Infrastructure Guidelines replace Public Spending Code

Published in December 2023, the Government’s new Infrastructure Guidelines set out value for money guidelines for the evaluation of public investment projects, replacing the Public Spending Code and the interim changes introduced in March 2023.

The Infrastructure Guidelines will act as the new centralised source of guidance from government for the completion of capital projects in Ireland, refreshing the requirements for such projects, reducing the number of approval stages, and streamlining the requirements for major projects, while “retaining the international best practice governance and oversight arrangements already in place”.

Key changes

Key changes have been made in various areas of the process in order to streamline project applications, including the introduction of shorter form strategic assessment informing the development of the preliminary business case at approval gate one. Minimum thresholds for projects have also been increased: those needing a detailed project brief and procurement strategy (approval gate two) have been increased from €10 million to €20 million; and the threshold for Major Projects Advisory Group (MPAG) assessment has been increased from €100 million to €200 million.

External assurance process and MPAG assessment for major projects will be focused on approval gate one, but the guidelines state that MPAG will be able to compel projects with which they are unsatisfied to revert for further pre-tendering scrutiny where warranted. The final business case (approval gate three) remains in place, stipulating that the case includes:

• final confirmation of the strategic relevance of the investment proposal and detailed specification of the objectives of the proposal;
• the detailed business case as set out in the planning and design phase and as confirmed by the tendering process;
• economic and financial appraisal using updated information from the tendering process as necessary;
• re-examination of affordability within existing resources and with particular reference to the medium-term exchequer capital envelope for projects funded from voted expenditure;
• full risk assessment and consideration of remaining optimism bias;
• detailed delivery schedule;
• benefits realisation plan; and
• evaluation plan.

Timeliness

With long timelines and delays in decision-making a common complaint with regard to capital projects in Ireland, the Infrastructure Guidelines state that there is a “necessity to ensure that projects are delivered in a timely manner and that there are no unnecessary administrative delays hindering this”.

Changes that have been made within the Infrastructure Guidelines in order to streamline the process include the approving authority performing consideration of the strategic assessment prior to further development of the business case and further clarity on the roles of the approving authority and the sponsoring agency, with the sponsoring agency given “primary responsibility for evaluating, planning, and managing public investment projects within the parameters” of the guidelines.

Clarity has also been provided on requirements within the preliminary business case in an attempt to demystify the process and allow applicants to understand it before application, informing would-be applicants of the elements required within, which include:

• confirmation of the strategic relevance of the proposal and detailed specification of the proposal’s objective;
• description of the shortlist of options to deliver said objectives;
• demand analysis and description underlying assumptions;
• climate and environmental performance assessment;
• appraisal options, such as financial and economic appraisal and sensitivity analysis;
• affordability assessment within existing resources;
• risk assessment;
• proposed approaches to procurement, implementation, and operation;
• assessment of delivery risk;
• key performance indicators monitoring and assessment plan; and
• recommendation for the approving authority.

Changes in this regard are manifold, with further details on the procurement strategy now required, including considerations of supply chain capacity and appetite, risk management approach, and how value for money will be achieved. Climate and environmental performance assessments will be required to include greenhouse gas emissions projections and resilience forecasting for the project. An assessment of construction productivity requirements, particularly in relation to modularity will also be required.

With objections a constant challenge with such large infrastructure projects, business cases are now required to include consideration of likely objection levels within the planning process.
Strategic assessment

The Infrastructure Guidelines now stipulate that an applicant must carry out and submit a strategic assessment of their proposal to the approving authority before a preliminary business case for the project is developed. The strategic assessment will set out: investment rationale; objectives; strategic alignment with government policy; preliminary demand analysis; and the longlist of potential options.

The introduction of the strategic assessment stage is similar to the strategic assessment report and Decision Gate 0, which had been introduced in the Public Spending Code but removed from the process by Circular 06/2023. The new strategic assessment stage is, however, designed to a lighter-touch process, with the approving authority and accounting officer given an earlier say in the preliminary business case development. Thus, while not constituting a full decision gate, this stage allows the approving authority to remain informed of a project’s progress at an earlier stage and request amendments, thereby avoiding situations where a sponsoring agency allows an unsatisfactory project to progress towards a decision gate.