174 trust econ appraisal updated report 211209
TRANSCRIPT
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Government and Public Sector ............. December 2009
Updated Economic Appraisal Transformation of the FormerDuncairn Presbyterian Church
Final Report
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IFI Economic Appraisal of Former Duncairn Presbyterian Church
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Contents1 Introduction .................................................................................................................................... 1
2 Strategic Context ........................................................................................................................... 5
3 Assessment of Need ..................................................................................................................... 7
4 Project Objectives and Constraints ............................................................................................. 13
5 Identification of options ................................................................................................................ 15
6 Quantification of monetary costs and benefits ............................................................................ 19
7 Assessment of Risk and Adjustment for Optimism Bias ............................................................. 25
8 Assessment of Non Monetary Costs and Benefits...................................................................... 299 Calculation of Net Present Costs and Assessment of Uncertainties........................................... 32
10 Conclusions and Recommendations ........................................................................................... 34
11 Project implementation/ management process ........................................................................... 37
Appendix A Analysis of Capital Costs
Appendix B Optimum Bias Calculations
Appendix C Net Present Cost Calculations
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1 Introduction
Background
1.1 In the early 1990s, the 174 Trust (the Trust) purchased the church buildings at the former
Duncairn Presbyterian Church, which is a B+ listed building, thereby providing a base for
the community development work central to the Trusts ethos. In 2004 the neighbouring
McCracken Cultural Society1(CCMR) approached the Trust with a proposal to lease the
Duncairn Church for the purposes of establishing a new Irish cultural, language and arts
centre.
1.2 PricewaterhouseCoopers (PwC) were appointed in 2005 by the North Belfast Partnership
Board (NBPB) of the Department for Social Development (DSD) to undertake aneconomic appraisal of the project and the McCracken Society secured an offer-in-principle
of funding from the Heritage Lottery Fund and the EU URBAN II Programme.
1.3 However the funding opportunity with URBAN was not progressed and the offer expired.
The project concept has however been revised and re-launched with the 174 Trust now
as the project promoters and with the concept being more broadly based as detailed
below. The revised proposal is seeking financial assistance from International Fund for
Ireland (IFI) with the balance from the Heritage Lottery fund.
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1.6 In December 2005 the then Minister for Social Development, set out a vision for the
redevelopment of the old Crumlin Road Prison and adjacent Girdwood Barracks site.
These visually prominent sites in North Belfast serve as physical reminders of the
turbulent years of conflict in the area but under redevelopment proposals, offer an
opportunity to bring regeneration and social and economic benefits to the whole
community.
1.7 Any proposals for redevelopment of the historically significant Duncairn Church building
should be cognisant of these other significant and strategic regeneration initiatives. The
inter-relationships between these projects could potentially play-out in a positive way interms of for example, by leveraging potential increased footfall in the area. However, the
economic appraisal will also need to consider any displacement and additionality issues in
this context.
Terms of Reference
1.8 The International Fund for Ireland (IFI) commissioned PricewaterhouseCoopers LLP
(PwC) to complete an update to the original economic appraisal of the project based on
the revised project concept. The appraisal is to be based on the requirements of HMTreasury Green Book (2003) and the associated Northern Ireland Practical Guide to the
Green Book (2003 edition). In addition, where appropriate, we have applied the latest
DFP guidance, the Northern Ireland Guide to Expenditure Appraisal and Evaluation
(NIGEAE).
1.9 The appraisal should also conform to the principles and good practice on investment
appraisal. The information and assumptions used in assessing the proposed option
should be fully explained and based on research and information gathered in consultation
with the project promoters and other sources
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produced a new Community Relations Strategy to cover a three year period (2006-2008),
which was funded by the IFI Community Bridges programme.
Summary of project details
1.15 The 174 Trust submitted an application form to the International Fund for Ireland (IFI)
under the Leaving a Legacy programme. IFIs Community Based Economic and Social
Regeneration Programme seeks to address the root causes of deprivation and
unemployment, using common economic concerns in the most deprived rural and urban
communities as a platform for future cross community activities. It comprises community
based economic regeneration in urban and rural areas where communities are at risk.
1.16 The 174 Trust are seeking capital funding under this programme to restore the former
Duncairn Presbyterian Church (a B+ listed building) and to establish the proposed
Community Resource, Arts and Cultural Centre within the building.
1.17 The central aim of the project is the restoration of the former Duncairn Presbyterian
Church and its transformation into a Community Resource, Arts and Cultural Centre
providing a Shared Space where the people of North Belfast and beyond can meet,exchange dialogue and celebrate diversity, thus promoting reconciliation.
1.18 As stated in the application form, the proposed refurbishment and reuse of the former
church building as a Community Resource, Arts and Cultural Centre will greatly enhance
the existing1facilities of the Trust that are currently catering for approximately 800 people
every week at the Duncairn Complex. With these enhanced facilities even greater
numbers (both main traditions) will be engaged in joint activities, projects and
programmes that will be aimed at celebrating diversity and highlighting, where possible,
those elements of a shared heritage
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derived from the letting of office and workspace, a bookshop, a performing arts space and
from the letting of the caf/ restaurant facilities. The 174 Trust states that this revenue
stream will help to sustain the development and secure the long-term future of the project.
Financial standing of applicant organisation
1.23 The 174 Trust is a charitable trust registered with the Inland Revenue (Charity Number:
XN62669A/AR). The 174 Trust is not VAT registered and so all costs detailed in the
appraisal are inclusive of VAT (where VAT is applicable).
1.24 In the context of determining whether the 174 Trust possess the requisite cash/ asset
backing to finance the project and achieve funding, key figures are included from the
Trusts audited financial accounts for the year-ended 30 September 2008.
1.25 The 174 Trust had cash at bank and in hand of 3,185 and total unrestricted funds of
24,050, which indicates that there is only limited cash backing relative to the size and
scale of the proposed project. There is however a stronger asset backing, with a fixed
asset holding of 95,944. This is comprised almost entirely of the Duncairn complex, and
in the context of the proposed project is of material significance to support the financialstanding and security of the project promoter.
Methodology for the Appraisal Update
1.26 Information was provided by the 174 Trust through the International Fund for Ireland
Leaving a Legacy Programme application form. This was supplemented by objective
research undertaken by PwC with a representative range of stakeholders and potential
users/ tenants of the facility. In addition, PwC also consulted Mackel and Doherty
Architects in relation to the building/ infrastructure costs of the project and associated
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2 Strategic Context
Introduction
2.1 In assessing the strategic context for this project, it is important to reflect on the fit of the
project with the imperatives of the International Fund for Ireland, and wider strategies for
the development of North Belfast and the community relations dimension therein.
International Fund for Ireland
2.2 The International Fund for Ireland was established as an independent international
organisation by the British and Irish Governments in 1986. With contributions from the
United States of America, the European Union, Canada, Australia and New Zealand, the
total resources committed to the Fund to date amount to 576m / 849m, funding over
5,700 projects across the island of Ireland.
2.3 The Funds objectives are to promote economic and social advance and to encourage
contact, dialogue and reconciliation between nationalists and unionists throughout Ireland.
2.4 The International Fund focuses its efforts in Northern Ireland and the border counties of
Cavan, Donegal, Leitrim, Louth, Monaghan and Sligo.
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North Belfast Community Action Unit2.10 The North Belfast Community Action Unit was established in 2002 within the Office of the
First Minister and Deputy First Minister (OFMDFM) to:-
develop community capacity within North Belfast;
develop a long-term strategy for North Belfast;
encourage and build partnerships; and
assist in addressing interface areas.
2.11 Clearly the restoration of the Duncairn Church is consistent with all of the headline aims
of the North Belfast Community Action Unit:
It will clearly develop community capacity;
It will contribute to the development of a long-term strategy for North Belfast, both inphysical/ infrastructure terms, but also in an economic and social terms, particularly
through building community cohesion and partnerships; and
It will directly service communities living in interface areas of North Belfast.
2.12 The Unit is also responsible for overseeing the redevelopment of the Crumlin Road Gaol
and adjoining Girdwood Park. The vision for restoration of these sites (both symbols of the
period of conflict in Northern Ireland) is to create a regeneration project of international
significance hich ill become an engine for economic and social regeneration This
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3 Assessment of Need
Introduction
3.1 This section aims to present an understanding of how the need for the proposed project,
to transform the former Duncairn Presbyterian Church as a Community Resource, Arts
and Cultural Centre can be substantiated. The section first examines the general aspects
of need for the project in the context of the socio-economic background of the community
in North Belfast area and the need to stimulate
3.2 Thereafter it progresses to examine the need to bring the Duncairn Church Building back
into community use.
3.3 The section then proceeds to consider the need for a cross community venue and goes
on to consider in more detail the specific demand for each of the activities proposed within
the restored Duncairn church.
Socio-economic background
3.4 As outlined in Section 1: Introduction, the proposed project is to be located on the lower
Antrim Road in North Belfast (the site of the former Duncairn Presbyterian Church) and
t ddl th N L d d W t k d f N th B lf t Thi l ti i
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employment. The above data is indicative of the deprivation that exists within the 174
Trusts target catchment area at ward level.
3.6 The percentage of adults aged 16 to 74 who are unemployed is high in North Belfast and
in the New Lodge and Waterworks wards, the average levels of unemployment in 2008
were 6.6% and 7.1% respectively (this is against a NI average of 2.6% for the same
period)1. Levels of unemployment across NI have increased significant in 2009 and as at
November the NI unemployment rate stood at 6.2%. Although a more detailed ward
breakdown is not available there is nothing to suggest that the most deprived wards have
been spared the impact of the economic down turn.
3.7 Whilst the project will not result in significant direct job creation, it will contribute to indirect
ob creation, through for instance employment associated with the franchised activity
within the restored facility (e.g. the bookshop and restaurant/ caf).
Need to bring the church building back into community use
3.8 The 174 Trusts project proposes to bring back into community use the former Duncairn
Presbyterian Church building, as a Grade B+ heritage listed building, which currently liesin a state of dereliction and is in need of refurbishment.
3.9 A Draft Conservation Statement (October 2004) was undertaken for the original project by
Consarc Conservation Architects identifying the areas of the building which were in need
of refurbishment. These included roofs, valleys and rainwater goods, external walls,
stonework, windows and doors and the internal fabric (floor, walls and ceiling) of the
building. This work was deemed as essential, as a pre-cursor to the main development
work, to bring the building back into community use. With the passage of time since 2004
it i d t d th t th f f bi h t h b h d
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Demand for specific project componentsRestaurant/Caf & Kitchen
3.13 It is anticipated that a caf/restaurant would add value to the proposed centre and would
provide a constant income stream, which would help to sustain the centre. Demand for
such a facility would come from tenants at the centre, students, audiences for
performances, participants of other events, tourists to the area and the local community.
Within the local community there is a relatively high population with a resident population
of approximately 43,000 people within the catchment area wards identified above and
11,500 people within the New Lodge and Waterworks wards alone1
. This would suggestthat there is a large potential base of customers.
3.14 In addition, the facility currently accommodates 17 community groups per week and is
open 7 days per week. On this basis, the 174 Trust estimates that approximately 800
people per week use the facility. This represents a sizeable level of footfall and is a
potential customer base for the new caf/restaurant. There are very few cafs or
restaurants in the surrounding area and no sit-in restaurants that open in the evening and
so it is viewed that there is potential to capture this population at the proposed facility.
3.15 Furthermore, CCMR who intend to move their Summer and Winter Schools, into the
restored Duncairn church, to date have engaged outside caterers for these events as
there are limited cafe/restaurant facilities in the surrounding areas. This trade could
potentially be redirected to an in-house restaurant facility, which would have a positive
economic impact in the local community.
3.16 At the time of the appraisal of the CCMR project and URBAN funding offer, Goodfella's
Restaurant, Kennedy Way Belfast, had confirmed in writing2
that they would be willing to
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of interest from a wider clientele base including interest from Belfast City Councils
Welcome Centre in providing tourist information space.
Performance Area / Conference Room / First Floor Gallery / Green Room
3.19 At the time of the CCMR appraisal/ URBAN funding offer the Blackbird Theatre group had
indicated a strong interest in using the performance area and indicated an estimated
demand for the area of 2 hours per evening on weekdays, with approximately 2 groups
(40 children) using the area per session. This equated to an estimated demand for the
performance area of 200 users per week (these figures do not include audience /
spectator numbers).
3.20 Blackbird Theatre currently caters for approximately 150 young people within several
theatre groups, operating out of St.Georges Hall on the Antrim Road. A key attraction to
Blackbird Theatre of the proposed facility is that they feel their catchment area
(Glengormley / Cavehill) would be better served by a performance area situated at the
proposed Lower Antrim Road venue (located approximately one mile from their current
venue).
3.21 Furthermore again leveraged through the CCMR link, the Irish Language Drama Group,
Aisling Ghearr, based in the Culturlann Theatre in West Belfast previously expressed an
interest in putting on plays in the proposed centre and estimated that they would put on 4-
6 plays there per annum, which could attract up to 1,000 people over the run of the
shows. The group also expressed an interest in showing Irish Language / Cultural
Documentaries in the centre approximately 6-10 times annually.
3.22 Other users which previously expressed interest in these facilities include Conradh na
G il G t N L d F ti l Offi P G li Athl ti Cl b d th
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of the project under the 174 Trust remit, it is likely that the bookshop may be broader in
focus (e.g. to also include an Ulster Scots focus).
Additionality / deadweight and displacement
3.26 Given the Trusts financial position noted in Section 1 of this appraisal, it is unlikely that
this project will be undertaken in the event that funding is not secured from IFI. In addition,
the following points are noted with regards to additionality, deadweight and displacement
relating to the specific project components;
Restaurant/Caf & Kitchen
3.27 There are few local cafes or sit-down restaurants situated nearby the proposed location of
the project on the Lower end of Antrim Road and so displacement of such local
enterprises is not expected to occur. In particular there are no sit-down restaurants that
are open in the evenings as mentioned by some potential tenants above.
Lettable workspace (Arts & Crafts area) / Lettable office space
3.28 Local office /workspace is available near the 174 site at NCBC1 and there are otherproviders of enterprise/ workspace accommodation in North Belfast which include:
The Ashton Centre;
Brookfield Business Centre; and
Ligoniel Community Enterprises.
3 29 H h 174 T d d i ld b id d f
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Conclusions on need3.31 In broad terms, the need for the project can be substantiated on a range of fronts namely:
in the context of the socio-economic challenges that prevail in the immediate
catchment;
on heritage/ aesthetics grounds, by restoring a grade B+ listed building on a main
arterial route; and
to consolidate the very strong track record of the 174 Trust in building bridges and good
relations between all the communities in North Belfast.
3.32 Finally it should be noted that there remains a healthy demand for each of the specific
project components. PwC independently verified in 2008 that some of the organisations
previously interested in leasing/ using the building when restored remained interested. It is
important to note that, whilst some of these organisations may not ultimately avail of the
Duncairn Project facilities, this represents significant demand at a point in time and while
some of these potential clients could be lost to other facilities, new clients may also befound. In discussions with the 174 Trust in recent weeks, the Trust has indicated that they
believe this level of interest remains high. Indeed the expanded scope of the current
proposed project is deemed to appeal to a wider potential clientele base than that of the
proposed CCMR project.
3.33 It is also noted that the Trust intend to commission consultants to produce an Activity
Report in March 2010. This will develop fully the demand forecasts for the range of
proposed services/ activities to be undertaken and will update the cost information.
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4 Project Objectives andConstraints
Primary aims of the project
4.1 The primary aims of the project are to:
Restore and refurbish the former Duncairn Presbyterian Church building and bring it
back into community use as a Community Resource, Arts and Cultural Centre,
providing an enhanced shared space for the Trusts community and community
relations activity;
Focus on facilitating a greater understanding of the historical foundations of the former
Duncairn Church and wider North Belfast community;
Promote education, culture and the arts to all sections of the community (irrespective of
gender, age, ability, religious affiliation, sexual orientation, ethnic origin, disability and
political belief); and
P id i t iti t th l l it hi h ill t ib t t th
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To provide approximately three units of lettable office space, to accommodate local
businesses and stimulate the employment, economic and community development
prospects of the area;
To provide lettable retail space to accommodate a bookshop;
To create 1.5 full time posts and 4 to 5 indirect full time posts
To provide a community performance area which will be used for 10 hours each week
to facilitate community development and cultural/arts activities and which willaccommodate up to 120 spectators will attract 3500 attendees per annum; and
To achieve an annual rental and user income target of over 40,000 in income from
letting the office, workspace units and the bookshop and through franchising the caf/
restaurant and kitchen.
Project constraints
4.4 In recent years, the North Belfast area has witnessed widespread sectarian violence.Despite marketing the proposed Community Resource, Arts and Cultural Centre on a
cross community basis, open to the entire community, the existing political, religious and
sectarian divides within North Belfast may deter some members of the community from
making full use of the centre.
4.5 Although this is a wider social issue, which may constrain the success of the project, the
174 Trust has some potential to influence cross-community participation. The
Management Committee is drawn from a wide range of cross-community interests and as
h th ti iti f th T t d f thi di it t f th id
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5 Identification of options
Introduction
5.1 Identification of options is at the heart of the economic appraisal process. There are anumber of options that could be considered at the long list stage, which are detailed
below. These options are then subjected to a short-listing process within the context of the
primary objectives for the project. The short-listed options are then carried forward for
further qualitative and quantitative evaluation.
Long list of options
5.2 The long list of options which have been identified are set out below.
Option 1: Do Nothing/ Status Quo
5.3 This option entails the 174 Trust remaining in their current location with continued use of
their facilities at the 174 Trust site within the Duncairn Complex.
5.4 This option would not allow the Trust to expand their programme of activities to stage
performances, shows and arts events or to generate additional revenue streams within
the Community Resource, Arts and Cultural Centre. The 174 Trust would continue to face
th bl th d tl i th t th tl il bl d f iliti
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Option 3: Do Everything Except the Caf/Restaurant and Kitchen
5.8 This option involves the refurbishment of the internal and external fabric of the old
Duncairn Church Building, as a pre-requisite for bringing the building back into use.
5.9 The key outputs of this option include; lettable workspace (two arts & craft-orientated
units), lettable office space (three units), bookshop and reading areas; performance area
(for drama, dance and discussion); ground floor foyer / exhibition area; first floor gallery;
rehearsal / green room; bathrooms and conference room.
5.10 The caf/restaurant and kitchen would be excluded under this option as it is a capitalintensive element of the design and does not directly contribute to the primary project
objective of promoting community resources, arts and culture.
5.11 This option is capable of meeting the project objectives and is carried forward for further
evaluation.
Option 4: Do Everything
5.12 As with Option 3, this option involves the refurbishment of the internal and external fabricof the old Duncairn Church building, as a pre-requisite for bringing the building back into
use, however all of the proposed project components would be included under this option.
5.13 The key outputs of the option include the restaurant / caf & kitchen; lettable workspace
(two arts & craft-orientated units), lettable office space (three units), bookshop and
reading areas; performance area (for drama, dance and discussion); ground floor foyer /
exhibition area; first floor gallery; rehearsal / green room; bathrooms and conference
room.
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Option 5b: Purchase/ rent alternative premises within the North Belfast area
5.18 Under this option, the 174 Trust would seek to find alternative premises in the North
Belfast area which would facilitate all of the proposed activities. However, the Duncairn
Church is ideally located in terms of the Trusts current activities which are undertaken at
the site of the Duncairn Complex, a site which in the Trusts view, provides links with the
past, present and future. In addition, the location is an ideal situation for the catchment
area (as discussed in Section 3) and any alternative site would need to be in close
proximity to the existing 174 Trust facilities/ premises at the Duncairn Complex in order to:
make management/ administration arrangements for the project feasible;
to promote the complementarities of the existing activities in the existing premises and
the proposed activities in the new premises; and
to provide an enhanced shared space for the Trusts community and community
relations activity.
5.19 This option would inhibit the 174 Trust in their proposed activities to promote community
resources, arts and culture and to create an enhanced shared space for the Trusts
community and community relations activity, as the location of the new and existing sites
would not be as complementary as the proposed site.
5.20 Furthermore, as per option 5a above, the Trust consider that the historical value of the
Duncairn Church building is symbolic of the central ethos of the organisations activities in
that the building is a former Protestant church to be used by both sides of the community
in an area which is now predominantly associated with the Catholic community. As a
lt th it l ti d b ildi f iti l i t t th ll j t
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Conclusion on short-listed options
5.24 Table 5.1 summarises the long list of options and those that are short-listed to be taken
forward to the next sections for further evaluation. (Y = Yes, N = No).
Table 5.1: Long list and short listed options
Option Description Carried forward for
evaluation
1 Do Nothing/Status Quo Y
2 Minimum Refurbishment N
3 Do Everything except the caf/restaurant and kitchen Y
4 Do Everything Y
5a Purchase / rent alternative premises to establish thecentre elsewhere in NI
N
5b Purchase / rent alternative premises within the North
Belfast areaN
6 Build and equip a new purpose built building on 174 Trustsite.
N
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6 Quantification of monetary costsand benefits
Overview
6.1 In this section of the appraisal the quantitative implications of the three short-listed options
are considered:
Option 1: Do Nothing;
Option 3: Do Everything except the caf/restaurant and kitchen; and
Option 4: Do Everything.
6.2 The financial implications for this capital project (and related options) are considered on
the basis of capital costs, operating costs and recurrent income. The appraisal is based
on information provided by the project promoter, W H McEvoy Chartered Quantity
Surveyors, Mackel and Doherty Architects and Consarc Conservation Architects. PwC
have not conducted an independent audit of any information provided.
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6.7 Table 6.1 shows that Option 1 entails no capital costs as it represents only the status quo
of the Trust remaining in their current premises. Option 3 and Option 4 would entail capitalcosts of 1,828,942 and 2,223,697 respectively.
Table 6.1: Capital costs (including VAT)
Option /
Capital cost element
Option 1
Do Nothing
Option 3
Do Everything except the
Caf/Restaurant & Kitchen
Option 4
Do Everything
General building costs 0 666,284 904,809
Fixtures, furnishings &
equipment costs
(see Table 6.4)
0
190,937 270,250
Refurbishment cost 0 532,980 532,980
Preliminaries1
0 111,216 136,643
Sub total 0 1,501,417 1,844,682
Professional/legal
(15% of sub-total)
0 225,213 276,702
Statutory fees
(building control)
0 14,688 14,688
Mortgage payment 0 70,000 70,000
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Opportunity costs
6.10 The proposed site and building is currently owned by the project promoters and therefore
it is appropriate to apply an opportunity cost based on the value of each of this site in line
with HMT Green Book guidance. In this regard, a valuation was sought from Land and
Property Services in July 2009 which placed a value of 180,000 on the building on the
assumption that it was repaired to the extent that it was capable of being used. For the
purposes of this appraisal, the opportunity cost for the do something options is assumed
at 180,000.
Operating costs
6.11 The operational costs assessed in this appraisal are the full costs in respect of this
project and relate to salaries, telephone/postage, heat/light, professional fees, insurance,
printing/stationery, marketing/promotions, travel, maintenance, recruitment, rates, activity
costs and training costs. We have excluded the operational costs
6.12 The operating costs have been considered in terms of the restoration of the Duncairn
Church complex and therefore relate specifically to Options 3 and 4. It should be noted
that the appraisal does not consider the costs associated with the operation of the currentfacilities of the 174 Trust at the Duncairn Complex as they are not deemed to be part of
this project. The costs outlined below relate solely to the costs that would be incurred
when the project commences.
6.13 For the purposes of this appraisal, the operating costs provided by CCMR for the previous
application for the transformation of the Duncairn Church at September 2005 have been
used and updated for inflation1
(from September 2005 to October 2009) where2
f
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Development Officer (as outlined above). It is also anticipated that the new Community
Resource, Arts and Cultural Centre would be launched in Year 2 (see Appendix C forrelevant NPC calculations over a 25 year period).
6.17 For the purposes of this updated appraisal it has been assumed that some costs under
Option 4 will be higher than under Option 3 due to additional costs associated with the
provision and maintenance of the catering facilities. The project promoters have indicated
that they consider it likely that any additional costs pertaining to the kitchen facility would
be met by the catering organisation which rents this facility. However it is considered
prudent to assume a 15% increase in heat and light, insurance, maintenance and ratescosts under option 4. This assumption leads to approximately 4k of additional
operational costs from Year 5 onwards under Option 4 compared to under Option 3.
6.18 The total operating costs of Options 3 and 4 are detailed in Table 6.2 below and Table 6.3
overleaf. These operating costs associated with the proposed Community Resource, Arts
and Cultural Centre have been supplied by the project promoters and have not been
subject to any audit by PwC.
6.19 It is assumed that the only operating costs incurred within Year 0 and Year 1 relate to thesalary costs of the Project Manager within the pre-construction/ refurbishment stage. As
the project is established, the activities and thus costs associated with the new
Community Resource, Arts and Cultural Centre are expected to increase in scale. These
operating costs (with the exception of training and recruitment costs) are projected to
increase year on year for the first three years of operation (i.e. Years 2-4) as per the
operating costs presented within the previous appraisal in relation to the CCMR proposed
project. Thereafter all operating costs are assumed to remain constant.
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Table 6.3: Operating Costs of Option 4
Option 4
Operating costelement
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5onwards
Project Manager 15,000 - - - - -
Events/ Cultural
Development Officer
- 26,000 26,000 26,000 26,000 26,000
Telephone/ Postage - - 927 927 953 953
Heat / Light - - 11,418 11,757 12,113 12,113
Insurance - - 7,564 7,802 8,025 8,025
Printing/ Stationery - - 2,886 2,971 3,061 3,061
Marketing/ Promotions - - 5,839 6,014 6,197 6,197
Travel & Hospitality - - 1,342 1,382 1,423 1,423
Maintenance - - 6,432 6,625 6,824 6,824
Rates - - 2,432 2,508 2,586 2,586
Recruitment - - 671 0 - -
Training Costs - - 1,119 2,237 3,356 3,356
Miscellaneous - - - - - -
Total cost 15,000 26,000 66,629 68,222 70,537 70,537
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Table 6.4: Breakdown of Income at the new Cultural Centre for options 3 and 4
(when fully operational)
Income Facility Squarefeet
/ per squarefoot
TotalOption 3 ()
Total
Option 4 ()
Rental Office space 570.51 7.27 4,150 4,150
Work space 452.10 8.95 4,050 4,050
Caf/Restaurant 699.68 15.71 Nil 11,000
Bookshop 215.29 8.95 1,925 1,925
Sub total 10,125 21,125
Income Facility WeeklyUsage
Charge perunit usage ()
Total*Option 3 ()
Total*
Option 4 ()
User Performance area 10 hours 13.42 5,369 5,369
After-schools 200 people 0.56 4,495 4,495
Lifelong Learning Classes 330 1.12 14,765 14,765
Sub total 24,629 24,629
Total Income 34,754 45,754
*Based on 40 weeks usage annually
6.22 It is anticipated that the proposed Community Resource, Arts and Cultural Centre will be
launched at the start of Year 2. As detailed in Section III: Assessment of Need, the 174
Trust has already identified a number of potential tenants/user groups for each of the
proposed facilities. However it is unlikely that full occupancy will be reached immediately.
Therefore occupancy rates of 33% and 66% are assumed for the first and second years of
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7 Assessment of Risk andAdjustment for Optimism Bias
Assessment of risk
7.1 A key aspect of the economic appraisal process is to identify areas of risk associated with
the proposed project and the relevant mitigating measures where appropriate. These
areas are as follows:-
Capital funding;
Operating shortfall; and
Lack of cross community participation
Capital funding is not obtained/ Insufficient capital funding to proceed with the
option proposed
7.2 The capital costs under both options have increased from the time of the CCMR
appraisal/ URBAN funding offer from 1.2m to 1.8m under option 3 and from 1.5m to
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facilitate the refurbishment and ongoing use of the building, rather than try to implement
most of the activity themselves.
7.6 However, in mitigation, the one-off mortgage payment of 70,000 included in the capital
costs will have the impact of reducing 174 Trusts annual outgoings by approximately
12,000. This provides additional funding to the Trust to significantly reduce the overall
deficit of 25k under option 4, therefore reducing the risk significantly for this option. In
addition the project promoter is confident that with active marketing of the facilities,
additional activity could be generated and the small deficit eliminated.
7.7 Accordingly, as a condition of support, IFI would need to seek reassurance from the 174
Trust as to how they would intend to finance this shortfall.
Lack of cross community participation
7.8 One of the primary objectives of this project is to consolidate the already strong track
record of the 174 Trust in promoting good community relations between all sections of
society in North Belfast. At the time of the CCMR appraisal/ URBAN funding offer a risk
was highlighted that the Centre as positioned at that time to promote Irish culture,
language and arts to all sections of the community may not secure involvement from all of
the same. With the broader focus of the project this risk is less imminent. Indeed the fact
that the 174 Trust have already secured IFI funding to implement their forward Community
Relations Strategy and the balanced representation on the 174 Trust Management
Committee, provides further reassurance that this project should achieve the necessary
cross-community participation.
Adjustment for optimism bias
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Capital Expenditure
7.12 An optimism bias assessment has not been conducted on Option 1 as it does not involve
capital works. The capital expenditure optimism bias adjustment factor has been
calculated for Option 3 and 4 as summarised below in Table 7.1. Detailed calculations
are included at Appendix B.
Table 7.1: Capital Expenditure Optimism Bias Factors
Option %
Option 1; Do Nothing N/A
Option 3; Do Everything except the caf/restaurant and kitchen 17.9
Option 4; Do Everything 19.7
7.13 The impact of the capital expenditure optimism bias factors is that the capital costs may
be higher than those estimated and is illustrated in Table 7.2 below.
Table 7.2: Capital costs with and without impact of Capital Expenditure Optimism Bias
Option Capital Costs, incl. VAT,
excluding Optimism Bias
Capital Costs, incl. VAT and
Optimism Bias
Option 1; Do Nothing 0 0
Option 3; Do Everything except the 1,828,943 2,156,324
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Table 7.4: Works Duration
Option Construction Time Excl.
Optimism Bias
Construction Time Incl.
Optimism Bias
Option 1; Do Nothing 0 0
Option 3; Do Everything except the
caf/restaurant and kitchen
17 months 19.6 months
Option 4; Do Everything 17 months 19.8 months
Conclusions on Sources of Risk and Optimism Bias
7.16 There are various sources of risk and uncertainty underlying the proposed project. The
primary risks are considered to relate to doubts over the capital and recurrent funding
applications as some applications for funding have not yet been made, and the outcomes
of all the applications, whether submitted or not, are currently unknown.
7.17 It is clear from the analysis above that Option 4 is the most capital intensive option both
including and excluding optimism bias due to the additional cost of including a
caf/restaurant and kitchen facility.
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8 Assessment of Non MonetaryCosts and Benefits
Introduction
8.1 An economic appraisal does not consider solely quantifiable matters. With any project,
there will be issues which cannot readily be quantified but which must be considered in
order to arrive at a balanced overall view of the various options. The non-monetary
evaluation is therefore recognised as an essential part of the economic appraisal process.
8.2 It is widely recognised that projects of this nature will have wider economic, social and
political benefits which, although difficult to quantify in monetary terms, are important andaccordingly should be carefully considered in evaluating the different options.
Qualitative Criteria
8.3 This section of the report therefore assesses the qualitative or non-monetary factors
associated with the project and is structured to reflect three qualitative criteria as follows:
Providing physical opportunity;
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Rationale for Weighting
Providing physical opportunity
8.5 As previously detailed this project will restore a derelict grade B+ listed building and as
such will provide visible physical / aesthetic improvements to this section of the lower
Antrim Road. Physical regeneration is not the over-riding aim of the project but is an
important benefit that will arise. As such this criterion has been allocated a weighting of 20
to reflect its non-monetary importance.
Promoting reconciliation and enhanced community relations8.6 Building on the core remit of the 174 Trust to promote and enhance community relations
between divided sections of the community in North Belfast, active and sustainable
reconciliation will be at the heart of the project. Given this and the fact that reconciliation
is the over-riding objective of the IFI strategy Sharing the Space, this criterion has been
given a weighting of 50.
Promoting of social and economic regeneration
8.7 As discussed in Section III: Assessment of Need, there is a strong need to encouragesocio-economic revival in the North Belfast area which has suffered years of deprivation
and high unemployment. This will be achieved through the provision of community
resources, centred on arts and cultural activities. This criterion is in keeping with the focus
of the IFI Community Based Economic and Social Regeneration Programme, which has a
strong emphasis on enabling community-based economic regeneration where
communities are at risk, and has been allocated a weighting of 30.
8.8 Each Option is awarded a total score out of 10 under each criterion and these scores are
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lunch) and so it scores marginally higher than Option 3 with scores of 10 and 9
respectively.
Promoting reconciliation and enhanced community relations
8.11 Under Option 1, the 174 Trust would continue to implement their existing activity including
activities within their forward Community Relations Strategy. Accordingly this option has
been awarded a score of 6.
8.12 Each of the Do Something options would facilitate further promotion of reconciliation and
community relations through the activities that will be hosted/ delivered within therefurbished church building and so both score highly against this criterion. However
Option 4, which includes the caf/ restaurant offers an additional attraction at the site,
which may draw more members of the community and on a more regular basis to use the
facility. As such, Option 4 has been awarded a score of 9 and option 3 a score of 8.
Promotion of social and economic regeneration
8.13 The 174 Trust also envisage wider community outputs to be realised upon completion of
the project. The 174 Trust estimate that the proposed Centre has the potential to createdownstream employment as well as providing a community resource, arts and cultural
facility for the people of North Belfast.
8.14 Under the Status Quo position, the existing 174 Trust facilities would continue to provide
an inclusive, non-threatening and neutral environment for individuals and groups to
access programmes and be involved in a wide range of cross community activities. This
provides a forum for people of all ages and backgrounds to come together and experience
different aspects of arts and culture and thereby contribute to social regeneration.
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9 Calculation of Net Present Costsand Assessment of Uncertainties
Calculation of Net Present Costs
9.1 The appraisal process requires the comparison of options that will impact over a period of
years and should generally include a calculation of their net present costs/ values.
Accordingly a net present value for each short-listed option has been calculated. This
expresses the stream of capital and operating costs and also recurrent income over the
appraisal period (in this case 25 years) discounted to the commencement of the projectusing a discount rate of 3.5%. Furthermore, given the commercial aspect to this project, a
discount rate of 8% is also applied.
9.2 The NPCs of the various options (including optimism bias) are summarised in Table 9.1
with detailed calculations included in Appendix C.
9.3 The main assumptions to highlight are as follows:
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original tenants were able to be contacted directly to re-confirm their interest at the time of
this appraisal having been updated.
9.7 The resulting NPCs (including Optimism Bias) are summarised in Table 9.1 (for 3.5%
Discount Rate) and Table 9.2 (for 8% Discount Rate) below.
Table 9.1: NPC and Sensitivity Analysis on Operating Revenues and Costs
(3.5% Discount Rate)
NPC
Standard000
Occupancy @ 75%
NPC000
Op Costs inc to 120%
NPC000
Option 3; Do everything except thecaf/restaurant and kitchen
2,752 2,879 2,966
Option 4; Do everything 3,140 3,306 3,526
9.8 It is evident from the above that the NPCs for both Options 3 and 4 are marginally more
sensitive to a change in operating costs than occupancy rates. This is potentially positive
because operating costs can be more controllable than occupancy for management of the
174 Trust.
Table 9.2: NPC and Sensitivity Analysis on Operating Revenues and Costs
(8% Discount Rate)
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10 Conclusions andRecommendations
Concluding comments/preferred option
10.1 This section summarises the findings of the appraisal of the project as detailed in the
previous sections and concludes on the case for IFI (Measure 1.2) support for the project.
Thereafter it progresses to comment on Viability and Cost-Effectiveness.
10.2 It is concluded that the 174 Trusts proposal to restore and refurbish the former Duncairn
Presbyterian Church (currently derelict and vacant) as an Irish cultural language and arts
centre offers a strong fit with the imperatives of IFI as detailed in Section II: StrategicContext. It is also consistent with the focus of other relevant Government initiatives
relating to regeneration, neighbourhood renewal, renewal of arterial routes and cultural
tourism as detailed in Section II.
10.3 The need for the project was examined in Section III: Assessment of Need through the
appraisal of various different dimensions of need surrounding the proposed centre and
most specifically by appraising local demand for use of each of the project components
proposed. Overall this analysis suggests a strong level of interest amongst the relevant
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Preferred Option
10.5 On balance, between options 3 and 4, Option 4 has the highest NPC but also the highest
qualitative score. Risks and constraints associated with each option are broadly similar.
An important factor in the overall consideration is the advantages brought by the inclusion
of the catering facilities in the design. These include;
Considerable reduction in operating deficit improves the financial sustainability /
viability of the project in the longer term; and
A catering facility should attract additional footfall and is more attractive to groupswishing to use this type of facility. This in turn helps the achievement of all other
objectives, raises awareness of the facilities and is more likely to increase usage (and
occupancy) of the Centre.
10.6 On this basis, the preferred option is Option 4.
Viability
10.7 The key risks identified which could undermine the viability of the proposed projectinclude:-
Insufficient capital funding is obtained; and
Operating shortfall;
10.8 The 174 Trusts audited accounts for the financial year ending 30/09/08 indicate that the
society have only limited cash backing relative to the size and scope of the proposed
project, and this would not facilitate any of the options if funding did not go ahead. On the
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10.10 In order for the proposed Cultural Centre to be financially viable it is important to
determine how this shortfall will be met, either through securing additional grant incomeas proposed or potentially through the 174 Trust charging patrons a higher rate for the
services offered through the Centre. In this regard it is relevant to note that the one-off
mortgage payment of 70k to be made will have the impact of reducing 174 Trusts
annual outgoings by approximately 12k. This would provide additional funding to the
Trust to significantly reduce the level of deficit under option 4 and with some additional
marketing of facilities the project promoter is confident this small deficit could be
eliminated.
Cost effectiveness
10.11 Option 4: Do Everything is considered to be the preferred option and will seek
approximately 1.4m From IFI. This figure represents approximately 60% of the total VAT
inclusive capital cost of the project of 2,223,697.
10.12 The proposed Centre is projected to generate income of 45,754 yet will incur annual
operating costs significantly in excess of this figure. However, as detailed in Section III:
Assessment of Need, the target population for this project is one which has suffered manyyears of deprivation, social exclusion and high unemployment. The project has the
potential to interface with large numbers of this population on a regular basis and so has
the potential to be a cost-effective means of promoting social inclusion and bringing
members of the community together in a common interest.
10.13 In addition, the core structure of the building is in need of a significant level of repair in
order to bring the building up to minimum health and safety standards and these essential
repair costs constitute the majority of the capital costs associated with either of the Do
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11 Project implementation/management process
Sources of funding
11.1 The funding arrangements relating to the preferred option are summarised below:
Table 11.1 Capital Cost Funding Details
Funding Body Capital Funding
Sought per application
Status of Application
IFI Circa 1,400,000 Submitted
Heritage Lottery Fund Circa 900,000 Previous application
Environment & Heritage Service Circa 100,000 Previous application
Total Circa 2,400,000
11.2 The modelling of costs in relation to the options indicates an operating deficit per annum
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11.6 In addition, the project promoter proposes to set up a specific project team for this project
which will include people with key competencies including construction and futureprogramming. It is envisaged that the project team would include representatives from the
management committee of the 174 Trust, as well as individuals seconded into it from the
immediate and wider North Belfast community to address any identified skills gaps.
Furthermore, it is anticipated that the project team will also include representatives from
the previous project promoters CCMR.
11.7 Specifically the project team would be established to oversee the construction phase of
the project and the mobilisation of the use of the restored facility as set out in this
appraisal report.
11.8 The Trusts management committee comprises seven people from a mix of religious
backgrounds as detailed in Table 11.2.
Table 11.2 Profile of the Management Committee of the 174 Trust
Member Position
Heather Carey Chairperson
David Van der Merwe Treasurer and Vice Chairperson
Karen Pauley Member
Briege O'Hare Member
Rev. Prof. Patton Taylor Member
David Read Member
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11.13 The 174 Trust indicate that non-quantitative project objectives will be monitored on a six-
monthly basis using qualitative evaluation techniques. Feedback mechanisms such asquestionnaires, focus groups etc will be developed by the management team for this
purpose.
11.14 The 174 Trust will carry out a full evaluation 18-24 months after the project is
implemented. The evaluation will seek to assess the project in order to:
Ascertain the extent to which the project has achieved its aims and objectives;
Examine the effectiveness and appropriateness of the projects approach in achieving
its aims and objectives;
Examine the effectiveness of the project structures; including staff; management,
utilisation of resources and monitoring systems and procedures;
Ascertain the projects success in meeting the objectives and targets of funders;
Ascertain the effectiveness and efficiency of the project in terms of value for money;and
Make recommendations for the future of the project.
11.15 Overall, the 174 Trust state that the above evaluation will be used to inform them of any
changes required to the project in order to increase cost effectiveness and the efficiency
of their services.
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40
Table 11.3: Benefits Realisation Plan -
Key Benefit Performance Indicator Measurement Method Frequency ofMonitoring
Target Responsibility
Restore and refurbish Duncairn Church as
a Community Resource, Arts and CultureCentre
Monthly 17 months The 174 Trust Management Committee (Sub -Group
Building Committee)
Financial Rental Income* Management Accounts Monthly Year 1 7k
Year 2 14k
Year 3 21k
Centre Manager (after Year 2) with the 174 TrustManagement Committee
Financial User Income* Management Accounts Monthly Sources include usage of performance area, hostingof after school activitiesand educational classes
Year 1 8k
Year 2 16k
Year 3 24k
Centre Manager (after Year 2) with the 174 TrustManagement Committee
Non-financial (skills development) throughproviding lifelong learning opportunities.
Participants in educationclasses. Satisfaction withcourses provided(measurable throughcourse monitoring forms'happy sheets'
Monthly Weekly target 400 per week (for regular classes)
Annual attendees 3,500
Centre Manager /Business Development Manager
Non-financial promoting of cross-community engagement
User profiling by variousmethods e.g. courseregistrationsheets/annualsurvey/communitysurveys
Some monthlyand annual usersurvey
To reflect the communitybreakdown of thecatchment area for thefacility
Centre Management (the 174 Trust Managementarea)
Quantitative Job creation (Direct and
Indirect)
Regular monitoring with
tenants/letting facilities(e.g. bookshop, caf,office space)
Monthly Direc t 1.5 FTEs
Indirect 2.7 (not all FTEs)
The 174 Trust Management Committee Centre
Manger after Year 2
Note* Years 1,2 and 3 relate to the first, second and third years of operations respectively. These correspond with years 2, 3 and 4 on the NPC
schedules per Appendix 3
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Appendix A Analysis of
Capital Costs
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Table 1: Breakdown of General Building Costs
Option /
Capital cost element
Option 1
Do Nothing
Option 3
Do Everything except theCaf/Restaurant and Kitchen
Option 4
Do Everything
Caf/Restaurant &
Kitchen
0 0 238,525
Toilets/ General 0 49,350 49,350
Rental Units 0 25,028 25,028
Arts and Crafts 0 77,256 77,256
First Floor Gallery 0 56,400 56,400
Bookshop and Reading
Area
0 122,200 122,200
Performance Space 0 240,875 240,875
Green Room 0 28,200 28,200
Conference Room 0 42,300 42,300
Ground Floor Foyer/
Exhibition Area
0 24,675 24,675
Total cost 0 666,284 904,809
Source: Estimates provided by Mackel & Doherty Architects, inclusive of VAT(March 2008)
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Table 3: Breakdown of Fixtures, Furnishings and Equipment
Option /
Capital cost element
Option 1
Do Nothing
Option 3
Do Everything except theCaf/Restaurant and Kitchen
Option 4
Kitchen, white goods and
servery
0 n/a 47,000
Caf seating and chairs 0 n/a 29,375
Dispensary/return cabinet 0 n/a 2,935
Platform Lift 0 29,375 29,375
Reception counter 0 11,750 11,750
Signage and advertising
board structure
0 23,500 23,500
Carpets/matwells/floor 0 14,688 14,688
Arts/Crafts fit-out 0 20,563 20,563
Performance area chairsand tables 0 17,625 17,625
Bookshop 0 14,688 14,688
Projecting room furniture ( 0 2,938 2,938
Stage 0 11,750 11,750
Performance Platform 0 14,688 14,688
Bleacher seating 0 29,375 29,375
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Appendix B - Optimism Bias
Calculations
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Table 1: Optimism Bias for Option 3
C ont rib ut or y F ac tor % C on tr ib ut ion M it iga tio n Fa ct or C omme nt
Procurement
Complexity of
contract structure 1 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so thisrisk cannot be mitigated.
Late contractor
involvement in design2 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and the
contractors have not been involved in the design from the early stages. It is considered that
this risk has not been mitigated.
Poor contractor
capabilities5 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so this
risk cannot be mitigated.
Dispute and claims
occurred11 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so this
risk cannot be mitigated.
Project
Specific
Design complexity 3 0.8
There is no indication of any complication in project design caused by difficult conditions or
requiring a complicated foundation. However, the proposed design is a blend of new and old
and takes account of the historic status of the building and so can is complex in nature. The
design process has included the surveyors, architects and conservation architects which has
significantly mitigated this risk.
Degree of innovation 9 0.6
This project involves an innovative design package, which blends modern design features
with the historically and architecturally interesting structure of the old church. There is
therefore no significant bank of experience on which to base these costs or the expected time
for completion, which limits the extent to which this risk can be mitigated.
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C ont rib ut or y F ac tor % C on tr ib ut ion M it iga tio n Fa ct or C omme nt
Compliance with
listed buildingdevelopment criteria.
5 0.7
This is a B+ listed building, which means that any potential development must comply with
the rules as detailed by Environmental Heritage Service. Both the architects and surveyors
for the project are aware of these restrictions and the proposed design takes these into
consideration, which mitigates this risk significantly. The need for listed building consent hasbeen highlighted in the Draft Conservation Statement and this has been obtained. However,
it is felt that during the property development phase of the project, unforeseen problems may
arise that may incur additional costs and time taken to complete the works in order to comply
with these strict criteria.
Client
Specific
Funding availability 3 0.3
The applicants are seeking funding for this project from the International Fund for Ireland (IFI)
with the balance from the Heritage Lottery Fund. There is a large degree of uncertainty
regarding both the availability of funding from other sources and the time that it may take to
secure such funding, which could have an adverse impact on works duration.
Inadequacy of the
business case23 0.8
A detailed business plan has been drawn up in relation to the project. The output
specifications have been clearly defined and a consultation process was undertaken with key
stakeholders. However, the capital costs projected in this business plan have changed
significantly throughout the planning process, which indicates a deficiency in the businessplanning process. These have subsequently been subject to review, involving the use of
specialised surveyors and architects, which mitigates this risk.
Project management
team2 0.7
The management committee of the 174 Trust has a range of competencies in financial and
supervisory management, accountancy and law. In this way the project promoter is well
placed to undertake the financial and legal management of the project, which should reduce
the risk of cost overruns. The 174 Trust however, has limited experience of capital build
projects and so this risk cannot be mitigated fully.
Poor project
intelligence6 0.8
This risk is significantly mitigated, as the surveyors to the project have been heavily involved
in the planning stages of the project.
Other (specify) 2 1.0 No other client specific issues have been identified.
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C ont rib ut or y F ac tor % C on tr ib ut ion M it iga tio n Fa ct or C omme nt
Environment
Site characteristics 1 1.0
No problematic site characteristics have been identified in relation to this option. The project
concerns the renovation of an existing building rather than the demolition and construction of
a new building and does not include extensive site works. Furthermore Consarc
Conservation architects were commissioned by The 174 Trust to prepare a Conservationstatement. This highlighted specific areas of design, which need to be incorporated and
managed effectively. As such, it is considered that this risk can be mitigated in full.
Permits/ Consents/
approvals
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Figure 2 below details the calculation of optimism bias factors for Option 3 using a
spreadsheet designed to facilitate optimism bias calculations in accordance with current DFP
requirements.
Figure 2
Standard Buildings
Non Standard Buildings
Both Standard & Non-Standard
Upper Bound Optimism Bias 39 51
WorksDuration
CapitalE
xp'ture
Risk Area Contribution
Procurement M i t i g a t i o n o f O B *
Complexity of Contract Structure 0% 3 1
Late Contractor Involvement in Design 0% 6 2
Poor Contractor Capabilities 0% 5 5G overnm ent Gu ide lines 0 0
Dispute & Claims Occurred 0% 5 11
In form atio n Ma nage me nt 0 0
O th er 0 0
Project Spec ific
Design Complexity 80% 2 3
Degree o f Innovation 60% 8 9
E nvironm ent al I mpa ct 0 0
MMD Optimism Bias Estimator: Buildings Projects - Option 3
Non-Standard Buildings
Non-Standard Buildings
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PricewaterhouseCoopers LLP 2008 No liability is accepted by the author in respect of any loss suffered by third parties who place reliance on the contents of this report.
Table 3: Optimism Bias for Option 4
Contributor y Factor % Contribution Mitigation Factor Comment
Procurement
Complexity of
contract structure1 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so this
risk cannot be mitigated.
Late contractor
involvement in design2 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and the
contractors have not been involved in the design from the early stages. It is considered that
this risk has not been mitigated.
Poor contractor
capabilities5 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so this
risk cannot be mitigated.
Dispute and claims
occurred11 0.0
If funding for this project is secured, a competitive tendering process will be undertaken to
appoint contractors. As such, there is no information available on the contractors and so this
risk cannot be mitigated.
Project
Specific
Design complexity 3 0.6
There is no indication of any complication in project design caused by difficult conditions orrequiring a complicated foundation. However, the proposed design is a blend of new and old
and takes account of the historic status of the building and so can is complex in nature. The
design process has included the surveyors, architects and conservation architects which has
significantly mitigated this risk. However, under this option, the inclusion of a caf and
kitchen makes the design marginally more complex than that proposed under Option 2;
therefore the mitigation factor is lower.
Degree of innovation 9 0.5
This project involves an innovative design package, which blends modern design features
with the historically and architecturally interesting structure of the old church. There is
therefore no significant bank of experience on which to base these costs or project duration,
which limits the extent to which this risk can be mitigated. Under this (the proposed) option,
the design concept will be implemented in full and so has additional design features adding
to the complexity and innovation. As such, under this option, the degree to which this riskcan be mitigated is lower.
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Contributor y Factor % Contribution Mitigation Factor Comment
Compliance with
listed buildingdevelopment criteria.
5 0.7
This is a B+ listed building, which means that any potential development must comply with
the rules as detailed by Environmental Heritage Service. Both the architects and surveyors
on for the project are aware of these restrictions and the proposed design takes these into
consideration, which mitigates this risk significantly. The need for listed building consent has
been highlighted in the Draft Conservation Statement and this has been obtained. However,
it is felt that during the property development phase of the project, unforeseen problems may
arise that may incur additional costs or time taken to complete the works in order to comply
with these strict criteria.
Client
Specific
Inadequacy of the
business case23 0.8
A detailed business plan has been drawn up in relation to the project. The output
specifications have been clearly defined and a consultation process was undertaken with key
stakeholders. However, the capital costs projected in this business plan have changed
significantly throughout the planning process, which indicates a deficiency in the business
planning process. However, these have subsequently been subject to review, involving the
use of specialised surveyors and architects, which mitigates this risk.
Funding availability 3 0.3
The applicants are seeking funding for this project from the International Fund for Ireland (IFI)
with the balance from the Heritage Lottery Fund. At the time of the appraisal, there is a largedegree of uncertainty regarding both the availability of funding from other sources and the
time that it may take to secure such funding, which could have an adverse impact on works
duration.
Project management
team2 0.7
The management committee of The 174 Trust has a range of competencies in financial and
supervisory management, accountancy and law. In this way the project promoter is well
placed to undertake the financial and legal management of the project, which should reduce
the risk of cost and project duration overruns. CCMR however, have limited experience of
capital build projects and so this risk cannot be mitigated fully.
Poor project
intelligence6 0.8
This risk is significantly mitigated as the surveyors to the project have been heavily involved
in the planning stages of the project.
Other (specify) 2 1.0 No other client specific issues have been identified.
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PricewaterhouseCoopers LLP 2008 No liability is accepted by the author in respect of any loss suffered by third parties who place reliance on the contents of this report.
Contributor y Factor % Contribution Mitigation Factor Comment
Environment
Site characteristics 1 1.0
No problematic site characteristics have been identified in relation to this option. The project
concerns the renovation of an existing building rather than the demolition and construction of
a new building and does not include extensive site works. Furthermore Consarc
Conservation architects were commissioned by The 174 Trust to prepare a Conservation
statement. This highlights specific areas of design, which need to be incorporated and
managed effectively. As such, it is considered that this risk can be mitigated in full.
Permits/ Consents/
approvals
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Figure 4 below details the calculation of optimism bias factors for Option 4 using a
spreadsheet designed to facilitate optimism bias calculations in accordance with current DFP
requirements.
Figure 4
Standard Buildings
Non Standard B uildingsBoth Standard & Non-Standard
Upper Bound Optimism Bias 39 51
WorksD
uration
CapitalE
xp'ture
Risk Area C ontribution
Procurement M i t i g a t i o n o f O B *
Co mplexity of Contract Structure 0% 3 1
Late Contractor Involvement in Design 0% 6 2
Poor Contractor Cap abilities 0% 5 5G overnm ent Gu ide lines 0 0
Dispute & Claims Occurred 0% 5 11
In form atio n Ma nage me nt 0 0O th er 0 0
Project Spec ific
Design Complexity 60% 2 3
Degree of Innovation 50% 8 9
E nvironm ent al I mpa ct 0 0
MMD Optimism Bias Estimator: Buildings Projects - Option 4
Non-Standard Buildings
Non-Standard Buildings
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Appendix C Net Present
Cost calculations
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OPTION 3: Do everything except the the Caf/Restaurant and Kitchen
YEAR DISCOUNT INITIAL OPPORTUNITY OPERATING REVENUE NET NET OB
FACTOR CAP COST COSTS COSTS REVENUE PRESENT ADJUSTED
VAL UE 1 7.9 % N Pv
3.50%
0 1.0000 -70,000 -180,000 -15,000 0 -265,000 -265,000 -277,530
1 0.9662 -1,758,943 -26,000 0 -1,784,943 -1,724,583 -2,028,786
2 0.9335 -62,997 11,585 -51,412 -47,994 -47,994
3 0.9019 -64,480 23,169 -41,311 -37,260 -37,260
4 0.8714 -66,683 34,754 -31,929 -27,824 -27,824
5 0.8420 -66,683 34,754 -31,929 -26,883 -26,883
6 0.8135 -66,683 34,754 -31,929 -25,974 -25,974
7 0.7860 -66,683 34,754 -31,929 -25,096 -25,096
8 0.7594 -66,683 34,754 -31,929 -24,247 -24,247
9 0.7337 -66,683 34,754 -31,929 -23,427 -23,427
10 0.7089 -66,683 34,754 -31,929 -22,635 -22,635
11 0.6849 -66,683 34,754 -31,929 -21,870 -21,870
12 0.6618 -66,683 34,754 -31,929 -21,130 -21,130
13 0.6394 -66,683 34,754 -31,929 -20,416 -20,416
14 0.6178 -66,683 34,754 -31,929 -19,725 -19,725
15 0.5969 -66,683 34,754 -31,929 -19,058 -19,058
16 0.5767 -66,683 34,754 -31,929 -18,414 -18,414
17 0.5572 -66,683 34,754 -31,929 -17,791 -17,791
18 0.5384 -66,683 34,754 -31,929 -17,189 -17,189
19 0.5202 -66,683 34,754 -31,929 -16,608 -16,608
20 0.5026 -66,683 34,754 -31,929 -16,046 -16,046
21 0.4856 -66,683 34,754 -31,929 -15,504 -15,504
22 0.4692 -66,683 34,754 -31,929 -14,980 -14,980
23 0.4533 -66,683 34,754 -31,929 -14,473 -14,473
24 0.4380 -66,683 34,754 -31,929 -13,984 -13,984
25 0.4231 180000 -66,683 34,754 148,071 62,656 62,656
-1,828,943 0 -1,635,503 799,342 N PC - 2, 43 5,4 55 - 2,7 52 ,1 88
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OPTION 3: Do everything except the the Caf/Restaurant and Kitchen - Sensitivity 75% Occupancy rates
YEAR DISCOUNT INITIAL OPPORTUNITY OPERATING REVENUE NET NET OB
FACTOR CAP COST COSTS COSTS REVENUE PRESENT ADJUSTED
VAL UE 1 7.9 % N Pv
3.50%
0 1.0000 -70,000 -180,000 -15,000 0 -265,000 -265,000 -277,5301 0.9662 -1,758,943 0 -26,000 0 -1,784,943 -1,724,583 -2,028,786
2 0.9335 0 0 -62,997 8,689 -54,309 -50,698 -50,698
3 0.9019 0 0 -64,480 17,377 -47,103 -42,484 -42,484
4 0.8714 0 0 -66,683 26,066 -40,618 -35,396 -35,396
5 0.8420 0 0 -66,683 26,066 -40,618 -34,199 -34,199
6 0.8135 0 0 -66,683 26,066 -40,618 -33,042 -33,042
7 0.7860 0 0 -66,683 26,066 -40,618 -31,925 -31,925
8 0.7594 0 0 -66,683 26,066 -40,618 -30,845 -30,845
9 0.7337 0 0 -66,683 26,066 -40,618 -29,802 -29,802
10 0.7089 0 0 -66,683 26,066 -40,618 -28,795 -28,795
11 0.6849 0 0 -66,683 26,066 -40,618 -27,821 -27,821
12 0.6618 0 0 -66,683 26,066 -40,618 -26,880 -26,880
13 0.6394 0 0 -66,683 26,066 -40,618 -25,971 -25,971
14 0.6178 0 0 -66,683 26,066 -40,618 -25,093 -25,093
15 0.5969 0 0 -66,683 26,066 -40,618 -24,244 -24,244
16 0.5767 0 0 -66,683 26,066 -40,618 -23,424 -23,424
17 0.5572 0 0 -66,683 26,066 -40,618 -22,632 -22,632
18 0.5384 0 0 -66,683 26,066 -40,618 -21,867 -21,867
19 0.5202 0 0 -66,683 26,066 -40,618 -21,127 -21,127
20 0.5026 0 0 -66,683 26,066 -40,618 -20,413 -20,413
21 0.4856 0 0 -66,683 26,066 -40,618 -19,723 -19,723
22 0.4692 0 0 -66,683 26,066 -40,618 -19,056 -19,056
23 0.4533 0 0 -66,683 26,066 -40,618 -18,411 -18,411
24 0.4380 0 0 -66,683 26,066 -40,618 -17,789 -17,789
25 0.4231 0 180,000 -66,683 26,066 139,383 58,979 58,979
-1,828,943 0 -1,635,503 599,507 N PC - 2, 56 2,2 40 - 2,8 78 ,9 74
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OPTION 3: Do everything except the the Caf/Restaurant and Kitchen - Sensitivity 120% Operating Costs
YEAR DISCOUNT INITIAL OPPORTUNITY OPERATING REVENUE NET NET OB
FACTOR CAP COST COSTS COSTS REVENUE PRESENT ADJUSTED
VAL UE 1 7.9 % N Pv
3.50% 'k 'k 'k 'k 'k 'k 'k
0 1.0000 -70,000 -180,000 -18,000 0 -268,000 -268,000 -280,5301 0.9662 -1,758,943 0 -31,200 0 -1,790,143 -1,729,607 -2,033,810
2 0.9335 0 0 -75,596 11,585 -64,012 -59,756 -59,756
3 0.9019 0 0 -77,376 23,169 -54,207 -48,891 -48,891
4 0.8714 0 0 -80,020 34,754 -45,266 -39,446 -39,446
5 0.8420 0 0 -80,020 34,754 -45,266 -38,112 -38,112
6 0.8135 0 0 -80,020 34,754 -45,266 -36,824 -36,824
7 0.7860 0 0 -80,020 34,754 -45,266 -35,578 -35,578
8 0.7594 0 0 -80,020 34,754 -45,266 -34,375 -34,375
9 0.7337 0 0 -80,020 34,754 -45,266 -33,213 -33,213
10 0.7089 0 0 -80,020 34,754 -45,266 -32,090 -32,090
11 0.6849 0 0 -80,020 34,754 -45,266 -31,004 -31,004
12 0.6618 0 0 -80,020 34,754 -45,266 -29,956 -29,956
13 0.6394 0 0 -80,020 34,754 -45,266 -28,943 -28,943
14 0.6178 0 0 -80,020 34,754 -45,266 -27,964 -27,964
15 0.5969 0 0 -80,020 34,754 -45,266 -27,019 -27,019
16 0.5767 0 0 -80,020 34,754 -45,266 -26,105 -26,105
17 0.5572 0 0 -80,020 34,754 -45,266 -25,222 -25,222
18 0.5384 0 0 -80,020 34,754 -45,266 -24,369 -24,369
19 0.5202 0 0 -80,020 34,754 -45,266 -23,545 -23,545
20 0.5026 0 0 -80,020 34,754 -45,266 -22,749 -22,749
21 0.4856 0 0 -80,020 34,754 -45,266 -21,980 -21,980
22 0.4692 0 0 -80,020 34,754 -45,266 -21,236 -21,236
23 0.4533 0 0 -80,020 34,754 -45,266 -20,518 -20,518
24 0.4380 0 0 -80,020 34,754 -45,266 -19,824 -19,824
25 0.4231 0 180,000 -80,020 34,754 134,734 57,012 57,012
-1,828,943 0 -1,962,604 799,342 N PC - 2, 64 9,3 15 - 2,9 66 ,0 49
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OPTION 4: Do everything
YEAR DISCOUNT INITIAL OPPORTUNITY OPERATING REVENUE NET NET OB
FACTOR CAP COST COSTS COSTS REVENUE PRESENT ADJUSTED
VAL UE 1 9.7 % N Pv
3.50%
0 1.0000 -70,000 -180,000 -15,000 0 -265,000 -265,000 -278,790
1 0.9662 -2,153,697 -26,000 0 -2,179,697 -2,105,987 -2,515,9182 0.9335 -66,629 15,251 -51,378 -47,962 -47,962