issue in their
interview (albeit as a cause of concern to them and a criticism of the local authority).
86
In the Naas case study area, it is interesting that the Town Council and Kildare County
Council are actively pursuing a policy to require developers to provide housing units,
rather than „payments-in-kind‟.
The legislation allows developers to meet their
obligations by way of a payment, and this facility is widely used across the country.
The policy in relation to Naas is set down in the Kildare County Housing Strategy
2005-2007, and in the Naas Town Development Plan 2005-2011, where it states that
“compliance with Part 5 through a financial contribution will only be acceptable in
exceptional circumstances” (NTC, 2005, p.56). There is some evidence therefore that
the Programme is assisting in the delivery of social and affordable housing, although
this is based on the case study areas rather than a full set of programme-wide data.
In relation to the industrial and commercial lands, most of the deliverables are
differentiated.
A high proportion, over 76%, are either developed or serviced for
development.
This indicated that they are currently in use, or are immediately
available for use. A relative small portion (less than 2%), have neither been serviced
nor developed. The remaining 22% were not subcategorised within the questionnaire
returns.
In summary, based on the questionnaire data, the Programme will exceed its expected
outputs for delivering housing units, housing lands and industrial / commercial lands.
However, some of these deliverables are not yet realised, but are likely to be in the
medium term.
6.3. Performance of Individual Projects
The output data for each of the 44 individual projects is included in a spreadsheet table
at Appendix VI, „Output Data‟. This allows for a direct individual comparison to be
made between the stated expected outputs when the projects commenced, and the
outputs as reported by local authorities in their questionnaire returns. Some projects
had either housing or commercial outputs as their focus, while others combined both.
At aggregate level, 34 of the projects reported output data for housing lands. Of these
over half (18 projects) exceeded their original projected outputs.
A further 8 are
delivering less housing lands than was originally anticipated, while another 8 report
outputs in line with original projections.
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14
In the case of housing units, 32 projects provided output data . 18 of the 32 exceed
original projections while 5 are delivering less housing units than were originally
expected. A further 9 have outputs in line with original expectations. Interestingly, in
the case of the Waterford City Outer Ring Road, Tramore Ring Road (Phase 5), Naul
Road and Lusk Bypass, while a smaller area of land is being facilitated, a greater
number of houses than forecast is being provided. This was explored in the interviews
with the respective local authorities, and can be partly explained with reference to
increased densities that are promoted under revised planning policies. In fact, higher
density development is something that is prevalent right across the Programme in
other projects. It is noticeable that a significantly greater number of housing units than
expected is being delivered (almost 20,000 in total). While this can be partly explained
by the greater overall quantum of land being facilitated, increased housing densities
have been crucial in the Programme exceeding expectations. The Old Whitechurch
Road in Cork City can be cited by way of an example. It had originally been expected
to deliver 400 units on 22.6 hectares of land. It is now delivering 1,100 within the
same area. Proximity of access to public transport routes has facilitated the increased
density. This is relevant from a policy perspective, because there is greater emphasis
on integrated planning that allows for higher density housing to be developed where
sustainable modes of transport can be accessed. In this case, the road upgrade is
allowing development to take place, while public transport is facilitating the higher
densities.
From the 30 projects reporting outputs of industrial and commercial lands, exactly half
(15) exceeded original projections, while 4 are meeting their original targets. Notably,
11 projects did not meet their original projections. While outputs are being exceeded
at an overall programme level, the fact that such a significant number of projects did
not meet expectations needs further examination. The Oranhill Distributor Road in
County Galway did not report any of its expected 20 hectares of commercial land.
However this was offset by the delivery of 56 extra hectares of housing land. The
Naas Ring Road at Craddockstown which opened in March 2008, reported that none
of its anticipated 95.5 hectares have been facilitated. However, planning maps for the
area that were examined during the case study work would suggest that substantial
tracts will be opened up in future.
14
Two of the projects that had housing land outputs did not provide additional data on housing
units Parkmore Road (Galway County Council) and Naas Ring Road Millennium Park (Kildare
County Council).
88
Of particular note has been the tendency for certain roads originally intended solely to
open up industrial lands, to have also facilitated housing. This particularly applies to
the Kileen Road in Dublin City, the Millenium Business Park section of the Naas Ring
Road (Kildare) and the Parkmore Road (both Galway City and County sections). For
example, Kileen Road was originally intended to open up 80 hectares of industrial
land, but has facilitated 43 hectares, along with a further 43 of housing land (86ha in
total). This trend has not been accidental. The developers of all three industrial /
commercial sites were interviewed as part of the qualitative element of the study.
There has been a conscious shift towards combining commercial facilities with
residential development and related amenities.
Heretofore these types of
development would have been separated. Principles of sustainable development have
shifted this policy.
There is a conscious decision on the part of developers and
planners to facilitate mixed developments.
While some of the projects that did not meet original targets appear to have simply
underperformed, there are valid explanations and underlying policy shifts that explain
others. The table below presents the aggregated performance data at programmelevel that has already been outlined above.
Table 6.6. Relative Performance of Projects - Reported Outputs Compared to Original
Intended Outputs
Housing Lands
Housing Units
Industrial /
(No. of Projects)
(No. of Projects)
Commercial Lands
(No. of Projects)
Greater than
18
18
15
Originally Expected
Same as Originally
8
9
4
Expected
Less than Originally
8
5
11
Expected
Total Projects
34
32
30
6.4. Roads Outputs
Upon completion of the Programme, the combined anticipated length of all roads
outputs will be 103,985 metres. This varies by almost 20 kilometres from the original
projected length. Almost all of the difference can be attributed to the reclassification
and removal of some of the original projects. When adjustments are made to take
account of these changes, the difference is 820 metres. There were some variations
within the individual projects, but this largely evened out at a programme level.
Obviously for the projects where the length of road changed, this would have cost
implications that will be examined later in the review. The length of road delivered in
89
line-metres offers a useful headline indicator for outputs. However, it has limitations
for other forms of analysis. For example, when the relative cost is considered, the
width of the road and particular design features (including structures like bridges etc.)
then become crucially important factors. Nevertheless, for the purpose of establishing
the level and trend of outputs, the length of road is informative.
In a manner similar to the earlier tables for the housing and development land outputs,
Table 6.7, provides a breakdown of the length of road delivered since the inception of
the Programme. The first column contains the original anticipated outputs from 2000.
Unlike the housing and development land data, this data is drawn from a complete set
of all 43 original projects. The second column is a revised version of column 1 and
represents the original projected output data for the 44 projects that current comprise
the Programme.
Column 3 contains data on roads outputs as reported in the
questionnaire returns. Columns 4 and 5 differentiate between outputs delivered up to
the end of 2008, and those expected to come on stream after that date. Significantly
12,660 metres remain to be delivered in 2009 and beyond.
Table 6.7. Roads Outputs
1
2
Original
Revised Original
Expected Road
Outputs
(see note 1 below)
Outputs – per
Circular RW
25/00
123,545 metres
104,805 meters
3
Total expected
outputs for the
Programme
(already
delivered and
projected)
4
Outputs
Delivered by
end of 2008
(see note 2)
5
Outputs
projected for
delivery post
2008
103,985 metres
91,325 metres
12,660 metres
Note 1 - The two Enfield to Edenderry schemes (Kildare) were reallocated from the Programme.
Plattin Colp (Meath), Naas Inner Relief Road (Dublin Road to Tipper Road) and Clane Inner Relief
Road were taken out of the Programme. New projects were added (Waterford Outer Ring and
Ballybeg). „Roads Serving Intel‟ was added to facilitate access and egress from the Intel plant at
Leixlip. It did not have a measurable length of surface.
Note 2 – 640m of the Balbriggan Inner Relief Road was completed in 2005 and is included in
column 4. The remaining 1,160m are due for completion in 2009 and are included in column 5.
The roads also incorporate associated physical infrastructure. Of particular interest
here has been an emerging tendency to include additional features to accommodate
cyclists and pedestrians. These were not seen as particularly crucial elements when
the projects were initially selected. However, they have become significant aspects as
transportation policy has shifted emphasis, with sustainability becoming increasingly
important. Based on the questionnaire returns, 26 of the 44 projects have included
cycle tracks as part of their roads outputs. In almost all cases, these are separated
90
from the main road carriageway, which has added benefits from a safety point of view.
35 of the 44 projects include footpaths to facilitate pedestrians. The projects that didn‟t
include cycle tracks and footpaths are the longer stretches of road passing through
predominantly rural areas.
Table 6.8. Facilities for Cyclists and Pedestrians
Cycle Tracks
Number of Projects
(from a total of 44)
26
Footpaths
35
Accessibility and mobility for pedestrians and cyclists is an important aspect of
sustainable planning and development. These principles are set out in the planning
guidelines issued by the Department of the Environment, and since 2007 are also
factors when transport projects are appraised under the Department of Transport‟s
guidelines for capital expenditure. The extensive provision of such facilities through
this programme can therefore be seen in a positive light. As well as providing mobility
and accessibility, there are also health benefits that accrue. Waterford City Council,
for example, reported that the cycle tracks and footpaths on new Outer Ring Road
(which is 6.8km in length) have become a route used for training and exercise by
walkers, runners and cyclists.
By and large then, the Programme is delivering what it set out to do in terms of the
roads being constructed. The outputs are broadly in line with what was projected.
However, the 12,660 line-metres scheduled to be delivered after 2008 represents over
12% of the total road length. Eight years after the commencement of a programme
that was supposed to last four years, the fact that such a large proportion of outputs
have yet to be delivered is a cause for concern. Delays affecting the projects and their
impact will now be considered in more detail.
6.5. Factors Affecting The Delivery of Outputs
6.5.1 Commencement and Completion of Projects
At the outset, a sense of urgency pervaded the Programme. It should be recalled from
Chapter 4, which identified the objectives of the Programme, that the timely
commencement and completion of projects was seen as important. It should also be
recalled that the Programme was originally intended to run from 2001 to 2004. As a
result of a variety of factors, the projects have taken much longer to complete than was
originally anticipated. In examining this whole area three key questions in particular
arise:
91
What were the extent of the delays?
What caused them?
What lessons can be learned for the future?
Data to address these questions is drawn from the questionnaire responses and
interviews. A significant number of projects neither commenced, nor were completed
within the original planned timescale. Within the intended lifespan of the Programme
(2001-2004), 32 projects commenced and 19 were completed. Coming into 2008, 3
projects had yet to commence, and 13 awaited completion. Summary tables (below)
set out in aggregate, the dates of commencement and completion for projects. The
information is based on data drawn from the questionnaires. The individual
commencement and completion dates for all 44 projects is included at Appendix VI.
Table 6.9. Project Commencement Dates
Year of Commencement
Number of Projects
2001
2002
2003
2004
2005
2006
2007
2008
2009
Post-2008
(with no date specified)
Total
11
8
8
5
2
3
4
1
1
1
44
Table 6.10. Project Completion Dates
Year of Completion
Number of Projects
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Total
1
4
5
9
4
6
2
7
4
1
1
44
In a majority of cases, the local authorities were overoptimistic in their estimation of the
time taken to commence and conclude their projects.
92
At programme level, the
Department‟s expectations for commencement and completion deadlines turned out to
be unrealistic and unattainable in practice. The data still only tells part of the story.
When evaluating a programme, it is also important to consider prevailing conditions
that impact upon delivery. The projects were being implemented within a changing
and volatile economic and policy environment.
Construction and land costs were
increasing and putting pressure on local authorities.
Other localised influences
associated with individual projects also need to be considered.
There is considerable overlap between the issue of delays and increased costs, with
the former contributing to the latter. For example, delays in the planning process and
land acquisition led to delays in works commencing.
consequent inflationary increases in construction costs.
This caused exposure to
In the year 2000 road
construction inflation was running at 12%. In 2001 it was 9% and in 2002, 5% (C&AG,
2004, p.56). Increased costs, particularly land costs, also created difficulties for some
local authorities in meeting their funding commitments on projects. This in turn led to
delays, which were again compounded through further inflationary cost increases. The
level and trend of costs will be examined in Chapter 8.
Apart from describing the delays, and suggesting ways in which they can be
overcome, it is also worthwhile to look beneath the statistical data, and explore
particular trends where they are present.
Evaluation theorist Ray Pawson
recommends a method that seeks to identify “what works, for whom, in what
circumstance and in what respects”, (Pawson, 2006, p18). This is described as a
„Theory-Based‟ approach to evaluation. In drawing conclusions for this section of the
review, it is proposed to invert Pawson‟s method. The review will identify what didn‟t
work, for whom, and what circumstances prevailed in those instances. In doing this,
the purpose is to identify the common factors that were present when delays arose,
and to recommend measures to anticipate and deal with them in future.
6.5.2. Public Consultation and Environmental Impact Statements
Part 8 of the „Planning and Development Regulations, 2001‟ sets down statutory
obligations on local authorities when seeking planning consent for certain public
infrastructure works. Local authorities are required to undertake a process of public
advertisement and consultation for the construction of a new road, or the widening or
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15
realignment of an existing road . The predecessor to this provision was Part 10 of the
„Local Government (Planning Regulations), 1994‟.
Within the questionnaires and
interviews, the processes themselves did not come in for criticism, and were seen a
necessary and democratic element of the planning process.
However, the public
consultation processes did take time to complete, and in a number of cases, delayed
commencement. This applied in particular to controversial projects, especially those
affecting residential areas where considerable local opposition arose.
Returns for 36 projects stated that they had been subject to a public consultation
process. The length of time taken to complete the process was indicated in 35 cases,
with one consultation process still ongoing at the time. One fifth of the projects
concluded their public consultation process within the minimum period possible, which
is 3 months.
Table 6.11. Length of Public Consultation
Length of Time to Complete
Number of Projects
Public Consultation
23/ 24 months
2
18 months
3
12 months
5
9 -11 months
3
7- 8 months
3
6 months
10
4-5 months
2
Within 3 months
7
Currently Ongoing
1
36
Just over half of the projects that engaged in a statutory public consultation concluded
it within 6 months. However, a considerable number took longer, with over one quarter
taking a year or longer. Projects where public consultation processes were particularly
cited as contributing to delays were two of the Cork County Council projects
(Carrigaline Western Relief Road and Clarkes Hill/Moneygourney Road), the South
Dublin Outer Ring Road, the Duleek to Julianstown Road (Meath), and the Newbridge
15
Part 8 (80.1.b). The provision applies to roads of 100 metres or more in an urban area, or 1
kilometer or more in a rural area.
94
Road to Caragh Road section of the Naas Ring Road (Kildare). All of these projects
also experienced cost increases to varying degrees.
Environmental Impact Assessments / Statements did not feature extensively, with
three in total. Where they were undertaken, they tended to be on larger and more
complex projects, again affecting residential areas (the Dundrum Bypass, South Dublin
Outer Ring Road and the Wicklow Port Access / Inner Relief Road). In the case of the
Outer Ring Road, it was originally intended that an EIS would be prepared for two
separate sections of the road. Following an oral hearing by An Bord Pleanála (the
independent planning appeals board), an additional (and third) EIS had to be
prepared. Recommendations from An Bord Pleanála also required that the design of
the road be modified.
According to the County Council, the scheme originally
proposed in 2001 did not complete all of its statutory processes for 3 years. This is
something of an extreme example, but it does demonstrate the potential for difficulties
to arise, especially when developing strategic roads in urban or suburban areas.
Public consultation, planning consent and environmental impact assessment are
necessary and desirable aspects of the planning process. However, it is unrealistic to
expect these to be concluded within the minimum possible statutory period. Some
good advice here was given by a local authority engineer who recommended that
realistic timescales should be allowed for:
“Give yourself a realistic window, and I suppose you have to be a bit
more realistic with regards to the timeframes. I think sometimes looking
at schemes, we‟re all very optimistic….and the next thing someone puts
an obstacle in front of us, and all of a sudden our three month timetable
to get through this process is now six months…”
6.5.3. Delays in Land Acquisition
The acquisition of lands was a significant delaying factor on a number of schemes.
Ten questionnaire responses cited delays caused by land purchase.
However, it
emerged as an even bigger issue during the interviews with the local authority
personnel. At the outset, a number tried unsuccessfully to conclude land deals by
negotiation and eventually had to use a Compulsory Purchase Order.
Ireland, in common with other jurisdictions has a market economy based on the private
ownership of assets.
This includes lands and buildings.
Article 43 of the Irish
Constitution guarantees the right to private property, although this right is regulated by
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16
principals of social justice . Land for roads and other public infrastructure projects
can be acquired by local authorities by agreement with the owner at market value.
Where agreement is not possible, statutory powers can be invoked allowing for
compulsory acquisition.
When this happens, the current basis for assessing
compensation to be paid to a landowner is the market value of the land, plus
allowances for what are described as „severance‟, „injurious affection‟ and
„disturbance‟. Allowances can also be made for „betterment‟, or improvements arising
as a result of the provision of local authority infrastructure like water services, roads
and public lighting. Where a dispute arises about compensation, the matter can be
referred to an independent property arbitrator for decision. The level of payments
made to landowners has implications for the cost of roads projects, and is addressed
further in the Chapter 8 of the review.
The way the procedure currently operates, is that an application is submitted to An
Bord Pleanála. Once a Compulsory Purchase Order is approved, a local authority is
then entitled to serve a „Notice to Treat‟ on persons holding an interest in the land in
question. In effect, it allows the local authority acquire the right to use the land upon
payment of compensation. The figure to be paid is either agreed by the parties, or by
the binding decision an arbitrator. An important consequence of the „Notice to Treat‟ is
that the market value of the land is (generally) assessed as its value when the notice
was served. Where there is a dispute about compensation, the local authority can still
take possession of the land, pending the determination of the sum to be paid.
Local authorities have traditionally relied upon a mixture of negotiation and compulsory
purchase to acquire the lands needed for public works.
changing.
However, this may be
There is an emerging view that even if negotiation is required in land
acquisition, it is best to serve the CPO at the outset, and negotiate within the context of
the CPO. This approach can have a crucial benefit in bringing greater certainty to the
time taken to complete a project.
This point was specifically made by nine local
authorities in interviews – Dublin, Limerick and Waterford City Councils, and Fingal,
Meath, Kildare, South Dublin, Limerick and Waterford County Councils. By way of an
example, in the case of the two Dublin City Council projects, a negotiated approach
was first adopted, but it subsequently became necessary to use a CPO. In the case of
16
This paragraph relies heavily upon information, definitions and descriptions contained in the
Report on „Private Property‟ prepared by the „All Party Oireachtas Committee on the
Constitution‟ (APOCC, 2005), and a briefing paper on compulsory purchase prepared by the
Department of the Environment, Heritage and Local Government.
96
the Kileen Road, the City Council reckoned a 12 months delay was incurred while
unsuccessful negotiations were undertaken.
In the interviews, the phenomenon of „Ransom Strips‟ cropped up frequently. This
term has not yet entered wider public discourse, but is used among local government
officials. It describes the practice whereby a landowner may retain a key piece of land
vital to the construction of a road, and use that leverage to gain a price greater than
market value. This effectively holds the local authority and the project „to ransom‟.
This practice invariably results in delays, and cost increases. A key point from the
interviews is that using a CPO at an early stage can obviate this. In one of the
interviews an official who was centrally involved in land negotiations explained the
benefits of this approach:
“We prefer to go with CPO because it basically means that we get the lands.
Once the scheme is actually approved we take possession of the lands. If
there‟s an argument with value, that goes to arbitration where they can set
the value. But it means that we can progress fairly quickly. With negotiation
we find that we are tied up with the detail and every time you try to close out
the deal there‟s always something else that comes into the equation…so it‟s
very hard to get negotiated land, particularly on the big schemes and they
know that you need it.”
There may be exceptions where going for an early CPO may not necessarily be
required. There are situations where negotiation can facilitate the speedy conclusion
of a deal. In addition, negotiated arrangements can yield land from developers at
preferential rates.
These circumstances particularly apply where there may be a
single owner (or group of owners) with a vested interest in co-operating to see that the
road project proceeds. As one official explained:
“The CPO is much cleaner, even where we are engaged in negotiations,
I‟d prefer to have a CPO sitting in my back pocket if things go wrong.
Now again, notwithstanding that, we are doing a couple of schemes at the
moment where we are doing it by agreement, but that‟s only because we
have 3 or 4 landowners where the developers would have a vested
interest in getting the road done”
Similarly, in the case of the R161 (Athlumney), Meath County Council negotiated an
agreement for land on Phase 1 where there was effectively one landowner. They
went with CPO in Phase 2, which was more complex and involved multiple
97
landowners. The Oranhill Road was a project in County Galway that combined both
negotiation and CPO. Agreement with developers enabled sections of the road to be
built, effectively at no direct cost to the local authority.
A CPO was needed on
additional lands required by the local authority to construct roundabouts. While this
approach has had financial benefits, it should be noted that elements of the project are
not yet complete and work is still ongoing. Nevertheless, even where arrangements
are being negotiated with landowners and developers, it can still be advisable to use a
CPO, especially where certainty of delivery is a factor. As one senior official advised:
“the lesson would be that even with agreement that you are receiving the
land at no cost, or receiving the land at a defined cost, that you proceed
with a CPO, particularly if you have to go to the Board anyway with the
scheme for approval….You should actually put the CPO in place, from
the point of view of ensuring that you have a defined timescale”
It should be noted that applying for a Compulsory Purchase Order is a statutory
process governed by legal rules and requirements. The preparation of documentation
for CPO also places an administrative burden on the local authorities, and can take up
a lot of time. This was also cited as a factor that caused delays in some instances. By
way of countering this, sufficient allowances should be made for the time it takes to
prepare CPO documentation. In the case of the Wicklow Town Relief Road and Port
Access failure to comply with the statutory requirement to serve the „Notice to Treat‟
within 18 months of the approval of the CPO Order led to the CPO being invalidated.
This necessitated a recommencement of the whole process, with resulting delays.
Where an application for a CPO is made, it is within the rights of those affected to
lodge an objection and this can proceed to a full oral hearing of An Bord Pleanála.
This was a delaying factor in at least six projects. In one case (albeit an exceptional
one), the CPO was appealed to the Supreme Court. This happened on the R161 Trim
to Navan Improvement Scheme. Where a CPO is involved, there is no way to predict
with certainty if objections will be lodged, and a full public hearing set up. However,
this eventuality should be considered at the outset, possibly as part of a risk analysis.
Sufficient contingency time should be built in, especially if the road is generating local
controversy or impacts upon residential dwellings. Based on the questionnaires and
interviews, these are two common contributory factors where appeals and objections
frequently occur, in both CPOs and also in statutory planning consent procedures.
98
6.5.4. Other Delaying Factors
Problems that arose in contracting and tendering were cited as causing delays in a
number of instances. In the case of phase 2 of the Corbally Link Road in Limerick
City, the two lowest companies that tendered for the job withdrew having been offered
the contract, and this resulted in delays.
The Balbriggan Inner Relief Road was
undertaken by a PPP arrangement, and the resolution of a development agreement
took longer than expected. Environmental constraints were cited as a factor on the
Oranhill project in Galway, Clarke‟s Hill / Moneygourney Road in County Cork and
again on phase 2 of the Corbally Link Road. Specific localised staffing issues were
particularly highlighted in Kildare County Council.
For two years at the
commencement of the Programme the local authority was without a Senior Engineer.
In examining the projects that experienced the most serious delays in commencement,
some common trends begin to emerge. These projects were generally affected by
multiple delaying factors that compounded themselves. In the case of the three Cork
County Council projects, changes in the projects specification to incorporate
alterations and additional features have had an impact (especially in Midleton). These
were compounded by land acquisition issues. Two of three Cork projects also had
complex planning and approval procedures. Similar factors were prevalent in the case
of the Wicklow Town Port Access and Relief Road. The local authority noted that
restarting the CPO process took 10 months, the pre-qualification of contractors caused
a 12-month delay. Getting an agreement with Irish Rail to build a bridge over the rail
line took 18 months, while the negotiations with landowners took 24 months. It is
scheduled for completion in late 2009.
6.6. Conclusions and Recommendations
After making allowances for changes in the overall composition of the Programme and
output data that was unavailable when it commenced, the Programme will have
exceeded its stated commitments under each of the three output headings of housing
units, housing lands and industrial/ commercial lands. These can be seen as both
„secondary outputs‟ and „intermediate outcomes‟, given that their presence derived
from the road construction. While somewhat pre-empting the next chapter, this can be
taken as an important indicator of effectiveness. It should be noted though, that some
of these outputs haven‟t been fully delivered. At least one third of the housing units
have not yet been submitted for planning permission. However, it should be borne in
mind that original terms of the Programme did not specify or require a timescale for the
delivery of the housing and land outputs. Most of the housing lands have been zoned
99
and serviced. Given the medium to long term forecasts of housing needs, these units
are likely to be required to cater for projected demand.
A significant outcome in terms of policies towards sustainable transport is the strong
prevalence of cycle tracks and footpaths adjoining the roads. At the outset these
weren‟t seen as particularly important factors, and their presence can now be seen as
something of a bonus benefit. A timescale for the commencement and completion of
projects was specified by local authorities at the outset, and problems have occurred
here. Delays have had a major impact on the Programme. A distinction can be drawn
between general delaying factors that occurred, and the more project-specific
problems. The more widespread delays were caused as a result of underestimating
the time required to complete public consultation processes, land acquisition and a
general over-optimism that projects could be concluded quickly. The more specific
ones related to the appointment
of
contractors,
environmental constraints,
modifications in projects specifications and staffing, amongst others.
Rising costs were both a cause and a contributing factor in delays. Chapter 8 will look
in more detail at the process by which cost increases put pressure on local authorities.
In particular, problems arose with them meeting their obligation to provide 25% of the
budgeted costs. This led the local authorities in turn to lobby the Department for
increased grants. All of this caused further delays, and there was something of a
spiral effect.
Delays contributed to cost increases, and as additional funding was
sought, further delays occurred.
Fuelling this whole process was land and
construction cost inflation during the biggest construction boom that Ireland has ever
experienced. Construction inflation was particularly acute between 2000 and 2002,
when many of these delays occurred. This combination of factors was particularly
prevalent in the larger projects in Kildare and Meath County Councils. However, they
didn‟t exclusively affect those areas.
This chapter has pinpointed the extent of the delivery of outputs. In doing so, some
issues have been identified where modifications could improve the performance of
future
programmes.
The
following
points
are
therefore
put
forward
as
recommendations:
1.
When the Programme was established some projects did not have measurable
outputs in the form of housing units and development lands. Notwithstanding the
case that existed for funding these roads, there is a need to have a more uniform
100
approach to output indicators, which allow a common basis for the comparative
appraisal and evaluation of projects.
2.
For future reference, the key benefits and outputs that are anticipated to accrue
from roads programmes should be subject to an estimated timescale for delivery.
This is notwithstanding the fact that some factors affecting delivery may be
outside the direct control of the Department or the local authority.
3.
Public consultation procedures for local authority roads, and requirements to
undertake Environmental Impact Assessments are a necessary and important
part of the planning process. While it is difficult to envisage every eventuality,
estimates of time taken to conclude these processes should be based on realistic
assessments.
4.
Based on the widely expressed view of local authorities as part of this review,
seeking a Compulsory Purchase Order at an early stage brings greater clarity
and certainty in planning the likely time that land acquisition will take. However,
there are situations where negotiated agreement can be both quick and effective
in securing land from developers at preferential rates. These circumstances can
typically apply where there is a limited group of owners with a vested interest in
co-operating to see that the road project proceeds.
5.
Overall, there is a need for greater rigour in the estimation of project timescales.
The probability of delays occurring and their potential impact should be assessed
at the outset in a risk analysis as part of the pre-approval project evaluation
process.
6.
Where delays occur and become particularly serious, there is a need for a formal
framework within which their impact can be assessed by the Department.
101
Chapter 7
“Examine the extent that the Programme’s objectives
have been achieved, and comment on the
effectiveness with which they have been achieved.”
7.1. Introduction
It should be recalled that the immediate objective of the Programme was to support
the building of roads in order to facilitate the construction of housing and the opening
up of development land. Progress in the delivery of the physical outputs (i.e. metres
of road), was outlined in the previous chapter. So too were details of the housing
and development lands facilitated. The extent of the delivery of these outputs is an
indicator of effectiveness. Based on an assessment of outputs it is possible to say
that the Programme has been effective, although this is tempered to an extent by
delays in both the completion of projects and the delivery of outputs. Cost increases
were a further factor affecting the Programme and their impact on effectiveness will
be examined in Chapter 8.
The overall approach in establishing „effectiveness‟ was discussed earlier in the
Methodology chapter. It is based upon the Programme Logic Model, which makes
direct links between inputs, outputs and effects. The technique proposed by Mayne
which is described as „Contribution Analysis‟, is adopted. This involves the use of
multiple lines of evidence to build plausible associations between activities and
outcomes. The outcomes in the case of this programme are varied. These range
from the impact on the supply of housing, to the social and economic effects that
have resulted from development. By combining different lines of evidence, drawn
from data generated by original research, and wider existing information in the form
of what Boyle calls „Context Indicators‟, a comprehensive picture can be painted.
This is somewhat similar to the approach adopted by Morgenroth in his wide-ranging
economic and social analysis of the Greater Dublin Region (2001). He used source
material drawn extensively from existing statistical data.
A fundamental question to be answered in the review concerns the causal
relationship between the roads and the delivery of the development outputs. We
know that certain roads were built.
We also know that certain housing and
development lands have come on stream. However, the „effectiveness‟ of the roads
102
crucially hinges on the role they played in enabling development to proceed. For
example, it is possible that the development might have gone ahead anyway, in the
absence of the roads being built. The earlier chapters introduced the complexities
surrounding the relationship between infrastructure and development, and housing
supply in particular. Through interviews with local authorities a plausible picture of
the relationship between roads construction and development is established in this
chapter. The discussions involving local planners were particularly insightful.
Based on the comments of the local authority officials, the general consensus was
that roads funded under the Programme were indeed crucial in the development of
the housing and in the facilitation of the lands. The most compelling supporting
evidence came when planning decisions were predicated on the presence of the
roads. There were also a difference between the roads which facilitated housing and
those with an emphasis on commercial lands, in terms of how effects were felt. The
particular dynamics involved in opening up industrial and commercial lands are
examined. This chapter will then look at effects of the Programme in the three case
study areas described earlier.
The review also establishes what might have
happened in the absence of the Programme. It explores what is called the „counterfactual‟ scenario. The final section of this chapter draws all of the evidence together,
using the multiple indicators already described to assess the effectiveness of the
Programme.
It applies the „Hendricks‟ test of whether “a reasonable person,
knowing what has occurred in the program, and that the intended outcomes actually
occurred, agrees that the program contributed to these outcomes” (Mayne, 1999,
p.7). Recommendations are then made.
7.2. How the Roads Projects Linked With the Planning Process
Typically, across the Programme, the existing roads infrastructure was insufficient to
facilitate additional development on any scale. This necessitated investment in new
and upgraded roads. For example, in the interview with Galway City Council it was
explained how the new Terryland Valley Access Road facilitated 37 hectares of lands
for housing. The existing narrow and rural road would not have been capable of
accommodating the development.
Similar comments were made by local authority officials in relation to the two Phases
of the Tramore Ring Road (Waterford County Council) and the Waterford City
Council Outer Ring Road.
For most of the projects, it is fairly clear that the
developments could not have happened without the road.
103
In the case of the
improvement works on Old Whitechurch Road in Cork City, the planning applications
for the housing had to await completion of the road. Similarly, with the Kileen Road
project undertaken by Dublin City Council, the officials were of the view that planning
permission would not have been granted for the scale of development had the road
not been upgraded.
On the Wicklow Town Port Access and Relief Road, an
example was cited of a major residential, commercial and office development that
applied for planning permission, but was refused initially on the basis of poor roads
infrastructure.
Kildare County Council were able to cite examples of planning
applications for housing around the Naas Ring Road, where conditions requiring
improved roads were included in the planning permissions. There was a similar
situation in relation to the road widening and improvement works at Clarke‟s Hill in
the Cork County Council area.
The granting of the planning permission was
contingent on the County Council giving a commitment to upgrading the road.
In the case of the Carrigaline Western Relief Road (also in Cork), the developers are
awaiting completion of the road, and at that point they will be able to apply for
planning permission. With the Oranhill Road in County Galway, the improved roads
were part of the planning permission for the housing being developed there. The
relationship between development and the provision of roads was commonly felt
through the County / City Development Plan or through more localised town or area
plans. These plans generally set down planning requirements for the provision of the
specific roads to allow development to proceed.
In the case of Dun Laoghaire
Rathdown County Council, the Dundrum Bypass was one of two crucial pieces of
infrastructure that allowed a major shopping centre and range of residential
development to proceed. The other infrastructural project was Luas. The officials
described
the
symbiotic
relationship
between
public
transport
and
roads
infrastructural that allowed for significant planned and sustainable development to
happen in and around Dundrum.
The Midleton Northern Relief Road in Cork County is the subject of a special local
area plan, which ties the future development of the town with the improved road
infrastructure and the re-opening of the rail line into Cork City. In the case of the
road improvement projects in County Meath (Trim-Kilcock, Trim-Navan, Dublin-Trim)
the local authority stated that these were linked in with the County Development
Plan, and that decisions locally to grant planning permissions hinged on the delivery
of these roads. However, it was suggested that in the absence of the roads, some
104
development may have gone ahead and placed pressure on the existing (and largely
overburdened) road networks.
Two of the roads projects funded under the Programme played a crucial role in
opening up „Strategic Development Zones‟.
These zones are a major recent
planning innovation that are designed to achieve the integrated planning of largescale housing developments.
They are designated by the Government under
Section 169 of the „Planning and Development Act 2000‟ and are deemed to be of
importance to the social and economic development of the State. Three were initially
established. Provision of Outer Ring Road by South Dublin County County Council
(which was funded under the Programme) was linked to the development of the
Adamstown SDZ. In the Fingal County Council area, the Ongar Road (which was
also funded) was crucial to the development of the Hansfield SDZ.
Given the
Government‟s endorsement of the Strategic Development Zones as a means to meet
housing needs and in delivering sustainable development, the role of roads funded
under the Programme in facilitating two of the first SDZ‟s in the country can be
assessed positively.
One of the most significant issues to emerge from the interviews was the extent to
which the roads have linked in with local development plans. This issue was raised
with all 15 local authorities. Each was able to relate their respective projects back
into their county development plan or a specific local area plan.
This points to
integration between transport and land use planning, which is inherent in the
hierarchy of planning policy that has come on stream since the year 2000. Evidence
from the interviews suggests that the influence of these policies is being felt locally.
While this was the stated position in the interviews, such claims will be further tested
with reference to the three case study areas.
7.3. Cases Where Output Data Was Not Available
There were projects where there was a general rather than a specific direct causal
link between new development and the presence of the roads. These tended to be
the longer road upgrade works, particularly in County Kildare for the R406 / R407
Regional Road improvements linking Kilcock, Maynooth, Barberstown Cross, Clane
and Sallins. These roads did not have quantified deliverables in the form of housing
units or land hectares when selected at the outset. Rather, they were chosen on the
basis that they would facilitate general development in the main towns along the
105
route. During the interview, the Kildare local authority officials noted that these roads
contributed in a general sense to the development of the county.
Based on the most recently available census data, between 2002 and 2006 the
population of Clane increased by 12.5%, Kilcock by 49.6% and Sallins by 30.3%, so
development has occurred. The local authority also cited significant increases in
traffic volumes as an indicator that development in these areas had taken place, and
that the roads were necessary to facilitate access to the occupants of new residential
developments. The available traffic count statistics collated as part of this review
point to a huge growth in traffic in a relatively short period of time. This was most
likely caused by major development in towns along the R406 / R407 Regional
Roads. The data is set out below.
Table 7.1. Summary Traffic Count Data for the R406 / R407 Kildare Projects (6 in total)
Project Title
Daily Traffic*
(Year of Count)
Daily Traffic*
(Year of Count)
% Change
Sallins to Clane (Blackhall
Junction)
12,923
(2007)
8,844
(2003)
+ 46%
Sallins to Clane (Blackhall Stud)
17,000
(2007)
12,786
(2005)
+33%
Figure
extrapolated from
traffic data
6,821
(2007)
4,930
(2005)
+38%
13,987
(2007)
7,623
(2003)
+83%
Clane to Kilcock (South)
Clane to Kilcock (North)
Counts apply to both projects.
Barberstown Cross to Maynooth
Barberstown (south of
Taghadoe Cross)
Counts apply to both projects
*Based on AADT – Average Annual Daily Traffic figures.
To put these figures into perspective, the National Roads Authority‟s long term traffic
forecasts for the period 2002 to 2040, estimate that future traffic growth on the
State‟s non-national routes will be 43% for cars and light goods vehicles over that
entire 38-year period (NRA, 2003, p.3). What effectively has happened on some
parts of the network in Kildare, is that a full generation of traffic growth has occurred
in less than four years.
The traffic volume figures convey something of the
unprecedented development pressures facing County Kildare.
Similar pressures
were prevalent in County Meath. Had the R406/R407 roads not been upgraded as
106
part of the Programme, it is unlikely that they would be able to cope with increasing
traffic volumes.
The consequences would likely have been felt through a
deterioration of the surface, worsening safety performance and increased journey
times. The traffic volumes being carried on these roads are well in excess of what is
seen on many of the major national routes17, although they do not have access to the
more substantial funding streams that support the national network. This was a key
reason why the Programme funded these roads, in spite of them not having
measurable deliverables in the form of housing and development lands. In other
words, the roads needed to be upgraded, but local funding sources were insufficient
and other national exchequer sources were unavailable.
Based on the traffic volume data, it is possible to say that expenditure was justified
and necessary with reference to demonstrated needs. However, questions can be
raised about levels of car-dependency and the implications for sustainability.
7.4. Industrial and Commercial Sites
Through the interviews with local authority staff it became apparent that there was a
different dynamic at play in the development of the industrial and commercial sites
when compared to the housing-focused projects. Local authorities can‟t in their own
right directly influence decisions on industrial and commercial jobs. However, they
do have an important role, particularly in the facilitation of zoned lands, and in the
provision of services and infrastructure.
These are a prerequisite if industrial
development sites are to be provided in sufficient numbers and at appropriate
locations. This role is specifically recognised in the National Spatial Strategy. To
help explore these issues, the owners of two industrial parks developed on foot of
the Programme were interviewed.
A meeting was also arranged with a senior
manager from IDA Ireland.
Based on the views of local authority staff, there appeared to be a strong level of
interaction between the developers of the industrial sites and the local authority.
This applies in the case of relationships with public bodies (IDA Ireland), and private
companies in the development of business parks (Park West in Dublin and
Millennium Park in Naas). Such an interactive approach is recommended in the
2007 guidelines issued by the Department of the Environment (DEHLG, 2007b,
p.26).
As an example, in the case of the Parkmore Road, which facilitated the
17
Full year-by-year NRA traffic count data on the National Roads network is contained on:
www.nra.ie/NetworkManagement/TrafficCounts/
107
extension of an IDA business park, Galway City Council described how both they
and the County Council met with IDA Ireland and were being encouraged to upgrade
the roads in the area in order to facilitate existing companies and to allow for an
extension of the business park to attract new companies. The local authority noted
that when they moved ahead with the road upgrade, the IDA announced additional
jobs for the site.
The manner in which business and industrial sites are selected and developed is
also relevant to the review.
It has implications for the provision of roads
infrastructure. Key local factors informing the choice of location are the accessibility
of the site, the availability of local authority services and the availability of sufficient
lands for development. The IDA official noted that key requirements in selecting
sites are: roads, water, waste, electricity and gas.
The role of roads is crucial to the site selection process in two distinct, but
interrelated, ways. The roads provide access to the site and make it viable as a
location in the first place. In addition, the roads are a crucial element in the decision
of a company to locate there. This manifests itself through the improved accessibility
to suppliers and customers. Increasingly, the ability to recruit from a sufficiently large
and accessible workforce is a vital factor in location decisions. A key determinant
here is the quality of the transport infrastructure. How such factors influence the
marketing strategies of business parks and the location decisions of companies are
examined in more detail later in the case study areas. A further noteworthy point
raised by IDA Ireland is that ease of access for key overseas parent-company staff
visiting their sites in Ireland is a significant and growing issue, particularly in the high
tech and services sectors.
The centrality of roads funded under the Programme in facilitating industrial lands
was most clearly demonstrated with Phase 1 of the South Dublin Outer Ring Road,
which opened up the Grange Castle Business Park. This is a facility run by IDA
Ireland and South Dublin County Council. One of the major companies located at
the site (with more than 1,000 employees) is the international biotechnology
company, Wyeth. According to the local authority, one of the requirements set down
by the company in selecting that location was that the Outer Ring Road be put in
place.
They viewed the access provided by the road as being crucial to their
operation.
108
In the case of the Millennium Business Park in Naas, the developer part-funded one
section of the ring road in order to open up the site.
In the absence of the
commitment from the Department and local authority to fund the remaining sections
of the road, the owners of the site (Osberstown Developments), were of the view that
the park would have been curtailed. Accessibility via the new ring road is cited by
the company as a key attraction of the site, and in the decision by companies to
locate there. Again in this case, the road was needed to open up the site, and the
presence of the roads is cited as a key factor in making the site accessible and
therefore attractive to client companies.
In March 2008, there were 757 people
working in the business park. With further companies in the process of taking up
vacant units, this was expected to rise to 1,000 by mid-2008. The Masterplan for the
area which links in to the local authority Development Plan sets out a long term goal
of having 12,000 jobs based at the site, with 8,000 residential units. The developers
estimate that within 7 years, 6,000 jobs will be located on the site and 3,000 of the
residential units will be occupied.
One way of assessing the economic benefits flowing from these new industrial and
commercial parks would be through the impact on job creation in an area. However,
it should be recognised that there are a number of inter-related factors that go into
decisions on the location of business parks and subsequent uptake of units by
companies. In the case of infrastructure, roads are only one element. In attracting
foreign direct investment, location decisions are also influenced by the presence of
incentives, not to mention macro-economic tax policies, amongst a range of other
factors.
In the case of the Programme under review, it would inappropriate to
ascribe all employment flowing from the development or extension of business parks
to the presence of the new roads. However, roads have played a crucial role in
opening up sites. In the case of Grange Castle (South Dublin), Park West (Dublin
City) and the Millenium Park (Naas), had the roads not been built or upgraded,
additional employment accruing to the areas would have been severely curtailed or
would not have happened.
These roads can therefore be seen as effective in
meeting the objectives of the Programme.
One of the larger projects funded was the Celbridge Interchange with the M4
motorway in County Kildare. Over €22m was provided against a total cost of almost
€45m. The basis for its inclusion in the Programme was to support development in
Celbridge and Leixlip, and specifically to facilitate the expansion of two of the major
multi-national companies in the State; Intel and Hewlett Packard. A specific stated
109
intention of the local authority in developing the project was to facilitate a motorway
access for these two companies. The needs of both companies were articulated in
meetings with the local authority. The project consisted of a full interchange and 3.8
kilometres of associated roads serving Celbridge, Leixlip, Intel and Hewlett-Packard.
A further €496k was expended under the Programme to part-fund separate road
improvements around Intel. These were to facilitate access and egress from the
Intel facility at Collinstown.
Both Intel and Hewlett Packard contributed to the
Celbridge Interchange by way of direct contributions.
Special Development
Contributions totaled €2.69m with a further €8.55m coming from General
Development Contributions. Given that a link was being provided to the National
road network, the NRA provided €11.63m.
Since completion of the interchange, the planned expansion of Intel did go ahead,
with the announcement in 2004 of a new fabrication plant to manufacture its „Fab242 Wafer‟. The cost of the plant was estimated at the time to be €1.6billion. It opened
in 2006. The company now employs over 5,000 people directly and indirectly in
engineering, technical and operational activities In the case of Hewlett Packard, in
2004 it established a Strategic Research and Development Centre at its site in
Leixlip, with a €21.4m investment in its Inkjet Manufacturing Operation, which
employs 1,800 people (DETE, 2004). In March 2006, Hewlett-Packard Financial
Services announced the expansion of its headquarters in Leixlip, with the creation of
110 high value financial services jobs. The jobs were in addition to the 250 people
already employed by HP Financial Services in Leixlip. Hewlett Packard as a whole
employs more than 4,000 people in Ireland (IDA, 2006). Although the Celbridge
Interchange and the smaller project to support the additional Intel roads did not
included measurable deliverables either at the outset or in the questionnaire
submitted for the review, there is evidence that the roads have been effective. The
main reason the roads were funded under the Programme was to facilitate the
expansion of Intel and Hewlett Packard. This has happened. While the upgraded
roads were a factor, they were one of a number of contributing influences. While
there were more significant reasons guiding investment decisions and the expansion
of the companies, the roads infrastructure funded under the Programme played a
role.
This chapter has so far looked at the wider effectiveness of the Programme, with
reference to the experience of individual projects. This is now taken a step further by
110
looking at the three case study areas. This allows for a more in-depth analysis of
how the effects of the road infrastructure are being felt on the ground.
7.5. Case Study - Tramore, County Waterford
Tramore is located 13km (8 miles) to the south of Waterford City. It is a traditional
seaside resort that in recent years has been attempting to diversify its commercial
base from an over-reliance on tourism. Phases 4 and 5 of the Tramore ring road
were funded under the Programme.
housing.
Its deliverables were focused mainly on
To explore the relationship between the roads infrastructure and the
construction of housing, interviews were conducted with two of the building
companies responsible for almost all of the housing development along the new
parts of the ring road.
One reason for adopting this approach was to provide
independent corroboration of the claims made by the local authority that the roads
were indeed crucial to facilitating development in the area. A further consideration,
as noted earlier, was that there is a lack of information on how developers operate
and how they make decisions on housing supply.
One interview was conducted with John and Pat McDonald, Directors of „R
McDonald & Sons Ltd.‟, Building Contractors. Their company was responsible for
around 85% of housing construction along the new ring road. The second interview
was with William Bolster, Managing Director of Bolster Construction. His company is
currently constructing 18 housing units at a site on the Tramore ring road. Bolster
Construction is also completing 180 housing units adjacent to the Waterford City
Outer Ring Road, which was also funded under the Programme.
These
developments form part of the quantifiable outputs for the two projects.
Both
interviews were held in the offices of the respective companies and lasted around 1
hour each.
Based on the interviews, the roads entered the supply decision on the part of the
builders in two distinct ways. The first was through the planning requirement to have
the roads in situ (or under construction) before development could proceed. The
presence of roads infrastructure is also important in conferring a comparative
advantage on one location over another when it comes to selling houses.
The
likelihood that housing units will sell is a crucial determining factor in the housing
supply decision, a point on which both sets of interviewees were in agreement. To
illustrate the point, one interviewee said that when developing a site, he would be
willing to pay more for lands that were serviced by roads and that were accessible.
111
In such circumstances he is more likely to be able to recoup the costs and turn a
profit, because potential purchasers would also be willing to pay for the location. In
economic terms the effects of roads infrastructure are ultimately felt in the property
market through accessibility. The quicker one can get to work or other locations, the
more attractive the site. At a more basic level what the interviews show is that the
claims of the local authority about the central role played by the roads in facilitating
housing development are substantiated by the developers.
The extent to which the development of Tramore is being properly planned was
examined with reference to the Local Area Plans for the town. The two most recent
plans cover the respective periods from 2003 to 2009 and 2008 to 2013. Both plans
were framed in the context of the National Spatial Strategy and the Regional
Planning Guidelines for the South East. These are set out as overarching principles
in the opening paragraphs.
Under section 4.6 of the National Spatial Strategy,
Tramore is identified as a town that can provide a good base for population and
services which will attract investment and employment activities additional to those of
Waterford (DEHLG, 2002, p.83). In the Regional Planning Guidelines it is seen as a
larger town which is to be strengthened (SERA, 2004, p. 30). In fact, the presence of
Waterford City nearby is seen as both an advantage and something of a hindrance.
Tramore has traditionally been a dormitory town of Waterford City, although the 2003
plan states clearly that this is unsustainable (WCC, 2003, p.6). The main challenge
flowing through the two successive Plans is to facilitate the long-term development of
the town, and to move it towards self-sustainability.
There is evidence in the development plans of principles of good planning being
adopted.
Lands are being zoned and developed in a logical sequential fashion
moving outwards, as sites closer to the town centre are developed. This can be
seen as a means to address the phenomena of „doughnut development‟ and
„leapfrogging‟.
In fact „leapfrogging‟ is identified as something that is to be
particularly avoided (WCC, 2007, p.34).
The interviews with the developers
confirmed that this is what is happening in the implementation of planning policy and
decisions. This overall approach is in line with Guidelines issued by the Department
of the Environment (2007b, p.35).
The provision of services for water is preceding new development. The view of the
two developers was that there is good co-ordination in the provision of roads and
water services to facilitate development. In the case of Bolster Construction, the
112
situation in Tramore was contrasted with that at the Outer Ring Road site. The view
was expressed that that the provision of some services was delayed here, and this
caused problems.
Both development companies stressed the importance of co-
ordination in the delivery of local authority services to allow development to proceed
in a timely and planned fashion. This supports the idea that a lack of co-ordination
can lead in extreme cases to a form of market failure. This was an issue identified in
the Barker Report in the UK.
The challenge facing Tramore in achieving self-sustainability should not be
underestimated. Based on the most recent Census, its population increased from
8,305 in 2002 to 9,634 in 2006. Given that most of the housing development in the
town in that period was based around the ring road, it played a key role in facilitating
the rise in population. The Census also confirms the current position of Tramore as
being predominantly a dormitory town. By using the „distance travelled to work‟ as a
proxy, the census data shows a fairly consistent commuting pattern between 2002
and 2006. Around 45% of workers travel a distance of between 10 to 14 kilometres,
which accords with the journey in to Waterford City.
The 2002 distances were
measured in miles, but tell the same story.
Table 7.2. Tramore - Distance Traveled to Work 2006
Year
Total
0 km
1 km
Number of
2 to 4
5 to 9
10 to
15
km
km
14 km
8.2%
6.8%
to
Over
Not
24 km
25 km
Stated
45.1%
13.5%
6.4%
10.6%
Over
Not
Stated
Persons
2006
3,797
0.7%
8.7%
(CSO, 2006, Vol. 12)
Table 7.3. Tramore - Distance Traveled to Work 2002
Year
Total
0
Number of
miles
1 mile
18
2
3 to 4
5 to 9
10
miles
miles
miles
14
15
miles
miles
17.4%
7.6%
Persons
2002
3,178
2.3%
14.3%
3.5%
2%
44.5%
to
8.4%
(CSO, 2002, Vol. 9)
18
Based on the working population aged 15 years and over usually resident in the state and
present in their usual residence on census night.
113
Other proxy indicators like the „time taken to travel to work‟ confirm the picture set
out above. Likewise, the predominant mode of travel is the private car, a further
indicator of unsustainable work and travel patterns.
However, from a more
favourable perspective, the relative proportion of commuters has remained around
the same in recent years, in spite of a significant population increase. This is in
contrast with some parts of the commuter belt around Dublin which has seen a rise
in absolute and proportional terms. Given the long-term and pre-existing status of
Tramore as a dormitory town, it may be too much to expect that this trend would be
turned around in a few years.
There has been some progress in creating conditions conducive to attracting industry
to the town. The Local Area Plan sets out to achieve this objective through zoning,
infrastructure provision and promoting Tramore as a viable location (WCC, 2007,
p.33).
The ring road is identified as a key element in providing accessibility to
potential companies locating in Tramore. An example is the Riverstown Industrial
Park at one end of the ring road. A new major access road to open up lands at the
site is currently under way (2008). According to the County Council, the rapid uptake
of sites in the business park is indicative of considerable demand for commercial and
light industrial units in the town. A visit to the area was undertaken as part of the
review and confirms that significant light industrial and warehouse development is
taking place. In addition, two major retail sites are also being developed, one in the
town centre and the other feeding off the ring road. According to the County Council,
both of the developments would not have been possible without the ring road. R
McDonald Ltd. is developing the site near the ring road, and this was discussed. The
development will include commercial retail outlets, ancillary infrastructure, and a
major new school to cater for the town‟s growing population. The 2006 Waterford
County Retail Strategy had noted that Tramore was underserved by retail outlets,
and that retail activity had declined by 3.6% between 2003 and 2006, in spite of an
increased population (ibid., p.34).
Essentially, local residents were doing their
shopping in Waterford City. This trend is now expected to substantially reverse once
the new retail outlets open.
Whether all of this will be sufficient to achieve the stated objective of reversing the
commuting patterns remains to be seen. What is important from a sustainability
perspective in evaluating the impact of residential development on the Tramore Ring
Road, is that it didn‟t happen in a piecemeal fashion.
The new houses were
accompanied in tandem by a strategy to create sustainable employment and
114
transport patterns, although the full impacts have not yet been felt. What can be said
is that the strategies are there for it to happen. This is indicative of a fairly standard
problem that arises in trying to evaluate the effectiveness of programmes.
It is
difficult to assess the social and economic impacts after a relatively short period of
time.
Based on the available evidence, the ring road has certainly facilitated
residential development. This was its primary objective, so from that point of view it
has been effective. The road is also contributing to the economic development of the
town. While it is too early to say what the long-term outcomes will be, there are
some positive indications that the stated objectives of the town development plans
have the potential to be delivered.
7.6. Case Study - Park West, Dublin 12
The realignment of the Kileen Road in Ballyfermot was funded under the Programme
in order to facilitate access to a major brownfield site, part of which was occupied by
the old Semperit tyre factory (which closed down in the 1990s). The whole site
measures 230 acres (93 hectares approx.). The Kileen Road is one of two access
points.
When approved under the Programme the lands to be facilitated were
intended to be used for industrial and commercial purposes. However, they are now
also being used for residential development. This issue was examined already and
is notable from a sustainable development perspective. The role played by the roads
infrastructure in opening up the lands was discussed with the group of City Council
personnel. A meeting was then held with the developers of the Park West site,
Harcourt Developments Ltd., which was attended by the Manager of Park West and
two other representatives of the company. Two officials from Dublin City Council
also participated. The initial discussion with the City Council staff examined the role
of the road in facilitating development.
The officials stated that the planning
permission for the development of Park West was contingent on the upgrade of the
Kileen Road (and the other access point at Cloverhill Road). Development at the site
was capped until the infrastructure was improved.
The existing road was of
insufficient scale and there were serious safety issues.
Park West has been a huge success story. According to the developers, there are
currently 270 companies located there employing some 8,000 workers. However, in
assessing the effectiveness of the Killeen Road project it is important to recall that
when the site was being originally developed, the lands were considered marginal
from an economic perspective. The area wasn‟t seen as an attractive proposition,
being the site of an old heavy industrial plant and located in a disadvantaged area.
115
The provision of new roads infrastructure was seen as a means to open up the
potential of the lands. While hindsight has shown it to be a good investment, at the
time back in 2000 there was considerable risk involved. This point was made by
both the developers and the City Council. The contribution of the Department in
funding the road was seen as a form of risk sharing, and was key to the road going
ahead. From the perspective of economic theory, Barker notes that brownfield sites
in particular can suffer from market failures and that public investment in
infrastructure can be justified on the grounds that it unlocks wider social and
economic benefits (Barker, 2004 p.57). In the case of the Kileen Road there is
evidence that this was the case. The developers paid for 50% of the costs of the
Killeen Road works, with the Programme funding the other 50%. The developers
also contributed 60% of the costs of the Cloverhill Road improvements (which were
not part of the Programme). The local authority met the remainder of the costs. In
the early days of the development, tax incentives were also offered to businesses
locating in Park West. This reiterates the view that the site was considered as a
marginal location. It also justifies the reluctance within this review to attribute the
success of the site solely to the infrastructural development. Other factors also had
an impact.
Clearly, benefits have flowed from the development of the site.
One way of
assessing them is in reference to the companies located there. In promoting Park
West as a business location, Harcourt Developments have created a series of
information and publicity publications. Within one of these, a series of three „case
study‟ companies were used as examples to demonstrate the advantages of the
location. While these materials are used for promotional purposes, they do offer
some useful information to show how benefits accrue to the companies and the staff
employed there.
„Hostings 365‟ is a technology company which provides internet infrastructure. It
states that the location allows the company to recruit from a wider range of areas
and pool of people. The Managing Director of this company also mentioned benefits
from shorter commuting times for employees and access to public transport
(Harcourt, 2007, p.27). What is interesting here is the fact that locational benefits are
felt through time-savings to employees, and through improved access for the
company to a wider workforce. These are seen as typical economic benefits which
are assessed in UK transport projects, especially ones affecting marginal and
brownfield sites (DfT, 2003, 3.5.8).
Reduced journey times and improved
116
accessibility were also cited by the insurance company Allianz in its testimonial. In
the UK‟s transport appraisal guidelines, further economic benefits are assessed with
reference to improvements accruing to businesses in accessing their clients and
customers. This was specifically cited as a benefit by the third case-study company,
the Park West Clinic. It also mentioned the ability to expand its operation as being
important. This is also regarded as an economic benefit, in that it allows for the
expansion of economic activity and the creation of employment.
Transport infrastructure was highlighted in the discussion with the developers, and
seen as crucial in making the site both accessible and attractive. This infrastructure
includes both the roads network and public transport. The Kileen Road was and still
is a key artery allowing access to the site. In recent years there has been a strong
emphasis on public transport.
station serving Park West.
Work is currently nearing completion on a new train
The level of planned, co-ordinated and integrated
development which is taking place can be seen as a positive outcome.
The
development of the area is based on the „Park West / Cherry Orchard Urban
Framework Plan‟ (McDermott Norton, 2002).
It sets out structuring principles
detailing how different parts of the site should develop. There is a strong level of
integration with public transport provision. In setting the planning context for the
framework plan, a number of key policy documents are identified. These are the
National Sustainable Development Strategy, the Strategic Planning Guidelines for
the Greater Dublin area and the Department of the Environment‟s Residential
Density Guidelines.
Based on the different information sources, it is possible to identify in overall terms
how economic benefits have arisen from the Kileen Road project and the
development of Park West. The roads played a key role in opening up the site. Park
West has generated considerable employment and led to the construction of
integrated residential and commercial development. It would be an inaccurate over
simplification to state that all of the employment generated in Park West flowed from
the roads investment. However, the funding provided under the Programme was
crucial in what was then a risky decision affecting a marginal site.
For those
companies now located in Park West, the economic benefits are particularly felt
through locational impacts, which are also dependent on transport infrastructure.
These benefits accrue to companies through improved access to its workforce and
customers, and by providing the scope for future expansion. These benefits were
also identified in the next case study area of Naas. These are standard economic
117
benefits used in the appraisal of transport projects. While limitations on time and the
scope of the review precluded the systematic calculation of these benefits, their
presence can be seen as an indicator of effectiveness in the assessment of the road
investment.
7.7. Case Study - Naas, Co. Kildare
Three separate sections of the Naas Ring Road were funded under the Programme:
Newbridge Road to Kilcullen Road to Craddockstown Road (1,850 metres)
Newbridge Road to Caragh Road (450 metres)
Industrial Estate - Millennium Park (1,800 metres).
These were intended to facilitate residential, as well as industrial and commercial
development. Rather than looking at these roads individually, the review will look at
the overall social and economic impact on Naas. While measurable outputs were
provided in the questionnaire returns for the projects, the three new roads are having
a significant impact on the entire town and not just in the areas where the roads are
directly located. This point was specifically mentioned during the group discussion
involving local authority officials. The Naas Town boundary extends to a radius of
1.5 miles (2.4km) from the centre and covers some 1,831 hectares (NTC, 2005, p.2).
The social and economic impacts can be examined with reference to Census data
and changes in the characteristics of the town. Two of the three projects were
completed in 2006, while the third was finished in March 2008. While it would be too
early to assess longer-term impacts, it should be possible to detect some emerging
trends. Most of the current and planned major development in Naas is taking place
around the ring road, or is predicated on its presence. For example, in addition to
the development on the ring road, the diversion of traffic has allowed a major 43-unit
commercial development at Corbin‟s Lane in the town centre to proceed. However, it
must also be recognised that the new roads, although crucial to the town‟s
development, are one of a number of contributing influences. At an infrastructural
level, the presence of the M7 motorway and the nearby rail link from Sallins to Dublin
are key factors.
The relevant local authority Development Plans for the town were used as an
important reference point. The two most recent development plans for Naas cover
the periods 1999 to 2004, and 2005 to 2011, respectively.
Under the Regional
Planning Guidelines for the Greater Dublin Area, Naas (along with Newbridge and
Kilcullen) is classified as being a ‟Primary Dynamic Cluster‟. It is envisaged that the
118
cluster will attract employment and be economically self-sustaining. Naas is seen as
„Large Growth Town – Category 1‟ (D&MRA, 2004, p.70).
In a manner similar to the Tramore case study area, Naas has traditionally been a
dormitory town, albeit on a far larger scale given its proximity to the capital city. It too
is attempting to establish itself as a self-sustaining entity. While improved transport
infrastructure was seen as contributing to the position of Naas as a commuter town,
it was also seen as a means to develop the town in its own right based on its location
and transport links. As the 1999 development plan stated:
“Naas has tended in recent decades to develop as a dormitory town for the
greater Dublin Metropolitan Area - a trend that is continuing as a result of
improved transportation links, - it is important that it also develops as an
independent integrated community with necessary support services located
at the strategic intersection of the N7 and N9” (NUDC, 1999, p.8)
Of particular relevance to the review is that the 1999 Development Plan set out plans
for the future residential and economic growth of the town, including a system of
distributor ring-roads linking the main radial arteries coming into Naas. These roads
were submitted as applications under the Programme. The roads therefore were
part of an overall plan to facilitate economic development. In order to improve the
economic position of the town, the Plan identified the need for three distinct types of
industrial development:
Manufacturing and warehousing / distribution.
Specialist Manufacturing of a high-Tech type.
Tertiary services. (ibid., p.12)
The 2005 plan built upon this objective.
As part of its strategic contribution to
attracting industry and employment the local authority placed its emphasis on the
provision of infrastructure. As the Plan states:
“Emerging policies favour the switch from subsidies and grants to
investment in infrastructure because it is considered to be more
effective and offers better value for money over the long term” (NTC,
2005, p.18)
This is in line with the overall economic policy for the region contained in the
Regional Planning Guidelines, which is to relieve supply constraints in relation to
119
infrastructure and some categories of labour (ibid. p.21). It is within this context that
the local authority has sought to invest money in roads. There was a twin objective
to facilitate the anticipated population growth of the town in a planned fashion, and to
create conditions conducive to attracting business and industry.
The first part of the ring road to commence under the Programme was the section to
open up the Millenium Business Park at Osberstown. It started in June 2004 and
was completed in November 2006.
Based on the questionnaire returns, it has
opened up almost 103 hectares of commercial lands and 7.5 hectares of residential
lands. A site visit to examine the extent of the development was undertaken in
January 2008 as part of the review. A meeting was also arranged with the owners of
the site, Osberstown Developments Ltd. Considerable development has taken place
there, and it is now the location of an expanding business park. There are currently
14 companies and organisations based there. In March 2008 there were 757 people
working there.
These include companies providing IT and engineering services,
financial and business services as well as public sector organisations. These are the
types of companies that the 1999 and 2005 Naas Town Development plan set out to
attract. The owners of the business park are also developing a separate part of the
site which is being termed the „Gateway‟. This has a particular target to attract
technology companies.
Based on the discussions with Osberstown Developments, the land and housing unit
outputs reported by the local authority may have erred on the side of conservatism.
The developers of the park envisage that up to 3,000 residential units will be in place
at the site within 7 years, with a longer term aim of 8,000 units. For the time being,
the estimates from the local authority are still used as the baseline in the review.
The attractiveness of the location and its comparative advantage over other sites
hinges on the presence of transport infrastructure. The developers cite accessibility
as a crucial selling point.
Economic theory in the area of transport posits that
benefits flowing from the infrastructure are felt through improved access by
companies to suppliers, customers and its workforce. In the case of the workforce,
the owners of the park have carried out research to measure the effects.
The
businesses that have relocated to the park from other sites have reported that the
per annum turnover rate of staff has fallen from between 33% and 35% to
approximately 10%. The location is more accessible for staff who would previously
have commuted longer distances. The easier access to their place of employment
120
makes it less likely that they will change jobs. This has resulted in direct monetary
savings for the companies involved.
The companies have also reported to the
owners of the park, that the salary packages needed to attract staff do not need to be
as high as those for Dublin City locations. For the workforce, the cost of travel to
their place of work is reduced (both in terms of time savings and direct costs). On a
more intangible level, the site developers also claim that the lower turnover of staff is
indicative of improved job satisfaction. Based on the information provided by the
business park developers it is possible to say that substantial economic benefits
have arisen from the business park. The road was crucial in allowing the park to be
developed, and in making it attractive as a location for companies. However, it is not
possible to say if the benefits outweighed the costs.
Ideally the economic benefits of the new roads would be measured by way of a cost
benefit analysis. The original 1983 motorway bypass around Naas was assessed in
this way (Barrett & Mooney, 1984). The 1999 Naas Development Plan noted that
many of the benefits from improved traffic flows through Naas arising from the
opening of the first bypass in 1983 were eroded through traffic growth in the town.
The new ring road funded under the Programme has again helped alleviate
congestion problems. However, in order to quantify and monetise these benefits,
certain types of data are essential.
The availability of traffic count and origin-destination surveys was discussed with the
local authority. A major data gathering exercise is currently under way to map traffic
patterns around Naas. Some of this data is available. What is lacking is an earlier
body of data for these specific roads against which the current data can be
compared. We know that current AADT traffic figure for the Newbridge Road to
Caragh Road section is 5,538 vehicles, with HGVs accounting for 6.2%. On the
Millennium Business Park section of the ring road the AADT is 12,098 vehicles,
comprising 4.7% HGVs. These are based on traffic counts from January 2008.
Origin, destination and travel time surveys are also being carried out. These are the
essential data sources in calculating time saving for cost benefit analysis. Timesavings constitute the vast majority of benefits in transport CBA. However, the local
authority has said that a comparable body of data from before the road was built is
not available. It is therefore not currently possible undertake a cost benefit analysis
as part of this review. What is becoming clear is that with some additional forward
planning, it should be possible in future to have full data sets available that would
allow for the ex-post and ex-ante calculation of costs and benefits. For example,
121
there is currently a proposal to build a new interchange onto the M7 motorway to
allow access to the Millennium Park / Osberstown development.
This is being
subject to a full cost benefit analysis, and original data is being gathered for this
purpose.
Where the scale of future projects is sufficient to justify the expense and effort,
modifications in how data is gathered should make it possible to carry out a
quantitative assessment of cost and benefits for local and regional roads. This is
notwithstanding the problems arising in the case of urban projects with more
complex traffic patterns, and situations where there is substantial induced traffic.
These issues were discussed earlier.
In any event, if the 2007 Department of
Transport capital appraisal guidelines are adapted for local and regional roads (as
this review proposes), Multi-Criteria Analysis will require the quantification of
benefits. The practical application of these guidelines is a major focus in Chapter 9.
Based on the evidence provided by the owners of the Millennium Business Park, the
Naas Ring Road specifically facilitated sites that have allowed new companies to
locate there. The ring road is also facilitating the construction of new housing units.
This is in line with the overall planning and development objectives for the town,
which were restated most recently in 2005 Naas Development Plan. It describes its
Strategic Goal as being:
“To improve the access of the existing and future labour force resident
in Naas to employment, and to make Naas a first choice location for
indigenous and foreign direct investment by developing, through the
effective and efficient deployment of resources, a location that will
attract
and sustain indigenous and foreign direct
job-creating
investment” (NTC, 2005, p.23)
According to the 2006 Census, the current population of Naas (including suburbs or
environs) is 20,044. This has risen from 18,288 in 2002, (an increase of 9.6%). The
population in 1996 was 14,074. The overall increase in 1996 to 2006 period was
almost 30%. While this appears to be quite high, it is in line with planning projections
contained in the recent town Development Plans, which were respectively planning
for a population of 23,000 by 2003 (NUDC, 1999, p.7), and 27,000 by 2011 (NTC,
2005, p.15). The population growth therefore could not be described as „unplanned‟,
which was an original criticism leveled at a lot of development in the Greater Dublin
Region. Given the town‟s role as envisaged under the National Spatial Strategy, its
population is likely to grow even further.
122
An indicator of sustainability is the extent to which those living in Naas actually work
there. The distance traveled to work can be used as a proxy for assessing level of
commuting. Trends between 1996 and 2006 are detailed in tables 7.5, 7.6 and 7.7,
below.
Given the changeover from miles to kilometers, there are difficulties in
drawing precise comparisons, however some observations can be made.
19
Table 7.4. Naas - Distance Traveled to Work 2006
0 km
1 km
2 to 4
km
Number
of 10,086
54
892
1,831
Persons
Percentage
100%
0.5% 8.8%
18.2%
(CSO, 2006, Vol. 12)
Table 7.5. Naas - Distance Traveled to Work 2002
0
1 mile
2 miles
miles
Number
of
Persons
Percentage
5 to 9
km
771
10 to
14 km
751
15 to
24 km
1,348
Over
25 km
2,770
Not
Stated
1,669
7.6%
7.5%
13.4%
27.5%
16.5%
3 to 4
miles
5 to 9
miles
Over
15
miles
3,586
Not
Stated
8,602
166
1,427
778
441
798
10 to
14
miles
828
100%
1.9%
16.6%
9.1%
5.1%
9.3%
9.6%
41.7%
6.7%
3 to 4
miles
5 to 9
miles
Over
15
miles
2,285
Not
Stated
37.1%
8%
578
(CSO, 2002, Vol. 9)
Table 7.6. Naas - Distance Traveled to Work 1996
0
1 mile
2 miles
miles
Number
of 6,162
Persons
Percentage
100
(CSO, 1996, Vol. 6)
308
1,188
593
294
512
10 to
14
miles
486
5%
19.3%
9.6%
4.8%
8.3%
7.9%
496
Between 1996 and 2002 there was a big increase in the number of commuters
traveling a distance greater than 10 miles to work every day. The most significant
figure from the 2006 data is the apparent decline in both the number and percentage
of people traveling longer distances. In 2002, 51.3% of workers were traveling 10
miles or more to work.
In 2006, 40.9% were traveling a roughly equivalent 15
kilometres or more. However in the 2006 data there was also a significant rise in
persons who did not state a distance traveled to work. This could be a confounding
factor. The proportion of those traveling shorter distances remained broadly the
same, with 27.5% traveling a distance of less that 4km in 2006, and 27.6% traveling
2 miles or less in 2002. This broadly matches the extent of Naas and its suburbs.
Between 2002 and 2006, there was an increase in the numbers traveling mediumlength journeys.
19
Based on the working population aged 15 years and over usually resident in the state and
present in their usual residence on census night.
123
Taking a longer-term perspective, between 1996 and 2006, the numbers of people
working in and around Naas (within a the distance threshold of 4km or 2 miles),
increased in absolute terms from 2,089 in 1996 to 2,371 in 2002 and to 2,777 in
2006. The data indicates that jobs are being created in Naas, and are being filled by
people living in, or moving to the area. While these jobs are keeping pace with the
population growth of the town, they are not exceeding it to any great extent.
The significant numbers who in 2006 did not state their distance traveled to work limit
any definitive observations on the available data. Notwithstanding this, the trends
between 2002 and 2006 indicate that, at worst, levels of commuting and distances
traveled have proportionately remained fairly static. However, Naas is still very much
a commuter town. If the analysis of Osberstown Developments is correct, there is
scope to encourage these people to work closer to home. However, as Morgenroth
noted in his analysis of the Greater Dublin Region, a crucially important determinant
in the attractiveness of a location to industry is socio-economic profile of the
workforce in an area (2001, p.64). Table 7.7. profiles the Labour Force in Naas,
making comparisons with the Greater Dublin area and the State.
Table 7.7. Naas - Labour Force by Social Class - Comparison with the Greater
Dublin Area and the State.
Professional
Workers
Naas
Naas (%)
858
7.6%
Managerial
and
Technical
3,354
29.7%
Non
Manual
Skilled
Manual
Semi
Skilled
Unskilled
Others
2,079
18.4%
1,759
15.6%
1,656
14.7%
458
4%
1,130
10%
Greater
Dublin
Area (%)
State (%)
9.3%
28.9%
20.6%
15.1%
11.2%
3.9%
11%
6.9%
26.3%
20.1%
19.4%
13.7%
4.8%
8.8%
(CSO, 2006, Vol 8)
In comparison with the Greater Dublin Area and the State as a whole, Naas has a
higher proportion of its workforce classified as „Managerial / Technical‟ and „Semi
Skilled‟. In comparison with the Greater Dublin, it has fewer „Professional Workers‟,
but has an advantage in the „Skilled Manual‟ category.
These are key skill
categories in attracting and retaining industry. This data suggests that the town‟s
resident workforce is an asset in positioning Naas to take advantage of economic
opportunities. The level of educational attainment achieved by the population is a
further indicator here, and it detailed in the table below.
124
Table 7.8. Naas - Highest level of educational attainment, as a percentage of the
population aged 15 and over.
rd
rd
3 Level (Non
3
Level
Total
Third
Degree)
(Degree
of
Level
Higher)
Naas (Persons)
1,650
3,389
5,039
Naas (%)
10.5%
21.6%
32.1%
Greater
Dublin
8%
21.5%
29.5%
Area (%)
State (%)
8.9%
15.6%
24.5%
(CSO, 2006, Vol.10)
Relative to the Greater Dublin Area and the State as a whole, Naas has a higher
proportion of third level graduates, which again make it attractive as a location for
business.
This review is particularly interested in the extent to which the
development of the town in recent years has changed the socio-economic profile of
the population. Table 7.9 is also based on Census data and compares data from
1996 and 2006.
Table 7.9. Naas – Population Classified by Socio Economic Group 1996 – 2006
Employers
Higher
Lower
Non
Manual
Semi
Un
Own
Managers
Profess.
Profess.
Manual
Skilled
Skilled
skilled
Account
Farmers
2006
2,797
1,107
1,887
3,169
1,544
1,505
491
524
49
1996
1,912
754
1,252
2,586
1,248
735
467
446
72
Agri
Others
Total
69
2,563
15,705
90
901
10,463
Workers
Workers
(CSO, 2006, Vol. 8), (CSO, 1996, Vol. 7).
The most significant change was in the category described as „others‟, which has
skewed the table and limited the use of percentage-based data to make comparisons
between the two data sets. What is clear is that there has been a shift away from
unskilled and manual towards more skilled and professional categories. In absolute
terms the numbers of people in the six categories of Employer/Manager, Higher
Professional, Lower Professional, Non Manual, Manual Skilled and Semi Skilled
recorded large increases over the ten year period. This indicates that the economic
profile of the town, as reflected in its socio-economic composition of its population
has improved between 1996 and 2006.
This examination of certain socio-economic indicators has of necessity been limited.
As Morgenroth has demonstrated, a far broader analysis is possible. The indicators
used were also confined to limited geographical area covering Naas town and its
environs.
Given the position of Naas within a „Primary Dynamic Cluster‟ that
incorporates Newbridge and Kilcullen, a wider perspective could easily be taken.
125
There are also growing urban areas in nearby Sallins and Clane, which would exert
some social and economic influences on Naas. However, the focus of the review is
on the effects of the 4.1 kilometres of new ring road that have opened up large tracts
of lands around the town and its immediate suburbs for development. Taking the
information provided by Osberstown Developments, significant employment is being
created in the area. With future plans for expansion, this is projected to increase.
The types of development being facilitated are in line with the objectives in the Naas
Development Plan and wider Regional Planning Guidelines. Population growth is
also consistent with stated planning objectives and the National Spatial Strategy.
The socio-economic profile of labour force in Naas compares well with the Greater
Dublin Area and the State as a whole. This provides tangible evidence to support
claims made by the developers about the potential of the location.
The socio-
economic profile of the town has also been changing for the better in recent years.
The commuting patterns of the workforce may be stabilising to some extent, but are
still significant in overall terms. Based on views of Osberstown Developments, the
roads have been crucial making the Millennium Business Park viable in the first
instance, and then in attracting companies to locate there.
The roads are also
facilitating additional housing, which in turn is a factor in the socio-economic changes
being experienced as the population expands. The roads have played a direct role
in opening up the development lands which have resulted in employment and
population increases. The roads can be said to have contributed to the resulting
socio-economic changes that are taking place among the population.
However,
these are just indications. The real longer-term impacts will only become apparent
after some time.
The three case study areas have allowed for a more in-dept examination of issues
that were identified more generally in the earlier parts of this chapter. By their nature
many of the conclusions from the individual areas are unique and can not be
generalised.
Their external validity is therefore limited.
The case studies are
valuable nonetheless and have enabled the question of „effectiveness‟ to be
explored at project-level using a range of additional local data sources.
In order to be considered fully effective, the Programme should have contributed
something extra. It should have enabled roads and related development to proceed
that wouldn‟t have otherwise.
The final section in this chapter will assess
effectiveness from this perspective.
126
7.8. The Counter-Factual
What Might Have Happened in the Absence of the Programme?
An important consideration in assessing the effectiveness of a programme is to
examine what might have happened in its absence. This provides what is known as
a „counterfactual‟ scenario. It is useful in assessing if „Deadweight‟ is present in the
form of projects that would have proceeded in any event.
„Deadweight‟ is also
closely allied to concept of „Additionality‟, which describes outputs that would not
have occurred without the intervention.
To complete a trilogy of related terms,
„Displacement‟ occurs when a programme output in one area leads to a loss of
output in another20. Effectiveness is enhanced when a programme can be shown
provide outputs and outcomes that would not have occurred.
Two different approaches were employed to deal with these questions.
When
applications under the Programme were invited from local authorities in 2000, a total
of 117 projects were submitted, with 43 being approved. A self-completion survey
was undertaken with local authorities in respect of the 74 projects that were not
selected for funding, with a 100% response rate. During the interviews involving the
local authority officials, they were also invited to speculate on what might have
happened had the Programme not happened.
They were asked if the selected
projects might have fully or partially gone ahead anyway.
In the questionnaire, local authorities were asked if the non-selected projects went
ahead.
The results indicate that a significant number of projects drew upon
alternative sources of funding and did proceed. From the 74 questionnaire returns, it
can be ascertained that 38 projects went ahead, while a further 9 projects partially
proceeded. Therefore, based on the returns, a total of 47 went ahead in some shape
or form. 27 projects did not proceed. However from amongst this number a subset
of 9 can be identified where there is a stated intention to proceed at some point.
Table 7.10. Applications that were not Selected – Did the Projects Proceed?
Did Subsequently Proceed
38
Proceeded in Part
9
Did not Proceed
27
Total
74
The formal definitions of „Deadweight‟, „Displacement‟ and „Additionality‟, as they relate to
Value for Money Reviews are contained in the Department of Finance Guidance Document
(2007, p. 107-108)
20
127
A further issue of relevance here is the source of funding for the 47 projects that
proceeded in full or in part. The questionnaire asked: “What were the sources of
funding (i.e. own resources, development contributions, a different non-national
roads grant scheme etc.)”. The majority of the 47 projects that did proceed (26 in
total) went ahead with locally procured funds. 7 were funded from national-level
sources, while a further 14 had some combination of local and national funding. The
Department‟s Regional and Local Roads Division provided funding in some shape or
form for 16 schemes.
This data can be interpreted in different ways.
At one level, it demonstrates a
considerable commitment on the part of the local authorities in funding important
regional and local roads projects. It has been a policy objective at Departmental
level for some time that exchequer funding should be augmented with locally
generated funds to the maximum degree possible. It also indicates that exchequer
funds weren‟t used to displace locally provided funds, and shift the burden of
responsibility for infrastructural provision to national government.
However, the data and interviews point to some deadweight within the Programme.
Clearly a considerable number of projects proceeded in any event, in spite of not
being chosen. It is reasonable to extrapolate that a number of the projects actually
selected under the Programme may also have similarly proceeded had they not been
approved.
The „counter-factual‟ scenario was discussed in each of the 15 interviews and group
discussions with local authority officials. When asked to speculate on what might
have happened in the absence of the Programme, their responses fell into three
categories:
1. The road could not have proceeded as the local authority was not in a
position to fund the costs involved.
2. It would have gone ahead at some point, but would have been delayed
for a number of years while alternative funding sources were found.
3. The road would have proceeded in a piecemeal fashion, based on
funding as it became available from development levies, or as developers
were prevailed upon through the planning process to upgrade stretches of
road.
128
Some of the discussions made specific reference to individual projects, while others
addressed the issue at a general level. However, the most commonly held view was
that in the absence of the Programme, a combination of responses number 2 and 3
(above) would have prevailed.
Response number 3 was the most prevalent.
Nevertheless, a near unanimous view of those interviewed was that the larger of the
projects would have been severely curtailed and may not have proceeded at all.
These views are broadly consistent with the data drawn from the survey.
For
example, Cork County Council in their interview speculated that some projects or
elements of them might have gone ahead within particular areas subject to the most
severe development pressures. However, they were also of the view that the larger
schemes would not have proceeded, or if they did, the County Council would have
had to apply to the Department for funding from another of its budget headings. This
view tallies with its returns from the survey.
Cork County had 18 unsuccessful
applications, 11 of which subsequently proceeded in whole or in part.
Of the 11,
each had an estimated cost of €2m or less (7 were under €1 million).
experience of Meath County Council also supports this analysis.
The
It had 13
unsuccessful applications, 4 of which proceeded. The 7 that did not proceed were
generally on a larger scale with estimated costs ranging from €1.3m to €26m (4
exceeded €13m). In its interview, Meath County Council said that if the Programme
was not in place, it‟s larger-scale projects that were selected, similarly would not
have proceeded. Making a related point, Waterford City Council noted that the final
cost of their Outer Ring Road project is the equivalent of two-thirds of the City
Council‟s entire annual budget, and could not have been met through local sources.
The identification of these examples of projects that are unlikely to have gone ahead
in the absence of the Programme offers evidence of „Additionality‟.
Dun Laoghaire Rathdown County Council had four unsuccessful applications that did
subsequently proceed. These had original estimated costs of €3.6m, €7.7m, €8.8m
and €29m respectively. However the four were either fully or part funded by national
exchequer sources.
Although not selected under the Programme, they were
deemed to be important enough to be supported under other exchequer funding
mechanisms. From the 47 projects that did proceed, 21 in total ended up being fully
or part-funded through an alternative Departmental or other exchequer budget
heading. This suggests that the original programme may have been too limited.
Projects that were needed, but that could not be funded locally were delayed while
alternative exchequer sources were found.
129
The fact that a large number of initially unsuccessful projects went ahead along with
the successful projects suggests that „Displacement‟ wasn‟t a major issue. This
interpretation posits that in making exchequer funding available for the successful
projects, this freed up other local funds to enable more projects to be undertaken. In
other words, the Programme in some instances got „two for the price of one‟.
7.8.1 Planned Rather than Piecemeal Development
Based on the interviews and focus groups, a key benefit of having the Programme
was that it allowed for roads that were identified as strategically important in the
delivery of development to proceed as planned, rather than in a piecemeal fashion.
This was a common view expressed across the interviews. Essentially, without the
Programme the delivery of relevant sections of planned roads would have been
dependent on developers, rather the wider infrastructural needs as identified in local
county development plans. The Castletroy Distributor Road in the Limerick County
Council Area, for example provided a key component that links together other
sections of road that were provided by developers. It allowed the network to be
joined up, and to achieve improved overall traffic management benefits.
In the
absence of the Programme, developer-provided sections may have been built, but
not the crucially important other parts that released the full benefit of the entire
network.
From amongst the projects actually selected under the Programme, one that is
amenable to speculation on the likely counterfactual scenario is the Corbally Link
Road in Limerick City. The view of the local authority was that in the absence of
exchequer funding, Phase I might have gone ahead, albeit on a more limited scale
and specification. An existing developer was keen to develop lands there. A cul-desac road could have been built, with the sole beneficiary of the infrastructure being
the development in question.
However, the project, as approved, involved two
phases. Phase II continued the link road with a canal bridge to open up further tracts
of land, and create a new access point into the city from the Limerick City suburbs
and County Clare.
What this is saying, in effect, is that part of Phase I may
represent „Deadweight‟.
However, without the Programme, significant additional
traffic management and development benefits would not have been achieved.
There are some further substantial points that were commonly expressed across the
interviews. Development levies were crucial in providing funds to enable many of the
originally unsuccessful infrastructural projects to proceed. The questionnaire data
130
supports this view. It should be noted that development levies in their current form
did not exist when the Programme was established in 2000. While the levies have
had a positive impact, the local authorities were at pains to point out that they are
insufficient in their own right. Each local authority had no difficulty listing current
priority projects that required exchequer funding to proceed.
Of its nature, seeking to establish a counterfactual scenario is speculative. There is
no way of knowing what might have happened in reality. Some observations can be
made however.
proceed.
Of the unsuccessful projects, two in five did not subsequently
The remainder did proceed in some form, but relied heavily on
contributions from developers. The Department acted as a key source in providing
funding. Other exchequer sources also contributed.
At the time of the announcement of the Programme the system of development
levies allowed for a far more limited scope to fund roads projects than is currently the
case. Development levies and other local funding sources on their own would not
been sufficient to fund larger-scale strategic roads projects. These can be seen as
„Additional‟. They wouldn‟t have gone ahead at all or to the same extent without the
Programme.
Some may have proceeded in a limited and piecemeal fashion.
However, referring back to the earlier section which examined „Causality‟, the
delivery of development lands would have been curtailed. Based on the interviews,
the piecemeal development of projects would have impacted adversely on wider
development objectives, traffic management, and the provision of integrated road
networks.
Conclusions and recommendations arising from this analysis, and from earlier parts
of the chapter are now outlined.
7.9. Conclusions and Recommendations
This chapter has followed an approach consistent with the Programme Logic Model
in establishing links between the primary outputs in the form of roads, the secondary
outputs that comprise the housing units and development lands, and then the
outcomes in the form of the social and economic effects. Multiple indicators and
data sources have been used to describe outcomes that can be attributed to the
Programme. This is consistent with the „Contribution Analysis‟ approach advocated
by Mayne. Establishing the contribution of the roads in enabling development to
proceed is a vital element in assessing „Effectiveness‟. In the majority of cases, this
131
relationship can be identified with reference to data drawn from the local authorities
and the case studies. The role of roads is crucial in the development of industrial
and commercial parks in two distinct, but interrelated, ways. The roads provided
access to sites and made them viable as locations. They also make sites accessible
and attractive to potential companies who are seeking a good business location.
From the Tramore case study, which had a particular research focus on housing, the
roads entered the housing supply decision in two distinct ways.
The first was
through the planning requirement to have the roads in situ (or under construction)
before development could proceed. The presence of roads infrastructure is also
important in conferring an advantage on one location over another when it comes to
selling houses.
For the case study areas that examined the Park West and
Millennium business parks, economic benefits arising from the roads are felt in
improved accessibility. This manifests itself in a practical sense through reduced
journey times leading to time-savings for employees, and in improved staff retention
and salary savings on the part of the businesses. The ability to expand operations at
the new locations was also cited as a benefit by companies. While the roads are
contributing to the location-decisions of businesses, it would be inappropriate to
ascribe all of the benefits that arise.
The contribution of the roads, although
important is one of a number of interrelated factors.
In Naas, the increased population and additional employment is impacting on the
social and economic profile of the town, however the long term effects won‟t be
evident for some time. From the three case studies there is evidence of sustainable
planning. This is based on interviews with the local authorities and developers, as
well as an examination of their local development plans.
At the outset of this chapter it was proposed to apply the „Hendricks‟ test. The
Programme set out to facilitate housing and development lands, and at aggregate
level has done this. Based on the available evidence, it is possible to conclude that
the Programme did indeed contribute to the key outcomes, and that these were
consistent with the original objectives.
There are also credible indications that
additional social and economic benefits have occurred. There are two issues that
temper this generally positive assessment.
The first concerns the delays that were
experienced in the delivery of projects. The second is the trend towards escalating
cost. This is the core focus of the next chapter. Before concluding the analysis of
programme „effectiveness‟, some recommendations can be made:
132
7.
The case study areas in particular identified the importance of good integrated
and sustainable planning. This manifests itself through linkages with local,
regional and national planning policy objectives. The extent to which project
proposals are consistent with other policies should be a key consideration in
the future appraisal of strategic roads projects.
8.
The review has found that a good deal of localised traffic count data is
generated by local authorities. When this data is being gathered, it is important
that it is done in a manner that will facilitate its application and use in the future
appraisal of road projects (through multi-criteria and cost benefit analysis).
9.
„Additionality‟ in the Programme particularly arose with the larger projects.
There is a case that the newer Strategic Regional and Local Roads programme
should therefore focus on larger-scale projects that are consistent with wider
strategic development objectives.
133
Chapter 8
“Identify the level and trend of costs associated with
the Strategic Non-National Roads Programme and
thus comment on the efficiency with which it has
achieved its objectives.”
8.1. Introduction
Having considered the outputs and outcomes of the Programme in the two previous
chapters, this chapter will now look at the costs that were incurred in their delivery.
When evaluated against its original objectives, it is possible to say that at an
aggregate level, the Programme was effective when assessed in terms of its
outcomes. This is notwithstanding the variance in performance between individual
projects, and the key issue of time delays, which hampered delivery of outputs and
outcomes. The cost of delivering those outputs and outcomes is also a factor in
assessing effectiveness. The overall efficiency of the Programme will be examined.
Costs associated with the Programme arise in a number of different forms. At one
level, they can be assessed in terms of the exchequer commitment. Exchequer
funds were augmented by other sources, principally from the local authorities‟ own
resources. Development levies in particular have taken on increased significance in
funding roads infrastructure since 2000. Within the original application form, local
authorities were asked to break down estimated expenditure, making a distinction
between land costs and all other costs. Some comparisons can therefore be made
between projected and actual expenditure under these two main headings.
At the outset the Department committed itself to funding a maximum of 75% of the
original costs, with the local authority having responsibility for the remainder. This
figure could have been higher or lower and the reasoning behind the decision will be
examined. When the announcement of the Programme was made in June 2000,
there was an initial commitment of €190.46m (IR£150m). By December 2000 when
the projects were selected and announced, sanction was given to spend €247.6m.
Between 2001 and 2003 there were cost increases affecting a significant number of
projects, which put their completion in jeopardy. Following a review in late 2003, the
exchequer commitment was increased to almost €301m in early 2004. Since then, a
more limited number of projects have seen changes in their level of grant funding.
134
When all outstanding commitments are met the total grant expenditure is forecast at
€317.334m.
The increased grant commitments are a reflection of the increased costs that have
faced projects in the lifetime of the Programme. When the policy measure was
announced in June 2000, it was estimated that total project costs would be
€253.95m (including grant funding), although this was based on a fairly limited
indicative estimate. When the 43 projects were selected in December 2000, their
total estimated costs were reckoned to be €385.97m. By early 2004, total project
costs had been revised upwards and were estimated at €464.35m. When all 44
projects that currently comprise the Programme are complete, the total outturn costs
are estimated to be €584.917m, although this figure is likely to be higher. Some of
the individual project costs are based on estimates.
Table 8.1. Level and Trend of Total Project Costs and Exchequer Commitment 2000 to 2008
Year
Total Estimated Project
Total Exchequer
Costs
Grant Commitment
June 2000
€253.95m
€190.46m
December 2000
€385.97m
€247.6m
April 2004
€464.35m
€301m
January 2008
€584.917m*
€317.334m
(see notes below)
*Notes on Table 8.1
The Total Estimate Project Costs for January 2008 are based on total costs for
the 44 projects that currently form part of the Programme.
Figures for the following projects are based on estimates: Carrigaline Western
Relief Road (Cork County Council), Balbriggan Inner Relief Road and Naul Road
Improvement Scheme (Fingal), Clane to Kilcock-South, Naas Ring Road to
Craddockstown Road (both Kildare County Council), Duleek-Julianstown, TrimNavan, R158 Trim-Kilcock (all Meath), Corbally Link Road - Phase II (Limerick
County Council), Jamestown Road and Killeen Road (both Dublin City), Wicklow
Town Port Access and Inner Relief Road.
The estimate for Clarkes Hill / Moneygourney Road (Cork County Council) is for
construction costs only.
For the Midleton Northern Relief Road (also Cork), phase 1(a) was funded by the
Programme. It was subsumed into a far larger project and an estimate is used.
The costs for the Oranhill Distributor Road (Galway) do not include works carried
out by developers as part of a local agreement.
For the South Dublin Outer Ring Road Phase 1, aggregate cost data for the entire
project was submitted. It was not possible to disaggregate the costs for
individual phases, so the figure used here for phase I is an estimate, based on
2004 data. The actual cost is likely to be higher.
In addition, given that 13 projects are being completed in 2008 and beyond, there
may be some further change in this total.
135
The Programme has also given rise to administration costs. These occur at a both
Departmental and local authority level and will be analysed. The construction and
upgrade of roads results in maintenance requirements, particularly the need to
rehabilitate the road at some future point. The review will calculate a cost estimate
for this work.
However, before examining the individual project costs in detail, the review takes a
step back in time. Decisions made in 2000 when the Programme commenced had
an important bearing on the level of exchequer funding commitment. This is the
focus of the first part of the chapter. This section then goes on to chart the level and
trend of exchequer commitments as the Programme proceeded.
8.2. - The Level and Trend of Exchequer Funding Over the Lifetime of the
Programme
8.2.1. Why 75% Exchequer Funding?
The amount of exchequer funding provided for individual projects was set at a
maximum of 75% of the original submitted costs (or 75% of the eventual expenditure,
depending upon which was lower). The balance was to be provided through the
local authorities‟ own resources, including from development levies, other private
sector contributions or contributions in kind (e.g. land). The decision to fund 75% of
costs represented a shift from the terms of the first (and smaller) grants scheme to
support housing, established in 1998 on foot of the first Bacon report. It had allowed
for a maximum of 40% of exchequer funding for individual projects, with 60% being
provided locally. Based on interviews with Departmental staff involved in setting up
the Programme, the reason for the shift to 75% was based on a concern that local
authorities would not be in a position to provide any more than 25%. Compared to
its predecessor, the current scheme involves projects of a larger scale, and it was felt
that a 60% local contribution would have been untenable. The first scheme provided
a relatively modest £5m (€6.35m) for 18 projects.
Local authorities were already contributing significant amounts of funding to the
„Pavement Restoration Programme‟ and other non-national roads works at that time,
so they were somewhat stretched financially. Departmental records indicate that
local authority contributions to these other programmes in 1999 and 2000 were
€108.6m and €123.3m respectively.
136
The obligation to provide a minimum 25% local contribution set the scheme apart
from another of the non-national roads programmes entitled the „Specific
Improvement Works Grants‟ Scheme which allowed for up to 100% funding of
approved projects. Its purpose was to support road infrastructure contributing to
balanced regional development and was co-financed by the EU as part of the
National Development Plan 2000-2006.
However, it was decided not to provide
100% funding for the Strategic Programme. These roads projects were intended to
facilitate development, which in turn had the capacity to generate local levies to
contribute to costs.
An additional reason for having the 25% local contribution was to make local
authorities partly responsibility for costs.
It was felt that this would encourage
stronger cost control and project management on the part of the local authority. This
would allow the Department to be less active in the micro-management of projects, a
function that it would have had difficulty fulfilling in any event because of limited
21
administrative resources . The choice of 75% as the threshold was not based on
any specific formula.
Rather it was an estimate of the level of expense local
authorities could be reasonably expected to bear, whilst also ensuring that projects
would actually proceed. It should again be recalled that when the Programme was
announced, a less structured system of development levies was in operation.
A significant clause in the terms of the scheme was that grants were to be awarded
on a „fixed sum‟ basis. This condition placed the onus on the local authority to meet
any cost overruns, or additional work from their own resources.
transferred the risk from the Department.
It effectively
Given the prevailing economic and
inflationary conditions in the construction industry, there was a strong likelihood of
this risk being realised.
There was something of a mixed outcome here.
The
Department ended up breaching this rule in a number of cases, as can be seen in
Table 8.1 which details the overall increased grant commitments as the Programme
progressed. There was also a significant trend towards the local authorities meeting
additional expenditure requirements that arose.
While the grant amounts did
increase in a number of cases, the percentage of costs covered by the exchequer
was not allowed to exceed 75%. The local authority was still held responsible for
meeting at least 25% of any revised costs. In many cases they exceeded this figure.
21
This point was raised in two of the interviews with Departmental staff, and is corroborated
by a conclusion in the 2002 mid-term review of roads expenditure under the NDP carried out
by Fitzpatrick Associates.
137
A detailed examination of the level and trend of costs will be undertaken later in the
chapter. For the time being, it can be concluded that the original decision to set the
level of exchequer funding at 75% was soundly based, when one considers the
circumstances as they prevailed in 2000. Whether such a fixed figure should now be
used is another issue and is addressed later. However, for the moment the review
will continue by chronologically outlining the series of events that led to the increased
levels of exchequer funding commitment.
8.2.2. Expansion of the Original Funding Commitment in December 2000
The combined total of the grants announced under circular RW 25/00 on December
14th 2000 was €241.34m. This amount was almost €40m greater than the original
22
projection of €190.46m (IR£150m ) when the policy announcement was made in
June 2000. This original figure of €190.46m was based on a series of indicative
estimates in respect of 44 potential projects that were submitted by local authorities
as part of the survey exercise arising from the second Bacon Report. The formal
application process when Circular 13/00 was issued to the 15 local authorities in July
2000 resulted in a greater number of projects being submitted, with different cost
implications than those from the original survey. A total of 117 submissions were
received from the local authorities, with a combined total cost of over €776m.
Exchequer resources would not have permitted all of these to be selected.
When formal Exchequer sanction was sought, the grant requirement was given as
€247.598m. Final modifications before the December announcement reduced the
overall total amount of the allocations to €241.34m, a difference of €6.258m.
However the sanction for €247.598m remained the baseline against which future
spending adjustments were made. In the event, the full €247.598m was expended
with the €6.258m leeway being used to approve three additional projects, and to
allow for increased allocations on a limited number of existing projects in 2001 and
2002. A full list of the grants allocated to the 43 individual projects in December
2000, is included in the Table 8.3 (overleaf).
This table also contains headline
information for each project on changes in the level of grant commitment over the
course of the Programme, from 2000 to 2004 and on to 2008.
22
Note on Currency Figures - Allocations under the Programme were announced in 2000 and
st
at that time were given in Irish Pounds (IR£). From January 1 2002, the Euro became
Ireland‟s currency. Throughout this chapter the official exchange rate (IR£1 = €0.787564) is
used in all conversions. For purposes of clarity, some figures are rounded.
138
Table 8.2. Level and Trend of Grant Allocations – 2000 to 2008
Local Authority
Road Project Name
#Cork County
1. Carrigaline Western Relief Road
#Cork County
2. Clarkes Hill / Moneygourney Road
#Cork County
3. Midleton Northern Relief Road [Phase 1]
#Dun Laog/ R‟down 4. Dundrum Main Street Bypass
Grant
Approved Grant at 2004 Grant at 2008 Change 2000
2000
to 2008
€1,866,515 €1,866,515
€1,866,515
€0
€3,371,155 €6,000,000
€6,000,000
€2,628,845
€1,333,225 €1,333,225
€1,333,225
€0
€29,203,976 €29,203,976 €23,537,944 -€5,666,032
€7,047,046
€7,047,046
€7,047,046
€0
#Fingal
#Fingal
5. Balbriggan Inner Relief Road [stage 2]: Dublin Road - Skerries
Road
6. Lusk Bypass
7. Naul Road Improvement Scheme
€4,025,069
€2,523,604
€4,025,069
€2,523,604
€3,954,491
€2,523,604
-€70,578
€0
#Fingal
#Galway County
#Galway County
8. Ongar Road
9. Oranhill Distributor Road
10. Parkmore Road [Phases I & II]
€3,809,214
€2,218,868
€1,428,455
€3,809,214
€2,218,868
€1,783,500
€3,809,214
€2,218,868
€1,584,948
€0
€0
€156,493
#Kildare
11. Barberstown Cross - Maynooth [R407] north of Barberstown
cross
12. Barberstown Cross - Maynooth [R407] south of Taghadoe Cross
13. Celbridge Interchange
14. Clane - Kilcock [R407] south of M4
15. Clane - Kilcock [R407] to a point 1500m north of Clane
Clane Inner Relief Road
Enfield - Edenderry [R402] [Carbury to Kishawanny]
€428,537
€1,428,700
€1,428,700
€1,000,163
€1,257,041 €1,290,481
€12,062,512 €22,062,512
€2,523,604 €4,027,650
€1,571,301 €1,602,840
€952,303 €1,219,875
€4,094,905 €5,788,112
€1,290,481
€22,062,512
€4,027,650
€1,602,840
€321,776
€249,722
€33,440
€10,000,000
€1,504,046
€31,539
-€630,527
-€3,845,183
€11,427,642 €12,883,219
€1,428,455 €4,315,193
€857,073 €2,689,125
€2,666,452 €7,840,661
€662,841 -€10,764,801
€359,890 -€1,068,565
€2,689,125
€1,832,052
€21,520,844 €18,854,392
#Fingal
#Kildare
#Kildare
#Kildare
#Kildare
#Kildare
Kildare
#Kildare
#Kildare
#Kildare
#Kildare
#Kildare
#Kildare
#Kildare
New - Kildare
Enfield - Edenderry [R402] [Johnstownbridge to Carbury
Naas Inner Relief Road [Dublin Road to Tipper Road]
16. Naas Ring Road - Newbridge Road to Caragh Road
17. Naas Ring Road - Newbridge Rd to Kilcullen Rd to
Craddockstown Rd
18. Naas Ring Road - Newbridge Road to Industrial Estate
[Millennium Park]
19. Sallins - Clane [R407} south of Blackhall junction
20. Sallins - Clane [R407] Castlesize estate to Blackhall Stud
21. Roads Serving Intel (Approved 2001)
#Limerick County
22. Castletroy Distributor Roads: Monaleen - Kilbane - N7 Dublin
Road
#Meath
23. Duleek-Julianstown-Laytown
#Meath
Plattin-Colp [MCC part]
#Meath
24. R154 Trim Inner Relief Road, phase 2a
#Meath
R154 Trim - Dublin Improvement Scheme (Subsequently Divided)
25. R154 Trim/Dublin [Iffernock]
26. R154 Trim/Dublin [Kiltale/ Scurlogstown]
27. R154 Trim Dublin [Tullaghmedan]
#Meath
R161 Athlumney (Subsequently Divided)
28. R161 Athlumney Phase I [Connaughtons]
29. R161 Athlumney Phase II (Bridge N3)
#Meath
30. Trim-Kilcock R158
#Meath
31. Trim-Navan Improvement Scheme [R161]
#South Dublin
32. Outer Ring Road
#Waterford County 33. Tramore Ring Road [phase 4]
New - Waterford
34. Tramore Ring Road [phase 5] (Approved 2002)
County
#Wicklow County 35. Wicklow Town Relief Road &
#Wicklow County Wicklow Port Access (Amalgamated)
€1,904,607
€6,462,375
€6,462,375
€4,557,768
€285,691
€1,142,764
€496,591
€343,220
€1,609,875
€496,591
€343,220
€1,609,875
€496,591
€57,529
€467,111
€0
€3,656,846
€3,656,846
€3,656,846
€0
€8,951,653 €12,386,529
€1,999,837
€87,684
€2,428,374 €4,654,069
€5,856,667 €6,033,723
€600,000
€3,571,398
€1,862,325
€4,951,979 €5,068,152
€653,568
€4,414,584
€21,426,830 €28,851,149
€5,856,667 €7,825,424
€46,662,874 €46,662,874
€1,468,578 €1,468,578
€1,500,000 €2,139,353
€12,686,529
€87,684
€4,654,069
€6,033,723
€600,000
€3,571,398
€1,862,325
€5,177,119
€653,568
€4,523,551
€43,500,000
€9,000,000
€46,662,874
€1,468,578
€2,139,353
€3,734,876
-€1,912,153
€2,225,695
€177,056
€22,073,170
€3,143,333
€0
€0
€639,353
€15,274,632
€28,283,274
€13,008,642
€476,152
€1,761,761
€476,152
€1,761,761
€0
€0
€225,140
€7,491,455
#Cork City
#Dublin City
36. Improvement works at Old Whitechurch Road
37. Jamestown Road, Inchicore
€7,783,177
€476,152
€1,761,761
#Dublin City
#Galway City
38. Killeen Road, Ballyfermot
39. Parkmore Road Industrial Lands
€3,352,108
€885,643
€3,352,108
€885,643
€3,352,108
€885,643
€0
€0
#Galway City
40. Terryland Valley Access Road
€1,532,733
€1,532,733
€1,532,733
€0
#Limerick City
Corbally Link Road
€3,466,385
€1,996,267
#Waterford City
New - Waterford
City
€3,458,997
€5,462,652
41. Corbally Link Road Phase I
€1,426,763
€1,426,763
42. Corbally Link Road Phase II
43. Outer Ring Road
44. Ballybeg Road (Approved 2002)
€2,032,234
€11,903,794 €20,445,750
€1,063,000 €1,063,000
€4,035,889
€20,445,750
€1,063,000
TOTAL (All Projects)
TOTAL (Original 43 Projects Only – per Circular 25/00)
TOTAL (44 current projects)
ORIGINAL EXCHEQUER GRANT COMMITMENT
€244,403,118 €300,956,603 €317,334,145
€241,343,527
€224,499,976
€315,652,232
€247.598m
The 43 Original projects announced December 2000 are marked with an with the hash symbol (#)
The three projects added subsequent to the Programme launch are marked „New‟.
The projects that are shaded were discontinued or reclassified from the Programme.
Following the same format as earlier, all of the current projects are numbered 1 to 44.
139
€8,541,956
€0
€72,931,027
€91,152,256
Of the projects announced in 2000, the largest single grant amount was for the South
Dublin Outer Ring Road (€46m). The smallest was the €285,691 allocated to for
work on the Sallins to Clane road (south of Blackhall Junction). The majority of
projects were awarded amounts up to €5million, with 31 of the 43 in this category.
Nine were to receive between €5m and €15m. The remaining three were awarded
amounts of €15m or higher. This data is presented in the chart below.
Fig 8.1. Breakdown of Grants by Amount Awarded - 2000
Up to €5m
€5m-€15m
€15m +
Throughout this chapter, the process that led to increased grant allocations for A
number of individual projects is explained and analysed. Of the 44 projects that
currently comprise the Programme, 32 are receiving amounts up to €5million, with
five projects in the €5m to €15 bracket. The remaining nine are receiving grants in
excess of €15m each.
Fig 8.2. Breakdown of Grants by Amount Awarded - 2008
Up to €5m
€5m -€15m
€15m +
While there was a net addition of 1 project (from 43 to 44) over its lifespan, there
were a considerable number of other changes. These included the addition of new
projects, and the de-committal of others, as well as subdivisions and amalgamations.
All of these changes are now described.
140
8.2.3. Project Changes 2000-2008
From its commencement in 2000 to the present time (2008), the composition of the
Programme changed. These changes had obvious financial implications on the level
of exchequer commitment and their background is now described.
1. Additions - Three new projects were added, as follows:
Kildare County Council: „Roads serving Intel‟ (February 2001).
A grant of
€496,591 was provided.
Waterford County Council: „Tramore Ring Road Phase 5‟ (July 2002).
An
allocation of €1.5m was made.
Waterford City Council: „Ballybeg Road‟ (September 2002).
€1.063m was
allocated.
2. Subdivisions - Three of the approved projects were subdivided. This was done for
ease of management and to allow projects to proceed on a phased basis.
Limerick City: the Corbally scheme was split in two;
County Meath: the R154 (Trim-Dublin) was split into 3;
County Meath: the R161 (Athlumney) was split into 2.
3. Amalgamations - The Wicklow Town Relief Road and Port Access were originally
approved as individual projects but were amalgamated.
4. Reclassifications - In 2006, two of the Kildare projects were taken out of the
Programme:
Carbury to Kishawanny, [R404] Enfield – Edenderry Road
Johnstownbridge to Carbury, [R404] Enfield – Edenderry Road
It was decided that these two roads schemes were of national importance in
supporting the National Spatial Strategy, and consequently were reclassified as part
of the new strategic roads programme announced in 2006. Over €900k had already
been expended on design, leaving €17,758,768 in unallocated funding.
5. De-Committed Projects
County Meath: Plattin-Colp (July 2002). Costs had also escalated and would
have been beyond the capability of Meath County Council to meet. Before
being discontinued, a total of €87,684 was paid (in 2001). This left a total of
€1,912,153 to be decommited.
141
County Kildare: Naas Inner Relief Road - Dublin Road to Tipper Road (January
2008). Cost increases made this project untenable. Estimated costs escalated
from €1,9m in 2000 to €30m in 2007.
€359,890 had been paid, but the
outstanding balance of €3,955,303 was transferred to cover additional costs on
the Naas Southern Ring Road.
County Kildare: Clane Inner Relief Road (January 2008). Similarly, estimated
costs had risen from €1.27m in 2000 to €8m in 2007, making this project
untenable. €321,776 had been paid and the balance of €898,099 was also
transferred to the Naas Southern Ring Road.
Some observations arise from the changes that occurred.
The fact that three
projects were effectively decommissioned because of rising costs is in line with the
current recommended approach in the Department of Finance Guidelines that there
should be a willingness to walk away from a project if costs become excessive. The
total amount clawed back from the reclassified and decommissioned projects was
€24.52m.
However this did not accrue to the exchequer as a saving and was
channelled back into the Programme to fund cost increases on other projects.
8.2.4. Increased Grant Allocations 2000-2008
Between December 2000 when the Programme was announced, and 2004,
increases in the individual allocations for a number of projects were approved by the
Department. This was a response to substantial local increases in estimated project
costs. Some of the extra commitments were met from within the initial approved
programme budget. However, the main source was an increased exchequer funding
commitment, which went from €247.6m to almost €301m.
Table 8.2 tracks the
changes in each project‟s allocation from 2000 to 2004, and then on to 2008. Later
in this chapter the particular factors driving costs within the projects will be examined
in greater detail.
From the outset, a number of local authorities experienced problems with escalating
costs, and put forward individual cases to the Department stating that they would not
be in a position to meet these increases from within their own resources. In July
2001 Meath County Council made representations in respect of the Trim Inner Relief
Road, citing increased land costs. A further case was put forward by Kildare County
Council in August 2001 for increased funding for the Barberstown Cross (north)
project. This arose from rising costs and a proposal to extend the road by 600
metres. Both projects were given increases, although the total exchequer grant still
142
had to be held at a maximum of 75% of costs. The Trim allocation increased by
€1.7m. Barberstown (north) increased by €0.9m. The increases were met from the
€6.258m leeway that existed from the outset in the Programme fund23.
The approval of these increases in grants (albeit on a limited scale) was contrary to
the stated position as set out in Circular 25/00 when allocations were made. Of
further significance was the fact that cost escalations within individual projects
became apparent within 7 months of the announcement of the Programme. This
was a trend that continued across other local authorities and throughout the lifetime
of the Programme to date. In March 2002 additional funding of €10m was sought by
Kildare County Council to complete the Celbridge Interchange project.
This
necessitated an additional sanction from the Department of Finance. The sanctioned
amount for the Programme therefore increased from €247.6m to €257.6m.
By 2003, difficulties with escalating project costs were being experienced within a
number of counties. There was also an acknowledgement that project completion
would be delayed beyond the originally anticipated target of 2004. Representations
were made separately by Kildare, Meath, Waterford, Galway and Cork County
Councils as well as Waterford City Council seeking increased allocations. Rising
land costs were a significant factor, although other factors cited were the increased
costs of construction and accommodation works. As projects moved into a detailed
planning phase, land and construction costs were estimated with greater accuracy,
with resulting increases in estimated costs in some instances. The increases were
particularly affecting Kildare and Meath, the counties with the greatest number of
projects. The local authorities set out their respective positions in submissions to the
Department.
Essentially they said that they were not in a position to meet the
additional costs, and that this was putting the delivery of the projects in jeopardy. At
this point the Department reviewed expenditure on the Programme. It considered
two main options24, as follows:
1. The deletion of certain schemes from the originally approved list and the
reduction of the length of other schemes with the resultant „savings‟ in Exchequer
grant aid being used to offset the effects of increased costs. (In effect this would
entail the prioritisation of a more limited number of projects and the redistribution
of funding from within the existing programme budget).
23
24
Both projects were also to receive further subsequent increases in their allocations.
Based on DEHLG Filenotes of 16.7.03, 22.9.03 and 25.9.03.
143
2. Seek sanction from the Department of Finance for an additional €43m in
Exchequer funding (over and above the €257.6m that had already been
sanctioned) to meet the revised estimates in respect of the projects affected by
cost escalations.
However, the exchequer commitment would remain at a
maximum 75% of total costs, with the local authority required to meet 25%.
In the event, the second of the two options was agreed. Sanction was sought and
approval given for the €43m increase. Circular RLS 3/2004 of 4 April 2004 notified
local authorities of the revised allocations. Between 2000 and 2004, allocations in
respect of 23 of the original projects were increased. This does not include the 3
new projects that were added. Between 2004 and 2008 a more limited number of
grant increases were approved on a case-by-case basis. However, the scale of the
individual amounts is significant. This data is also contained in Table 8.2. For the
Naas Ring Road (to Cradockstown Road), the allocation increased by €13.68m
between 2004 and 2008. On the R158 Trim-Kilcock scheme the allocation increase
by €14.65m. The Wicklow Town Relief Road and Port Access grant went up by over
€13m, while phase II of the Corbally link Road increased by over €2m.
These
increases were partly met through the reallocation funds from decommitted projects.
However, an additional €16m was also required. This brings the Department‟s total
commitment under the Programme in 2008 to €317.334m.
This section has tracked how the overall exchequer commitment to the individual
projects and the Programme as a whole increased between 2000 and 2008 and how
those decisions were taken. The various increases have been described rather than
analysed. The focus now shifts towards the projects themselves and becomes more
analytical in identifying why costs increased.
144
8.3. The Level and Trend of Project Costs Over the Lifetime of the Programme
8.3.1 Headline Trends in Cost Data
The introduction to this chapter outlined the overall trend towards increased project
costs from 2000 to 2008. In December 2000, the estimated cost of completing the
43 projects originally selected was €385.97m.
Based on data collected for this
review, the total cost in 2008 of completing all 44 current projects is estimated at
€584.917m. To reiterate a caveat given earlier, some of the figures that formed the
basis for this calculation are estimated. The final total cost of completing all projects
may therefore be higher. The fact that a number of the cost figures are based on
estimates also limits the extent of their use in calculating the unit cost of certain
outputs.
Based on the cost estimates provided in 2000, most of the projects (27 of the 43)
had total costs of less than €5m, with 13 having estimates between €5m and €30m.
The remaining 3 had estimated costs in excess of €30m.
Fig 8.3 Projects Separated into Cost Bands - 2000
Up to €5m
€5m-€30m
€30m +
When the 2000 estimates are compared to the costs as reported in the survey
questionnaires, there has been some change. Of the 44 projects in the Programme,
19 have estimated costs of less than €5m, with 18 now estimated to cost between €5
and €30m.
There are now 7 projects with estimated costs over €30m.
The
significance of these bands is that they represent the threshold figures for different
levels of appraisal in the Department of Finance Capital Appraisal Guidelines. The
figure of €30m is the threshold for undertaking full cost benefit analysis.
The
implications of this observation are examined in more detail in the next chapter.
Figure 8.4 (overleaf) presents the 2008 data in a pie chart.
145
Fig 8.4 Projects Separated into Cost Bands - 2008
Up to €5m
€5m-€30m
€30m +
An important aspect in assessing the level and trend of costs is the ability to match
the projected budget at the outset, against the final expenditure upon completion. To
facilitate these comparisons, some modifications are being made in the presentation
of data. Forty sets of comparative project data will therefore be examined25.
Based on the data returns in the questionnaires, 34 of the 40 projects had or will
have higher costs upon completion, when compared with their original expected
costs. Costs decreased in 4 cases. For the remaining 2, it was not possible to make
26
an assessment .
This information is contained in Table 8.3.
The largest cost
increases occurred on the following projects (with increases in brackets):
Wicklow Town Port Access and Inner Relief Road (+€39.97m)
Trim to Kilcock R158 (+€29.43m)
Naas Ring Road to Craddockstown Road (+€27.31m)
Waterford Outer Ring Road (+€21.278m)
Carrigaline Western Relief Road (+€18.66m)
Celbridge Interchange (+€14.456m)
Naas Ring Road to Millennium Park (+€12.712)
25
Projects that were initially subdivided have been recombined to provide a single set of
figures in each case. This affects the R161 Athlumney (Meath), the R154 Trim to Dublin
Road (Meath), Corbally Link Road (Limerick City).
26
For Oranhill Distributor Road (County Galway) sections of the road were built by the
developer and an estimate of the cost of this contribution was not provided by the local
authority. The original Midleton Northern Relief Road phase 1(a) was subsumed into a far
larger project as part of the reopening of the Cork-Midleton Rail Line, and development of the
northern part of the town. An estimated cost for the construction element of the original
section was provided by the local authority (€1.1m). This doesn‟t include land or other costs.
The substantial change in the scale and scope of the project limits comparisons. The figure
used in table 8.4 is the original cost estimate of €1,777,633.
146
Table 8.3. Project Cost Comparison, Original Estimates from 2000 versus Costs
Reported in the Questionnaire Returns 2007/2008
Original
Estimated Cost
in 2000
€2,488,687
€4,494,873
€1,777,633
€57,138,214
Reported Cost
2008
Difference Difference %
2000 - 2008 2000 - 2008
€21,150,000*
€12,000,000*
€1,777,633*
€42,037,860
€18,661,313*
€7,505,127*
749.8%*
167%*
-€15,100,354
-26.4%
€9,396,062
€18,818,388*
€9,422,326*
100.3%*
€10,069,022
€3,364,805
€17,612,324
€6,839,686*
€7,543,302
€3,473,881*
74.9%
103.3%*
Fingal
8. Ongar Road
Galway County 9. Oranhill Distributor Road
€21,852,192
€2,958,490
€13,150,661
€2,200,000*
-€8,701,531
-39.8%
Galway County 10. Parkmore Road [Phases I & II]
€1,904,607
€2,113,264
€208,657
11%
€571,382
€2,851,342
€2,279,960
399%
€1,676,054
€5,464,466
€3,788,412
226%
€30,473,714
€3,364,807
€2,095,068
€1,142,764
€3,555,267
€44,930,407
€6,200,000*
€2,515,971
€3,596,906
€30,866,084*
€14,456,693
€2,835,193*
€420,903
€2,454,142
€27,310,817*
47.4%
84.3%*
20.1%
214.8
768.1%*
€2,539,476
€15,252,110
€12,712,634
500.6%
€380,921
€1,523,686
€418,903
€2,172,663
€37,982
€648,977
10%
42.6%
€761,842
€4,875,794
€833,040
€5,754,816
€71,198
€879,022
9.3%
18%
€11,935,538
€3,237,832
€7,808,889
€20,500,000*
€6,697,368
€11,117,925
€8,564,462*
€3,459,536
€3,309,036
71.8%*
106.8%
42.4%
€6,602,638
€7,313,746
€711,108
10.8%
€28,569,107
€7,808,889
€58,000,000*
€12,000,000*
€29,430,893*
€4,191,111*
103%*
53.7%*
Local Authority
Cork County
Cork County
Cork County
Dun Laog/
R‟down
Fingal
Fingal
Fingal
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Limerick
County
Meath
Meath
Meath
Meath
Meath
Meath
Road Project Name
1. Carrigaline Western Relief Road
2. Clarkes Hill / Moneygourney Road
3. Midleton Northern Relief Road [Phase 1]
4. Dundrum Main Street Bypass
5. Balbriggan Inner Relief Road [stage 2]: Dublin Road Skerries Road
6. Lusk Bypass
7. Naul Road Improvement Scheme
11. Barberstown Cross - Maynooth [R407] north of
Barberstown cross
12. Barberstown Cross - Maynooth [R407] south of
Taghadoe Cross
13. Celbridge Interchange
14. Clane - Kilcock [R407] south of M4
15. Clane - Kilcock [R407] to a point 1500m north of Clane
16. Naas Ring Road - Newbridge Road to Caragh Road
17. Naas Ring Road - Newbridge Rd to Kilcullen Rd to
Craddockstown Rd
18. Naas Ring Road - Newbridge Road to Industrial Estate
[Millennium Park]
19. Sallins - Clane [R407} south of Blackhall junction
20. Sallins - Clane [R407] Castlesize estate to Blackhall
Stud
21. Roads Serving Intel (New 2001)
22. Castletroy Distributor Roads: Monaleen - Kilbane - N7
Dublin Road
23. Duleek-Julianstown-Laytown
24. R154 Trim Inner Relief Road, phase 2a
R154 Trim - Dublin Improvement Scheme
25. R154 Trim/Dublin [Iffernock]
26. R154 Trim/Dublin [Kiltale/ Scurlogstown]
27. R154 Trim Dublin [Tullaghmedan]
R161 Athlumney
28. R161 Athlumney Phase I (Connaughtons)
29. R161 Athlumney Phase II (Bridge N3)
30. Trim-Kilcock R158
31. Trim-Navan Improvement Scheme [R161]
South Dublin
Waterford
County
Waterford
County
Wicklow
Wicklow
Cork City
Dublin City
32. Outer Ring Road Phase I
33. Tramore Ring Road [phase 4]
€67,296,118
€1,958,104
€71,119,744*
€2,365,097
€406,993
20.8%
34. Tramore Ring Road [phase 5] (New 2002)
€1,998,367
€2,442,373
€444,006
22.2%
35. Wicklow Town Relief Road &
Wicklow Port Access
36. Improvement works at Old Whitechurch Road
37. Jamestown Road, Inchicore
€15,027,350
€10,377,569
€634,869
€2,349,015
€65,375,000*
€601,992
€6,021,000*
€39,970,081*
-€32,877
€3,671,985*
157.3%*
-5.2%
156.3%*
Dublin City
Galway City
38. Killeen Road, Ballyfermot
39. Parkmore Road Industrial Lands
€4,469,478
€1,180,856
€10,353,000*
€1,401,180
€5,883,522*
€220,324
131.6%*
18.6%
Galway City
40. Terryland Valley Access Road
€2,043,643
€2,172,327
€128,684
6.3%
Limerick City
Corbally Link Road
€4,621,847*
€10,207,401*
€5,585,554*
120.8%*
€21,278,180
-€277,571
134%
-15.4%
41. Corbally Link Road Phase I
€2,761,675
42. Corbally Link Road Phase II
€7,445,726*
Waterford City 43. Outer Ring Road
Waterford City 44. Ballybeg Road (New 2002)
TOTAL
€15,871,726
€1,800,000
€37,149,906
€1,522,429
€363,997,195
€584,917,012
Figures marked with the asterix symbol (*) are estimates
Original estimated costs for the three projects added after 2000 are from the year when they were approved.
The original estimated costs in the table are for the 44 current projects. The 5 projects that were removed from the
Programme are not included here. The total estimated costs for the 43 original projects announced in December 2000
was €385,974,513
147
The cost increases set out in the table are clearly significant both in absolute and
relative terms. In the case of the Wicklow Town project, there was a 157% rise in
original estimated costs, while on the Trim to Kilcock Road it was 103%. On the
Naas Ring Road to Craddockstown it was 768%. Although this was the largest
percentage increase and is at the extreme end of the scale, it was by no means
unique. In the case of 15 of the 40 projects, the final declared or estimated cost is
over 100% greater than the original projected cost submitted to the Department in
the year 2000. However, at an aggregate programme level, the cost increases whilst
significant, weren‟t as severe. Taking the 44 projects that currently comprise the
Programme, the combined level of cost increases over the lifetime of the Programme
was 61%.
Their costs increased from €364m to almost €585m.
The knock-on
effects as they impacted on the exchequer grant allocations were already outlined.
Between 2000 and 2008, the grant commitment under the Programme went from
€247.598m to €317.334, an increase of 28%.
The combined grants for the 44
projects that currently comprise the Programme went from an original figure of
€224.5m to a current amount totalling €315.65m, an increase of 40%.
There are some observations that can be made here. The first is that cost increases
affected some projects more than others. Where increases occurred, their impact
was profoundly felt. In response, the Department relaxed its original rule about not
awarding funding increases. However it did this in a way that required the local
authorities to take on greater responsibility for costs. At an aggregate level, the
Department is providing €317.334m, while €267.583m is coming from other sources.
This represents a ratio of 54% : 46%. When the allocations were announced in
December 2000, the ratio was 63% : 37% between the Programme grants and other
sources.
The funding provided by sources other than the Programme is mainly coming from
local development levies.
In the questionnaire, local authorities were asked to
specify from what source their portion of project funding came from. A full set of data
is not available which limits conclusions that can be drawn. A breakdown of funding
was provided in respect of €159.7m of the €267.5m non-exchequer sources. All bar
€26m (approx) of this came from development levies in one form or another. It
should also be acknowledged that the financial data here under-represents local
contributions in the case of the Midleton Northern Relief Road and South Dublin
Outer Ring Road, where subsequent phases of these roads are largely being funded
from development levies.
148
What all of this indicates is that when costs increased, both the exchequer and local
authorities ended up footing the bill. The fact that the local authorities had recourse
to development levies enabled them to provide additional funding.
Within the
interviews it was a widely held view that had development levies not been available,
the local authorities wouldn‟t have been in a position to meet their additional funding
obligations. This highlights again the significant impact that the new system of levies
has had since its relatively recent introduction.
Whether it was an aggregate 61% increase in costs, or the more significant
increases that occurred in a number of individual cases, two key questions arise
What were the factors that drove the costs upwards?
What measures can be put in place in future to control and manage costs?
The first of these questions will now be addressed. The second question is the main
focus of Chapter 9, which follows.
8.3.2. What Factors Were Driving Cost Upwards
Within the questionnaire, and during the interviews, local authorities were asked to
identify the factors that had the most significant effect on costs.
Land was the
biggest common issue, and will now be examined in detail. Construction inflation
was also raised. At a more specific level, a number of the projects incorporated
additional works, had their length increased or were subject to changes. Of note
here are the following projects which cited these as issues: Carrigaline Western
Relief Road (Cork Coutny), Clarke‟s Hill / Moneygourney (Cork County), Duleek to
Julianstown Road (Meath), Trim to Kilcock R158 (Meath), Outer Ring Road (South
Dublin), Jamestown Road (Dublin City), Kileen Road (Dublin City), Corbally Road
Phase II (Limerick City), Wicklow Town Relief Road and Port Access (Wicklow), Trim
to Dublin Improvements Scheme (Meath), Clane to Kilcock south of M4 (Kildare) and
Barberstown Cross North (Kildare). For the Tramore Ring Phase 5, the Department
granted additional funding to enable simultaneous resurfacing work to be undertaken
on an earlier phase of the ring road. This list of projects may not be exhaustive and
is reliant on information from the questionnaires.
The need to undertake unforeseen accommodation works was cited as a factor in a
number of cases, as were problems with contract tendering. On the Trim to Kilcock
road, archaeological finds delayed work, and also required elements to be
redesigned with resulting cost implications. On the South Dublin Outer Ring Road,
the planning approval from An Bord Pleanala included conditions that required
149
additional works to be carried out. For the Corbally Link Road (Phase II), the two
lowest tenders refused the job, and the eventual tender selected was €1.4m higher
than the lowest. On both the R161 Athlumney (Meath) and the Lusk Bypass (Fingal)
the lowest tender was disallowed, and this also resulted in increased costs.
Inflation in construction costs between the approval of the projects and the
preparation of tender documents was widely cited as an issue. Delays experienced
between project approval and commencement compounded this problem. The issue
of delays was already addressed in Chapter 6. As local authorities tried to source
additional funding to cover rising costs, further delays were felt.
With a few
exceptions, those that experienced the largest increases were affected by delays.
Construction inflation was particularly rampant around the time when the Programme
commenced. In 2003, the Department of the Environment produced a series of
inflation calculations for road construction in the years up to 2002 (C&AG, 2004).
These show road construction inflation running at 12% in 2000, 9% in 2001 and 5%
in 2002.
Comparable figures for roads inflation are not available post-2003. Other
sources for construction and tender price inflation data are therefore referenced.
Table 8.4 contains construction inflation figures for the period 2000 to 2007. This is
drawn from the authoritative Bruce-Shaw „Construction Cost‟ and „Tender Price‟
indices, and the construction cost inflation index prepared by the Society of
Chartered Surveyors. The data in the table relates to the construction industry in
general, so the situation affecting local authority road construction is likely to differ.
There is also likely to be regional variation. However, the inflation figures do convey
a good sense of changes in wider construction costs during the period.
For
comparative purposes, annual inflation figures from the Consumer Price Index are
also included.
Table 8.4. Construction Inflation, 2000-2007
2000
2001
Bruce
Shaw 9%
9%
Construction
Cost Index
Bruce
Shaw 14%
6%
Tender
Price
Index
SCS
8.2%
14.8%
Construction
Cost Inflation
CPI Consumer 5.6%
4.9%
Price Inflation
*Year on year figure to July 2007
2002
3%
2003
3%
2004
2%
2005
3%
2006
3%
2007
3%
-2%
-4%
4%
4%
3%
0%
6.2%
2.8%
5.2%
4%
5.4%
5%*
4.6%
3.5%
2.2%
2.5%
4%
4.9%
Sources: Bruce Shaw Partnership (2008), DKM (2006), DKM/DEHLG (2007), CSO (2008)
150
The table broadly confirms the trend between 2000 and 2002 towards rising costs,
although there are variations between the different indices. This is understandable,
given that they are measuring different things, and use different methodologies27.
Post-2003, prices appear to have stabilised to some extent, but were running ahead
of the general Consumer Price Index in a number of years. When combined and
compounded, the inflation rate for roads (based on the Department of the
Environment data) in the period 2000 to 2002 was around 28%. This would explain
some of the increases in the early years of the Programme, particularly in the leadup to the review of grant allocations 2003. Taken across the entire period from 2000
to 2007, the SCS index shows cumulative increases of 64%. The Bruce Shaw
Tender Price Index and Construction Cost Index increased by 27% and 40%
respectively during that period. The Consumer Price Index rose by 37%.
What is apparent is that adequate contingency wasn‟t included to cope with
inflationary increases. Estimates were submitted in 2000. Some of these estimates
were based on pre-existing cost data that had been prepared at an even earlier
stage by local authorities.
As they were being submitted, the estimates were
becoming dated and obsolete. The allocations had only been announced a few
months before local authorities began making claims for additional exchequer
funding arising from cost increases.
There are really two issues here; the
underestimation of costs to begin with, and the insufficient attention that was paid to
the likely future impact of inflation.
While there were exceptional inflationary increases at points in the lifecycle of the
Programme, there is something that can be learned from the experience. There is a
need for more robust estimation of costs from the outset.
A significant number of
projects experienced changes in their specifications post-approval. While there may
have been a justifiable case for many of these changes (in some instances they were
forced upon the local authority following statutory procedures) there are measures
that the Department can introduce to manage this situation better.
These are
discussed in Chapter 9. The inflationary changes explain some, but not all of the
increases that occurred. It was noted earlier that the most commonly cited problem
raised by the local authorities was that of land price increases.
The methodologies are described in Appendix I of the „Review of the Construction Industry
2005 and Outlook 2006 to 2008‟, DKM Economic Consultants (2006).
27
151
8.3.3. Land Prices
Table 8.5 provides comprehensive details on land acquisition costs as they impacted
on each of the projects. The data confirms the overall trend towards rising land
prices, although the impact was not uniformly felt. From 40 individual sets of figures,
comparable before-and-after data on land was available for 25. Land costs
increased in real terms in 19 cases and decreased in 6 cases.
Fig 8.5. Proportion of projects affected by Land Cost Increases
Increased Land Costs
Decreased Land Costs
Land as a proportion of the total cost increased in 11 of the 25 comparable cases.
Where increases occurred, the consequence for individual projects was dramatic.
On the final section of the Naas Ring Road the estimated land cost went from
€1.27m in 2000 to €15.2m in 2008. On the Millennium Park section of the Naas Ring
Road, land estimates increased from €380k to €5.37m. For the Carrigaline Relief
Road the initial estimate of €0.5m in the year 2000 is now €14m. Land estimates on
the Wicklow Town Port Access and Inner Relief Road have gone from €10.15m to
€18.26m, and this doesn‟t allow for the fact that some of these lands are being
provided at less than market value. In many instances the relative cost of land as
part of the total project costs is in excess of what is being experienced on National
Road and Motorway construction projects funded by the National Roads Authority.
Up until 2000, land traditionally accounted for around 11% of the cost of building
National roads. This increased to 14% by 2002/2003 (C&AG, 2004, p.36). In 2005,
land costs were 17% of the NRA‟s budget, and this went up to 22% in 2006. Within
the Programme, 18 projects will have final land costs in excess of 20% of total costs.
For five of these, land costs will account for 50% or more of costs.
contains comprehensive comparative data on land costs.
Table 8.5
It also includes a
calculation for the unit cost of land, where data was available. Explanatory notes to
assist in interpreting the figures are included on the following page. It should be
noted that the cost-per-hectare is based on an average price (i.e. the total number of
hectares acquired divided by the total cost for land).
The actual amounts paid to
individual owners will differ widely depending on the size, location and type of
holding.
152
Table 8.5. Cost of Land Acquisition, 2000 - 2008 and Unit Cost Per Hectare
Local Authority
Project
Start /
Finish
Original
Original
Land Cost Land Cost Average Cost
Estimated Land Cost
2008
as % of
per Hectare
Land Cost in as % of
Total
2000
Total
2008
2008/ 2009 €457,105
18%
€14m*
66.19%* €4,912,280*
2009/ 2011 €685,658
15%
To be determined
2007/ 2008 €515,513
29%
€16 - 21m (all 56.5%- €1.66-2.44m*
phases)*
63.06%*
2001/ 2002 €44,440,832
78%
€26,571,074 63.21% €2.2-€5.44m*
Road Project Name
Cork County
Cork County
Cork County
1. Carrigaline Western Relief Road
2. Clarkes Hill / Moneygourney Road
3. Midleton Northern Relief Road [Phase 1]
Dun Laog/
R‟down
Fingal
4. Dundrum Main Street Bypass
2003/ 2009 €3,301,319
35%
€4,092,106
2003/ 2004 €5,471,781
2010
€952,303
54%
54%
€4,031,207
22.89%
€995,359
Unavailable (UA)
Fingal
8. Ongar Road
Galway County 9. Oranhill Distributor Road
2005/ 2006
2003/2009
UA
€380,921
UA
13%*
Galway County 10. Parkmore Road [Phases I & II]
2002/ 2004
€380,921
20%
Kildare
2004/ 2005
€190,460
33%
€400,150
14%
€102,251
2006/ 2006
€380,921
23%
€609,140
11.2%
€135,094
33%
13%
12%
33%
36%
€10,141,943
€512,150*
€89,276
€1,114,604
€15,231,269*
22.6%
8.3%*
3.6%
31%
50%*
€441,203
€322,106*
UA
UA
€1,650,549*
Meath
Meath
11. Barberstown Cross - Maynooth [R407] north of
Barberstown cross
12. Barberstown Cross - Maynooth [R407] south of
Taghadoe Cross
13. Celbridge Interchange
14. Clane - Kilcock [R407] south of M4
15. Clane - Kilcock [R407] to a point 1500m north of Clane
16. Naas Ring Road - Newbridge Road to Caragh Road
17. Naas Ring Road - Newbridge Rd to Kilcullen Rd to
Craddockstown Rd
18. Naas Ring Road - Newbridge Road to Industrial Estate
[Millennium Park]
19. Sallins - Clane [R407} south of Blackhall junction
20. Sallins - Clane [R407] Castlesize estate to Blackhall
Stud
21. Roads Serving Intel
22. Castletroy Distributor Roads: Monaleen - Kilbane - N7
Dublin Road
23. Duleek-Julianstown-Laytown
24. R154 Trim Inner Relief Road, phase 2a
R154 Trim - Dublin Improvement Scheme
25. R154 Trim/Dublin [Iffernock]
26. R154 Trim/Dublin [Kiltale/ Scurlogstown]
27. R154 Trim Dublin [Tullaghmedan]
R161 Athlumney
28. R161 Athlumney Phase I (Connaughtons)
29. R161 Athlumney Phase II (Bridge N3)
30. Trim-Kilcock R158
31. Trim-Navan Improvement Scheme [R161]
South Dublin
32. Outer Ring Road Phase I
Waterford
County
Waterford
County
Wicklow
Wicklow
Cork City
Dublin City
33. Tramore Ring Road [phase 4]
2002/ 2005 €6,348,690
[phase I]
2001/ 2002 €285,691
34. Tramore Ring Road [phase 5]
2003/ 2004
35. Wicklow Town Relief Road &
Wicklow Port Access
36. Improvement works at Old Whitechurch Road
37. Jamestown Road, Inchicore
2007/ 2009
Dublin City
Galway City
Fingal
Fingal
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Limerick
County
Meath
Meath
Meath
Meath
5. Balbriggan Inner Relief Road [stage 2]: Dublin Road Skerries Road
6. Lusk Bypass
7. Naul Road Improvement Scheme
2001/ 2003 €10,157,904
2002/ 2008 €444,408
2006/ 2007 €253,947
2005/ 2006 €380,921
2007/ 2008 €1,269,738
21.75%
€1,461,466
€75,000
0.6%
UA
Incomplete data provided
Incomplete data provided
2004/ 2006
€380,921
15%
€5,372,125
35.2%
€611,093
2003/ 2003
2007/ 2008
€63,486
€253,947
17%
17%
€269,526
€475,358
64.3%
21.9%
€1,052,835
€1,061,066
2002/ 2004
2002/ 2006
UA
UA
UA
UA
€26,177
€100,423
3.1%
1.8%
€77,218
€19,651
2004/ 2008
2001/ 2003
UA
€761,842
UA
UA
24%
UA
3,300,000*
€2,197,639
€1,745,402
16.1%*
32.8%
15.7%
€196,592*
€364,571
€118,654
€952,303
14%
€573,200
7.84%
€130,272
UA
UA
UA
UA
10,732,000*
€1,578,485*
18.5%*
13.2%*
€228,729*
€114,316*
9%
€26,719,032* 19.9%*
[all 3 phases] [all phases]
€600,575
25.4%
2001/ 2006
/ 2004
/ 2002
2001/ 2001
/ 2005
2004/ 2008
2004/ 2008
15%
UA
€133,461
UA
€512,062
21%
€365,758
€10,151,556
2002/ 2003
0
2003/ 2004 €1,269,738
40%
0
54%
€18,260,000*
0
€2.4m*
27.9%*
0
39.9%*
€561,846*
0
€2m*
38. Killeen Road, Ballyfermot
39. Parkmore Road Industrial Lands
2003/ 2004 €1,041,185
2001/ 2003 €168,875
23%
14%
€3,850,000*
€42,946
37.2%*
3.1%
€2,566,666*
€208,479
Galway City
40. Terryland Valley Access Road
2002/ 2004
UA
UA
€248,360
11.4%
€1,403,168
Limerick City
Corbally Link Road
€304,737
7%
UA
41. Corbally Link Road Phase I
2001/ 2002
0
0
0
42. Corbally Link Road Phase II
2006/ 2007
€435,501*
5.9%*
€483,890*
10,130,592
0
27.3%
0
€239,267
0
2003/ 2005 €2,158,554
2003/ 2004
0
Waterford City 43. Outer Ring Road
Waterford City 44. Ballybeg Road
figures marked with the asterix symbol (*) are estimates
153
14%
0
Notes on Table 8.5
For the Ongar Road (Fingal), 1.2ha was provided by developers as part of an
agreement and did not feature as a direct cost.
For the Lusk Bypass (Fingal), lands were acquired at approximately 75% of market
value through a local development agreement.
On the northern section of the Clane to Kilcock road (Kildare) no lands acquired
other than roadbed and wayleave.
The majority of lands for the Castleroy Distributor Road (County Limerick) were
provided by the developer at no direct cost to the local authority.
Current land estimates for the Wicklow Town Relief Road and Port Tunnel take
account of a local arrangement with landowners along the route to acquire lands at
less than market value. However full market value is likely to be paid for some
lands.
Local authorities were asked if any additional local authority lands were provided
over and above those directly acquired and reported in the main cost data in the
questionnaire. They were asked to give details of the size, and estimated price at
the time it was used. The following data was provided on these additional lands,
and was not included in the calculations in Table 8.5.
The estimated price is
provided in brackets;
-
Balbriggan Inner Relief Road (Fingal): 2.2ha (€6.2m)
-
Duleek – Julianstown (Meath): 0.442 ha (€85,000)
-
Trim Navan Improvement Scheme (Meath): 1.598 ha (€250,000)
-
South Dublin Outer Ring Road: 50ha (€124m)
-
Wicklow Port Access and Town Relief Route: 1.01 ha (€499,000)
-
Corbally Link Road Phase I (Limerick City): 0.3ha (€100,000)
-
Waterford Outer Ring: 3.45ha (€7.3m)
The trends identified in the questionnaire data are also borne out from the interviews.
The strong and consistent view among local authority officials is that land costs now
represent a growing constraint on the ability of local authorities to undertake work on
regional and local roads. This is being acutely felt close to towns, villages and in
suburban areas, where lands (including those zoned agricultural) have tended to
attract what is called a „hope‟ value commensurate with their location close to other
development. However the trend is also prevalent on longer schemes through rural
areas where the land zoning is largely agricultural. For example, this was particularly
evident on the Duleek to Julianstown road, and R158 Trim to Kilcock (both Meath).
Procedures for land acquisition, and rules governing the assessment of compensation
when land is compulsorily acquired for roads are set out in statute, and are well tested
154
and established. These were touched upon already in Chapter 6. Landowners are
entitled to the market value for their land, plus compensation.
Paradoxically, in the case of the Programme under review, as the strategic roads have
set about opening up lands for development, one reported effect has been to increase
land values in the relevant areas.
The increased value is part of what is known as
„betterment‟. Betterment describes how the value of land can increase on foot of
rezoning, the provision of physical infrastructure (e.g. roads, sewage), or through the
provision of social infrastructure (schools, sports facilities etc.).
The impact of
„betterment‟ in causing cost increases in land acquisition for infrastructural projects is
not unique to regional and local roads. It has also been highlighted as a cause of
concern by both the Dublin Transportation Office and National Roads Authority
(APOCC, 2004, p.90).
The consequence, in simple terms, is that the land required to build a road increases
in cost by virtue of the self-same road being built.
The road is also made more
expensive by being proximate to other developments, which benefit from new roads
but do not have to bear any of the cost. This issue was consistently raised by local
authority interviewees. As one local official explained:
“land cost is an issue, and this is coming up on practically every scheme
that we‟re doing here at the moment. Particularly when you‟re working
in a city environment, one of the big factors on every roads job is the
ratio of land costs to overall project costs, because every piece of land
has a development potential by virtue of its zoning, or would have a
development hope potential in the future because of its proximity to
other development or to the city centre. And I mean every piece of land
that you go in to, like you start negotiations probably at a million an
acre, and go up from there.”
Some local authorities have been able to recoup part of the „betterment‟ value by way
of special agreements with developers to acquire lands at preferential rates, or at no
cost. Fingal County Council acquired lands for the Ongar Road at no cost through an
agreement with developers. Limerick County Council similarly acquired land. The
land costs for that project constituted less than 2% of the total budget.
For the
Dundrum Bypass, agreements were also made with developers on land.
As was
already noted, Wicklow County Council has made an arrangement with landowners
along the route of the Wicklow Port Access and Town Relief Road. However, this deal
155
took years to conclude. The number of owners involved and the difficulty is achieving
consensus was a factor in causing delays. In all of these instances, local
arrangements are involved. While there is scope under planning legislation to enter
into agreements with developers for the provision of infrastructure, there is no means
to oblige a developer or landowner to cede land at less than the market rate.
Where there is no scope to make localised arrangements on land acquisition, or where
there are too many owners to conclude a deal, the local authority is left with little option
but to pay the going rate through CPO. As has been noted, these rates are based on
statutory rules over which the local authority has little or no control. Where there is a
limited and finite budget available for road construction and an increasing proportion is
being taken up by land acquisition, a logical response would be to scale back the
outputs. This essentially was the choice facing local authorities and the Department
as the Programme progressed. There were two options: either pay the going rate for
land which was rapidly rising, or make cutbacks.
Given that the roads were
considered strategic in nature, increased funding was provided (in the main). There
were some exceptions. The Naas Inner Relief Road (to Tipper Road), and the Clane
Inner Relief Road, were removed from the Programme in January 2008 largely
because of rising land costs. Their allocations were diverted to help pay for cost
increases on the Naas Southern Ring Road, which were again largely driven by land.
Under the rules as they stand, and as they are required to be applied by arbitrators
when deciding upon compensation, regard is had for the market value but also the
„hope‟ value based on the value of other lands in the area. One local authority official
stated:
“when it comes to arbitration and the arbitrator decides on the land value,
which is a not unusual process - if the land is zoned agricultural but is
within the frame of an urban setting….that they use the adjoining land
zoning, whatever it may be, whether it‟s residential or commercial or
whatever to colour their position with regards to the value of the land”
The general view of local authority personnel in the interviews was that short of major
legislative change, the land costs as they stand simply have to be paid. The question
then arises as to how some of the benefit that accrues to landowners by virtue of the
„betterment‟ caused by the road can be captured. The most obvious vehicle is through
the system of development levies. This is examined in more detail in the next Chapter.
156
There is then the issue of whether the local authorities achieved value for money in
their acquisition of land. Table 8.5 includes data on the cost per hectare of lands
purchased.
A problem in trying to draw unit cost comparisons between different
projects is that the market for land varies significantly from county to county, and is
crucially dependent on location.
From the table it can be seen that the cost per
hectare of land varies considerably and ranges from €20,000 to €5.44m. Even within
the same town, land prices can vary. In the case of the Tramore Ring Road, the cost
per hectare on the first section to commence (Phase 4) was €133k. For the Phase 5,
the cost was €365k. This can be partly accounted for by additional conditions attached
to the purchase agreement on Phase 5, and to some extent by inflation, but the
location was a key factor. The land required was part of (or adjacent to) the local golf
course, making it more expensive.
Relative comparisons between projects while
interesting and somewhat informative are of limited use in assessing cost
effectiveness. Other benchmarks are needed.
Unfortunately there isn‟t an official-level source of data on all land transactions. The
nearest thing available that constitutes a comprehensive national analysis of land price
trends is the Irish Auctioneers and Valuers Institute (IAVI) Annual Property Survey.
This is based on information reported by its members on individual transactions.
Given that these lands are being commercially traded, rather than being acquired by
compulsory purchase order, the basis upon which prices are determined is different.
While land values per hectare paid under the Programme may seem large, they do not
appear to be out of step with the prices reported in the IAVI surveys. In its 2006
survey (IAVI, 2007), one sale along the Nangor Road, which connects to the Killeen
Road (a road funded under the Programme), is reported at €2.14m per hectare. Land
in south-west Dublin was achieving €3.75m per hectare and €4m in South East Dublin
/ North Wicklow. In Midleton, County Cork, prices of €2.4m per hectare are quoted in
the IAVI Survey. In comparison, the estimated land costs per hectare on the Midleton
Northern Relief Road Phase 1a range between €1.66m and €2.4m per hectare. In the
suburban areas of Waterford City a 4.4ha site with planning permission sold for €1.7m
per hectare. In Kildare there were reports of agriculture land not zoned, but with
potential selling for €1.25m per hectare. In another transaction in Kildare the price was
€2.5m per hectare for development lands. The price per hectare on the final section of
the Naas Ring Road completed in March 2008 averaged €1.65m.
While these
comparisons are somewhat arbitrary, the quoted land costs incurred by local
authorities are within the ranges of figures referenced by the IAVI.
157
One thing that can be said is that land prices nationally have been increasing over the
lifetime of the Programme, and this is reflected in successive editions of the IAVI
Annual Survey, with year-on-year increases of around 15% on certain types of
development land over the early and middle parts of the decade (IAVI 2006, p.21).
Given the different scope of the IAVI data, and the basis upon which prices are
determined, such inflation figures can only be used only for indicative purposes. What
is relevant is that local authorities, like other participants in the market, have been
affected by these changes and had to pay market rates. Whether land price will
continue to rise in the long term is another matter. The most recently available IAVI
data points to a general reduction in the price of development land in 2007 (IAVI, 2008,
p.15). Whatever about the macroeconomic consequences, a downward trend in land
prices would reduce the cost of constructing roads infrastructure.
The increase in costs and the factors that contributed to them had implications for the
efficiency of the Programme. More resources than originally anticipated were required
to achieve outputs and outcomes. Spending more money than was budgeted raises
questions about possible inefficiencies. The next section considers the efficiency of the
Programme in more detail.
8.4. The Cost of Achieving Outputs
While there are different definitions available, Efficiency can essentially be understood
as getting the maximum output from available inputs. This section will bring together
the cost data outlined earlier and make comparisons with the levels of outputs, as
reported in Chapter 6. These outputs are the roads that were constructed and the
housing units and lands that were facilitated. Comparing the cost of achieving these
outputs is a necessarily limited exercise. It is confined to quantitative data and does
not take account of the other social and economic outcomes identified in Chapter 7. In
looking at the direct construction-related outputs, there are some challenges in
preparing comparative efficiency data, and these were briefly addressed already. The
1997 review by KPMG developed a series of unit costs for different types of road
works but was unable to calculate a uniform and comparable unit cost on „Road
Improvements‟ because of the variation in the type of works. These would include, for
example, the construction of new roads, the widening or realignment of an existing
road and the construction of roundabouts. These are precisely the types of activities
funded under the Programme. In the main questionnaire, data on the dimensions of
the road (length and width), as well as other particular design features was sought.
158
Based on these details it is possible to calculate the area of road constructed in square
metres, and then calculate a basic unit cost per square metre. Given the significant
variation in land costs and the effect that they have in skewing the figures, unit costs
with and without land costs were prepared. Some significant reservations must be
raised on the use of this data.
In examining the unit cost data, problems similar to those already identified in the
KPMG report were identified. Excluding land, values ranged from €1,719 per square
metre at the top end to €79 at the lower end. The most expensive was the Dundrum
Main Street Bypass, which included a new road bridge, pedestrian bridge, demolition
works, a series of junction realignments and some enabling works affecting the Luas.
Construction took place in a busy and populated area of Dublin City. The lowest unit
cost was reported on the 270-metre stretch of the R407 road at Blackhall Junction in
County Kildare, and involved an improvement in the sightline of the road. Little in the
way of valid comparison can be made between the two projects. These unit cost
figures were at the extreme ends of the scale, but for those in-between there was also
considerable variance depending on the types of works that were undertaken.
There are a number of variables that have an influence on the unit cost. One key
determinant is whether the road was being constructed new or being improved and
realigned. Some of the projects had a combination of different types of works. The
level and extent of particular features like Bridge Structures, Roundabouts, Junctions,
Cycle Lanes and Footpaths also affects cost. Typically the projects with the highest
unit costs are those involving bridge construction and other major engineering works.
The extent of requirements related to what are called „accommodation works‟ to
ameliorate the impact of construction work on properties adjacent to the road is a
further factor. Some roads were undertaken in conjunction with additional works to
provide ducting for power, sewerage and telecoms.
This had cost implications.
Ground conditions are also a factor, as is the proximity to environmentally sensitive
sites. Safety and access are issues, especially if a road must be kept open to traffic as
improvement works are simultaneously ongoing.
So many qualifications and caveats have to be introduced to explain each case that it
severely limits the value of the data at a programme level. Where it is of use, is in
making comparisons between projects that have similarities. However some detailed
knowledge of engineering and design issues is required. A particular value in using
unit cost data in the Programme is not so much that it answers questions, but causes
159
them to be asked. For example, on Parkmore Road in Galway, which crosses the
boundary between Galway City and County Council, the road was substantially
improved, but the work was undertaken as two separate projects by the two local
authorities. The unit cost per square metre for the Galway City end was €208. It was
€297 on the County side.
This issue was raised with the County Council, which
explained that ground conditions on their side were substantially different,
necessitating excavation and levelling works. The usefulness of the unit cost data
arises in drawing attention to apparent anomalies. Of course, a level of expertise is
required in assessing the validity of the explanations. The data can‟t be said to „speak
for itself‟. The unit cost per metre would therefore be of most use as an indicator
internally within the Department where the technical expertise is available to make a
balanced judgement based on all of the potential factors impinging on cost. As a
general performance indicator for publication it would likely be counterproductive.
What this exercise confirms is that the KPMG analysis from its 1997 Value for Money
Review still holds true.
Units costs can‟t really be used for general comparative
purposes in these types of regional and local road works.
Apart from the roads themselves, the major outputs were the housing lands, housing
units and commercial development lands.
Table 8.6 compares the outputs against
their cost of delivery. The Programme had two different emphases, on housing and
commercial development. A considerable number delivered combined outputs under
the two headings. To get a meaningful common measurement for use in calculating a
unit cost for these outputs would involve combining housing lands, housing units and
industrial lands into some hybrid form. Given that the three outputs are quite distinct
and different in character, it wasn‟t felt appropriate to undertake such an exercise. The
table therefore lists the cost of the individual projects and their respective outputs,
without performing any additional data processing exercises on the figures.
160
Table 8.6. Cost of Achieving Development-Related Outputs
Housing Land
(Ha)
Industrial Land
(Ha)
Housing Units
Total Cost
€21,150,000*
€12,000,000*
€1,777,633*
€42,037,860
54.5
100
133.8
41.64
7.36
1
37.6
20.7
1,000
2,000
2,500
2,667
5. Balbriggan Inner Relief Road [stage 2]:
Dublin Road - Skerries Road
Fingal
6. Lusk Bypass
Fingal
7. Naul Road Improvement Scheme
Fingal
8. Ongar Road
Galway County 9. Oranhill Distributor Road
€18,818,388
67
€17,612,324
€6,839,686
€13,150,661
€2,200,000*
70
151
73
86.38
Galway County 10. Parkmore Road [Phases I & II]
€2,113,264
85.11
Kildare
€2,851,342
Local Authority
Cork County
Cork County
Cork County
Dun Laog/
R‟down
Fingal
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Kildare
Limerick
County
Meath
Meath
Meath
Meath
Meath
Meath
South Dublin
Waterford
County
Waterford
County
Wicklow
Wicklow
Cork City
Road Project Name
1. Carrigaline Western Relief Road
2. Clarkes Hill / Moneygourney Road
3. Midleton Northern Relief Road [Phase 1]
4. Dundrum Main Street Bypass
11. Barberstown Cross - Maynooth [R407]
north of Barberstown cross
12. Barberstown Cross - Maynooth [R407]
south of Taghadoe Cross
13. Celbridge Interchange
14. Clane - Kilcock [R407] south of M4
15. Clane - Kilcock [R407] to a point 1500m
north of Clane
16. Naas Ring Road - Newbridge Road to
Caragh Road
17. Naas Ring Road - Newbridge Rd to
Kilcullen Rd to Craddockstown Rd
18. Naas Ring Road - Newbridge Road to
Industrial Estate [Millennium Park]
19. Sallins - Clane [R407} south of Blackhall
junction
20. Sallins - Clane [R407] Castlesize estate
to Blackhall Stud
21. Roads Serving Intel (New 2001)
22. Castletroy Distributor Roads: Monaleen Kilbane - N7 Dublin Road
23. Duleek-Julianstown-Laytown
24. R154 Trim Inner Relief Road, phase 2a
R154 Trim - Dublin Improvement Scheme
25. R154 Trim/Dublin [Iffernock]
26. R154 Trim/Dublin [Kiltale/
Scurlogstown]
27. R154 Trim Dublin [Tullaghmedan]
R161 Athlumney
28. R161 Athlumney Phase I
(Connaughtons)
29. R161 Athlumney Phase II
(Bridge N3)
30. Trim-Kilcock R158
31. Trim-Navan Improvement Scheme
[R161]
32. Outer Ring Road Phase I
33. Tramore Ring Road [phase 4]
Dublin City
34. Tramore Ring Road [phase 5] (New
2002)
35. Wicklow Town Relief Road &
Wicklow Port Access
36. Improvement works at Old Whitechurch
Road
37. Jamestown Road, Inchicore
Dublin City
Galway City
38. Killeen Road, Ballyfermot
39. Parkmore Road Industrial Lands
Galway City
40. Terryland Valley Access Road
Limerick City Corbally Link Road
41. Corbally Link Road Phase I
42. Corbally Link Road Phase II
Waterford City 43. Outer Ring Road
Waterford City 44. Ballybeg Road (New 2002)
TOTAL
2.600
32
2,849
5,800
3,000
2,160
96.28
€5,464,466
€44,930,407
€6,200,000*
€2,515,971
€3,596,906
11.5
336
€30,866,084*
42.7
1,310
€15,252,110
7.48
102.69
€833,040
€5,754,816
96.4
87
2,410
€20,500,000*
€6,697,368
€11,117,925
12
56
50
20
51
23
360
1,700
750
€7,313,746
58
54
1,300
€58,000,000*
€12,000,000*
23
34
10
8
710
1000
€71,119,744*
€2,365,097
478.9
102.9
200
10
16,000
1,044
€2,442,373
34
€65,375,000*
€601,992
58.15
22.6
33.6
0.405
€10,353,000
€1,401,180
42.75
42.9
58.33
€2,172,327
37
€418,903
€2,172,663
€6,021,000*
400
1,450
1,100
7
2132
520
€10,207,401*
€2,761,675
0.5
0.5
200
€7,445,726*
4
3
€37,149,906
€1,522,429
217
29.66
60
7.06
7,595
543
€584,917,012
2,281
973.5
65,436
Figures marked with the asterix symbol (*) are estimates
161
Earlier in Chapter 6, comparisons were made between the original projected outputs of
the Programme, and the outputs as reported in the recent questionnaires. In a likewith-like comparison between these two data sets, the Programme is expected to
deliver 19,412 (or 42%) more housing units than expected, along with 27.5% more
housing lands (490ha) and 1.5% more commercial development lands (14.5ha). More
outputs are being delivered, but balanced against this were increased costs. Taken at
an aggregate level, the combined cost of projects funded under the Programme
increased by 61% (approx.) from the period 2000 to 2008, although this figure is likely
to be higher. The cost to the Department as reflected in its grant funding, increased by
28%. From looking at this information it is clear that a key to enhancing efficiency in
future will be the ability to keep control of costs.
While efficiency is centrally concerned with the cost of achieving the objectives of a
programme, the pursuit of greater efficiency can also be affected by the manner in
which the work is undertaken. This relates back to the Programme Logic Model, and
the role that „Activities‟ play in transforming inputs into outputs and outcomes. The
focus of the review then shifts in this direction.
8.5. Contract or Direct Labour? - How the Works Were Carried Out
It should be recalled that the two previous studies undertaken to review non-national
roads highlighted this as a key issue. The 2002 review noted that the proportion of
works carried out by direct local authority labour was at least 50% in all cases, and
over 80% on certain grant schemes. While it found no evidence that direct labour
costs were more expensive than contractors, it concluded that its dominance was not
in accordance with international practice where the trend was moving away from use
of direct labour by public bodies (Fitzpatrick, p.c29). The 1997 KPMG review noted
that the vast majority of non-national road works were carried out by direct labour at
that time. In the current review, local authorities were asked to identify how the design
and construction works were undertaken.
By way of a caveat, the projects were generally larger in scale and more self-contained
than a lot of the routine road maintenance works undertaken by local authorities. It
could be expected that quite a number would be contracted out. However, the data
indicates that in a significant majority of cases, contracting (particularly by competitive
tender) was the preferred option. For the construction work, 33 projects (75%) were
undertaken by contract using competitive tender, with only 3 (7%) being undertaken by
direct labour. A further five were undertaken by contractors or developers through a
162
different appointment process, while 3 had not yet commenced.
From the 44
schemes, in 30 cases (68%) the design work was contracted using competitive tender,
while in 8 cases (18%) the work was done by direct labour.
With only three projects having been constructed using direct labour it is difficult to
make any meaningful relative comparisons between the cost of undertaking projects
by the use of contract or direct labour.
The conclusion that can be drawn from this data is that there is a growing use of
contractors appointed by competitive tender. This particularly applies in the case of
larger self-contained schemes. This represents a shift from the 2002 report and brings
the Programme more in line with international practice in this area. It is reasonable to
assume that part of the reason for this change has been driven by EU co-financing
rules, which required projects over certain thresholds to be undertaken by contract28.
However, these practices are also becoming common on exchequer-funded schemes.
Table 8.7. Contract or Direct Labour – How Works Were Carried Out
Design
Construction
Competitive Tender
30
33
In-house / Direct Labour
8
3
Negotiated Procedure
2
Restricted Tender
1
Public Private Partnership
1
Work undertaken by Developer
2
1
2
Not yet at Construction Phase
3
Project
2
Managed
by
Local
Authority Using Contractors
Total
44
44
Overall, there are implications for the trends identified in the table. With more and
more road projects being undertaken using contractors, the manner in which tenders
are prepared and agreed becomes an issue of greater importance. This is probed in
more detail in Chapter 9.
Under these rules, at least 90% of the value of projects costing more than €3m (excluding
land) must be undertaken by single or multiple contract. Earthworks costing more than €0.6m
and bridgeworks costing more than €0.25m must be undertaken by contract (DoT Circular RLS
20/2007).
28
163
8.6. Administration
The Department of Finance Guidelines for carrying out VFM Reviews recommend that
consideration of efficiency and effectiveness requires an estimate of the administrative
costs (2007, p.64).
In the case of this particular programme, costs arise in two
particular forms. There are the administration costs of the Department, and the costs
borne by the local authority.
8.6.1. Departmental Administration
These costs can be calculated using a template approved by the Department of
Finance (CEEU, 2007). This allows for total salary costs to be calculated based on the
direct gross salary, employers PRSI contributions, an imputed pension contribution
plus an additional allowance to cover office overheads. The first step in the process is
to ascertain what staff members are directly involved in the administration of the
Programme. The Regional and Local Roads Division currently has 14 staff, not all of
whom work on the Programme. The combined grants paid by the Regional and Local
Road Division in 2008 total €618.714m. Expenditure on the Programme under review
in 2008 is projected to be €40.324m.
The estimation of the administration commitment is based on the assessment of the
two senior line managers in the Division, which takes account of commitments set
down in PMDS Role Profile forms29.
The number and grades of staff, and the
proportion of their respective jobs that relate to the Programme, was reckoned. This
represents the best effort at calculating the extent of the administrative commitment.
However it cannot be taken as an absolute measurement. The total administrative
costs for 2008 can be estimated at €76,400 (approx.). Intuitively this appears to be
relatively small and represents less than 0.2% of the annual projected expenditure for
2008. The Programme may be benefiting from certain economies of scale that arise as
a result of being located within the larger Regional and Local Roads Division. If the
Programme operated as a stand-alone entity, it would still require expert input from
engineers, and would also need dedicated administrative support.
The Division
already has these resources in place and has been able to manage them in order to
simultaneously administer a number of different grants schemes, as well as other
responsibilities. The estimated staff commitments in 2008 are set out in table 8.8.
29
PMDS is the Performance Management and Development System which operates across the
civil service. Each member of staff has a Role Profile form which sets out the individual
responsibilities for that person.
164
Table 8.8. Estimated Administration Costs - 2008
Staff Grade
Principal Advisor
Higher
(Pre-1995)
Principal Officer
(Higher)
(Pre-1995)
Roads Inspector
(Engineer Grade I
Civil)
(Post 1995)
Roads Inspector
(Engineer Grade I
Civil)
(Post-1995)
Assistant
Principal Officer
(Pre-1995)
Higher Executive
Officer
(Post 1995)
Clerical Officer
(Post-1995)
Proportion of
Job
Attributable
5%
Annual
Salary
(2008)
€106,616
Amount
Attributable
Employer
PRSI
Pension
€5,330.80
€107.15
5%
€101,675
€5,083.75
€102.18
€1,525.13
€3,154.20
€9,865.26
10%
€74,438
€7,443.80
€800.21
€1,860.95
€4,749.33
€14,854.29
10%
€74,438
€7,443.80
€800.21
€1,860.95
€4,749.33
€14,854.29
5%
€71,812
€3,590.60
€72.17
€1,077.18
€2,227.78
€6,967.73
10%
€53,614
€5,361.40
€576.35
€1,340.35
€3,420.71
€10,698.81
10%
€31,576
€3,157.60
€339.44
€789.40
€2,014.63
€6,301.07
€1,599.24
Staff
Overhead
Costs
€3,307.48
Total
€10,344.67
TOTAL
Travel and
Subsistence
Expenses
€73,886.12
Total
€76,386.12
€2,500
Notes on Table 8.8
(a) The salaries are those effective from March 1 2008 and based on Department of
Finance Circular E107/22/06 of 20 February 2008.
(b) The annual salary attributed to each grade is taken as the mid-point on the scale.
(c) There are two rates for Employers PRSI. For staff who entered the civil service
before April 1995, the rate charged in 2.01%. For those that joined after April 1995, the
rate is 10.75%.
(d) The pension allowances are based on revised arrangements contained in Department
of Finance Circular E109/76/01 of 20 September 2005. For those in the civil service
before April 1995, 30% is added to gross salary. For post-1995 staff, 25% is added. The
pension is based on gross salary (excluding the PRSI charge).
(e) Additional staff costs and overheads related to the use of office space, telephones,
security, training, recruitment etc. are then added. The recommended convention is for
the addition of 47% to the total salary costs to cover such overheads. The „total salary‟
is defined as the combined direct salary, employer‟s PRSI and pension allowance.
(f) Disaggregated travel and subsistence expenses for individual roads programmes are
not recorded. The total budget for the Division in 2008 is €50,000. Taking account of
experience in previous years, it is estimated that proportion expended on the
Programme is approximately 5% of the total.
165
The administrative overheads, as calculated, represent an estimate of the cost in
2008. If these figures are extrapolated across the full life of the Programme, the
estimated proportion would still be approximately 0.25% of total expenditure. While at
first glance the level of administrative costs seem low, they may not be that surprising.
They confirm a finding in the NDP Mid-Term Review, which said that “the non-national
roads section of the Department has limited staff available for monitoring delivery of
the overall roads programme” (Fitzpatrick, 2002, p. c32).
By way of a comparative example, the Expenditure Review of the Local Authority
Swimming Pool Programme estimated departmental administrative costs at less than
2% of the overall programme (DAST, 2007, p.43).
This programme is somewhat
similar to the one under review, in that it is run by a Government Department, but
delivered by local authorities.
The Expenditure Review of the Sports Capital
Programme also estimated Departmental administrative costs as being less than 2%
of programme costs (DAST, 2005, p.8).
The level of administrative resources compares favourably with schemes operating in
England and Scotland, although direct like-with-like comparisons are difficult. The
„Community Infrastructure Fund‟ in England has similar aims.
It allocated
£200m(sterling) to aid transport infrastructure to support housing development. The
background to this programme was examined earlier in the Chapter 2. Based on
discussions with an official involved in managing the Programme, the staff commitment
can be estimated as follows:
Executive Officer equivalent - 75% of job
Higher Executive Officer equivalent - 75% of job
Grade 7 (Assistant Principal Equivalent) – 10-15% of job
Divisional Manager Grade 5 (Principal Officer Equivalent) – supervisory role.
When this programme was set up, there was considerable input from economic
analysts. It wasn‟t possible to estimate in quantitative terms the extent of involvement
from these staff but it was particularly strong when applications were being assessed.
This is a reflection of the appraisal process, with its emphasis on techniques aimed at
measuring costs and benefits using a „Transport Economic Efficiency‟ model. This
system is more complex than the assessment procedure that was undertaken for the
scheme in Ireland.
A point of note here is that if the Regional and Local Roads
Division moved towards such forms of appraisal, there would be administrative
166
implications. An overall observation on the Programme in England is that the level of
the commitment is comparable to that in Ireland.
In Scotland there is a form of specialised funding for „regionally important‟ local roads,
which is in addition to the more generalised roads funding provided from central
Government. In its latest round of funding, the Scottish Executive has set aside £35
million for this purpose. It is being provided to local authorities for projects identified
through the seven „Regional Transport Partnerships‟ that are spread across Scotland.
These partnerships are made up of local transport companies, local authorities, as well
as business and citizen interests.
These roads could be considered „strategic‟ in
nature, although there are more differences than similarities when compared to
Ireland‟s programme, or indeed the „Community Infrastructure Fund‟ in England.
The Scottish initiative was discussed with an official who is responsible for the
Regional Transport Partnerships within the Scottish Executive (Transport Directorate).
Apart from certain legislative and policy aspects, responsibility for local roads is largely
devolved to local government.
Funding is agreed as part of the general local
government allocation or „Settlement‟.
The additional £35m is tied up in these
allocations. The unit that deals with the Regional Transport Partnerships has three
full-time liaison officers, which have an equivalence with the Higher Executive Officer
grade in the Irish civil service, along with one more senior official.
Given the
substantial differences between the Programmes in Ireland and Scotland, direct
comparisons are not possible. However, at a more general level, it can be noted that
administration for the Programme in Ireland requires fewer resources.
This exercise in estimating the level of administrative costs and examining the
equivalent commitment in other programmes indicates that the Programme under
review compares favourably.
The 2002 Fitzpatrick review (mentioned above),
concluded that “The Non-National Roads Programme is being operated on a
reasonable and efficient basis” (2002, p.c15). The evidence presented here supports
that assertion. The level of administrative resources committed at Departmental level
is reasonable, and is being employed efficiently. If anything, costs are the lower end of
the scale in comparison with other programmes.
8.6.2. Local Authority Administration
Apart from direct project overheads that arise in the form of construction contract
payments, materials, land etc., there are also administration costs. Under the terms
167
and conditions that govern the payment of roads grants by the Department, local
authorities are specifically disallowed from claiming administration overheads. A list of
items than can and cannot be recouped is contained in Part 3 of the „Memorandum on
Grants for Non National Roads‟ issued by the Regional and Local Roads Division
(DELG, 2001).
Irrespective of who pays for the local administration of road works,
they do represent a cost. This was probed through the main questionnaire and in the
interviews with local authority personnel.
The manner in which project costs are calculated limited the ability to gather data.
Because the Department doesn‟t recoup administration costs, these overheads are not
apportioned to individual projects. Based on the interviews with local government
officials, this is the general practice. The data is not required for any official purpose at
the moment and is therefore not systematically gathered. A more general system of
overhead apportionment has operated with administration costs being allocated to
larger programme-based headings rather than on a project-by-project basis.
In the questionnaire completed by the local authorities, efforts were made to gather
data. Each was requested to estimate the level of administration resources committed
to their respective projects. This approach met with mixed success. For 16 of the
projects, no data could be provided. In the case of a three projects which had yet to
commence, „guesstimates‟ were submitted. For a further two, staff time commitment
couldn‟t be calculated, but a more generalised estimate of administrative costs was
submitted. For three projects, the estimates provided had already been included in the
main body of the survey.
What this means is that data for well over half the projects is either unavailable, or in a
format that curtails its usefulness.
It is therefore not possible to develop any
programme-level estimate of administrative costs, or a framework that can yield
systematic and valid comparisons.
For future reference, it is important that these
limitations be overcome. When the full cost of a roads project is calculated there is a
need to ensure that all costs, including local authority administrative overheads, are
included irrespective of whether or not they are recouped by the Department.
A development of some significance has been the introduction from 2008 of a new
„Costing Service Structure‟ for local authorities.
This is being rolled out by the
Department of the Environment, Heritage and Local Government. A key reason is to
enable the “identification of the full cost of delivering services and the corresponding
168
unit cost” (DEHLG, 2007e). The main difference between the old and the new system
is that overheads were formerly apportioned on the basis of a Programme Group.
Under the new system, overheads are being charged against specific services.
This
will make it easier to identify the full cost of providing the service.
The potential of the new system was discussed during the interviews with the local
government officials. The emerging consensus is that the new system will provide the
wherewithal to more fully assess the costs of providing roads infrastructure. This has
the potential to benefit both local authorities, and the Regional and Local Roads
Division of the Department.
The local authorities are currently absorbing
administration costs, which are not being recouped by the Department, but are not
being routinely reported either. In effect, these costs are currently invisible.
8.7. Maintenance
The construction of roads gives rise to maintenance requirements and these have cost
implications. The official VFM Guidelines, and the Department of Finance Capital
Appraisal Guidelines advise that maintenance costs should be considered in the
evaluation and appraisal of projects.
The future maintenance needs of the roads
funded under the Programme are the responsibility of the relevant local authorities.
Given that maintenance costs will, in the main, fall to be met by the local authority they
were not considered when projects were selected. Irrespective of who is responsible,
these costs will arise and will have to be met at some point in the future. Maintenance
is essential to ensure that the road does not deteriorate and continues to deliver
benefits.
The most significant expense will be incurred when the road has to be
rehabilitated at the end of its design life. This is the focus of the review here. There
are also further expenses related to items like road makings, signalling and signage.
The level of maintenance is crucially dependent on the standard of design and
construction when the road is being built. Based on the questionnaire returns, and
responses given in the interviews, specifications drawn from the National Roads
Authority Design Manual were used across the Programme in almost all cases. These
allow for a design life of 20 years. Even with increases in traffic well above the norm,
the projected 20-year design life should hold true across the Programme and may
even prove to be conservative. By way of a recent example, the first bypass of Naas
in 1983 (the M7) was designed to a similar standard as the roads under the
Programme. It lasted 24 years before needing rehabilitation works. Incidentally, the
original Cost Benefit Analysis estimated a lifespan of 20 years.
169
At the end of their design-life this „rehabilitation‟ will involve works to restore the
strength of the road, and the quality of the surface.
Based on current unit cost
estimates from 2008 (provided by the NRA), the cost of carrying out this work is
approximately €70 per square metre. This represents the cost of high quality works
carried out a heavily trafficked national route. If every square metre of the 103,985
metres of road funded under the Programme required rehabilitation to this standard,
the total cost would be approximately €61m in 2008 terms (without applying discount
rates to represent the real cost of future expenditure). This should be treated as a
general indicative estimate, given the substantial differences between projects.
Nonetheless, it is illustrative of the potential future costs that will need to be met, most
likely by local authorities.
8.8. Conclusions and Recommendations
Over the lifetime of the Programme a prevailing trend has been towards cost
increases. Based on a comparison between the financial information contained in the
original application forms and the final costs as reported in the questionnaire returns,
the original costs were underestimated. While some of the cost increases affecting
projects were exceptional, there are lessons that can be learned for the future. Cost
increases were caused by construction inflation, changes in the project specification
after initial approval, specific problems affecting individual projects (e.g. environmental
issues and contract disputes) and land cost increases.
Delays were also a
contributory factor. When applications were submitted in 2000, they contained cost
estimates and some limited supporting information. They were approved on this basis,
and the Department was then fully committed to supporting them. As more detailed
plans were prepared and implemented the estimated costs increased.
The
Department was faced with a difficult choice of cutting back on projects, or allowing
them to proceed by providing additional funding. In all but a few cases, it chose the
latter option. The following points arise from these conclusions:
There is a need for more robust cost estimation;
Time-scales for commencement should be based on a realistic assessment;
Contingency for inflation should be built in to estimates;
The risk of delays and cost increases should be assessed at the outset;
Given the dramatic impact that land prices can have on the total cost, the
Department should await a more definitive estimate before giving final approval
to proceed.
170
While,
the
Exchequer
contribution
to
the
Programme
increased
by
28%,
proportionately the local authorities took on additional responsibilities in meeting cost
increases. The new system of development levies provided important additional
funding. This supports a finding from the previous chapter where development levies
were also instrumental in supporting roads submitted but not selected under the
Programme.
When established, it was decided that Department would provide a
maximum 75% of original costs, with the local authority funding at least 25%. Based
on circumstances as they prevailed at the time, this decision was soundly based.
Record levels of development in recent years have made substantial additional
resources available to local authorities. While this may not continue in the longer term,
development levies still represent an important source of funding for future roads
infrastructure.
From an efficiency perspective, the use of competitive tender for the procurement of
design and construction contracts was the norm across the Programme.
This
represents a shift from earlier studies in 1997 and 2002.
The preparation of a unit cost per square metre of road constructed can facilitate
limited comparisons between similar projects.
Given the substantial differences
between projects, and the number of variables affecting cost, a programme-wide unit
cost comparison is not possible. The difficulties encountered in preparing unit costs in
the review are consistent with prior experience in this area.
Outputs were greater than expected, but so too were costs. Controlling costs will be a
key issue in improving efficiency for the future. In the main, the Programme is being
efficiently administered. Administration costs compare favourably with those reported
in other VFM reviews. They also stand up well when compared with other roads
programmes in England and Scotland. Administration costs within local authorities
proved difficult to calculate, but the introduction of a new system of overhead
apportionment should improve matters. Most roads under the Programme have a
design-life of 20 years. At that point, rehabilitation works will be required. As an
indicative estimate, this could cost up to €61m (in 2008 terms).
Arising from these conclusions the following recommendations can be made:
10.
The Department should not give full and irreversible approval to projects based
on initial cost estimates.
171
11.
Problems related to cost increases and delays should be addressed through a
more formalised structure or framework for project appraisal, approval and
monitoring. This is the main focus of Chapter 9, which follows.
12.
Where a proposed road project has the capacity to generate development levies,
there is a case for this to be reflected in the proportion of funding provided by the
Department.
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Chapter 9
“Evaluate the degree to which the objectives warrant
the allocation of public funding on a current and
ongoing basis and examine the scope for alternative
policy or organisational approaches to achieving these
objectives on a more efficient and/or effective basis.”
9.1. Emerging Analysis on the Current Policy Position
The policy context for the provision of strategic regional and local roads, and the
planning of roads infrastructure has shifted considerably since the Programme was
established in 2000. This was already examined in some detail in Chapter 5. In
many ways the current policy objectives, and the means to address them have
already been mapped out in the review. As Ireland‟s population grows and as the
number of people occupying each dwelling falls, there will be considerable demand
for housing. The projections are set out in the Department of the Environment,
Heritage and Local Government‟s policy document „Delivering Homes Sustaining
Communities‟, and are consistent with other credible sources. There will also be a
need to provide infrastructure to support industrial and commercial sites. This is
recognised under the National Spatial Strategy and the National Development Plan.
The findings of the review confirm that roads infrastructure does play an important
role in facilitating housing and industrial development. However, the pressing and
immediate conditions that gave rise to the creation of the Programme no longer
prevail.
Housing supply peaked in 2006, and has since declined. The housing facilitated by
the Programme contributed to record levels of output. Given the established inverse
correlation in Ireland between housing supply and price (OECD 2006, Bacon 1998),
it can also be said that this increased output has contributed to a softening of the
serious house price inflation that was prevalent.
When the Programme was
established in June 2000, year-on-year house price inflation were running at 21%,
having earlier reached record levels of 30% (Permanent TSB/ESRI). From mid-2001
to mid-2007 house price increases have fluctuated between 2% and 15%, but never
again reached the record levels experienced between 1998 and 2000. In July 2007,
the year-on-year price declined for the first time in over a decade and has continued
173
to fall since (ibid.). Apart from the impact of increased supply on price, there are
currently a number of other factors exerting downward pressures on house prices.
These include the slower rate of economic growth, higher interest rates, and current
problems in the international financial sector caused to a large extent by sub-prime
mortgage lending to high-risk customers.
Notwithstanding current difficulties in the market, the long term demand conditions
indicate the need for a significant future housing supply in Ireland. The developers
interviewed as part of this review confirmed that demand (and consequently supply)
in the short term has contracted, but were also of the view that in the long term it
should recover, although not at the same levels experienced at the height of the
housing boom up to 2006. Nevertheless, the market failures that particularly affect
the housing market that were acutely prevalent in Ireland in 2000 are not as evident
today.
The framework within which current and future development is taking place is a
hierarchy of planning policy, the most important element of which is the National
Spatial Strategy.
Flowing downwards from the NSS are a series of other policy
documents that direct and guide planning decisions. Within the interviews with local
authority officials, the view was consistently expressed that these policy initiatives
are now driving planning and development policy at local level. These views were
corroborated in the three case studies areas of Tramore, Killeen Road / Park West
(Dublin City) and Naas. Evidence was identified that the principles of sustainable
development and planning as enunciated in the National Spatial Strategy are being
incorporated into local development plans. More importantly, there is evidence that
they are influencing planning decisions at a practical level.
In considering options to meet policy objectives, it is advisable that all possibilities be
considered, including a „Do Nothing / Do Minimum‟ scenario. In the case of the
current review, this option would effectively involve winding up the Programme when
the remaining funding commitments totalling €70m (including 2008) are met. Given
that the current programme was a dedicated policy response to a series of
exceptional circumstances that prevailed at the turn of the millennium, this is an
approach that can now be validly recommended. However there is an important
caveat. While this specific programme may no longer be required, there is still an
identified need to support the provision of strategic roads infrastructure.
The
changed policy focus of recent years has already been reflected in the new
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programme established in 2006 to provide exchequer funding for strategic regional
and local roads that support the implementation of the National Spatial Strategy.
The current National Development Plan includes a clear commitment to regional and
local roads, and explicitly recognised the role of the new programme:
“A key objective for the Plan will be to provide a non-national road
network which will support economic and social development at regional
and local levels.
This will be achieved, inter alia, through the
acceleration of the Non-National Roads Restoration Improvement
Programme and the continuation of the scheme to assist Local
Authorities in progressing new major strategic non-national roads
projects” (NDP, 2007, p.85)
“NDP 2000-2006 saw major investment in key strategic non national
roads, especially in urban areas. This investment will be built upon in
the new plan with a particular focus on roads in the NSS Gateway
areas”. (ibid., p 133)
The Department of Transport‟s new Statement of Strategy reiterates this
commitment (2008, p40). It is against this background that the direction of current
policy can be interpreted. The objectives of the Programme under review revolved
around the delivery of housing and lands for economic development. Such needs
still remain, but are now more appropriately addressed within the context of the
National Spatial Strategy. There is no longer a need for a specific housing-focused
roads programme. However, there is still a need for strategically-targeted exchequer
expenditure on regional and local roads that support social and economic
development, particularly at regional level.
Evidence from the review, and in
particular from the case study areas, indicates that investment in local roads is
important in assisting economic development. At a general level, it supports targeted
population growth and spatial development that is vital to regional economic growth.
Such investment is crucial in facilitating the establishment of industrial and
commercial sites to allow for the spatial distribution of indigenous economic
development. Regional and local roads are also one of the factors that influence the
location decisions of foreign direct investment.
While the broader objectives of the original programme to support residential and
economic development are still valid, they should be subsumed into the new
programme. Therefore, the key issue arising is not whether the current programme
175
should be re-established or extended. Policy-needs and the mechanisms to meet
them have moved on. Likewise, the question of whether or not there should be a
new programme with a different and broader focus has already been answered in the
NDP 2007-2013, and Department of Transport‟s Statement of Strategy.
The emphasis in this chapter is therefore on the organisational approaches that will
improve the efficiency and effectiveness of the newer programme established in
2006. The previous chapters highlighted some of the key issues that arose in the
current programme. Chief amongst them were delays and cost increases. When
these arose, the Department addressed them in an organised fashion. Options were
considered and decisions taken. However, there is a case for adopting a more
systematic approach to the appraisal, sanctioning and review of expenditure
commitments. The Programme did deliver more housing and development lands
than anticipated. It was also important in facilitating local development. Economic
benefits arising from development are identifiable. The roads were an important
factor in achieving these benefits. However, cost increases somewhat undermined
the more positive outcomes.
While there is a case for continued exchequer investment in strategic local roads, the
problems identified in this review need to be tackled if efficiency and effectiveness is
to be optimised. In essence, there is an identified policy need to support strategic
regional and local roads, but not at any price.
The Department of Transport
„Guidelines on a Common Appraisal Framework for Transport Projects and
Programmes‟, published in 2007 offers a structure that can be applied.
These
guidelines are compatible with the Department of Finance „Capital Appraisal
Guidelines‟ published in 2005. In many ways the DoT Guidelines are more relevant
to public transport projects, especially in their focus on certain benefits that are more
likely to arise in the case of rail and bus investment. But the template it offers is still
relevant and can be used for regional and local roads, and adapted if necessary.
Drawing upon the DoT and Department of Finance Guidelines, this chapter will
therefore recommend practical ways in which issues identified in the review can be
addressed. However, before this can be considered, it is important to examine the
origins and objectives of the newer strategic roads programme mentioned already.
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9.2. The New Strategic Regional and Local Roads Programme
As has been outlined, the Programme was introduced in 2006 to assist with the
provision of major schemes that support the National Spatial Strategy. At that time
local authorities had identified a series of regionally important roads that required
significant investment which were beyond their ability to fund from their own
resources. These roads were needed in order to facilitate regional development
objectives. Many of these proposals were already submitted under the Department‟s
„Specific Improvement Grants‟ scheme. However, this tended to fund smaller scale
projects. The County and City Managers Association had also made a case to the
Department for a new strategic programme.
Initially, appropriate projects were selected from the major schemes that had already
been submitted to the Department.
12 projects were funded under the new
programme in 2006 and 24 funded in 2007 (of which 8 were specifically limited to
design stage only). In 2008 this has risen to 33 schemes. While project proposals
under this new programme were assessed in terms of their merit, there was no
formal call for applications or an application form for the submission of proposals.
This may be understandable, given that the projects originally selected were already
known to the Department, and their very presence contributed to the case for setting
up the new programme.
However, in the interests of transparency, and to facilitate the uniform and consistent
appraisal of projects going forward, there is a need to introduce a formal and
structured application process for the allocation of funding. Based on meetings with
Departmental staff, such a need has already been acknowledged.
The DoT
Statement of Strategy also recognises the need for effective management and
monitoring arrangements for regional and local roads programmes (2008, p.43).
In the process of developing a formal application and appraisal mechanism there is
also a need to re-state in more detail, the objectives of the new programme. These
are currently set out in general terms.
This harks back to a more fundamental
principle that has informed the review – in order for an appraisal or evaluation to be
effective, the objectives of the Programme should be clearly stated. It is already
clear that the primary objective of the Programme is to contribute to the fulfilment of
the National Spatial Strategy through balanced regional development, with a
particular focus on the NSS Gateway areas. In practice, this objective would benefit
from being fleshed out.
177
To help clarify the focus of the new programme, there is already a set of ready-made
criteria to assist in identifying projects that can contribute to regional development.
These are detailed in the Department of Transport Guidelines already mentioned
above. The following types of project are regarded as positive to regional balance:
Projects in Gateways or giving local access to Gateways in the peripheral
regions;
Between Gateways in the peripheral regions;
On routes accessing international ports and airports;
On radial routes to the East region, where such routes improve access to
international ports and airports (DoT, 2007, p.27).
In the interests of consistency in meeting the Department‟s policy objectives, it would
be appropriate if the Regional and Local Roads Division used the above list as
guidance to inform its selection of projects. Given the new programme‟s stated
objectives to support the National Spatial Strategy, there is a case for placing
particular emphasis on the first two bullet points.
The new strategic programme would also benefit from having some sort of defined
time frame within which it is expected to operate. A logical lifespan would be the
duration of the current NDP, up to 2013. In advance of this date, the Programme
and its objectives could be reviewed, before the successor to the present NDP is
agreed. While the current programme did encounter delays, the fact that it had a
limited and defined lifespan gave a focus for its delivery. It also provided a basis on
which assessments could be made as part of this VFM review. The design of the
original programme included elements of what is now considered to be good
practice. While the Programme predated the NESC‟s report on the „Management of
Public Expenditure‟, it reflects many of its subsequent recommendations. These
include; the Programme having strategic focus (2002, p.144), an emphasis on
measurable outputs (ibid., p.146) and a completion date in the form of a „sunset‟ or
termination clause (ibid., p152). That is not to say that improvements can‟t be made,
though.
9.3. Assessing Benefits and Costs
The original strategic roads programme was set up with a particular purpose in mind.
Quantified deliverables were measured in terms of housing and development lands.
178
This was understandable given the focus of the Programme and the prevailing policy
objectives of the time. A central theme running through this review is that the policy
focus has shifted and broadened. Although useful as a basis for this review, outputs
like residential housing units and hectares of lands are limited in the types of benefits
they capture.
Such indicators do not, for example, identify the extent to which
development is compatible with the objectives of National Spatial Strategy, or other
key planning policy documents.
They do not capture economic benefits like
improved accessibility that are key to facilitating access by companies to their
potential workforce, and which enables people to access employment more easily.
The review has identified these and other benefits that have arisen as a result of the
Programme. There is therefore a need for a more broadly focused set of headings
and indicators against which projects can be appraised.
The approach recommended in the Department of Transport Guidelines is described
as an “objectives led framework that employs both multi-criteria and cost benefit
analysis” (DoT, 2007, p.i). The policy goals and objectives are set by the political
and administrative process, and used as a basis for carrying out the appraisal. The
Guidelines recommend that a „Project Appraisal Balance Sheet‟ be used and that
potential projects be assessed against 5 separate headings as follows:
Economy,
Safety,
Environment,
Accessibility and Social Inclusion,
Integration [with other local and national policy objectives].
The „Balance Sheet‟ presents a summary of the appraisal results in three forms:
A Qualitative Statement summarising the impact of the project in qualitative
terms.
A Quantitative Statement that sets out quantified and monetised indicators of
impacts.
A scaling statement that ranks the project on a five-point scale in terms of
each criterion. The scale ranges from „highly negative‟ to „highly positive‟.
By way of an example, for the Economy criterion typical quantitative benefits would
arise through time-savings as described in the opening chapters of the review, where
the techniques associated with Cost Benefit Analysis were explained. While these
179
types of benefits are important and traditionally form the core of costs benefit
analysis, the „Balance Sheet‟ approach allows them to be combined in a more
measured and overall assessment. In situations where only limited monetisation of
certain economic benefits is possible (typically with strategic roads in urban areas),
there is scope to consider other types of quantitative and qualitative effects. The
„Qualitative Statement‟ can be particularly useful here. A significant advantage of the
Balance Sheet approach in appraising regional and local roads is that it would allow
a fairly clear and concise list of costs and benefits to be articulated in summary form.
The Guidelines note that multi-criteria analysis sometimes encompasses a ranking or
weighting system.
However it leaves it open to policy makers within individual
transport sectors to adopt weightings that are appropriate to their own situation (ibid.
p.10). For the new programme, there is a case for a positive weighting towards the
„Integration‟ criteria, which appraises the degree to which the proposal is compatible
with other local and national policies. The benefits of integrated development were
particularly identified in the case study areas within the review, and a
recommendation to this end was made in Chapter 7. A particular emphasis here
should be on the National Spatial Strategy and the planning hierarchy that flows from
it. Under the „Economy‟ criterion, improved accessibility between locations is also an
important factor.
While the template provided by the DoT Guidelines provides a useful basis for
appraising potential investment in local and regional roads, it could be adapted to
reflect the particular requirements of policy in this area. In other words there is a
case for using the guidelines as a basis for developing a more specific structure that
could be used in the appraisal of strategic local and regional roads projects.
9.4. Stages and Level of Appraisal
Both the Department of Finance and Department of Transport Guidelines set out a
staged process whereby potential projects are appraised, and either progressively
sanctioned, or not approved. At any stage in this process, the guidelines advise that
the Sanctioning Authority (i.e. the Department) and Sponsoring Agency (i.e. the local
authority) should be prepared to abandon the project, if continuation would not
represent value for money.
This is an important issue of relevance to the
Programme under review. The two most serious problems that arose related to
delays and increased costs. The staged appraisal process would allow for these
issues to be considered in a formal structured fashion. A valuable advantage of
180
linking this approach with the „Summary Appraisal Balance Sheet‟, is that it would
enable comparisons to be made between the relative costs and benefits when
changes occur in either.
For example, if the cost of land was significantly
underestimated, or construction costs were subject to serious inflationary effects in
the course of the project‟s planning phase, these could be assessed against the
expected benefits and a decision taken as to whether the project was still justified.
An issue identified in the current programme was the position the Department found
itself in when costs began to increase. The Department had approved grants in
2000 based on information provided in an application form. The application was
supported in most cases by some very basic additional information like maps and
drawings. Cost estimates in a significant number of instances were less than robust
and timescales for delivery were over optimistic. The Department dealt with the
consequences of these issues, and considered a number of individual cases for
increased funding, particularly in 2001 and 2002. When cost increases became a
more serious programme-wide issue, the Department was faced with the difficult
choice - either provide more funding or shelve a number of the projects. These were
the options considered when the review of allocations took place in 2003 and an
additional €43m in funding was sanctioned. Based on the findings of this review,
future programmes would benefit from having a formal system in place to deal with
such issues when they arise.
The staged approach to the appraisal and management of projects in the
Department of Finance Capital Appraisal Guidelines can provide a basis for
developing a system to be used for local and regional roads. These Guidelines set
out the four different stages in making capital investment decisions;
(1) Appraisal
(i) Preliminary Appraisal - to assess whether the project has sufficient merit to
justify a full detailed appraisal.
(ii) Detailed Appraisal – which aims to provide a basis for a decision on whether
to drop or re-scope a project or approve it in principle.
(2) Planning / Approval
This involves detailed planning and costing of the project: no commitment to
finance a project should be taken until this stage is completed and a decision on
whether to proceed is taken.
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(3) Implementation
This requires clear arrangements for monitoring progress and cost control,
securing standards and timely delivery.
(4) Post Project Review
This is an assessment of both the project outturn and the appraisal and
management procedures used.
(Dept. Finance, 2005, p.5/6)
What happened in the case of the current programme was that projects were
approved in full after the preliminary appraisal at Stage 1(i), rather than after Stage 2.
Some modifications to this approach have since been made. With the new strategic
roads programme, the Department has adopted a more incremental approach by
initially sanctioning funding for planning and design work in advance of making a full
commitment. There would be merit in formalising this system. Given the experience
of the current programme, there should be a facility for the Department to review the
level of costs and the case for the proposal once full planning, design and land
acquisition issues become clear.
An issue of some importance concerns the level of appraisal that should be carried
out.
The ex-ante appraisal of project proposals can have significant resource
implications, both for the local authority and the Department. Depending on the
method adopted, and the level of detail required, project appraisal can be both
complex and relatively costly to undertake. The Department of Finance Guidelines
recommend that the appraisal should be commensurate with the costs of the project
and the degree of complexity involved. It sets out a series of cost thresholds, and
the appropriate methodologies to be employed within different expenditure bands.
These can be summarised as follows:
Less than €0.5m - simple assessment with a single appraisal,
Between €0.5m and €5m - single appraisal, incorporating elements of both
Preliminary and Detailed Appraisal (as described above),
€5m to €30m – „Multi Criteria Analysis‟,
Over €30m - full „Cost Benefit Analysis‟.
30
30
The original guidelines published in 2005 stipulated that a full CBA was required for
projects costing in excess of €50m. This was revised downwards in January 2006.
182
Had they been subjected to these requirements at the outset in 2000, only 3 of the
original 43 projects would have required a full cost benefit analysis.
27 had
estimated costs below the €5m threshold. The remaining 13 had estimated costs of
between €5m and €30m.
Taking the actual expenditure as a benchmark (as
reported in the questionnaires), 7 of the 44 projects that currently comprise the
Programme had costs in excess of the €30m threshold that would have required a
CBA. 19 projects are under the €5m mark. The remaining 18 cost between €5m
and €30m, which would fulfil the requirement to undertake a multi-criteria analysis.
Based on this information, a challenge is to develop a systematic approach to
appraisal that can be commonly applied over the entirety of the new Strategic
programme, but that takes account of the varying levels of expenditure, and
consequentially, the need to have different levels of appraisal.
A potential solution can be found in the selection process for the „Specific
Improvements Grant‟ Scheme‟. To recap, this scheme provides grant funding for
roads that support local and regional economic development, in line with EU criteria
and objectives.
The „Specific Improvements‟ programme uses a comprehensive
application form that combines both quantitative and qualitative elements in
assessing proposals. For example, it allows for statements and supporting evidence
to be provided on impacts related to the National Spatial Strategy. The level and
type of commercial traffic usage is taken as a proxy in determining the economic
importance of the road. The information requirements on cost estimates are quite
detailed, as are the data requirements dealing with technical, structural and
engineering issues. However, quantitative indicators covering areas like projected
time-savings, accident reduction data or an overall rate of return are not sought.
If this application form were restructured and expanded to take account of the policy
objectives of the new Strategic programme, and the requirements contained in the
Department of Transport Framework Guidelines, it could be effectively used as the
basis for of the „Single‟ appraisal in the case of projects costing less than €5m. It
could also be simultaneously used on projects costing more than €5m for the
„Preliminary‟ appraisal, as envisaged under the Capital Appraisal Guidelines.
If
these larger projects were found to have merit, they could then undertake a more
detailed multi-criteria or cost benefit analysis, as is required. Both the application
form and any subsequent CBA or MCA could also be based around the stated
objectives of the Programme, and the relative importance attached to specific
assessment criteria.
183
Irrespective of whether or not an application form is used as the basis of the
preliminary appraisal, some form of structured approach is needed. The alternative
would be for the Department to issue more generalised guidelines on the submission
of proposals for funding under the Programme. These would set out the criteria
against which the proposal would be assessed, and list the information required from
the local authorities in order for the Department make decisions on the relative merits
of proposals. This is a viable option, although for a variety of reasons, using the
format of an application form has a number of potential advantages, namely:
It would minimise confusion on the part of local authorities in the information
requirements of the Department.
It is a format that local authorities are familiar with and currently use in
applying for regional and local roads grants.
It would allow comparisons to be made by the Department between projects
in terms of their costs and benefits.
It would allow cost data to be collected under uniform headings across the
Programme.
The issue of administrative resources is also important. In the previous chapter it
was noted that the Regional and Local Roads Division is administering a significant
budget, and is spreading its resources quite widely.
Relatively speaking, the
administrative commitment to the Strategic Non-National Roads programme
compares favourably with other similar programmes. It can even be suggested (as it
has been previously in the 2002 Fitzpatrick review), that the staffing levels available
for the monitoring of the Programme are relatively limited, and that the Division may
even be under-resourced.
Notwithstanding these issues, having a standardised
application format would enable proposals to be processed more efficiently. For
these reason it is recommended that an application form be developed, with
appropriate supporting information to assist local authorities in complying with any
new requirements.
A new system for the appraisal and approval of projects has the scope to provide a
consistent and structured approach. It would also provide a framework to deal with
the two key problems of delays and cost increases that were identified in the review.
In assuring value for money in the management of capital expenditure on roads,
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there is also a further vital element that requires consideration.
This relates to
tenders and contracts.
9.5. Contracts and Value for Money
Chapter 8 identified a growing trend towards the use of competitive tender contracts
in regional and local road works, particularly within the Programme under review.
This represents a shift in previous experience and is in line with international best
practice. In these circumstances the manner in which contractors are engaged and
works undertaken is becoming a more important element in project management.
Currently, there is a system within the Regional and Local Roads Division to monitor
and approve tender contracts31.
Documentation must be submitted to the
Department for approval in advance of advertising for tenders. These include key
documents like the „Bill of Quantities‟, „Instruction to Tenderers‟, „Forms of Tender‟
and the Drawings. This requirement applies to all regional and road contracts with
an estimated tender value of €2m or more, and all bridges/structures contracts
valued at €0.5m or more. The examination of contract documents and tenders is an
important function undertaken by the Division in assuring both quality and cost
control in its administration of public funds. Within any new appraisal structure, it
would be important that this facility is incorporated, possibly as a central element of
the „Planning / Approval‟ stage. From the point of view of efficient administration, it is
equally important that the process is not replicated.
The Department‟s examination and approval of contract documents happens when
the tender is being finalised.
However, issues can and have arisen after the
contractor has been selected and works commenced. This was discussed within the
interviews with local authority officials.
In a number of cases, the view was
expressed that where circumstances allow, contractors will submit claims for extra
costs where any additional or unforeseen issues arise.
Any modifications,
insignificant or otherwise, can and invariably have resulted in claims. The structure
of public works contracts as they have heretofore existed, allowed this to happen.
While the review did not quantify the extent of such impacts on the Programme, they
were identified as being a prevalent factor. This is a far wider issue that stretches
beyond local and regional roads and has been the subject of major reform over the
past two years. Since February 2007, new public works projects must be undertaken
using a
„Fixed Price Lump Sum Contract‟.
Similar conditions relating to the
As set down in the Department‟s „Memorandum on Roads Grants‟ (DELG, 2001), and
subsequent Circular letters RLS 28/2005 and RLS 10/2007.
31
185
engagement of construction consultants are also in place. The arrangements for
giving effect to these changes are set down in Department of Finance Circular 33/06
„Construction Procurement Reform‟ (2006a), and in the detailed „Capital Works
Management Framework‟ (2006b)32. The Regional and Local Roads Division of DoT
has given effect to new procurement requirements in its own circulars and guidelines
issued to local authorities33.
What all of this means is that there is little the review can recommend in the way of
improvements that have not already been implemented.
The element of „Risk‟
arising from unforeseen issues emerging in the course a project is now priced into
the tender.
The new contract arrangements were discussed in some of the
interviews with local government officials. A common view (albeit based on a limited
number of opinions) was that inclusion of „risk‟ within the contract may make the
initial price higher, but brings benefits through greater certainty in cost estimation.
This was welcomed.
Local authorities also reported that the new requirements
necessitate a more detailed and precise definition of works when tender documents
are being prepared. This is resulting in additional work for them at pre-tender stage.
Overall then, it can be noted that the use of fixed-price lump sum contracts as
standard, represents a further significant element in the assurance of value for
money. This particularly applies in the case of consultancy work at design and
planning stage, and in relation to construction contracts. The third major element in
the cost of providing regional and local roads is land. The previous chapter identified
the dramatic effects that rising land costs had on a large number of projects within
the Programme. It was a widely held view among local authorities that rising lands
prices are a factor that is putting potential future roads projects at risk. The scope for
making localised arrangements with developers to offset these costs was also
considered. The next section looks at recent proposals being discussed in the public
arena to address the consequences of rising land costs.
9.6. Dealing with the Rising Cost of Land
The balance between property rights, and the acquisition of land for public
development purposes was comprehensively addressed in the 2004 report on
32
Some additions to the original requirements were recently made through Department of
Finance Circular 4/08, issued in February 2008.
33
Circular NNR 27/2007 and RLSD 09/2008, both of which are entitled „Procurement
Procedures for Regional and Local Roads‟.
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„Private Property‟ by the All-Party Oireachtas Committee on the Constitution. It has
already been noted that the Constitution guarantees the right to private property of its
citizens, and that these rights are regulated by the principles of social justice. A key
purpose of the Committee in undertaking its work was to assess whether proposals
on the acquisition of private lands by public bodies that were originally put forward in
the seminal 1973 „Kenny Report‟ would require constitutional change in order to be
implemented.
By way of background, in the early 1970‟s a committee chaired by Mr. Justice Kenny
was established by the Minister for the Environment and Local Government. Its
remit was essentially to put forward proposals to control the price of land required for
housing and other development, and for ensuring that some of the „betterment‟
arising from the zoning and servicing of lands be recouped by local authorities for
wider public benefit. The committee‟s recommendations were published in 1973 and
became known as „The Kenny Report‟. As the housing boom took hold in Ireland in
the late 1990‟s the report received something of a renaissance and began to be
widely quoted and advocated in public debates. It was against this setting that the
Oireachtas Committee undertook to examine whether there were constitutional
impediments to its implementation.
The central recommendation of the Kenny Report was that local authorities should
have the right to nominate „Designated Areas‟. Within these areas, land could be
acquired compulsorily, based on its „current use value‟, plus 25%. The land could
then be used by the local authority, or sold on at a higher price, thereby capturing a
portion of the „betterment‟. The proposal was never implemented, and disagreement
about its likely constitutionality continued in the 30 years following its publication. In
dealing with this core question, the Oireachtas Committee concluded that:
“it is very likely that the major elements of the Kenny Report
recommendations – namely that land required for development by
local authorities should be acquired at existing use value plus 25% would not be found to be unconstitutional….the committee is not,
therefore, persuaded that the existing constitutional provisions place
any unjustified impediment to infrastructural development.” (APOCC,
2004, p.137).
The Oireachtas Committee favoured the implementation of recommendations from
the original Kenny Report, with appropriate modifications to reflect changed
187
circumstances since it was published (ibid. p.142). Interestingly from the point of
view of transport and economic infrastructure, the National Roads Authority, Railway
Procurement Agency and Forfás (the state‟s enterprise promotion body) all argued in
favour of the implementation of the Kenny report recommendations, (APOCC, 2004,
p.95).
They were concerned that rising land costs were making it increasingly
difficult to fulfill their respective functions. It is fair to speculate that if the Kenny
Report‟s main recommendation was implemented, the likely result would be a
reduction in the cost of land needed for works on strategic regional and local roads.
The Oireachtas Committee noted that there were alternative options available within
current policy parametres. It said that if the Kenny Report recommendations were
not implemented, there are mechanisms open to local authorities to recover
betterment. These they listed as follows:
Development Charges/Levies.
Planning Gain, whereby local authorities and developers enter into
agreements, as part of the grant of planning permission, which require the
provision of infrastructure and services, including social infrastructure such as
schools (Agreements under Part V of the 2000 Act are an example of
planning gain).
Taxation, this could vary from taxing the gains arising from increases in
value, to an annual site value tax.
Compulsory Acquisition of Land at existing use value in specified locations to
provide for social and affordable housing and other uses related to the public
good.
(ibid. p.143)
The tool in most common current usage by local authorities from the above list is the
development levy system. This probably represents the most realistic and practical
way of capturing betterment, and funding roads infrastructure.
In the current
circumstances, development levies provide an avenue to systematically deal with the
issue of betterment.
This is notwithstanding circumstances where local
arrangements can be made with developers.
The two previous chapters identified the key role played by levies in supporting
projects under the Programme, and in also allowing those that weren‟t selected to go
ahead. Based on the views expressed by local authority staff, many of the projects
188
wouldn‟t have happened had the new system of levies not been in place. On current
estimates, the Departmental grants under the Programme totalling €317m are being
supplemented by at least €267m from other sources, although this figure is likely to
be far higher. Development levies are the key source, with other local authority
revenues making an important contribution. It is a reasonable expectation on the
part of the exchequer that those benefiting from the provision of roads infrastructure
should provide some of the funding. It is clear that new and upgraded roads bring
economic benefits to the owners of lands in the relevant areas, particularly where
they are located in and around urban areas. Under the current programme, local
authorities were required to provide a minimum 25% of local funding, with the
Department providing up to 75%. Under the new Strategic Programme, there is
scope to provide up to 100% exchequer funding. The logic behind this provision is to
allow for the funding of roads between larger urban settlements where there is little
or no capacity to open up development lands along the route and generate levies.
Notwithstanding the validity of this view, there is still a case for requiring local
authorities to provide some contribution towards the provision of strategic roads.
The previous chapter recommended that where a proposed road project has the
capacity to generate development levies, this should to be reflected in the proportion
of funding provided by the Department.
It is difficult to be prescriptive about a
precise figure, given the variation in local circumstances. However, the capacity of
roads to generate development levies should be reflected in the funding
arrangements for the roads, and the proportionate level of national / local
contributions.
9.7 Conclusions and Recommendations
The Programme was set up at a time of unprecedented supply and demand
pressures on the housing market. Those pressures have now significantly eased.
Since 2000, a new hierarchy of planning policies and structures have been put in
place. There is a now a greater focus on integrated and sustainable development.
As a reflection of this shift in policy, a new strategic programme to support roads that
contribute to the implementation of the National Spatial Strategy was put in place in
2006. A commitment to this programme is contained in the National Development
Plan 2007-2013, and the Department of Transport‟s Statement of Strategy. The
focus of this chapter has therefore been to recommend where improvements can be
made based on issues and problems identified in the review.
recommendations are therefore put forward:
189
The following
13.
Once the remaining €70m in commitments (including for 2008) to existing
projects under the Programme is met, the original Strategic Non-National
Roads Programme should be concluded. While the broader objectives of the
original programme to support residential and economic development are still
valid, they should be subsumed into the new programme to fund strategic
regional and local roads aimed at supporting the objectives of the National
Spatial Strategy.
14.
Any new system for the appraisal, approval and monitoring of projects should
be based on the Department of Transport‟s „Guidelines on a Common
Appraisal Framework for Transport Projects and Programmes‟ (2007) and
Department of Finance „Capital Appraisal Guidelines‟ (2005). These should be
suitably adapted to reflect the policy priorities of regional and local roads.
15.
In the interests of administrative efficiency, an application form should be
developed for the Programme.
The structure of the application should be
consistent with information requirements as set down in the Department of
Transport and Department of Finance appraisal guidelines. This would allow
for the assessment of costs and benefits through the use of a „Project Appraisal
Balance Sheet‟. By implementing a staged approach, as recommended in the
Department of Finance guidelines, the application form could be effectively
used as the basis for „Preliminary‟ appraisal in the case of projects costing
more than €5m. If these larger projects were found to have merit, they could
then undertake a more detailed appraisal. The application form could also be
simultaneously used for undertaking a „Single‟ appraisal for projects costing
less than €5m.
16.
Given the experience of the current programme, there should be a facility for
the Department to review the level of costs and the case for the proposal once
full planning, design and land acquisition issues become clear. In the case of
land acquisition in particular, a final estimate of costs should be provided to the
Department for approval before the „Notice to Treat‟ activating the Compulsory
Purchase Order is served on land owners.
17.
Currently, contract documentation must be submitted to the Department for
approval in advance of advertising for tenders.
This procedure should be
retained and incorporated into the new system of appraisal.
18.
There is a need to re-state in more detail, the objectives of the new strategic
programme. These are currently set out in general terms. This will aid the
appraisal of proposed projects, and assist in monitoring and evaluation.
190
19.
The new strategic programme would benefit from having a defined time frame
within which it is expected to operate. A logical lifespan would be the duration
of the current NDP, up to 2013. In advance of this date, the Programme and its
objectives could be reviewed, before the successor plan to the NDP is agreed.
20.
There should be an expectation that some of the „Betterment‟ arising from the
road development be captured, either through „General‟, „Special‟ or
Supplementary‟ development levies. The capacity of proposed road projects to
facilitate development should be assessed when the project is being appraised
by the Department.
191
Chapter 10
“Specify potential future performance indicators that
might be used to better monitor the performance of
the Programme or other specific programmes related
to the grant support of roads infrastructure to
facilitate social and economic development”
10.1 Introduction
At the outset, the Scene Setting chapter considered the initial development and
adoption of performance indicators for regional and local roads. It has already been
noted that a good deal of progress has been made in their general application.
Consistent with widespread existing practice, especially in relation to the construction
of roads and other public infrastructure projects, there is a strong emphasis on inputs
and outputs. This chapter builds upon the earlier discussions, and brings them up to
date with an examination of more recent developments. The approach adopted is
consistent with good practice in the field. Boyle in his 2005 paper on civil service
performance indicators advises that a first step in developing indicators is “to
determine what existing performance indicators are in use, what aspects of
performance they cover, what gaps exist in coverage, and how these gaps might be
filled” (2005, p.8).
In analysing existing arrangements and considering the need for additional
indicators, this chapter also draws upon the guidance on performance indicators
issued by the Department of Finance „Management Information Framework‟ (MIF)
Project Management Group and Central Unit (MIF, 2001) (MIF, 2004). Their
recommended approach is based on the Programme Logic Model.
The basic
principle is that indicators can be used to assess performance in relation to inputs,
activities, outputs and outcomes. When designing performance indicators, there is
always a danger that they become an end in themselves. At the outset it is important
to restate the benefits that good indicators bring to decision-making, whether in the
management of projects, in assessing performance across a programme, or in
determining higher-level resource allocation priorities between programmes. The
MIF „Users Guide‟ issued in 2001, contains a crucial piece of advice:
192
“Performance indicators are a means to an end. They are a key
component of the reporting structures to meet governance,
accountability and management requirements. The ultimate end is
achieving Government‟s policy objectives (outcomes) through the
delivery of efficiently and economically produced public services
(outputs)” (ibid., p.3)
This statement re-iterates something that is central to both good evaluation and the
effective application of indicators. The objectives of a programme must be clearly
specified. As Schacter has noted, it is difficult to gauge performance if it is unclear
what a programme is supposed to be doing in the first place (2002, p.3). Partly with
this in mind, the previous chapter noted the need to articulate more clearly and
concisely the objectives of the new Strategic Regional and Local Roads Programme.
The quoted extract above also points to important distinctions between different
levels and types of indicators. The MIF guidelines list five types of indicator (ibid,
p.7), which can be described as follows:
„Strategic‟ indicators – these are high-level indicators about performance on
policy objectives.
„Effectiveness‟ – these are used to assess if the Programme is doing what it set
out to do. Typically they would be used in high-level internal management
reports.
„Quality‟ measures. This can relate to the standards being achieved, and also
the level of customer satisfaction.
„Efficiency‟– these are predominantly quantitative with an emphasis on financial
data and the ratio between inputs / outputs. These would usually be used for
inhouse resource decisions.
„Activity‟ – these would typically look at throughput in an office.
The types of indicator employed and level of detail required are also dependent on
their intended use.
For example, the indicators described in the Scene Setting
chapter covering resource inputs, roads outputs and activities are quite
comprehensive. These have mostly been developed in order to report on progress
in the implementation of successive National Development Plans. The Department
itself also gathers more detailed information on inputs and outputs for the purpose of
programme management and resource allocation. These allow for the determination
of unit costs per square metre on more standardised types of works.
193
10.2. Performance Management and Current Performance Indicators
Some elements of the Department‟s performance management system have already
been introduced.
As a project moves from being a proposal into more detailed
design and tendering phases, the Department‟s Regional and Local Roads Division
is actively involved in reviewing and sanctioning progress through the different
phases. Approval of the key design and tendering documents is required in advance
of their operational use.
As construction work commences and proceeds, the
Department monitors progress. Post-project spot checks are also undertaken. The
use of specific indicator data supports this work.
The scene-setting chapter at the outset also described the development of a
comprehensive range of guidelines manuals by the Department over the past ten
years.
These cover the broad array of works involved in the maintenance and
construction of regional and local roads. The guidelines act as a key performance
management tool to assure compliance with standards that are set down by the
Department. Their objective is also to ensure the adoption of consistent approaches
across local authorities.
Clarity of purpose is an important factor in developing meaningful indicators.
Regional and Local Roads benefit from having their main priorities set out in the
Department of Transport‟s „Statement of Strategy‟:
“the main focus of the regional and local road investment programme is to
restore roads that have been identified as deficient in pavement condition
surveys, and to invest in strategic roads that support the implementation
of the National Spatial Strategy” (DoT, 2008, p.40)
The relevant „Key Performance Indicator‟ within the Statement of Strategy is
measured in terms of:
“schemes completed under the strategic regional roads programme” (ibid. p.43)
Using the MIF terminology, this can be seen as the main „Strategic‟ indicator.
„Effectiveness‟ indicators for roads have generally used outputs as proxies. For the
Programme under review, effectiveness has been assessed in terms of the roads
built, the number of houses provided, and area of lands facilitated for development.
For the „Specific Improvement Grants‟ scheme, the level of usage, particularly of
tourist and commercial traffic can be seen as an effectiveness indicator.
194
That
programme has a particular objective to assist regional development and this
indicator is used in reports prepared for the Department and Regional Authorities.
„Quality‟ indicators are used to assure the standard of the road works undertaken,
and to assure compliance with technical requirements set out in Departmental
circulars and guidelines. „Efficiency‟ indicators are used within the Department in
comparing, for example, the cost per square metre, or linear kilometre of road
surfaced.
In 2006, the Minister for Finance announced a series of reforms affecting the Budget
and Estimates process. From 2007 all Departments were required to produce an
„Output Statement‟, in respect of their „Statement of Strategy‟. The Output Statement
is intended to set out the high level objectives for Departments, the strategies being
pursued to meet those objectives, and the actual outputs projected for the year. The
2007 Output Statement contained three sets of targets for regional and local roads.
For the strategic roads (the Programme being reviewed here, and the „new‟ strategic
schemes), the statement contains targets for the number of projects being brought to
planning stage during the year, those at construction stage and projects to be
completed.
This has the potential to be an important indicator for the new
programme, especially in highlighting if the projects are not proceeding as planned
through their different phases. The other two indicators on the Output Statement
relate to the „Specific Improvement Grants‟ scheme and „Restoration Programme‟.
When funding decisions on Strategic roads are being considered, the technical
specification of the works must be submitted by the local authority. This includes, for
example, the types of materials used (concrete, asphalt, bitumen, macadam, etc.)
and the depth of the different layers (surface, base, and sub-base). Such data and
monitoring by the Department can be seen as a form of „quality‟ and „activity‟
indicator. Given its technical nature, interpretation of this data requires a level of
expertise.
The data feeds into the Department‟s system of performance
management and is used as a monitoring and quality assurance tool.
10.3. Identifying Gaps in Current Indicators
From reviewing the systems currently in place, it is apparent that under each of the
five types of indicator as set out in the MIF guidelines, there are measures in place.
At a strategic level, indicators are published in the Department‟s Statement of
Strategy, and the annual „Output Statement‟. These can also be seen as high-level
195
effectiveness measures. There are also medium-level effectiveness and efficiency
indicators that are collated in reports to the Department and Regional Authorities.
Internally within the Department, indicators of Effectiveness, Quality, Efficiency and
Quality are routinely collected and used. This includes unit cost data. In the main
then, local and regional roads have a well-developed system of indicators.
In
recommending additions or changes, there is always the danger of placing too many
demands on the system. As Schacter has noted, overly complicated performance
frameworks inevitably leads to implementation problems (p.27). However, there are
some specific gaps that can be identified in relation to the strategic roads
programmes.
Two very prominent factors in the review that affected performance were costs and
delays. In any new system of project appraisal, it would be important that both costs
and progress against expected deadlines be monitored.
There is already a
requirement in the Department of Finance Capital Appraisal Guidelines that the
Sanctioning Authority (i.e. the Department) be notified if there is a change in costs, or
if factors arise that affect project delivery.
There would be merit in having a
formalised system of reporting by local authorities on progress towards the
completion of their projects an annual basis.
The Department does report at
aggregate level on the progress of the Programme within its annual Output
Statement. This is a strategic level indicator. At a management and operational
level, it is important that the progress of each individual project be regularly and
systematically tracked and compared against their original planned timescales.
A particular issue of concern identified in the Programme was that of cost increases
in general and land costs in particular. Information on land costs was gathered as
part of this review and helped place the scale of the problem of price increases into
perspective.
In gathering information from local authorities, disaggregated data
should be collected in a manner that would allow for comparative analysis to be
regularly carried out on land costs.
This should include the relative proportion of
land costs within the total project costs.
In addition to making comparisons across individual projects in relation to land costs,
it would also be beneficial from a management point of view if the relative costs of
the other headline cost elements were also systematically compared. At the moment
four main aggregate headings are currently used to differentiate costs are:
„Land‟, „Construction‟, ‟Design and Supervision‟, „Other‟.
196
These headings are used, for example, on the application form for the „Specific
Improvement‟ grants scheme. The benefit of having financial information routinely
reported in this format is that it allows for the relative effect of the two key cost
drivers of construction and land acquisition to be separately assessed. It would also
allow for the routine calculation of the cost per square metre of road constructed
under the new programme. However, as the review has already noted, technical
expertise would be required in assessing this data. It could really only be used as a
management tool for carrying out limited non-parametric comparisons between
similar projects. The Regional and Local Roads Division is already planning to use
these headings to gather and assess cost data under the new strategic programme.
The recommendation to introduce a new structure for the appraisal of projects is also
highly relevant in the development of performance indicators. The objectives and
criteria against which proposals are appraised at the outset should be used as
benchmarks when assessing performance. At its most basic, this would involve
comparing the projected inputs, outputs and outcomes, against those actually being
delivered. These indicators will be somewhat dependent on the final format of any
new system of appraisal, and the relative weighting given to different criteria in the
assessment of projects. It is therefore difficult to be too prescriptive at this point.
While indicators like the construction of the roads, and certain quantifiable outputs
related to journey time savings and levels of development can be gathered,
assessing changes in wider social and economic indicators may be more
challenging. The distinction that Boyle draws between „Programme‟ and „Context‟
indicators is therefore relevant. The former are issues for which the roads projects
can be held directly accountable, whereas the latter represent wider factors over
which there may be limited control. In referring back to the Department of Finance
Capital Appraisal Guidelines and the approach it recommends, the „Evaluation‟ stage
may be particularly beneficial in assessing social and economic indicators that can
be difficult to systematically monitor on an ongoing basis. As Mayne acknowledges,
when it comes to more complex outcomes where measurement and attribution is an
issue, the use of evaluation rather than performance indications is the ideal option
(1999, p.3). The following recommendations can therefore be put forward:
197
10.4. Recommendations
21.
In the application form, evaluation documentation and monitoring reports, all
cost estimates should be disaggregated under the four standardised headings
of: „Land‟, „Construction‟, „Design & Supervision‟ and „Other‟. This is already
being done on other regional and local roads programmes. The format enables
comparisons to be made on the key elements driving the costs of projects.
22.
Given its particular significance, disaggregated data should be collected in a
manner that would allow comparative analysis to be regularly carried out on
land costs.
23.
Additional output and outcome indicators will be dependent on the final format
of any new system of appraisal, and the relative weighting given to different
criteria in the assessment of projects. It is therefore difficult to be prescriptive
at this point. However, quantifiable indicators should relate to roads outputs,
improved accessibility through journey time savings (where relevant) and levels
of development.
24.
Using the framework set out in Department of Finance Capital Appraisal
Guidelines (2005), the more complex social and economic outcomes may be
better examined during the „Evaluation‟ stage of the Programme.
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Chapter 11
Concluding Comments and Next Steps
11.1. Issues for Further Consideration Not Addressed in the Review
The Programme established in 2000 has been reviewed in terms of its outputs,
efficiency and effectiveness. Broader issues associated with the value of investment
in strategic roads have been examined.
The pre-existence of the new strategic
regional and local roads programme has led the review to follow a certain direction.
What the current review has not done is consider the relative merits of the
Programme in comparison with other regional and local roads policies and
programmes. This was beyond its scope.
It is nevertheless worth putting the strategic programmes (both old and new) into
some sort of wider context. In 2008, state grants totalling €618.714m are being
distributed to local authorities by the Regional and Local Roads Division of the
Department of Transport. €40.324m was allocated to the strategic programme being
reviewed, while €45.909m was committed to projects under the newer strategic
programme.
budget.
The two programmes together constitute around 14% of the total
The remainder is spread across different funding categories that were
outlined in the introductory chapter. This review has shown that the Programme was
effective in terms of outcomes.
It also identified problems that hampered its
progress. Ways and means of addressing these problems have been identified.
Recommendations are put forward to improve the capacity of the new programme to
deliver value for money. However, it was beyond the scope of the review to say if
strategic roads are more deserving of exchequer support than the other policy
priorities within the Regional and Local Roads Division. That is a question which will
need to be considered elsewhere, most likely in the political sphere.
A further and more complex question concerns the funding arrangements for local
government. Regional and local roads are a core local government responsibility,
and as such are bound up in wider debates about local government funding. CentralGovernment funding of these roads comes from two principal sources, the „Local
Government Fund‟, and direct exchequer provision via the vote of the Department of
Transport. The Local Government Fund was established under the „Local
Government Act, 1998‟. It was set up as a means to compensate local authorities for
the loss in direct revenue that they incurred when rates on domestic and agricultural
199
properties were effectively abolished in the late 1970s. The Fund is financed from
the proceeds of motor tax receipts, and from an exchequer contribution. Following
the transfer of responsibility for regional and local roads from the Department of the
Environment, Heritage and Local Government to the Department of Transport in
2007, a portion of the fund (34%) is now ringfenced and transferred into the
Department of Transport‟s Vote for allocation to roads.
The amount being
transferred in 2008 is €564.9m. An additional €53.814m was approved from the
DoT‟s vote, bringing the total budget in 2008 for to €618.714m.
While the Local Government Fund represents a stable and coherent system of
funding for local authorities, many of the bigger questions and debates about who
should fund local government continue. Regional and local roads have featured
strongly.
The most recent significant initiative was the establishment by the
Government in February 2008 of a new Commission on Taxation. One of its terms of
reference is to; ”consider options for the future financing of local government” (COT,
2008). It is due to report to the Minister for Finance with recommendations by the
end of September 2009.
At issue here are higher-level policy questions about taxation, and far broader
concerns associated with the financing of local government. Such issues date back
to the origins of local government and feature regularly in policy discussions. A
subset of this debate over the years has been the financing of road infrastructure,
and the respective responsibilities of local and national government. In fact these
matters have been on the policy agenda since the advent of motoring at the start of
the 20th century (Daly, 2007). Such fundamental questions are likely to continue to
be debated into the future and stretch well beyond the scope of this particular review.
The review now returns to its original remit and makes some final comments.
11.2. Key Findings
At the outset, a particular challenge was identified when assessing the value of
investment in regional and local roads. Earlier studies had concluded that these
roads play a role in social and economic development, but had difficulty specifying
the precise nature of the contribution. Taking up this challenge, the review set out to
identify the manner in which regional and local roads interact with local development
decisions. This exercise required the use of multiple methodological approaches and
sources of data. Quantitative data on development outputs was combined with the
qualitative views of local authority engineers, planners and senior policy makers.
200
Drawing upon the experiences of other studies, a key decision was taken to consult
with builders and developers to seek their views.
Localised demographic and
economic data was used to build a wider picture of changing development patterns
within case study areas. Based on this range of data sources it can be concluded
that strategic regional and local roads do make an important contribution to social
and economic development within areas where investment is targeted.
The particular objectives of the Strategic Non-National Roads Programme were a
product of the unique circumstances that prevailed when it was set up. It was a
necessary policy response, particularly when one considers the unprecedented
pressures on the housing market at that time. However, there is still a need for
investment in strategic roads, albeit with an emphasis on different objectives that
reflect current policy priorities. There are certain projects which are vital in facilitating
the strategic social and economic development of towns and regions, but that are
beyond the abilities of local authorities to fully fund from their own resources (even
with development levies). Investment in roads and other transport infrastructure is
important in achieving spatially balanced development across the State. In making
investment decisions, it is crucial that structures to appraise the costs and benefits of
proposed projects are robust and lead to the best choices being made. The central
conclusion from this review is that strategic roads are worthy of investment, and the
central recommendation is that a revised system of appraisal is needed to assure
value for money.
11.3.
The Next Steps
A series of recommendations have been set out in this report, and the next step in
the Value for Money Review process is to follow through with their adoption. As the
VFM review was being completed between April and July 2008, work had already
commenced on the implementation of the Review‟s draft recommendations. The
Regional and Local Roads Division is now at an advanced stage in adapting the
Department of Finance Capital Appraisal Guidelines for use on its new strategic
programme. The new structure being put in place identifies the different stages for
the appraisal and approval of proposed regional and local roads projects.
An
application form is being developed that incorporates the five appraisal criteria, as set
out in the Department of Transport‟s appraisal framework. The new application form
will act as the „Preliminary Appraisal‟ for projects costing over €5m. Multi-criteria or
Cost-Benefit Analysis will also be required for projects costing more than €5m. Draft
guidance notes to assist local authorities in complying with the Department‟s new
201
requirements are also being prepared. The new appraisal structure is expected to be
rolled-out in September / October 2008. The work of the Department is developing
these new structure and the related supporting documentation has also been
informed by new project appraisal guidelines published by the National Roads
Authority in March 2008.
Considerable progress has already been made in implementing the review‟s key
recommendations.
Carrying through the recommendations, and monitoring their
implementation, will now be the responsibility of the Regional and Local Roads
Division of the Department of Transport.
202
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Daly, Mary E., (1995), „The Buffer State – the Historical Roots of the Department of
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204
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DELG (2001), „Memorandum on Grants for Non-National Roads‟, Department of the
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DEHLG (2001-2008), Annual Housing Statistics, Department of the Environment,
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Department of Finance (2007), „Value for Money and Policy Review Initiative
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205
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206
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208
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209
Appendix II
Steering Committee
Membership
Mr. Kevin Ring, Principal Officer, Regional and Local Roads Division,
Department of Transport (Chairperson)
Mr. Dominic Mullaney, Principal Roads Advisor, Regional and Local Roads
Division, DoT
Mr. John O‟Flynn, County Engineer and Director of Service, Waterford County
Council
Ms. Mary Finnegan, Assistant Principal Officer, Housing Policy and Finance,
Department of the Environment, Heritage and Local Government
Ms. Elizabeth Munro, Assistant Principal Officer, Affordable Housing, DEHLG
(replaced Mary Finnegan in September 2007)
Mr. Barry Quinlan, Assistant Principal Officer, Finance Section, DEHLG
Mr. Derek McConnon, Assistant Principal Officer, Finance Division, DoT
Mr. Eamonn Waters (Policy Analyst)
Dates of Meetings
July 5th, 2007
October 5th, 2007
November 23rd 2007
February 8th, 2008
March 28th, 2008
210
Appendix III
Questionnaires and Cover Letter
Main Self-Completion Questionnaire for all projects funded under the
programme.
Supplementary Questionnaire for projects that were submitted but not funded.
Cover Letter to Local Authorities - Circular NNR 25/07 of 24.10.07, „Value for
Money Review of the Strategic Non-National Roads Programme (formerly
known as „Non-National Roads Grants to Support Housing and other Related
Developments‟)‟.
211
QUESTIONNAIRE for FUNDED PROJECTS
Value for Money Review of the Strategic Non-National Roads Programme
(formerly known as „Non-National Roads Grants to Support Housing and
other Related Developments‟)
Background To The Questionnaire
As part of the Government‟s „Value for Money and Policy Review Initiative‟, a
review is being undertaken of the „Strategic Non-National Roads Programme‟.
The decision to undertake this specific review was made by the Government,
and there is a requirement that it be carried out in accordance with
Department of Finance guidelines.
Your co-operation would therefore be
greatly appreciated.
When established in 2000, the programme was known as „Non-National
Roads Grants to Support Housing and other Related Developments‟.
The programme arose from recommendations contained in the reports on the
Housing Market produced by Peter Bacon and Associates.
The
Government‟s policy response „Action on Housing‟ (June 2000) recognised
the need for targeted investment in non-national roads schemes crucial to
housing and other development.
Formal applications were invited in July 2000 (Circular RW13/00), and
allocations announced in December 2000 (Circular RW 25/00). Information is
being sought on a total of 47 projects across 15 local authority areas.
Information on Completing the Questionnaire
An individual questionnaire must be completed in respect of each road project
funded under the programme.
The information being sought is wide-ranging (i.e. technical, financial and
administrative). Some consultation may be required between different offices
within the local authority.
Completed questionnaires should be returned to: Non-National Roads
Division, Department of Transport, Block 6, Irish Life Centre, Dublin 1, email:
[email protected], fax: 01-8882857. Please note that the deadline
for receipt of completed questionnaires is Wednesday November 14th 2007.
If you have any queries about the review or require clarification on any aspect
of the questionnaire, please contact Eamonn Waters at Tel:, 087-7592539
(mobile), 01-888 2747 (office), or email: [email protected].
212
QUESTIONNAIRE
Value for Money Review of the Strategic Non-National Roads Programme
(formerly known as „Non-National Roads Grants to Support Housing and other
Related Developments‟)
1. Scheme Details
1.1. Name of Road Project
1.2 Name of Local Authority
1.3. Brief description of road
works
(Please note that details from the
original
application
forms
submitted under the scheme are
attached and may assist you
here)
1.4. Location of Works (start and
end point)
1.5. Type of road (single/dual)
1.6 Type
widening)
of
works
(new
/
1.7. Length of Road (m)
1.8. Carriageway width (m)
1.9. Total width of Footpaths (m)
1.10. Total width of cycle tracks
(m)
1.11. Speed Limit (km / hour)
1.12 Technical Details
pavement structure)
(e.g.
1.13. Were the road works If Yes, please specify the additional works
undertaken in conjunction with undertaken.
any
other
non-roads
infrastructural works (e.g. pipe
laying for water services, etc.).
213
2. Statutory and Procedural Issues
2.1 Land
Were all lands owned by the local
authority (Yes / No)
If „No‟, how were they acquired
(i.e. by Compulsory Purchase
Order or by agreement)
Please specify the amount of
land (in hectares), and number of
landowners involved.
2.2 Consultation
Was
a
statutory
public
consultation process required for
the road (i.e. under Part 8 of the
Planning
and
Development
Regulations, 2001 - or its
predecessor) Yes / No
If Yes, how long did this take to
complete (in months)
2.3 EIS
Was an Environmental Impact Statement
Prepared? (Yes/No)
If yes, how long did this take to complete
(in months)
2.4 How were the Design
Construction works undertaken:
and
Design
Competitive Tender
Restricted Tender
Direct Labour
Other (please specify)
2.5
Was
a
specific
project
management IT system used on the
road project?
214
Construction
3. Construction Period
3.1. Date / Year of commencement of
works (e.g. June 2001)
3.2. Is the project complete? Yes / No
3.3. If the project is complete, please
indicate the date and year of
completion (e.g. October 2004)
3.4. If the project is not yet complete,
please indicated the expected date
and year (e.g. September 2008)
3.5. Reasons for Delays (Where Applicable):
Under the terms of the programme, work on projects was expected to commence in
2001. The programme was also originally intended to cover works undertaken during
the period 2001 to 2004. If delays were experienced in the commencement or
completion of the works, please indicate (briefly) the main reasons in the space
provided below. This should include an estimate of the length of time caused by
each of the individual delaying factors.
215
4. Cost / Expenditure Details
4.1. Total Final Expenditure of Road
Project Including Design,
Construction, Land, VAT, etc.) (in €).
Where road works were undertaken in conjunction with other non-roads
infrastructural works (e.g. laying of water services pipes), please estimate the
amount related to the road works here, and in the other relevant boxes below.
Where the works are not yet complete, estimates for the total expected outturn
costs should be included.
4.2 Breakdown of Total Direct Expenditure (in €):
Design
Land Acquisition (i.e. land
purchased directly)
Construction:
Labour
Materials
Plant
Other (please specify)
Other Costs (Please Specify)
4.3 Total Amount provided by the
Strategic Non-National Roads
Programme
4.4. Total Amount Provided from
Sources other than the Programme
4.5. Please provide a Breakdown of
Funding from These Other Sources:
General Development
Contributions
Special Development
Contributions
Supplementary Development
Contributions
Other Local Authority Funds
National Roads Authority
Other National Exchequer
Funding (please specify)
Other Sources (e.g. loans)
216
4.6. Expenditure by Year
Please indicate the total expenditure incurred by the project in respect of each of the
years below. This includes all direct costs, as set out under 4.2 above). In the case
of the period 2008 to 2010, the expected expenditure figure should be included.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010 (and
after)
4.7. Lands Provided by the Local Authority
These are separate to lands directly
purchased (under 4.2 above). Where
local authority-owned lands were used,
please provide details of:
The amount of land (in hectares), and;
An estimate of the value of these lands.
The basis for this estimate should be the
market value in the year of construction.
4.8. Administration
Although the Department does not allow administrative salaries and costs to be
included in grant claims, it is a requirement of the review that they be considered.
Staff Grade
Amount of Time (estimated in
hours over the lifetime of the
project)
217
Were these
Administration Costs
included in the Cost
Estimates under 4.2,
above (Yes / No)
4.9. Factors Affecting Costs
Significant cost increases over the lifetime of projects have been identified as
an issue that arose across the programme. If there were particular factors that
caused an increase in costs on the project, please identify them (e.g. land,
plant, materials, planning, consultation, EIS).
Please also provide a brief summary of the relative impact they had on the overall
costs.
218
5.1 Vehicular Traffic Using Road (Average Annual Daily Traffic)
Where reliable information or accurate estimates are available, please include
details below. If the project is not yet complete, future projections should be
estimated (where this can be done reliably).
Vehicular Traffic AFTER Completion of Road Project
AADT
HCV Content
Basis for Figures
(Estimate / Actual)
Year when data
was gathered /
Year on which
estimate is based
Vehicular Traffic BEFORE Commencement of Road Project
AADT
HCV Content
Basis for Figures
(Estimate / Actual)
Year when data
was gathered /
Year on which
estimate is based
Additional Traffic Attributable to new Development
AADT
HCV Content
Basis for Figures
(Estimate / Actual)
Year when data
was gathered /
Year on which
estimate is based
5.2. Additional Traffic Survey Information
If original traffic-count data or other traffic survey reports (e.g. Origin and
Destination Surveys) are available for the road in question, please forward
these as attachments.
219
6. Project Justification
The key objective of this scheme was to provide grant assistance to
relevant local authorities for certain strategic non-national roads to
support housing, industrial/commercial and other developments.
6.1 Type of Development
supported by the proposed
road (i.e. Housing / Industrial /
Commercial / Other)
Housing
6.2. Overall Total area of new
Housing Land facilitated by the
road (in Hectares)
6.3 Breakdown of Housing - Please provide a breakdown of the above
figure using the categories below:
Area of land that has
been zoned, serviced and
built
upon
(including
construction
currently
underway)
Area of land that has
been zoned and serviced
but not developed.
Area of land that has
been zoned but not
serviced or developed.
6.4 Total Number of Housing
Units Facilitated or To be
Facilitated
6.5 Breakdown of Housing Units - Please provide a breakdown of the
above figure using the categories below:
Housing
Units
constructed,
under
construction or in the
planning process
Potential housing units on
other zoned land not yet
submitted for planning
permission
Other (Please specify)
6.6. Of the Total number of
housing units in 6.4 and 6.5
above, please indicate the
numbers classified as Social &
Affordable Units
220
Industrial / Commercial / Other
6.7 Overall Total area of New
Industrial / Commercial land
facilitated by the road (in
Hectares)
6.8 Breakdown of new Industrial / Commercial Land - Please provide a
breakdown of the above figure using the categories below:
Area of new land that has
been zoned for industrial /
commercial
and
developed upon (including
construction
currently
underway)
Area of land that has
been zoned and serviced
for industrial / commercial
but not yet developed.
Area of land zoned but
not
serviced
or
developed.
7. Contact Details and Further Information
In the event of that of follow-up in relation to the survey questionnaire, please
include the name and telephone of a contact person in the local authority:
Name:
Phone
Number:
If you have any queries about the review or require clarification on any aspect
of the questionnaire, please contact Eamonn Waters at Tel: 087-7592539
(mobile), 01-888 2747 (office), or email: [email protected].
Please note that the deadline for receipt of completed questionnaires is
Wednesday November 14th 2007.
221
XXXXXXXX County Council
Supplementary Questionnaire for Projects That Were Not Funded
Value for Money Review of the Strategic Non-National Roads Programme
(formerly known as „Non-National Roads Grants to Support Housing and other
Related Developments‟)
PLEASE
NOTE
THAT
QUESTIONNAIRES
QUESTIONNAIRE
THIS
RELATED
SEEKS
IS
TO
THE
THE
INFORMATION
SECOND
OF
PROGRAMME.
ON
TWO
THIS
UNSUCCESSFUL
APPLICATIONS THAT WERE NOT FUNDED.
When projects were submitted for funding under the scheme in 2000, a
total of 117 applications were received. 47 were approved.
To get a wider picture of other roads schemes that may have assisted in
the provision of housing, we are trying to get a synopsis of what happened
with these other projects.
All of the information for all of these additional projects should be included
on the attached table.
Completed questionnaires should be returned to: Non-National Roads
Division, Department of Transport, Block 6, Irish Life Centre, Dublin 1,
email: [email protected], fax: 01-8882857. Please note that the
deadline for receipt of completed questionnaires is Wednesday
November 14th 2007
If you have any queries about the review or require clarification on any
aspect of the questionnaire, please contact Eamonn Waters at Tel: 01-888
2747, 087-7592539 or email: [email protected].
222
XXXXX County Council
Supplementary Questionnaire for Projects That Were NOT Funded
Value for Money Review of the Strategic Non-National Roads Programme (formerly
known as „Non-National Roads Grants to Support Housing and other Related
Developments‟)
Name of Project
Description
Did this
project Go
Ahead
(or is it
planned to go
ahead)
If „Yes‟, please
indicate when
it started.
223
What were the
sources of funding
(i.e. own resources,
development
contributions, a
different non-national
road grants scheme,
etc.).
Director of Services,
24 October 2007
Circular NNR 25/07
Value for Money Review of the
Strategic Non-National Roads Programme (formerly known as „Non-National
Roads Grants to Support Housing and other Related Developments‟)
Dear Director,
As part of the Government‟s „Value for Money and Policy Review Initiative‟, the
Department has recently commenced work on a review of the „Strategic Non-National
Roads Programme‟. The decision to undertake this specific review was made by the
Government, and there is a requirement that it be carried out in accordance with
Department of Finance guidelines. Your co-operation would therefore be greatly
appreciated.
When established in 2000, the programme was known as „Non-National Roads
Grants to Support Housing and other Related Developments‟. The programme arose
from recommendations contained in reports on the Housing Market produced by
Peter Bacon and Associates. The Government‟s policy response „Action on Housing‟
(June 2000) recognised the need for targeted investment in non-national roads
schemes crucial to housing and other development. As a result, the programme was
put in place. Formal applications were invited in July 2000 (Circular RW13/00), and
allocations announced in December 2000 (Circular RW 25/00).
Since its
commencement, 47 projects have been supported under the programme, with the
provision of grant aid totalling approximately €301m.
A list of the relevant projects in your area is attached. Feedback from the review
will inform national-level policy and will help improve other schemes operated by the
Department.
224
What is the „Value for Money and Policy Review Initiative‟
The initiative is a Government-wide programme. As a general rule each Department
must carry out a series of reviews covering 10-15% of its expenditure every three
years.
The final report from each review is independently assessed, and then
published. It is also submitted to the Oireachtas Select Committee dealing with the
relevant policy area. A Steering Committee was established to oversee the review.
Membership comprises staff from the Department of the Environment, Heritage and
Local Government, the Department of Transport and a local authority representative.
Terms of Reference have been agreed in line with Government Guidelines.
What We are Asking You to Do:
1. Complete a Questionnaire in respect of EACH of the projects funded in your
local authority area. To assist you in this process, please find attached a table with
information in respect of each individual project. This is drawn from the original
application form submitted by your authority to the Department of the Environment. In
some cases the cost estimates will have been subsequently revised. The actual final
expenditure for many of the schemes will also be greater than initially forecast.
There is scope in the questionnaire for you to address these issues. The information
being sought is wide-ranging (i.e. technical, financial and administrative).
Some
consultation may be required between different offices within the local authority. It
may be advisable to nominate an individual to co-ordinate these responses from
within your local authority.
2. Complete one additional single questionnaire. When projects were submitted
for funding under the scheme back in 2000, a total of 116 applications were received.
47 were approved. To get a wider picture of other roads schemes that may have
assisted in the provision of housing, we are aiming to get a general synopsis of what
happened with these other projects. The detail being sought here is very brief. All
of the information for all of these additional projects can be included on a
single sheet. On the questionnaire, the project title and details have already been
filled in for your area. The two additional questions being asked are:
Did these additional projects, not included in the programme, go ahead? (or
are they planned to?),
If so, how were they funded? (i.e. own resources, development contributions,
a different non-national road grants scheme, etc.).
225
3. Following completion and return of the questionnaires, it is proposed to
meet with you individually (or a senior member of staff involved in the construction
of the road schemes within your local authority). The purpose of this meeting will be
to discuss your overall view of how the scheme has operated, and any issues that
may have arisen. It is expected that these meetings will be arranged to take place in
December and January at a time and location convenient to you. Two or three
projects from the 47 that were funded will also be examined in greater detail as case
studies.
Further Queries and Return of Completed Survey Forms
Work on the review is being undertaken by Eamonn Waters from the Department‟s
Non-National Roads Division. If you have any queries or require clarification on any
aspect of the survey questionnaires, please contact him at 087-7592539 (mobile),
01-8882747
(office),
or
email:
[email protected].
Completed
questionnaires should be returned to: Non-National Roads, Department of Transport,
Block 6, Irish Life Centre, Dublin 1, email: [email protected]. Please note
that the deadline for receipt of completed questionnaires is: Wednesday
November 14th 2007.
Yours sincerely,
Kevin Ring,
Principal Officer, Non-National Roads.
c.c. County / City Manager.
Attachments with this Circular:
1. List of Projects and Approved Grant Amounts in your local authority area.
2. A table of data from the original application forms submitted in 2000 (to assist in
completing the Main Questionnaire).
3. Main Questionnaire for Funded Projects (one to be returned for each project).
4. Additional single questionnaire with summary information on all projects that were
submitted but not funded.
226
Appendix IV
Interviews– Participants and Dates
Interviews / Focus Groups With Local Authority Staff
Local Authority
Participants
Date
Cork City Council
14.12.07
Tony Fleming (Senior Engineer)
Cork County Council
14.12.07
John Lapthorn (Senior Engineer)
Pat O‟Mahony (Senior Engineer)
Tom Coughlan (Senior Engineer)
Fingal County Council
17.1.08
Mick Lorrigan (Director of Service)
Galway City Council
16.1.08
Ciaran Hayes (Director of Service)
Joe Tansey (Senior Engineer)
Galway County Council
16.1.08
John Morgan (Director of Service)
Danny Barrett (Senior Executive Officer)
Limerick City Council
10.1.08
Pat Dromey (Director of Service)
Vincent Murray (Senior Engineer)
Limerick County Council
10.1.08
Robert Gallagher (Senior Executive Engineer)
Diarmuid O‟Dea (Assistant Engineer)
Meath County Council
29.1.08
Charlie McCarthy (Senior Engineer)
South Dublin County Council 18.1.08
John McLoughlin (Senior Engineer)
Donna Lakes (Senior Executive Engineer)
Waterford City Council
31.1.08
Fergus Galvin (Acting Director of Service)
Billy Duggan (Senior Executive Officer)
Waterford County Council
31.1.08
John O‟Flynn (Director of Service)
Paul Daly (Senior Engineer)
Ray Malone (Senior Executive Officer)
Wicklow County Council
11.1.08
Seamus Walker (Director of Service)
Frank Clarke (Senior Engineer)
Margaret Hartnett (Senior Resident Engineer)
Sessions Involving Planning Officials
Local Authority
Date
Dublin City Council
15.1.08
Dun Laoghaire/ Rathdown
County Council
17.1.08
Kildare County Council
22.1.08
Participants
Frank Fallon (Senior Executive Officer)
Rory Deegan (Deputy City Planning Officer)
Eoghan Madden (Senior Engineer)
Dermot Hanney (Senior Engineer)
Willie Horgan (Senior Engineer)
Denise Doherty (Senior Planner)
Jim Hayes (Senior Executive Engineer)
Gerry Corcoran (Executive Technician)
Pat Whelan (Senior Executive Officer)
Des O‟Connor (Senior Engineer)
David Real (Senior Executive Engineer)
Willie Joe Padden (Planner)
Interviews with Housing and Business Park Developers
Company
Date
Participants
Bolster Construction Ltd.,
19.2.08
William Bolster (Managing Director)
Tramore
R. McDonald & Sons Ltd.
19.2.08
John McDonald (Director)
Tramore
Pat McDonald (Director)
Harcourt Developments
11.2.08
Mick Arthur (Business Park Manager)
(Park West Business Park)
Donal Leahy, Dermot Arthur (Harcourt Developments)
Osberstown Developments
7.3.08
Gerry Prendergast (Executive Director)
(Millennium Business Park)
Sinead Murphy (Marketing Manager)
227
Informal Interviews With Departmental Staff
Date
Name
23.10.07
John Devlin, Former Senior Inspector and Principal Advisor, Non-National
Roads, Department of the Environment, Heritage and Local Government
26.10.07
Aeneas Langford, Former Principal Advisor, Non-National Roads, DEHLG
16.11.07
John Murphy, Former Principal Officer (Housing), DEHLG
Consultation Meetings / Discussions
Date
Name
6.3.08
Brendan McDonagh (Manager, Policy and Planning Development, IDA
Ireland)
24.1.08
Robert Fox, Department for Transport UK („Community Infrastructure Fund‟)
25.1.08
Alistair Mitchell, Transport Directorate, „Partnership and Local Authority
Liaison‟, Scottish Executive.
228
Appendix V
Original Circular Letters and Application Form
Circular RW 13/00 of 3.7.00, „Non-National Road Grants to Support Housing
and Other Related Development‟ which invited applications from local
authorities under the programme.
Original Application Form from July 2000.
Circular RW 25/00 of 14.12.00, „Non-National Road Grants to Support
Housing and Other Related Development‟, which formally notified local
authorities of approved projects and grant amounts.
229
3 July, 2000.
Circular RW 13/00
Non-National Road Grants to Support Housing
and other related developments
Dear Manager,
1.
Background
I refer to the announcement in the “Action on Housing” programme in
relation to the provision of an additional £200 million for Non-National
Roads Schemes supporting residential and other developments. This
new budget line (which follows on a similar scheme of road grants in
support of housing operated in 1998 and 1999) was established, inter
alia, on the basis of indications to the Department from local authorities
that a number of roads projects, having the ability to support significant
housing and other development, could be mobilised quickly if
necessary funding were provided. Arising from this commitment, an
additional £74 million to the existing roads budget will be provided by
the Government for this purpose in the period 2000 – 2002, with the
balance of £76 million over the period 2003-2004; this will give a total
Exchequer contribution of £150m to this new roads programme.
2.
The Government recognises that rapid economic development is
generating a need for targeted investment in the non-national roads
area. The key objective of this scheme is to provide grant assistance
to relevant local authorities, particularly in the Greater Dublin Area, for
certain
strategic
non-national
roads
industrial/commercial and other developments.
230
to
support
housing,
3.
The purpose of this circular is to
(a)
invite certain local authorities to confirm projects to be partfinanced under this scheme, and
(b)
set out for local authorities how the scheme will operate.
Operation of the Scheme
4.
Exchequer funding for qualifying road projects will be at a maximum
rate of 75%. The balance must be provided by local authorities from
their own resources, which may include the proceeds of development
levies, other private sector contributions or contributions in kind (e.g.
land).
5.
Fixed sum grants will be allocated (up to a maximum of 75% of the cost
of the scheme). It will be a matter for local authorities to finance any
cost overruns or additions or unforeseen work from their own
resources.
6.
Local authorities, in completing submissions to the Department, should
have regard to the following criteria:
(a)
the impact of the development on the environment;
(b)
planning status of the land in question e.g. zoning,
planning permissions, etc.
(c)
the availability of serviced land, appropriately
zoned, in the area.
Submitting Applications
7.
In submitting projects to the Department for consideration, local
authorities should bear in mind that the total Exchequer monies
231
available for all projects in the period 2000-2002 is £74 million with the
balance of £76 million in the period 2003-2004.
8.
Proposals under this circular should relate to works which will
commence in 2000 or 2001. The position will be reviewed at the end of
2001. Local authorities should ensure that arrangements in relation to
planning, land acquisition, EIS‟s, Part X procedures etc., are either
completed or sufficiently well advanced to ensure that expenditure
targets can be met.
9. Subject to the foregoing paragraphs, local authorities should complete, as
a matter of urgency, proposals in respect of the construction of new
roads or the widening or realignment of existing roads which can be
considered for funding under this programme.
In the case of the
counties of Cork, Galway, Limerick and Waterford, proposals should be
confined to the hinterland of the relevant county borough.
Format and timetable for submission of proposals
10.
Local authorities should submit proposals to the Department on the
form attached as an Appendix to this circular by Wednesday 19 July,
2000
11.
The Department will approve projects for funding having regard to the
level of funding available, the criteria set out above and the merits of
the projects submitted for consideration.
12.
Grants will be notified to local authorities as soon as possible.
13.
Full plans and documentation in respect of projects selected for funding
under this scheme will have to be submitted.
232
14.
All queries regarding the contents of this circular letter should be
addressed to Ms. Sheila Power, Tel: 01 – 888 2274,
Fax: 01-888 2857; e-mail [email protected].
Yours sincerely,
______________________
Martin Condon,
Principal Officer,
Road Works Section.
Phone: 8882146
To:
The county councils of Dun Laoghaire/Rathdown;
Fingal;
South Dublin;
Kildare;
Meath; Wicklow; Cork; Galway; Limerick and Waterford
The county borough corporations of Cork; Dublin; Galway; Limerick and Waterford
233
14 December, 2000.
Circular RW 25/2000.
Non-National Road Grants to Support Housing
and other related development.
Dear Manager,
1.
I refer to this Department’s Circular RW 13/2000 of 3 July, 2000 which
sought applications from certain local authorities under the above new budget
line for non-national roads.
2.
The applications received have now been considered in the Department and 43
projects costing £294m are now being approved. The maximum Exchequer
contribution will be £190m over the 2001 – 2004 period. These projects will
facilitate the provision of 43,659 housing units and benefit 932 hectares of
industrial land.
3.
Exchequer funding for approved projects will be at a maximum rate of 75% of
the cost indicated in response to RW 13/2000 (see attached schedule) or 75%
of the completion cost if lower. This cost includes design, supervision,
construction, land, VAT etc. Some projects will receive grant aid which is
capped at less than 75% and this is indicated where appropriate. The grants
being notified now represent the maximum Exchequer grant which will be
forthcoming. Local authorities are reminded, in particular, that these grants
represent the maximum Exchequer contributions to these specific projects and
any cost overruns must be dealt with by the authorities themselves from their
own resources. Any application for increased funding over and above that
notified now for each scheme will not be entertained.
In all cases the balance of the funding must be provided by local authorities
from their own resources which may include proceeds of development levies,
or private sector contributions or contributions in kind (e.g. land), etc.
4.
While total allocations for the 2001 – 2004 period are being notified now,
individual allocations for 2001 will be notified with the Non-National Road
Grant Allocations for 2001 early next year. These individual allocations
cannot be made until a response has been received to paragraphs 5 and 6
under.
/…
234
2
5.
The grant(s) now notified to you in respect of the project(s) in the attached
schedule are subject to the following conditions:(a)
Schemes should be frontage free insofar as is possible and the number
of road accesses should be minimised.
(b)
Where appropriate schemes should be designed to the requirements of
the Design Manual for Roads and Bridges, as amended by the National
Roads Authority.
(c)
The length to be completed and the cross section to be provided shall
be in accordance with the proposal which was submitted (see attached
schedule).
(d)
Proposals regarding scheme programme and annual profile of
expenditure to be agreed with the Department by 10 January, 2001.
6.
When expenditure profiles have been agreed with the Department and
individual allocations for 2001 have been notified to you, payment may be
claimed by using the normal payment claim form with the name of the project
inserted thereon. The normal requirements applicable to all non-national road
grant payments apply, dates for claims, unpaid bills etc.
7.
This budget line is once-off and relates to the 2001 - 2004 period only. It will
not be extended beyond 2004. This targeted investment programme provides
a key opportunity to advance important projects. For this reason it is of the
utmost importance that the local authorities involved put in train now the
preparatory work which is necessary to ensure the timely drawing down of the
available funding. This budget line, over and above normal Non-National
Road Grant funding, was approved by the Department of Finance because of
the importance of the schemes involved and because they could be undertaken
in the timescale envisaged if there was funding available. There is an onus on
this Department and the local authorities involved to ensure that this budget
line is used effectively and efficiently and that it achieves its intended targets,
i.e. road length, total cost, housing and industrial lands facilitated etc.
/..
235
3
8.
Any queries in relation to the contents of this circular should be addressed to
the undersigned.
Yours sincerely,
_____________________
Denis McDonald,
Assistant Principal,
Non-National Roads Section,
Tel: 01 888 2284.
To: City Managers of the County Borough Corporations of Dublin, Cork,
Limerick, Waterford and Galway and County Managers of the County Councils of
Cork, Dun Laoghaire-Rathdown, Fingal, Galway, Kildare, Limerick, Meath, South
Dublin, Waterford and Wicklow.
236
Appendix VI
Output Data
Housing Units, Housing Lands and Industrial / Commercial Lands –
Reported Outputs
Project Commencement and Completion
237