Cost of modular homes for Ukrainians more than doubled

The cost of building rapid-build modular homes for Ukrainians has more than doubled, according to the Comptroller and Auditor General.

The latest report from the State's spending watchdog, the Comptroller and Auditor General, has highlighted delays in delivery and significant project cost overruns in the Government's rapid build housing programme.

It reports the initial projected cost was an estimated €200,000 per residential unit in June 2022.

But this increased to an average projected cost per unit of around €436,000 by June 2024 - an increase of almost 120%.

The Department of Children, Equality, Disability, Integration and Youth (DCEDIY)'s latest total programme cost projections of €289.3m indicate a final projected average cost per unit of around €442,000.

The OPW developed proposals for a pilot "proof of concept" programme which was approved by Government in June 2022 which envisaged the delivery of 500 modular units, to accommodate 2,000 beneficiaries of temporary protection, by February 2023.

The original plan was to develop 500 units for 2,000 people at a cost of €100m by February 2023, this was revised three times to a new plan in June 2024 to develop 654 units for 2,640 people at a cost of €285m to be completed in April 2025.

The report said the pilot proof of concept proposal prepared by OPW in May 2022 cautioned that the modular homes programme should only be progressed if sufficient suitable sites were immediately available and signalled that in the absence of suitable sites, the programme was not viable.

"Challenges were experienced in identifying suitable sites for the modular units, and this delayed the delivery of the accommodation," it stated.

"By January 2023, the OPW had considered over 70 sites, of which around threequarters were found to be unsuitable for a variety of reasons," it stated.

"The final site required for the programme was only confirmed in March 2024. The programme would have benefited from sites of a higher standard being identified and made available to the OPW earlier in the process," it added.

The report said that while a credible and long-term use for the modular units was seen as key to the programme representing value for money, the DCEDIY identified several possible uses for the units post their need for Ukrainian BOTPs, but no specific long-term use has yet been determined.

Planning exemptions to enable the speedy delivery of the programme were provided by the Minister for Housing, Local Government and Heritage but longer term use of the sites covered by the EU temporary protection directive (recently extended to March 2026) is subject to normal planning conditions.

The report warned: "There is a risk to the significant capital investment under the programme if planning is
not permitted, exempted or otherwise regularised by the expiry date."

The C&AG report recommended a plan for the long term use of the units should be developed and agreed.

The DCEDIY has commenced a multi-stakeholder process to determine the long-term Strategy for the sites, post expiry of the temporary protection directive.

This process will be completed for all sites in the second quarter of 2025 and planning regularisation will be pursued in tandem, to be finalised by the end of 2025.

The report identified that a cost benefit analysis in compliance with the Public Spending Code was not carried out.

"The construction cost comparison with two social housing projects was not undertaken until January 2024, at which point seven sites (310 units) had been delivered."

It said storage costs of around €310,000 had been paid up to June 2024 but this figure is likely to increase as some storage costs have yet to be agreed.

It also said in the pilot proof of concept proposal document it envisaged the programme would be assessed after the first 500 units had been installed but a feasibility study has not yet been carried out.

The report stated: "Government departments and offices are required to consider the inclusion of green
criteria in their procurements. There was no specific reference to green criteria/sustainability requirements in the tender documentation or in the signed contract with the main contractor."

The report recommended that assessment of the feasibility of the rapid build process as a delivery mechanism for future use should be carried out in a timely manner on completion of the programme.

The OPW Accounting Officer's response was that assessment of the delivery mechanism will be carried out in a timely manner on completion of the programme and will include consideration of all the various factors involved in its delivery.

"The use of the NEC4 Option E (cost reimbursable) contract in this instance will be assessed in the context of this exercise. Any lessons learned will be shared with the Office of Government Procurement," it added.