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Minister Michael McGrath TD outlines National
Minister Michael McGrath TD: National Development Plan priorities for 2022
The National Development Plan (NDP) published in October 2021 represented the largest such plan in the history of the State. The initial period of its rollout will be pivotal in consolidating the progress already made, and most importantly, in delivering the infrastructure to support our future climate, social, and economic requirements, writes Minister for Public Expenditure and Reform Michael McGrath TD.
Effectively delivering on investment of this magnitude requires the necessary capacity in our construction sector, delivery-focused oversight and governance structures, the adoption of technology and sound public policy.
Reforms
We have already put in place numerous reforms to support delivery, governance, and the implementation of capital projects and programmes. We have included professionals from industry early in the project lifecycle process to provide additional insight to support a rigorous decision-making process.
In December 2021, I announced the introduction of the new External Assurance Process (EAP) for major capital projects which allows independent external experts to scrutinise investment projects. To support the EAP, I have also established a new Major Projects Advisory Group (MPAG). The first meeting of the MPAG took place in January and will bring on board independent experts to further strengthen project management and support my department in its project assurance role.
The Project Ireland 2040 Delivery Board, the core function of which is to track the delivery of projects, is comprised of the secretaries general of the main capital spending departments. There will almost certainly be delivery challenges as we ramp up investment. To respond to these challenges, the Board will focus on the delivery
of infrastructure projects on time and on budget. The Government also provided in the NDP for the addition of up to five external members to the Board to bring additional expert knowledge and an enhanced challenge function to the deliberations of the Board.
Along with these reforms, we will continue to report on project delivery through the work of the National Investment Office (NIO) in my department. The NIO will collate data on the planning and delivery of projects through the MyProjectIreland investment tracker. Our publicly available and detailed tracker provides information on over 350 major capital projects across all regions and highlights the pipeline and progress of such projects. This monitoring is intended to show taxpayers that we are achieving value for money and improving project delivery.
Capacity and digital adoption
Strengthening our governance and oversight structures is only one part of the measures we need to take. Ensuring that capacity in the construction sector is available to meet demands is one of our primary objectives for 2022. A competitive,
dynamic, and sustainable construction sector is needed to build the infrastructure promised by our ambitious NDP. The Innovation and Digital Adoption Subgroup, as part of the wider Construction Sector Group (CSG), will play an active role in promoting this necessary initiative.
Following consultation with members of the CSG, several cross-cutting issues will be tackled in 2022. These include the improvement of procurement, the supporting of innovation and digital adoption through the Build Digital Project and the better engaging with government departments to put in place the required skills and expertise.
Innovation and digital adoption within the construction sector are being supported with a range of actions to be delivered using the Government’s collaborative approach and through continued engagement with industry representatives via the CSG.
One such action is to improve delivery using digital technologies. In November 2021, I announced that a consortium led by TU Dublin would be awarded €2.5 million in grant funding over a five-year period to deliver the Build Digital Project. This project will provide guidance and leadership on the digital tools, standards and training required across the construction sector to increase productivity and sustainability.
The Disruptive Technology Innovation Fund (DTIF) is a €500 million fund being rolled out over the 10-year period of the NDP. A total of €235 million has been allocated to 72 projects over the three DTIF calls to date. The deadline for applications for a fourth call was 10 February 2022.
Enterprise Ireland, through the actions of the CSG Innovation and Digital Adoption Subgroup, will also establish a Construction Technology Centre in 2022 to identify the optimal consortium of research performing organisations in the Irish ecosystem that will deliver productivity and sustainability for the Irish construction sector.
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In addition, the Supporting Excellence Action Team (SEAT) report, published alongside the NDP, examined the capability of the public service to deliver a largescale capital programme. The 34 actions included in the report will all be progressed in 2022 with the aim of boosting delivery capability in individual sectors, supporting excellence from the centre and improving coordination to support excellence on a system wide basis. Examples of measures include the development of the Office of Government Procurement’s Commercial Skills Academy, the further enhancement of our public procurement framework, as well as the introduction of new legal and planning reforms.
Conclusion
The revised NDP published by the Government is a robust and ambitious plan that will have a transformative impact on this country’s climate, economic and social development. Our focus now must be on effective delivery of this investment. 2022 is a pivotal year in bringing forward critical reforms to remove bottlenecks in the system and to build capacity in both the public sector and private industry.
An innovative, dynamic, and responsive construction sector will be crucial in the delivery of the NDP. I will continue to support and engage with the sector to sharpen our focus on delivery throughout 2022 and help ensure success in our common endeavour. I am confident that working together we will meet the needs of our citizens in a way that supports our climate ambitions and our economic recovery from the Covid-19 pandemic.
Digital twins: A digitally assured future for our infrastructure
Infrastructure organisations are renewing their efforts to digitalise. We are seeing data, analytics and new technologies being used to dramatically improve the planning cycle. We are seeing infrastructure owners and operators starting to build digital into their operations, from integrated asset management systems through to new payment systems, writes Jenna Davis, Associate Director of Infrastructure and Government at KPMG Ireland.
Talk of digital twins is becoming common place however confusion remains over what a digital twin is and therefore what is the right route for organisations to develop their digital twin capability. This is unsurprising as the answer is that a digital twin is a digital representation of your assets or network and representation is just that. Whilst it could be a fully digitally interactive or even virtual reality multidimensional physical model embedded with IoT sensors and asset service history, it may also be a performance simulation of how your infrastructure, or just critical parts of it performs that is modelled on entirely different parameters than the physical design. It may encompass other forms of digital planning or decision support tools across key aspects of the business such as capital portfolio planning and management based on project data.
KPMG in collaboration with Centre for Digitally Built Britain produced a report on the value of information in the construction sector that estimated the capex BIM savings to be 1.5 per cent-3 per cent and 7.5 per cent-14 per cent operational savings. These enabling benefits in an industry with slim margins are too great to be dismissed in the context of time, cost and risk.
In developing a blueprint for a digital twin, organisations should be asking themselves what their role is, what decisions they need to make, what data capabilities do I need to achieve this, what organisational capabilities do I need to do this and then lastly what type of Digital Twin do I really need? What is key to any form of digital twin, as with any technology, is the capability of the people, supported by the necessary systems and controls, that need to use it. This applies to the end users and those who will manage the data processes. support platform that need to be aligned to business outcomes and any investment will need to be mindful of the pace technology development moves so organisations should develop a nimble approach that they can flex as new technologies come to market. And as with any digital tool, the digital twin is only as good as the underpinning data and information management framework; don’t just buy the shiny tech, invest in the people and data to truly enable a digital future.
E: jenna.davis@kpmg.ie W: www.kpmg.ie
The principles of asset management are key to making the necessary investment decisions to transition to sustainable infrastructure but changes from traditional to whole life costing approaches and agility to cope with short- and long-term changes are needed, writes Matthew King, Head of Infrastructure Asset Management, Director Infrastructure and Government at KPMG Ireland.
Asset management has long been the practice of balancing investment decisions across the creation of infrastructure assets and the management of existing ones to achieve the best value over the life of the assets. Historically there have often been competing outcomes that require value and outcome objectives to be balanced against cost. However, whilst some industries have long had environmental performance objectives, the imperative to consider the full suite of ESG is now clear to all. Environmental factors and governance practices have long been discussed by the infrastructure sector. It is the social focus where the balance of economics and engineering now come to the fore; how do we appraise the social benefits of investment in tandem with the asset lifecycle? Asset management principles aid this dynamic by setting the strategic objectives so that the line of sight to specific assets in operation is clear and aligned. As such, asset management becomes a tool to deliver sustainable infrastructure, with the societal benefits as a key measure.
Furthermore, we are in a period of seismic change driven by climate change, the pandemic and global political and economic patterns. How we live, work, travel has changed and whilst we do not know how much of the change will stay for the long term, the demand on our existing infrastructure has changed and questions are raised on the investment case for new infrastructure – at least as it may have been conceived or indeed approved only a short time ago.
The good news is that the principles that define asset management are key to making the necessary decisions but changes from the traditional approaches and decision support tools are needed.
• Our infrastructure systems are more connected than ever, and these connections are fundamental to achieving sustainable infrastructure.
At the national level, strategies and government policy are needed to foster collaboration across industries and joined up planning and decision making.
• Whole lifecycle costing to inform the capital injections needed to achieve sustainability targets.
• Asset policies to deliver on sustainable strategies consistently across sectors.
• The balance between opex and capex – how to use existing infrastructure effectively in the circular economy.
• What is the return on investment on capex vs opex funding? How benefits are defined and measured is key and needs to be consistent.
Capex could need longer term incentives to drive the right behaviours and decisions in construction.
• Future proofing – integration of new assets and manage asset obsolesce proactively and responsibly.
Ireland has a maturing asset management capability complimented by the growing capital projects capability to deliver the Project Ireland 2040. With these skills and ambition, the infrastructure sector will be an important catalyst, and needs to be ready to take on the challenge and lead the change at the most senior level in our infrastructure organisations.
E: matthew.king@kpmg.ie W: www.kpmg.ie
Beyond the business case: The transition to delivery
The Public Spending Code (PSC) was first published in 2013 as a structure to ensure value for money in public expenditure particularly in major infrastructure projects, writes Jenna Davis, Associate Director of Infrastructure and Government at KPMG Ireland.
Complex and major projects can take over a decade to cycle through inception, detailed design, and delivery to get to the operational phases. Societal needs, uncertainty of future demand as climate change progresses, and significant world events such as a pandemic add layers of challenge to large scale infrastructure projects as these drive changes in need over that time. The ability to manage change and remain agile as projects transition from design to delivery will be the differentiating factor for successful infrastructure investment going forward.
The Public Spending Code also brought in significant changes to the governance over project development and project delivery. That will delay project development, but it is making sure projects being brought to market will have more developed scopes and more realistic cost estimates. We need to ensure that it also allows projects to remain agile and responsive to societal changes. Governance needs to be made to work effectively for the project and be seen as a positive agent for change for the better.
To achieve the ambitions of Project Ireland 2040, as detailed in the National Planning Framework (NPF) and the National Development Plan (NDP), there are three key aspects to consider to ensure appropriate governance yet enable agility:
Strategic procurement
Complex capital projects require a multitude of resource and expertise with the sector. Procurement strategies developed as part of the initial business case stages should be regularly reviewed to identify gaps and opportunities to further align with the current supply chain environment and updated NDP. There is also a need to ensure an external assurance process (Update of the Public Spending Code: Guidelines for the External Assurance Process for Major Public Investment Projects; effective 17 November 2021) is included as part of any contracting arrangements.
Public and private engagement
Public entities at a national and local level, such as government departments, local authorities, state agencies, devolved agencies, semi-state companies and approved independent bodies are all responsible for the delivery of capital programmes. These entities need to work with the supply chain to communicate the increased capability and capacity needs with realistic timetables to allow enough time to plan, upskill and respond to project tenders without potential delay to execution. A strategic procurement strategy that engages the private sector early at home and abroad will be needed to bridge the skills gap. Public entities will also need to review their internal capability to evolve from planning teams to capital project managers leading the execution stages.
Intelligent KPIs
Key performance measures form the structure of effective governance in project delivery. To understand the actual status and performance of a delivery team, KPI measures on schedule, costs and risk are needed but measures that reflect progress towards meeting the ultimate objective of the project will maintain clarity for decision making, particularly at board level. You can have a project delivered on time and on budget, but we also need a stand back to make sure it has met the need identified in the first place. These measures need to be incorporated at procurement stages so that external assurance throughout can be applied effectively to add insight during delivery and as part of a post execution review.
The overriding theme for publicly funded major capital projects will be managing transition and change. Transition from planning to execution will see change in terms of what was planned, sector change in the demand for more skills and people; and change in what is actually needed now. Smart procurement, clear communication and meaningful measures will allow the ability to anticipate change and react effectively to manage the outcomes. These changes could manifest as scope variations or amendments to government policy or new regulation. Infrastructure projects are long term investments delivered often over decades. We must be agile to avoid under delivery on the outcomes that Ireland needs from its infrastructure and at the same time exercise appropriate governance and change processes to oversee them.
E: jenna.davis@kpmg.ie W: www.kpmg.ie
