Infrastructure Development in Romania

1
Infrastructure Development in Romania

• Workshop

2
Project Life Cycle

• by
• W J McCoubrey
• BSc CEng FICE FIEI FIHT FIAE
• Transport Infrastructure Consultant
• Email billy.mccoubrey_at_nireland.com

3
Introduction

• Project Stages and responsibility
• Tendering and Contract Types
• Project Closure and Audit

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Cohesion Fund Financial Controls
EU Commission Audits carried out by EU
Commission Control Units
Certification of all expenditure
Certification of all expenditure
Certification of all expenditure
DoELG/MoT
ESB/MET
NRA/MoE
Certification of all expenditure

• Structure of financial controls to
• comply with Commission Regulations (EC) 1386/2002
• Article 9.1(a) and 9.1(b) and the Protocol on
• Internal Audit (IA) co-operation

RDO / Councils
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Project Stages

• 1 - Concept
• 2 - Preparation
• 3 - Application
• 4 - Evaluation - Funding Appraisal
• 5 - Decision - Approval for Cohesion Fund
• 6 - Selection and Award of Contract
• 7 - Contract Supervision
• 8 - Payments
• 9 - Modifications
• 10 - Project Closure and Audit

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Eligibility Issues

• General rules open to interpretation
• Commission Decision
• defines total CF assistance limit and period of
  eligibility
• Transparency
• Expenditure incurred in eligibility period
• Eligibility of expenditure
• Public Authority employees
• Land purchases
• limited to maximum 10 of project eligible
  expenditure

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Eligibility Issues (2)

• Treatment of Financial other charges
• Operating costs
• Information publicity measures
• Car parks
• Computerised management monitoring systems

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Land Issues - Ireland

• Land purchases
• limited to maximum 10 of project eligible
  expenditure
• typically 25 -30 of overall project cost
• M50 SCRM major disagreement with auditors
• time period
• land not used for project
• robustness of systems for monitoring and audit
  trail
• initial decision was to exclude land from
  eligibility claims
• revised to now include land that has been
  directly used
• only within boundaries of project
• only payments made to landowners within
  eligibility period
• excludes interest payments from CF claim

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M50 SouthernCrossRouteMotorwayLand Use
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M1 Lissenhall-Balbriggan

• Commission Decision C (2000) 3518
• Period covered 07/07/2000 31/12/2004
• Decision covers expenditure during eligible
  period to value of 41,485,702 with 85 funding
  being 35,262,847 maximum
• Expenditure covered construction costs of 9.8km
  of main line, motorway including earthworks,
  pavement, drainage and fencing.
• Elements of structures, interchanges, side roads
  and land acquisition not assisted

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M1 Lissenhall-Balbriggan

• Commission Decision C (2000) 3870
• 15 October 2003 Amended original decision
• Decision covers expenditure during eligible
  period to value of 62,134,212 with 85 funding
  being 52,814,080 maximum
• Expenditure covered building and construction
  costs of provision of elements of structures,
  interchanges, side roads, earthworks, pavement,
  drainage ,fencing and land acquisition of
  mainline motorway

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Land Acquisition example
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The FIDIC Rainbow

• The Red bookConstruction
• The Yellow bookPlant and Design-Build
• The Silver bookEPC Turnkey Projects
• The Green bookShort Form of Contract

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Contract Selection
STRAIGHTFORWARD PROJECT
EMPLOYER DESIGN
CONTRACTOR DESIGN
fixed price lump sum little employer
involvement no major unforeseen risks
Plant and/or high unforeseen risks
DISCUSS IN DETAIL Employers requirements with
the Contractor and negotiate an appropriately
modified FIDIC contract
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Stage 8 Payments

• Financial Control
• IB assists FB with claims and payments
• Payment of Contract Claim
• FB responsibility, funds from IB
• Eligibility of Claim
• handled by IB FCU
• Drawdown of Cohesion Funding
• twice yearly by IB to Paying Authority
• all funds lodged in Treasury
• IB authorised to make payments direct to FB

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Cohesion Fund Finance Flows
ESB/MET
Contract Claim paid to Contractor
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Stage 9 Modifications

• Variations of Price
• on materials for gt 2 years contracts
• Modifications to quantities or scope
• to be avoided where possible
• gt 10 probably requires new Decision

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Stage 10 Project Closure and EU Audit

• Completion of the contract
• Project closure
• Archival of documentation
• Minimum of 3 years after Project closure
• Can be as much as 7 years for Audit
• EU Audit
• Regulation compliance
• Eligibility issues
• Financial corrections loss of funding

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EU Audit in Ireland

• Cohesion I
• N4 Collooney / Sligo, Stage II (CF No.
  94.07.65.004)
• Cohesion II
• No audit reports available
• Only 3 projects reported on
• all under review
• 11 million financial correction, claimed wrong
  form of contract as price variation inappropriate
• 750.000 still under discussion of which
  100.000 issues relating to use of transport on 2
  sites

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Infrastructure Development in Romania Workshop
Issues

• Maximising Grant Assistance
• Project selection
• Eligibility of expenditure
• Delivery - Earning Grant
• Contract selection
• Contract administration
• Ensuring Grant is Certified and Retained
• Audit trail
• Project closure
• Archiving documentation