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Public Private Partnership welcome

ISME, the Irish SME Association today (20th February) welcomes the stance taken on the role of Public Private Partnerships (PPP’s) in the National Development Plan ‘Project Ireland 2040.’ The commitment to adhere to evidence-based approaches in evaluating the relative benefits of PPP propositions is necessary. The Association highlights the need for foresight and patience in delivering future infrastructural projects.

The formation of a long-term strategy encompassing all Government investment is welcome, even where it includes projects previously announced. Incorporating them into a single plan will reduce the temptation to announce them again in future.

In our pre-budget submission ISME, sought a Government commitment to infrastructural spending of 4% of GNI*. While Ireland has underinvested in its infrastructure over the last decade, basing future expenditure on Irish GDP is risky. Irish GDP exceeds GNI* by approximately 30%, but the latter dictates our ability to repay borrowings.

Ultimately, the plan is about the long term future of Ireland. ISME supports greater efficiency and a drive towards densification of living patterns as public policy. This allows for better value for money to be obtained and for services to be delivered more efficiently. SMEs will benefit from having more liveable towns and cities, offering the prospect of a better quality of life to their potential employees and customers.

The prudential prioritisation of critical infrastructural deficits will be as important as patience in assessing when to advance certain projects. Some of the capital investment (e.g. the M9 motorway) during the early part of this century was over specified relative to need at the time, and delivered at very high costs (per metre construction costs on an international comparative basis). We also had major cost overruns on infrastructural projects like the LUAS and Dublin Port Tunnel during this period. As a result, we support the plan’s stated aim to provide strong evidence in support of the investment, but timing and prioritisation are key to delivering value for money. Cost-benefit analyses for all projects should be published immediately. In view of its overall utility for the entire rail network, we are surprised that the Dart Underground connection of mainline rail in Dublin has been overlooked in favour of an extended Metro North proposal.

In order to avoid persistent delays, the planning process must fully engage with the smaller towns. Local enterprises should be encouraged in the tendering processes.

There will also need to be investment in the people charged with delivering this plan; we note the current priority of the State to invest in training those who buy on behalf of the State. This will especially important for complex, technical instruments where PPPs are being considered.

There will be opportunities for SMEs on most if not all such initiatives, either as suppliers to major construction programmes, in post-construction maintenance and management, or in delivering goods and services following the launch of projects. This is welcome and we have every confidence that SME Ireland will rise to the challenge in delivering value for money, deep expertise, and excellent goods, services, and works to the State as it develops these projects.

Commenting on this ISME spokesperson Ross McCarthy saidWhile we acknowledge Minister O’Donovan’s recent comments about the amount of tendered goods, services and works awarded to SMEs, there is more to be done. We need to push SMEs to upskill and get better at competing for State contracts. We need buyers, particularly outside centres of excellence like the OGP and Health Business Services to be trained to a sufficiently high standard in identifying good contractors, regardless of whether they are big brand enterprises or not. And Irish SMEs must drop their resistance to forming consortiums. This is the only way they can compete for larger contracts.”

He added,

“Lastly, such a substantial program of works will require tight, continuous supervision of suppliers, and sound cost control. We must avoid a Carillion-type scandal here, and ensure that all contractors awarded business are financially sound, are signed-up members of the Prompt Payment Code, and maintain a maximum debtor days of 60. We are specifically calling on the government to make adherence to the Prompt Payment Code a requirement for those main contracts under this scheme”.