Irish Water says it saved €100m in setup costs
By Finfacts Team
Jan 14, 2014 - 3:54 PM

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Irish Water today told the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht that Bord Gáis expertise has shaved close to c€100m from the setup bill for the agency. He did not say if there would be an inter-agency charge.

Irish Water executives told the Committee that the set-up costs for a brand new national utility reaching into and serving every home on the public water system were necessarily large, and so it was a priority to manage those costs.

The budget for external consultants is  €85m to be spent by April 2015. 

“Between now and 2021, Irish Water will save the Exchequer over €2bn - - which is a fraction of the set up costs,” said John Tierney, MD of Irish Water. “The set up costs could have hit €250m. Instead, the bill is €150m, thanks to the Government decision to set up Irish Water within Bord Gáis and give us access to Bord Gáis’ expertise.”

Estimates of claimed savings on projects like this are usually guesses and are seldom realised.

Tierney said Bord Gáis made it clear from the outset that specialist external expertise would be required in line with the standards adopted in utilities worldwide for the creation or upgrade of major IT platforms, systems or processes. "This skill set is completely different from the skill set required to run a utility on a day-to-day basis. IBM, Accenture, Ernst & Young and KPMG were appointed following rigorous tendering processes. Their appointment was approved by DECLG (department of environment, community and local government)."

The final cost for specialist services will be:

  • IBM €44.8m;
  • Accenture €17.2m;
  • Ernst & Young €4.6m;
  • KPMG €2.2m
  • McCann Fitzgerald solicitors will get €970,000 and A&L Goodbody will receive €2.9m while the briefing document also says another €13.3m is “ covered by another 18 contractors who were procured.”

Setup costs equate to 1.6% of the Industry estimated current asset value of €11bn; represent a one off cost of c€100 per customer, or €5 per annum over 20 years.

 Price control documents from the UK indicate:

  • Severn Trent Water expects to spend £101m to upgrade its IT systems;
  • Yorkshire Water has budgeted £110m spend on IT systems in 2010-2015;
  • Thames Water installed a new WAM system in 2011 at a cost of £150m.

"The Irish Water Programme is delivering on time and within budget," John Tierney concluded.

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