1. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Infrastructure Development in Romania Workshop

2. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Project Life Cycle by W J McCoubrey BSc CEng FICE FIEI FIHT FIAE Transport & Infrastructure Consultant Email: billy.mccoubrey@nireland.com

3. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Introduction Project Stages and responsibility Tendering and Contract Types Project Closure and Audit

4. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Cohesion Fund Financial Controls EU Commission Audits carried out by EU Commission Control Units Paying Authority Ministry of Finance Managing Authority Ministry of Finance Level 3 Responsible for completing Form B3 Intermediate Bodies Level 2 Responsible for completing Form B2 Final Beneficiaries Level 1 Responsible for completing Form B1 Internal Audit Unit System Audits by Internal Audit Units at each level throughout cascade – Article 9.1 (a) CSF Financial Control Fund Unit Control Checks on Cohesion Fund Expenditure and Systems – Articles 9.1 (a) and (b), 10 and 11 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 NRA/MoE DoELG/MoT ESB/MET

5. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

6. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

7. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Eligibility Issues (2) Treatment of Financial & other charges Operating costs Information & publicity measures Car parks Computerised management & monitoring systems

8. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

9. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A M50 Southern Cross Route Motorway Land Use

10. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

11. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

12. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Land Acquisition example

13. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A The FIDIC Rainbow The Red book Construction The Yellow book Plant and Design-Build The Silver book EPC Turnkey Projects The Green book Short Form of Contract

14. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Contract Selection STRAIGHTFORWARD PROJECT EMPLOYER DESIGN CONTRACTOR DESIGN DISCUSS IN DETAIL Employer’s requirements with the Contractor and negotiate an appropriately modified FIDIC contract fixed price – lump sum little employer involvement no major unforeseen risks Plant and/or high unforeseen risks no

15. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

16. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Cohesion Fund Finance Flows RDO / Councils NRA/MoE DoELG/MoT IB Draws down payment due within contract limits EU Commission EU Commission Control Units Paying Authority Ministry of Finance Managing Authority Ministry of Finance Level 3 Intermediate Bodies Level 2 Authorises Payment due Final Beneficiaries Level 1 Makes payment to Contractor Internal Audit Unit System Audits by Internal Audit Units at each level throughout cascade – Article 9.1 (a) Financial Control Unit Treasury Account Assembles all funds needed for Project Expenditure Project Contractor Claim from Contractor Certification of all expenditure Claim from EU (twice per year) Payment of CF Expenditures Passed to Treasury Contract Claim paid to Contractor ESB/MET

17. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A Stage 9 – Modifications Variations of Price –on materials for > 2 years contracts Modifications to quantities or scope –to be avoided where possible –> 10 % probably requires new Decision

18. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

19. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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

20. I N S T R U M E N T E S T R U C T U R A L E I N R O M A N I A 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