‘Horrendous’ procurement rules pushing up social housing costs

A "horrendous", onerous public procurement process is pushing up the cost of providing local authority housing, Dublin City Council deputy chief executive and head of housing Brendan Kenny has said.

Mr Kenny was speaking after it emerged the construction of 54 social homes at St Teresa's Gardens in Dublin's southwest inner city is projected to cost about €26 million, or almost €500,000 per home. Taoiseach Leo Varadkar on Friday said he was seeking a briefing on the matter.

The scheme included eight one-bedroom, eight two-bedroom and 28 three-bedroom apartments and a terrace of 10 two-bedroom houses on the council-owned site of the former 1950s flat complex beside the Coombe Hospital.

A report published earlier this month by firm of surveyors Linesight put the building cost of an average family home at €126,000 to €161,000.

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The St Teresa’s Gardens homes would be built to the highest standards, Mr Kenny said. “They’d be better quality than an awful lot of what’s being built in the private sector, so it’s not comparing like with like.”

The cost of building a social home on land owned by the city council was an average of €300,000, Mr Kenny said, but he said there were additional costs associated with St Teresa’s Gardens. “There are issues of contamination and site improvements and a temporary [sports] pitch that’s adding to the cost.”

City council building projects could also require site security, and were generally in built-up areas which made it difficult for large trucks and machinery to access the sites, which added to costs, he said.

However, he said one of the most substantial costs associated with council housing was the procurement process required to select a developer.

“The private sector doesn’t have to go through the horrendous public procurement process we have to go through. The process of competing for public jobs is much more onerous for the contractor, and has become even more onerous in the last few years,” Mr Kenny said.

“If I could just go along to a contractor in the morning and select him for the job, I could get great value for money,” he added.

Inflexible process

Royal Institute of the Architects of Ireland housing spokeswoman Claire McManus, of JFOC Architects, agreed the procedure for awarding public contracts pushed up costs.

“The issue is that these projects can be very complex and complex projects require a flexible approach, but the public procurement process is inflexible,” she said.

The initial phase of bidding for a public project is extremely time-consuming she said, and once the project starts, there is little scope under the procurement rules to adapt to any challenges that might arise on the site. For this reason costs have to be built in up-front.

“You’re trying to build out risk, because you have to make sure you’re not going to lose your shirt on a project, so the local authority might be getting certainty but they’re not getting value,” she said.

“The public process could never be as efficient as he private sector, but that is understandable because when you are spending public money you have to have a transparent, open and fair process, but what would help is if staff levels in the architectural departments of local authorities were reinstated so they could write better project briefs.”

Hugh Brennan, chief executive of Ó Cualann, which last year sold 49 homes on council land in Ballymun at prices starting from €140,000 said he did not have to use the public procurement process, which was a cost saving, but he said it was "hard to see how social housing could cost up to €500,000".