The infrastructure of Northern Ireland is set to be transformed by the Investment Strategy for Northern Ireland 2008-18, published in January this year by the Executive of the Northern Irish Assembly. The Investment Strategy sets out a planned spend approaching £20bn on new infrastructure in Northern Ireland over a 10-year period, approximately £6bn of which will be delivered over the next three years. Funding in the main is from the Northern Ireland Executive, but supplemented by the disposal of public assets and other third-party sources.

Other sponsors have set up investment funds, such as the Emerald Infrastructure Development Fund, a private equity fund set up by four New York City pension funds in April 2008, which aims to deliver a £75m investment into infrastructure investment projects in Northern Ireland with a focus on the border areas. This boost to the Northern Irish economy is intended to deliver high-quality public services throughout the region and should provide significant opportunities for sponsors, contractors, funders and their legal, financial and technical advisers.

There is currently much speculation as to exactly how this money will be spent, what projects will be brought to the market and how these will be procured. The investment strategy gives some indication of this by identifying six 'pillars of investment': networks, skills, health, social, environment and productive. These pillars are then divided into twenty-three 'sub-pillars', each to be delivered by the relevant departments of the executive.

The Strategic Investment Board (SIB), the body established by the executive to assist in the delivery of major infrastructure programmes in Northern Ireland, has developed a template for investment delivery plans which covers method of procurement, capital expenditure profile and nature of projects, among other things. The SIB has also put in place an investment strategy tracking system with a 'senior responsible owner' appointed for each project, tasked with reporting monthly on capital spend to date, contract structure and nature of sub-contracts. This control is to aid ministers of the executive in monitoring infrastructure spend on a monthly basis over the life of the investment strategy. To date, five investment delivery plans have been published covering, among other things, roads, water, energy, waste, housing, regeneration, further and higher education and telecommunications.

The broad thrust of the projects which are to be brought to the market can be gleaned from the key goals of each pillar of investment and accompanying milestones set out in the investment strategy:

Networks key goals

• A modern rapid transit system for the Greater Belfast area;
• upgraded key transport corridors connecting major towns and cities to regional gateways;
• new modern rolling stock to replace older trains; and
• investment to support the single electricity market (an all-Ireland electricity market) and improved communications networks in terms of increased internet connectivity speed, capacity
  and availability.

Milestones include the Roads Package 2, which will result in the opening of the Dungannon to Ballygawley dualling in 2010 and the opening of the A1 Beach Hill to Cloghogue dualling in 2010.

Skills key goals

• Modernised schools;
• modernisation of further education infrastructure;
• support for universities; and
• modernisation of libraries.

Milestones include the opening of a new campus for Belfast Metropolitan College and new accommodation at the Southeastern Regional Colleges campuses in Lisburn, Downpatrick, Newcastle and Ballynahinch, which are in procurement.

Health key goals

• A regional network of 35 primary and community care facilities;
• an acute hospital network;
• information and communications technology to support administration;
• integrated emergency and rescue services; and
• modernisation of the mental health service estate.

Milestones include the first phase of the Ulster Hospital redevelopment to be completed by 2010, new acute hospitals at Enniskillen in 2011 and a local enhanced hospital in Omagh soon after.

Social key goals

• Major mixed-use regeneration schemes and strategic site redevelopment in Belfast and the northwest;
• comprehensive development schemes in 13 towns across the region;
• high-quality private, social and affordable housing across the region;
• an up-to-date welfare system; and
• elite facilities for sport.

Milestones include delivery of 10,000 new social and affordable houses by 2013 and the completion of a new, 50m swimming pool in time for the 2012 Olympics.

Environment key goals

• A high-quality water and waste water infrastructure for the region; and
• a new approach to waste management and flood risk management.

Milestones include the completion of Project Alpha to upgrade water treatment facilities by 2009 and Project Omega to upgrade waste water and sludge disposal facilities by 2010.

Productive key goals

• Support for sustained private sector growth;
• sufficient high-quality serviced sites for industrial development;
• tourist infrastructure development; and
• modernisation of Government accommodation.

Milestones include completion of the Workplace 2010 Contract, which will see the transfer of 65 public buildings to a private sector partner which will manage and service the estate, the refurbishment of 15 core properties, the introduction of new accommodation standards and the disposal of surplus properties.

The next step

The majority of the milestone projects listed above are already in procurement by means of the private finance initiative (PFI) and fall within the planned £6bn of infrastructure to be delivered over the next three years. Schools continue to be modernised via PFI – for example, the Bangor and Nendrum College PFI and most recently the £400m Belfast Education & Library Board PFI, which entails the refurbishment or rebuilding of many of the schools libraries and youth clubs throughout the capital. Currently under procurement are the Lagan and Tor Bank schools, Derry schools and Down and Connor schools.

Due to EU directives, the waste sector is also livening up, with ARC 21 expected to be the first project to appear in the Official Journal of the European Union later this year, followed by the Northwest Project. It seems that there will be a number of smaller projects in the southwest region.

With so much happening in the market, many of the projects have been delivered by consortia comprising local contractors such as Graham, McLaughlin & Harvey, McAleer & Rushe, Farrans, Lagan, Patton and major international contractors such as Bilfinger Berger, Hochtief, Balfour Beatty, Laings, SITA, Veolia, Skanska and Ferrovial.

On 15 April this year, the Northern Ireland Assembly met to discuss concerns raised about procurement via PFI and to gain clarity on the role and scope of PFIs across all executive departments. There was a general acknowledgement among Assembly members that PFIs are a part of the fabric of infrastructure delivery, with 'value for money' now being the key touchstone.

In addition, the SIB is looking at developments in infrastructure procurement models in the Scottish market, where the non-profit distributing model is being taken forward by the Scottish Government – this in essence involves the private sector accepting capped returns on their investment in projects.

The outlook for the infrastructure market in Northern Ireland is positive, and this will contribute to Northern Ireland being a more desirable place to live and work, for businesses to locate and for the economy to grow. The Executive, the Assembly and the SIB are each playing a key role in bringing the projects described in the investment strategy to market in a timely fashion. What the market is waiting to hear now is how the remaining projects of the investment strategy are to be procured.

Drysdale Graham is a partner and Jill Harrower a senior solicitor at McGrigors in Belfast.

NIJune2008