174 Trust Econ Appraisal Updated Report 211209

7/30/2019 174 Trust Econ Appraisal Updated Report 211209

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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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PricewaterhouseCoopers LLP

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.

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 /


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 /


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


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


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




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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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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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



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Table 3: Optimism Bias for Option 4

Contributor y Factor % Contribution Mitigation Factor Comment

Procurement

Complexity of

contract structure1 0.0




Late contractor

involvement in design2 0.0


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




Dispute and claims

occurred11 0.0




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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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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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




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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


58/68

OPTION 3: Do everything except the the Caf/Restaurant and Kitchen - Sensitivity 75% Occupancy rates



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


59/68

OPTION 3: Do everything except the the Caf/Restaurant and Kitchen - Sensitivity 120% Operating Costs



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


60/68

OPTION 4: Do everything



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

174 Trust Econ Appraisal Updated Report 211209

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Transcript of 174 Trust Econ Appraisal Updated Report 211209