The package will aim to rebalance the risk involved in delivering public works projects, while maintaining expenditure control for contracting authorities.
- Introducing Liability Caps for Contractors );
- Amending the Price Variation Mechanism for recovery of inflationary cost to an approach solely based on published indices;
- Removing the fixed price period for materials, energy and fuel;
- Lowering the threshold for recovery of inflationary costs in key material categories;
- introducing a simple price variation provision to cover materials in Public Works Contracts of lesser value.
On announcing these changes, Minister Donohoe said: “I am pleased to announce these measures to address uncertainty and risk in the delivery of Public Works Contracts. This follows a series of measures introduced by my department over the last 18 months to address the challenges that the construction industry has faced over the past two years in terms of material price inflation, supply chain disruption and the reduced availability of professional indemnity insurance. The measures that I am announcing today under my department’s renewed focus on balancing the concerns of the industry and the needs of departments and agencies to deliver public infrastructure.
Improving the risk/reward balance of public works contracts through the introduction of caps on liability and reform of the price variation mechanisms will encourage a greater level of competition for public works tenders. This will lead to an improved quality of bids received and maximize value-for-money, key priorities for my department in delivering the NDP.
We continue to develop a comprehensive and agile response to the risk posed by exceptional levels of inflation and supply disruptions that create a challenging and uncertain environment for project delivery.”
The new platform promotes digitalisation with increased online functionality and offers free and unrestricted access to procurement competitions.”
The Construction Industry Federation has welcomed the announcement of amendments to the Public Works Contract to support the delivery of infrastructure under the National Development Plan critical for Housing for All and Climate Action.
Paul Sheridan, CIF Director of Main Contracting said: “While we need to study the proposed mechanisms in detail, they appear to embed strict checks and balances that will help provide greater certain budgetty and value for money to the state and taxpayer, while also supporting the viability and delivery of important infrastructural projects.
“These mechanisms bring us closer to alignment with international norms and are to be widely welcomed by our industry. We remain focused on supporting the Government and Office of Government Procurement as they work on developing further reforms necessary to effectively balance risk, support green procurement and ensure that all projects are awarded based on quality and not the lowest price, through the International Construction Measurement Standards and Building Information Management.”
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