Contractors angry at Ireland’s rushed fixed-price contract plan

The Irish construction industry is in talks with the government over plans to bring in new contracts for contractors and consultants on future public projects to reduce cost overruns.

Contractors body the Construction Industry Federation (CIF) and consultant group the Society of Chartered Surveyors have begun talks with the Irish Department of Finance on the new contracts.

The government is planning to pass more risk over to contractors to ensure costs are kept in check by forcing them to submit fixed-price lump-sum contracts for future schemes. Until now the government shouldered increases in material and labour costs. Consultants will also face competitive fee bidding for public work. Previously fees were negotiated.

The move has angered the CIF. A spokesman said: “We believe they are going down a dangerous road for the future (with these contracts). It’s not a sensible approach. The contracts are not used in any other part of the developed world.”

Tony Smith, chief executive of the Society of Chartered Surveyors, said he was unable to comment on the specifics of the negotiations. He said: “The process has just begun. I think the government wants a conclusion to the negotiations fairly quickly.”

It’s not a sensible approach. The contracts are not used in any other part of the developed world.

CIF spokesman

A major Irish consultant said the current regime had been ineffective. He said: “It’s allowed contractors to claim back for increases in labour and materials. It’s been a bit of a mess.”

In a speech late last year, minister of finance Charlie McCreevy said the new regime would “help reduce the scale and scope of cost overruns on construction projects”. He said he was determined that the government’s planned £20bn spending programme in the next five years was used effectively.

McCreevy said the new regime for consultants would “move away from a situation where fees rise as project costs rise”. He said: “The proposal will introduce greater competition into the procurement process but, importantly, without compromising on quality.”