University College Dublin (UCD) has sustained a €29.5 million financial hit due to its decision not to proceed with two capital projects estimated to cost €590 million.
The governing authority of the country’s largest university decided not to proceed with a student residence scheme and a centre for creativity project due to “unprecedented levels of construction cost inflation”.
According to UCD’s annual financial statements for 2022, the university’s €29.5 million exceptional impairment charge contributed to its pretax surplus more than halving to €16.2 million in the 12 months to the end of September last.
The university’s surplus reduced by 53 per cent from €34.92 million to €16.29 million despite income increasing by 13 per cent, or €80.7 million to €718.35 million, as the university recovered from Covid-19 lockdowns.
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The rise in income was driven by academic fees increasing from €260.56 million to €283.46 million as the total number of students increased by 2,465 to 33,178, while “other income” rose from €106.16 million to €138.16 million.
The chief driver of “other income” increasing was rental income from residences on campus, which almost tripled from €13.96 million to €40.27 million.
In a note with the accounts, the directors said that the “other income growth reflects the repopulation of our student beds following the return to on-campus teaching and the introduction of 924 new beds giving a total of 4,100 beds”.
The note also said that 2021/22 was the university’s most successful ever year for securing external research funding, rising by €23.8 million to €155.7 million.
The accounts show that decisions by UCD’s governing authority to “reluctantly” axe two projects due to construction inflation resulted in the €29.5 million impairment charge.
In May 2022, the authority decided not to proceed with its residences phase two capital project after spending €11.5 million on design fees and enabling costs.
In March 2023, the authority decided not to advance the centre for creativity project due to inflation costs. It had already spent €18 million on design fees and enabling costs.
The accounts show that the design fee and enabling costs represented about 5 per cent of the expected capital costs.
“However, the design and enabling works on both projects will benefit future construction if economic circumstances in the future allow the projects to go ahead,” the accounts said.
Employees at UCD earning more than €100,000 last year increased from 543 to 590, including 15 people earning more than €200,000, according to the accounts.
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Numbers employed increased from 5,085 to 5,339 as staff costs went up from €356.39 million to €381.84 million.
The accounts said that staff costs increased by €25.4 million “driven by recruitment of additional faculty staff and public sector pay awards”.
