Worcester Swimming Pool Feasibility Study Worcester...

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February 2013 – Final Worcester Swimming Pool Feasibility Study Worcester City Council

Transcript of Worcester Swimming Pool Feasibility Study Worcester...

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February 2013 – Final

Worcester Swimming Pool Feasibility Study Worcester City Council

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Contents

1 Executive summary 1

2 Limitations and Caveats 7

3 Introduction 9

4 Background 11

5 Site Survey Results 13

6 Concept Design 17

7 Capital Costs 21

8 Business Case 25

9 Financial Appraisal 33

10 Procurement Strategy 37

11 Capital Works Procurement 41

12 Operator Procurement 49

13 Selection of Consultants 53

14 Selection of a Contractor 57

15 Governance 59

16 Programme 67

17 Risk 69

Appendix A – Survey Tender Results

Appendix B – Design Brief

Appendix C – Architectural Plans

Appendix D – Option 2 Plan

Appendix E – Design and Access Statement

Appendix F – Cost Plan

Appendix G – Programme

Appendix H – Risk Register

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Worcester Swimming Pool Feasibility Study 1

1 Executive summary

Introduction 1.1 This Feasibility Study considers how Worcester City Council can develop new swimming pool facilities at

Perdiswell Leisure Centre, in a financially sustainable way. The Study also advises on how the Project could be progressed in a way that would meet Worcester City Council’s key drivers.

Site Survey Results 1.2 The following surveys were commissioned and completed during the Feasibility Study. These were

undertaken to inform the Outline Planning Application and the cost plan:

§ Topographical and Utilities surveys;

§ Site Investigations;

§ Ecology – Phase 1 Habitat Survey;

§ Arboricultural survey;

§ Bat survey;

§ CCTV Drainage survey;

§ Utilities Infrastructure Assessment;

§ Noise Survey;

§ Flood Risk Assessment; and

§ Transport Assessment and Travel Plan.

1.3 The surveys mitigated a number of risks. Results informed the design process and meant that we were able to reduce the Client contingency level in the cost plan from the previous level of 10% to 8%.

1.4 The final Phase 2 Site Investigation has not been completed yet. It is expected to be completed by the middle of March 2013 and we will feed in the results to a revised report at that point.

1.5 The surveys are all assignable to a future contractor to avoid any abortive costs of repeating them.

Concept Design 1.6 The design progressed well to Outline Planning Stage with a high level of input from Worcester City Council.

1.7 The proposed facilities for the new swimming pool consist of:

§ golf clubhouse and pro shop;

§ 8 external team changing rooms for outdoor sports;

§ 8 lane 25m swimming pool to county standard;

§ formal spectator seating for a minimum of 250;

§ teaching pool (17.5m x 8m) with moveable floor and formal spectator area on poolside;

§ confidence water area for children;

§ wet changing;

§ Changing Places facility;

§ 150 station fitness suite;

§ one dance studio divisible into two or three plus a specialist facility e.g. Spinning;

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§ dry changing for health and fitness facilities and studio;

§ café / bistro for 50 / 60 with external area;

§ soft play;

§ resurfacing of the two existing 5-a-side pitches;

§ increased car parking provision; and

§ relocation of the first golf tee.

1.8 The plans also show a crèche. Through detailed financial modelling, it was decided that the crèche would be omitted from the scheme. The plans included at Appendix C have not been updated, however they should be updated at the next stage to show this alteration.

1.9 The Outline Planning Application was validated on 14 November 2012. The application was referred to Committee as the proposed development was a major planning application submitted by Worcester City Council.

1.10 The application was heard at a Planning Committee meeting on 24 January 2013. The Committee unanimously agreed to the proposal on the basis that:

§ The committee be minded to grant outline planning permission, subject to the outcome of additional bat surveys being carried out in the next survey season to the satisfaction of relevant statutory consultees; and

§ The committee delegates authority to issue the decision to the Development Services Manager in consultation with the Chairman of the Planning Committee, subject to the conditions set out in the plans list and any additional conditions as may be required to ensure compliance with any recommendations of the additional bat surveys and / or any appropriate mitigation measures.

1.11 As a result of design development that took place in the initial stages of this study, the design increased in size by 274m2 when compared with the original design agreed at the Options Appraisal stage. The facilities added in were as follows:

§ confidence water;

§ soft play area;

§ a café has been included in lieu of vending; and

§ the existing outdoor changing rooms are to be retained, whilst the rest of the existing centre is demolished. A new golf shop will then be constructed on the side of this block to form a separate building from the new leisure centre.

1.12 This increase in area increased the capital cost so it was decided to also produce a reduced area option, known as Option 2 for the purposes of this report. The changes that were made to form Option 2 are as follows:

§ main 25 metre pool reduced from 8 to 6 lanes;

§ spectator seating reduced to 120-150 poolside seats;

§ learner pool reduced from 8m x 17.5m to 8m x 12.5m, in line with main pool width reduction;

§ confidence water removed;

§ wet changing areas reduced in line with reduction of pool areas;

§ reduce the size of the café area;

§ reception area reduced;

§ crèche removed;

§ soft play area removed; and

§ health and fitness suite reduced from 150-120 stations.

1.13 The revisions listed above, reduced the overall area of the new centre. This area saving equates to a significant cost saving on the capital build works, as outlined in section 7.

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Capital Costs 1.14 The budget originally agreed during the initial Options Appraisal was £12,910,000. This was based on a

building that was 4,935m2 in area.

1.15 During the Feasibility stage additional areas were added into the building. These additional areas have increased the size of the floor plans by 274m2, increasing the floor area to 5,209m2. The increase in area has had an impact on the cost plan.

1.16 Overall the cost has increased by £615,981 to £13,525,981 for Option 1.

1.17 A crèche was also added in during the feasibility stage, as can be seen on the plans. However, it was decided that this would be omitted from the cost plan and business plan as it was not deemed to be financially beneficial to the scheme. £110,000 has been omitted from the budget to reflect this.

1.18 The reduction in area and specification for Option 2 reduces the total capital cost for this option by £2,825,981 to £10,700,000. This is a significant decrease in the capital cost for the scheme.

1.19 The cost to progress the design of Option 1 to Stage D and to tender the project will be approximately £400,000.

Business Case / Financial Appraisal 1.20 It is important to compare the estimated revenue projections with the current performance of Worcester

Swimming Pool and Perdiswell Leisure Centre, or ‘Base’ position. The principal reason for this is that the Projections will be used as the basis of the business case when calculating Public Sector Borrowing.

1.21 In summary, the current base position (cost to WCC of subsidising the operation of the facilities) is -£324,000 per annum. The breakdown of the current base position is provided in Table H below.

Table H: Breakdown of Current Base Position

1.22 The forecast profit from the operation of the new facilities (Option 1) is circa £65,000. This results is an improvement in revenue performance, or comparison to base, of circa £389,000 per annum.

1.23 The main funding opportunities for the Project are prudential borrowing and a land receipt from the sale of the Sansome Walk site. There is significant potential to access public sector loan funding, via prudential borrowing. This would be based on using some or all of the revenue saving that results from the development of improved facilities to finance the cost of borrowing a capital sum. The calculation is based on a loan term of 40 years and an interest rate of 3.96% (as agreed with the Council) and equates to circa £7,753,000. The sale of Sansome Walk is expected to achieve a £500k receipt, based on a prudential assessment from the Council’s Estates and Valuation manager. Therefore, the total funding available is circa £8,253,000.

1.24 The conclusions of the financial analysis show there is currently a funding shortfall of circa £5,273,000 for the initial option (Option 1). As a result, an alternative option (Option 2) has been developed, which could help reduce the funding shortfall and improve the affordability.

Item Cost

Existing management contract budget -£282,000

Changes to dual use centre management -£42,000

Total -£324,000

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1.25 The analysis, summarised in Table P below, shows a summary of the revenue Projections and comparison to the base operating position for options 1 and 2.

Option 1 Option 2

Income £2,166,115 £1,951,333

Expenditure -£2,100,740 -£1,772,714

Profit/(loss) £65,374 £178,619

Base Position -£324,000 -£324,000

Comparison to Base £389,374 £502,619

Table P: Summary of Revenue Projections and Comparison to Base

1.26 The analysis, summarised in Table Q, shows the impact of the various options on the affordability of the Project.

Option 1 Option 2

Total Capital Cost £13,525,981 £10,700,000

Potential Funding Potential Funding Maximum Prudential

Borrowing £7,752,885 £10,007,724

Capital Receipt £500,000 £500,000

Football Foundation £0 £0

Sport England £0 £0

Total Funding £8,252,885 £10,507,724

Funding Shortfall -£5,273,096 -£192,276

Table Q: Summary of Affordability

1.27 The conclusion of the review of the options contained in the table above, demonstrates that Option 2, which is the lower cost option, is very close to being affordable (£192k funding shortfall) whereas Option 1 (£5,273,000 funding shortfall) would require a significant improvement in the revenue position to deliver an affordable scheme.

Procurement 1.28 Following the review of the advantages and disadvantages of joint procurement versus separate processes

we would recommend that the operator and construction contracts are procured separately.

1.29 This will provide WCC with control over the building design, reduced timescales for delivery, a good level of cost certainty, competitive pricing, increased competition from the construction and management markets, flexibility of the management contractor’s contract term and reduced procurement costs.

1.30 It is recommended that the Operator is procured using a Restricted OJEU procedure. This will attract a wide range of bidders.

1.31 The recommended procurement route for the capital works is:

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§ a Single Stage “Develop and Construct” procurement route;

§ the design should be progressed to Stage D before the tender is undertaken and a fixed price obtained, to draw out some of the benefits associated with ‘design and build’ and ‘traditional’ procurement routes.

1.32 It is important to recognise that this procurement route has been recommended for delivering the Project within the current market conditions and the timescales and cost pressures that are currently influencing the project.

1.33 It is recommended that a consultant team is appointed through a Lead Consultant using the Government Procurement Service Framework. It should be noted that the GPS Framework is due for renewal in early 2013. A Purdah period will begin from mid June 2013 onwards, until the new framework is announced. Therefore if the Council wish to use this route they should begin procurement of a team immediately after Council sign off in March.

1.34 It is recommended that a Contractor is appointed using a restricted OJEU procedure. This will ensure compliance with EU procurement regulations and encourage a high level of competition for the tendering of the project.

Governance 1.35 It is noted that Mike Worsnop will be the Client Project Director for the scheme and that the Client Project

Manager will be appointed / designated at the appropriate time.

1.36 A detailed meeting schedule should be established at the next stage. This should run until the end of the Project.

Programme 1.37 The programme is based on a detailed analysis of the design development programme, an agreed planning

and consultation strategy and a discussion regarding the Client’s stance on risk. The programme shows that the new facilities could be ready for use in late 2015.

1.38 The programme has been benchmarked against similar leisure schemes we have delivered in the past five years. At the next stage we would recommend early discussions are held with contractors to ensure the period allowed for the post-contract and construction phases is realistic.

Risk 1.39 An initial Risk Register has been prepared. The schedule identifies risks and states the probability of

occurrence, the likely extent of impact and the parties who will be liable should the event occur.

1.40 The initial Risk Register has been prepared based on our understanding of the critical objectives for the Projects.

1.41 The risk register should be developed in parallel with the design and wider Project development. Close communication between the Client team and their appointed consultant team will be vital during the Project to ensure all risk are documented and can then be managed.

Next Steps 1.42 It is important that WCC establish which option they wish to proceed with. A clear brief from the Council at

this stage will avoid abortive design fees and potential programme delays, in the next stage. This brief should include an agreed budget for the capital works and a business case position that the Council want to deliver.

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1.43 The procurement strategy should be reviewed once a decision on the brief and budget has been made. The strategy should be adjusted if the Council decide that other aspects, like programme and quality, should be focussed on more than cost.

1.44 It is recommended that WCC appoint a consultant team using the GPS Framework, to manage the capital works and operator procurement. This team should have a good record of delivering wet leisure centres and specifically, the individuals proposed should be experienced in leisure centre development. An initial remit of this appointment could be to work with WCC to finesse the option they wish to proceed with.

1.45 The Architectural design has been progressed to RIBA Stage C. If the Council decide to proceed with the Project once the brief is agreed, the next phase will involve developing Structural, Civil, Pool Filtration and Services design to a similar level of detail. Coordinating the design at Stage C is important to avoid abortive work later in the Project.

1.46 At this stage a more detailed cost plan can be established to ensure the Project is still within budget. The design will then be progressed to Stage D, prior to being tendered.

1.47 The Design Brief should be updated as the design progresses and the planning conditions will need to be discharged at the appropriate time, prior to any works starting on site.

1.48 Additional Bat Surveys should be programmed in for early May. The results of these surveys should be reviewed with the Council’s Ecology department and the planning officers, so that a mitigation strategy can be agreed to allow Outline Planning to be granted.

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2 Limitations and Caveats

This report has been prepared on the basis of our appointment with Worcester City Council dated 20 December 2012.

Caveats / Assumptions Please note the following caveats apply to this report:

Cost Report 2.1 The report provides an estimate of costs based on the information provided, assumptions and exclusions,

and is not an assurance or guarantee that those will be the costs actually incurred.

2.2 All areas referred to in the cost plan are calculated in accordance with the RICS Code of Measuring Practice, 6th Edition.

2.3 Definitions:

§ NIA Area excluding all circulation, toilets, showers, plant, storage, ducts, structure etc;

§ GIA Area up to internal face of the external wall including structure but excluding voids; and

§ GEA Area up to external face of the external wall including all internal structure.

2.4 The internal areas are subject to construction and measurement tolerances.

2.5 The areas are intended for the production of this report only and should not be relied upon for any other purpose.

2.6 No allowances have been made for future multi tenancy arrangements (i.e deductions for corridors and lobbies)

2.7 No deduction has been made against the net internal area for design development, notional lobbies or the like i.e. no contingency.

2.8 The Following assumptions have been made in preparing this estimate:

§ costs have been prepared on a present date fixed priced basis, at Q4 2012 price levels. We don't anticipate there to be any inflation during the Project duration and commencement of site , therefore it is excluded;

§ procurement is assumed to be single stage design and build;

§ the FF&E allowance assumes that the Operator will be providing the majority of the equipment for the facility; and

§ with regards to the existing structure that is to be retained, it is assumed that this requires no strengthening to the existing foundations.

Exclusions 2.9 The following items are excluded from this report, this list is not exhaustive and should be used as a guide

only:

§ The following are thought to be required and provision should therefore be made by the client separately:

§ Value Added Tax;

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§ Capital Allowances or other grants / incentives; and

§ finance costs.

§ The following may be required and if required provision should therefore be made by the client separately:

§ Costs arising from section 106 agreements; and

§ feature site hoardings.

Business Case 2.10 The revenue Projections are based on a combination of information from the following sources:

§ The Sports Consultancy’s benchmark database, which contains records of revenue and throughput information from over 200 operational leisure facilities across the United Kingdom;

§ historic revenue and throughput data from the existing sports facilities in Worcester, supplied by the Council and the current operator;

§ local pricing, programming and staffing information’

§ the results of supply and demand modelling completed during the initial options appraisal study; and

§ consultation with stakeholders and Council officers.

2.11 The combination of this data provides a solid basis for all assumptions, which is underpinned by relevant data from operational facilities on a national and local level. However, the figures contained in this business plan should be considered as an initial indication of the financial performance only.

2.12 The actual performance achieved, will be dependent on many variables including:

§ the capability and experience of the selected management contractor to maximise revenue and control costs;

§ changes in pricing policies; and

§ changes in locally competing facilities between the completion of this study and the opening of the new facility.

Programme 2.13 The programme for this feasibility study has been prepared with the following assumptions:

§ the procurement strategy of Develop and Construct (progressing the design to RIBA Stage D before entering into a design and build contract) will be accepted by the Council;

§ the consultant team will be procured immediately after the Council have approved the scheme in March 2013;

§ the RIBA Stage D design will continue following completion of RIBA Stage C but prior to formal Stage C sign-off. i.e. there will be no down time for the designers between RIBA Stages C & D;

§ a 16 month build programme has been estimated based on a predicted straight line cash flow of circa £700k per month; and

§ the existing facility can only be demolished following the completion and opening of the new facility.

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3 Introduction

This Feasibility Study looks at how Worcester City Council can re-locate the City’s swimming facilities to provide a new state of art leisure centre. A new centre will help the Council reduce on going revenue costs, whilst increasing sports participation. In particular, this document sets out how the design for the new centre has been developed up to Outline Planning Stage, the development of the business plan in parallel with the design development and recommendations for how the Council can procure the capital works and an Operator for the new centre. It also summarises investigative survey works that have been completed on the site, outlines how long we expect the Project will take to deliver and what risks the client will be exposed to during the Project.

Background 3.1 Worcester City Council, the Client, is planning to deliver a new Swimming Pool on the existing Perdiswell

Leisure Centre site in Worcester.

3.2 Based on our understanding of the Project and discussions to date with the Client, we believe the critical objectives to be as follows:

§ the Project must be financially sustainable;

§ the Project must be economically viable, with the Project being predominantly financed from prudential borrowing;

§ it must be delivered with minimal risk to the client both in terms of the construction works and with regards to the on-going operation of the centre;

§ the new centre must be well designed and efficient to operate;

§ the centre should provide a community hub that will encourage greater use of Perdiswell Park by the local community, as well as attracting the wider area population; and

§ the new facility should use modern service provisions in seeking to minimise life-cycle costs.

3.3 It will be important therefore to adopt a procurement strategy that balances the Client’s desires to achieve a cost effective, quality development achieving a strong revenue position for the Council, whilst also minimising the risks, especially in respect of cost, programme overrun and the on-going revenue position of the new centre.

3.4 Stringent cost control and Project Management will be required to procure the new facility within the available budget. Risk management will play a key role in ensuring that unexpected costs are avoided. Experience in procuring a management contractor will be vital to the Council achieving a strong revenue position for the new building.

3.5 The procurement of a suitable consultant team to deliver the Project is reviewed in the report to provide guidance on how the Council could proceed to the next stage.

3.6 This report considers how the new facilities can be best procured to deliver a known product in line with the critical objectives.

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Terminology 3.7 Throughout this document the level of design development is referred to using the definitions provided by the

Royal Institute of British Architects, the “RIBA”, and for ease of reference the main design stages are noted below in Table A:

RIBA Stage Status Summary (based on information to be provided by the architect)

A Appraisal Review feasibility and alternative design solutions

B Strategic Brief Preparation and development of the Client Brief

C Outline Proposals Site master plan, floor plans, elevations, typical sections, indicative material schedule

D Detailed Proposals Development of floor plans, elevations, sections, room data sheets, building materials. Fully coordinated with other consultants.

E Final Proposals Detailed design and specification.

F Production Information Construction details

G and H Tender Preparation of tender documents and tender period.

I No such stage under RIBA schedule

N/A

J to L Construction period Tasks to be performed under the construction contract.

Table A: RIBA Design Development Stages

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4 Background

Introduction 4.1 The Council’s vision is to ‘Make Worcester a top rank cathedral and university city’. High quality leisure

facilities can make an important contribution to this. Worcester Swimming Pool was built in 1970 and at over 42 years old, it is nearing the end of its useful life with significant structural elements, plant and equipment likely to need replacement, at significant cost, in the near future.

4.2 The Sports Consultancy was appointed by Worcester City Council (WCC), in February 2012. They were appointed to conduct an Options Evaluation Study to investigate the options for the replacement of Worcester Swimming Pool and the potential for rationalisation of leisure facilities across the city. The Sports Consultancy was supported by S&P Architects and Drivers Jonas Deloitte who provided specific design and technical input.

Conclusions of the Initial Options Appraisal 4.3 The report concluded that the best approach to re-providing a swimming pool in the future would be to

replace the existing City Centre facility in the next 0-5 years. It was felt to be imperative that this happened in the near future due to the centre’s deteriorating condition, the fact the contract for management of the City services is due to expire in late 2013 and Worcester Arena is due to open in early 2013.

4.4 It was felt that the opening of Worcester Arena would have a negative impact on the demand for use at Perdiswell Leisure Centre, with anticipated revenue from hire of the hall space being significantly reduced. If Perdiswell remained as it is, it was likely that the Council would face a deteriorating revenue position at the centre.

4.5 With Public Sector borrowing rates at historically low levels, and contractor prices being very competitive, it was recommended that if the Project moved forward quickly there was an opportunity to benefit from these factors.

4.6 It was noted that if an early decision was taken to proceed with the Project, an achievable date for opening a new facility would be spring 2016. This would require the Council to maintain and operate the existing facilities for at least another 3 – 4 years. If a decision was delayed further, this would only increase the likelihood of significant repair works being required, as well as potential loss of income to the Council, if elements of the existing pool building or plant deteriorate during that time.

4.7 The issues faced by Worcester City Council are typical of those faced by many local authority leisure providers. In particular:

§ the current city centre leisure facility is approaching the end of its useful life. It is inefficient and increasingly costly to maintain and operate;

§ the facility supply and the demand from consumers has changed significantly since the original facilities were built 30–40 years ago with increased competition from new providers; and

§ above all, there is an economical requirement to develop more financially viable ways to deliver improved services.

4.8 The recommendations of the report were as follows:

§ provide a more commercial facility mix - maximise income by selecting the most financially viable facility mix, while still meeting the needs of the community;

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§ rationalise facilities and release enabling land – move to a more efficient operational model based on a single facility. This would reduce property and staffing expenditure, leading to a reduction in revenue costs, while also freeing up existing sites to generate capital receipts for the Council; and

§ partner with other providers – by working with other facility providers (e.g. Worcester University and local schools) the Council could provide access for the community, to a wider range of facilities. This would enable the Council to focus on a core facility offering which is supplemented by access to those of a range of key partners. This broader view of provision of ‘complementary’ facilities was expected to benefit all providers in the City and is a key element of Sport England’s current strategy.

4.9 The report recommended that a detailed feasibility study and business case should be developed to explore the feasibility of the Project in greater detail. This would allow variations of the preferred option to be investigated in depth before a commitment is made by the Council to proceed with procurement and construction.

Feasibility Study 4.10 Following the recommendations of the report, Worcester City Council tendered for a consultant to advise

them on developing a more detailed feasibility study for the Project.

4.11 Drivers Jonas Deloitte was appointed in September 2012 to develop a detailed feasibility study that would provide more detail on the design and business plan whilst de-risking the capital costs.

4.12 Drivers Jonas Deloitte has worked in partnership with The Sports Consultancy and S&P Architects to develop this study.

4.13 This Feasibility Study outlines the detailed Project design, it establishes robust business and cost plans and provides advice on how the Project could be best procured, if the Council wish to proceed with the development.

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5 Site Survey Results

Introduction 5.1 Table B below sets out details of the surveys and investigations that were undertaken as part of this

feasibility study. We have highlighted the cost of each survey against the budget cost and any salient points, which each survey report recommends. In summary, none of the surveys undertaken to date have highlighted significant problems that would pose a risk to the Project or render the Project unviable.

5.2 All of the surveys were competitively tendered; ensuring that we delivered value for money from the market. A copy of the tender results is included at Appendix A.

Topographical & Utilities Survey Cost

A final topographical survey was provided on 5th November 2012 following the issue of a number of drafts to enable other surveys and investigations to progress. Midland Survey Ltd undertook the topographical and utilities survey for £3,890 + VAT.

£3,890

Site Investigations A Phase 1 site investigation has been completed. This is a desk top study only and has recommended that further intrusive survey work be undertaken. The Phase 2 site investigation will be completed by the middle of March. The Phase 2 site investigation cost was £12,154.10 + VAT.

£1,650 + £12,154.10

Ecology – Phase 1 Habitat Survey

A Phase 1 ecology survey and report has been provided by Middlemarch Environmental Ltd for £800 + VAT. The survey provides recommendations, which the team would expect to see for a development of this nature:

1. ramps from excavations for land mammals; 2. bat survey (which has already been undertaken); 3. removal of any vegetation is to be undertaken outside of the bird nesting

season; and 4. should the development change and the new building move to the grassed

land to the North of the site, a reptile survey is recommended. This is not required at present.

£800

Arboricultural – Tree Survey

This survey was also undertaken by Middlemarch Environmental Ltd for £1,550 + VAT. The survey identified category B and C trees within the vicinity of the building that should remain untouched and/or protected during the works where possible.

£1,550

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Bat Survey

A bat survey was undertaken ahead of the Ecology Phase 1 survey and the Phase 1 report’s recommendations. The Project could not wait for a recommendation prior to undertaking the bat survey due to the bat activity season; a bat survey should be undertaken between April and September and without a bat survey, an outline planning permission could not be granted. Therefore, we recommended that a bat survey was undertaken ‘at risk’ to mitigate the far greater risk of delaying the Project by 6 months. This decision proved prudent as the Phase 1 ecology survey actually recommended that a bat survey was undertaken. The overall cost of this survey was £2,100 + VAT with £1,300 payable now and £800 payable in April 2013 following a further site inspection.

£2,100

CCTV Drainage Survey

A CCTV drainage survey has been undertaken by The Drainage Consultants for £3,200 + VAT. This survey information was not required for the planning application but will be used to influence further design work.

The CCTV survey has identified a number of issues with the existing drainage system. These issues include partial blockages and some noticeable existing damage, which requires resolution. A total budget cost of £6000 has been recommended by the specialist consultant, which includes for high pressure jetting, re-sleeving of drains and isolated excavation and repair. Non-of the issues highlighted are insurmountable and they are minor, relative to the overall Project. We have however, taken account of these costs within the cost plan.

£3,200

Utilities Infrastructure Assessment

This report proved invaluable as it indicated a High Voltage electrical cable was located within the vicinity of the new building footprint. This knowledge ensured that we allowed sufficient space within the red line boundary of the planning application to accommodate this HV cable. Not detecting this cable early through this site investigation would potentially have led to an additional planning application and/or the diversion of a HV cable. The cost of this survey was 1,995.95 + VAT and was undertaken by Van Zyl and De Villiers.

The other infrastructure, ie. water, gas, telecoms, serving the site, is deemed suitable to serve the new centre without needing to be upgraded.

£1,995.95

Noise Survey

A diurnal (daily recurring) noise survey has been completed by Applied Acoustic Design for £895 + VAT. This report provides recommendations of the noise restrictions, which should be placed on the building; for example limiting the noise of any roof mounted plant.

£895.00

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Flood Risk Assessment

A flood risk assessment was undertaken by Cole Easdon Consultants for £1,500 + VAT. The outcome of their report was that the new facility was not situated in an area which is prone to flooding.

£1,500

Transport Assessment and Travel Plan JMP, a transport consultant, undertook a transport assessment and travel plan for the site for £3,700 + VAT. The location and characteristics of the site were considered, alongside details of the current level of sustainable transport provision to the site. Their report considers that the development offers good opportunities for the use of sustainable travel and that the development will achieve safe and suitable access for all people. The County highways team requested that JMP carry out two additional junction reviews on the Bilford Road / Astwood Road junction and on the Droitwich Road / Bilford Road / Coombs junction. These additional surveys were issued to the County Highways officers for review. The impact of the development was not felt to be significant on these junctions.

£3,700

Total £33,435.05

Table B: Surveys and Investigations

Summary 5.3 The results of the surveys helped to inform the design and cost plan. Notably the red line boundary was

increased on the planning submission to allow us some flexibility in locating the building. This flexibility will afford us the chance of relocating the building slightly, to miss a High voltage cable that runs near the development, when the design is developed in the next stage.

5.4 We were also able to reduce the Client contingency in the cost plan, as explained in section 6, because of the results of the Site Investigation.

5.5 Many of the surveys were required to support the Outline Planning Application and they were issued as part of the submission.

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6 Concept Design

Introduction 6.1 S&P Architects worked with Worcester City Council, Drivers Jonas Deloitte and The Sports Consultancy to

develop the design from that proposed at the initial Options Appraisal stage. The design development was an iterative process that responded to developments in the business planning, until a coordinated position was agreed.

Design Brief 6.2 A detailed technical Design Brief was written to set out the Client requirements in a clear and detailed

document. This has been reviewed and revised as the design has been developed up to RIBA Stage C.

6.3 A copy of the Design Brief is included at Appendix B.

Design Development 6.4 Plans for the proposed development are included at Appendix C.

6.5 The proposed facilities for the new swimming pool (Option 1) consist of:

§ golf clubhouse and pro shop;

§ 8 external team changing rooms for outdoor sports;

§ 8 lane 25m swimming pool to county standard;

§ formal spectator seating for a minimum of 250;

§ teaching pool (17.5m x 8m) with moveable floor and formal spectator area on poolside;

§ confidence water area for children;

§ wet changing;

§ Changing Places facility;

§ 150 station fitness suite;

§ one dance studio divisible into three or two plus a specialist facility e.g. Spinning;

§ dry changing for health and fitness facilities and studio;

§ café / bistro for 50 / 60 with external area;

§ soft play;

§ resurfacing of the two existing 5-a-side pitches;

§ increased car parking provision; and

§ relocation of the first golf tee.

6.6 Design development during the Feasibility stage has led to additional facilities, listed below, being added to the building:

§ confidence water;

§ soft play area;

§ a café has been included in lieu of vending; and

§ the existing outdoor changing rooms are to be retained, whilst the rest of the existing centre is demolished. A new golf shop will then be constructed on the side of this block to form a separate building from the new leisure centre.

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6.7 These additional facilities increased the floor area of the building by 274m2, which in turn had an impact on the capital cost.

6.8 The plans also show a crèche. Through detailed financial modelling, it was decided that the crèche would be omitted from the scheme. The plans should be updated at the next stage to show this alteration.

6.9 A reduced budget scheme was therefore also developed; this facility is referred to in this study as Option 2. A plan of the design for Option 2 is included at Appendix D.

6.10 The changes that were made to the original facility mix in Option 2, are listed below:

§ main 25 metre pool reduced from 8 to 6 lanes;

§ spectator seating reduced to 120-150 poolside seats;

§ learner pool reduced from 8m x 17.5m to 8m x 12.5m, in line with main pool width reduction;

§ confidence water removed;

§ wet changing areas reduced in line with reduction of pool areas;

§ reduce the size of the reception/café area;

§ reception area reduced;

§ crèche removed;

§ soft play area removed; and

§ health and fitness suite reduced from 150-120 stations.

6.11 The revisions listed above, reduced the overall area of the new centre by approximately 745m2. This area saving equates to a significant cost saving on the capital build works, as outlined in section 7.

Outline Planning Application 6.12 An Outline Planning Application was drawn up in line with WCC’s Planning Officer requirements. Results

from relevant surveys that were completed during the Feasibility Study, were included in the submission for example, ecology, flood risk assessment, noise survey, etc.

6.13 A copy of the Outline Planning Application Design and Access Statement (D&A Statement) is included at Appendix E. The D&A Statement provides a detailed overview of the design work completed on the Project as part of the Feasibility Study.

6.14 During the feasibility study, an EIA Screening Opinion for the proposed development was submitted to WCC for consideration. The Council responded to the Screening Opinion and confirmed an EIA would not be required.

6.15 The application was submitted and subsequently validated on 14 November 2012. The application was referred to Committee as the proposed development was a major planning application submitted by Worcester City Council.

6.16 The application was heard at a Planning Committee meeting on 24 January 2013. The Committee unanimously agreed to the proposal on the basis that:

§ The committee be minded to grant outline planning permission, subject to the outcome of additional bat surveys being carried out in the next survey season to the satisfaction of relevant statutory consultees; and

§ The committee delegates authority to issue the decision to the Development Services Manager in consultation with the Chairman of the Planning Committee, subject to the conditions set out in the plans list and any additional conditions as may be required to ensure compliance with any recommendations of the additional bat surveys and / or any appropriate mitigation measures. Next steps

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6.17 The Architectural design has been progressed to RIBA Stage C. If the Council decide to proceed with the Project, the next phase will involve developing Structural, Civil, Pool Filtration and Services design to a similar level of detail. The design will then be progressed to Stage D, and onwards, as a coordinated design.

6.18 Coordinating the design at Stage C is important to avoid abortive work later in the Project.

6.19 The Design Brief should be updated as the design progresses and the planning conditions will need to be discharged at the appropriate time, prior to any works starting on site.

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7 Capital Costs

Cost Plan – Option 1 7.1 A detailed elemental cost plan is included at Appendix F.

7.2 The report sets out an Order of Cost Estimate in relation to the development of the Worcester Swimming Pool. The report details the Project cost associated with Option 1 of the scheme.

7.3 The Order of Cost estimate has been divided into two sections, Wet Facility and Dry Facility, inclusive of all associated works.

7.4 The budget originally agreed during the initial Options Appraisal was £12,910,000. This was based on a building that was 4,935m2 in area.

7.5 During the Feasibility stage additional areas were added into the building, as outlined in the previous section. These additional areas have increased the size of the floor plans by 274m2, increasing the floor area to 5,209m2. The increase in area has had an impact on the cost plan.

7.6 A crèche was also added in during the feasibility stage, as can be seen on the plans. However, it was decided that this would be omitted from the cost plan and business plan as it was not deemed to be financially beneficial to the scheme. The table below shows this item having been omitted from the costs at -£110,000.

7.7 Overall the cost has increased by £615,981 to £13,525,981. A summary of the Project cost is included in Table C below:

Breakdown of Costs Wet Facility Total Dry Facility Total Total

Demolition - - 110,000

Substructure 1,000,000 300,000 1,300,000

Superstructure 600,000 2,410,000 3,010,000

Internal Finishes 460,000 540,000 1,000,000

Fixtures, Fittings and Equipment 60,000 100,000 160,000

Services 1,060,000 1,340,000 2,400,000

Renewables 125,000 125,000 250,000

External Works - - 1,400,000

Subtotal £3,305,000 £4,815,000 £9,630,000

Preliminaries & Overheads and Profit (11%) 397,000 578,000 1,059,300

Allowance for Utilities 200,000 200,000 400,000

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Allowance for Access Roads 150,000 150,000 300,000

Allowance for Landscaping 35,000 35,000 70,000

Total Construction Cost £4,087,000 £5,778,000 £11,459,300

Professional Fees - - 1,125,000

Client FF&E - - 100,000

Client Contingency - - 951,681

Inflation to start on site - - Excluded

Omission of Creche - - -110,000

Total Estimated Project Cost £13,525,981

Table C: Cost Summary

7.8 The area rate for the building construction is comparable to similar scale and quality schemes that have been delivered in the past five years.

7.9 The contingency has been reduced since the Options Appraisal stage. We have reduced the contingency because we have greater knowledge and certainty about the site, following the detailed surveys that have been completed. The contingency stands currently at just over 8%. The contingency should be reviewed continually as the design develops during the next stages.

Option 2 7.10 To reduce the capital costs the cost plan was adjusted to reflect the reduced floor area of the Option 2

design, and then a reduced average m2 rate was applied to the building floor area. The reduced area rate reflects a lower specification of building and a reduction in the extent of the external works.

7.11 Table D below outlines the revised Project cost.

Breakdown of Costs Total

Total Construction Cost – 4,527m2 @ approx. £1,975/m2 £8,950,000

Professional Fees 900,000

Client FF&E 100,000

Client Contingency 750,000

Inflation to start on site Excluded

Total Estimated Project Cost £10,700,000

Table D: Revised Project Cost

7.12 The reduction in area and specification for Option 2 reduces the total capital cost for this option by £2,825,981 to £10,700,000. This is a significant decrease in the capital cost for the scheme.

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7.13 However, a large number of facilities have been lost in Option 2. The materials that would be used to clad the building will need to be tightly controlled and agreed with the planners at the next stage of design to ensure no cost overrun.

7.14 If WCC wish to proceed on this basis, this option should be developed in greater detail prior to proceeding to the next stage.

Recommendation

7.15 The cost to progress the design of Option 1 to Stage D and to tender the project will be approximately £400,000.

7.16 However, before you embark on the next phase, we recommend that the Council agree the budget for the scheme. This will be directly related to the business plan. The Council should then confirm which option they wish to proceed with and the project can be procured on the agreed basis.

7.17 A well defined brief will enable the project to be procured efficiently and effectively.

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8 Business Case

Introduction 8.1 This section contains a summary of the results of the business planning work completed by The Sports

Consultancy. It identifies the forecast operational revenue implications of the proposed scheme and links this to the capital cost estimates and funding strategy to complete a financial appraisal of the overall business case. The business case is based on the facility mix contained in Option 1.

Summary of Operational Income and Expenditure Forecasts for the First Ten Years of Operation 8.2 To complement the capital cost estimation, and to provide WCC with an understanding of the estimated

revenue implications of operating the new centre, operational income and expenditure projections were developed. These are based on the facility mix contained in the Project brief.

8.3 The projections are based on a combination of information from the following sources:

§ The Sports Consultancy’s benchmark database, which contains records of revenue and throughput information from over 200 operational leisure facilities across the United Kingdom;

§ historic revenue and throughput data from the existing sports facilities in Worcester, supplied by WCC and the current operator;

§ local pricing, programming and staffing information;

§ the results of supply and demand modelling completed during the initial options appraisal study; and

§ consultation with senior WCC officers and stakeholders.

8.4 In consultation with WCC’s Project team, the following general approach was adopted in estimating income and expenditure:

§ Income – this took into account the performance of the existing Worcester Swimming Pool and Perdiswell Leisure Centre, the fact that the new centre will be designed to a higher specification than is currently the case and the need for the business plan to provide a relatively prudent basis for decision making by WCC.

§ Expenditure – this took into account the expenditure levels at the existing Worcester Swimming Pool and Perdiswell Leisure Centre. The facilities will be new and more efficient than the existing ones, thereby providing scope for more efficiencies in terms of running costs.

§ Throughput – this took into account the throughput levels at the existing Worcester Swimming Pool and Perdiswell Leisure Centre, the results of supply and demand modelling, comparison with other similar centres and the likely increase due to the opening of a new, high quality facility.

8.5 The outcomes of the operational revenue Projections are summarised in Table E.

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Table E: Option 1 Income and Expenditure Projections – Summary

Summary of Operational Income 8.6 The key income headings used in the revenue Projections are listed below:

§ health and fitness (memberships, casual fitness and fitness classes);

§ wetside (casual swimming, lessons, pool hire (clubs, schools, parties & galas));

§ rentals;

§ secondary spend (café, vending, retail and functions); and

§ outdoor (five-a-side football and golf course).

8.7 The income Projections are summarised in Table F below.

Table F: Income Summary

Revenue Projections

Income Year 1 Year 2 Year 3 Year 4 Year 5 10-year average as % incomeHealth & Fitness £926,141 £1,113,334 £1,153,678 £1,167,633 £1,167,854 £1,154,543.92 53.3%Wetside £509,463 £514,557 £519,703 £524,900 £530,149 £533,010.63 24.6%Rentals £0 £0 £0 £0 £0 £0 0.0%Secondary £170,738 £196,646 £203,479 £205,067 £205,214 £203,673 9.4%Outdoor £262,743 £265,370 £268,024 £270,704 £273,411 £274,887 12.7%Total Income £1,869,084 £2,089,906 £2,144,884 £2,168,303 £2,176,627 £2,166,115 100%

Expenditure Year 1 Year 2 Year 3 Year 4 Year 5 10-year average as % expenditureStaffing costs: (£956,096) (£956,096) (£956,096) (£956,096) (£956,096) (£956,096) 46%Premises costs: (£401,995) (£407,562) (£478,382) (£451,762) (£506,635) (£457,484) 22%Management costs: (£255,591) (£235,591) (£250,521) (£246,577) (£256,569) (£239,187) 11%Cost of sales: (£85,369) (£98,323) (£101,740) (£102,534) (£102,607) (£100,361) 5%Other costs: (£317,908) (£339,991) (£345,488) (£347,830) (£348,663) (£347,611) 17%Total expenditure (£2,016,960) (£2,037,563) (£2,132,227) (£2,104,799) (£2,170,570) (£2,100,740) 100%

Net Revenue Year 1 Year 2 Year 3 Year 4 Year 5 10-year averageProfit/Loss (Management Fee) (£147,876) £52,343 £12,657 £63,504 £6,057 £65,374

Income (Growth in usage) Year 1 Year 2 Year 3 Year 4 Year 5 10 Year Av

Health & FitnessMemberships £847,259 £1,030,358 £1,065,248 £1,079,203 £1,079,424 £1,066,270

Casual Fitness £17,850 £19,910 £22,313 £22,313 £22,313 £21,965Fitness Classes £61,031 £63,066 £66,117 £66,117 £66,117 £66,309

WetsideCasual Swimming £164,533 £166,179 £167,841 £169,519 £171,214 £172,138

Lessons £179,400 £181,194 £183,006 £184,836 £186,684 £187,692Pool Hire - Club Use £90,522 £91,427 £92,341 £93,264 £94,197 £94,706Pool Hire - Schools £60,817 £61,425 £62,039 £62,660 £63,286 £63,628Pool Hire - Parties £11,220 £11,332 £11,446 £11,560 £11,676 £11,739Pool Hire - Galas £2,971 £3,000 £3,030 £3,061 £3,091 £3,108

SecondaryCafé/bar £141,526 £161,611 £164,961 £166,322 £166,447 £165,841Vending £23,588 £26,935 £27,493 £27,720 £27,741 £27,640

Retail £0 £0 £0 £0 £0 £0Functions £5,625 £8,100 £11,025 £11,025 £11,025 £10,193

OutdoorFive a side football - General £99,743 £100,740 £101,747 £102,765 £103,792 £104,353

Golf course £163,000 £164,630 £166,276 £167,939 £169,618 £170,534

Total Income £1,869,084 £2,089,906 £2,144,884 £2,168,303 £2,176,627 £2,166,115

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Summary of Operational Expenditure 8.8 The key expenditure headings used in the revenue Projections are listed below:

§ staffing (salaries, wages, training and on costs);

§ utilities (utilities, repairs and maintenance, grounds maintenance, capital costs, cleaning, refuse and lifecycle costs);

§ NNDR assumptions are based on an 80% due to management by a not for profit organisation. This is the same as the current situation

§ management costs (marketing, advertising, promotion, insurances, ICT, licences and subscriptions and irrecoverable VAT);

§ cost of sales (food and beverage, vending cost of sales); and

§ other costs (golf course costs, central costs and profit).

8.9 The expenditure Projections are summarised in Table G below.

Table G: Expenditure Summary

8.10 It should be noted that lifecycle costs have been included in the Projections. These are included to provide funding for significant periodic refurbishment and updating of the building and replacement of key elements, which have a limited life (e.g. playing surfaces and mechanical and electrical plant etc). They are above and beyond typical repair and maintenance costs. Please note that a sinking fund, to fund eventual replacement of the facility at the end of its life, has not been included in these costs.

8.11 This approach is required to ensure that the facilities are maintained to a high quality throughout their life. If lifecycle costs are not included, there is a risk that the quality will diminish over time. This will have a negative impact on throughput and usage.

Year 1 Year 2 Year 3 Year 4 Year 5 10-year averageStaffing costs:Permanent staff costs (£884,868) (£884,868) (£884,868) (£884,868) (£884,868) (£884,868)Casual staff costs (£54,600) (£54,600) (£54,600) (£54,600) (£54,600) (£54,600)Staff training (£12,495) (£12,495) (£12,495) (£12,495) (£12,495) (£12,495)Uniforms (£4,134) (£4,134) (£4,134) (£4,134) (£4,134) (£4,134)Sub Total (£956,096) (£956,096) (£956,096) (£956,096) (£956,096) (£956,096)Premises costs:Utilities - electricity (£58,764) (£61,857) (£65,113) (£68,368) (£71,787) (£74,239)Utilities - gas (£47,011) (£49,486) (£52,090) (£54,695) (£57,429) (£59,391)Utilities - water (£13,023) (£13,023) (£13,023) (£13,023) (£13,023) (£13,023)Repairs & maintenance (£78,135) (£78,135) (£78,135) (£78,135) (£78,135) (£78,135)Grounds maintenance (£15,627) (£15,627) (£15,627) (£15,627) (£15,627) (£15,627)Cleaning and refuse (£15,627) (£15,627) (£15,627) (£15,627) (£15,627) (£15,627)NNDR (£18,648) (£18,648) (£18,648) (£18,648) (£18,648) (£18,648)Lifecycle costs (£64,960) (£64,960) (£129,920) (£97,440) (£146,160) (£110,635)Capital costs (£90,200) (£90,200) (£90,200) (£90,200) (£90,200) (£72,160)Sub Total (£401,995) (£407,562) (£478,382) (£451,762) (£506,635) (£457,484)Management costs:Launch marketing and promotion (£20,000) £0 £0 £0 £0 (£2,000)Marketing, advertising and promotion (£32,173) (£32,173) (£32,173) (£32,173) (£32,173) (£32,173)Insurances (£18,232) (£18,232) (£18,232) (£18,232) (£18,232) (£18,232)Print, post and stationery (£21,449) (£21,449) (£21,449) (£21,449) (£21,449) (£16,156)Telephone (£21,449) (£21,449) (£21,449) (£21,449) (£21,449) (£16,814)Audit and legal (£21,449) (£21,449) (£21,449) (£21,449) (£21,449) (£19,444)Licences and subscriptions (£8,120) (£8,120) (£8,120) (£8,120) (£8,120) (£8,120)Irrecoverable VAT (£112,720) (£112,720) (£127,649) (£123,706) (£133,698) (£122,962)Sub Total (£255,591) (£235,591) (£250,521) (£246,577) (£256,569) (£239,187)Cost of sales:Food and beverage cost of sales (£85,369) (£98,323) (£101,740) (£102,534) (£102,607) (£100,361)Sub Total (£85,369) (£98,323) (£101,740) (£102,534) (£102,607) (£100,361)Other costs:Golf course costs (£131,000) (£131,000) (£131,000) (£131,000) (£131,000) (£131,000)Central costs (£93,454) (£104,495) (£107,244) (£108,415) (£108,831) (£108,306)Profit (£93,454) (£104,495) (£107,244) (£108,415) (£108,831) (£108,306)Sub Total (£317,908) (£339,991) (£345,488) (£347,830) (£348,663) (£347,611)

Total Expenditure (£2,016,960) (£2,037,563) (£2,132,227) (£2,104,799) (£2,170,570) (£2,100,740)

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Comparison to Base Operating Position 8.12 It is important to compare the estimated revenue Projections with the current performance of Worcester

Swimming Pool and Perdiswell Leisure Centre, or ‘Base’ position, particularly as the Projections are to be used as the basis for a business case for calculating Public Sector Borrowing. Table H below contains a summary of the combined revenue performance of the existing facilities that has been used as the basis for comparison. This base operational revenue information was supplied by WCC and shows that the cost of subsidising the operation of the existing facilities is £324,000.

Table H: Base Revenue Performance (Supplied by the Council’s Finance Department)

Throughput Projections 8.13 The membership and throughput forecasts are based on a combination of existing membership data, the

results of detailed supply and demand analysis and benchmark data for similar, newly opened, facilities. These Projections show a health and fitness membership increasing to circa 3,200 members by year 3 and a throughput of over 552,000 as a 10 year average.

Table I: Membership and Throughput Projections

Sensitivity Analysis 8.14 At this stage in the development of the Project, it is recognised that there are a number of variables that

could impact on the actual performance of the centre once operational. Therefore, a sensitivity analysis has been completed to show the impact of a number of variations on the base revenue forecasts. This involves varying the income and expenditure headings by plus or minus 10%. The results are summarised in Table J below.

Item Annual Cost

Existing management contract budget -£282,000

Changes to dual use centre management -£42,000

Total -£324,000

Membership Numbers Year 1 Year 2 Year 3 Year 4 Year 5 10-year average2,330 3,110 3,200 3,222 3,194 3,151

Throughput Year 1 Year 2 Year 3 Year 4 Year 5 10-year averageTotal Throughput 471,752 538,702 549,870 554,406 554,825 552,802

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Table J: Sensitivity Analysis

8.15 The sensitivity analysis shows a range of possible outcomes with Scenario 1 (higher income and base costs) resulting in the best case, with a net surplus of over £281k. Scenario 1 illustrates the potential outcome if fees and charges are increased by 10%. Scenario 5 (lower income and higher costs) results in the worst case, with a net deficit of over £361k.

Management Options 8.16 For the purpose of the revenue Projections, we have based the income and expenditure model on the

assumption that a trust management option will be used in the future. This allows a like-for-like comparison to be made with the current revenue data, which is based on the operation of facilities by Leisure Connection under it’s not for profit trust. The principal benefit of the trust management option is that it allows for 80% National Non-Domestic Rates (NNDR) relief. This is not available under private sector management or in house management options, which tends to make these options less competitive from a financial perspective. Further details on management options and operator procurement are provided in section 10.

Market Testing 8.17 Based on recent experience on operator procurement, if the management contract is subject to a competitive

procurement process it is likely that there will be significant competition within the market. Potential operators are likely to take a more commercial view on the business plan, which could provide an improved revenue position for the Council, over and above the forecast. This will only become clear following market testing via the procurement process.

8.18 Recent contracts for new build facilities have attracted bids from operators, which have been significantly in excess of the initial business plan Projections, notable examples include, Harborne Pool in Birmingham and

Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5

Higher income &

base costs

Higher income &

higher costs

Base income & lower costs

Base income & higher

costs

Lower income &

higher costs

Income10% 10% 0% 0% -10%

£0 £0 £0 £0 £0 £010% 10% 0% 0% -10%

£1,154,544 £1,269,998 £1,269,998 £1,154,544 £1,154,544 £1,039,09010% 10% 0% 0% -10%

£533,011 £586,312 £586,312 £533,011 £533,011 £479,710Secondary 10% 10% 0% 0% -10%

£203,673 £224,041 £224,041 £203,673 £203,673 £183,30610% 10% 0% 0% -10%

£274,887 £302,375 £302,375 £274,887 £274,887 £247,398

Total Income 2,166,115£ 2,382,726£ 2,382,726£ 2,166,115£ 2,166,115£ 1,949,503£

Expenditure0% 10% -10% 10% 10%

-£956,096 -£956,096 -£1,051,706 -£860,487 -£1,051,706 -£1,051,7060% 10% -10% 10% 10%

-£457,484 -£457,484 -£503,233 -£411,736 -£503,233 -£503,2330% 10% -10% 10% 10%

-£239,187 -£239,187 -£263,106 -£215,269 -£263,106 -£263,1060% 10% -10% 10% 10%

-£100,361 -£100,361 -£110,397 -£90,325 -£110,397 -£110,3970% 10% -10% 10% 10%

-£347,611 -£347,611 -£382,373 -£312,850 -£382,373 -£382,373

Total Expenditure -£2,100,740 -£2,100,740 -£2,310,814 -£1,890,667 -£2,310,814 -£2,310,814

Net Surplus/Deficit (Management fee) £65,374 £281,986 £71,912 £275,448 -£144,699 -£361,311

Wetside

Outdoor

Base (10 year Average)

Creche

Health & Fitness

Staffing costs:

Premises costs:

Management costs:

Cost of sales:

Other costs:

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Westminster Lodge in St Albans. In a number of cases this has resulted in local authorities receiving management payments of several hundred thousand pounds annually for the term of the contract. The impact of this potential uplift in the business plan has not been included in the Projections at this stage.

Assumptions 8.19 The revenue Projections are based on a combination of information from the following sources:

§ The Sports Consultancy’s benchmark database, which contains records of revenue and throughput information from over 200 operational leisure facilities across the United Kingdom;

§ historic revenue and throughput data from the existing sports facilities in Worcester, supplied by the Council and the current operator;

§ local pricing, programming and staffing information’

§ the results of supply and demand modelling completed during the initial options appraisal study; and

§ consultation with stakeholders and Council officers.

8.20 The combination of this data provides a solid basis for all assumptions, which is underpinned by relevant data from operational facilities on a national and local level. However, the figures contained in this business plan should be considered as an initial indication of the financial performance only.

8.21 The actual performance achieved, will be dependent on many variables including:

§ the capability and experience of the selected management contractor to maximise revenue and control costs;

§ changes in pricing policies; and

§ changes in locally competing facilities between the completion of this study and the opening of the new facility.

Option 2 Revenue Projections 8.22 Due to the funding shortfall resulting from Option 1, a second option (Option 2 was created. The changes

that were made to form Option 2 are as follows:

§ main 25 metre pool reduced from 8 to 6 lanes;

§ spectator seating reduced to 120-150 poolside seats;

§ learner pool reduced from 8m x 17.5m to 8m x 12.5m, in line with main pool width reduction;

§ confidence water removed;

§ wet changing areas reduced in line with reduction of pool areas;

§ reduce the size of the café area;

§ reception area reduced;

§ crèche removed;

§ soft play area removed; and

§ health and fitness suite reduced from 150-120 stations.

8.23 The results of the income and expenditure projections for Option 2 are included in Table K, these are based on the same methodology as that used for Option 1

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Table K: Option 2 Income and Expenditure Projections – Summary

8.24 The revenue projections show a significant improvement compared to the base position and to Option 1.

Summary 8.25 Table L below highlights the difference in the 10 year average net revenue, between Options 1 and 2.

Table L: 10 Year Average Net Revenue Summary

Income Year 1 Year 2 Year 3 Year 4 Year 5 10-year average as % incomeDry side £0 £0 £0 £0 £0 £0 0.0%Health & Fitness £926,141 £1,113,334 £1,153,678 £1,167,633 £1,167,854 £1,154,543.92 59.2%Wetside £438,956 £443,346 £447,779 £452,257 £456,780 £459,245.25 23.5%Rentals £0 £0 £0 £0 £0 £0 0.0%Secondary £50,109 £59,252 £63,267 £63,693 £63,707 £62,657 3.2%Outdoor £262,743 £265,370 £268,024 £270,704 £273,411 £274,887 14.1%Total Income £1,677,948 £1,881,301 £1,932,748 £1,954,286 £1,961,751 £1,951,333 100%

Expenditure Year 1 Year 2 Year 3 Year 4 Year 5 10-year average as % expenditureStaffing costs: (£789,914) (£789,914) (£789,914) (£789,914) (£789,914) (£789,914) 45%Premises costs: (£359,118) (£363,956) (£423,449) (£401,342) (£447,489) (£403,535) 23%Management costs: (£237,032) (£217,032) (£230,721) (£227,322) (£236,279) (£222,203) 13%Cost of sales: (£25,055) (£29,626) (£31,633) (£31,847) (£31,854) (£30,928) 2%Other costs: (£298,795) (£319,130) (£324,275) (£326,429) (£327,175) (£326,133) 18%Total expenditure (£1,709,913) (£1,719,658) (£1,799,992) (£1,776,853) (£1,832,711) (£1,772,714) 100%

Net Revenue Year 1 Year 2 Year 3 Year 4 Year 5 10-year averageProfit/Loss (Management Fee) (£31,965) £161,643 £132,756 £177,433 £129,041 £178,619

Income Option 1 Option 2 Variance Comments

Health & Fitness £1,154,544 £1,154,544 £0Whilst the size of the health and fitness facility has reduced the volumes using the facility are not expected to reduce

Wetside £533,011 £459,245 -£73,765Both pools reduced in size resulting in reduced swim programmes

Secondary £203,673 £62,657 -£141,016 Catering and ancillary facilities reduced in size

Outdoor £274,887 £274,887 £0

Total Income £2,166,115 £1,951,333 (£214,781)

Expenditure

Staffing costs (£956,096) (£789,914) £166,182Less staff required due to reduced pool sizes and reduction in catering operation

Premises costs (£457,484) (£403,535) £53,949Reduction in utility and cleaning cost due to reduced size of building

Management costs (£239,187) (£222,203) £16,985

Cost of sales (£100,361) (£30,928) £69,432 Reduction in food costs to reflect lower level of provision

Other costs (£347,611) (£326,133) £21,478 Reduction in central costs and profit

Total expenditure (£2,100,740) (£1,772,714) £328,026

Net RevenueProfit/Loss (Management Fee) £65,374 £178,619 £113,245

Note: Table based on 10 year average figures

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9 Financial Appraisal

Introduction 9.1 The financial appraisal is based on an analysis of the capital costs, the revenue Projections and the

anticipated funding. This section provides a summary of the appraisal and the affordability of the proposed Project.

Revenue Projections Compared to the Base Position 9.2 As highlighted in the previous section, it is important to compare the estimated revenue Projections with the

current performance of Worcester Swimming Pool and Perdiswell Leisure Centre, or ‘Base’ position. The principal reason for this is that the Projections will be used as the basis of the business case when calculating Public Sector Borrowing.

9.3 Table M below contains a summary of the Projected revenue performance of the new facilities compared to the existing (base) position. This shows that the current base position (cost to WCC of subsidising the operation of the facilities) is -£324,000 per annum. The forecast profit from the operation of the new facilities is £65,374. This results in an improvement in revenue performance, or comparison to base, of £389,374 per annum.

Revenue Summary 10-year average

Income £2,166,115

Expenditure -£2,100,740

Profit/(loss) £65,374

Base Position -£324,000

Comparison to Base £389,374

Table M: Projected Revenue Summary Compared to the Base Position

Funding Opportunities 9.4 Table N below contains a list of typical funding sources, which have been considered during the feasibility

study. Each of these has been reviewed and the likelihood of securing funding from each has been summarised. Funding should be reviewed at key milestones, as the Project develops.

Funding Source Likelihood Possible Amount

Prudential borrowing There is significant potential to access public sector loan funding, via prudential borrowing. This would be based on using some or all of the revenue saving that result from the development of improved facilities to finance the cost of borrowing a capital sum.

The calculation is based on a loan term of 40 years and an interest rate of 3.96% (as agreed with the Council).

Maximum

£7,752,885

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Capital receipts There is a possibility that the site of the existing swimming pool at Sansome Walk will be sold for residential purposes. This could result in a capital receipt for the value of the land, which could be used as a capital contribution towards the Project. This figure is based on a prudential assessment from the Council’s Estates and Valuation manager

£500,000

Enabling development

The Council will test the scope for development of other facilities on the site of the new leisure centre, which could be used to contribute capital or revenue towards the development of the new sports facilities.

£0

Grant funding There is currently an opportunity to apply for up to £500,000 in grant funding from Sport England to contribute towards the Project. This is under its medium sized grants scheme, which currently has priorities that include the upgrade of swimming pool changing areas. However, for the purpose of this feasibility study we have not assumed that this funding will be secured, as it would be subject to a very competitive bidding process.

£0

Partner contributions At this stage, the Project does not involve any significant partnerships with other organisations, which will contribute capital or revenue funding towards the Project (e.g. health or education).

£0

Planning obligations (S106 agreements)

At the stage, we are not aware of any planning obligations (S106 agreements) that will contribute capital towards the Project.

£0

Public private partnerships

It is possible that funding could be secured via a public private partnership arrangement with a management contractor or developer. However, the cost of financing the borrowing is likely to be higher than accessing public sector borrowing. At this stage it is recommended that public sector borrowing is preferable to funding from an external contractor. For this reason no amount has been included.

£0

National Governing Body investment.

Discussions will be held with the Amateur Swimming Association to understand whether there is any likelihood of a capital contribution towards the cost of the Project. This will be completed by Council officers. No amount has been included as this will likely be reviewed at the next stage.

£0

Total £8,252,885

Table N: Summary of Funding Opportunities

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Affordability 9.5 The affordability of the Project has been assessed based on the outcome of the capital cost estimates, the

revenue Projections and the funding analysis. This involved comparing the potential funding with the capital cost of the Project. The analysis, summarised in Table O below, shows that there is currently a funding shortfall of £5,273,096.

Capital Costs

Total Capital Cost £13,525,981

Potential Funding

Maximum Prudential Borrowing £7,752,885

Capital Receipt £500,000

Football Foundation £0

Sport England £0

Total Funding £8,252,885

Funding Shortfall -£5,273,096

Table O: Summary of Affordability

Further Options 9.6 The conclusions of the financial analysis show there is currently a funding shortfall of £5,273,096 for the

initial option (Option 1). As a result, an alternative option (Option 2) has been developed, which could help reduce the funding shortfall and improve the affordability. The changes that have been made to the initial option are listed below:

Option 2 – Initial option (Option 1) with the following changes :

§ main 25 metre pool reduced from 8 to 6 lanes;

§ spectator seating reduced to 120-150 poolside seats;

§ learner pool reduced from 8m x 17.5m to 8m x 12.5m, in line with main pool width reduction;

§ confidence water removed;

§ wet changing areas reduced in line with reduction of pool areas;

§ reduce the size of the reception/café area;

§ reception area reduced;

§ soft play area removed; and

§ health and fitness suite reduced from 150-120 stations.

9.7 The analysis, summarised in Table P below, shows a summary of the revenue Projections and comparison to the base operating position.

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Option 1 Option 2

Income £2,166,115 £1,951,333

Expenditure -£2,100,740 -£1,772,714

Profit/(loss) £65,374 £178,619

Base Position -£324,000 -£324,000

Comparison to Base £389,374 £502,619

Table P: Summary of Revenue Projections and Comparison to Base

9.8 The analysis, summarised in Table Q below, shows the impact of the various options on the affordability of the Project.

Option 1 Option 2

Total Capital Cost £13,525,981 £10,700,000

Potential Funding Potential Funding

Maximum Prudential Borrowing £7,752,885 £10,007,724

Capital Receipt £500,000 £500,000

Football Foundation £0 £0

Sport England £0 £0

Total Funding £8,252,885 £10,507,724

Funding Shortfall -£5,273,096 -£192,276

Table Q: Summary of Affordability

9.9 The conclusion of the review of the options contained in the table above, demonstrates that Option 2, which is the lower cost option, is very close to being affordable (£192k funding shortfall) whereas Option 1 (£5,273,096 funding shortfall) would require a significant improvement in the revenue position to deliver an affordable scheme.

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10 Procurement Strategy

Joint Strategy Versus a Split Approach 10.1 There are two key Project elements that need to be procured to deliver the new swimming pool Project at

Perdiswell. The first is the delivery of a new capital build Project and the second is procuring an operator to manage and operate the new centre.

10.2 Procurement of these two elements can be considered separately or as a combined approach. The most common industry approach, is to currently split the two procurement streams. The reasoning for this is set out below.

Combined Approach 10.3 There are two main forms of joint procurement; these are Design, Build, Operate and Maintain (DBOM) and

Design, Build, Finance and Operate (DBFO).

10.4 With a DBOM approach one contract is signed that includes the Design and Build as well as the operation and maintenance agreements, for a new centre. The management contractor takes full responsibility for full lifecycle cost of the building over the prescribed contract term and is paid through a unitary charge. A typical contract term is 15-20 years.

10.5 A DBFO approach is similar to DBOM, however, the contractor’s consortium in this instance also provides finance for the new centre. The Management contractor takes full responsibility for the lifecycle costs of the building over the contract term and is paid (along with the cost of the capital) through a unitary charge. A typical contract term for this approach is 25-35 years.

Separate Approach 10.6 Using this approach, the capital build contract and the operation contracts are procured separately. The

design process is separate from the operator tender, however, the management contractor can be procured in parallel with the capital works to facilitate management contractor input into design.

10.7 There are a number of ways a main contractor can be procured to construct the capital build, for example Traditional, Design and Build, Management Contracting, Construction Management and Develop and Construct. These routes are looked at in detail in section 11.

10.8 Operation contracts are generally procured on a similar basis for each Project, and the variations that exist in the drafting of agreements do not affect the procurement process. We haven’t therefore gone into detail on these. A typical management contract will last for 7-10 years.

10.9 For the purposes of comparing the combined and separate approaches, for the separate approach we have assumed a Develop and Construct procurement route for the capital works with a standard operator procurement process, run in parallel.

Advantages and Disadvantages of Joint Procurement 10.10 Below we have set out some of the advantages and disadvantages of separate and combined procurement

routes.

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Client Control over Design 10.11 The Client’s control over design is minimal in both DBOM and DBFO. This can be mitigated to some extent

through devising a detailed specification, but the Client is always kept at a distance from the design team, which reduces their influence on the design outputs.

10.12 A Develop and Construct procurement route offers the Council a much higher level of Client input and control over the design of the facility because the designers are directly employed by the Client. The stage at which the Council decide to pass the design responsibility over to a contractor can be decided, to ensure the desired level of input and control are achieved.

Programme 10.13 Practice shows that DBOM can take a long time to deliver Projects. This is due to the fact that there is a

greater level of work required by bidding consortia during the tender process, because both the capital build works and operational management elements have to be worked up and then assessed (developing the design, due diligence of the returns, etc.). DBFO further complicates the tender process due to the additional bank due diligence work required. The result is the programme implications of a DBFO route can be significant.

10.14 Develop and Construct typically takes the least amount of time to deliver a Project. A Project the scale of Perdiswell would take approximately 3 years from start to finish. The overall programme for delivering both the capital works and the operator contract, are shortened with a separate approach, because the management contract can be run in parallel with the capital works procurement.

Cost Certainty (build and lifecycle costs) 10.15 There is a high level of cost certainty with DBOM and DBFO. DBOM and DBFO involve the Council signing

up to a fully costed solution, including lifecycle costs.

10.16 Develop and Construct offers a high level of cost certainty on the build cost, however, there are a number of cost variables. For example, the cost of the management contract may be influenced by the quality of the build and lifecycle costs remain as a risk as these only become clear when costed by a management contractor as part of their proposals for operation of the site.

Risk Transfer 10.17 There is a high degree of risk transfer under DBOM and DBFO, as major risks can be transferred and will be

accepted, under a long term contract. One major advantage is that the operator directly influences the design thus removing the risk of a potential mismatch between the completed building and the management operator’s needs.

10.18 Under Develop and Construct the transfer of risk for the construction of a new centre can be passed to the contractor fairly easily. However, the fragmented approach provides increased scope for risk in other areas. For example, there is the potential for a mismatch between the completed building and management operator needs. This can be mitigated to some extent through consultation with operators during the design process. These risks can also be mitigated by the Client employing an experienced consultant team that have delivered a number of leisure schemes before, on both the capital works and management contractor sides.

Price 10.19 DBFO is an expensive option due largely to the cost of obtaining capital from a 3rd party. DBOM is generally

cheaper because the financing would be provided by the council. Also there can be greater efficiencies due to the operator working in a consortium with the designer and contractor. This allows operators to reduce the risk profile of a Project as there is less risk of poor design. They are involved in creating a design that

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best meets their operating model. However, both DBFO and DBOM, whilst they can be competitive on pricing in some circumstances, are generally felt to be uncompetitive in the West Midlands as there are a limited number of operators that have a track record of delivering projects through this procurement route.

10.20 The split approach offers the advantage of having a highly competitive market for the construction and operation contracts. The greater level of competition will drive the price down in both the construction and management contracts. The risks associated with design can be mitigated by employing an experienced design team and by allowing the appointed management contractor the opportunity to input into the design. This will reduce any risk allowance the management contractor may feel like including.

Competition within the operator market 10.21 Whilst DBOM and DBFO can be competitive on pricing in some circumstances, they are generally felt to be

uncompetitive in the West Midlands. There is limited interest in the DBOM and DBFO management contractor market, and the reduced level of competition will inevitably lead to a lack of competition.

10.22 By procuring the capital works and management contract separately, the management contractors can tender for the operation of the new centre, as a stand alone contract.

Flexibility of Contract Term 10.23 DBFO requires a long term contract to achieve a return on the investment of the operator, thereby restricting

the ability of the Council to test the market on a regular basis. Typical contract lengths under DBFO are 25-35 years (similar to PFI contracts). DBOM is typically a shorter term of 15+ years.

10.24 By splitting the procurement processes it is possible to reduce the contract term of the management contractor to 7-10 years, and it is much easier to terminate if required.

Procurement Costs 10.25 DBOM and DBFO require significant technical input, particularly from a legal perspective, due to the complex

nature of the contracts and procurement processes.

10.26 Splitting the procurement elements reduces the technical input required. The management contract and capital works can be procured relatively simply if carried out as separate processes. The overall cost will be less than if a DBOM of DBFO approach is taken, mainly because the legal input required will be less specialised.

Recommendation 10.27 Following the review of the advantages and disadvantages of joint procurement versus separate processes

we would recommend that the operator and construction contracts are procured separately.

10.28 This will provide WCC with control over the building design, reduced timescales for delivery, a good level of cost certainty, competitive pricing, increased competition from the construction and management markets, flexibility of the management contractor’s contract term, and reduced procurement costs.

10.29 The following chapters review the Council’s options for procuring the capital works and Operator contracts separately.

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11 Capital Works Procurement

Introduction 11.1 Choice of an appropriate procurement route is crucial to the success of any Project. The Project has some

unique requirements such that a range of viable procurement options need to be appraised.

11.2 This section provides a brief insight and summary into the most viable and likely options. These options will be familiar to many readers but are included to provide an overview for all interested parties.

11.3 The proposed procurement route has been benchmarked against successful leisure schemes and this section therefore seeks to record the options and the reasons for the recommendation of the procurement route.

11.4 Each of the commonly adopted procurement routes have differing characteristics in respect of:

§ Client control of design;

§ Cost certainty;

§ Risk;

§ Ability to accommodate change;

§ Time;

§ Quality control.

11.5 The existing dry side centre on site is to remain operational throughout the build period. The requirement to construct the new building on an operationally live site, along with the requirement to run two buildings in parallel for a short period of time, whilst the new building is being commissioned, brings added complications to the Project.

11.6 The council will have to develop the chosen scheme within the constraints of the prudential borrowing that can be afforded. Whilst quality and programme are important to the Council, the key consideration will be to ensure the project is affordable.

11.7 The site is located adjacent to the existing Perdiswell Leisure Centre. The design therefore needs to be of a suitable quality, finished with good quality materials that are robust in nature and well-constructed.

11.8 The centre consists of swimming pool areas that are notoriously complicated to build. It is recommended that the risks inherent in constructing the pools, along with other risks, are transferred away from the Council.

11.9 Invariably, those aspects that should affect the selection of a procurement strategy should relate to risk, quality, consistency and cost.

11.10 Therefore, it is recommended that the proposed / selected procurement route should provide Worcester City Council, with:

§ a cost driven solution;

§ robust and functional design solutions, proven to be durable;

§ a transfer of Project and more specifically design risks to the contractor;

§ minimal risk of Project / Programme over run;

§ minimal risk of Project / Programme overspend;

§ a tender price early on in the project to inform decisions on affordability;

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§ minimal snagging that ensures the facilities can be used from day one after handover; and

§ reduced lifecycle costs.

Procurement Options

Traditional 11.11 Traditional contracting clearly separates the design and construction processes and responsibilities. There

are three key teams in the procurement process of traditional contracting - the Employer; the Design Team; and the Contractor.

11.12 Having developed a Brief from the Employer, the Architect produces detailed drawings and specifications, with advice drawn from other specialist consultants. Bills of quantities (the bills) are usually drawn up by the Quantity Surveyor and an estimated cost produced once the design is complete.

11.13 Contractors are invited to price the works, quantifying every specific work item from the bills or a specification. Tenders are submitted and a preferred contractor is selected. The Contractor agrees to produce exactly what has been specified in the documents and therefore has no design liability.

11.14 Traditional contracting is a slow method of procurement as the detailed design and specification needs to be completed prior to tendering the works and a long tender period is required to accurately price the works.

11.15 Once construction commences on site, the Client with the Project Manager must manage the contract efficiently to avoid problems associated with issuing instructions and information. It is to the Contractor’s advantage if information is insufficient or issued late, as this will establish grounds for extensions of time and claims for loss and expense. This restriction limits the Client’s ability to review and revise the design once an operator has been selected.

11.16 Traditional contracting can provide a good level of cost certainty based on a defined product. However, as the Client remains responsible for the design, any design defects have to be corrected at the Employer’s expense.

11.17 Furthermore, cost certainty can only really be attained once the works have been tendered, which takes place once the design is substantially complete. Should the submitted tenders be significantly higher than the cost estimate prepared by the Quantity Surveyor, thus requiring a significant redesign to reduce costs, there will be a substantial amount of abortive design and cost. This will also delay the project by many months.

11.18 Traditional contracting should deliver a quality building as the standards can be accurately prescribed in the specification. However, the designers may not be aware of similar more cost effective products which could improve buildability and help keep costs down without compromising quality.

11.19 Under a traditional contract, the Client can change an element of the design during construction. However, as the Client will have to bear all direct and associated costs such flexibility comes at a high price.

11.20 The Client is liable for any defects due to poor design and specification whilst the Contractor is liable for defective construction.

11.21 The traditional procurement route is not recommended for this Project as residual risks cannot be transferred to the Contractor, and time and cost certainty would be difficult to achieve.

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Construction Management 11.22 Under this form of procurement, the Client appoints a Construction Manager at an early stage to advise on

buildability and to manage the various work sub-contractors, for which they are paid a management fee. The Client then enters into a direct contract with each of the sub-contractors.

11.23 The design is carried out by the Client’s design team, and whilst this should produce a high quality product, the associated design risk remains with the Client.

11.24 Under this form of contract, the Construction Manager accepts very little risk, as they have no design responsibility and are not responsible for work carried out by the sub-contractors.

11.25 Construction management provides flexibility, as changes can be introduced at a late stage. However, the cost and programme implications of any changes are borne by the Client.

11.26 Works can start on site earlier compared to other procurement routes, but there is no programme certainty until the final works package has been let.

11.27 Construction management provides very little cost certainty as it is impossible to get an accurate fix on the final Project cost until all of the sub-contracts are entered into. This lack of cost certainty, and the fact that the Client bears the majority of the risk, should rule out this procurement route for the Worcester Swimming Pool Project.

11.28 There also tends to be a limited number of good experienced Construction Managers that are able to deliver this type of work, even in the current market, so that this should further preclude this form of procurement for the Project.

Management Contracting 11.29 This form of procurement is similar to Construction Management, except that under this form of procurement

the Client appoints a Management Contractor to provide advice on buildability and manage the construction works. All of the construction works are sub-contracted and the Client pays the Management Contractor a fee for his management services.

11.30 As with Construction Management, the Management Contractor has no design responsibility and accepts very little risk.

11.31 Management Contracting provides flexibility for altering the design during construction, but these alterations are more expensive than if the design had been fixed pre-contract.

11.32 Management Contracting also provides very little cost certainty and the final cost will not be known until all of the sub-contracts are entered into.

11.33 Therefore, as with Construction Management, Management Contracting is not therefore considered to be an appropriate procurement route for the proposed swimming pool Project.

Design and Build 11.34 For Design and Build procurement, the Client provides the Contractor with a defined set of performance

requirements against which the Contractor responds with a proposal, including prices for construction and design works. The Client and Contractor negotiate to ensure that the Contractor’s proposals accurately reflect the Employer’s requirements and agree a mutually acceptable specification.

11.35 Under this form of contract, the Contractor is solely responsible for design, fabrication and co-ordination of the works as described in the Contractor’s proposals, including the appointment of specialist consultants and sub-contractors.

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11.36 The Client will usually utilise a consultant to prepare the Employer’s Requirements and to monitor the progress and quality of the works.

11.37 Under the Design and Build form of procurement, the Contractor is responsible for all aspects of the work. This “single point” responsibility can be highly attractive and advantageous to Employers.

11.38 The Design and Build form of procurement also presents a time advantage, as design work does not have to be completed before the commencement of construction. The development is therefore complete much sooner than under more traditional forms of contract.

11.39 Design and Build normally involves the design being progressed to RIBA Stage C – Outline Design. This would normally involve the production of floor plans, a site plan, basic elevations and room data sheets. This level of design provides a good overview of the scheme without going into too much detail. The design team make assessments on how much space they expect they will need for service zones and structure and use these assumptions to generate design areas and an overall footprint and volume for the building.

11.40 Because the design is still relatively flexible at this stage tenders for basic buildings are often sent out with only this level of detail. For example warehousing, retail sheds, etc. This is because contractors have a good knowledge of how to construct simple buildings like this and they can therefore input advice on constructability at this stage.

11.41 The disadvantages of going out to tender at this stage are that: with only a basic level of design to hold a contractor to once in contract, the client has little control over the end quality of the building. Specifications for internal finishes and detailing of design can often be poor.

11.42 Design and Build contracts offer high cost certainty as the Contractor is obliged to do whatever is necessary to comply with the contractual requirements. However, tendered costs may be slightly higher than with other procurement routes in order to cover the Contractor’s liability or risk.

11.43 Cost certainty is attained at an early stage in the design and abortive costs are therefore less should the Contractor tenders be more than the cost estimate prepared by the Cost Consultant and a redesign required.

11.44 It is especially important to provide the Design and Build Contractor with accurate information on site conditions and ecology at tender stage to avoid additional costs or delay.

11.45 Quality control problems are often given as a reason for not selecting Design and Build. However, provided that the Employer’s Requirements document is sufficiently detailed and quality is closely monitored on site, it is possible to achieve a good quality building.

11.46 With Design and Build contracts, it is difficult to vary the works once the contract has been entered into. Variations can be awkward to deal with so that it becomes even more important to ensure that an accurate and comprehensive Employer’s Requirements document is prepared and agreed with all parties before the contract is let.

Develop and Construct 11.47 If the Client wants to be closely involved in the development of the concept design it is advisable to adopt a

“Client led design” approach, which is a procurement route that is often referred to as Develop and Construct, whereby the Contractor is only required to carry out limited elements of the detailed design.

11.48 The Employer’s Design Team works up the design in some detail, typically to RIBA stage D/E to ensure that the Brief can be met and that a unique design is achieved. The Design Team may subsequently be appointed by or novated to the successful Design and Build Contractor.

11.49 The differences between RIBA Stages D and E are as follows:

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§ Stage D - Scheme design

o Once the layouts and aesthetics of the building have been agreed at Stage C, the design is developed to be fully coordinated with the Structure, Services and Civils.

o The external envelope is detailed during Stage D, which removes the risk that an allowance for setting out assumed at Stage C might have been incorrect. Coordination is progressed to also ensure ceiling heights and allowances for plant space are correct. Initial mood boards for internal finishes are produced and reviewed with the client and the internal layouts should be finalised including for all structural and M&E zones.

o Going out to tender at Stage D allows the client to obtain a price for the works fairly quickly, (normally about ten weeks after you would obtain a price if tendering on Stage C information). However, when compared with Stage C, progressing the design to Stage D allows the client to prescribe the external aesthetic to a much greater extent, which maintains quality.

o Taking the design a stage further does lose some of the flexibility, so tender prices may not be as competitive as a less defined tender, but a good level of competition should still be maintained. For a complicated building such as a leisure centre, this is the minimum level of design detail we would recommend a project is progressed to, prior to tender. .

§ Stage E – Detailed Design

o Stage E design involves developing detailed design for the structural frame, services, cladding, internal finishes, etc. This is normally done in discussions with sub-contractors to ensure accuracy. By detailing the design to a greater extent, the client can ensure that the required quality for the scheme is defined in greater detail. However, this increased quality comes at the price of flexibility in pricing, programme (stage E typically takes 8-10 weeks to complete) and less input on buildability from contractors.

o The cost of producing stage E design is also significant and therefore if affordability is key, it may be better to obtain a price from the market sooner, to avoid abortive design costs.

11.50 Whilst the Develop and Construct procurement route ensures that the Client can maintain the integrity of the design, some of the advantages of Design and Build are sacrificed as the Contractor is not able to contribute to the buildability of the Project at an early stage.

11.51 However, this absence of Contractor input to buildability can be mitigated by consulting main sub-contractors on the more complex aspects of the design, such as steelwork, and by appointing an experienced Design Team.

11.52 The Develop and Construct route allows for changes in the Brief to be integrated into the design for an extended period prior to tendering, which would be important where there are several key stakeholders and funders.

11.53 Furthermore, whilst any post tender changes should ideally still be avoided, any essential changes may be accommodated without penalty if a disciplined change order procedure is adopted.

11.54 Therefore, the Develop and Construct route has many of the advantages of Design and Build in relation to the speed of design development, with the residual risks associated with shortcomings in the design and temporary works being transferred to the Contractor. However, the design and quality of workmanship can be more closely prescribed in order to achieve a fixed price tender from the successful Contractor for a defined product.

11.55 A Develop and Construct procurement route is therefore considered appropriate for this Project. We recommend the design is progressed to stage D to ensure that the Client can retain more control over quality, but the Council will still benefit from not restricting the tenderers, thus encouraging input on the design and materials proposed, and they will obtain a tender price earlier in the project.

Design Development Options for Tendering 11.56 The more advanced that the design is prior to tendering the works, the greater control the Client retains over

the quality of the design. There would however be implications in that it would take longer to deliver the

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facilities; cost certainty would not be obtained until a later date; and there would be less opportunity to draw input from the Contractor on buildability issues.

11.57 With a Develop and Construct procurement route, it is important to decide at an early stage the extent of design work that should be commissioned by the Client pre-contract and when to involve the Contractor. The most common variances on the recommended procurement route are through either single stage or two stage processes.

Single Stage Process 11.58 The single-stage approach requires the design to be developed to a certain stage (suggested as RIBA Stage

D for the proposed Project) at which point the work would be tendered and a fixed price obtained for the works.

11.59 A detailed set of Employer’s Requirements would also be prepared along with other key information to define quite precisely the Client’s requirements and this would form part of the tender documentation.

11.60 The Contractor would not be involved in the design process prior to tendering the works, so that it would effectively be a closed book tender.

Two Stage Process 11.61 As the title suggests, this involves two stages to the tender process.

11.62 The first stage of the tender would invite tenderers to provide a financial submission confirming their proposed levels of overheads, profit and preliminaries, along with a quality submission including proposed programme, site team, track record, health & safety, etc. The Contractor would be selected based on these two submissions.

11.63 The second stage would involve working with the appointed Contractor to produce designs to an agreed level of detail (RIBA Stage D), at which point the Contractor would obtain costs from sub-contractors to which the agreed overheads, profits and preliminaries would be added to provide a fixed cost for the works.

11.64 The involvement of the Contractor in the design process with pre-defined overheads, profits and preliminaries effectively means that the two stage process is an open book tender process.

11.65 Whilst this process involves the contractor much earlier, a guaranteed fixed price is still not obtained for the works until sub-contractor prices have been obtained.

11.66 The perceived advantages of a two-stage tender, when compared to a single stage tender, are that:

§ the contractor is involved much earlier in the design process and can therefore contribute to buildability and programme issues;

§ the contractor is selected on both cost and quality and a better quality of Contractor can be attracted to submit a tender;

§ by tendering on an open book basis, the Contractor is paid a fair price for the works thereby ensuring quality as the Contractor is less likely to cut corners;

§ the overall length of the programme is reduced by involving the contractor earlier;

§ cost certainty can be obtained at a much earlier stage; and

§ risks can be mitigated earlier and passed to the contractor.

Summary 11.67 The key consideration for the Council when deciding on a procurement option, is to manage and reduce the

potential risks associated with delivering a new facility whilst ensuring flexibility. The Council wish to procure

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a project that is value for money, whilst still being able to deliver a quality product within a reasonable time scale. Single stage Design and Build, provides a good compromise on all of these factors.

11.68 The current tender market is receptive to a single stage procurement route, with Contractors more prepared to accept the associated risk transfer.

11.69 However, there is a significant risk associated with a single stage approach in the current market, as Contractors are reducing prices in order to win contracts. Reduced allowance for profit can lead to corners being cut to reduce costs along with the submission of claims to try and recover costs. This can lead to a very adversarial contract and could compromise the quality of the design and the finished product.

Recommended Procurement Route 11.70 Based on all of the factors considered throughout this section, the recommended procurement route is:

§ a Single Stage “Develop and Construct” procurement route;

§ the design should be progressed to Stage D before the second stage tender is undertaken and a fixed price obtained, to achieve some of the benefits associated with ‘design and build’ and ‘traditional’ procurement routes.

11.71 It is important to recognise that this procurement route has been recommended for delivering the Project under the current market conditions and the Client requirements.

11.72 This recommended procurement route has the following benefits:

§ a fixed price is obtained following the single stage tender, which is much earlier than some other procurement routes, such as through a traditional procurement route;

§ greater cost certainty when compared with other forms of procurement as the Contractor accepts the risk on many of the factors such as design development, compliance with statutory requirements and management of sub-contractors;

§ single point of responsibility for progress, design and construction will rest with the contractor;

§ the design is progressed to a fairly detailed stage to ensure quality, but is left flexible enough to encourage innovative thinking from Contractors to reduce costs;

§ construction can commence prior to the completion of detailed design work, thereby reducing the overall development timescales and providing overall Project completion at an earlier date than under a traditional procurement route;

§ a proportion of designer’s fees for the detailed design work, post RIBA Stage D, are deferred until the Contractor is appointed and fees are paid via the contract; and

§ going out to tender at Stage D design allows an experienced Contractor to input into the design earlier in order to refine the construction details, structural engineering and building services to improve buildability.

11.73 Once a final decision has been made on how the Council wish to progress the project, we recommend that the procurement strategy is reviewed. The Council’s requirements may change and quality or programme, for example, may become a more important aspect of the project, than cost. If this were to be the case, two stage develop and Construct and the use of contractor frameworks should be reviewed again.

11.74 The physical mechanism for procuring and selecting the Contractor and Consultants needs to be informed by this strategy. The following sections review the relevant options and provide recommendations accordingly.

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12 Operator Procurement

Introduction 12.1 There are a range of potential management options available to the Council for the new centre. These

include:

§ in-house;

§ private sector;

§ private sector hybrid trust;

§ stand-alone trust; and

§ external trust.

12.2 The swimming pool and Perdiswell Leisure centre are currently managed by Leisure Connection, under their Leisure in the Community company, which is effectively a private sector hybrid trust. This is a 10.5 year management contract that is due to expire in November 2013. Given the need to replace the existing swimming pool, it is important that the long-term contract for management of the new facility will be procured to coincide with the opening of the new centre.

Current Market Overview 12.3 Recent figures obtained from the Leisure Database Company, which is responsible for managing and

maintaining Sport England’s Active Places Database, demonstrate the current split of management arrangements across 4,125 public sector facilities that have a gym, pool or sports hall (or any combination of these facilities) available for general public access:

§ In House (Local Authority) = 30%;

§ Education (Schools and Universities) = 24%;

§ Trust (stand-alone trust, external trust & private sector hybrid trust) = 22%;

§ Leisure Management Contractor (Private Sector) = 8%; and

§ Other = 16%.

12.4 The private leisure management contractor’s percentage share is in decline from a high of 12% now down to 8%. The Trust sector is growing, gaining 2% in the last year alone. While this is a snapshot of current management, it recognised that more local authorities are now outsourcing management of facilities, particularly as a means of reducing the revenue costs of leisure services in response to government spending cuts.

12.5 The outsourcing of management has resulted in the growth of the leisure Trust sector. Since the mid-1990s, there has been a growing trend for local authorities to set up not-for-profit trusts to manage their leisure centres. They are, in effect, social enterprise organisations, which have developed from local authority in-house services.

12.6 Many local authorities are now investigating the option of wider ‘Cultural Services Trusts’ encompassing services beyond those in the traditional sport and leisure portfolio. Local Authority in-house/education remains the largest percentage, but with the potential cost savings of externalising management we anticipate this proportion reducing in the medium-term.

12.7 In many areas, the impetus for the establishment of trusts has been to secure National Non Domestic Rates (NNDR) and VAT savings. However, they do also offer the opportunity to develop a more focused management structure for a Council’s leisure service. A number of these trusts have subsequently

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expanded (through contract acquisitions) to manage facilities in other local authority areas, however, the vast majority of them are still single-authority bodies. There are currently over 100 trusts in operation in the United Kingdom and around 95% of these are members of SpoRTA (Sport and Recreation Trusts Association).

12.8 Recently, there have also been tentative moves towards partnership arrangements with two or more local authorities seeking to appoint a management contractor across a wider portfolio of facilities, via joint procurement of management contractors. This approach is aimed at maximising interest and competition from the market, due to the increased value of the portfolio, as well as reducing procurement costs for the authorities involved.

12.9 For the purpose of this report, we have created a revenue model based on the ‘optimum’ option for the Council, from a financial perspective. As a result, we have based our initial financial modelling on the Trust management option (due mainly to the NNDR and VAT benefits). As the Council’s facilities are currently operated under the Trust management option, it also enables a like for like comparison with the existing operation.

12.10 We have not considered the VAT implications of the management options in detail during this study, as this requires specialist financial advice. However, in general terms, it is usually the case that there are greater VAT benefits in selecting the Trust management route, when compared to In-House or Private Sector management options. Specialist VAT advice will need to be sought as part of a detailed management options appraisal.

Summary and next steps 12.11 There are a range of management options available to the Council. While there are clearly financial

advantages associated with the trust based options, the future choice of management option is likely to be decided following an open procurement process, which will determine the best option for the Council against a range of detailed assessment criteria.

12.12 The procurement of a new leisure management contractor typically takes 12 months, including Project launch, agreeing the Project scope and responsibilities and drafting tender documentation. The typical stages in the procurement of a management operator are listed in Table R below.

Stage Key Tasks

1 Project Inception and Project Launch Meeting

Typical issues that would be covered include:

• agree delegated authority of the Council’s Project team; • understand which decisions will need to referred to the Council’s Executive; • agree meetings and a reporting schedule; and • draft evaluation criteria for award of contract.

2 Preparation of Contract Documentation

• draft, agree and issue OJEU Notice (and collate expressions of interest); • draft and agree PQQ, including evaluation criteria; • draft and agree Invitation to Tender and Evaluation Criteria; • draft and agree Asset Management Responsibilities Matrix; • draft and agree Performance Management System; • draft and agree Service Specification; and • draft and agree position papers relating to TUPE, Pensions, ICT.

3 Pre-Qualification Questionnaire

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• issue PQQ; • plan, agree and host ‘Bidders’ Open Day; • undertake initial interviews; • evaluate PQQs; • draft and agree PQQ Evaluation Report, selecting Invitation to Tender List; and • draft, agree and issue letters to Bidders.

4 Invitation to Tender

• issue Invitations to Tenderers; • co-ordinate clarification meetings with Bidders; • receive submissions, review and evaluate (in conjunction with members of the Project

Team); • clarification meetings with bidders; • member consultation and briefing; and • draft, agree and issue Evaluation Report to Council’s decision makers.

5 Award of Contract

• fine tune contract documentation; and • draft, agree and issue any further papers for Full Council decision.

6 On-going Project Management and Reporting

• regular written and meeting updates with Project team to ensure the Project is running to time, budget and to specification.

Table R: Key Stages in Management Procurement of a Management Operator

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13 Selection of Consultants

Introduction 13.1 To decide how the Council can best procure a consultant team to deliver the Project, it is firstly important to

consider whether the Council wish to appoint each consultant separately or if they would prefer a ‘one stop shop’ approach where a single consultant leads the design team. This approach means that the Council would only have to form one appointment, with a single party.

Services 13.2 It is recommended that the following services are procured to ensure the building design can be developed

to be robust and in a good level of detail:

§ Project Manager;

§ Architect;

§ Landscape Architect;

§ Structural and Civil Engineer;

§ Mechanical and Electrical Engineer;

§ Pool Filtration Engineer;

§ Cost Consultant;

§ CDM Coordinator;

§ Acoustic Engineer; and

§ Fire Engineer.

13.3 Other fees to be expected on the Project are Building Control, Legal and Planning fees.

Separate Appointments v Appointing a Lead Consultant 13.4 The approach of appointing all of the consultants separately is time consuming. It also adds more risk to the

Project, because the client has to ensure a number of appointments are agreed and that there are no gaps between the consultant’s scopes of service.

13.5 The advantage to this approach is that the client can create a bespoke team of individual consultants, which they feel would best suit the Project requirements. The disadvantage however, is that if consultants have not worked together before they may not be as efficient and coordinated as a team that have worked together before.

13.6 Designating a consultant as the Lead Consultant on a Project avoids the issue of creating numerous appointments. One consultant, typically the Project Manager or Architect employs all of the other consultant services / roles as sub-consultants. The Client therefore only has to sign one appointment with the Lead Consultant.

13.7 Often a hybrid is used where a client will look to employ a core team of consultants that will work on the Project on a day to day basis, through a Lead Consultant, and then they will employ other more peripheral roles on an ‘as and when’ required basis. We recommend the core services that should be included in a Lead Consultant appointment are as follows:

§ Project Management;

§ Architect;

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§ Landscape Architect;

§ Structural and Civil Engineer;

§ Mechanical and Services Engineer;

§ Pool Filtration Engineer (often combined with M&E);

§ Cost Consultancy; and

§ CDM Coordinator.

13.8 Fire, Acoustic Engineers and any other roles can then be directly employed as and when required, using simple appointments.

Procurement Routes 13.9 The Project is of a significant value and it is likely that all of the main consultancy disciplines will command

fees that are over the OJEU threshold. OJEU is the publication in which all tenders from the public sector, above a financial threshold according to EU legislation, must be published.

13.10 There are two ways the council could employ a consultant team to design the Project. The first is to use a standard OJEU (Official Journal of the European Union) route and the second is to use an OJEU compliant framework.

OJEU 13.11 There are four routes in OJEU, Restricted, Open, Competitive Dialogue and Negotiated. The most common

route is Restricted, because it attracts the most credible and experienced tenderers due to its efficiency. In a restricted tender consultants are asked to pre-qualify for the tender process by completing a Pre-Qualification Questionnaire. They are then shortlisted normally to a minimum of five consultants, and they are invited to tender.

13.12 The OJEU notice can request a Lead Consultant with a full design team, single consultancy roles or any permutation in between.

13.13 The biggest issue in appointing a team or single consultants through this approach is that the Council would have to procure the team in advance of beginning the Project. A typical Restricted OJEU procedure normally takes 4 months from start to finish, once tender review and sign off periods have been completed. This means that the Project programme would be delayed by three months from that shown on the programme.

13.14 The cost of running this procurement exercise can also be substantial and the Council would need to fund this.

Frameworks 13.15 An OJEU compliant framework could be used to procure the consultant team more efficiently. The most

commonly used framework accessible to the public sector is the Government Procurement Service (GPS) used to be known as the OGC framework / Buying Solutions). There are twelve consultants (Project Management firms) on this framework and they all provide Lead Consultancy services called Project Management and Full Design Team Services, under the framework.

13.16 The GPS Framework has been used for many years and is well tested. Each Lead Consultant on the framework has agreed framework rates that have been competitively tendered to satisfy public authority procurement rules.

13.17 One advantage of this framework is, it is very flexible, for example, the Council could decide to undertake a direct appointment of a team or they may wish to competitively tender the appointment. Either can be carried out through the framework.

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13.18 The services provided can also be tailored to suit a Project and Client requirements. For example, the scope of service can consist of just Project Management, full Design Team services or anything in between, as long as the Project Manager is appointed as the lead consultant.

13.19 A team could be appointed through a competitive tender using the GPS Framework in approximately 1 month. This is the time period we have based our current programme on.

13.20 The Council may have access to other smaller local authority consultant frameworks and they could access the SCAPE consultancy framework. It is unlikely however, that the consultants on these frameworks could demonstrate such a strong track record of delivering leisure facilities. For this reason we would not recommend them.

Recommendation 13.21 It is recommended that the Council procure full design team services through a Lead Consultant using the

GPS Framework. If the Council wish to have more flexibility in procuring some of the more peripheral services, we would recommend that the main design consultancy roles at least, are procured through a Lead Consultant. The other roles can then be appointed directly at a later date.

13.22 It should be noted that the GPS Framework is due for renewal in 2013. A Purdah period will begin from Midnight 16 June 2013 until the new framework is announced later in the year. Therefore if the Council wish to use this route they should begin procurement of a team immediately after Committee sign off.

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14 Selection of a Contractor

Introduction 14.1 Following the recommendation that the Project is delivered using a Single Stage Develop and Construct

approach, there is only one possible mechanism for procuring a contractor. A Contractor will have to be procured using OJEU (The Official Journal of the European Union).

14.2 If a two stage approach was selected other options for procuring a contractor would become available.

OJEU 14.3 There are four possible OJEU routes that can be used to tender Projects, they are the Negotiated,

Restricted, Open and Competitive Dialogue routes.

14.4 For a Project of this nature the most suitable route will be the Restricted procedure. This route will attract the most contractors to tender due to its efficiency, it is also recognised in the industry as the most suitable route because the outputs of a Develop and Construct tender package are very specific, leaving little room for manoeuvre. This satisfies the legislative criteria that surrounds the use of the Restricted procedure.

14.5 Contractors would be sought via the Restricted OJEU procedure with a Project Information Memorandum (PIM) which provides the Project background, and a Pre-Qualification Questionnaire (PQQ). The contractors would be required to provide information in response to the PQQ including the following:

§ Company information – size, location;

§ Financial information – audited accounts, ability to provide a performance bond, Dunn and Bradstreet credit rating;

§ Insurance details – including Professional Indemnity;

§ Project team – experience of the team, track record, proposed sub-contractors;

§ Experience – track record, working with public bodies, experience of procurement route;

§ Health and Safety – health and safety policy, track record, ability to act as the Principal Contractor; and

§ Regulatory issues – Regulation 14 of the Public Works Contract Act 1991.

14.6 Interest would be generated in the Project prior to the OJEU notice being released by contacting or meeting with contractors of suitable size and experience to run through the scheme in more detail. This would ensure that a good response is received to the OJEU notice from suitable contractors. This would also provide an opportunity to review the programme for the construction phase and any buildability issues before tendering the works.

14.7 It would be recommended that a maximum of five contractors be shortlisted to tender from the expressions of interest received in response to the OJEU notice. In our experience, contractors are not prepared to commit significant resource and cost to prepare a tender if more than five contractors have been asked to tender for the works. This approach is in line with OJEU procurement rules.

14.8 The tender procedure would be in accordance with Public Procurement Regulations and would follow the Code of Procedure for Selective Tendering for Design and Build published by the NJCC.

14.9 Tenderers would be invited to mid-tender meetings at which they can seek clarification of the Client’s requirements and discuss the priorities and critical objectives. Responses to contractor’s questions would be

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circulated to each of the contractors tendering. This would also give Worcester City Council an opportunity to meet the individuals who will be responsible for delivering the construction of the Project.

14.10 A Contractor would be appointed on the basis of them scoring the highest overall tender score, and the other tenderers would be notified accordingly.

14.11 The whole process could take 4 months from the beginning to finally appointing a contractor. However, the tender process could be run in parallel with the design development, so that no time would be lost on the overall programme.

Summary 14.12 Using a Restricted OJEU procurement route for the Contractor appointment is a suitable approach that

would meet the Council’s requirements. However, in the current market when there is a greater risk of an appeal being made during an OJEU process, the Council will need to ensure that the OJEU process is run in a robust manner and that all documentation issued is clear and rational.

Recommendation 14.13 It is therefore recommended that a Restricted OJEU procedure is run to procure a Contractor for the

Swimming Pool Project.

14.14 The design team would be novated to the contractor post contract at RIBA stage E.

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15 Governance

15.1 The Project Governance arrangements including roles, responsibilities and authority should be established early on to clearly define the respective responsibilities for decision making.

Roles and Responsibilities 15.2 The successful delivery of Projects stems from clear direction and control, so that establishing a Project

group with clearly defined roles and responsibilities is essential. In relation to the Worcester Swimming Pool feasibility the following structure is proposed to ensure efficient delivery of the Project:

Council

Operator

Project Manager

Specialist Advisory

Consultants

Client Side Project Team

Design Team

CDM Coordinator

Client Side

Project Manager

Scrutiny Board Cabinet

Cabinet Portfolio holder for Safer and

Stronger Communities

Programme Board

Client-side

Consultant-side

Programme Director

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Executive Project Roles and Responsibilities 15.3 The Key Executive Roles and Responsibilities are set out in Table S below.

Role Representation Overall Role

Programme Board

Senior Council Officers, Project Director & Client Side Project Manager

To ‘champion’ the Project ensure consistency with city wide objectives and priorities, whilst ensuring that the strategic and financial modelling are achievable and deliverable. To provide guidance, definition and context to ensure that political approval is sought and approved at the appropriate stages.

Project Director Mike Worsnop Overall client-side management responsibility for delivering the Project. Managing / delivering the client side requirements within approved budgets and against the achievement of agreed strategic objectives / indicators.

Client Side – Project Manager

TBC Responsible for representing the City Council’s interests and priorities and providing an interface with the client and operational side of the Project. Work with the Project Director to manage the Client Side – Project Team and overseeing the procurement and management of the Consultant Side – Project Management Team, Design Team, & Contractor.

Consultant Project Manager

TBC Responsible for the day to day detailed management of the Project and providing the delivery side advice, guidance and management as an interface between the client side requirements / objectives and the technical, design and contracting side of the Project Team – from inception to opening, on time and within budget.

Table S: Key Executive Roles and Responsibilities

Key Responsibilities 15.4 The Key Responsibilities defined in this section correspond to the overall Roles as defined in Table S.

Programme Board 15.5 A Programme Board should be established to control the overall Programme at a Senior Officer level in

Worcester City Council, who will ultimately be the principal funder in the delivery of the Project.

15.6 The Key Responsibilities of the Programme Board are to:

§ champion and assume overall ownership / sponsorship of the Project;

§ provide connection and facilitate working with relevant partners, which may include other departments of the City Council, other institutions, professional bodies and agencies;

§ provide a city wide strategic context and advise of any necessary changes that might be required throughout the delivery of the Project;

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§ provide appropriate resource to the Project to ensure continuity and deliverability;

§ provide an interface between the Project Delivery Team and the political level to ensure that all submissions seeking political approval are underpinned by a robust strategic and financial justification of needs;

§ provide sign off of the Project at key stages as identified; and

§ continually monitor the progress of the Project alongside the agreed strategic and budgetary goals.

Project Director 15.7 The Programme Director should be responsible for delivering the overall Project requirements in accordance

with the agreed strategy and approvals received from the Programme Board.

15.8 The Programme Director should therefore be accessible to Senior Council Officers along with the Client and Consultant Side Project Management Teams;

15.9 The Key Responsibilities of the Programme Director are to:

§ coordinate the shaping of the Project for submission to the Programme Board and subsequent political levels for approval;

§ ensure that all proposals are consistent with the wider strategic and development plans of WCC and the intended operator;

§ work with the Client and Consultant Side Project Management Team to ensure that all Project delivery meets the agreed strategic objectives;

§ work with the Client and Consultant Side Project Management Teams to ensure that the Project Design Brief meets the Client Side Project objectives;

§ oversee and manage the involvement of key stakeholders throughout the course of the Project;

§ oversee the business planning for the Project to ensure that the Project meets the user needs and provides best value for money;

§ ensure that all proposals are financially modelled to demonstrate viability against the availability of capital resource and future operational revenue resource;

§ work with the Client Side Project Manager to approve changes to the scope of the Project ensuring that any changes that impact upon time, cost or objectives are assessed and reported to the Programme Board accordingly;

§ work with the Client Side Project Manager and Client Side Project Team to ensure that all risks relating to the overall management of the Project have been clearly identified;

§ work with the Client Side Project Manager to oversee the procurement of the Consultant Project Manager;

§ work with the Client Side Project Manager and Consultant Project Manager to oversee the procurement of a Contractor and Design team;

§ establish and oversee appropriate Project Management structures and related lines of communication along with associated processes;

§ establish a progress and reporting structure that ensures that any changes in circumstances affecting the Project are evaluated and managed accordingly;

§ act as an arbiter in any client side disputes; and

§ ensure that an evaluation of the Project is undertaken and considered by all of the users and key stakeholders, with lessons learned being fed into the future Council Projects.

Client Side Project Manager 15.10 The Client Side Project Manager should provide the day to day and on-going management of the client side

interests and investment in the Project.

15.11 The Key Responsibilities of the Client Side Project Manager are to:

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§ oversee and manage the Client’s interests in the Project by co-ordinating and directing the user input; appraising options; ensuring that Project briefs are prepared; that a change control process is in place; that risks are determined and managed and that the Project budget is managed;

§ ensure that all Project proposals are consistent with the Client’s strategic and development plans;

§ manage the client side resources in relation to the development of all business planning;

§ work with the Project Director to procure professional services for delivery of the Project by procuring Consultants and a Contractor;

§ provide the focal point for client side contact with the Project Management Consultants, Design Team and other professional services;

§ oversee and manage the quality of the Project by:

§ Maintaining at all times an overview of the Project status in relation to the established objectives;

§ Ensuring that the implementation of control and management of the Project is defined and monitored;

§ Managing the performance of the Consultant Side Project Management Team;

§ Ensuring that the Project Manager receives client decisions on time;

§ Receiving and reviewing detailed reports from the Project Manager; and

§ Working with the Consultant Side Project Manager to establish and agree a resolution procedure for any major issues that arise;

§ work with the Project Director to monitor and report to the Programme Board on the performance of the principal Consultants and Contractors engaged in the works;

§ ensure that formal progress reporting from the Consultant / Contractor side is communicated to the client side stakeholders; and

§ oversee a process of assessing the objective impact of Projects and ensuring that lessons learned are carried forward into subsequent Council Projects.

Consultant Side Project Manager 15.12 The Project Manager should be responsible for managing all of the delivery requirements of the client

through the direct management of Contractors, Design Teams and other professional services as required.

15.13 The Key Responsibilities of the Consultant Side Project Manager is to:

§ develop an initial Design Brief for the proposed Project, which should become more detailed as specific research and modelling is undertaken during detailed design;

§ develop and implement a specific procurement strategy for the Project and carry out the obligations necessary to achieve a satisfactory completion of the Project;

§ assist in the appointment of Consultants to the Design Team as required and appropriate to the preferred procurement route;

§ coordinate the individual Consultants and collective Design Team in order to produce Project reports including cost plans and programmes as needed;

§ establish and implement Project Management processes that facilitate efficient management of the Project and serve to highlight / rectify any issues;

§ establish formal communication procedures for the Design Team and a hierarchy of responsibilities;

§ work with the Consultants to refine, amend and adapt the Design Brief and agree with the Client Side Project Manager;

§ undertake risk assessments and manage Project risks, including the development of contingency plans;

§ work with the Cost Consultant to establish cost control procedures and monitor against the developed design, to ensure that the budget is not exceeded;

§ report through agreed processes on the progress of the Project in relation to both design programme and cost;

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§ work with the Design Team to coordinate the production of the tender documentation;

§ co-ordinate, issue and evaluate tender appraisals leading to appointment of the successful Contractors for the Project;

§ administer the terms of the contract, implementing the full range of defined duties of the Project Manager;

§ ensure that all contract documentation is produced and issued, as required by the terms of the contract for the Project;

§ preparation of all necessary final documentation, including contractual certificates and final accounts for the Project;

§ preparation of a completion report for the Client showing an evaluation of the Project including cost and Programme achievements; and

§ undertake Employer’s Agent / Contract Administrator duties.

The Consultants / Design Team 15.14 The Design Team should be formed from a core team of Consultants consisting of an:

§ Architect;

§ Structural and Civil Engineer;

§ Mechanical and Electrical Engineer; and

§ Pool Water Services Engineer.

15.15 The Design Team should all report through and along with the Project Manager, at regular Project and Design Team Meetings;

15.16 In addition to the ‘core’ Design Team, a number of specialist Consultants should be selected and appointed via competitive tendering processes, to facilitate the design and de-risking of Projects, as and when required.

Project Approvals 15.17 As the Project progresses, varying levels of approval should be required depending upon the specific impact

or implications of the approval.

15.18 Table T below defines the specific authority that should be required to formally approve the various outputs throughout the course of the Project:

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Output Approval

Project Business Planning & Strategic Justification of Funding

Council

Detailed Design Brief of the Project Programme Board

Tender Lists (Consultants and Contractors)

Project Director / Client Side Project Manager

Issue of Tenders – sign off Programme Board

Contractor / Consultant Appointments Cabinet

Construction Contract Terms Programme Board

Commit / Place Order Cabinet

Timetable and Key Milestones Project Director / Client Side Project Manager

Project Quality Project Director / Client Side Project Manager

Change Requests Project Director / Client Side Project Manager

Management Progress Reports Consultant Project Manager & Client Side Project Manager

Stage Cost Reports Project Director / Client Side Project Manager

Approval of Invoices for Payment Project Director / Client Side Project Manager

Draw-Down of Contingency Programme Board

Table T: Authority for Approvals

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Meetings 15.19 The meeting groups set out in Table U below should meet at set frequencies, whilst the appropriate

management of agenda items should facilitate effective running of the Project.

15.20 Particular meetings may need to be dedicated to a detailed presentation/review of key issues at particular milestones of each Project and these should be pre-planned and scheduled appropriately.

15.21 Project progress, costs, risks, etc. should be formally reviewed at monthly Project Meetings. A variety of other design meetings and workshops should be held on a regular basis.

Meeting Type Attendees Frequency

Programme Board Meetings Project Director

Client Side Project Manager

Senior Council Officers

* Consultant Project Manager

* Architect

* Cost Consultant

Monthly

Project Team Meetings Project Director

Client Side Project Manager

* Client Project Team Members

Consultant Project Manager

Architect

Cost Consultant

Structural Engineer

M&E Engineer

*CDM Coordinator

*Specialist Consultants

Monthly

Design Meetings / Workshops

(during the design phase)

Architect

Cost Consultant

Project Engineer

CDM Coordinator

*Specialist Consultants

*Consultant Project Manager

Fortnightly

Contractor Progress Meetings

(during construction phase)

Project Director

Client Project Manager

Consultant Project Manager

*Architect

Cost Consultant

CDM Coordinator

Contractor

Monthly

* By invitation / as required

Table U: Recommended Project Meetings and Attendees

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Summary of the proposed consultation strategy for the Project 15.22 The key strands of the Consultation Strategy will be as follows:

§ Programme Board - A Programme Board should be set up that is made up of Council Officers, which will convene initially on a monthly basis moving to quarterly. At each Programme Board meeting, the Client will provide an update of progress to the Programme Board and seek instruction on key decisions relating to the Project development. The consultant team will attend these meetings as and when required.

§ Council Officers – Regular meetings will be held with the Project Director and Council Officers on day to day issues.

§ Planning – Early discussion will take place with planning to determine the planning requirements. Public consultation will also be carried out prior to submission of the planning application.

§ National Governing Bodies – NGB’s such as the ASA and Sport England will be consulted as the design progresses to ensure it meets the standards set by the NGB’s.

§ User Groups – Groups such as swimming clubs and the golf club will be consulted on the emerging design.

§ Public Relations – Information on the design proposals will be released to the public at key stages of the Project.

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16 Programme

16.1 A detailed programme has been prepared for the Project and is attached at Appendix G.

16.2 The programme is based on a detailed analysis of the design development programme, an agreed planning and consultation strategy and a discussion regarding the Client’s stance on risk. The programme shows that the new facilities could be ready for use in Late 2015.

16.3 The programme has been benchmarked against similar leisure schemes we have delivered in the past five years. At the next stage we would recommend early discussions are held with sub contractors to ensure the period allowed for the post-contract and construction phases is realistic.

16.4 The programme should continue to be developed as the Project progresses. Updates should then be issued each month to monitor progress.

16.5 The key programme milestones for this Project are shown below. Please note that final approval to proceed with the scheme will not occur until after the tender evaluation:

Assumptions 16.6 The programme for this feasibility study has been prepared with the following assumptions:

§ the procurement strategy of Develop and Construct (progressing the design to RIBA Stage D before entering into a design and build contract) will be accepted by the Council;

§ the consultant team will be procured immediately after the Council have approved the scheme in March 2013;

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§ the RIBA Stage D design will continue following completion of RIBA Stage C but prior to formal Stage C sign-off. i.e. there will be no down time for the designers between RIBA Stages C & D;

§ a 16 month build programme has been estimated based on a predicted straight line cash flow of circa £700k per month; and

§ the existing facility can only be demolished following the completion and opening of the new facility.

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17 Risk

Risk Register 17.1 An initial Risk Register has been prepared and is included at Appendix H. The schedule identifies risks and

states the probability of occurrence, the likely extent of impact and the parties who will be liable should the event occur.

17.2 The initial Risk Register has been prepared based on our understanding of the critical objectives for the Projects.

17.3 The register deals with design and construction risks. It can also include Client specific risks, as and when they become apparent.

17.4 The Risk Register will be used to identify risks, to enable the risk to be managed by the risk owner, mitigated and / or transferred to the contractor or management contractor wherever possible. By their nature, some risks will need to be retained and managed by the Council.

17.5 The risk register will be coordinated by the appointed Project Management team and it will be updated regularly as the design development progresses, during tender stage and post contract.

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Appendix A – Survey Tender Results

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Appendix B – Design Brief

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Appendix C – Architectural Plans

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Appendix D – Option 2 Plan

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Appendix E – Design and Access Statement

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Appendix F – Cost Plan

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Appendix G – Programme

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Appendix H – Risk Register

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