New Guidelines for Public Investment Management in Ireland

New guidelines for public investment management came into effect on the 1st of January 2024. The are simply called ‘Infrastructure Guidelines’ and they largely replace the previous ‘Public Spending Code’. The new guidelines can be accessed from https://www.gov.ie/en/collection/e8040-infrastructure-guidelines/  In addition, there is a  Government Circular 24/2023 that announces the advent of the new guidelines. https://www.gov.ie/en/circular/2c314-circular-24-2023-update-of-the-infrastructure-guidelines-capital-spending-requirements/

The Guidelines cover several key areas, especially evaluation, planning and management of public investment projects, including purchase or acquisitions of assets or shareholdings, in Ireland. The guidelines have been issued by the National Investment Office of the Department of Public Expenditure, NDP Delivery and Reform. The arrangements set out in the guidelines apply to all public bodies and all bodies in receipt of Exchequer capital funding.

Infrastructure Guidelines need to be ‘fit-for-purpose’

Investment guidelines need to be revised regularly to ensure that they are ‘fit-for-purpose. Much has changed since the Public Spending Code was published back in 2013. Revisions were made to the Code in December 2019. However, during the subsequent four years, the investment world in which the Code had to operate changed considerably. dramatically. In particular, the delivery of projects under the National Development Plan was badly affected by Covid-related pauses in the construction sector. Then there were the inflationary impacts of both COVID-19 public health measures and the war in Ukraine. These developments had adverse effects on the supply chain for construction materials. In the light of these developments, key support structures in place across Government were reviewed with the objective of maximising delivery of infrastructure. Therefore, new arrangements have been introduced to sharpen the focus on risk and cost management, to reduce the compliance burden on low-risk projects, bringing Ireland into line with leading international approaches to major project delivery. They are in addition to changes than were made in March 2023.

Key changes under the Guidelines

The main changes that have now been made are a reduction in the number of approval stages and a streamlining of the requirements for major projects, while retaining international best practice governance and oversight arrangements already in place. Specifically, the changes affect the Project Lifecycle for projects i.e., the series of steps and activities that are necessary to take a project from the proposal stage through to completion and evaluation. Projects vary in size and complexity, but all projects can be mapped under a project lifecycle structure. In the main, in future there will only be three approval stages in the lifecycle prior to implementation:

• Strategic Assessment & Preliminary Business Case
• Pre-tender – Project Design, Planning and Procurement Strategy
• Post Tender – Final Business Case.

What do the changes mean for major projects? Proposals with an estimated capital cost more than €200 million are considered Major Projects and are subject to the following:

• External Assurance Process at the Strategic Assessment and Preliminary Business Case stage of the project lifecycle,
• Review by the Major Projects Advisory Group at the Preliminary Business Case stage of the project lifecycle, and

• Consideration by Government at the Preliminary Business Case and Final Business Case stage of the project lifecycle.

In the case of projects with an estimated capital cost of less than €20 million, there will only two approval stages in the project lifecycle prior to implementation.

The reasons for having several control stages are simple. It is to prevent lock-in at the proposal stage and to protect scarce Exchequer resources. Accordingly, proposals must be approved, at each stage, before advancing to the next stage in the process, rather than getting overall investment approval at the initial proposal stage. As the National Investment Office put it – “While there may be a commitment in principle to the policy objectives being pursued, departments and public bodies can be prepared at any stage, despite costs having been incurred in appraising, planning and developing a project, to abandon it if on balance, continuation would not represent value for money.”

Guidance for the Different Stages

The Department of Public Expenditure, National Development Plan Delivery and Reform released the new Infrastructure Guidelines on 21st December 2023 on the weblink  https://www.gov.ie/en/collection/e8040-infrastructure-guidelines/

Attached to the weblink are thirteen individual documents in PDF format i.e. in “portable document format”. For facility, these documents are listed individually in Table 1. The table shows that the first six documents are new publications, while the final seven documents have been republished from the earlier Public Spending Code.

Table 1: CAPITAL – Infrastructure Guidelines, December 2023

Appraisal of Current Expenditure

The foregoing discussion related to capital expenditure. There are separate guidelines relating to current expenditure, which are overseen by the Government Accounting Unit of the Department of Public Expenditure, NDP Delivery and Reform. The relevant weblink is at https://www.gov.ie/en/campaigns/db9e8-government-accounting/  The three sets of guidelines are presented as part of the ‘Value for Money Framework’ on the website and listed her in Table 2. They had previously been presented as components of the earlier Public Spending Code.

Table 2: CURRENT Expenditure Guidelines

Will there be further reviews?

The advent of the new ‘Infrastructure Guidelines’ makes a lot of sense. If the previous arrangements, under the Public Spending Code, were not ensuring timely delivery of public sector projects, then it was time for change. It does not matter what the process is called, provided it does the fundamental job of ensuring projects are delivered on time and within budget.  And some departments have heavier burdens that others. Specifically, it is the responsibility of some to ensure that, where required, departments and agencies draw up their own sector specific procedures for evaluating, planning and managing public investment, which align with the Infrastructure Guidelines. There is also a necessity to have regular reports published to demonstrate that departments and agencies are fully implementing the requirements of the new guidelines. Only in this way can Irish taxpayers be assured that they are getting real value for money from public expenditure.

Tom Ferris, Consultant Economist.

Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and blogs regularly for PAI. He was formerly the Senior Economist at the Department of Transport, Ireland.