project investment methodology – case study

Project Investment

Methodology – Case Study

Petra WendelováJim WheelerLibor CupalDavid Koudela

2. a 9.9.2008

Project financingprovided by the European Commission

Launch of a public / private sector partnership system in the Czech Republic, CZ05.02.04.02.0002, VZ60004428

Presentation program

Project Background

Financing

Approvals process

Project Investment Methodology

Presentation program

Financing

Approvals process

Project Investment Methodology

Project Background

Project Background

NPV PP

• Joint Public and University Library with other elements

• Groundbreaking scope

• Multiple Procuring authorities

• Significant commercial opportunity

Presentation program

Project Background

Approvals process

Project Investment Methodology

Financing

Financing

Treasury

DCMS

Funding Allocation

Other Department

Other Department

Other Department

£130m

Financing

DCMS

WCC

Applications from 32 Local Authorities

LA LA LA

Financing

Treasury DCMS

Funding Allocation £130m

Leisure Project

Library Project

Sports Centre

Library and Archive Project

Library Project

Multi -Service Centre

£35m £30m £15m £15m £30.0m £5m

Financing

Expected Unitary Charge

PFI Credits

Grant Funding

Existing University

Budget

Existing Council Budget

Affordability Gap

Commercial Income

£?m

Presentation program

Project Background

Financing

Project Investment Methodology

Approvals process

Identification of Approvals

NPV PP

Approvals required from• County Council – Responsible for provision of Public Libraries

• University – Responsible for provision of Library to University Students

• Minority Stakeholders – Inclusion of certain other services

• HEFCE – Grant funding only for specific needs

• DCMS – Responsible for allocation of PFI credit funding for libraries

• Treasury / PRG – Responsible for overseeing PFI consistency across sectors

• Other – Planning, Land issues etc.

Planning Approvals Process

HEFCE

County Council

University

Minority Stakeholders

DCMS

Treasury (PRG)

Other approvals

Project owners

Applications

Gateway approvals

• Direct Interest in Project

• Full Scope of authority

• Form Joint Project Team – represented by all stakeholders

• Delegated approvals to proceed within agreed parameters

• Confirm commitment at key stages

• No Direct Interest in Project

• Limited Scope of authority

• Formal Applications timed to fit with timetable

• No Direct Interest in Project

• Full Scope of authority

• Determine Process

Presentation program

Project Background

Financing

Approvals process

Project Investment Methodology

Project Investment Methodology

PRG ApprovalDCMS Selection

DCMS Approval

OBC Preparation

Technical Options

Appraisal

Procurement options (VFM)

Strategic Need

Form project team

Appoint advisors

Risk Workshop

Risk mitigation

Risk Assessment

Accounting Review

Affordability

Market Testing

Aug 2005

Provisional Funding Allocation

Funding Confirmed

Nov 2006Oct 2006

FINANCING

GOVERNANCELA / Uni Approval

Commit to Affordability Gap

PROJECT DEVELOPMENT