infrastructure development in romania
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Infrastructure Development in Romania. Workshop. Project Life Cycle. by W J McCoubrey BSc CEng FICE FIEI FIHT FIAE Transport & Infrastructure Consultant Email: [email protected]. Internal Audit Unit - PowerPoint PPT PresentationTRANSCRIPT
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
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 McCoubreyBSc CEng FICE FIEI FIHT FIAE
Transport & Infrastructure ConsultantEmail: [email protected]
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 CommissionAudits carried out by EU
Commission Control Units
Paying Authority
Ministry of Finance
Managing AuthorityMinistry of Finance
Level 3Responsible for completing Form B3
Intermediate Bodies
Level 2Responsible for completing Form B2
Final BeneficiariesLevel 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
Certification of all expenditure
Certification of all expenditure
Certification of all expenditure
Structure of financial controls tocomply 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
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
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
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
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
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
CrossRoute
Motorway
Land Use
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
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
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
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The FIDIC Rainbow
• The Red bookConstruction
• The Yellow bookPlant and Design-Build
• The Silver bookEPC Turnkey Projects
• The Green bookShort Form of Contract
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 DETAILEmployer’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
no
no
no
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
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 CommissionEU Commission Control Units
Paying Authority
Ministry of Finance
Managing AuthorityMinistry of Finance
Level 3
Intermediate Bodies
Level 2Authorises Payment due
Final BeneficiariesLevel 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
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
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
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
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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