Audit office report finds capital projects costs soar by £2.45bn

Northern Ireland's major capital projects portfolio will cost £2.45 billion more to complete than originally estimated, an Audit Office report has found.

The report by Comptroller and Auditor General Dorinnia Carville provides an overview of progress on 11 projects previously covered in a 2019 report, including seven flagship infrastructure projects identified by the Northern Ireland Executive in 2015 as highest priority.

That 2019 report had identified cost overruns for the 11 projects of around £700 million.

The latest report said that, based on current estimates provided by departments, the total cost overruns are now close to £1.94 billion.

More than four years on, the report said only one of the seven flagship projects has been completed.

The seven flagship projects are the A5 road, the A6 road, Belfast rapid transit, Belfast transport hub, the Maternity and Children's Hospital, regional and sub-regional stadia, and the Northern Ireland Fire and Rescue Learning and Development Centre in Cookstown.

The Belfast rapid transit project is the only flagship project to have fully completed.

An additional four projects which the report said had experienced problems are the critical care centre at the Royal Victoria Hospital, primary community care centres at Lisburn and Newry, Ulster University's greater Belfast development, and the Strule shared education campus.

Ms Carville's report said delays and costs overruns have also continued to persist in more recently approved projects.

In the period April 2019 to August 2023, the major capital projects portfolio across Northern Ireland departments consisted of 77 projects.

Originally estimated to cost £5.63 billion to complete, it is now expected to cost £8.08 billion, a 44% increase on the original business case cost estimates.

Only nine of the 77 projects are expected to meet both their original time and cost estimates.

The report said: "Given the scale of delays and cost overruns, we are left with the clear impression that departments are not achieving value for money in the delivery of these major capital projects.

"As major capital projects run over the course of several years, it will take time to fully assess the impact of the actions that have been taken so far to improve delivery in Northern Ireland.

"However, given the lack of substantive progress since our last report, we are of the view that immediate action is needed to prevent further cost overruns and delays."

The report notes that, over the past 10 years, there has been a series of reviews by bodies including the Strategic Investment Board, the Confederation of British Industry and the Organisation for Economic Co-operation and Development, as well as a 2020 report by the Northern Ireland Assembly's Public Accounts Committee.

Collectively, the report said these have highlighted "significant weaknesses" in the commissioning and delivery system for major capital projects in Northern Ireland, as well as the "need for enhanced governance and improved staffing capacity and capability".

While the report identifies some limited progress, it concludes that there is little evidence of the substantial reform that is necessary.

Ms Carville said: "Major capital projects are inherently complex, and the reasons for delays and increased costs can, in some cases, be attributed in part to significant external factors, including the impact of the pandemic, inflation and global political factors.

"Even so, it remains extremely concerning that, more than four years after my office's last report on this issue, there is little evidence of improvement or past lessons learned being applied to new projects.

"Even among the flagship projects, identified as the Northern Ireland Executive's highest priority, progress has been very limited.

"It is clear that departments are not achieving value for money in the delivery of these major capital projects"

"Successful completion of capital projects is crucial for Northern Ireland in supporting our economy and ensuring the effective delivery of public services."

Ms Carville added: "Failure to make fundamental reforms to the way major capital projects are commissioned and delivered is a significant contributing factor in the substantial cost and time overruns identified in this report.

"A comprehensive transformation project must be established to overhaul the system for commissioning major capital projects and ensuring stronger accountability for how these projects are delivered."