DAA 'must challenge' Irish firms for more competitive tenders

The study, by London economic consultancy Steer for the Commission for Aviation Regulation (CAR), said Dublin Airport had pointed out that the local construction market was overheating.

The consultancy said that the DAA should give "serious consideration" to looking further afield for suppliers to deliver fit-out works at the airport.

But the DAA has rejected Steer's comments, arguing the consultancy has put forward a "theoretical" view that "misunderstands the market for fit-out works [and] the way in which DAA procures such works".

"All significant projects at Dublin Airport are awarded via an open tender process throughout the EU and we have held roadshows in locations such as London, Paris and Madrid to alert potential overseas bidders to the opportunities that exist here," said a DAA spokesman.

The Steer report was referenced by the CAR as it published an invitation to tender to firms to independently and continually assess the cost of about €1.3bn worth of capital projects planned or under way at Dublin Airport.

The new assessment process was introduced by the CAR this year as it made a decision on passenger charges that can be levied by the DAA at Dublin Airport.

A so-called StageGate process being implemented is intended to "improve the regulatory model by allowing for ongoing flexibility for the cost and/or scope of certain projects to evolve throughout the regulatory period, rather than largely being determined on a purely ex-ante basis", the CAR noted.

Under the StageGate process, 17 projects with an estimated total cost of €1.3bn will be continually assessed.

"We have been told by Dublin Airport on several occasions that the Dublin construction market is extremely busy and, indeed, is overheating and that, in turn, this is having an implication on the cost of projects at the airport," noted the Steer consultancy in its report to the CAR.

It added: "This is particularly apparent in the fit-out market, where the proposed cost of the fit-out works included in the CIP [capital investment programme] projects is significantly higher than we would expect, even in a busy market."

The DAA spokesman said that fit-out projects at Dublin Airport tended to be "relatively small-scale in the context of our major capital programmes".

Steer pointed out that in the south east of England, and particularly around London, where the construction market is buoyant but faces challenges due to labour shortages, fit-out costs are not at a "level close to what we have seen at Dublin Airport".