Projects work has been a mainstay for Northern Ireland's law firms over the last few years, but now the pipeline is looking bleak. Adrian Eakin looks at the reasons why

December 2004. It was a Christmas like no other when finance minister Ian Pearson announced a 10-year framework that could see up to £16bn of investment poured into Northern Ireland's ailing infrastructure after years of under-funding. The Government's newly-created Strategic Investment Board (SIB) for Northern Ireland had just reached financial close on its first public-private partnership (PPP) scheme (giving Invest NI its award-winning new headquarters) and had announced a pipeline of sizeable schemes in various sectors including health, education, transport and ICT.

Large international contractors and hoards of professional services firms arrived in Belfast quicker than you could say public-private partnership, and Northern Ireland was in the news again, but this time for the right reasons. With devolution now in its third year however, (or 19th month if you count the stalemate over policing and justice) was it really "an unprecedented expansion of investment" as the minister claimed or simply an unprecedented series of announcements?

Success

Progress made since 2004's announcements has generally been good. The SIB was created by Tony Blair and Gordon Brown in 2003 to oversee the programme of infrastructure investment in Northern Ireland under the Strategic Investment Programme and to help implement investment in public services. It was formed as a company limited by guarantee and wholly-owned by the Office of the First Minister and Deputy First Minister.

No-one ever doubted that parts of Northern Ireland's public sector needed more resource and expertise when it came to complex forms of procurement and the SIB have to be congratulated in this regard. Quite a number of schemes have successfully reached financial close over the last five years including: DBFO Roads I & II; new headquarters for Invest NI; Projects Omega and Alpha in the water and waste water sectors; the e-HR Project for Northern Ireland's civil service; Belfast Schools Strategic Partnering Scheme; and a new acute hospital for the South West signed only a few weeks ago despite the challenges of the credit crunch. There are currently three large procurements underway in the waste sector (attracting serious international competition) and plans for a number of other facilities in various sectors including policing and justice. For a country with a population of 1.7 million that up until now spent little on infrastructure, this is impressive and no-one could say it is not a big achievement.

Why then, the growing lack of confidence in the market?

Politics

In May 2007, after decades of conflict and direct rule, Northern Ireland's four main political parties formed a new power-sharing Government. The 2007 elections saw the Democratic Unionist Party (DUP) become Northern Ireland's largest political party with 30.1% of the vote followed by Sinn Fein with 26.2%. The Social Democratic and Labour Party (SDLP) picked up 15.2% of the vote and the Ulster Unionist Party (UUP) 14.9%. Just after the Government was formed, we were fortunate to meet all four political parties to assess whether addressing Northern Ireland's infrastructure deficit was high on their agenda and, they said, it was. It was clear then that in terms of political ideology, neither the DUP nor the UUP had any objection to PPPs and both claimed to be supportive of such schemes in certain circumstances, both stressing the need to scrutinise each particular project on a case-by-case basis to ensure overall value for money.

Sinn Fein and the SDLP on the other hand were happy to state their opposition to PPPs and, in policy terms, were aiming to raise resource through direct taxation and deliver all public services from the public purse. Ideology aside, however, all the parties admitted to having a pragmatic openness to finding the best way of funding much-needed improvements in public services and no-one disputed that Northern Ireland's capital constraints could well dictate the need for private finance in certain sectors, as Sinn Fein's Martin McGuinness found as Minister for Education when he approved a number of PPP schemes in the education sector. The outlook, therefore, was positive and the SIB had by that stage been bringing forward and closing deals for more than four years.

2009

We recently interviewed a number of contractors and bidders and asked them whether devolution had improved the speed and efficiency of procurement. All were agreed that it had not helped but there were differing views on the reasons for the general slowdown.

l Politicians: there was no consensus on whether the local representatives were up to the job and properly focused on economic issues as opposed to purely political issues such as policing and justice. The majority believe politicians are taking too long to get to grips with economic matters and are more concerned with low key 'successes' such as announcing free travel and prescriptions for pensioners, with no real idea of what is needed strategically for Northern Ireland. Some, on the other hand, believe the problem is not with the politicians but with the civil service and other officials who are reluctant to make key decisions.

There was general agreement on the fact that ministers had one eye on re-election in their own constituency when making important decisions and that decisions, which might otherwise have been made quickly, were sometimes not being made until something 'political' was given in return. A large number of those interviewed regarded direct rule as being better for Northern Ireland's economy as decisions were made more quickly at Westminster – not all of them good, but decisions nonetheless.

There was a general feeling that Northern Ireland was over-governed with too many politicians and civil servants not managing to co-ordinate key decisions, or even take them in some cases. In short, the local assembly needs to take a step back from some of the small detail, think strategically and move up a gear, and quickly.

• SIB: everyone accepted the need for the SIB and acknowledged its commercial outlook and input into the sector, although some felt that its role had become less meaningful following devolution as local politicians wanted to be much closer to the decision making process. The general view was that the SIB was effectively being held back by the local assembly and to maintain credibility it needed to reassert itself with a clear plan for the future across each sector, regardless of whether this involves different types of procurement models such as partnering, design and build, design/build/operate and private finance initiatives. Many wondered why more had not been done to capitalise on recent success stories such as Belfast Schools and Enniskillen Hospital.
• Pipeline: much mention was made of the Republic of Ireland's approach to addressing its infrastructure deficit with the creation of a delivery body, the National Development Finance Agency, with bespoke legislation allowing it to enter into PPP arrangements as agent of state authorities along with a clear plan covering all sectors. Schemes are currently being rolled out in the Republic of Ireland in the health, transport, roads, justice and education sectors, albeit at varying degrees of pace in a seriously competitive market. No-one felt that there was yet a visible and strategic plan for Northern Ireland which was bought into by politicians and procuring authorities.
• Funding: almost everyone made reference to the £16bn package mentioned in 2004's announcements, but the general view was that most of the package had already been committed to schemes before it was announced (and not much of it was new money). Part of the funding for future schemes was reliant on money being raised through the sale of government sites but the property slump has obviously made a dent in those plans and the sizeable Workplace 2010 Project failed to proceed quickly enough to benefit from the property boom. There was a general recognition that some departments' capital budgets had recently been drastically cut but also despair at some departments failing to spend their budgets especially where some of their facilities were falling apart.
• Sectors: there was general agreement that some sectors were better than others, roads coming in for praise ahead of others. Most agreed that the education sector was struggling and many believed that there was a 'one deal at a time' mentality, with some authorities reliant on the same advisers for each scheme. Some sectors such as health had previously announced a pipeline of works including Omagh and the Ulster Hospitals but the market had no clear idea of when, or if, those schemes would proceed, despite a lot of preparatory work clearly having been done on them.

A way forward?

The fact remains that Northern Ireland continues to have a serious infrastructure deficit with some schools and hospitals literally now falling apart. This is not in dispute, only what is needed to kickstart the sector. Bringing confidence back to the market will be critical and further announcements will be greeted with scepticism until schemes are seen to come on line again in each sector as promised.

Local politicians claim to have a strategic vision for what a new Northern Ireland should look like but the claims are not yet being reflected in how business is actually done. There are a lot of issues at play and the truth is that a number of factors are to blame for the delay in the promised pipeline of works. However, as long and complex debates over funding, politics and priorities continue in Stormont's imposing parliament buildings, there are really only two simple questions on contractors' minds. What. And When.

Adrian Eakin is head of L'Estrange & Brett's construction and projects group.