Primary Care Centres In Ireland 4e3a12

Primary Care Centres in Ireland Analysis of Emerging Business Opportunities

Mateusz Mrowka

BSc. Construction Economics and Management Dublin Institute of Technology 2014

ABSTRACT Introduction of a new strategy to health care in 2001 has been followed by the announcement of plans for development of modern, sustainable, dedicated, medical infrastructure which would accommodate reformed health care teams and allow for transfer services from centralised hospitals into locally developed Primary Care Centres. The then estimated value of construction works on circa 600 facilities was equal to one billion euro and the whole project has been announced as a new business model opportunity for private investment.

Thirteen years since an initial announcement, development of PCC is being reported as unsatisfactory. Development aims haven’t been achieved and whole business model is being criticised as flawed.

The author undertakes the research of the subject, collecting data on underlying policy and legislature, researches technical output specifications and public-private business arrangements concerned with development and operation of PCCs. The author believes that the subject hasn’t been comprehensively researched to date and none of the theories has been formulated and published. The author of these dissertation chose an explanatory approach to the subject and employs qualitative methods of research. The compilation of results from literature review, case study and interviews allow the forming of a personal view and introducing a theory which s the opinion that investment in Primary Care Facilities has a potential of profitable business but unfortunately has been prevented from fulfilment, by flaws in the current implementation model.

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DECLARATION This dissertation is submitted in part fulfilment of the BSc. Construction Economics and Management (Quantity Surveying) Degree from Dublin Institute of Technology.

It is the result of my own independent work and has never been submitted in part or in whole for any other coursework or dissertation.

All secondary sources of information have been acknowledged and a reference of all literature used has been provided.

Signed: ______________________________________________________________

Date: ________________________________________________________________

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ACKNOWLEDGEMENTS

I would like to thank my thesis supervisor Mr Kevin O’Reilly and Dr Alan Hore, for their time, expertise and constant help during my work on this dissertation. I dedicate my work to my parents who had to wait for so long to witness my academic achievement. I would like to thank Ania who gave so generously of her time, taking care of our little son Jonatan especially during the course of this research. Without her , this thesis would not have been possible.

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List of Tables

Table 2.1 Indicative Financial Requirements…………………………………………15 Table 2.2 Accommodation Project Capital Value…………………………………….16 Table 2.3

Conventional Procurement……………………………….......................... 19

Table 2.5

Operating Lease……………………………………................................... 21

Table 2.6

PPP………….…………………………………................................... 22

Table 5.1

Area Schedule………………………………………………………...……41

Table 5.2

Life Cycle Costing……………………………………………….…...……42

Table 5.3

Maintenance cost……………………………………………………..……43

Table 5.4

NPV analysis………………………………………………….…...………45

Table 5.5

IRR analysis……………………………………………………..…………47

Table 7.1

Variants comparison………………………………………..………..…56

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LIST OF FIGURES Figure 1.1 Sample PCT……………………………….. .............................................. .7 Figure 2.1 PPP PCC bundle………….. ……………….……………………………..13 Figure 2.2 Partners in delivery of PPP…..................................................................... 16 Figure 2.3

Construction Stage: Payments………....................................................... 17

Figure 2.4

Operational Stage: Payments…………………………………………… 18

Figure 2.5 Decision Tree on DBOF PPP Contracts……………….………….……... 22 Figure 2.6 PPP…………………………………………….......................................... 23 Figure 5.1 Doughiska PCC info request via e-mail……………… ............................ 36 Figure 5.2 Doughiska PCC drawings via e-mail ……….............................................37 Figure 5.3 Doughiska, Co. Galway, Primary Care Centre- exterior........................... 38 Figure 5.4 Doughiska, Co. Galway, Primary Care Centre- interior…….................... 39 Figure 5.5 Take-off screen shot……………………………. ........................... 39 Figure 5.6 Elemental Cost Plan………………………………………………………40 Figures 5.7 IRR graph………………………………………………………............. 48

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List of Abbreviations

AFL - Agreement For Lease A - Certified Public ants I - Consumer Price Index DBFM - Design Build Finance an Manage DOE - Department of Education DPER - Department of Public Expenditure and Reform EC - European Committee FDI - Foreign Direct Investment GCCC - Government Contract Committee for Construction GP - General Practitioner HSE - Health Service Executive IAPC - Irish Association of Primary Care IAS - International ing Standards IMO - Irish Medical Organisation IRR - Internal Rate of Return IT - Information Technology NDFA - National Development Finance Agency NPV - Net Present Value OJEU - Official Journal of European Union OJHC - Oireachtas t Health Committee VI

PCC - Primary Care Centre PCCC - Primary Care Centre Committee PCF - Primary Care Facility PCT - Primary Care Team PIM - Preliminary Information Memorandum PPP - Public Private Partnership PQQ - Pre-Qualification Questionnaire PSI - Pharmaceutical Society of Ireland QS - Quantity Surveyor TD - Teachta Dála

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TABLE OF CONTENTS

ABSTRACT...................................................................................................................... I DECLARATIONS........................................................................................................... II ACKNOWLEDGEMENTS............................................................................................ III LIST OF FIGURES ........................................................................................................IV LIST OF TABLES ..........................................................................................................V LIST OF ABBREVIATIONS ........................................................................................VI TABLE OF CONTENT…...........................................................................................VIII

1. Chapter One……………….......................................................................................... 1 1.1 Introduction ...................................................................................................... 1 1.2 Dissertation aims .............................................................................................. 2 1.3 Research goals............................................................................ ……………..2 1.4 Outline methodology......................................................................... ………...3 1.5 Outline chapters ............................................................................................... 4

2. Chapter Two – Literature Review Part One................................................................. 6 2.1 Introduction....................................................................................................... 6 2.2 Primary Care – A New Direction ................................................................... ..6 2.2.1 Common facilities .................................................................................. 8 2.2.2 Retail Pharmacies & Primary Care Centres.......................................... ..9 2.3 Current Delivery Models – HSE Direct Build……………………..…….10 2.4 Operational (or Operation) Lease................................................................... 10 2.5 PPP – Design, Build, Finance and Maintain………..……………...12 VIII

2.6 ing in HSE Projects......................................................................... ..19

3. Chapter Three – Part Two- Challenges and Opportunities......................................... 23 3.1 Introduction.................................................................................................... 23 3.2 Current Government Stance……….…………………………………..……..23 3.3 GPs Opinions………………………………………………………....… …..24 3.4 Developers’ Opinions ..................................................................................... 25 3.5 Pharmacists’ Opinions............................................................... …………….26 3.6 Incentives ....................................................................................................... 28 3.7 Summary ................................................................................................. .…..29

4. Chapter Four - Methodology.......................................................................... ………30 4.1 Introduction.............................................................................................. …...30 4.2 Strategy ................................................................................. ……………….30 4.3 Methodology .......................................................................................... ……31 4.3.1 Surveys vs. Interviews..................................................................................31 4.3.2 Sampling........................................................................ …………………..33 4.4 Case Study ..................................................................................................... 34 4.5 Conclusion ......................................................................................... ……...34

5. Chapter Five – Case Study………………………………………………………......35 5.1 Introduction......................................................................................... ……...35 5.2 Choice of A Model....................................................................................... ...35 5.3 Facility Description .........................................................................................37 5.4 Take-off & Cost Plan ..................................................................................... 39 5.5 Rental Division ................................................................................. ……….41 5.6 Life Cycle Cost.................................................................................. ……….41 5.7 Operational Maintenance Cost........................................................................ 43 IX

5.8 NPV & IRR Analysis.................................................................................... 43 5.8.1 Net Present Value................................................................. ………44 5.8.2

Internal Rate of Return....................................................... ……….46

6. Chapter Six - Interviews .................................................................. ………………49 6.1 Introduction................................................................................. ……………49 6.2 Summary of Interviews....................................................................................49 6.3 Conclusion ...................................................................................................... 53

7. Chapter Seven - Conclusion ................................................................. ……….......54 7.1 Introduction – Dissertation Aim........................................................ ……….55 7.2 Comments on Research Objectives................................................................. 55 7.3 Limitations & Obstacles to Research............................................ ………….56 7.4 Further Research Recommendation............................................ …………...57

BIBLIOGRAPHY ......................................................................................................... 58 APPENDIX A: List of PCC Development Progress .................................... ………….61 APPENDIX B: Take-off Mark-up Drawings .................................................................67 APPENDIX C: Cost Plan............................................................................ …………...82 APPENDIX D: Financial Analysis ..............................................................................106 APPENDIX E: Thesis Proposal ...................................................................................118

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Chapter One 1.1

INTRODUCTION

‘What a difference a year makes? Whilst 2013 represented another tough year in the construction industry it also marked the first year since the start of the downturn where certain sectors experienced growth and a real sense of optimism took hold,’ (Mitchel, 2014). The Head of Aecom in Ireland, Paul Mitchel, introduces his company annual review of the construction market, stating that ‘the influx of foreign direct investment continued unabated and exceeded the investment made in 2012. We saw new corporate brands enter the market and reduce the percentage of surplus office space in our cities. 2013 saw the first of the new office buildings commence construction towards the end of the year, signifying the viability tipping point in the market,’ (Mitchel, 2014). There is a significant upsurge in further investment in high technology infrastructure – data centres, Intel’s industrial developments, pharmacology. Increasing Foreign Direct Investment (FDI) is a strong indication of approval for current reforms and expanding presence of the world’s largest companies and investors’ works as the best invitation for other players to the Irish stage where it is seen as safe, despite recent years’ turmoil, and most importantly, seen as a profitable market again. This is in stark contrast to stagnant Public sector developments harnessed by limitations in public expenditure and worryingly unbalanced residential market, which in contrast with the lack of investment over recent years, enters a so called two-tier market. The situation characterised by oversupply of dwellings in areas with virtually no demand and densely populated, urbanized areas where demand exceeds supply yielding constantly growing prices. The Government is bound to deliver public infrastructure in transportation, education and healthcare, revives the concept of involvement of private equity in the delivery of public infrastructure. The ‘Infrastructure Stimulus Plan’, announced in 2012 by the Minister for Public Expenditure and Reform, Mr Brendan Howlin TD, amounted to “€2.25 billion in multi-annual infrastructure investment will be used to facilitate the

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delivery of Phase I of a Public Private Partnership (PPP) programme and to further labour intensive capital projects” (DPER, 2012). Under this plan, there is a designation for €115 Million for development of a bundle of 16 Primary Care Centres under PPP scheme, highlighting controversial issues present with developments on Health Service Executive’s reform. The ambitious strategy described in ‘Primary Care – A New Direction‘(HSE, 2008), where one of most important tasks of the undergoing reform is supply of new infrastructure is valued in excess of €1 billion. The rollout of facilities seemingly lags behind the schedule and also political controversies surround development of the projects. •

Unclear information policy,

•

conflicts among stakeholders,

•

call out for involvement of private investors and,

•

Constantly repeated necessity for ‘off balance sheet’ ing.

What is a factual situation in PCC rollout? Is there a space for private investors and if so, can the Health Care be an alternative option for investment opposed to the proven office or technology sectors? In this dissertation, I will research the issues of PCC development by utilizing core Quantity Surveying skills and professional expertise in relevant fields of cost planning, project appraisal and from that formulate the answers.

1.2

DISSERTATION AIMS

The Author aims to research private investment opportunities arising due to development of new infrastructure for Primary Care Teams, currently being implemented along the reform of Health Care structure and services in Ireland.

1.3

RESEARCH GOALS

The Author has selected a number of primary objectives for the research: •

The review of short history of the PCC infrastructure development, review of relevant legislation, outline output requirements;

•

The review of current delivery models, factual progress of implementation and current status;

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•

The level of participation of private sector in infrastructure delivery, business models, opportunities and challenges.

1.4

OUTLINE METHODOLOGY

The Author wishes to establish the outline methodology with the aim to execute the research in a structured and comprehensive manner; Stage One: Literature Review. The Literature Review consisted of research and analysis of publicly available sources of information on recent history, legislature, technical specifications, economic and financial basis, relevant statistics, and reports on development of PCC infrastructure in Ireland. The primary source contained topical, government publications. The secondary source, which proved to be an invaluable source for the most current data and opinions: healthcare, construction journals, newspapers, magazines, online publications, databases of quantity surveying practice involved in work on PCC projects. Stage Two: Case Study. The Author concludes development of a theoretical model for Construction Cost of development of standard sized building, designed to accommodate three Primary Care Teams (PCT). The model has been based on an existing building, currently in service of HSE Board under Operational Lease in Doughiska, Co Galway. The facility was designed by Cullen Payne Architects for a private operator. The Model build up consists of: •

A Quantity Take-Off assisted by dedicated quantity surveying software – CostX v.3.53 which is a standard software being used in Dublin Institute of Technology (DIT) and which operating knowledge is a part of current curriculum at DT111. The Author is a holder of current Student Licence and under its is entitled to use aforementioned software for academic purposes.

•

Compilation of cost plan by estimation of construction costs of materials in quantities measured in on screen take-off and relevant works value accordingly to current, market tendering costs. Costs’ data sourced from a choice of recently

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tendered winning bids on similar size and specifications projects istered by PQS in Dublin. Data usage restricted by copy rights and identification of projects withheld by the owner of intellectual property, Aecom, due to commercial sensitivity. • • •

Modelling of life cycle approximate costs of hard maintenance; Analysing of rental arrangements under HSE operational lease scheme; Simple financial model for project appraisal identifying financial risks of HSE operational lease scheme;

The case study aimed, by researching of feasibility into potential development of PCC for an Operational Lease business model, to acquire the knowledge if projects are a valid option for private equity involvement considering current macroeconomic trends and the long term (25 years) future.

Stage Three: Supplementary, semi structured interviews. The Author has chosen the semi structured interview as a supplementary to conducted research of the Case Study. This method of communication is important in its results, by bringing the views of industry professionals.

Stage Four: analysis of the results The results of research are combined in the final chapter.

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OUTLINE CHAPTERS

This thesis comprises of seven chapters briefly described as follows:

Chapter One: Here the author outlines the research area, describes the thesis and introduces the methodology undertaken to execute the research.

Chapter Two: The author undertakes the literature review of the researched subject. This chapter is a first part focused on the inception of new Primary Care Centres strategy, adequate

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legislation, HSE requirements, and Government macro level strategy. It will also outline PCC delivery specifics, context of current, government capital investment strategy and current delivery models. Chapter Three: This is a part two of the literature review concerned with research of current issues troubling PCC development. The author researched published opinions of involved stakeholders. Chapter Four: The author discusses the research methodology of the Case Study and supplementary research of opinions among industry leading professionals. Chapter Five: This chapter will build a Case Study for theoretical investment model in PCC development, the basis upon a PCC built under Design & Build procurement method in Doughiska, Co Galway. The author undertakes measurement and cost planning followed by financial analysis for privately financed, designed and build facility with a purpose to be leased to HSE.

Chapter Six: This chapter focuses on presenting the results of interview analysis.

Chapter Seven: In the final chapter the author concludes the results of the undertaken research. It will be an overall commentary with indication of proposed solutions to the delivery of PCC in Ireland.

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Chapter Two –Part One; Literature Review.

2.1

INTRODUCTION

Part one of literature review undertakes a comprehensive secondary data collection, comprising reviews of numerous publications in the form of Government, Ministerial and Departmental policy statements, strategy outlines, case and annual reports, scrutinising planned developments and listing officially ed progress in implementation of PCF delivery.

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PRIMARY CARE – A NEW DIRECTION

In line with PCCC Transformation program which outlines changes to national strategy for delivery of optimal outcome from both health care and cost effectiveness perspectives. ‘Between 90% to 95% of the health and personal, social service needs of our population can be delivered in a primary care setting. These services provide first level that is fully accessible by self-referral and have a strong emphasis on working with communities and individuals to improve their health and social wellbeing.’ (HSE, 2008) Also…‘the aims of the proposed developments are to provide: •

A greatly strengthened primary care system which will play a more central role as the first and on-going point of for people with the health care system;

•

An integrated, interdisciplinary, high-quality team-based and friendly set of services for the public;

•

Enhanced capacity for primary care to complement the existing diagnosis and treatment focus in the areas of prevention, early intervention, rehabilitation and personal social services.’ (HSE, 2008)

New health care network is based on a core Primary Care Team PCT, offering health services as a hybrid model including co-operating private and public specialists.

A typical PCT consist from 5 GPs, Public Health Nurse,

Physiotherapist, Occupational Therapist and Social Worker – and in principle

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should be sufficient to care for approximately 3000 people. Depending on requirements of local population (catchment area) teams can offer a second tier of extended care range including Psychologist and Dentist. Based in larger catchment areas PCT capacity will be extended by simple multiplication – up to 5 PCT placed in the same location creating a Primary Care Network. The network could cater for a population of ca.10, 000 people serving as a focal point for inclusion of other health and social services not considered as a standard scope of the PCT.

Figure 1.1 Sample PCT; source HSE 2008

The reform, initiating an unprecedented scale shift of health care services from existing, centralised hospitals and small, scattered around the country, obsolete healthcare units to PCT or networks, require completely new, purpose designed and built infrastructure. HSE has prepared the list of general indicators to be considered during development of Primary Care Centres which base on the number of PCT per catchment area principle. According to guidance notes - space in the facilities shall be divided to those occupied by private (General Practitioners) and public (Health Service Executive) specialist allowing ca. 546-670 sq.m per one PCT Centre including 364-535 sq.m for shared area. A centre accommodating two PCTs - ca. 739-836 sq.m with 466 – 605 sq.m of shared area and in case of 3 PCTs - with 518-647 sq.m of shared area. Shared areas - Common Facilities- include all areas in the building which are accessible by, or in use by both -

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private and HSE tenants and patients. The size of GPs’ rooms has not been predefined but the average required space is 16-20 sq.m The general division of PCC space between private, public and shared areas has the

implication for facility management and allocation of rental/management costs hence the need to clearly set out proposed room allocation.

2.2.1

COMMON FACILITIES

Facilities to be shared between the public and private healthcare service providers include: • Reception and Waiting Area. • Public female/male toilets. • Enabling toilet (female/male) with baby changing facility. • Staff Changing / toilet / showers. • Bookable Room for visiting clinics. • Group Room / Meeting Room. • Student Room (to facilitate students from any discipline attending the Centre). • Records Room. • Baby & Parent Room. • Childs Play Room. • Kitchen / Break Room. • Wheelchair trolley bay. • Photocopy room / Stationery Room. • Clean Utility Room. • Dirty Utility Room. • Clinical Waste Room. • Household Waste Room. • Cleaners Store. • General Store. • IT/Communication Room. • Plant Room. • Boiler House. • Circulation Area including Stairs / Lifts.

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In the case of development plans offering non-standard services (not included in core Primary Care or Social Care Network), extended range of services/facilities should be considered as with ‘common’ potential and share of its maintenance - costs/rental shall be negotiated with all parties involved.

Potential Common Facilities Menu: • Crèche and Play Room. • Centre Manager/Security Officer. • Coffee Dock. • Porters Base. • Gym - adult rehabilitation (shared). • Gym - paediatric (shared). • Conference Room. • Library. • Paper Shredding Room. • Archive Area. • Social Worker student room 4-5 students. • Medical Gases Manifold.

2.2.2

RETAIL PHARMACIES & PRIMARY CARE CENTRES

HSE acknowledge an existing trend of co-locating pharmacies in PCC throughout the country as an attempt to accomplish ‘one-stop-shop’ set up, but recognises associated risks. The potential for an abuse of position of trust among GPs and co-located pharmacists; can result in possibility of patient recruitment purposes in order to maximise return on investment, loss of choice of service supplier, inappropriate referral, inappropriate proximity and access to medicinal products including controlled drugs, inappropriate professional integration in the care process. The need for effective regulation of the risk has been addressed by development of the policy applicable in case of PCC development. Schedule of accommodation for HSE owned PCC doesn’t include an option for a retail pharmacy; dispensary is only subject to permission. In case of facilities leased by HSE, co-locating a retail pharmacy is to be

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a subject to approval of local planning authorities with the stipulation that a pharmacy cannot be accessed directly through the PCC. There should also be recognition that all contract and relevant professional guidelines should be adhered to including those that may be developed by the HSE for regulating such co-located environments. (HSE, 2008)

2.3

CURRENT DELIVERY MODELS: HSE DIRECT BUILD.

This is a conventional model where Government procures public infrastructure facilities funded by the Exchequer (Howes and Robinson, 2005). The HSE Board procures construction services only. The authority supplies a site, detailed architectural project with all other relevant tender documentation and secure granting of planning permission. The facilities are developed under obligatory GCCC contract assuring transparency of the process and transfer of construction risks to the contractor ensuring best practice in management of expenditure of public funds. Upon finalising construction works HSE takes over the possession of the site and remains a sole owner occupier in charge of maintenance and servicing of the facility. Arguably in the long term, it is the most efficient way of procurement since the client remains in full control over the project development from design stage, contract istration, quality control until takeover, however this model requires spending the capital which is not available in post recessionary economy not to mention that even in times of prosperity the funds are always somewhat limited. The additional considered factor for HSE commitment to develop and own a facility is dynamically changing demographics. While it is safe to assume that in densely urbanised areas there will always be a need for delivery of health services and it is anticipated that demand will almost certainly grow requiring future expansion of PCT’s and relevant accommodation, demographic trends in rural areas indicate that taking on ownership of infrastructure might eventually render not viable in long term. Somewhat distant and reserved but reasonable approach of HSE Board towards definitive investment in infrastructure is understandable.

2.4

OPERATIONAL (OR OPERATION) LEASE.

Delivery of the Primary Care Teams (PCT) services accommodated in facilities acquired via Operation (Operating) Lease, are an alternative to Direct Build

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procurement model pursued since the introduction of the current HSE strategy. This model involves active participation of commercial entities. The authorities interested in placing PCT services in a particular area agree to enter in to an operational lease on an already existing, suitable, privately owned facility or more often agree to enter into the lease on the facility to be purposely developed in compliance with HSE PC output. The standard lease of the facility is considered upon fulfilling by the investor strict criteria. The Board of HSE considers a scheme viable only if the proposed location has agreed participation of GPs, suitable site possession is secured by the future landlord (there is no option of private development on HSE owned land and the authority do not consider land swaps) and required funding for development has been agreed and guaranteed. The Letter of Intent which is a non-binding document - mere stating an interest is being issued to the bidding entity or to the Most Advantageous Bidder in case of competition. The project’s design is developed; the interior adheres to HSE criteria (Board of HSE, 2006) and envelope of a building accordingly to criteria of local planning authorities. The future tenant have limited influence on the employed technology or building design in of its sustainability. Upon completing pre construction proceedings, providing HSE requirements are fulfilled, the investor is awarded with an Agreement for Lease (AFL). This is a legally binding document opening the way for commencing a construction of a facility, however still not guaranteeing a lease. Eventually after completion of construction, upon occupation by GPs the HSE will sign a lease subsequently accommodating its own staff. The lease for a minimum of 15 years and a maximum of 35, with no break clause in, must offer significant discount to current local market rents any reviews reserve a continuity of a discount and depend on fluctuations of I. According to HSE in 2008-2010 the discount achieved equalled 18 per cent however discount on leases entered to from 2011 was closer to five per cent since rents fall in general. (HSE/Comptroller, 2012) Particular lease agreement might contain option for HSE to acquire a freehold from year 10 onwards. In particular cases the HSE might consider entering in to short term (3-5 years) lease on temporary accommodation if service delivery in the area is urgent while waiting for construction of a fully suitable facility. The HSE Board questioned by Office of Comptroller on rationale behind such an extensive use of Operational Lease model and sustainability, especially versus PPP model utilized successfully by other departments (Department of Education - Author), argued however that both models are broadly similar in of costs acquired during

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tenancy. The final outcome, takeover and ownership, is not necessarily desired and advantageous. ‘The key difference to a PPP is not the ownership in year 25, as this small residual value is included in Cost Benefit Analysis, but rather it is the ability of the HSE to break the lease and vacate the building if GPs are not present (i.e. due to lowering demographic) in the building and participating in primary care teams. […] The HSE considers the program to be progressing well in current economic climate and the cost to the Exchequer compares very favourably to traditionally funded health projects.’ (HSE, 2012) It is important to note that all currently leased facilities are under operational as opposed to Financial Lease as HSE has no legal capacity to enter the latter. I shall discuss the reasons and illustrate ing implications in simplified financial model in a dedicated paragraph. Currently, a majority of operating PCC buildings are privately owned. Since 2006 HSE leased 112 centres and ca. 90 locations are being considered. (Office of the Comptroller, 2012) Full list of facilities and locations compiled by the author and current as per March 2014 can be found in Appendix A.

2.5

PPP – DESIGN, BUILD, FINANCE AND MAINTAIN

This is the current model being implemented for delivery of PCC infrastructure through Public Private Partnership (PPP). Experiences acquired during past developments and istration of PPP schemes for School Bundles 1, 2 and 3 encouraged the authorities to introduce this form of development into a new field – Primary Care Centres. The National Development and Finance Agency (NDFA) acting as the State’s Financial Advisory body for all public investment projects greater than €20 million (on both PPP an non PPP projects) on behalf of contracting authority – Minister for Health, sanctioning authority – Department of Health and finally the sponsoring authority – Health Service Executive - is in charge of procurement process and management of construction stage through to Service Commencement. (NDFA, 2012) As mentioned already in previous chapter a number of PCC facilities have been qualified as suited to be developed via PPP vehicle. Complete and detailed business case has been carried out on pre-qualified 30 locations taking to consideration indications of the HSE report on ‘Accommodation Needs Assessment for Primary Care Teams’. Stakeholder’s consultations with range of groups including GP’s, HSE staff, local communities and planning authorities has been concluded and resulted with an ultimate choice. Facilities in sixteen locations with size ranging from 1500 m2 to 5000 m2 have been compiled to

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a bundle forming a two tier package of construction works valued at ca. e115 million and Facility Maintenance contract for term of 25 years of lease.

Figure 2.1 PCC PPP bundle: source: HSE, NDFA

Currently the PCC PPP bundle contract published in Official Journal of European Union (OJEU) Contract Notice accordingly to bounding in such instance Directive 2004/18/EC (as Services Contract) has ed the deadline for formulating queries and submission of prequalification questionnaires as a form of expression of interest in participation in the scheme. It is in fact the beginning of the long procurement process which is best illustrated by a table on the next page.

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Figure 2.2 Summary of Negotiate process: source: HSE, NDFA

Under the Design, Build, Finance and Maintain (DBFM) scheme the winning bidder, called the PPP Co, will be presented with the design for facilities based on HSE Output Specifications advanced to the stage enabling for planning application and then required to develop and finalise the project. All aspects of financing the investment are the sole responsibility of the PPP Co and any participation in project costs by the Exchequer are not considered. Upon completion of the buildings, the PPP Co is required to fit out, ensure supply of all required medical, technical and social equipment and is bound to execute on-going maintenance for a period of 25 years post construction including: 14

•

Contract Management:

•

Building Management & Maintenance:

•

Life Cycle replacement;

•

Limited Grounds maintenance;

•

Security;

•

Cleaning;

•

Pest Control;

•

Porterage;

•

Non clinical Waste Management

The operation of the PCCs will continue to be the responsibility of the HSE, including the provision of GP’s (NDFA, 2012). During prequalification process the Authorities will scrutinise the candidates assessing their ability to successfully manage simultaneous multi-site operation (portfolio of previous works however there is no strict requirement to identify preferred contractors at PQQ stage). Works programme, project management and HR capacity as well as financial condition. NDFA has published notes on indicative financial requirements which are illustrated in the table below. Indicative financial requirements Minimum Turnover (annual, averaged over 2 years) Equity provider Total (Aggregate) Construction Contractor Total (Aggregate) Individual FM Services Provider Total (Aggregate)

Net Assets

n/a

[100million]

[120 million] [40 million]

[40 million] n/a

[10 million]

n/a

Table 2.1 Indicative financial requirements; Source: NDFA 2012

As already illustrated the complexity of the project and applying criteria makes the tendering process particularly resource and money exhaustive over 11 months, between publishing PIM and announcing the preferred Tender. The authorities implemented bid compensation strategy, the Author presents general conditions in the form of the table.

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Typical Accommodation Project with capital value euro 100 million or greater Unsuccessful Tender payment: each Tender Authority decision not to award during Tender period: all Authority decision not to award during PT period: Preferred Tender ("PT") payment

300000 300000 900,000 + disbursed cost for any statutory payment included Table 2.2 Typical Accommodation Project; Source: NDFA 2012

Series of charts below illustrate structure of engagement of stake holders and payment patterns.

Delivery partners in a PPP Contracting Authority

Sherholders to PPP Co. Equity

Funders Senior Debt

PPP Co.

Works Co. Design & Build Contractor

Soft Services Co & Hard FM

Design Team

FM Contractor

Works Contractor

Figure 2.2 Delivery partners in PPP; Source: NDFA 2012

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Figure 2.3 Construction stage payments; source: NTFA 2012

As can be seen from the chart above, there is no transfers due from contracting Authority to PPP Co. in lieu of construction work. Contractors work is deemed to be fully financed from the PPP Co. shareholders equity. Upon closing Construction Phase and successful commencing of health services (Operational Phase) the PPP Co. is to be remunerated by a monthly Unitary Charge including apportioned cost of construction works and payment for an on-going service. The Contracting Authority assess PPP Co. actual performance on monthly basis and has a range of istrational-financial ‘tools’ available to ensure a satisfying outcome. Service availability and service based deductions from Unitary Payments are considered a sufficient incentive for service improvements in case of less than satisfactory performance.

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Figure 2.4 Operational stage: payments: Source: NDFA 2012

In the final year of lease a t committee of tenant and landlord’s agents will assess the condition of the buildings and agree upon works needed to be executed to bring their condition to the standard as at the beginning of initial occupancy and the landlord will be required to procure, execute and cover costs of works. Finally upon exhausting term of the lease the HSE will take over ownership of the facilities completing the scheme. As all other previously implemented PPP schemes, the framework created under the Finance Minister, Mr Charles McCreevey in 2001 is customarily designed to accommodate both experience from past projects and specific requirements of PCC. Long and very rigorous prequalifying proceedings do not guarantee tendering process and the award of the scheme to any potential bidder. As of yet, there is no information available on an actual interest. It can be viewed as a pilot scheme and the exact outcome can be anticipated rather than planned or foreseen.

The 18 months reserved for

tendering process until the construction phase can begin, combined with 24 months on average (Aecom, 2013), for a facility construction and fit-out allow to assume that first results to be available for review not earlier then mid-2017. There is no specific information available on any plans for subsequent PCC PPP schemes at least not until 18

the ‘pilot’ scheme has been completed and operating, however it shall be noted that authorities work on Bid Regime improvements aim to shorten procurement process (on as much as 6 months) through fully developing Specimen Designs along with securing full planning permissions by the Authorities which indicates an interest in future developments.

2.6

ING IN HSE PROJECTS

The austerity measures introduced by the Government in an attempt to balance books impose very strict limitations on capital spending. The 20 billion euro gap between annual revenue and spending, impose consequent reductions on infrastructure development, funded from public means. Hence the Government pursuit of an alternative to capital spending which does not affect the national balance sheet negatively. In the case of any project financed directly by the public body according to International ing Standards, it has to be brought on the Balance Sheet as General Government Expenditure – accruing expenses as per ‘acquire of an asset’ (IAS, 2005) Conventional Procurement (On Balance sheet) Operation

Construction Year

Total Project Costs over 25 years

1

1

2 etc

25

-115

-1

-1

-1

1. Voted Current Expenditure

0

-0.5

-0.5

-0.5

-12.5

2. Voted Capital Expenditure

-115

0

0

0

-115.0

0

-0.5

-0.5

-0.5

-12.5

Total EBalance im pact

-115

-1

-1

-1

-140.0

Capital Envelopes im pact

-115

0

0

0

-115.0

GGBalance im pact

-140.0

EBalance im pact

3. Central Fund

Table 2.3 Conventional Procurement; Source: NDFA

The HSE working along the stringent ing rules for management of Government Finance consequently follows a strategy of non-accrual of additional capital expenditure.

19

The ing practice for leased assets disclosure according to IAS 17 (International ing Standards, 2005) determines options of Financial and Operating lease. Difference in classification is based on allocation of substantial risks and rewards either to the vendor or lessee. IAS 17 has significant implications for key ing ratios used to analyse financial statements. Currently, under IAS 17, operating leases do not have to be capitalised. This means that if a lease can be structured such that it can be classified as an operating lease then the lease will act as a form of off balance sheet financing. This is very attractive to public bodies because a contract that allows for the use of an asset, but does not convey rights of ownership of this asset is ed for as a rental expense and can improve financial ratios (Certified Public ants, 2011).

HSE leases negotiated on PCF leave all substantial risks and rewards associated on the side of lessor; the owner of the facility covers the costs of its maintenance, and suffers a fall in value of an asset due to its technological obsolescence. It is a lessor to use an asset through to the end of its useful life, accruing profits. The ownership doesn’t to HSE in the end however there is an option of buyout. ‘A persuasive factor in classifying a lease as an operating lease is if at inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset’ (Kelly, 2010) This condition is sufficed by HSE through entering to the lease on discounted to average market rates. Lease cancellation clause which can be triggered by absence of GPs in PCC does not inflict any costs to the public body. The fluctuations in fair value at the end of the lease do not accrue to the HSE and are a sole risk of Lessor- private entity. ‘To identify the characteristics of a lease over land and buildings the two elements should be separated. Land is generally considered to have an infinite life and therefore an associated lease will normally be classified as an operating lease, unless there are other characteristics, such as title of the land transferring to the lessee, that suggest otherwise.’ (IAS, 2005) HSE lease on PCF has all characteristics of Operation Lease therefore brings to the Government the benefit of ‘Off-Balance-Sheet’ disclosure.

The figure below demonstrates typical allocation of accrued costs and balance sheet disclosure.

20

Operating Lease (Off Balance sheet) Operation

Construction Year

Total Project Costs over 25 years

1

1

2 etc

25

0

-1

-1

-1

-25.0

1. Voted Current Expenditure

0

-1

-1

-1

-25.0

2. Voted Capital Expenditure

0

0

0

0

0

Capital Envelopes im pact

0

0

0

0

0.0

GGBalance im pact EBalance im pact

Table 2.5 Operating Lease; Source: NDFA

Procurement of infrastructure through PPP Schemes – from ing point of view is essentially a form of lease. If it is a government intention to avail of benefits ‘Off balance sheet’ disclosure, it has to be assured that during both, construction phases, all or majority of construction risks and during operational phases of the scheme the substantial availability and demand risks are allocated accordingly to already outlined above rules. Figure 2.5 shows simplified structure used for qualifying construction PPP projects as required.

Figure 2.5 Decision Tree: Source: NDFA

21

The table below demonstrates typical allocation of accrued costs and balance sheet disclosure on PPP Schemes. PPP (Off Balance sheet) Operation

Construction Year

Total Project Costs over 25 years

1

1

2 etc

25

0

-5.6

-5.6

-5.6

-140.0

1. Voted Current Expenditure

0

-5.6

-5.6

-5.6

-140.0

2. Voted Capital Expenditure

0

0

0

0

0

Capital Envelopes im pact

-115

0

0

0

-115.0

GGBalance im pact EBalance im pact

Table 2.6 PPP; Source: NDFA

22

Chapter Three Literature Review Part Two - Challenges and Opportunities

3.1

INTRODUCTION

In part two of the literature review the author attempts to investigate the current government stance on progress in PCC development, opportunities and challenges as seen by the private stakeholders.

3.2

CURRENT GOVERNMENT STANCE

The strategy sought is to shift the emphasis from the current over-reliance on acute services, such as hospitals, to ‘one-stop-shops’ where patients would be able to access a team of GPs, nurses, physiotherapists, chiropodists, social workers and home helps. Minister Róisín Shortall, assessing implementation of healthcare reform reminds that ca. 425 PCTs are currently in operation (2012, Author), however ‘the majority of these teams are virtual in nature, meaning that they are not housed within the same building and are spread across many sites…facilities are in various stages of maturity and development’. About 55 primary care centres had been built across the country, a figure she described as ‘hugely disappointing’. The government is to consider locating primary care centres (PCCs) in former Garda stations and other state-owned premises. Hospital wings and empty state buildings, such as those earmarked for decentralisation, could be used to house badly-needed primary health care facilities. ‘We need to work with what we have. We might be able to use existing buildings.…The private sector has a role to play given the scale of the need for good-quality premises. We need a number of different strategies to deliver this. There is huge ground to be made up. Very little progress in of delivering on what was a 2001 strategy has been made. We should be much more advanced. There should be a whole network provided at this stage,’ she said. ‘I am very open to (private sector involvement – Author). The problem is that the market hasn't delivered.’ (Shortall, Mitchell, 2012)

23

3.3

GPs OPINIONS

Private stakeholders point out that there is a lack of clarity in authorities’ approach to the problem. The state is currently unable to sufficiently finance and progress PCC strategy and is referring to private sector involvement. There is large interest on the part of investors and implementation of incentives which would make PCC not attractive alone but simply viable, would be welcome. The numbers of repeating issues have been disclosed by leading healthcare sector investors and developers. George McNeice, the Irish Medical Organization chief executive, voiced strong criticism of the Government approach, ‘In the few areas where centres have been established, the state has shamefully stood back and encouraged GP’s to invest heavily in infrastructure, and then used the recession to achieve deals and rents that undermine the very viability of these developments…In other areas, the state stands idly by as banks refuse finance necessary to develop centres’ (Sunday Business Post, 2012). Dr David Molony, one of the investors in €25 million Mallow Primary Healthcare Centre (the very first facility developed under a leasehold model), warns other GPs to be cautious with building similar facilities elsewhere. Development shared with other GPs is facing large bank loans in currently very difficult environment, with a burden of local authority rates and much reduced HSE payments after renegotiation on movement of hospital services to PCCs. ‘Primary care centres could do a lot of the outpatient work that is done in hospitals, and for a lot less money. We were promised new services and a new model for the delivery of care. There has been a lot of talk, but little else. To be honest, at this stage I am in despair. Nothing has happened.’ (Molony, 2012) The one of the objectives of the reform – transfer of some, specialist services from hospitals accruing high cost to more efficient delivery network of community PCCs haven’t been implemented and costs of those services are being refused to be covered by HSE. The patients in large numbers see the opportunity in the change and shift to localized service provider but the money doesn’t follow the patient. ‘Health insurers are refusing to pay for treatment in PCCs, even though they will pay for the same treatment in a hospital setting, which invariably costs a lot more.’ (Baxter, 2012) A lack of for GP developed PCCs is another failure of the Government strategy in healthcare reform claims Martin Daly, the GP leader with the Irish Medical Organization (IMO). The initial strategy saw GPs and the independent, private sector partner to HSE as a driving force in the development of the shared facilities. However, 24

initial response was optimistic and the organisation felt that private healthcare companies and building consortiums had an unfair advantage over ordinary GPs in the submission process and proposed that the model shifted towards third-party providers. GPs were feeling pressurised by such companies and felt that they could not compete. (Baxter, 2010)

3.4

DEVELOPERS’ OPINIONS

According to AJ Noonan, the director of Rhonellen Developments (which in summer of 2012 has begun development of a 3.5 million euro PCC in Mayo), was seeking planning permissions for a number of other facilities; ‘rolling out PCC around the country has stalled due to difficulties in securing finance and ‘buy-ins’ from GPs.’ (Noonan, 2012) He was very concerned by Minister Shartall’s comments on plans to convert empty Garda stations and other state properties into primary care centres, and commented: ‘we have had a strategy for ten years, and invested money on the back of that strategy…the backing from international investors for the other projects has been withdrawn’ (Noonan, 2012) [after public announcement from Minister Shortall, T.D.- Author]. Jack Nagle, a chairman of the Irish Association of Primary Care (IAPC), stated: ‘It is safe to say that most are struggling, because the debt mountain they are sitting on has been made all the more challenging by the fact that services that were due to move into the primary care environment have not moved as promised,[…] many of these centres were developed on the premise that they would be able to secure more work from the state. This hasn't happened and made GPs to approach with reserve. (Nagle, 2012) The Pharmaceutical Society of Ireland – a body representing other important stakeholders creates more uncertainty through its strong opposition to the co-location of pharmacies and GP practices. Such co-location is critical to the financial success of ‘one- stop- shop strategy’ of these projects. The lease break clause, that allows the HSE to pull out if GPs withdraw from the project. The HSE argues that this provides flexibility, but Nagle said the clause was deterring funders. This view was seconded by Malcolm Moss, founding partner of US private equity firm Beringea. Americans were interested to invest part of their $600 million fund in PCC services in Ireland but the company pulled out after negative outcome of risk analysis. 25

Prime Healthcare, the primary care centre development company run by Sean McGuire, opened its first centre in Carlow in 2009 and the second in Killarney in 2011. In January, it was placed into examinership, with high rental costs and property development issues reported to be at the centre of its financial problems. The Killarney centre also had a number of planning problems. AJ Noonan of Rhonellen Developments said incentives were needed to help develop primary care. ‘The health committee did an entire report on the incentives needed for primary care centres; none of their recommendations has been implemented.’ (Noonan, 2012) Despite the lack of certainty in the market, Centric Health has said it will open a centre in Newbridge in Co Kildare next year, and start the construction of a centre on the Navan Road in Dublin soon afterwards. The company also plans to submit a planning application for a primary care centre in Celbridge. 'I'm taking a five-to-sevenyear view… right now; the money is not following the patient. When it happens - and I believe it will - the situation will change’ (Noonan, 2012).

3.5

PHARMACISTS’ OPINION

According to actively pursued by private developers ‘one-stop-shop’ strategy locating a pharmacy in the Primary Care Centre is mutually beneficial for the patients and medicine supplier. The patients benefit from a central presence of multidisciplinary specialist and immediately after consultation are able to purchase the prescribed medication while the pharmacy benefits from PCC induced high footfall. Seemingly simple, mutually beneficial arrangement can, as noted by HSE, be at least controversial and potentially can be damaging to healthcare system. According to many of the pharmaceutical profession, locating pharmacies in PCC creates grounds for two main concerns; wellbeing of patients and integrity of the professionals involved. According to Dr Stack, a local GP based in Killiney, 15 per cent of prescriptions are new 85 per cent are repeat prescriptions, (2010) that means that the overwhelming majority of patients are already acquiring their medicine in their local shops. They are known to personnel. Pharmacies store records of issued medication assuring the highest level of care for patients’ wellbeing. Closing existing shops may be one of the outcomes disturbing the already balanced network. Relocating shops from their current locations will require transfer of stored data, very possibly leading to mistakes which can affect patients. 26

The second major concern arises from the introduction of more free market approach in operating of pharmacies. The reform of the system introduced a new model of commercial entity – ‘a retail pharmacy’ - which allows to merchant products other than medication only and thus creating an opportunity to generate a bigger income. Increased earning potential makes pharmacies a very sought-after business partner and in a tough economic climate this draw can place their management, or owners, under unwelcome pressure.

The Pharmaceutical Society of Ireland (The Pharmacy Regulator), decided to strongly address reservations mentioned above, more in the form of an advice rather than prescription. ‘Memorandum of Advice’ circulated in 2011 by the Pharmaceutical Society of Ireland (PSI), who 'do not favour' what it describes as a 'hybrid model of primary care provision involving the co-location of retail pharmacy and GP practices… The retail pharmacy business becomes a significant (and sometimes key) financial driver for the success of the enterprise (PCC, Author). The disproportionate contribution which a retail pharmacy business is sometimes called upon to make in of the price paid for a shop premises or the rent offered therefore is an unhealthy one insofar as patient safety is concerned. The emergence of such a hybrid model also thwarts the development of primary care units as envisaged by the Government and ed by the PSI and the profession of pharmacy gen Further the PSI points out to Pharmacy Act (2007) which is clearly designed to prohibit the creation of improper relationships between pharmacists and doctors and between retail pharmacy businesses and medical practices. From a common-sense standpoint it is clear that the two healthcare professionals, doctor and pharmacist, should be independent of each other in the treatment of patients.’ (PSI, 2011) Business model with retail pharmacy as in opposition to traditional model of medicine dispensary to be placed in PCC can lead to planning issues as it happened in case of Killarney Town PCC. Zoning of the land didn’t allow for inclusion of commercial entity and development of health centre - valued at euro 40 million - dependant on participation of pharmacy, sharing high development’s costs, was deemed to be necessary. The spokesman for Killarney Town Council argued that: ‘There is planning there for a primary care unit. Their claim is that the commercial element is crucial to the whole project.’ Further developments disclosed that applicant submitted updated plans 27

including this time purely dispensary pharmacy which according to Dr Stack changed the business plan and ultimately they couldn’t tender for the land. The decision, taken because the pharmacy element of the scheme contravened the zoning of the area, had ‘national implications’… Quite a number of other primary care centres may be looking at HSE sites as well, and those sites would be similarly zoned to ours, Dr Stack stated (Culliton, 2009).

3.6 INCENTIVES The numbers of existing players in the primary care are frustrated on a number of levels and Mr Noonan point out that the Oireachtas t Health Committee has issued an entire report on the incentives needed for primary care centres but none of their recommendations have been implemented (Noonan, 2012). A new report by the committee says fewer centres that were ‘of higher quality’ would ‘encourage engagement by general practitioners’ (OJHC, 2012). The committee says that the provision of primary care centres is essential to the operation of primary care teams. It acknowledges that there are obstacles, particularly in relation to funding; to the development of new centres and that a system of incentives is required to expedite delivery. The committee was of the opinion that a partnership approach was needed in order to create more primary care centres around the country. Capital allowances were backed for GP groups that are involved in building such clinics, as the committee felt that nothing much had happened in respect of this issue. In view of the current economic situation, the committee team thought that the timeframe for the rollout of primary care in the community should be extended, so that the centres can provide a top-quality service. It urged the introduction of a range of different incentives. They set out a menu of options in this regard: •

Capital tax allowances against all income;

•

Stamp-duty relief on the purchase of a site;

•

Double rent relief for health professional tenants;

•

Double the interest relief on all loans, and capital investments, for owneroccupiers;

•

The provision of a tax relief for significant innovation and/or delivery of new clinical services not previously available in primary care, e.g. diagnostic 28

services, chronic -disease services, endoscopy, etcetera. Such relief should be strictly limited to the first five years to reflect the high set-up costs; •

Rates relief should be provided. (At present, the Health Service Executive is exempt from rates, whereas all other health professionals working from a primary care centre are subject to the payments.) (Irish Medical Times, 2010)

The committee also suggested that there should be a waiver of local authority development levies (either in full or in part); there should be direct grants and subsidies; accelerated capital allowances; and a mortgage rent relief scheme. However, the committee strongly opposed the ‘corporatisation’ of the development of new primary care infrastructure. (Baxter, 2010)

3.7

SUMMARY OF LITERATURE REVIEW PART ONE & TWO

The controversial subject is also present in printed and electronic media addressing both general public interest and stakeholders professionally involved in the process, namely medical, construction professionals and general business. By its very nature daily newspapers and online media are providing the most current on opinions, trends and developments and often are a forum for a lively discussion on burning issues which allows for a multi angled insight in to the topic. The literature review helped to acquire solid, introductory knowledge on new healthcare strategy, technical output, frame work for implementation and most importantly disclosed widely acknowledged unsatisfactory progress in infrastructure development. Signalled issues has helped to outline the areas for further research and necessity for further studies strategy had to be draught and implemented.

29

Chapter Four – Methodology

4.1 INTRODUCTION In this chapter the Author described development of his own, primary source research strategy, guides through his research design process, assesses available methods, restates the aims of the dissertation and explains his choice of methods used to satisfy research goals. Furthermore, describes development of a case study and the process of construction and execution of interviews, undertaken in order to create basis for development of a final theory for the topic.

4.2

STRATEGY

The literature review outcome disclosed that ‘hard and reliable’ data necessary to successfully conduct qualitative studies are virtually not available. There are no detailed statistical data on PCC development published, neither statistically tracked development, nor researches concluded to issues surrounding particular cases. The numbers available are confusing, since all available data refers to numerous, often overlapping periods of time and no records have ever been officially amended and published. Finally a variation of opinions on PCC issues among stakeholders doesn’t help in formulating a theory. It became clear that exploratory research which is intertwined with a need for a clear and precise statement of the recognized problem-in other words – formulating the theory is the most suitable model to be adopted in my research. The choice of qualitative method above quantitative research was the only natural consequence emerging from a need for a theory development. Qualitative research aims in analysis of existing order of the things by quantifying outcomes. It helps to classify results and enables to issue the statement which might prove or disagree with tested theory. While secondary sources research already painted a picture of lacklustre PCC development- I was interested in finding out ‘why’ this is happening and qualitative approach is best suited to achieve this aim. 30

4.3

METHODOLOGY

Theoretical or conceptual framework for further research is self-designed and has been formed as a result of a literature review coupled with informal interviews with quantity surveying professionals. Their present and past involvement in healthcare projects on behalf of private investors guaranteed accessibility to wealth of information about the subject. After numerous consultations with QS mentor at my work place - taken along progressing literature review enabling constant to direction of studies – we have agreed that a case study approach combined with sampling valuable opinions of people in the heart of a problem will be the best combination of fieldwork approaches in the attempt to fulfil aims of the dissertation.

 To identify new, business model opportunities emerging in Ireland due to implementation of new Health Care strategy utilising core aspects of Quantity Surveying practice;  Examine feasibility of construction projects were development is an integral part of new HSE strategy;  Examine proposed development variants HSE led vs. Developer led;  Determine if there is an economic ground to attract private investors;

However in the light of literature review results the initial aims have evolved since the original proposal, research of the short history of PCC development, screening employed solutions, diagnosing HSE led vs. privately led development have remained the core tasks in the attempt to find out causes of the fall-outs in PCCs roll-out and formulating a theory on feasibility of the business model.

4.3.1

SURVEYS VS. INTERVIEWS

The results of secondary source research indicated aims for further investigation of the subject. Highlighting issues in the specialized areas of PCC development called for in31

depth primary source research and it has been agreed that approaching people involved in the process is one of the best methods. Seeking professional opinions in the subject was a priority and the next step was to decide on the most advantageous technique to be employed. The surveys are helpful in addressing large number of respondents with fairly similar backgrounds or approaches to the problem. Results are focused on analysis of the large sample concerned with generalized opinions, however I felt that there is a potential to reinforce the patterns already emerging from research of secondary source (Literature Review) this will most likely not help to gain the deeper in-sight to the issues in question. Limitations of questionnaires (listed by Naoum, 2008) mention suitability for asking simple, straightforward questions which usually are succinctly explained and are seeking only brief answers. Assessment of data sourced by ’on-line’ questionnaire risks shifting the research direction into a quantitative area which wasn’t intentional. Further questionnaires do not offer any opportunity to follow up with additional questioning, since there is no interaction with respondent. Focus on finding out why the process is not efficient and why it isn’t proving so far as a viable business model suggested interviews as a method suited for reaching out to specific person in search of specific information, their view on the subject or issue - enabling more in-depth studies. According to Dr Naoum use of personal interviews to utmost benefit requires: •

need for interpersonal to explain or explore questioned issues;

•

all targeted participants to share common characteristics which in case of my research is personal involvement in PCF development, however varied on basis of profession or stakeholder’s interest;

•

advanced knowledge of the subject enabling to question specific issues in detail;

•

seeking for detailed views, opinions, clarifications on undertaken Case study investigation,

•

designed questions to be too complex to be answered as per questionnaire in form of short: Yes, No, etc. (Naoum, 2007)

Among three standard types of interview techniques available I have already tested Unstructured Interviews during strategy design phase and while it proved to be perfectly suitable to discuss general direction of the research in a form of a friendly 32

chat with only one person involved at the time I have felt I need to employ more structured form to achieve a common platform among the numbers of different interviewees for comparison purposes. Structured interviews with a standard set of questions to be asked people with different approach to the problem seemed tobe too close in approach to questionnaires and could potentially limit benefits coming from face to face discussion. Set of standard questions applied equally to all participants simply wouldn’t work as interviewing people with different scope of interest creates an opportunity to investigate deeper issues which are less familiar to other participants. Semi-structured interviews allow freedom of ‘catering’ to suit changes in order to maximise benefit of questioning a variety of sources. Including closed-end questions as a ‘starting point’ or a question leading to further investigation with open end questions reaching further into details can be utilised and there is no strict order of questioning required. Construction costs and risks, ‘HSE led development’ and ‘Developer/GPs led developments’ are three groups of questions designed to address specific stakeholders and to contain questions designed to investigate relevant issues. The main aim was to ask all participants the questions from a common framework and possibly follow up in each person’s main interest area. I have compiled an initial list of 28 questions and reviewed for a merit content with the help of a professional member from a leading in the field quantity surveying practice. After narrowing list to optimal length and timing the questionnaire has been submitted for a further review by a member of an academic staff from DIT to ensure that the wording of questions complies with the criteria of chosen method.

4.3.2

SAMPLING

As mentioned above the three major categories originate in construction cost/risk, HSE involvement and private development areas hence the interviews ware targeted at professionals currently involved or involved in the past. Quantity Surveyors working on healthcare projects, HSE employees implementing healthcare reform and possibly GP’s or pharmacists participation were considered as a possible resource. The list of individuals has been prepared, s, names, phone numbers and e-mail addresses have been sourced on-line from various institutional web pages or from 33

previously reviewed publications. Finally, just two out of a long list of desired professionals agreed to participate in the interview. A. Niall Butler MRICS MSCSI working as Project Surveyor in HSE B. Brian Kevans BBS MSc QS MRICS Senior Quantity Surveyor in Aecom and conditions for interviews have been agreed and meetings arranged.

4.4

CASE STUDY

In order to test particularly prevalent arguments raised by the stakeholders disclosed in literature review I have been encouraged by my colleagues at work to undertake indepth analysis of a model project for PCF. The theoretical nature of the model eliminated a descriptive and analytical type of approach to the case study as simply not enough details could be gathered to satisfy a fully scientific approach fulfilling those methods. I thought that, explanatory case study of which theoretical approach describes/explains casualty and tries to show a link among the objects of the study, ask why things happen the way they do is a most suitable method, considering a type of information and degree of detail available. According to Dr Naoum this type of research collects facts and studies the relationship of one set of facts to another, with the hope of finding some causal relationship between them (Naoum, 2007) – which is basic to logic of the hypothesis’ (Bouma & Atkinson, 1995 - cited by Naoum, 2007) This exercise was aimed to help formulate my own opinion on profitability potential and or dismiss claims of private stakeholders at PCF low profitability artificially inducted by HSE discounted rental agreements which in consequence force developers to look for additional income from other retail tenants (i.e. retail pharmacies), in an attempt to balance books.

4.5 CONCLUSION This chapter has reviewed and assessed the various methodology used in the process of primary data collection and demonstrated why I have opted for explanatory strategy of research through qualitative methodology.

34

Chapter Five – Case Study

5.1

INTRODUCTION

The following case study undertakes an investigation into a cost/benefit model of a privately developed, ‘Design & Build Primary Care Facility’. Methods and practices used follow procedures of best quantity surveying practice, commonly employed during early stages of feasibility studies on such projects. Cost planning exercise is based on measurement of architectural drawings, taking-off quantities, preparation of elemental cost plan and cost estimation according to current market trends based on pricing of recently developed, similar works. In the second part of a case study exercise, the architectural drawings for floor layout will be marked up with a purpose of indicating rental responsibility of public and private tenants in shared facility and will served as a base for indicator of a financial responsibility of the parties involved. Net Present Value and Internal Rate of Return analysis in three scenarios for development and lease arrangements will be undertaken as part of a project appraisal process aimed to give information on financial grounds of a project. Primary sourced information by undertaking this case study aim to help establishing validity of claims for low profitability and presence of numerous risks highlighted by stakeholders in reviewed literature sources which allegedly impair viability of business model.

5.2

CHOICE OF A MODEL

Research on specialized healthcare infrastructure led me to have a close look at the case study of feasibility studies/ cost planning undertaken by PQS I was working for at the time. I thought that an investigation of cost planning process, perhaps construction phase and operational financial model while having an access to drawings, technical specifications and with professionals involved in the project was a great research opportunity. Unfortunately data on operational costs were perceived by a client as commercially sensitive and it turned out that my access would be heavily restricted and I wasn’t able to carry out my research as originally planned; •

Use of the original drawings to report on cost planning of construction works; 35

•

Report on possible Value For Money or Value Engineering, specification level considerations etc.;

•

Gain with engaged parties (a client, business strategy);

•

Report on development of any issues and applied solutions;

•

Link the values of construction costs with benchmarked rents.

I didn’t want to abandon this particular project, as this modern building developed specifically to incorporate HSE output specs and accommodate three PCTs, I deemed to be close to a generic ‘facility in type’ for PCC and as such I thought it an ideal model for a case study. I have tried to gain access to relevant data by approaching the Architects, unfortunately my request was denied again. Referring to online data bases for planning permissions and public procurement projects I have established the following: A project has not been published on e-Tenders web site indicating that indeed Public sector bodies have not been involved in the procurement of construction works. Planning permission identified a project but returned no data whatsoever (usually there are: a copy of planning application, planning stage drawings, notices, letters of intent, etc.); I have assumed that the HSE Board should have some information of interest to me on the subject and I ed the Facility Manager for HSE West region, Mr Joe Molloy, with a request for information.

Figure 5.1 Doughiska PCC info request via e-mail, source: the author’s electronic correspondence;

36

Facing thus far unsuccessful pursuits of the Doughiska project, and being under rising pressure of time, I had to look for any other suitable model. Eventually an online search on e-Tenders database returned PCC development in Glenties, Co Donegal. Opened for service in 2007, the facility wasn’t a perfect choice due to its size, (at730 sq.m and designed to accommodate just one PCT) but because it was procured in the traditional way by the public authority, I thought there was a chance that general data would be more accessible. Subsequent search on Galway city planning authority web site disclosed a number of drawings available for . Unfortunately the drawings haven’t contain enough details for undertaking a comprehensive cost plan but could be used with some assumptions for undisclosed details like ground works, finishes etc. During work on my backup PCC model I have received an email from the Architect of Doughiska PCC positively addressing my request forwarded to them by Mr Molloy. Eventually, I had access and permission to use the project which I intended to use initially.

Figure 5.2 Doughiska PCC drawings via e-mail, source: the author’s electronic correspondence;

An access to architectural drawings and Room Data Sheets was sufficient enough to undertake a cost planning exercise and investigate approximate cost of building works.

5.3

FACILITY DESCRIPTION

The facility is a Design and Build Primary Care Health Centre in Doughiska, Galway, to provide primary care services in the eastern suburbs of the City is privately led development in co-operation with HSE West and comprise of construction of the 37

modern, 1750m2 facility including a steel frame, insulated Kingspan cladding; double glazed aluminium windows and external door; gypsum sound proofing partitions; mechanical & electrical installation and full fit out. The building was officially opened in April of 2011. Doughiska PCC complies with departmental output specifications and is built to the highest medical building standards, namely the UK Technical Memorandum Standards. It acts as a base for the City East and Ballybane Primary Care teams and includes services such as GPs, public health and practice nurses, physiotherapists and occupational therapists. There are no retail services provided within this facility. By accommodating three PCT’s, the facility caters for a local population of ca. 7000 people and can be viewed as an example very close to generic understanding of HSE scheme.

Figure 5.3 Doughiska, Primary Care Centre – exterior; source: HSE

38

Figure 5.4 Doughiska, Primary Care Centre – interior; source: HSE

5.4

TAKE-OFF & COST PLAN

Quantities take-off and following cost planning have been undertaken to ascertain construction costs for the PCC in Doughiska, which I planned to use subsequently, for financial analysis in feasibility studies. The simplified cost planning exercise typical for early stages of project development was based on drawings containing limited data purposed therefore with general cost estimation. I have not engaged in a detailed description of measured elements focusing more on quantities and value things relevant to further studies on lifecycle costs of the building.

Figure 5.5 Take-off screen shot; source the Author

39

The estimated value of construction works and materials are valued at €2,028,707 and I added fifteen per cent pro rata for not measured (due to unknown scope) external works and preliminaries at seven per cent. Total estimated cost carried from cost planning to financial analysis is €2,496,323.96. A table below shows elemental division of estimated costs, full BOQ is available in Appendix B.

Figure 5.6 Elemental Cost Plan; source the Author

40

5.5

RENTAL DIVISION

PCCs are divided between private and public tenants under specific lease arrangements. Based on Doughiska private tenants GPs, have a lease on ca. 240 m sq. which are solely for their own designated use. Similarly HSE is in the lease of ca. 1302 m sq. for their own use only. Shared areas comprising of ca. 450 m in meeting rooms, istration, IT etc. are accessible by both tenants and contribute to rent payments together. The payments are based on designated areas occupancy ratio between tenants and calculated against GFA, less shared areas. In this particular case GPs whom occupy 18.5 per cent of tenants’ designated areas are bound to contribute its 18.5 per cent equivalent in shared areas. The table below explains lease schedule.

AREA SCHEDULE - LEASE DIVISION

GFA Shared Division base: GFA less shared areas

Option A,B Option C AREA m2 % OF TOTAL AREA m2 % OF TOTAL 1727 100.00% 1927 100.00% 425 24.61% 425 22.06% 1302

GPs retail HSE Table 5.1

240 0 1062

100%

1502

18.43% 0.00% 81.57%

240 200 1062

100%

15.98% 13.32% 70.71%

Area Schedule- lease division; source the Author

5.6 LIFE CYCLE COST The life span of all measured elements has been assessed according to industry guidance and placed in a lifecycle replacement schedule. Apportioned costs projected to accrue in the future have been transferred to the relevant year of lease as a scheduled outflow. Assessment of lifecycle costs is one of the key cost factors to be considered while taking decisions on investment feasibility. The table below is an example of my projection based on costs estimated in the cost planning exercise. The full lifecycle schedule can be found in Appendix C

41

Table 5.2 Lifecycle costing for PCC Doughiska; Source: the Author

42

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25

Lifecycle costs

€93,600.00

Windows and doors

External Walls: Completions

€67,000.00

Doors

€7,285.00

€7,285.00

€7,285.00

€7,285.00

Painting Door Frames and Architraves

Internal Walls: Completions

€2,126.00

Painting

Wall Finishes Externally

Life Cycle Cashflow Information

€21,500.00

€21,500.00

€21,500.00

Painting

Wall Finishes Internally

€2,394.00

€2,394.00

€2,394.00

€75,000.00

€74,285.00 €98,120.00

€77,394.00 €21,500.00

€7,285.00

€21,500.00 €2,394.00

€7,285.00

€77,394.00

€2,394.00

TOTAL

€2,394.00 €7,285.00 €21,500.00

€75,000.00

Vinyl & Carpet Flooring and Skirting

€2,394.00

Painting Skirtings

Floor Finishes

5.7

OPERATIONAL MAINTENANCE COST

‘Soft’ maintenance costs are accrued on a daily basis throughout the operation of the building and include; planned maintenance, cleaning services, security, waste disposal, etc. It is another key cost factor which cannot be omitted in a comprehensive study, therefore I have prepared a schedule for estimated maintenance costs priced pro rata on data sourced in Aecom. Computed annual costs are introduced to NPV analysis as scheduled outflows.

Estimated Maintenance Costs- - pro rata per m2 (AECOM) monthly 1727

euro/m2

m2

1

Planned Preventative Maintenance

9

€

15,543.00

€

17,343.00

2

Allowance for Unscheduled Maintenance

5

€

8,635.00

€

9,635.00

4 16 7 3

€ € € € €

6,908.00 27,632.00 11,225.50 4,317.50 74,261.00

€ € € € €

7,708.00 30,832.00 12,525.50 4,817.50 82,861.00

4 5 6 7

8 Table 5.3

5.8

1927

m2

Cleaning Utilities istration Costs Waste Disposal Total

€ 43.00

HSE service charge

5

5310

Maintenance costs build-up; source Aecom & the Author

NPV & IRR ANALYSIS

The next step in investigation on feasibility of a model PCF which I can greatly benefit this study, I have planned to undertake the assessment of potential value in rental return. The exercise is based on application of financial data (sourced from published details for similar HSE lease arrangements) to rental areas division worked out in the process of cost planning for the model PCF. Analysis of Net Present Value for projected cash flows ed by projection of Internal Rate of Return is designed to help answer questions on feasibility of a business and usually is a part of project appraisal studies. Feasibility studies of three financial models are based on three scenarios: •

Option A – where rental area of 1727 m2 from the original project is leased at maximum rates;

43

•

Option B – as Option A with typical current arrangement with discounted rates for HSE areas;

•

Option C – Option B arrangement with rental area enhanced to accommodate additional retail tenants; construction cost respectively adjusted;

5.8.1

NET PRESENT VALUE

NPV analysis for Option A is set out on following assumptions: •

Lease on PCF is for 25 years, no periods of vacancy contemplated;

•

Facility is occupied by GPs and HSE specialists;

•

No retail outlets included;

•

Both tenants pay the same rates at current market levels;

•

Cash inflow includes for shared areas lease and HSE standard maintenance contribution;

•

Outflows include for maintenance costs and lifecycle costs.

Projection of NPV for cash flows based on assumptions for option A brought a sum of Present Values (PV) well above initial negative number. A result achieved at somewhat low but feasible discount rate of four per cent indicates healthy financial outlook. The Table 5.4 included on the following page introduces to the reader cash flow calculations model and full analysis can be found in Appendix C.

44

Table 5.4 NPV Analysis for Option 1; source the Author

45

The Option B scenario is closer to real lease arrangements and takes for HSE lease discount. The twenty per cent rent discount results in significantly smaller annual contribution from a public tenant while all other inflows and outflows remain unchanged. The net present value of cash flow in year twenty five remains in positive area however the annual values are noticeably lower than in option A. This means that however the project still should be considered feasible there is significantly smaller margin for absorption of any kind of unforeseen financial stress and associated risk should be considered when taking a decision for undertaking this development.

The option C is a private investors’ response aimed to narrow risk margins of option B. The investor seeks mitigation of discounted HSE lease inflows on investment. The PCF area is enlarged ca. 200 m sq. to accommodate retail tenants – for example pharmacy or optician. The overall construction costs rise but as can be seen from cash flows analysis the sum of present values is double of option B which offsets loss on HSE discounted rent and additional construction costs.

5.8.2

INTERNAL RATE OF RETURN

Net present value analysis is one of the most precise analytical methods used in feasibility studies but very often is seen by people with no financial background, as difficult to understand. Since the method is concerned with cash flows (not a profit as such) I have thought it will be a good practice to the NPV analysis with graphic method for Internal Rate of Return. The total cash flows for all three options have been separately analysed in discount spread from four to eleven per cent, with the aim to calculate positive and negative sums of present values. Projection of results on the graph allows for locating neutral values for NPV discounts and those can be anticipated as rate of return. A graph below locates discount rates for all three options illustrating in the same time outcome differences.

46

Table 5.5

IRR analysis for option A; Source: the Author

Assessment of Internal Rate of Return (IRR) for all options in discount spread between 4 and 11 per cent gives a result of ca. 8 per cent. Assuming that 8 per cent discount is a forgone opportunity from an alternative investment the projected IRR of 8 per cent, is an indicator of profit generating potential equal to current return from investment in office development in multinational corporation hub in Dublin city. In case of project appraisal analysis the result of NPV & IRR a decision for undertaking of this development.

47

IRR for Doughiska PCC 1100 1000

Option A

900 800 700

Option A

NPV=0 @ 8%

Option B

NPV=0 @ 5,5%

Option C

NPV=0 @ 6.75%

600

Option C

500

negative NPV

positive NPV

400 300

Option B

200 100

-100 -200

4 %

11 %

-300 -400 -500 -600 -700 -800

x 1000

Figure 5.7

€

IRR for investment options; Source: the Author

The IRR graph allows to clearly see difference in NPV values and respective projected rates of return. Option A offers return at eight per cent which is four to five per cent above return guaranteed currently by Irish Government on bonds. The result is comparable with return delivered by high profile office developments unfortunately it is purely theoretical scenario and rather not achievable in current economic climate. Option B projects return at ca. 5.25 per cent which is more than assumed four per cent of forgone capital investment opportunity and might be enough to ensure flawless operating of the facility if no financial stress occur in the future. Option C indicates expansion of a size of PCF and accommodating additional income generating retail tenants. Projected rate of return at almost seven per cent advocate additional construction costs and promise healthy business model.

48

Chapter Six – Interviews

6.1

INTRODUCTION

This chapter provides a brief analysis of the interviews conducted with Quantity Surveyors involved in PCC development. The HSE project Quantity Surveyor Niall Butler (MRICS MSCSI) and representing clients in health care developments Senior Quantity Surveyor in Aecom - Brian Kevans (BBS MSc QS MRICS MSCSI). The interviews were presented with a selection of question from pilot questionnaire; the answers were recorded by the author and subsequently compiled in to brief resume.

6.2

SUMMARRY OF INTERVIEWS

1. Do you think current construction costs are a prohibitive factor in PCF development? Brian Kevans is moderately optimistic talking about future construction outlook:

‘No, if anything it is the opposite. Construction costs have reduced in Ireland by circa 40 per cent since the peak in the tender indices during the property boom years of 2006/07. The SCSI Index reports that since construction tender prices bottomed out in the end of 2010 and beginning of 2011, construction prices have risen by between 2.5 and 3 per cent per year and this trend looks as though it is set to continue.

So although we are seeing moderate rises in construction costs or tender inflation continuing in 2013/14, the correction in construction costs was so dramatic post-crash, that the tender indices which is indicative of construction costs is back at levels last seen in the end of 1990s.’

49

‘timing for private developers seeking to develop Primary Care Centres remains opportune in of Construction costs, where very good value for money can still be achieved with construction costs coming off such a low base, which means Primary Care Centres can be delivered in the €1,400 to €1,800/sq.m range depending on exact specification in of fit out and any site ‘abnormals’ which may be present. Further the SCSI believe the market will remain competitive for the foreseeable future as relative over capacity or a shortage of work continues in both the public and private sectors.’

In view of the interviewees the current main barriers to significant investment in Primary Care Centres are most likely; ‘the lack of development finance available from the Irish Banking Sector primarily AIB and Bank of Ireland, who both post-crash are repairing their balance sheets and are only lending in to the economy in a limited way and are risk averse when it comes property development currently’ and reluctant participation of General Practitioners who are the anchor tenants required by HSE .

2. Do you think is there a significant difference in construction costs between HSE led and privately led development? In opinion of Niall Butler in construction it is always a market which determines costs. Cost are down to building regulations, standards shouldn’t be different. He notes that there might be difference between private and public medical facilities but not in case of PCC. Brian Kevans agrees to with this view to the certain extent saying that in principle HSE and private development won’t differ in quality of work and fit out standard but takes slightly different approach towards overall outcome. Saying that ‘having an experience in istration of public contracts I have witness only too often situation where contractor wins a bid based on factors included in MEAT analysis only to try to recoup bid sacrifices through additional claims. Especially in D&B projects efficiency of private sector is far superior to public projects due to whole design process flow and achieved ‘buildability’. The difference has been disclosed by post recessionary trend of underbidding in scarce environment.

50

3. How do you think the adoption of already existing but not used, public buildings might affect private developers’ opportunities?

In general it is all down to extent of work. ‘If HSE can deliver PCC through adoption of existing buildings and it is cost effective, than it makes much more sense than developing completely new facility.’ Asked more specifically about possibility of adopting unoccupied public buildings as in case of never used before buildings from decentralisation scheme or estates owned by NAMA - Mr Butler answered that he is not aware of any successful attempt and he doesn’t think it has any influence on money lenders’ decision.

Brian Kevans answered that ‘it is somewhat a myth that government owns many disused buildings all over the country which can be used for this or other purpose. It is truth to the extent but only very limited number of facilities could be potentially adopted and serve as efficiently as purpose build medical facility besides the main problem with developments financed from public funds is there is no money. It still is cheaper to lease privately owned facilities.’

4. Do you think that rental arrangements – HSE discounts vs. GP’s ‘Free market’ and common – shared areas might be influencing negatively PCF viability?

According to Niall Butler rental arrangement does not affect negatively viability of PCF. Each ‘investor like in any other business has to weight an offer, GPs as well. If HSE achieve discount larger then private tenant that probably means there is a margin available.’ Brian Kevans agrees that HSE as a main tenant is in somewhat privileged position and can afford simple game of numbers. ‘It isn’t unusual situation, some might ask if we are in free market why it is a public tenant always getting significant discounts comparing to say GPs but it is a free market bargain power of large customer.’

51

5. Should benefit of discounted rates be abandoned in order to avail of general benefit of PCC development/operation? Mr Butler is of opinion that it is difficult enough to ensure that a tenant is there, HSE offers lease for very long period offering guarantee of occupancy it is only natural that department tries to get as big discount as possible. HSE is bound to deliver best value for money and this policy is scrutinised by taxpayer. From taxpayer’s point of view the discount in rental arrangements is a desired outcome and the strategy should be continued. There are other areas where feasibility of privately run can be improved with government for example private tenants could be granted an exemption from local rates as it is in practice with HSE owned facilities.

6. Private developers bear construction, demand and availability risks. Is it a case of shifting simply too much of a risk on to one side of business? In the opinion of both professionals it might be a case. There is a little doubt that overall privately led construction projects are more efficient than public. It is a demand and availability risks encountered during operational phase of the PCC business which induce financial stress and uncertainty of business in the long run.

7. Should GP’s presence in PCC be guaranteed by HSE? Lack of practitioners’ commitment is an issue. Recession didn’t spare doctors. People forget that it is a profession as any other and doctors have to ‘take in’ a lot of patients to earn their living. During recession people save also on doctors’ visits… if there is a bleak financial outlook then commitment to nearly lifetime arrangement is understandable. Mr Kevans adds further ‘it is not clear how the new government initiative to be introduced in budget 2014 to provide free G.P care to under 6’s will impact the Primary Care business model, as re-imbursement rates and payment mechanism are yet to be confirmed.’ Concluding the Department of Health has very limited influence on GPs and assuring their participation in the PCC can’t be achieved by authoritarian decisions the solution should be seek in some kind of incentives rather.

52

8. Considering other investment/development opportunities, (office, retail areas) would you describe PCC as an attractive option? Office developments, large retail opportunities are available at the moment mostly in densely urbanized areas of big cities or within commuter’s belt. PCC has nationwide range which means that it is an attractive alternative but considering issue with GPs participation who are a minority tenant but of importance as for securing HSE presence there is an occupancy risk which might be considered a detrimental factor for an investors considering it as too big of an uncertainty.

6.3

CONCLUSION

Concluding this chapter - the interviews carried out provided the author with insightful opinions from professionals involved in PCC development.

I have used the experience of the first interview to improve my technique and introduce more detailed discussion during the subsequent interview. This succeeded in attracting more interest and engagement which result in more in depth answers.

The theme prevailing in almost all answers on different aspects of PCC development is an issue of GPs reluctance in involvement, which is a fundamental factor for the success of PCC business. The construction costs and delivery costs difference between private and public sector accordingly to interview quantity surveyors has a marginal influence.

The author will compile the results of case study and interviews in the final chapter 7 with an effort to achieve the aims set out in this dissertation.

53

Chapter Seven – Conclusion

7.1

INTRODUCTION – DISSERTATION AIM

The topic of business opportunities in the development of PCF born by the introduction of a new health care strategy in Ireland focuses on aspects which are of interest to quantity surveyor professionals. Prior to undertaking of this research the author did not have a clear formulated theory which could be tested. The subject described as construction based business model, a niche worth 1 Billion Euro of investment which seemingly is not working as it was expected, caught my interest and developed a will to find out the issues and why things are functioning as they are. My initial knowledge was very limited, hence a necessity to start with guiding questions in the attempt to develop a theory through results of the research.  To identify new, business model opportunities emerging in Ireland due to implementation of new Health Care strategy - utilising core aspects of Quantity Surveying practice; This evolved into the research of what health care reform aims are and what type of opportunities for construction sector and investment they create. Finding out what is a legacy of the PCF development, strategy, what are the general criteria, technical specifications, financial rules, etc. governing involvement of public and private sectors.  Examine feasibility of construction projects which development is an integral part of new HSE strategy; Since construction costs are in the heart of real estate development of any kind, the attempt to investigate PCF model seemed to be a natural consequence.  Examine proposed development variants - HSE led vs. Developer led; Government strategy utilising heavily involvement of private sector required comparison of public and private routes of development and analysis of the outcome.  Determine is there an economic ground to attract private investors The final aim of this dissertation is to ascertain upon consideration of research results is development of PCC infrastructure an attractive form of investment.

54

7.2

COMMENTS ON RESEARCH OBJECTIVES

Each of the guiding questions served as a basis for extensive research of the subject. Review of secondary sources enabled the author to gain a fair knowledge of HSE primary care strategy reform and the basis for private investors’ involvement. Investigation to legislature and all relevant criteria helped to create the picture of emerging business model and highlighted issues considered by stakeholders as impairing its viability. Analysis of burning issues undertaken further in the studies of primary sources enabled to develop initial point questions into the final theory. Investigation into feasibility of PCC based on case study, cost planning and comprehensive financial analysis of construction and facility maintenance costs achieved its explanatory aims and helped to understand fundamentals of this business model and its current way of operating. Cost model, which emerged from case study analysis, indicated the existence of high risks associated with development based on HSE criteria. The financial analysis of Option B in case study seems to picture very convincingly common condition of the financially strain private PCC. Analysis of Option C for PCC operating with co-located retail units explain why developers are in favour of including pharmacies or opticians. The analysis clearly shows validity of claims about low profitability and pursuit of additional rental income is aimed at counter balancing discounted HSE rates which in current economic climate might make a difference between survival and bankruptcy. Close examination of development variants - HSE vs. Developer led – led to the observation that governmental extreme pursuit of achieving ‘value for money’ in development of PCC is negatively affecting achievement of development of a PCC network. Unbalanced transfer of risks involved onto private sector impairs feasibility of investment opportunities and results in unsatisfactory pace of development.

55

Issues

HSE led

Land availability

Available from own sources

Finance availability

Limited but guaranteed

Construction risk GP 'buy in' GPs' own cost GPs' employment contracts

Limited under GCCC contract suite presence guaranteed euro 4000 per room per year Not limited

Developer led free market sourcing Available on business & conditions RIAI contracts risk allocation Availability a risk factor free market rental arrang. Limited between 5-15 years

GPs' equipment, including IT Covered by HSE

GPs own expense

Retail units

seek after due to contribution value

Limited presence

Table 7.1 Variants comparison; source the Author

The conclusions of the research cannot be compared to any previous studies as I am not aware of any and I believe it is a very first attempt in format and scale to gather the information and develop the theory. None the less, it can be said that research proves validity of points occasionally raised in the public media by people who are involved in PCC business and had encountered difficulties.

7.3

LIMITATIONS & OBSTACLES TO RESEARCH

One of the criteria crucial for a right choice of the dissertation topic is availability of information and ease of approach of sources and people involved. The subject chosen by the Author was deemed to be difficult in this regard, however it was seen as very interesting, focusing on very current issues very much in the heart of quantity surveyor interests and expertise, despite the prospects of potential difficulties I decided to take on this ambitious task. Undertaking successful case study research depends on continuous and open access to a chosen model, associated data and people involved. Case Study research carries a significant risk of possible restrictions on access to required information which I didn’t expect a risk unfortunately has materialised and hindered the author’s efforts. Commercial sensitivity and internal information policies were two major reasons put up by both: private and public stakeholders to deny access to information required. I encountered general reluctance in any engagement requiring sharing of information. Those restrictions were a cause of numerous setbacks and affected the time frame of a project, in order to gather required data it was important to approach various institutions, sourcing information piece by piece to be able to eventually create a 56

viable model. Initially rendered research strategy turned out to be impossible to carry out and most of the required data has been patiently collected from the alternative sources. The whole process caused significant time delays and put limitations on originally planned scale of research and depth of analysis. The subject chosen for study, by its very nature is of limited public knowledge and a lot of information is very often circulated on internal basis only by government departments. This presented difficulties in gathering detailed information even though most are not deemed as classified or of sensitive nature. Approaching people engaged in the process and finally securing their participation in interviews was another source of difficulty. Lack of available time to engage in research of issues in which some shareholders are currently involved through participation in PCC business, did not allow the undertaking of interviews with people whose opinions I would have liked to include in to research.

7.4

FURTHER RESEARCH RECOMMENDATION

The research undertaken aimed into the development of a general theory on why the health care reform’s PCF development doesn’t progress as it is anticipated, and why this is happening. As it is one of the very first attempts to research the subject, the employed methodology focused on qualitative results as in opposition to quantitative which in my opinion would be the next stage of research to be considered in the future. Collecting detailed data on PCF development case by case and analysis of the results might further benefit understanding of the problems encountered by private investors and possibly contribute to finding satisfying solutions.

57

BIBLIOGRAPHY

Publications: Comptroller and Auditor General, (2012) Report on the s of the Public Services, Stationery Office, Dublin Department of the Environment and Local Government (2011) Public Private Partnership Assessment, Stationery Office, Dublin Department of Health and Children (2001) A New Direction, Stationery Office, Dublin Davis Langdon (2006) Cost model: Primary healthcare, Building London DPER (2011) Project Discount & Inflation Rates, Stationery Office, Dublin HSE (2010) Fixed Assets and Capital ing NFR-06, Stationery Office, Dublin HSE (2008) Guidance Document for Primary Care Developments, Stationery Office, Dublin HSE (2010) Protecting the HSE’s Interest NRF-18, Stationery Office, Dublin Irish college of general practitioners (2011) Primary Care Teams a GP perspective, Stationery Office, Dublin NDFA (2013) Irish Government Stimulus Package and PPP Programme, Stationery Office, Dublin NDFA (2006) PPP Central Guidance Note No. 7, Stationery Office, Dublin NDFA (2012) Primary Care Centre Public Private Partnership Project Market Launch Day, Stationery Office, Dublin NDAF (2014) Primary Care Centres PPP Project, Stationery Office, Dublin NDFA (2012) Report of the Comptroller and Auditor General Vol2, Stationery Office, Dublin Reeves, E (2012) Expansion of PPP Programme is Premature Limerick Institute of Technology, Limerick

58

Online sources: http://www.rte.ie/news/2013/1117/487209-primary-care-centres/ http://www.independent.ie/irish-news/just-one-of-the-primary-care-centres-added-tolist-by-reilly-will-go-ahead-29762680.html http://www.ndfa.ie/TenderCompetitions/PrimaryCareCentresPPPProgramme.htm http://www.irishexaminer.com/archives/2012/1204/ireland/hse-pays-1m-foraposunusableapos-care-facility-215943.html http://www.imn.ie/index.php?option=com_content&view=article&id=5230:fundingfears-for-primary-care-centres&catid=61:news&Itemid=28 http://www.audgen.gov.ie/documents/annualreports/2012/report/en/Report2012.pdf http://www.businesspost.ie/#!story/Home/News/Roscommon+primary+care+centre+'un viable'/id/67fccd0e-2ebe-4c52-b24c-8ffa3d0b1812 http://healthupdate.gov.ie/minister-james-reilly/primary-care-centres.html http://www.merrionstreet.ie/index.php/2013/11/minister-for-health-opens-inchicoreprimary-care-centre/?cat=72 http://www.kildarestreet.com/debates/?id=2012-03-27.37.0 http://www.imn.ie/index.php?option=com_content&view=article&id=4608:ministerestablishes-universal-primary-care-project-team&catid=61:news&Itemid=28 http://www.donegalcdb.ie/eplan/internetenquiry/rpt_ViewApplicDetails.asp?validFileN um=1&app_num_file=0930172 http://www.donegaldemocrat.ie/news/donegal-news/1-7m-glenties-primary-care-centreopened-1-3894444 http://www.merrionstreet.ie/index.php/2012/07/20-new-primary-care-facilities-acrossthe-country-reilly/ http://www.medicalindependent.ie/28442/primary_care_planning_criticised_by_icgp http://www.medicalindependent.ie/2281/new_beginnings_in_developing_an_irish_prim ary_care_network http://www.iasplus.com/en/standards/ias/ias17 http://www.independent.ie/opinion/analysis/dr-ruairi-hanley-primary-care-centres-agps-nightmare-and-a-waste-of-money-28818189.html http://www.roscommonherald.ie/2012/12/04/rental-of-hse-buildings-costing-over-e1mevery-year/ http://www.saveroscommonhospital.com/?p=9560 59

http://www.careydev.com/health-centre-doughuiska https://www.icgp.ie/assets/12/41C2F481-19B9-E185839D9014590ABB34_document/Practice_centre_15-16.pdf http://irishcommercialtenants.wordpress.com/2012/07/14/minister-reilly-should-seekrent-reductions-on-all-primary-care-clinics/ All online sources were accessed numerous times between December 2013 and May 2014.

60

Appendix A: List of PCC Development Progress

PCC development progress list 2001-2008 Count

1 2 3 4 5 6 7 8

PCT Name / Location

Current Status

No

Opened/Exp ected

N/A N/A N/A N/A N/A N/A N/A N/A

Operational Operational Operational Operational Operational Operational Operational Operational

1 2 3 4 5 6 7 8

N/A N/A N/A N/A N/A N/A N/A N/A

PCT Name / Location

Current Status

No

Opened/Exp ected

Letterenny kinnegad Ballogan/Leoparstown Watrford City West Moate Mallow

Operational Operational Operational Operational Operational Operational

1 2 3 4 5 6

2009 2010 2010 2010 2010 2010

Trim

Operational

7

2010

Newtownmountkennedy Mitchelstown Gorey/Nixon Mountmllick Naas Roscommon Carlow Ballina Galway City East Callan Kilkenny Portarlington

Operational Operational Operational Operational Operational Operational Operational Operational Operational Operational Operational Operational

8 9 10 11 12 13 14 15 16 17 18 19

2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011

Tramore

Operational

20

2011

Mahon, Cork City

Operational

21

2011

Macroom

Operational

22

2012

Gorey (Doherty) Cavan Malhuddart Asbourne Kingscourt, Co Cavan Kenmare Drogheda North

AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed

1 2 3 4 5 6 7

2012 2012 2012 2012 2012 2012 2012

AFL Signed

8

2012

AFL Signed

9

2012

2008-2013 Count

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Longford 30 31 Abbey - St. Mary's Limerick City

62

32 33 34

Castlrea Pimlico Blanchardstown (Grove Court)

AFL Signed AFL Signed AFL Signed

10 11 12

2012 2012 2012

35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83

Athenry Co Galway

AFL Signed

13

2012

Monksland Co Roskommon Schull Greystones Kilbeggan Churchtown Newbridge Mullingar Clondalkin Swinford Kilcullen Athy Carnew Athlone Wcklow Summerhill (Meath) Portmarnock/Malahide Edenmore (Baldoyle) Balbriggan Droghea South Ballyjamesduff Arde Kells Ashtown (Navan Road) Summerhill (North Inner City) Tipperary Town Charleville Listowel Thomastown Cobh Newmarket, Co Limerick Celbridge Leixlip Kildare Town Mayfild, Cork City Dungarvan Fairview (Killester/Marino) Finglas/Glasnevin North Fring/Clongriffin Arva/Killashandra Killester/Marino Monaghan Navan Adamstown Carrigtwohill Terenure Donnybrook Shankill Abbeyleix

AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed AFL Signed LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 1 2 3 4 5 6 7

2012 2012 2013 2013 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014

63

2012 2012 2013 2013 2013 2013

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136

Castlebar Gorey (Kennedy) Ballybay Airside Swords Ballinrobe Galway City West (Shantalla) Fermoy Mohill Portumna Enniscorthy Clifden Ballincollig Ballyhaunis Cahirciveen Dun Laoghaire Mountbellew Kinamanagh Claregalway Glin (Limerick) Kilmallock Crumlin Village Springfield (Tallaght) Kilkenny City (2) Cahir Blackrock Stillorgan Rathdrum Citywest Rathcoole Rathmines Firhouse Baggot Street Lifford Tubbercurry Abbeyfeale, Co Limerick Newcastle West, Co Limerick Rathfarnhamxxxxxxx Dolphins Barn Kinsale Bantry Wexford Youghal Midlton Blarney Togher Bandon Rosslare age Wst Bishopstown Castlelyons Kanturk Ballincollig 1 Castleiland Killorglin

LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI with AFL Target LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Expired LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn Notice of withdrawal of AFL LOI Withdrawn LOI Withdrawn

64

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 16 17

2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2013 2013 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188

Skries Dundalk Castleblaney Corduff Dublin North Inner City West County Waterford Graignamanagh Clommel Watrford City West Fairhill Croom, Limerick Tralee Glanmire Killarney Oranmore Enniscorthy Castletownbere Roscrea Caheronlish, Tipp Ballina - Killaloe New Ross Mountrath Blessington Clan Kilcock Sallins Ferban Portlaoise Rathdowney Stradbally Tulamore Ballymahon Edgeworthstown Patrick St. (Liberties) Drimnagh Dublin South Inner City Cathedral PCT Monkstown Dublin Cabinteely Liffey Valley Edenderry Birr Bray Kilybegs Donegal Town Dungloe Buncrana Drumcliffe, Co Sligo Westport Belmullet Boyle Knocknacara, Galwy City Castlgar, Galwy

LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn Bidder Withdrew Bidder Withdrew LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Withdrawn LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued

18 19 20 21 22 23 24 25 26 1 2 27 28 29 30 31 32 33 34 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

LOI Not Issued

16

N/A

LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued

17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

65

Oughterard 189 Headford 190 Ennistymon 191 Kilkee, Co Clare 192 Rathkeale 193 194 Limerick - Ballinacurra, Weston

195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210

Limerick Market, Garryowen, Pennywell Limerick Ennis Road Limerick Rahen Limerick Hospital Limerick Castletroy Thurles Carrickmacross East Wall, Dublin Grangegorman Howth/Sutton Athboy Donabate Ratoah Bettystown Enfield Clons

LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued

33 34 35 36 37 38

N/A N/A N/A N/A N/A N/A

LOI Not Issued

39

N/A

LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued LOI Not Issued

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Current Status

No

Opened/Exp ected

2008-2013 Count

PCT Name / Location

211 212 213 214 215 216 217 218 219 220 221 222 223 224

PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP PCC PPP

Ballymote; Boyle; Westport; Claremorris; Tuam; Limerick City; Dungarvan; Carrick-on-Suir; Wexford Town; Waterford City; Kilcock; Knocklyon/Rathfarnham; Crumlin/Drimnagh; Coolock/Darndale Summerhill, north inner city 225 Dublin 226 Ballinrobe

PCC PPP PCC PPP

66

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018

Appendix B: Take-off Mark-up Drawings

68

69

70

71

72

73

74

75

76

77

78

79

80

81

Appendix C: Cost Plan

Elemental Summary

0 5 . 9 1 5 , 2 4 1 5 7 . 1 7 4 , 3 1 1

5 7 . 1 7 4 , 3 1 1 0 0 . 0 8 6 , 3 6 1

0 0 . 0 8 6 , 3 6 1 0 0 . 0 8 5 , 7 4

0 0 . 0 8 5 , 7 4 0 0 . 0 4 0 , 6

0 0 . 0 4 0 , 6 0 8 . 9 0 0 , 6 5

0 8 . 9 0 0 , 6 5 0 0 . 0 0 6 , 3 9

0 0 . 0 0 6 , 3 9 0 3 . 6 8 9 , 3 7

0 3 . 6 8 9 , 3 7 0 0 . 0 8 5 , 5

0 0 . 0 8 5 , 5 0 0 . 7 6 5 , 8 5

0 0 . 7 6 5 , 8 5 0 2 . 8 9 6 , 7 1

0 2 . 8 9 6 , 7 1 5 8 . 6 2 7 , 7 7

5 8 . 6 2 7 , 7 7 0 0 . 6 9 0 , 2 2

0 0 . 6 9 0 , 2 2 8 7 . 3 0 5 , 7 7

8 7 . 3 0 5 , 7 7 0 0 . 6 9 0 , 2 7

0 0 . 6 9 0 , 2 7 0 0 . 0 8 0 , 6 1

0 0 . 0 8 0 , 6 1 5 7 . 6 3 5 , 8 2 4

5 7 . 6 3 5 , 8 2 4 0 0 . 0 0 5 , 7

0 0 . 0 0 5 , 7 5 8 . 1 3 7 , 6 3 3

5 8 . 1 3 7 , 6 3 3 0 0 . 5 6 3 , 1 3

0 0 . 5 6 3 , 1 3 0 0 . 0 0 1 , 1 2 1

0 0 . 0 0 1 , 1 2 1 8 3 2 , 9 5

8 3 2 , 9 5

0 5 . 9 1 5 , 2 4 1

0 3 . 4 3

l e e t S l a r u t c u r t S

2 9 . 2

2 1 . 0 7

s g n i t t i F & s g n i n e e r c S e g a r o t S

7 9 . 5

6 1 . 8 1

s g n i t t i F y r a t i n a S

5 5 . 1

8 9 . 4 9 1

s n o i t a l l a t s n I l a c i r t c e l E

0 6 . 6 1

4 3 . 4

l a s o p s i D e s u f e R & e g a n i a r D

7 3 . 0

4 1 . 8 4 2

s n o i t a l l a t s n I l a c i n a h c e M

3 1 . 1 2

1 3 . 9

s e h s i n i F f o o R

0 8 . 0

5 7 . 1 4

s e h s i n i F g n i l i e C

6 5 . 3

8 8 . 4 4

s e h s i n i F r o o l F

3 8 . 3

9 7 . 2 1

y l l a n r e t n I s e h s i n i F l l a W

9 0 . 1

1 0 . 5 4

y l l a n r e t x E s e h s i n i F l l a W

4 8 . 3

5 2 . 0 1

s n o i t e l p m o C f o o R

8 8 . 0

1 9 . 3 3

s g n i l i e C d e d n e p s u S

9 8 . 2

3 2 . 3

s n o i t e l p m o C s p m a R / s r i a t S

8 2 . 0

4 8 . 2 4

s n o i t e l p m o C l l a W l a n r e t n I

5 6 . 3

0 2 . 4 5

s n o i t e l p m o C l l a W l a n r e t x E

2 6 . 4

3 4 . 2 3

e r u t c u r t S f o o R

7 7 . 2

0 5 . 3

s p m a R s r i a t S

0 3 . 0

5 5 . 7 2

s r o o l F

5 3 . 2

8 7 . 4 9

s l l a W l a n r e t n I

7 0 . 8

0 7 . 5 6

s l l a W l a n r e t x E

0 6 . 5

2 5 . 2 8

3 0 . 7

e r u t c u r t s b u S

2,028,707 1,174.70 100.00

Total SubTotal Cost/m2 % BC Description

Page 1 of 1

EDUCATIONAL VERSION

CostX 11/05/2014 18:41:31

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

1

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Substructure

Substructure Generally

Allowance for substructure complete including: excavation works, disposal of excavated material, in-situ reinforced concrete foundations, rising walls, filling cavities, DPC membrane, radon sump & pipework, radon barrier, appropriate insulation, power floating finish.

CostX 11/05/2014 18:25:44

950 m2

EDUCATIONAL VERSION

150.00

142,520

142,520

7.03

Page 1 of 22

Bill of Quantities

External Walls 2

s l l a W l a n r e t x E

k r o w k c o l B / k r o w k c i r B

0 0 . 0 0 0 , 3

5 1 . 0 4 2 8 , 1

9 0 . 0

0 0 . 5 8 4 , 1

0 0 . 5 8 4 , 1

8 0 . 0

0 0 1 , 9 8

0 0 1 , 9 8

0 4 . 4

0 0 . 0 0 5 , 1

0 0 . 0 0 5 , 1

8 0 . 0

5 7 . 2 6 3 , 8

5 7 . 2 6 3 , 8

2 4 . 0

0 0 . 0 0 2 , 4

0 0 . 0 0 2 , 4

1 2 . 0

0 0 . 0 0 0 , 3

0 0 . 0 0 0 , 3

5 1 . 0

0 0 . 0 0 0 , 1

0 0 . 0 0 0 , 1

5 0 . 0

m

s t n i o J n g i s e D

m e t i 1

0 0 . 5 2

m

0 0 . 5 3

m

0 0 . 5 2

m

0 0 . 0 3

m

e l g n A ; y a r T y t i v a C ; s l e t n i L

0 2 1

g n i k c a B e t e r c n o C ; C P D , s l l i C

0 2 1

s b m a J n o i t a l u s n I ; C P D ; k c o l B L ; s e i t i v a C g n i s o l C

5 3 3

t e p a r a P C P D ; g n i p p a C ; s e i t i v a C g n i s o l C

0 5

h g i h m 3 b a l s o t b a l s m e t s y S l l a w t f a h S k c o r p y G

0 7 2

0 0 . 0 0 0 , 1

4 2 8 , 1

2 m

0 0 . 0 0 0 , 3

2 m

0 0 . 5 1

s g n i n e p o r o f r e v O a r t x E

0 0 . 4 2

s e i r d n u S

0 0 . 0 3

m e t I e t i s o p m o C f a e L r e n n I

0 0 . 0 3 3

2 m 9 9

n o i t a l u s n I ; s e i T l l a W ; s e i t i v a C g n i m r o F

6 7

m m 0 0 1 k r o w k c o l B

0 0 1

m m 5 1 2 k r o w k c o l B

Page 2 of 22

EDUCATIONAL VERSION

CostX 11/05/2014 18:25:44

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

3

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Internal Walls

s l l a W l a n r e t n I e t e r c n o C 0 0 . 0 3 1

0 5 9 , 1

0 5 9 , 1

0 1 . 0

2 m

0 0 . 0 6

0 0 . 0 4 7 , 5 2

0 0 . 0 4 7 , 5 2

7 2 . 1

m

0 0 . 5 1

0 0 . 0 9

0 0 . 0 9

1 0 . 0

4 0 6

m

0 0 . 5 2 2

0 0 9 , 5 3 1

0 0 9 , 5 3 1

0 7 . 6

3 m

6

9 2 4

k r o w k c o l B / k r o w c i r B

5 1

l l a w m m 5 1 2 e t e r c n o c c r u t i s n I k r o w k c o l B m m 5 1 2 s g n i n e p o g n i m r o f r o f a r t x E s l e t n i L s n o i t i t r a P CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 3 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

4

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Floors

s r o o l F 5 3 . 2

0 0 . 0 8 5 , 7 4

0 0 . 0 8 5 , 7 4

EDUCATIONAL VERSION

0 0 . 0 6

2 m

3 9 7

d e d u l c n i g n i t a o l f r e w o p ; r o o l F e t e r c n o C t s a c e r P CostX 11/05/2014 18:25:44

Page 4 of 22

Bill of Quantities

Stairs - Ramps 5

0

0

0 0 . 0 0 0 . 0 0 8 , 3

9 1 . 0

0 0 7 , 1

0 0 7 , 1

9 0 . 0

0 0 . 0 4 5

0 0 . 0 4 5

3 0 . 0

d e d u l c n i g n i l l e w o r t ; s g n i d n a L f l a H

2 1

2 m

0 0 . 0 0 8 , 3

g n i d n a L f l a H o t

0 0 . 5 4

r o o l F e t e r c n o C t s a c e r P

0 0 . 0 5 8

g n i d n a L f l a H o t s r e s i R 9 / s d a e r h T 6 s t h g i l F r i a t S

0 0 . 0 5 9

s r e s i R 9 / s d a e r h T 8 s t h g i l F r i a t S

r N 2

s t h g i l f r i a t S e t e r c n o C t s a c e r P

r N 4

s p m a R s r i a t S

Page 5 of 22

EDUCATIONAL VERSION

CostX 11/05/2014 18:25:44

︶ ︵

︶

︵

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

6

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Roof Structure

e r u t c u r t S f o o R e r u t c u r t S f o o R 2 m

0 0 . 0 3

0 8 . 0 0 5 , 6 2

0 8 . 0 0 5 , 6 2

1 3 . 1

2 m

0 0 . 5 2

0 0 . 4 8 0 , 2 2

0 0 . 4 8 0 , 2 2

9 0 . 1

5 3 1

2 m

0 0 0 . 5 5

5 2 4 , 7

5 2 4 , 7

7 3 . 0

e r u t c u r t S f o o R t a l F

3 8 8

k c e d i t l u M n a p s g n i K

3 8 8

a e r A f o o R r e p e r u t u r t S f o o R CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 6 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

7

Quantity

Unit

Rate

Total

Subtotal

% of Cost

External Wall Completions

s n o i t e l p m o C l l a W l a n r e t x E 0 0 . 5 2 5

0 0 . 0 0 9 , 1 8

0 0 . 0 0 9 , 1 8

4 0 . 4

0 0 . 0 5 7 , 1

0 0 . 0 0 5 , 3

0 0 . 0 0 5 , 3

8 1 . 0

0 0 . 0 5 3 , 1

0 0 . 0 0 4 , 5

0 0 . 0 0 4 , 5

7 2 . 0

r N 2

0 0 . 0 0 4 , 1

0 0 . 0 0 8 , 2

0 0 . 0 0 8 , 2

4 1 . 0

s e i t i l i t U s r o o D e l b u o D

r N 4

r o o D e l g n i S

r N 2

s r o o D e l b u o D

2 m

6 5 1

s n e e r c S & s w o d n i W CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 7 of 22

Bill of Quantities

Internal Wall Completions 8

s n o i t e l p m o C l l a W l a n r e t n I

g n i x i F d n o c e S

1 8 . 9 3 8 , 1

1 8 . 9 3 8 , 1

0 1 . 0

0 0 . 0 7 4 , 1

0 0 . 0 7 4 , 1

8 0 . 0

0 5 . 6 7 9 , 3

0 5 . 6 7 9 , 3

0 2 . 0

0 0 . 0 0 3 , 2 3

0 0 . 0 0 3 , 2 3

0 6 . 1

0 0 . 0 0 0 , 3 3

0 0 . 0 0 0 , 3 3

3 6 . 1

0 0 . 0 0 4 , 1

0 0 . 0 0 4 , 1

7 0 . 0

0 0 . 5 7 1

n o i t p e c e R o t n e e r c S l a n r e t n I

8

2 m

0 0 . 0 0 1 , 1

0 5 . 5

m

0 5 . 0 1

m

y r e g n o m n o r I ; g n i t n i a P ; s r o o D e l b u o D

r n 0 3

y r e g n o m n o r I ; g n i t n i a P ; e m a r F ; s r o o D e l g n i S

r n 8 3

0 5 . 5

s r o o D e r i F

0 0 . 0 5 8

m 3 2 7

g n i t n i a P ; e v a r t i h c r A

0 4 1

g n i t n i a P ; s d r a o B w o d n i W

5 3 3

g n i t n i a P ; g n i n i L r o o D / w o d n i W

Page 8 of 22

EDUCATIONAL VERSION

CostX 11/05/2014 18:25:44

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

9

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Stairs /Ramps Completions

s n o i t e l p m o C s p m a R / s r i a t S m

0 0 . 0 6

0 0 . 0 8 6 , 1

0 0 . 0 8 6 , 1

9 0 . 0

0 2

m

0 0 . 5 9 1

0 0 . 0 0 9 , 3

0 0 . 0 0 9 , 3

0 2 . 0

g n i t n i a p d n a y l p p u s s e d a r t s u l a B

8 2

g n i t n i a p d n a y l p p u s s l i a r d n a H CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 9 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

10

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Suspended Ceilings

s g n i l i e C d e d n e p s u S s g n i l i e C d e d n e p s u S 2 m

0 0 . 5 4

0 0 . 5 5 9 , 6 2

0 0 . 5 5 9 , 6 2

3 3 . 1

9 2 1 , 1

2 m

0 0 . 8 2

0 0 . 2 1 6 , 1 3

0 0 . 2 1 6 , 1 3

6 5 . 1

g n i l i e c d a e h k l u b

9 9 5

d i r g n o s n e p s u s g n i d u l c n i , s e l i T g n i l i e C 0 0 6 x 0 0 6 CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 10 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

11

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Roof Completions

s n o i t e l p m o C f o o R s n o i t e l p m o C f o o R 0 0 . 0 0 8

0 0 . 0 0 2 , 7

0 0 . 0 0 2 , 7

6 3 . 0

0 0 . 0 0 5 , 1

0 0 . 0 0 0 , 3

0 0 . 0 0 0 , 3

5 1 . 0

0 0 . 0 6

0 2 . 8 9 4 , 7

0 2 . 8 9 4 , 7

7 3 . 0

m

5 2 1

m e t s y S t s e r r A l l a F

r n 2

h c t a H f o o R

r n 9

e m o D x o C CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 11 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

12

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Wall Finishes Externally

y l l a n r e t x E s e h s i n i F l l a W s e h s i n i F g n i l i e C & l l a W r o o l F 2 m

0 5 . 7 2

5 8 . 6 2 1 , 2

5 8 . 6 2 1 , 2

1 1 . 0

8 0 0 , 1

2 m

0 0 . 5 7

0 0 . 0 0 6 , 5 7

0 0 . 0 0 6 , 5 7

3 7 . 3

g n i d d a l C

7 7

h s i n i f " e h c u o c o n o M ' d e r u o l o c e r P CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 12 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

13

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Wall Finishes Internally

y l l a n r e t n I s e h s i n i F l l a W s e h s i n i F g n i l i e C & l l a W r o o l F 2 m

0 5 . 6

0 0 . 0 1 4 , 7

0 0 . 0 1 4 , 7

7 3 . 0

2 m

0 5 . 6

0 0 . 7 6 7 , 3 1

0 0 . 7 6 7 , 3 1

8 6 . 0

r N 3

0 0 . 9 2

0 0 . 7 8

0 0 . 7 8

1 0 . 0

0 0 . 8

0 0 . 2 3 8

0 0 . 2 3 8

5 0 . 0

n o i t c e t o r P l l a W

8 1 1 , 2

s n o i t i t r a p o t g n i t n i a P

0 4 1 , 1

s l l a W k r o w k c o l B o t g n i t n i a P s n e e r c s

m

4 0 1

s r o t c e t o r p r e n r o c CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 13 of 22

Bill of Quantities

Floor Finishes 14

s e h s i n i F g n i l i e C & l l a W r o o l F

0 0 . 2 3 3 , 1

7 0 . 0

5 4 7 , 2 3

0 0 . 5 4 7 , 2 3

2 6 . 1

9 1 2 , 3

0 0 . 9 1 2 , 3

6 1 . 0

0 0 . 0 4

0 8 0 , 2 1

0 0 . 0 8 0 , 2 1

0 6 . 0

0 0 . 2 1

0 0 . 4 4 4

0 0 . 4 4 4

3 0 . 0

0 0 . 2 1

2 9 1 , 9

2 9 1 , 9

6 4 . 0

0 0 . 2 1

0 0 . 0 6 9

0 0 . 0 6 9

5 0 . 0

0 0 . 5 1

5 7 2 , 4

5 7 2 , 4

2 2 . 0

0 0 . 8 3

4 5 7 , 0 1

4 5 7 , 0 1

4 5 . 0

0 5 . 0 1

0 0 . 4 9 3 , 2

0 0 . 4 9 3 , 2

2 1 . 0

m

0 0 . 6

8 7 . 8 0 1

8 7 . 8 0 1

1 0 . 0

0 0 . 2 3 3 , 1

0 0 . 7 3

m

0 0 . 7 3

2 m

0 0 . 7 3

m

2 m

m

2 m

s a e r a t n a l p

m

g n i t a o C l a i c e p S

m

2 m

d e t n i a P ; s g n i t r i k S

2 m

g n i t a r o c e D & g n i t n i a P

8 1

t e p r a C

8 2 2

p i l s i t n a l y n i v

3 8 2

C r u o l o c l y n i v

5 8 2

B r u o l o c l y n i v

0 8

A r u o l o c l y n i v

6 6 7

g n i t r i k s l y n i v d e v o c

7 3

2 0 3

p i l s i t n a l y n i v

7 8

C r u o l o c l y n i v

5 8 8

B r u o l o c l y n i v

6 3

A r u o l o c l y n i v

Page 14 of 22

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% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Floor Finishes

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

15

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Ceiling Finishes

s e h s i n i F g n i l i e C s e h s i n i F g n i l i e C & l l a W r o o l F 2 m

0 0 . 2 3

0 0 . 6 3 7 , 8 6

0 0 . 8 6 3 , 4 3

9 3 . 3

8 4

2 m

0 0 . 5 3

0 0 . 0 6 3 , 3

0 0 . 0 8 6 , 1

7 1 . 0

d e p o l S ; s r i a t S f o e d i s r e d n U t n i a P & r e t s a l P

4 7 0 , 1

t n i a P & r e t s a l P CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 15 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

16

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Roof Finishes

s e h s i n i F f o o R s e i r d n u S 2 m

0 0 . 5 6

0 0 . 0 1 7 , 8

0 0 . 0 1 7 , 8

3 4 . 0

4 3 1

m

0 0 . 5 5

0 0 . 0 7 3 , 7

0 0 . 0 7 3 , 7

7 3 . 0

g n i h s a l F & d n a t s p U ; f o o r m a e s g n i d n a t s l i f a n r a S

4 3 1

s e i r d n u S ; f o o r m a e s g n i d n a t s l i f a n r a S CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 16 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

17

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Mechanical Installations

s n o i t a l l a t s n I l a c i n a h c e M 5 7 . 6 3 5 , 8 8 3

5 7 . 6 3 5 , 8 8 3

6 1 . 9 1

0 0 . 0 0 0 , 0 4

0 0 . 0 0 0 , 0 4

0 0 . 0 0 0 , 0 4

8 9 . 1

s n o i t a l l a t s n I s e c i v r e S t r o p s n a r T

0 0 . 5 2 2

2 m

7 2 7 , 1

A F G r e P e c n a w o l l a t f i L

1 Item

CostX 11/05/2014 18:25:44

EDUCATIONAL VERSION

Page 17 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka Description

18

Quantity

Unit

Rate

Total

Subtotal

% of Cost

Drainage & Refuse Disposal

l a s o p s i D e s u f e R & e g a n i a r D 7 3 . 0

0 0 . 0 0 5 , 7

0 0 . 0 0 5 , 7

EDUCATIONAL VERSION

0 0 . 0 0 5 , 7

m e t I 1

s e t s a w d n a s l i o s , m e t s y s l a s o p s i d r e t a w n i a R CostX 11/05/2014 18:25:44

Page 18 of 22

Bill of Quantities Details: Detailed Elemental PCC Doughiska

Project: Default Project Building: Doughiska PCC Model M Mrowka

Unit

Rate

Total

Subtotal

% of Cost

0 6 . 6 1

19

Quantity

5 8 . 1 3 7 , 6 3 3

Description

Electrical Installations

s n o i t a l l a t s n I l a c i r t c e l E 5 8 . 1 3 7 , 6 3 3

EDUCATIONAL VERSION

0 0 . 5 9 1

2 m

7 2 7 , 1

A F G r e P CostX 11/05/2014 18:25:44

Page 19 of 22

Bill of Quantities

Sanitary Fittings 20

s g n i t t i F y r a t i n a S

s n o i t i t r a P t e l i o T

0 0 . 0 0 4

0 0 . 0 0 6 , 1

0 0 . 0 0 6 , 1

8 0 . 0

0 0 . 0 0 5 , 1

0 0 . 0 0 5 , 4

0 0 . 0 0 5 , 4

3 2 . 0

0 0 . 0 0 3

0 0 . 0 0 1 , 5

0 0 . 0 0 1 , 5

6 2 . 0

0 0 . 0 5 2

0 0 . 0 5 7 , 9

0 0 . 0 5 7 , 9

9 4 . 0

0 0 . 0 0 0 , 1

0 0 . 0 0 0 , 2

0 0 . 0 0 0 , 2

0 1 . 0

0 0 . 0 3

0 0 . 0 2 4

0 0 . 0 2 4

3 0 . 0

0 0 . 5 4

0 0 . 5 5 7 , 1

0 0 . 5 5 7 , 1

9 0 . 0

0 0 . 0 6 1

0 0 . 0 4 2 , 6

0 0 . 0 4 2 , 6

1 3 . 0

B H W r e p 1

B H W r e p 1

r n 9 3

C W r e p 1

s r e s n e p s i D p a o S

r n 9 3

s r e d l o H l l o R t e l i o T

r n 4 1

e t i u S e l b a s i D

r n 2

B H W

r n 9 3

s ' C W

r n 7 1

s g n i t t i F y r a t i n a S

r n 3

d e l b a s i D

l e n a P t n o r F & r o o D

s r o r r i M

Page 20 of 22

EDUCATIONAL VERSION

CostX 11/05/2014 18:25:44

r n 4

l e n a P t n o r F & r o o D

︶ ︵

︶ ︵

︶ ︵

︶ ︵

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities

Storage Screenings & Fittings 21

s g n i t t i F & s g n i n e e r c S e g a r o t S

0 0 . 0 5 4

0 0 . 0 0 7 , 0 2

0 0 . 0 0 7 , 0 2

3 0 . 1

0 0 . 0 0 0 , 1

0 0 0 , 0 2

0 0 0 , 0 2

9 9 . 0

0 0 . 0 6 4

0 0 2 , 9

0 0 2 , 9

6 4 . 0

0 0 . 0 5 1

0 0 8 , 1

0 0 8 , 1

9 0 . 0

0 0 . 0 0 7

0 0 6 , 5

0 0 6 , 5

8 2 . 0

0 0 . 0 0 2 , 1

0 0 6 , 3

0 0 6 , 3

8 1 . 0

0 0 . 0 0 4

0 0 4 , 6

0 0 4 , 6

2 3 . 0

0 0 . 0 5 6

0 0 7 , 1 1

0 0 7 , 1 1

8 5 . 0

0 0 . 0 5 3

0 5 6 , 0 2

0 5 6 , 0 2

2 0 . 1

r n 3 3

0 0 . 0 5 6

0 5 4 , 1 2

0 5 4 , 1 2

6 0 . 1

k s e d k s a t

r n 9 5

r i a h c k s a t

r n 8 1

e g a r o t s e g r a l

r n 6 1

e g a r o t s l l a m s

r n 3

e l b a t e c n e r e f n o c

r n 8

e g r a l k s e d

r n 2 1

e l b a t e e f f o c

r n 0 2

s n e e r c s

r n 0 2

d e b

r n 6 4

r i a h c m r a

Page 21 of 22

EDUCATIONAL VERSION

CostX 11/05/2014 18:25:44

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

Bill of Quantities

Structural Steel 22

0 0 . 0 0 8 , 1

0 . 0 2 6 , 0 1

0 2 6 , 0 1

3 5 . 0

0 0 . 0 0 8 , 1

4 7 3 , 4

4 7 3 , 4

2 2 . 0

0 0 . 0 0 8 , 1

0 8 4 , 6

0 8 4 , 6

2 3 . 0

0 0 . 0 0 8 , 1

4 9 3 , 1 1

4 9 3 , 1 1

7 5 . 0

0 0 . 0 0 8 , 1

0 6 2 , 9 1

0 6 2 , 9 1

5 9 . 0

0 0 . 0 0 8 , 1

0 1 7 , 1

0 1 7 , 1

9 0 . 0

n T 3

0 0 . 0 0 8 , 1

0 0 4 , 5

0 0 4 , 5

7 2 . 0

. c t e , s r e l o h , s e t a l P

n T 0 5 9 . 0

B U e g d i r

n T 0 0 7 . 0 1

0 7 0 . 0 x 0 5 2 . 0 C D s n i l r u p

n T 0 3 3 . 6

8 7 1 . 0 x 0 1 4 . 0 B U r t g n i l i e c

n T 0 0 6 . 3

8 7 1 . 0 x 5 0 4 . 0 B U g n i c a r b

n T 0 3 4 . 2

f o o R

Page 22 of 22

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n T 0 0 9 . 5

0 9 1 . 0 x 0 5 4 . 0 B U

UB 0.203x0.203

% of Cost Subtotal Total Rate Unit Quantity Description

Details: Detailed Elemental PCC Doughiska Project: Default Project Building: Doughiska PCC Model M Mrowka

STEELWORK

Frame

Appendix D: Financial Analysis

Life Cycle Cashflow Information

Lifecycle costs

External Walls: Completions

Windows and doors Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25

Internal Walls: Completions

Doors

Painting Door Frames and Architraves

Wall Finishes Externally

Wall Finishes Internally

Painting

Painting

Floor Finishes

Painting Skirtings

Vinyl & Carpet Flooring and Skirting

€2,394.00

€7,285.00

€2,394.00 €7,285.00 €21,500.00

€21,500.00 €2,394.00

€75,000.00

€7,285.00

€21,500.00 €2,394.00

€2,394.00

€7,285.00

€7,285.00 €21,500.00

€67,000.00

€7,285.00

€77,394.00 €7,285.00

€21,500.00

€93,600.00

TOTAL

€2,126.00

Life Cycle Cashflow Information

107

€2,394.00

€2,394.00

€75,000.00

€77,394.00 €21,500.00 €74,285.00 €98,120.00

Lifecycle costs

Ceiling Finishes

Suspended Ceilings Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25

Paint Ceilings

€9,324.00

Paint Internal Walls

Mechanical

Electricity Centre and Main Distribution

Replace - selected items (40% of cost plan)

Replace selected items (30% of cost plan)

Fittings

Sanitary Appliances

Roof Finishes

Sanitary Fittings Roof Coverings incl (Partitions) Upstand & Flashing

€21,000.00 €9,324.00

€21,000.00

€6,100.00

€21,000.00

€6,100.00 €21,000.00

€9,324.00

€9,324.00

€21,000.00

€21,000.00 €75,311.00

TOTAL

€25,365.00

€9,324.00

€171,414.40 €21,000.00

€6,100.00 €101,019.30

108

€26,000.00

€100,676.00 €9,324.00 €203,514.40 €21,000.00 €101,019.30

NPV Option A

-€

2,496,323.96

Inflows m2 240

m2 1062

20

rate/m2

20

Private

now 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ € € € € € € € € € € € € € € € € € € € € € € € €

57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00

254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00 254,880.00

m2 331.5

20

hse

€ € € € € € € € € € € € € € € € € € € € € € € € €

Outflows

m2 93.5

1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00

total lettable area 1727

Discount 4%

20

shared GPs

€ € € € € € € € € € € € € € € € € € € € € € € € €

m2 425

shared HSE

€ € € € € € € € € € € € € € € € € € € € € € € € €

6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00 6,630.00

HSE maint contr

€ € € € € € € € € € € € € € € € € € € € € € € € €

5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00

109

maintenance

€ € € € € € € € € € € € € € € € € € € € € € € € €

74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00

lifecycle costs

€ 2,394.00 € 28,285.00 € 30,824.00 € € € 77,394.00 € 6,100.00 € 28,285.00 € € 30,824.00 € 2,394.00 € € € € € 178,070.00 € 30,824.00 € 203,514.40 € € 95,285.00 € 199,139.30

total cashflow

-€ 2,496,323.96 € 252,029.00 € 252,029.00 € 252,029.00 € 252,029.00 € 249,635.00 € 223,744.00 € 221,205.00 € 252,029.00 € 252,029.00 € 16,992.00 € 245,929.00 € 223,744.00 € 252,029.00 € 221,205.00 € 249,635.00 € 252,029.00 € 252,029.00 € 223,744.00 € 252,029.00 € 73,959.00 € 221,205.00 € 48,514.60 € 252,029.00 € 156,744.00 € 52,889.70

discount factor

1 0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

PV

-€ 2,496,323.96 € 242,335.58 € 233,014.98 € 224,052.86 € 215,435.45 € 205,181.77 € 176,828.13 € 168,097.62 € 184,155.12 € 177,072.23 € 11,479.19 € 159,750.79 € 139,749.84 € 151,362.09 € 127,740.38 € 138,613.45 € 134,560.34 € 129,384.95 € 110,446.33 € 119,623.66 € 33,753.92 € 97,072.19 € 20,471.00 € 102,254.80 € 61,149.20 € 19,839.82 € 883,425.68

IRR for Option A m2 -€

discount

discount

4%

11%

1727

2,496,323.96

year

total cashflow

now

-€

2,496,323.96

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ € € € € € € € € € € € € € € € € € € € € € € € €

252,029.00 252,029.00 252,029.00 252,029.00 249,635.00 223,744.00 221,205.00 252,029.00 252,029.00 16,992.00 245,929.00 223,744.00 252,029.00 221,205.00 249,635.00 252,029.00 252,029.00 223,744.00 252,029.00 73,959.00 221,205.00 48,514.60 252,029.00 156,744.00 52,889.70

discount factor

PV 1 -€

0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

€ € € € € € € € € € € € € € € € € € € € € € € € € €

2,496,323.96

242,335.58 233,014.98 224,052.86 215,435.45 205,181.77 176,828.13 168,097.62 184,155.12 177,072.23 11,479.19 159,750.79 139,749.84 151,362.09 127,740.38 138,613.45 134,560.34 129,384.95 110,446.33 119,623.66 33,753.92 97,072.19 20,471.00 102,254.80 61,149.20 19,839.82 883,425.68

110

discount factor

PV 1 -€

0.900900901 0.811622433 0.731191381 0.658730974 0.593451328 0.534640836 0.481658411 0.433926496 0.390924771 0.352184479 0.317283314 0.285840824 0.257514256 0.231994825 0.209004347 0.188292204 0.169632616 0.152822177 0.137677637 0.124033907 0.111742259 0.100668701 0.090692524 0.081704976 0.073608087

€ € € € € € € € € € € € € € € € € € € € € € € € € -€

2,496,323.96

227,053.15 204,552.39 184,281.43 166,019.31 148,146.22 119,622.68 106,545.25 109,362.06 98,524.38 5,984.32 78,029.17 63,955.17 64,901.06 51,318.42 52,174.80 47,455.10 42,752.34 34,193.05 34,698.76 9,173.42 24,717.95 4,883.90 22,857.15 12,806.76 3,893.11 582,098.66

NPV Option B total lettable area

-€2,496,323.96 m2 240

1062

93.5

331.5

425

1727

Inflows 20

rate/m2

16

Private

now 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ € € € € € € € € € € € € € € € € € € € € € € € €

57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00 57,600.00

€ € € € € € € € € € € € € € € € € € € € € € € € €

203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00

16

shared GPs

€ € € € € € € € € € € € € € € € € € € € € € € € €

4%

Outflows 20

hse

Discount

1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00

shared HSE

€ € € € € € € € € € € € € € € € € € € € € € € € €

5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00

HSE maint contr

€ € € € € € € € € € € € € € € € € € € € € € € € €

5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00

maintenance

€ € € € € € € € € € € € € € € € € € € € € € € € €

74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00 74,261.00

total cashflow

lifecycle costs

€ 2,394.00 € 28,285.00 € 30,824.00 € € € 77,394.00 € 6,100.00 € 28,285.00 € € 30,824.00 € 2,394.00 € € € 28,285.00 € € 178,070.00 € 30,824.00 € 203,514.40 € € 95,285.00 € 199,139.30

€ € € € € € € € € € € € € € € € € € € € € -€ € € €

-€2,496,323.96 199,727.00 199,727.00 199,727.00 199,727.00 197,333.00 171,442.00 168,903.00 199,727.00 199,727.00 122,333.00 193,627.00 171,442.00 199,727.00 168,903.00 197,333.00 199,727.00 199,727.00 171,442.00 199,727.00 21,657.00 168,903.00 3,787.40 199,727.00 104,442.00 587.70

NOTES: In NPV depreciation must be ignored because the full cost of the asset is treated as a capital investment at the start (year 0) of the project

111

discount factor

1 0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

PV

-€ 2,496,323.96 € 192,045.19 € 184,658.84 € 177,556.58 € 170,727.48 € 162,193.34 € 135,493.10 € 128,352.40 € 145,938.56 € 140,325.54 € 82,643.79 € 125,776.41 € 107,082.17 € 119,950.86 € 97,537.27 € 109,572.01 € 106,635.88 € 102,534.50 € 84,628.59 € 94,798.91 € 9,883.97 € 74,120.31 -€ 1,598.11 € 81,034.50 € 40,745.07 € 220.46 € 172,857.61

IRR for Option B m2 -€

discount

discount

4%

11%

1727

2,496,323.96

year

total cashflow

now

-€

2,496,323.96

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ € € € € € € € € € € € € € € € € € € € € -€ € € €

199,727.00 199,727.00 199,727.00 199,727.00 197,333.00 171,442.00 168,903.00 199,727.00 199,727.00 122,333.00 193,627.00 171,442.00 199,727.00 168,903.00 197,333.00 199,727.00 199,727.00 171,442.00 199,727.00 21,657.00 168,903.00 3,787.40 199,727.00 104,442.00 587.70

discount factor

PV 1 -€

0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

€ € € € € € € € € € € € € € € € € € € € € -€ € € € €

2,496,323.96

192,045.19 184,658.84 177,556.58 170,727.48 162,193.34 135,493.10 128,352.40 145,938.56 140,325.54 82,643.79 125,776.41 107,082.17 119,950.86 97,537.27 109,572.01 106,635.88 102,534.50 84,628.59 94,798.91 9,883.97 74,120.31 1,598.11 81,034.50 40,745.07 220.46 172,857.61

112

discount factor

PV 1 -€

0.900900901 0.811622433 0.731191381 0.658730974 0.593451328 0.534640836 0.481658411 0.433926496 0.390924771 0.352184479 0.317283314 0.285840824 0.257514256 0.231994825 0.209004347 0.188292204 0.169632616 0.152822177 0.137677637 0.124033907 0.111742259 0.100668701 0.090692524 0.081704976 0.073608087

€ € € € € € € € € € € € € € € € € € € € € -€ € € € -€

2,496,323.96

179,934.23 162,102.91 146,038.66 131,566.36 117,107.53 91,659.89 81,353.55 86,666.84 78,078.23 43,083.78 61,434.62 49,005.12 51,432.55 39,184.62 41,243.45 37,607.04 33,880.21 26,200.14 27,497.94 2,686.20 18,873.60 381.27 18,113.75 8,533.43 43.26 967,053.34

NPV Option C -€ m2

total lettable area

2,755,413.11 440

1062

93.5

331.5

425

1927

Inflows 20

rate/m2

16

Private

now 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00 € 105,600.00

€ € € € € € € € € € € € € € € € € € € € € € € € €

203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00 203,904.00

16

shared GPs

€ € € € € € € € € € € € € € € € € € € € € € € € €

4%

Outflows 20

hse

Discount

1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00 1,870.00

shared HSE

€ € € € € € € € € € € € € € € € € € € € € € € € €

5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00 5,304.00

HSE maint contr

€ € € € € € € € € € € € € € € € € € € € € € € € €

5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00 5,310.00

maintenance

€ € € € € € € € € € € € € € € € € € € € € € € € €

82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71 82,429.71

total cashflow

lifecycle costs

€ € € € € € € € € € € € € € € € € € € € €

2,657.34 31,396.35 34,214.64 85,907.34 6,771.00 31,396.35 34,214.64 2,657.34 31,396.35 197,657.70 34,214.64 225,900.98 105,766.35 221,044.62

-€ € € € € € € € € € € € € € € € € € € € € € € € € €

NOTES: In NPV depreciation must be ignored because the full cost of the asset is treated as a capital investment at the start (year 0) of the project

113

2,755,413.11 239,558.29 239,558.29 239,558.29 239,558.29 236,900.95 208,161.94 205,343.65 239,558.29 239,558.29 153,650.95 232,787.29 208,161.94 239,558.29 205,343.65 236,900.95 239,558.29 239,558.29 208,161.94 239,558.29 41,900.59 205,343.65 13,657.31 239,558.29 133,791.94 18,513.67

discount factor

1 0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

PV

-€ 2,755,413.11 € 230,344.51 € 221,485.11 € 212,966.45 € 204,775.43 € 194,715.31 € 164,513.40 € 156,044.30 € 175,042.90 € 168,310.48 € 103,801.08 € 151,214.18 € 130,017.33 € 143,872.50 € 118,580.84 € 131,542.69 € 127,902.13 € 122,982.82 € 102,754.59 € 113,704.53 € 19,122.88 € 90,111.69 € 5,762.77 € 97,195.11 € 52,195.11 € 6,944.79 € 486,432.24

IRR for Option C m2

discount

discount

4%

11%

1927 year

total cashflow

now

-€

2,755,413.11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

€ € € € € € € € € € € € € € € € € € € € € € € € €

239,558.29 239,558.29 239,558.29 239,558.29 236,900.95 208,161.94 205,343.65 239,558.29 239,558.29 153,650.95 232,787.29 208,161.94 239,558.29 205,343.65 236,900.95 239,558.29 239,558.29 208,161.94 239,558.29 41,900.59 205,343.65 13,657.31 239,558.29 133,791.94 18,513.67

discount factor

PV 1 -€

0.961538462 0.924556213 0.888996359 0.854804191 0.821927107 0.790314526 0.759917813 0.730690205 0.702586736 0.675564169 0.649580932 0.62459705 0.600574086 0.577475083 0.555264503 0.533908176 0.513373246 0.493628121 0.474642424 0.456386946 0.438833602 0.421955387 0.405726333 0.390121474 0.375116802

€ € € € € € € € € € € € € € € € € € € € € € € € € €

114

2,755,413.11

230,344.51 221,485.11 212,966.45 204,775.43 194,715.31 164,513.40 156,044.30 175,042.90 168,310.48 103,801.08 151,214.18 130,017.33 143,872.50 118,580.84 131,542.69 127,902.13 122,982.82 102,754.59 113,704.53 19,122.88 90,111.69 5,762.77 97,195.11 52,195.11 6,944.79 486,432.24

discount factor

PV 1 -€

0.900900901 0.811622433 0.731191381 0.658730974 0.593451328 0.534640836 0.481658411 0.433926496 0.390924771 0.352184479 0.317283314 0.285840824 0.257514256 0.231994825 0.209004347 0.188292204 0.169632616 0.152822177 0.137677637 0.124033907 0.111742259 0.100668701 0.090692524 0.081704976 0.073608087

€ € € € € € € € € € € € € € € € € € € € € € € € € -€

2,755,413.11

215,818.28 194,430.88 175,162.96 157,804.47 140,589.18 111,291.87 98,905.50 103,950.69 93,649.27 54,113.48 73,859.52 59,501.18 61,689.67 47,638.66 49,513.33 45,106.96 40,636.90 31,811.76 32,981.82 5,197.09 22,945.56 1,374.86 21,726.15 10,931.47 1,362.76 907,476.41

IRR for Doughiska PCC 1100 1000

Option A

900 800 700

Option A

NPV=0 @ 8%

Option B

NPV=0 @ 5,5%

Option C

NPV=0 @ 6.75%

600

Option C

500

negative NPV

positive NPV

400 300

Option B

200 100

-100 -200

4 %

11 %

-300 -400 -500 -600 -700 -800

x 1000

€

Figure XXX Internal Rate of Return projection

115

Mortgage Amortization Schedule Option B Inputs Loan principal amount Annual interest rate Loan period in years Base year of loan

€ 5% 25 1

Key Figures 2,496,323.96 Annual loan payments Monthly payments Interest in first calendar year Interest over term of loan Sum of all payments

€ € € € €

175,119.12 14,593.26 123,647.26 1,881,654.04 4,377,978.00

Payments in First 12 Months Year 1

Beginning Balance

Jan € 2,496,323.96 Feb € 2,492,132.05 Mar € 2,487,922.67 Apr € 2,483,695.75 May € 2,479,451.22 Jun € 2,475,189.01 Jul € 2,470,909.04 Aug € 2,466,611.23 Sep € 2,462,295.52 Oct € 2,457,961.82 Nov € 2,453,610.07 Dec € 2,449,240.19 Yearly Schedule of Balances and Payments Year 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Payment € € € € € € € € € € € €

Beginning Balance € € € € € € € € € € € € € € € € € € € € € € € €

2,444,852.10 2,390,746.60 2,333,873.21 2,274,090.06 2,211,248.29 2,145,191.42 2,075,754.95 2,002,765.98 1,926,042.76 1,845,394.24 1,760,619.58 1,671,507.68 1,577,836.66 1,479,373.25 1,375,872.26 1,267,075.96 1,152,713.44 1,032,499.92 906,136.05 773,307.15 633,682.49 486,914.35 332,637.29 170,467.11

Principal 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26 14,593.26

€ € € € € € € € € € € €

Payment € € € € € € € € € € € € € € € € € € € € € € € €

175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12 175,119.12

Interest 4,191.91 4,209.38 4,226.92 4,244.53 4,262.21 4,279.97 4,297.81 4,315.71 4,333.70 4,351.75 4,369.88 4,388.09

€ € € € € € € € € € € €

Principal € € € € € € € € € € € € € € € € € € € € € € € €

54,105.50 € 56,873.40 € 59,783.15 € 62,841.77 € 66,056.87 € 69,436.47 € 72,988.97 € 76,723.22 € 80,648.53 € 84,774.66 € 89,111.89 € 93,671.03 € 98,463.41 € 103,500.99 € 108,796.29 € 114,362.52 € 120,213.52 € 126,363.88 € 132,828.89 € 139,624.67 € 146,768.13 € 154,277.07 € 162,170.18 € 170,467.11 €

116

Cumulative Principal Cumulative Interest Ending Balance 10,401.35 € 10,383.88 € 10,366.34 € 10,348.73 € 10,331.05 € 10,313.29 € 10,295.45 € 10,277.55 € 10,259.56 € 10,241.51 € 10,223.38 € 10,205.17 €

Interest 121,013.62 118,245.72 115,335.97 112,277.35 109,062.25 105,682.65 102,130.15 98,395.90 94,470.59 90,344.46 86,007.23 81,448.09 76,655.71 71,618.13 66,322.83 60,756.60 54,905.60 48,755.24 42,290.23 35,494.45 28,350.99 20,842.05 12,948.94 4,652.01

4,191.91 8,401.29 12,628.21 16,872.74 21,134.95 25,414.92 29,712.73 34,028.44 38,362.14 42,713.89 47,083.77 51,471.86

€ € € € € € € € € € € €

10,401.35 20,785.23 31,151.57 41,500.30 51,831.35 62,144.64 72,440.09 82,717.64 92,977.20 103,218.71 113,442.09 123,647.26

€ € € € € € € € € € € €

Cumulative Principal Cumulative Interest € € € € € € € € € € € € € € € € € € € € € € € €

105,577.36 162,450.75 222,233.90 285,075.67 351,132.54 420,569.01 493,557.98 570,281.20 650,929.72 735,704.38 824,816.28 918,487.30 1,016,950.71 1,120,451.70 1,229,248.00 1,343,610.52 1,463,824.04 1,590,187.91 1,723,016.81 1,862,641.47 2,009,409.61 2,163,686.67 2,325,856.85 2,496,323.96

€ € € € € € € € € € € € € € € € € € € € € € € €

244,660.88 362,906.61 478,242.58 590,519.93 699,582.18 805,264.83 907,394.98 1,005,790.88 1,100,261.48 1,190,605.94 1,276,613.16 1,358,061.26 1,434,716.97 1,506,335.10 1,572,657.92 1,633,414.52 1,688,320.12 1,737,075.37 1,779,365.59 1,814,860.05 1,843,211.03 1,864,053.09 1,877,002.03 1,881,654.04

2,492,132.05 2,487,922.67 2,483,695.75 2,479,451.22 2,475,189.01 2,470,909.04 2,466,611.23 2,462,295.52 2,457,961.82 2,453,610.07 2,449,240.19 2,444,852.10 Ending Balance

€ € € € € € € € € € € € € € € € € € € € € € € €

2,390,746.60 2,333,873.21 2,274,090.06 2,211,248.29 2,145,191.42 2,075,754.95 2,002,765.98 1,926,042.76 1,845,394.24 1,760,619.58 1,671,507.68 1,577,836.66 1,479,373.25 1,375,872.26 1,267,075.96 1,152,713.44 1,032,499.92 906,136.05 773,307.15 633,682.49 486,914.35 332,637.29 170,467.11 -

Mortgage Amortization Schedule Option C Inputs Loan principal amount Annual interest rate Loan period in years Base year of loan

€ 5% 25 1

Key Figures 2,759,470.68 Annual loan payments Monthly payments Interest in first calendar year Interest over term of loan Sum of all payments

€ € € € €

193,579.08 16,131.59 136,681.37 2,080,006.32 4,839,477.00

Payments in First 12 Months Year 1

Beginning Balance Payment

Jan € 2,759,470.68 € Feb € 2,754,836.88 € Mar € 2,750,183.78 € Apr € 2,745,511.29 € May € 2,740,819.33 € Jun € 2,736,107.82 € Jul € 2,731,376.68 € Aug € 2,726,625.83 € Sep € 2,721,855.18 € Oct € 2,717,064.65 € Nov € 2,712,254.16 € Dec € 2,707,423.63 € Yearly Schedule of Balances and Payments Year 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Beginning Balance € € € € € € € € € € € € € € € € € € € € € € € €

2,702,572.97 2,642,764.12 2,579,895.49 2,513,810.38 2,444,344.23 2,371,324.05 2,294,568.03 2,213,885.02 2,129,074.12 2,039,924.13 1,946,213.06 1,847,707.55 1,744,162.31 1,635,319.50 1,520,908.09 1,400,643.17 1,274,225.27 1,141,339.59 1,001,655.23 854,824.35 700,481.32 538,241.81 367,701.82 188,436.68

16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59 16,131.59

Principal € € € € € € € € € € € €

Payment € € € € € € € € € € € € € € € € € € € € € € € €

193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08 193,579.08

Interest 4,633.80 4,653.10 4,672.49 4,691.96 4,711.51 4,731.14 4,750.85 4,770.65 4,790.53 4,810.49 4,830.53 4,850.66

€ € € € € € € € € € € €

Principal € € € € € € € € € € € € € € € € € € € € € € € €

59,808.85 62,868.63 66,085.11 69,466.15 73,020.17 76,756.02 80,683.01 84,810.90 89,149.99 93,711.07 98,505.51 103,545.24 108,842.81 114,411.41 120,264.92 126,417.90 132,885.68 139,684.36 146,830.88 154,343.03 162,239.51 170,539.99 179,265.14 188,436.68

117

11,497.79 11,478.49 11,459.10 11,439.63 11,420.08 11,400.45 11,380.74 11,360.94 11,341.06 11,321.10 11,301.06 11,280.93

Cumulative Cumulative Ending Balance Principal Interest € 4,633.80 € 11,497.79 € 2,754,836.88 22,976.28 € 2,750,183.78 € 9,286.90 € € 13,959.39 € 34,435.38 € 2,745,511.29 € 18,651.35 € 45,875.01 € 2,740,819.33 € 23,362.86 € 57,295.09 € 2,736,107.82 € 28,094.00 € 68,695.54 € 2,731,376.68 € 32,844.85 € 80,076.28 € 2,726,625.83 € 37,615.50 € 91,437.22 € 2,721,855.18 € 42,406.03 € 102,778.28 € 2,717,064.65 € 47,216.52 € 114,099.38 € 2,712,254.16 € 52,047.05 € 125,400.44 € 2,707,423.63 € 56,897.71 € 136,681.37 € 2,702,572.97

Interest € € € € € € € € € € € € € € € € € € € € € € € €

133,770.23 130,710.45 127,493.97 124,112.93 120,558.91 116,823.06 112,896.07 108,768.18 104,429.09 99,868.01 95,073.57 90,033.84 84,736.27 79,167.67 73,314.16 67,161.18 60,693.40 53,894.72 46,748.20 39,236.05 31,339.57 23,039.09 14,313.94 5,142.40

€ € € € € € € € € € € € € € € € € € € € € € € €

Cumulative Principal 116,706.56 179,575.19 245,660.30 315,126.45 388,146.63 464,902.65 545,585.66 630,396.56 719,546.55 813,257.62 911,763.13 1,015,308.37 1,124,151.18 1,238,562.59 1,358,827.51 1,485,245.41 1,618,131.09 1,757,815.45 1,904,646.33 2,058,989.36 2,221,228.87 2,391,768.86 2,571,034.00 2,759,470.68

€ € € € € € € € € € € € € € € € € € € € € € € €

Cumulative Interest 270,451.60 401,162.05 528,656.02 652,768.95 773,327.85 890,150.91 1,003,046.98 1,111,815.16 1,216,244.25 1,316,112.26 1,411,185.83 1,501,219.67 1,585,955.94 1,665,123.61 1,738,437.77 1,805,598.95 1,866,292.35 1,920,187.07 1,966,935.27 2,006,171.32 2,037,510.89 2,060,549.98 2,074,863.92 2,080,006.32

Ending Balance € € € € € € € € € € € € € € € € € € € € € € € €

2,642,764.12 2,579,895.49 2,513,810.38 2,444,344.23 2,371,324.05 2,294,568.03 2,213,885.02 2,129,074.12 2,039,924.13 1,946,213.06 1,847,707.55 1,744,162.31 1,635,319.50 1,520,908.09 1,400,643.17 1,274,225.27 1,141,339.59 1,001,655.23 854,824.35 700,481.32 538,241.81 367,701.82 188,436.68 -

Appendix E: Thesis Proposal

SCHOOL OF SURVEYING AND CONSTRUCTION MANAGEMENT CONSTRUCTION ECONOMICS AND MANAGEMENT DEGREE DT111 AND DT155 THESIS PROPOSAL FORM 2013/2014 THESIS PROPOSALS MUST ONLY BE SUBMITTED IN THIS FORMAT.

SUBMISSION DATE:

WEDNESDAY 23rd OCTOBER 2013

STUDENT NAME: ____Mateusz

Mrowka___ STUDENT NO: ___C10726301___

FULL TIME or PART TIME: _Full MOBILE NO: DIT EMAIL:

1.

083 3400504

Time_ HOME PHONE: ______N/A___________

[email protected]

WORKING TITLE OF THESIS

‘Primary Care Centres in Ireland – analysis of emerging business opportunities’ 2.

SUBJECT AREA

Please select the general subject area(s) within which your proposed thesis lies



  

Cost and Value Management

 QS Practice  Sustainable Development 

Contract istration and Law

Construction Economics I.T and QS Software

Other (please specify)

3.

RESEARCH OBJECTIVES

Identify the primary objectives or hypothesis of the dissertation/thesis.

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To identify new, business model opportunities emerging in Ireland due to implementation of new Health Care strategy - utilising core aspects of Quantity Surveying practice;

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Examine feasibility of construction projects which development is an integral part of new HSE strategy;

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Examine proposed development variants - HSE led vs. Developer led;

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Determine is there an economic ground to attract private investors (utilising freshly available in Ireland REIT financial vehicle)

4.

RATIONALE/BACKGROUND TO PROPOSED RESEARCH:

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This section must provide a single page overview of the proposed research including: ~ Overview of the scope of published research within the topic area ~ Where the proposed research lies within the existing literature ~ What the proposed research may contribute to the subject area ~ How the proposed research relates to the Degree in Construction Economics & Management Degree

Rollout of new government strategy for Primary Care Centres involves significant level of construction development. Creating a network of ca. 200 new health care units, each designed to cater medical services to .8000 -10000 people means initiation of construction activity across the island with opportunities in areas heavily affected by recession. Building new health care objects it is an opportunity not only for construction sector per say. Due to incentive strategy HSE will not finance, build and own the assets but enter to 15-35 years long lease on approved developments. This is an unequalled opportunity for private investors struggling in current economic climate to find the attractive options with guaranteed and reasonable return on their investment. This business model is untested in Ireland, its initiation meets introduction to Irish markets new, exciting financial vehicle for investors – Real Estate Investment Trust (REIT) creating an opportunity to further the idea of PPP projects. The nature and timeframe of PCC development means that published sources on the subject matter are very limited hence an attempt of comprehensive research in proposed dissertation. The Author will focus on main aspects of implemented new business model. Intend to research basis for HSE incentive and look at completed development led by HSE. Assess feasibility of the construction projects by the means of case study on cost planning different construction variants - new build vs. refurbishment/conversion. The Author intends to research opinions of medical professionals who are in core of the HSE plans and whose current business arrangements, liabilities bear on viability of privately led developments. Appraisal of the hypothetical PCC Unit will take to consideration published HSE technical specifications cost against PQS benchmark projects. Projection of income from long term lease, asset depreciation and maintenance costs. The Author intends also to assess will the current, low lease rates affect the standard of construction work or not. Development of the new business model which requires expertise in the fields of project appraisal, construction costs, value management places Quantity Surveyors as most suitable professionals.

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5. • •

INDICATIVE CHAPTER HEADINGS Include brief outline of topics to be covered in each chapter. Indicate proposed sources of information for each chapter.

Chapter One – Introduction to aims and objectives of the Dissertation; • The National Strategy for Primary Care Centres; • Implementation of the new model; • Opportunities for Quantity Surveyors (Cost Modelling, Project Appraisal, Financial Advice to the Client- Developer) • HSE led development; • Developer led development; Information: • Official Government & Departmental publications (HSE & Ministry of Finance); • Public Service officials; • Industry Professionals; • On-line professionally oriented sources; • Industry Journals; Methodology: • Documentary research; • Interviews;

Chapter Two – Business Variants • Construction Options, Construction Cost Analysis; • Project Appraisal; Information: • Quantity Surveying Practice Data Bases; • Professional publications; • Published legislation; • Journals; Methodology: • Documentary research; • Desktop research;

Chapter Three – Construction Cost Case Study • Theoretical Model based on available HSE specifications, Quantity Surveying Practice cost Databases and commercial lease information;

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Chapter Four – Funding Models • Banks - funding guaranteed by the Government; • REIT- investment opportunity in new model of PCC; Information: • Published sources • Online sources • Industry Professionals Methodology: • Documentary research • Interviews Chapter Five – Non construction aspects and influence on feasibility of the project; • Survey addressed to medical Professionals (G.P.) aimed to establish availability of required Professional resources; Information: • Compiled statistics; • Interviews; Methodology: • Questionnaire; • Interviews;

Chapter Six – International best practice? • Possible comparison with existing international solutions.

Chapter Seven – Conclusion and Recommendations;

LIST AND OUTLINE OTHER SOURCES OF INFORMATION INCLUDING ORGANISATIONS/INDIVIDUALS WHO YOU HAVE OR INTEND TO CONSULT DURING THE COURSE OF YOUR RESEARCH

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Professionals from leading Quantity Surveying Practice - specialising in Public Sector, healthcare projects.

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Public Service Officials involved in implementation of the new HSE strategy for PCC; of Medical Profession;

•

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7.

RESEARCH METHODOLOGY.

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Which of the following methods do you intend to utilise in your study? (Students may choose more than one method if appropriate and provide a brief note on the rational for the use of mixed methods research).

Please Tick 

Documentary Research



Interviews Questionnaire Survey(s)

 *

Case Study

Other (Specify)

Please state why you consider this/these method(s) to be appropriate and whether confirmation of participation by individuals or organisations has been confirmed.

Documentary research is the appropriate method to gain knowledge on the legislative statistical and historical background to the subject. Interviews and questionnaire are the most adequate way to compile data necessary for feasibility analysis.

8.

KEY REFERENCES INCLUDING TEXTBOOKS, JOURNALS, CONFERENCE PRECEEDINGS, LIBRARY CATALOGUES, DATABASES, THESES

• HSE issued documents; • Aecom Cost Consultancy publications, databases; • Department of Finance publications;

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