Dáil Éireann Debate, Tuesday - 11 July 2023
335. Deputy Ivana Bacik asked the Minister for Housing, Local Government and Heritage if he will make a statement on the effect of inflation on local authorities and approved housing bodies in the context of construction. [33446/23]
View answerHousing for All is the Government’s plan to increase the supply of housing to an average of 33,000 per year over the next decade. This includes the delivery of 90,000 social homes and 54,000 affordable homes by 2030.
Since 2020, there has been significant inflation in construction materials, fuel and energy costs. The COVID-19 pandemic and the Russian invasion of Ukraine in 2022, were significant factors impacting on the level of construction inflation. This inflation, coupled with supply chain constraints, impacted on the cost of delivering housing projects. In May 2022, the Government introduced the Inflation/ Supply Chain Delay Co-operation Framework. This framework included measures to:
- address delay to the Substantial Completion of the Works, or a Section of the Works, that had occurred since 01 January 2022 where the delay is caused by supply chain disruption;
- address recent inflation in the prices of fuel and energy;
- address inflation in materials, from 1 January 2022 onwards for those Public Works Contracts with a version date earlier than 7th January 2022; and
- proactively, and collaboratively, manage the on-going impact of these external factors insofar as is possible within the project’s original delivery parameters.
In 2022, following the introduction of the framework, tender competitions for social housing projects indicated some reduction in the levels of price volatility, along with some increase in the number of tenders returned per competition. This improvement in the tendering environment has continued into 2023.
On 3 July, the Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe TD, and Minister of State with responsibility for Public Procurement and eGovernment, Ossian Smyth T.D., announced significant amendments to the Public Works Contract to provide greater certainty with respect to risk in response to continuing challenges in the construction market. These measures include revised price variation clauses for the recovery of inflationary costs and the removal the fixed price period for inflation energy and fuel. The package will rebalance the risk involved in delivering public works projects, while maintaining expenditure control for contracting authorities.
