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Wilde words a warning for British delegates in Dublin

A party from Britain's Construction Confederation arrived in the Irish capital last week to find out more about the government's £15 billion planned infrastructure upgrade programme. But whether they take or are offered any work will depend on several fac

Agenda

SIX MEN in suits silently read Oscar Wilde quotes etched on two black marble pillars that stand before a colourful statue of the poet in Dublin's Merrion Square.

They have half an hour to kill before rejoining the rest of their party on a visit to the Irish capital organised by the Construction Confederation.

A guttural laugh breaks the silence and the pinstriped figure of Gleeson managing director Dermot Gleeson draws attention to the source of his amusement.

'Experience is the name we give to our mistakes,' he reads. The others join in the laughter.

'That could be the motto of the construction industry. You could have it carved into a plaque and mounted in every boardroom,' he adds. The others laugh even more.

But, it could turn out to be a prophetic warning. The purpose of the visit is to help the Irish government sell its £15.4 billion six-year infrastructure programme to British contractors.

The most interesting element to the delegation is the £3.4 billion roads programme.

The work is being driven at the highest governmental level. Ireland's transition from one of the poorest and least developed nations in the EU to its fastest growing has strained the infrastructure. Fear of economic paralysis because of the limitations of an infrastructure more suited to holiday traffic has driven the Irish government to prioritise transport infrastructure improvement. A cabinet sub-committee headed by Taoiseach Bertie Ahern is overseeing the work to be carried out to a strict six- year plan.

The roads programme will develop five key inter-urban routes - from Dublin to Dundalk, Waterford, Cork, Limerick and Galway - to dual or motorway standard by 2006.

This avalanche of construction work brings industry politics into play. The local industry will be keen to reap much of the work from Ireland's biggest construction bonanza and some will be wary of too much of the spoils ending up in foreign hands. Already there are murmurings of lobbying to ensure that contracts are let in smaller packages to give local firms a better chance. With even the largest Irish firms dwarfed compared with the major European contractors, parcels of contracts worth £200 million or more could be beyond their grasp. Apart from their limited capacity to carry out this scale of work, even negotiating bonds to cover such projects could be impossible.

The attraction for UK and overseas firms will be on jobs where they will have a competitive edge. The Irish version of PFI is an example of this. Local firms lack the expertise that their UK counterparts have when bidding for contracts let under the Public Private Partnership (PPP). A key incentive for British firms to move across the Irish Sea will be the size of the jobs. UK firms will be attracted only by larger chunks of work. Chris Morris, who as Amec project leader was one of the Construction Confederation delegates, said: 'No UK contractor is going to be bothered coming over for small £20-50 million contracts, we want the bigger deals where we have more experience in PFI and design and build.'

The government has already taken the initiative before any horse-trading might become public. The Taoiseach recently fuelled the anxiety of those who oppose foreign help by stating: 'Within two years an awful lot of the EU contracts in this area are going to go to outside companies. The people here do not have the capacity to take them on. We are determined to get on with this and the huge contracts are going to go abroad.'

This view was supported recently when the £95.5 million M50 Dublin Southern Ring Road - one of the largest road projects to be put out to tender in Ireland - received only two bids and has had to be re-advertised.

Nevertheless, there is still speculation about pressure to let more and smaller jobs.

On the first day of the visit, Tim Ahern, of the Irish National Roads Authority - equivalent to the UK's Highways Agency - said no decisions had been made on contract sizes.

'It is still not definite that these jobs won't be broken down into smaller jobs,' he said. 'The Irish construction federation is lobbying to bring them down to no bigger than £50 million - discussions are ongoing.'

But he stressed the roads authority would look at all options.

He said: 'It is up to UK contractors to tell us what they think. We are trawling for views on how best to deliver this work. The only certainty is that there is no flexibility on the time for delivery - whether the work is let in contracts of £50 million or £200 million, it has to be delivered by 2006. We're not just talking about contract size, it's the whole supply chain and how this amount of work can be undertaken.

'From a start position of letting jobs in smaller lots we've moved to a view that the fewer and bigger, the better. Anyone who feels they have an interest in this should approach the Irish government. Firms should say what benefits they would bring in, what changes to the industry they might suggest or what disadvantages there might be in terms of them doing business here.'

The 'big is better' view was mirrored by a senior civil servant.

'The mood is to do longer stretches of road and to have bigger packages. In the past we've done a bit here and a bit there,' said Jim Humphreys from the Department of the Environment.

Of the £3.4 billion earmarked for roads, 23 per cent (£735 million) will come from the public-private partnership arrangement. The rest is a cocktail of exchequer and European funding.

Contractors are worried that the authorities, whose patches these roads will cut through, have minimal experience in PPPs. The government has said that it recognised this and was 'looking at upskilling'.

'PPP is probably a reality,' confidently predicted Dudley Solan, of international solicitors' practice Masons which co-hosted the visit.

There is considerable pressure from British firms to use design and build on other big jobs not yet identified as PPP projects. The feeling is that this would be hugely beneficial to contractors in helping to deliver the programme to budget and on time.

Part of the problem is that road design, which normally falls under the control of the local authorities in Ireland, has been farmed out to private consultants. Ten of the 12 biggest European consultants are now operating in Ireland - last year there were two.

This would suggest that there is less of an opportunity for contractors to take on D&B work.

In addition, there are conflicting points of view about the chances of foreign firms bidding alone.

'There are no brownie points for having an Irish partner on board just because he is an Irish partner,' Tim Ahern said. 'We will be looking for previous experience.'

In practice, previous major civils contracts resulted in partnerships between local and overseas firms, benefiting both.

'Any UK contractor wishing to work in Ireland would be well served to find themselves a local partner,' said Dermot Gleeson. 'There are differences here - different forms of contract, different procedures for awarding work, and a local partner brings you all the benefits of local knowledge.'

Mike Jones, of the Irish Construction Industry Federation, said that, while there may be some pressure from smaller firms to keep work at home, the size and specialised nature of some of the work made overseas involvement essential.

'The bigger the project, the less chance there is for Irish firms to win work without some overseas partnership. Jobs like the Dublin Port Tunnel are huge and specialised and require specialist expertise not available at home.'

He said that collaboration with a local contractor was a key way to control costs in an unfamiliar market.

The infrastructure boom is set against a background of economic growth that is double the EU average.

Jim Higgins, of the Department of Finance, said: 'Gross domestic product is forecast to grow at 5.4 per cent between 2000 and 2006. While growth was happening over the previous six years we didn't really invest too heavily in the public infrastructure.'

This new investment has come at a bad time for local contractors, though, as they already have more than enough work on their hands.

The pace of delivery will mean that it will have to be shared abroad.

So was the trip worthwhile?

'It went very well,' said John Bromley, of the Construction Confederation.

'The Irish government has been very encouraging and is making real noises. It's all very well for the Irish government to say 'come over', but, with the UK almost as busy, it's a big decision for a UK contractor to make.' Several of the delegates are already following up contacts made on the trip.

And the contractor's view? Mr Gleeson said: 'My feeling is that the opportunities are substantial and real. It is very encouraging the extent to which the Irish government has been persuaded regarding design and construct and PPP. British contractors have a lot to offer in these two areas, and we were encouraged by the enthusiasm with which we were received.'