CIF cites slowdown in spending on NDP

CONSTRUCTION OUTPUT will decline dramatically over the next 12-18 months because the Government is not delivering on its capital investment programme, the Construction Industry Federation (CIF) has claimed.

The CIF estimates the aggregate value of Government projects shortlisted in 2010 will be about €1-1.5 billion – a figure that “bears no relationship” to the Government’s commitment in the budget to invest €6.4 billion in 2010, and €5.5 billion in 2011, 2012 and 2013 respectively, it claims.

The Department of Finance yesterday defended the Government’s expenditure on capital investment projects, pointing out that the 2010 capital expenditure allocation of €6.4 billion represents around 5 per cent of GNP, a figure that is “proportionally very high compared to levels of capital investment across the EU”.

The CIF based its research on an analysis of Government public procurement notices – the formal tendering process through which the State, and related State agencies, procure construction services. It plans to conduct a similar report on a bi-monthly basis.

The report states that the value of Government projects currently at the tender stage is substantially below its commitments, and that the conversion rate of tenders – ie the proportion of tendered projects that have commenced – may be as low as 60 per cent. It also claims that some projects have a time lag of between two and three years.

The Department of Finance said yesterday that the Government is aware that public sector construction contracts need to be awarded within a reasonable period of time following the short-listing and tender procedures, but that it is too early in the year to say that there will be a delay in any project in 2010.

The CIF’s director of policy and research, Martin Whelan, said yesterday that Government capital expenditure on infrastructure is well below the European average, and is of particular concern considering the country’s “major infrastructural needs”.

The CIF also criticised the Government’s decision to abolish its five-year capital investment “envelopes” in the last budget. “This is creating huge difficulties . . . for individual procurement authorities, who are unsure as to their budget allocations over the coming years”. The CIF estimates that construction-related employment will fall below 100,000 by the start of 2011, down from its 2007 peak of 400,000.