KPMG was delighted to host the recent IPFA webinar on Project Ireland 2040’s role in recovering from the COVID-19 crisis.
Government and industry have reacted rapidly to dealing with the crisis – dealing with immediate priorities necessitated by shutdown in the construction industry and wider economy.
However, the speed at which focus has shifted to recovery and our new reality is encouraging. It was clear that Project 2040 (which still has broad political support), is recognised as a key enabler of economic recovery and growth.
There was an acceptance, in particular, that we were too pessimistic about the future in planning our recovery last time around. It is acknowledged that we didn’t plan for growth which left us playing catch up and facing into significant housing shortages and congestion issues. It does appear to be accepted within Government that we need a different approach this time around and need to continue to invest.
It is proposed however that there will be a short period of re-evaluation of projects and programmes. It will look at some reprioritisation to balance theoretically-better projects that enhance supply side more in the longer term with shovel ready projects that can deliver an immediate impact. Importantly, this review is not going to hold up activity on projects in the interim. It is also likely to look at the sustainability of projects and delivery methods, for example off site construction and modular build will come to the fore.
No doubt there will also be some re-evaluation in business cases to consider whether current behaviours will be sustained post COVID-19 or whether there will be a return to pre COVID-19 patterns. That is obviously trying to predict the unknown. Demand for public transport might be well down now but it would be short sighted to make 50-100 year infrastructure decisions solely on that basis.
There was challenge put forward as to whether the construction industry would be able to deliver at the scale needed.
While there has been a large decline in construction output for the period of the lockdown, industry has reacted quickly with a focus on introducing safe ways of working as we commence a reopening of the industry. The vast majority of the construction labour force has completed COVID-19 safety training whilst in lockdown. There is also increased collaboration between the public sector, unions and the construction industry around immediate reaction to the crisis and longer term measures to attract skills into the industry. Having a confirmed and clear pipeline would allow the industry to plan ahead, to mitigate supply chain challenges with international suppliers. Of particular interest, will be whether the current crisis accelerates the use of innovative techniques in technology and construction methodologies (BIM, modular, retrofit) and the transfer of best in class approaches throughout what is a fragmented industry.
It is hoped that this partnership culture can be continued to facilitate growth in the industry. A need to reform the nature of our contracting mechanisms was clearly called out to try and avoid the cycle of litigation and disputes going forward which not alone is costly but also causing significant delays.
Housing was a major challenge before COVID-19 and remains so today. The renewed focus by the LDA on delivery of affordable housing mechanisms as part of their strategic approach was welcomed as was the conclusion that development of a mechanism for affordable homes was a solvable problem. Projects in this area can support the recovery in terms of significant short-term economic gain from construction activity but also solve a challenge that would otherwise remain with us for the long term. The need for the related infrastructure to support compact growth and development of new communities was called out – ranging from public transport, broadband to water connections.
While there is a concern that funding and affordability will be a constraint on the delivery of Project 2040, there are also some positive aspects in this regard – the low interest rate environment and availability of capital for both the Exchequer and private finance and moves within the EU to provide support for recovery. There was a clear message that Government has the capital to invest. However, there was a challenge put back that failing to leverage in private finance outside of user pay projects was a sub-optimal use of capital. This remains a bone of contention for the industry.
In conclusion, now more than ever, there is a need to deliver and enhance Project Ireland 2040. Obviously, there may be some changes to reflect the new reality both in terms of priorities and ways of working. However, that should not hold up project development in the interim. Project Ireland 2040 does have cross party support and it was called out that we need the new Government formation plans to confirm this. We also need to work in partnership to make sure we are leveraging in solutions to deliver more, faster and better.
This article originally appeared on the IPFA website, and is reproduced here with their kind permission.