Buying land for new motorways in Ireland accounts for 23 per cent of the construction cost of the projects, the highest percentage in Europe, according to the National Roads Authority (NRA).
Fred Barry, chief executive of the NRA, said land costs in the State had spiralled over the past three years and will make up 23.5 per cent of road projects in 2007.
On this basis up to €360 million of the €1.57 billion allocated in the Budget estimates for road building will be required to purchase land. He added that despite criticism of the NRA from environmental groups, the percentage spend on archeology in Ireland was far higher than in other European States, with 2 per cent of the cost of each new road scheme on average spent on archeological services.
This data is contained in an NRA value-for-money analysis on road building projects based on a comparison with seven other EU member states. The analysis was presented at an Engineers Ireland conference last night.
The analysis suggests that in the four years to 2006, construction and design costs have fallen as a proportion of road project costs, while land prices have risen significantly.
Land costs for road projects in the UK are the next most expensive among the other countries examined but at 12 per cent, are half those in Ireland. Land prices in the remaining European states examined are significantly lower.
Mr Barry explained to The Irish Times last night that part of the reason for land price inflation was the way the compulsory purchase order (CPO) system operates. The NRA cannot use an agent to acquire land because its power to purchase land arises only after approval is given from An Bord Pleanála.
"There is an issue at the heart of the CPO process. When we announce we are building a new road the existence of that road plan tends to increase land prices along its route. So we end up paying for the land on the basis of the value it has with the road going through it." He said to alleviate this effect "the State certainly could change the basis on which land is valued for CPO purposes".
Despite these land costs, according to the NRA, it is still significantly cheaper to build a kilometre of road in Ireland compared with the other member states examined. In Ireland it costs between €10-14 million per motorway kilometre, compared with the UK which is between €23 and €27 million per motorway kilometre.
"It is almost impossible to get a direct like-against-like comparison. What we got was the [ price] ranges the other European countries operate in. Each country has different circumstances, in Greece, for example they have to tunnel a lot on their new routes. That said, clearly the industry here is quite efficient and we would expect that trend to continue," Mr Barry said.
Mr Barry also disagrees with the ESRI's recent assessment that the current capital infrastructure investment is too high and may lead to construction inflation.
"I don't agree with the ESRI's contention. The output volume for roads is up 33 per cent over the last three years, yet tender prices were just 2 per cent last year, under inflation."
In fact, while insisting he is not complaining about the €1.57 billion allocation for road projects next year, Mr Barry said if an additional €500 million had been allocated the sector has the capacity to cope.
"I firmly believe that if we got more money we could deliver more projects faster. There is no shortage of work that needs doing and there is a lot of competition for road tenders now. The Irish market has attracted a lot of international attention."
A feasibility study of the outer orbital route - outside the M50 - commissioned by the NRA will be completed in the New Year.
