Appendix 1. olympic pool redevelopment business case

Transcription

1 Appendix 1 olympic pool redevelopment business case v February

2 how to read this document This Single Stage Business Case (SSBC) proposes that $14-$17 million is invested in the period for redevelopment of Gisborne s Olympic Pool to ensure it is fit for purpose and able to meet the needs for the people of Tairāwhiti over the next 30 years. This document follows the Better Business Case five-case format: > part one is the strategic case, which starts on page 3. It provides the context for why swimming pools are important for communities, and the functions and roles of the Olympic Pool complex. > part two is the economic case, which starts on page 30. It assesses the options for how the community might invest in the Olympic Pool complex, identifies a preferred option, and quantifies the likely costs and benefits. > part three is the financial case, which starts on page 44. It describes the funding requirements and funding sources for the preferred option. > part four is the commercial and management case, which starts on page 47. It describes how the required services for the preferred option would be procured, and how the resulting project would be run. > recommendations and next steps are made, starting on page 56. strategic case: page 3 economic case: page 30 commercial and management cases: page 47 recommendations and next steps: page 56 2

3 part one: the strategic case The Olympic Swimming Pool is Gisborne s leading and largest recreational and sporting aquatic complex, and services the wider Tairāwhiti region. It was built in 1974, funded largely through community efforts, and it is owned and run by the Gisborne District Council for the benefit of the region. Like many other New Zealand public pools of the era, it was originally designed as an outdoor facility that was used during the summer season and shut down over winter. The primary function of the pool was to provide a training and competition facility for aquatic sports, with a secondary use as a recreational facility. Three pools were initially constructed, and as demand for recreation has grown, new facilities such as a hydro-slide, barbecue areas and a hydrotherapy pool have been added. To extend the use of the pool outside the summer season, a tent-like cover was constructed in the The plant and equipment necessary to support the pools has been gradually upgraded over the decades. However, the Olympic Pool facility is beginning to show its age, and there are a number of issues facing the complex: 1. There is a growing list of major maintenance issues that will need to be addressed. These include a needed refurbishment of the hydro-slide, resurfacing of some pools, replacement of tiled edges and the likely end of the economic life for the main pool roofing system in the coming decade. 2. The changing demand for aquatic recreational facilities and the changing expectation of pool patrons means that the configuration of the complex is no longer ideal. Some key facilities such as changing rooms are substandard and have poor quality access to the pool, and the demand for some aspects of the pool complex such as winter swimming and hydrotherapy exceed available supply. 3. Demand also exists for services that the Olympic Pool can t provide in its current form, such as learn to swim classes. Learning to swim is an important skill, and there is poor provision at the region s leading aquatic facility. strategic case > the olympic pool 3

4 the council has been considering redevelopment for some time The redevelopment of the pool has been incorporated into the council s 10-year Long Term Plans (LTP) since Over time the scope for the redevelopment has changed, as has proposed budget. The LTP recognised there are a number of limitations with the current pool including the age of the asset, its condition and the impact on repair and maintenance costs, the inability to meet community expectations due to closure of pools in winter, and the shortfall of facilities. Council allowed $15m for year 9 of the plan (2014/15) for the redevelopment of the Olympic Pool. The new complex would satisfy the new trends for aquatic recreation as a year-round activity and cater for swimming, leisure, health, learning and play. The cost would be 100% grant funded. Three years later, the LTP increased the scope of the project to include a recreation centre, with the proposed cost climbing to $23.6M. A stadium was also mooted at an extra cost of $37m. By the LTP the stadium had been dropped as it was deemed to be too expensive. There was still support for the replacement or redevelopment of the pool and a total budget of $30.19m was included for years 2018/2019 /2020; the intended source of the funding was about 33% in loans and 66% from grants. In the LTP the budget (and subsequently the scope) of the project was reduced. Council acknowledged that the pool is in need of a make-over with parts of the facility having 5-10 years of economic life before they need replacing. Upgrades and repairs were considered together at an estimated cost of $10.5m to be finalised in 2018/20. The project is to be 100% grant funded. During the decade-long debate over the future configuration of the Olympic Pool, some major maintenance items have been delayed or deferred on the assumption that a major redevelopment would obviate the need for the expenditure, and to avoid re-work. However, the necessity to address these items is beginning to grow. Accordingly, this business case has been written to look at the case for a refurbishment earlier than set in the LTP. strategic case > redevelopment 4

5 the Tairawhiti context The main users of the pool are the residents of Gisborne city and the wider Tairāwhiti region. Around 31,683 people live in Gisborne city and a further 13,224 in the wider region, according to the 2013 census. Compared to the rest of New Zealand, Gisborne city s residents are likely to be more socio-economically deprived, younger (under the age of 20) and be living as part of a family with children. The age distribution of Gisborne s population is also different from the national picture, with children and young people being over-represented in the local population. The left side of the graph below shows that 32% of people in the Gisborne region (in purple) are aged less than 20 compared to 27% for the rest of New Zealand (clear back boxes). The right of the graph shows the same pattern continues to % compared to 22%. This younger group are the majority of pool users. The graph above shows Gisborne families are more likely to have children than families nationally - 66% of Gisborne families have children compared to 59% nationally. There are almost twice as many single parent families. 4,863 households have more than 3 residents. Families with children are one of the major user groups for the pool. Gisborne City residents have a relatively high level of socio-economic deprivation compared to the rest of New Zealand (see the graph below). 69% of residents are graded seven or above on the deprivation scale, compared to 40% nationally. As the level of deprivation increases the greater the gap, to the point that there are significantly more people at the highest level of deprivation in Gisborne than the rest of the country. In spite of potential challenges in their ability to afford the entry fees to the Olympic Pool, this group does use the facilities. strategic case > context 5

6 the current state of olympic pool The pool complex comprises a range of recreational and sporting facilities: A 50m x 7-lane main pool with roof A 33m outdoor recreation pool A dive pool with diving boards A 98m hydro-slide An outdoor toddlers pool with slide An indoor hydrotherapy pool A retail shop and outdoor kiosk Outdoor recreation areas, including family barbecue sites and shade sails Changing rooms and administrative facilities These developments largely reflect the changing usage patterns of the pool. Today, around 6% of pool patrons swim competitively as part of a club, while the remaining 94% are primarily interested in recreation ranging from a day out with the family to regular pool attendance for general fitness. The areas around the pool have been progressively landscaped so they are pleasant places for families to enjoy the surroundings, and there are five barbecue areas available for rent. Shade sails, green landscaping and generous sitting areas mean that the pool complex is an enjoyable place for all-day outings. On a busy summer day, around 1500 people will use the Olympic Pool. The filtration system for the pool has recently been upgraded, which means that water quality meets the appropriate New Zealand standards. Recent changes to the heating system mean that the complex now uses wood chips, which has both lower costs and significantly lower carbon emissions than a traditional natural gas system. The pool is situated opposite the beach, at the end of the newly-built Oneroa Beachfront Cycle and walkway. Photo credit: Robin Capper via Flickr, CC BY-NC 2.0 strategic case > current state 6

7 the main pool The main pool is 50 meters long with seven lanes. It was built as an outdoor facility, designed to be used primarily for the summer season. Over the years it became apparent that there was a significant demand for yearround use of the pool. In order to make it more fit for purpose, the main pool was heated and covered in a canopy structure in However, while it does provide an effective covering for the pool, the canopy is not a building so provides minimal thermal protection it does not continue to the ground, allowing draughts to move freely under the structure and on many days, the air temperature under the canopy is similar to the outdoor temperature. However, the canopy does allow the pool to open all year round, 14 hours a day during the week in the summer, and 10 hours a day in winter, during the weekend and on public holidays. In addition to the temperature issues under the canopy, access to the pool from the changing rooms is via an outdoor space, so swimmers need to transition through potentially cold and inclement weather in order to reach the heated pool. People on the side of the pool such as teachers, parents, spectators and lifeguards are also exposed to the outside temperature, although they are sheltered from wind or rain. This is an issue because of Gisborne s climate. While the region has some of the highest sunshine hours in the country, it does have a cool winter, with the average low around 5 degrees Celsius for three months a year. In summary, the primary issues with the main pool are: Access from the changing rooms to the main pool needs to be improved The floors and walls of the pool will need resealing and re-coating to address the gradual break-down in the surface finishes that is occurring over time The pool surrounds need work to bring them up to an appropriate standard. There are two issues: The space for people who sit by the pool (e.g. to supervise young children, watching people swimming, or for swimmers who just want to get out of the pool for a break) is physically uncomfortable due to the rough concrete aggregate finish The concrete surrounds need some repair work to remediate the wear and damage that has occurred in the 40 years since they were first installed While the canopy is working within its specification at the moment, in the next 10 years it is likely to reach the end of its economic life and will need to be replaced The canopy does not have good thermo-regulation so the temperature outside the pool is likely to be the similar to the outside, albeit with less wind chill and rain. This makes it unpleasant on a cold day for both spectators and swimmers The heating system is inefficient because it heats both the pool and the air Spectator seating is inadequate In addition to the challenges with the canopy, the main pool is not optimally configured. It has seven lanes and a 50 metre length, which means that swimming capacity has been a problem in the past. To attempt to address this, a divider was added so the main pool could be used as 14 x 25 meter lanes as needed. The divider is in place most of the time, which underlines the fact that demand exceeds capacity at peak times. strategic case > the main pool 7

8 the outdoor recreation pool The primary aquatic recreational area is a 33 metre outdoor pool. The main purpose of this pool is recreational it s a place where people can play have fun with friends and family. This pool has a shallow beach area where younger children can splash around and a deeper area where older children and adults can play in the water in the sunshine. Over time a number of improvements have been made to this pool, including shade sails in some parts of the pool, which enables people to play in the pool for longer periods. The primary challenge with this pool is parents leaving very young children to play unsupervised, resulting in lifeguards effectively acting as the sole adult supervision for some children. This situation occurs frequently despite clear rules for pool users to take responsibility for the well-being and safety of the children in their care. During summer the problem is so endemic that a person is employed on the weekends to simply reunite younger children with their caregivers. One of the contributing factors for this lack of supervision is the functional design of the areas around the beach where young children are most likely to be are not pleasant places to stay. The area is open and exposed, and there is very limited shade from the sun or places to sit within the beach area. From a maintenance and condition perspective, the floors and walls of this pool will need to be stripped and resealed in the years ahead, some tiles will need to be replaced and some remedial work is likely to be required for expansion joints and overflow channels. strategic case > the outdoor pool 8

9 the hydro-slide and the diving pool the hydro-slide The most iconic and prominent part of the pool is the 98m hydro-slide, which was added to the complex in It is one of the most popular parts of the Olympic Pool, with many people using it multiple times during a day out. the diving pool Next to the hydro-slide is the diving pool with three diving boards. It is part of the original construction at Olympic Pool and is a very popular attraction, with most of its use being recreational. Going down the hydro-slide is an experience treasured by many Gisborne locals we were told the story of a father taking his son through for the first time as his father had done with him, and the story of a woman who took her first slide at age 89, after delaying the experience for 30 years. People have even made YouTube videos of the fun they have on the hydro-slide. The hydro-slide is structurally in good condition but looks tired and worn. Some of the joints between the sections leak and need resealing, and the clear panels need refinishing. The whole structure requires repainting and the area around the pool could do with some rejuvenation to bring it up to standard. Due to the nature of the hydro-slide construction, dealing with the joint leaks and sealing as well as the painting will require the hydro-slide to be closed, disassembled, remediated and then reconstructed. The pool is surrounded by concrete seating where friends and family can watch the more energetic participants jump into the pool. The viewing area has no shade and because of the thermal mass of the concrete can get very hot on a sunny day, which makes it unpleasant for spectators. The area around the pool is also somewhat stark and utilitarian, so would benefit from some landscaping, which might be able to be undertaken as part of the hydro slide reconstruction. Generally, the pool is in reasonable condition with only minor cosmetic work needed, such as repairs to concrete surrounds. strategic case > hydroslide and diving pool 9

10 the toddlers pool and the hydrotherapy facilities the toddlers pool In 1994 the toddlers pool and a small slide was added to the pool complex. Staff and local people have progressively beautified the pool area with the addition of a statue of Moko the dolphin, an elephant fountain and a mural of an African savannah. the hydrotherapy facilities and hot pools In 1996 the spa and therapy hot pool was added to the facility. This is used for recreational purposes as well as for therapy, and is the only hydrotherapy pool in Gisborne. It is used by a range of people, including the disabled, people recovering from injuries and as a learn to swim facility, as well as by the general public. It is in a fenced-off space and is deigned to be used exclusively by young children and their families. The recent addition of a barbecue area within the pool fence has proven to be very popular. This pool needs some redesign to establish a wet splash deck, and the pool shell needs relining and re-coating. This is the most unattractive and unappealing of the pools. While it is indoors, it is in a room that is too small for the functions it serves, and the pool itself can only accommodate eight people due to limitations in water turnover and cleanliness due to the water volume. The plant and equipment that supports the pool is state of the art, but the small size of the pool and its configuration mean that it struggles to be fit for purpose. Considerable work has gone into making the facility more suitable for its users over the years. For instance, a hoist has been added to help get people in and out of the pool, using a commercial winch retrofitted to a beam that runs the length of the room. However, there are limits to the ingenuity of these solutions, and a complete reconfiguration of the pool and its changing rooms is required in order to make it fit for hydrotherapy purposes. strategic case > toddlers pool and hydrotherapy pool 10

11 other pool facilities The rest of the pool complex consists of the functional areas that support the pool s operation and outdoor areas that enhance the users experience. Most of the support areas are in the main building at the front of the site, which contains the female and male changing rooms, front of house reception areas, a shop, the old clubrooms for the Comet swimming club, and offices and staff areas. The main building was originally smaller and the changing rooms were open to the elements. In 1995 the structure was extended and roofed, but there are a number of challenges with the current building: The changing rooms are not of a high standard (old, communal and tired) and as noted above are disconnected from the main pool, requiring patrons to walk outside in inclement weather. The current reception and shop area is small, and the shop would ideally be bigger to allow the sale of swimwear and related equipment, rather than just the drinks and snacks available at the moment. This would increase the turnover and profitability of the shop, but would require at least one fitting room. The staff and first aid areas are somewhat tired although the required changes are largely cosmetic. The staff areas are too small for the peak summer season but are adequate for the rest of the year. Outside, there are family barbecue cabanas, shade sails and landscaped grounds. Individual shade sails were recently added so groups can have their own space out of the sun. There is also a small kiosk that can sell refreshments. It has been leased to commercial operators in the past, but given the limited size they have not been able to make the operation a financial success. In order to meet customer demand, the kiosk is now operated by the pool staff but continues to run at a loss. The family barbecue areas have been added incrementally since Users can rent these for the day and have a barbecue safely. The facilities are exceptionally popular and are booked out every weekend and public holidays during summer. The filtration plant and circulation systems were updated in 2015 to bring them into line with the NZ standards for water quality. At the same time the heating system for the main pool plant was replaced and updated to a biomass boiler, which has produced significant operational savings in heating costs. These upgrades will hold the facility in good stead for the next years and no major capital improvements are currently planned for the systems. strategic case > other facilities 11

12 asset management approach The Gisborne District Council has an obligation to manage its assets in a responsible fashion, in line with good practice in local government. The requirement is to effectively manage the existing asset base, whilst making evidence-based investment decisions about when, or whether, to replace, repair and build new infrastructure to meet the needs of the Tairāwhiti community. The following diagram shows how decisions are made about GDC s assets: The following figure indicates how the renewal decision for an asset can be optimised. The green arrow indicates the cost of repairs and maintenance that increases over time, especially as the asset nears the end of its economic life; the blue arrow is the condition of the asset that deteriorates over time. The cross-over point in the graph indicates the replacement sweet spot, where the maintenance cost of the asset has risen to the point where it would be more cost effective to replace the asset rather than continue to maintain and repair it. Some of the objectives result in a routine maintenance and renewal cycle, while others are external drivers that influence the nature and timing of replacement decisions. Maintenance and replacement can also be influenced by other factors, such as how critical the asset is (the consequence of failure) and the function of the asset. As a general rule, planned maintenance is more cost-effective than unplanned maintenance, because the asset can be optimised to ensure it has the lowest whole-of-life cost. Research has shown that optimisation analysis can result in between 15% and 25% in long-term cost savings compared to reactive maintenance. strategic case > asset management 12

13 current asset condition While the graph represents an idealised approach to asset management, the reality is that many government entities don t optimise their assets. In 2014 the Office of the Auditor General (OAG) undertook a review of asset management in the public sector, and found that: component before it failed. using such approaches could mean that local authorities miss opportunities for appropriate interventions that could be more effective in the long run. In the case of the Olympic Pool, there are number of different components that need to be viewed independently from an asset management perspective: Component Current state Approach needed Main pool Configuration is suboptimal and remedial maintenance is required Targeted re-configuration and refurbishment to extend asset life Main pool roof Operating to specification but likely to reach the end of its economic life in Replacement and possible re-configuration before asset life is exhausted the next 10 years Outdoor recreation pool Configuration is suboptimal and remedial maintenance is required Targeted re-configuration and refurbishment to extend asset life Hydro-slide Reaching the end of its economic life, with growing maintenance and safety Complete disassembly, refurbishment and reconstruction to renew the asset issues Diving pool Configuration is suboptimal and remedial maintenance is required Targeted re-configuration and refurbishment to extend asset life Toddlers pool Minor configuration issues Scheduled maintenance Hydrotherapy/spa pool Configuration is poor for hydrotherapy and facility is not fit for purpose Replacement and re-configuration Hydrotherapy plant Recently upgraded and replaced to meet water quality standards; fit for Scheduled maintenance purpose Changing rooms Reaching the end of its economic life, with growing maintenance and safety Complete refurbishment to renew the asset issues Reception and retail Configuration is suboptimal Targeted re-configuration and refurbishment to extend asset life Staff areas Configuration is suboptimal Targeted re-configuration and refurbishment to extend asset life External spaces Some recent upgrades to partially meet user needs Scheduled maintenance Pool plant and equipment Recently upgraded and replaced to meet water quality standards; fit for purpose Scheduled maintenance strategic case > asset condition 13

14 the pool and the community Leisure and recreation are crucial components to having a balanced and healthy lifestyle. Leisure time is a time when people can do what they want to do, away from work and other commitments. As the NZ Recreation Association notes: Community recreation can be a means to an end or might be the end in itself. It meets the Sport in community environments and all kinds of active recreation can result from people s desire to be part of a community. Social reasons and a desire to be part of a local community are often primary reasons for going along. Recreation and leisure play an important role in social well-being by providing people with a sense of identity and personal autonomy. Involvement in leisure-time activities adds meaning to individual and community life and contributes to people s overall quality of life. Recreation can encourage personal growth and self-expression and provide increased learning opportunities, satisfying needs not met in people s non-leisure time. Participation in leisure and recreation activities can also have social benefits. It creates opportunities to socialise with others and contributes to social cohesion by allowing people to connect and network with others. It can also contribute to family bonding when families do things together. However, some reasons are more or less important to some groups (particularly men and women). Maori were less likely to view fitness and health as the primary reason, but more likely to prioritise cultural reasons (which includes supporting friends and family to take part). People in areas of high deprivation and in rural areas are also less likely to view fitness and health as the primary reason they exercise enjoyment and social reasons are the prime motivators. For many people, participation in recreation and leisure improves their physical and mental health. Recreation often involves a physical activity or sport, and water based activities are amongst the most popular leisure activities in New Zealand. Almost all participants (97.7%) took part in their chosen sports/activities casually, either on their own or with others. In 2013/2014 the Sport NZ Active New Zealand Survey found people participate in sport and recreation for three reasons; the primary driver was health and well-being, with enjoyment and social reasons a close second and third. These three primary reasons are the same for men and women, and across participants of all ages, ethnicities, socio-economic backgrounds and locations. strategic case > the community 14

15 new zealanders love water-based activities The NZ Survey found New Zealanders love water-based activities and participate in heavily in them. Swimming is the second most popular leisure activity with an estimated 1 million people swimming in 2013/2014. It is the fourth most popular leisure activity (27% participation) for men, and the second most popular activity with women. They found that 91% of people have used a built facility, such as a swimming pool, in the last year. Older people, particularly 75 and over, were more likely choose a built facility over a natural setting. The groups more likely swim in natural settings rather than pools were: Rural participants who have limited access to pools Maori were less likely to have used indoor pools/aquatic centres. Those with high and medium deprivation. Most water based activity took place at the beach or by the sea with 36% going to the beach, 28% on the beach and 28% in or on the sea. At built facilities 81% of all participants used an indoor pool or aquatic centre and 10% an outdoor pool. When compared with all participants, Maori were less likely to have used indoor pools/aquatic centres. Swimming is popular with all age groups. They found that for all demographic groups swimming is consistently in the top ten. Swimming is most popular with younger age groups, with participation gradually declining with age although relative to other activities it retains its popularity. For both Maori and NZ European, swimming was the second most participated in leisure activity. In the Gisborne region, these are the top two ethnic groups in terms of numbers. Socio economic background did not predict the popularity of swimming, with swimming the second most popular activity for people from all socio-economic backgrounds strategic case > exercise trends 15

16 competitive swimming and health olympic pool is an important regional competitive sporting facility Olympic Pool has regular users who predominantly attend the pools alone or in small groups for structured fitness, or aquatic sport activities. In addition, there is a smaller group of competitive swimmers who are very heavy users of the pool, and who are normally part of a swimming club. Nationally these groups are collectively estimated to be 20-30% of pool users. The competitive/training/fitness group is a specialist market containing younger, fitter and more active people who make time to train and compete. The primary focus for these pool users is the Comet Swimming Club, which has a long-standing relationship with Olympic Pool. The Club was the driving force behind the public campaign to fund and build the pool in the 1970s, and have based themselves at the pool for most of that time. There is currently a lease in place that allows Comet to exclusively use a number of lanes on an exclusive basis for defined periods each day. Research shows increased physical activity can lead to fewer health problems and higher productivity at work, especially when combined with a balanced diet and a healthy lifestyle. The benefits for mental health are equally important. Several studies have demonstrated links between regular physical activity and a reduction in the symptoms of mild or moderate depression, stress and anxiety. According to research in the Journal of Cardiopulmonary Rehab and Prevention, most people enjoy water-based exercise more than land-based exercise. The second group of fitness users are the general public, who use the pool to help reach their individual fitness goals. These people either swim or use some other form of water exercise. There are a number of water aerobics classes which are also well attended. Participation in aqua-fitness is increasing in most centres in New Zealand, although participation rates in Tairāwhiti are static-to-falling. It is recognised as beneficial for maintaining fitness levels for recreational, amateur and professional sports people. Aqua-fitness caters to a wide range of participants wanting to improve fitness and strength, and to people requiring rehabilitation. It uses water for resistance while providing a low impact environment and can be adapted to different levels of fitness and ability. strategic case > competitive swimming 16

17 pool users and their experiences The GDC Long Term Plan notes the work that is underway to ensure pool users have an enjoyable experience: What have we been doing? What we do in years 1-10? Delivered recreational opportunities for residents and visitors and enjoyable activities for people of all ages. Maintained operational standards and achieved POOLSAFE accreditation (industry best practise standard). Installed additional shade structures and renovated the pool kiosk which operates as a summer pool shop. Made significant improvements to the pool plant, filtration and sanitation systems to improve pool water quality in all our pools. Undertook maintenance of 33m pool and dive pool. Commenced process of activity risk analysis to confirm operating procedures and health and safety procedures. Commenced scoping, feasibility and design concepts for potential pool redevelopment. Years 1-3 Continue with a programme of facility and operational improvements. Continue maintenance programme as needed. Focus on risk management and the achievement of a high level of compliance with operational standards and health & safety requirements. Progress feasibility and design for redevelopment. Consider proposal to redevelop including establishing any external funding support. Commence redevelopment if approved Years 1-10 Complete pool redevelopment project, if approved. In the 2014 GDC survey of residents, some 55% of respondents had used the pool. Of those that had, 70% were very or fairly satisfied, compared to 54% for all respondents. Younger people, between 18 and 29 years, were more likely to be satisfied compared to those (those more likely to be parents). Of those that were dissatisfied the reasons included the pool needing upgrading and maintaining, with more facilities added. One resident stated It is getting too old and its taking them far too long to make a decision on what to do with it. The Council s satisfaction surveys consistently show that the Olympic Pool complex is regarded as a community asset that provides value to a wide range of community users. It is not just a swimming pool it is viewed as a fun place to have a day out together with family or a group of friends, is a hub for social interaction, provides a venue for improving fitness and facilities for assisting with health and rehabilitation. The objective stated in the LTP is to provide a range of sustainable, quality aquatic and recreational opportunities for Gisborne district residents and visitors. The performance measures for Olympic Pool are therefore as follows: Performance measure Results 2013/14 Target Years 1-3 Target Years 4-10 Council aquatic facilities are safe and operate in accordance with nationally accepted guidelines Number of pool admissions per annum. Percentage of external revenue from users versus expenditure. Percentage of residents satisfied with the Olympic Pool as found in our Annual Resident Satisfaction Survey. Percentage of users who are satisfied with the pool service Amended measure Achieve 140, ,000 yrs % 40% 30% in year 3-5 construction period Achieve 165,000 from year 6 40% 54% 50% 50% years % years 6-10 Amended measure 90% 90% strategic case > pool usage 17

18 there are real health advantages to water-base exercise There are significant advantages of water based exercise over land based exercise: Water places an upward force on a person; the person is more buoyant. When a person is in the water up to neck, they effectively lose 90% of their body weight, allowing them to do exercises that are difficult on land, as the water is cushioning their body. The low-impact nature of exercising in water means a person can exercise longer without additional wear and tear on muscles and joints. This lower impact on joints is ideal for those who have pain when doing most land-based exercises. Water adds percent more resistance than land, so every move the person makes in water improves strength and increases metabolism (the rate calories are burnt, even during resting). Resistance does not allow for sudden body movements. Water also provides multi-directional resistance which means muscle pairs work in balance during the same movement. Water disperses heat more efficiently, so there is less chance of overheating. Water regulates temperature and enables heart rate to stay low whilst working at intensity which helps heart muscle becomes stronger through aerobic exercise. For many older adults, joint pain makes running, cycling, and other land-based exercises difficult. Water-based exercise can benefit older adults by improving the quality of life and decreasing disability. This supports Tairāwhiti s aging residents, who made up 18% of the population in 2013 and are estimated to increase to 27% of the total by Water-based exercise can help obese people for whom land based exercise would be hard on the joints. In the area covered by the Tairāwhiti DHB the levels of obesity are higher than the national average, especially in the older group: Access to water exercise has benefits for everyone, but there are certain segments of the population that would not have access to exercise any other way. The pool fills an important role in the Tairāwhiti region. Aquatic exercise is promoted by medical practitioners as a safe way to lose weight, so some people will drive up to three hours to access the facilities given the lack of alternatives in the region. Adults aged 15 years and over classified as obese in Gisborne and nationally Tairāwhiti DHB, (Ministry of Health statistics) strategic case > health benefits 18

19 there are real health advantages to water-base exercise Swimming pool exercises such as water aerobics can help with cardiovascular health, flexibility, and endurance. In the Gisborne District there are a number of people who have already had significant cardiovascular illnesses or who have with cardiovascular disorders who might benefit from water based exercise: Research also demonstrates that water-based exercise improves mental health, and that swimming can improve mood in both men and women. Water-based exercise can also improve the health of mothers and their unborn children and has a positive effect on the mothers mental health. It can provide relief from back pain and discomfort for pregnant women. It also improves or maintains the bone health of post-menopausal women. Water-based exercise can help people with chronic diseases that affect the joints. For people with arthritis, it improves use of affected joints without worsening symptoms and eases pain. People with arthritis have more health improvements after participating in hydrotherapy than with other activities. In the Gisborne region there are a significant number of people with arthritis. Of the 35,310 people in the Gisborne district in 2013 this equates to more than 5,000 people or some 15% of the population, growing to an estimated 17%, (over 6,000 people) by Adults aged 15 years and over with high blood pressure, heart disease and who have had a stroke Tairāwhiti DHB, (Ministry of Health statistics) strategic case > exercise benefits 19

20 Our social and physical surroundings often play a key part in whether drowning or injuries happen. These include our natural environments as well as built environments such as swimming pools. Data from Surf Life Saving NZ shows that Gisborne suffers disproportionately from water safety issues, based on its population. The Gisborne region has significant issues with water safety. The following graph shows the rates of drownings and hospitalisations in the Gisborne region over the last five years, drawn from Water Safety New Zealand s DrownBase database: These figures represent the most serious incidents, so they are likely to be just the tip of the iceberg. To assess the trends for less serious incidents, a review of Surf Life Saving New Zealand s (SLSNZ) statistics was undertaken for four beaches in the Gisborne region Midway SLSC, Tolaga Bay SLSC, Waikanae SLSC and Wainui SLSC. Six surf lifesaving seasons were reviewed from 2009/2010 to 2014/2015. In the last five years the average number of people rescued by life guards on Gisborne beaches is 30 per season and 5.8. people being searched for. While a number of these incidents may have a primary cause of a challenging environment and/or risky behaviour, the primary contributing factor will be a lack of appropriate water skills. Drownings and hospitalisations from 2009 to 2014 (source Drownbase) They show comparatively high levels of serious water incidents nationally. In 2014 Gisborne had the fourth highest drowning rate in New Zealand and the third highest rate of hospitalisations. In 2013 Gisborne had the most hospitalisations in a region but the least number of fatalities. Being male, Maori and under 35 years old, particularly from 0-4 years old, means you are more risk at risk of being involved in water safety incidents in the Gisborne area. strategic case > water safety 20

21 what affects water safety Improving water safety is dependent on the skills and knowledge a person has, their attitude to water and the environment in which they are in or on the water. The main factors that affect water safety are lack of swimming ability, lack of barriers to prevent unsupervised water access, lack of close supervision while swimming, location, failure to wear life jackets, alcohol use, and seizure disorders (source: ACC) Public swimming pools provide a safe place for a person to develop and practice those skills in a tutored or untutored way. A public pool gives users an opportunity to develop and practice some of the simple skills and behaviours they will need in less managed environments such as a beach. These include becoming accustomed to and comfortable in the water to avoid panic, and to develop the ability to float and tread water. Pools are places to learn to swim and develop survival skills, and ensure they have a positive attitude to water safety from a young age. Water Safety New Zealand see public pools providing this environment. Research shows that past participation in formal swimming lessons was associated with an 88% reduction in the risk of drowning in 1 to 4-year-old children. The American Red Cross lists the basic water skills as: being able to float or tread water for one minute without a flotation device being able to step or jump into water over your head and return to the surface treading water or floating in a full circle and then finding a way out of the water exiting a pool without using a ladder swimming 25 yards (the length of a standard pool) without stopping. Research from 2010 showed that 80% of New Zealand children could not swim well enough to save themselves if they found themselves in trouble in the water. Water Safety New Zealand estimates that in New Zealand half of all 10-year-old children can t swim 25 metres, and that 25% of them are unable to keep afloat. The base requirements to have a greater chance of being safe in the water are modest. Water Safety New Zealand concluded the ability to float, avoid panic, conserve energy and swim a short distance to safety appear to be the most important factors for both rivers and beaches. strategic case > water safety 21

22 the importance of learning to swim Learning to swim is no longer a requirement of the school curriculum and most students in the Gisborne region do not have access to a school pool. As a result, a significant number of children may not be receiving the quality of learn to swim education they need. The 2007 school curriculum states: Schools will design their aquatics education programme in the learning area of the Health and Physical Education based on the same. Individual school programmes will vary as students developmental needs and school environments differ. There is a need for a school s aquatic programme to include the development of: Water competence. environments. Water safety and survival skills. Knowledge and sound decision making especially around open water. Aquatic sports. other aquatic environments. Ministry of Education. New Zealand Curriculum (2007). Many of the remaining school pools in Gisborne are small and of varying quality, and the majority are open air. Whether those schools that currently have pools will continue to do so in the future is uncertain nationally around 156 school pools have closed in the past six years and a further 30 nationwide are at risk of being shut down permanently (source: Water Safety NZ). In the Gisborne region alone, 8 school pools have closed since This is because the Ministry of Education does not automatically replace pools at the end of their economic life, nor do they meet the cost of running pools. In addition, the Ministry does not provide pools in new schools. These issues have caused difficulty for some schools, who now largely rely on the local community for funding. As is the case around New Zealand, the number of local school pools has declined in recent decades, and only 54% of students in the Gisborne area have access to a school pool. A large proportion of students in the Gisborne area, some 3,923 children, do not have access to a school pool and of those that do, most are primary students, some 2,900 out of a total of 4,621. Percentage of school-age children in New Zealand with access to a school pool strategic case > learning to swim 22

23 making changes at olympic pool reasons for making changes there are some clear goals that are being sought There are a number of drivers for the proposed changes at Olympic Pool: The outcomes that are being sought for the proposed investment are: The refurbishment of key elements of the pool infrastructure such as the hydro-slide, pool surfaces and tiled surrounds is either pending or will become a priority as they reach the end of their economic life. The canopy of the main pool is currently performing to specification, but will reach the end of its economic life within the next 10 years, requiring a decision about replacement or alterations to the roof structure. Some of the facilities such as the changing rooms and the hydrotherapy pool are not correctly configured to provide the services expected by their users, as reflected in the satisfaction surveys over a number of years. There is under-provision of aquatic recreational facilities in Tairāwhiti compared to the rest of New Zealand, and Olympic Pool is unable to accommodate demand from users in some areas during peak periods. There are gaps in the learn to swim facilities in Gisborne due to the gradual closure of school pools, which is resulting in falling rates of swimming competence, leading to the potential for greater drowning deaths and injuries. The current Olympic Pool facilities are not configured correctly to allow children to be taught to swim at the scale required. Olympic Pool lacks some of the facilities expected of a modern aquatic facility, such as zero-depth splash play areas, which are typically popular and heavily used by pool patrons. An improved user experience at Olympic Pool Improved community participation in aquatic recreation, fitness and sports An uplift in the number of children and adults learning to swim and developing water confidence The benefits that will result from these improvements are: Increased recreational, fitness and sporting usage of the Olympic Pool complex, leading to better social connectivity and cohesion in the Tairāwhiti region, and better health outcomes for users Greater swimming and water confidence skills in the Tairāwhiti region, leading to fewer drowning injuries and deaths The scope of this business case therefore includes assessing the options for: The location of the regional aquatic centre The configuration of the aquatic centre, in order to meet the needs and expectations of its user communities How the services at the aquatic centre can best be delivered? The alternatives available for the project to change or upgrade the aquatic centre How the upgrades or changes to the aquatic centre can be funded The scope does not include the day-to-day management and maintenance of Olympic Pool. strategic case > goals 23

24 investment outcomes Improved user experience Improved community participation Improved learn to swim and water confidence outcomes While there has been a concerted programme of maintenance and upgrading over the years, many of the swimming and recreational facilities are in need of significant improvement to bring them up to the standard expected of a regional aquatic centre. Issues are widespread across the complex, ranging from leaks and cosmetic issues with the hydroslide to outdated changing room facilities and the age and condition of the pool surfaces and surrounds. The improvement sought is therefore the ability for users to enjoy an aquatic facility that meets the standards expected by the Tairāwhiti community. There are three limitations in the community achieving greater use of the Olympic Pool: 1. The recreational swimming season is limited in duration by the seasons, as the main pool only has partial weather protection and all other facilities are outdoors 2. Users are deterred by the relative unattractiveness of the facilities in the winter months, due to the partial weather protection of the main pool and the need to transition outdoors between the changing rooms and the pool itself 3. There are constraints on the number of people who can simultaneously use the facilities on busy summer days, which is currently limited to around 1500 visitors Ensuring the people of Tairāwhiti have the ability and confidence to enjoy the water is a significant challenge. Olympic Pool is currently not well configured to teach children to swim and to gain water confidence, and there is a shortfall of suitable facilities as school pools in the region gradually close. The improvement sought is therefore the provision of a suitable learn to swim facility at Olympic Pool that can provide the infrastructure necessary for more Tairāwhiti residents to gain swimming skills and water confidence, to aid in the reduction of drowning injuries and deaths in the region. There are also functional limitations ranging from outdated changing room facilities to the age and condition of the pool surfaces and surrounds that are acting as disincentives for users. The improvement sought is therefore the ability to allow more people to enjoy recreational, fitness and sporting activities at Olympic Pool by extending the swimming season, increasing the number of people who can enjoy the complex during peak periods, and reducing or removing the disincentives for using the facilities. strategic case > investment outcomes 24

25 There are a number of benefits that accrue to the wider community from the investment outcomes. These are related to the costs of poor health and early deaths, which carry very high costs for the community, the economy and affected whanau, along with the benefits that come from greater community cohesion. institutions, based on trust and respect (Spoonly, Peace, Butcher, & O Neill, 2005). A commonly accepted definition of social cohesion is the bonds that bring people together within society or the social glue that maintains stability in society (Boundless, 2014). A number of studies have looked at the links between sport and active recreation and the wider social, health and economic outcomes. They show that in addition to the direct benefits generated by the growth of the sport itself, sporting activities have the capacity to cover a wide range of external effects including health benefits, crime reduction, educational attainment, social capacity and cohesion, and improvements in living standards. Consequently, there has been a move away from encouraging people to undertake sport for sport s sake to participating in sport to improve social and economic wellbeing. There is well documented evidence of the strong relationship between participation in sport and high levels of social capital (Putnam, 2000) (Coalter F., 2002) (Delaney and Keaney, 2005). Putnam has identified two main mechanisms which allow for the creation of social capital through participation in sport: The bonds and connections made between people who participate in an activity together, for example, members of a sports team The wider bonds created between supporters of a local sports activity or team. Both of these mechanisms relate to a sense of belonging and creating identity. Increased time spent in sports also leads to increased interaction with others (Bovaird, T., Nichols, G. and Taylor, P, 1997), and increased interaction with others leads to an increased stake in social relations. In turn, an increased stake in social relations leads to reductions in anti-social behaviour and contributes to the building of social capital in a community. Key elements of a socially cohesive society are: belonging, participation, inclusion, recognition and legitimacy. New Zealand becomes an increasingly cohesive society with a climate of collaboration because all groups have a sense of belonging, participation, inclusion, recognition and legitimacy (Spoonly, Peace, Butcher, & O Neill). Given social cohesion is interactive, the linkages with sport are closely aligned. Sport New Zealand recognises the role that sport plays in contributing to social cohesion. In its Strategic Plan states:...the power of sport helps build social cohesion that binds individuals, families, communities, regions and the nation together (Sport NZ, 2012a). Sport can help build shared identities and has a critical role to play in building social cohesion. This can occur in a variety of ways: Through social activity and membership of sports clubs. When sports groups create networks which extend beyond the participants themselves. For example, social cohesion can be developed among groups of parents or supporters of a local team or volunteers who help run an activity When bonds of different groups of people are created - for example between supporters of a national, regional or local sports team. Social capital is arguably a prerequisite to social cohesion because social cohesion requires high levels of cooperative social interaction amongst citizens, groups and strategic case > social benefits 25

26 There is a significant role for local government to play in providing opportunities for residents to increase their physical activity levels. This can be in the form of urban design, transport planning, provision of safe places to exercise and socialise. Delaney and Keaney (2005) researched the relationship between sport and social capital in Britain, where the relationship between sport and the community has become central to policies of social inclusion and community regeneration. The British government has identified community regeneration as one of a number of key strategies intended to take a community-based approach to tackling problems such as deprivation and inequality. Delaney and Keaney s research revealed some key findings: Countries with high levels of sports participation also tend to have high levels of social capital and institutional trust Individuals that are involved in sports organisations are more likely to vote, contact a politician, have improved well-being, frequently socialise with friends and maintain social networks Sport attracts more volunteers than any other activity (except for religion) and that sport volunteers undertake a wide range of tasks. These tasks not only benefit the sports sector but also provide valuable transferable skills than can contribute to community regeneration Countries with high levels of membership of sports groups also tend to have high levels of membership of social and cultural groups, suggesting that participation is cumulative. In other words, people who are already involved in one type of activity are more likely to get involved in other activities Membership of a sports club has the same impact on individual wellbeing as an increase in income of $NZ6,650 per year Sport can be used to create or maintain social connectivity across boundaries defined by class, religious and ethnic backgrounds. It s important to note that in this context, sport means many active recreational activities that don t necessarily involve teams. For instance, the social and health benefits that accrue from playing a team activity are equally felt in familyorientated active recreation. The Sport NZ Active NZ survey also noted that for the large majority of participants, health and fitness (90.7%) and enjoyment (87.9%) were their main reasons for taking part in their chosen sports/activities. Other common reasons included social reasons (52.9%), low cost (44.5%), convenience (43.5%) and sport performance (31.1%). Reasons varied in importance for some groups, and most notably between men and women: Men were more likely to say they took part in activities for enjoyment, social reasons and sport performance Women were more likely to say they took part in activities for fitness and health, low cost and convenience. Most adults (both participants and non-participants, 65.6%) were interested in either trying a new sport/activity or doing more of an existing one. Among participants, interest was higher in trying a new sport or recreation activity (47.4%) than in doing more of an existing one (43.8%). Recreation activities attracted more interest overall than sports. Activities participants were most interested in trying were swimming, cycling, tennis, Pilates/ yoga, golf, dance and snow sports: Men were most interested in cycling, golf, swimming and snow sports Women were most interested in swimming, Pilates/yoga, tennis, cycling, netball and dance. It is clear from the survey that there is a demand for sporting and active recreation and by implication, for facilities that enable these activities to occur. strategic case > social benefits 26

27 intervention logic To assess whether the proposed investment will deliver the wider societal benefits expected, the intervention logic for the proposed changes to the Olympic Pool complex have been mapped out. This shows the linkages between the problems being experienced, the barriers that exist to their resolution, the proposed interventions and the intermediate and ultimate outcomes that can be expected. The map helps decision makers be confident that a clear line of sight exists between the proposed investment and the wider benefits expected by the Tairāwhiti community. ultimate outcomes Greater community cohesion Better health outcomes for individuals Lower health burdens for society Better outcomes for families intermediate outcomes Improved user experience for pool users Improved active recreation participation rates in the community Fewer drowning deaths and injuries Improved water confidence and safety outcomes interventions Redevelopment and/or reconfiguration of the Olympic Pool complex Establishment of a correctly configured learn to swim facility known barriers Some of the Olympic Pool assets are reaching the end of their economic life and decisions need to be made about replacement Configuration of the Olympic Pool complex is not aligned with the needs of its user community Many of the school pools have closed in Tairāwhiti due to reductions in Ministry of Education funding rationale The refurbishment of key elements of the pool infrastructure is either pending or will become a priority within a few years. The canopy of the main pool will reach the end of its economic life within the next 10 years, requiring a decision about replacement or alterations to the roof structure. There is under-provision of recreational facilities, and Olympic Pool is unable to accommodate demand from users during peak periods. Some of the facilities are not correctly configured to provide the services expected by users There are gaps in the learn to swim facilities in Gisborne resulting in falling rates of swimming competence. strategic case > intervention logic 27

28 strategic alignment - active recreation strategy The proposed investment has significant strategic alignment with the Council s goals and aspirations. The improvements to community well-being are aligned with the GDC Long Term Plan in the following areas: and Recreation (SPARC) New Zealand. Consultation and strategy development was undertaken by APR Consultants Ltd in conjunction with the TARS Steering Committee and New Zealand Recreation Association (NZRA). Resilience the ability to prepare for and bounce back from adversity Prosperous Tairāwhiti fostering economic growth and community well-being Mana Tairāwhiti enhancing and enjoying our unique region Inclusive decision-making involve and engage people in decision-making processes The improvements to the sporting facilities and outcomes are aligned with the Gisborne Sporting Infrastructure Strategy The operation and future development of the Olympic Pool Complex is governed by three primary strategic documents: Active Recreation Strategy (2005) This Strategy was produced in 2005 and has been adopted by the Gisborne District Council. The strategy defines how the GDC will provide the infrastructure (parks, reserves, facilities) for currently active people and increase the opportunities, through collaboration, for people who are currently inactive to participate. It says that Council is responsible for providing appropriate recreation facilities and opportunities to meet the needs of the community (Page 5; Council Responsibility). In regards to the Olympic Pool complex, the strategy asks to undertake a feasibility study and consultation in order to establish community ideas on maintenance of current the facility or the development of a new complex. (Page 17: Aquatic Recreation Development). The Strategy was formally presented to GDC and acknowledged in One of the six identified goals of TARS is to: Advocate for the provision of adequate facilities required for the region s high performing sports and high participation activities. In the same context the strategy states: The Gisborne District Council has also identified the need for a multi-purpose facility that will include an updated pool facility and indoor stadium resource. (Page 32: Goal 6) According to TARS the aim is: The inclusion of the commitment to the development of a multipurpose facility in the GDC LTCCP. (Page 32: Aim) GDC Recreation Plan The GDC Recreation Plan was aimed at providing a planning perspective for the district and at identifying requirements for increased recreation opportunities for our community. While the document might seem somewhat dated, many of the principles identified still hold true today and many of the goals identified are still in the process of being achieved. The Plan in turn builds on another GDC strategic document Towards Recreation Strategy. The Plan highlights one of the stated goals of GDC as to promote, facilitate and provide leisure and recreation facilities that maximise recreation opportunities and meet the needs of the community. The Plan is based on a random telephone survey (n=237) and a random street survey (n=446). The Plan identifies swimming as the most popular activity undertaken by children in the district, well ahead of soccer, netball and rugby. Tairāwhiti Active Recreation Strategy (TARS) (June 2006) The Tairāwhiti Active Recreation Strategy was driven by the Tairāwhiti Active Recreation Strategy (TARS) Steering Committee and respective contributing organisations. Funding for the strategy development was provided by Sport strategic case > strategic alignment 28

29 investment risks There are a number of risks associated with the proposed investment. The key categories and primary risks are: Delivery Risks 1. Incorrect scope for the pool complex may lead to a design that is not as attractive as planned for users, leading to lower participation rates 2. The costs or timelines of the construction project may be significantly longer or more expensive than budgeted for, leading to additional financial impact on the Council or a de-scoping of the design 3. External funding from sources such as Trusts and community groups may be less than envisaged, leading to additional financial impact on the Council or a de-scoping of the design Outcome Risks 1. Use of the pool in the non-summer months does not increase by the amount expected, leading to a lower return on investment for the Council 2. Swimming and water-based recreation may fall in popularity over time, leading to a lower return on investment for the Council over the life of the asset Of the two risk categories, the delivery risks are the easiest to both quantify and manage, given that their mitigations lie in standard project management techniques. Assuming the disciplines outlined in the Management Case section of this business case are followed, the analysis shows that these risks can be effectively contained. Delivery Risk Incorrect scope for the pool complex may lead to a design that is not as attractive as planned for users, leading to lower participation rates The costs or timelines of the construction project may be significantly longer or more expensive than budgeted for, leading to additional financial impact on the Council or a de-scoping of the design External funding from sources such as Trusts and community groups may be less than envisaged, leading to additional financial impact on the Council or a de-scoping of the design Probability (H/M/L) L M M Impact (H/M/L) H M H Comments and risk management strategies The scope for the complex should be developed in consultation with key stakeholder groups, and the final design should be tested with the community before construction contracts are signed Detailed costing should be prepared prior to the commencement of construction. Contingency should be allowed in the budget for unforeseen issues such as geotechnical or other engineering challenges. A Revenue Generation Strategy (RGS) should be prepared and approved by Council prior to the commencement of the design phase of the project to ensure that the scope is right-sized to the likely available funding The outcome risks can only be mitigated to a limited degree, given that the factors that drive the popularity of aquatic recreation are not fully within the control of the Council. Accordingly, it is recommended they are not managed as specific project risks, but are assessed as part of the sensitivity analysis in the Economic Case, which will address the possible range of outcomes if usage (and therefore revenues) are lower than forecast. The prevention and mitigation actions stemming from the risk analysis are discussed in later Cases within this document. strategic case > investment risks 29

30 olympic pool redevelopment part two: economic case The purpose of the economic case is to assess the full range of options, identify the preferred approach that will deliver the required community outcomes, and quantify the likely costs and benefits of the proposed investment. 30

31 assessing the options The purpose of the investment objectives and the critical success factors is to provide the criteria against which the various alternative investment options can be evaluated; preferable options will have good alignment to the objectives, while poor options will show only limited alignment. The first step in determining the potential value for money of any solution is to assess the options that are available to the Council to produce better outcomes for the community, taking into consideration the sunk cost of the current Olympic Pool complex. In the Better Business Cases methodology, this is a multi-step process as follows: Determine the dimensions of the possible solutions and develop a long-list of available options Assess the long-list options against the investment objectives to determine whether each solution will meet the full range of requirements Assess the long-list options against the critical success factors used in the Better Business Cases methodology to determine their viability Develop a preferred solution based on the assessments This is the process that forms the structure of this section of the business case. The investment objectives in this case reflect the benefits being sought for the Tairāwhiti community, and were developed in a workshop session with senior Council staff: 1. The ability for users to enjoy an aquatic facility that meets the standards expected by the Tairāwhiti community 2. The ability to allow more people to enjoy recreational, fitness and sporting activities at Olympic Pool by extending the swimming season, increasing the number of people who can enjoy the complex during peak periods, and reducing or removing the disincentives for using the facilities. 3. The provision of a suitable learn to swim facility at Olympic Pool that can provide the infrastructure necessary for more Tairāwhiti residents to gain swimming skills and water confidence, to aid in the reduction of drowning injuries and deaths in the region. All options have been assessed against their ability to meet these investment objectives, as shown in the following table. The Treasury best practise critical success factors have also been assessed for each option. These are: Strategic fit and business needs Potential value for money Supplier capacity and capability Potential affordability Potential achievability In addition, there is a regulatory element that must be observed by any viable option. This is: The option must meet the full range of health and safety obligations for the Council s operations, including water quality standards economic case > options assessment 31

32 options development The option dimensions were developed during a workshop session with senior Council staff. As a result of these deliberations, five option dimensions were identified. These are: The scope of the solutions, ranging from do nothing to an aspirational aquatic centre The service solutions, ranging from altering the current complex through to relocating it to a different location The service delivery options, ranging from the Council owning and operating the entire facility through to leasing key elements of the complex to the private sector The implementation options, ranging from staged upgrades and construction over a period of time to full closure and reconstruction of the complex The funding options, from being fully funded by the Council through to fully funded by the private sector The different option dimensions will interact with one another to produce the short-listed and preferred option; the preferred option for the business case is constructed from the preferred option in each of the dimensions. This can be shown graphically as shown at right: Looking at the range of alternatives within each dimension resulted in the following long-list of options. economic case > options development 32

33 options long-list Option Scope Options Do nothing Do minimum Targeted changes Major upgrades New aspirational facility Solution Options Retain facilities at the existing seafront location Move the facilities to the location of another pool in Gisborne Build new facilities at a green fields location Service Delivery Options Council owned, maintained and operated Council owned and maintained pool facilities, retail areas leased Council owned and maintained, swim school and retail facilities leased Implementation Options Staged implementation across multiple years, facilities remain partially open Complete closure while all work is undertaken in a single stage Funding Options Solely Council funded Partial Council funding, external Trust and fundraising contribution Solely external Trust and community fundraising Description Continue to operate Olympic Pool in its current form, with routine maintenance only Continue to operate Olympic Pool in its current form, with some small-scale upgrades to fix immediate problems or address infrastructure failure as it occurs, such as hydroslide leaks Make targeted changes to the complex to address outstanding issues, such as remediating pool surrounds, replacing the main pool roof at the end of its life and addressing hydroslide leaks and cosmetics. There are no major structural changes to areas such as the main pool structure or hydrotherapy pool Make wide-ranging changes to the complex to improve functionality, including altering the main pool structure, renovating the hydroslide, improving pool surrounds and spectator areas, renovating the changing facilities, replacing the hydrotherapy pool and upgrading the recreational facilities, and constructing a purpose-built learn to swim facility Demolish the existing complex and replace it with a purpose-built regional aquatic centre with multiple indoor pools, indoor hydroslide and recreational facilities, learn to swim school, and additional recreational and sporting facilities such as a café and gym Retain the existing seafront location for the complex, with the ability to expand onto adjacent Council-owned land if required Upgrade or alter another facility in Gisborne such as Enterprise Pool to meet the needs of the community and achieve the investment objectives Construct new facilities in a different location on land that is either owned by the Council or that is purchased specifically for the purpose The Council owns and maintains the facility, and operates all aspects of the complex, including the retail areas and the learn to swim school The Council owns and maintains the facility, and operates the aquatic aspects of the complex, including the pools and the learn to swim school. Retail areas are leased to a suitable private sector operator The Council owns and maintains the facility, and operates most of the aquatic aspects of the complex, including the pools. Retail areas are leased to a suitable private sector operator. The learn to swim school is leased to a suitable public or private sector operator The facility is upgraded or constructed in stages, with the remainder of the complex remaining open while work is undertaken The existing facility is closed while all upgrade or construction work is undertaken in a single stage All capital investments are funded by the Council Council make a contribution to the capital investments, with the balance made up from external Trusts and community fundraising efforts All capital investments are funded from external Trusts and community fundraising efforts The available options have been analysed against the investment objectives and the critical success factors. Each option in each dimension was categorised using a RAG status, as follows: Status Description Likely to meet the objective or critical success factor May not meet the objective or critical success factor, or carries material risk or uncertainty Unlikely to meet the objective or critical success factor The results of the analysis of the long-list of possible options is shown in the following table. economic case > options long-list 33

34 options analysis Description Scope (What) Solution (How) Service Delivery (Who) Implementation (How) Funding Investment Objectives Critical Success Factors Strategic Fit Value for Money Supplier Capability Affordability Achievability Regulatory Improved recreational, training and fitness user experience Improve recreational participation rates Improved water safety and confidence for children and adults Increase the opportunities for people who are currently inactive to participate Provide facilities that maximise recreation opportunities Optimises value for money Creates greater participation and engagement Service provider(s) can meet the needs Service provider(s) have the capacity Affordability must match ambition Matches other funding constraints Internal and external skills exist and are available Meet the full range of Health and Safety obligations Do nothing Do minimum Targeted changes Major upgrades New aspirational complex Retain facilities at the existing seafront location Move the facilities to the location of another pool in Gisborne Build new facilities at a green fields location Council owned, maintained and operated Council owned and maintained pool facilities, retail areas leased Council owned and maintained, swim school and retail facilities leased Staged across multiple years, facilities remain partially open Complete closure while all work is undertaken in a single stage Solely Council funded Partial Council funding, external Trust and fundraising contribution No Partial Partial Yes Yes Yes Unknown Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No Partial Yes Yes Yes Yes Yes Yes Yes Partial Yes Yes Yes Yes Yes Partial Partial Partial Yes Yes Yes Yes Yes Yes Yes Partial Yes Yes Yes Yes Yes Partial Partial Partial Yes No Yes Unknown No Yes Yes Yes Yes Yes No Yes Yes No No Partial Yes Yes Yes Yes Yes Yes Yes Partial Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Partial Yes Yes Yes Yes Yes Yes Yes Partial Yes Yes No Yes Yes Yes Yes No Yes Partial No Yes Yes Yes Yes No No Yes Yes Yes Yes Yes Yes No Yes Partial No Yes Yes Yes Yes No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Partial Partial Yes Yes Yes Yes Partial Partial Partial Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Summary Discount Discount Discount Progress Discount Progress Discount Discount Progress Progress Progress Progress Discount Discount Progress Discount Option Progressed to Solution Option Short List Yes Yes Yes Yes Yes Yes Yes Solely external Trust and community fundraising economic case > options long-list 34

35 scope options Do nothing Continue to operate Olympic Pool in its current form, with routine maintenance only Do minimum Continue to operate Olympic Pool in its current form, with some small-scale upgrades to fix immediate problems or address infrastructure failure as it occurs, such as hydroslide leaks Targeted changes Option rejected options analysis The goals of improved recreational experience, better participation and improved water safety cannot be realised unless changes are made to the existing facilities. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Option rejected The goals of improved recreational experience and better participation are unlikely to be realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Option rejected Make targeted changes to the complex to address outstanding issues, such as remediating pool surrounds, replacing the main pool roof at the end of its life and addressing hydroslide leaks and cosmetics. There are no major structural changes to areas such as the main pool structure or hydrotherapy pool The goals of improved recreational experience and better participation will only be partly realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Major upgrades Make wide-ranging changes to the complex to improve functionality, including altering the main pool structure, renovating the hydroslide, improving pool surrounds and spectator areas, renovating the changing facilities, replacing the hydrotherapy pool and upgrading the recreational facilities, and constructing a purpose-built learn to swim facility Option preferred The new configuration of the facilities means that the goals of an improved recreational experience and improved water safety can be met, and participation rates are likely to rise as a result. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance New aspirational facility Demolish the existing complex and replace it with a purpose-built regional aquatic centre with multiple indoor pools, indoor hydroslide and recreational facilities, learn to swim school, and additional recreational and sporting facilities such as a café and gym Option rejected While an aspirational facility will meet all the goals of an improved recreational experience, better participation rates and improved water safety, the cost and complexity of the facility means that it is unlikely to be affordable or represent value for money for the community. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance solution options Retain facilities at the existing seafront location Retain the existing seafront location for the complex, with the ability to expand onto adjacent Council-owned land if required Option preferred Further developing the existing location delivers the investment goals whilst being costeffective for the community and leveraging other facilities such as the seafront boardwalk. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Move the facilities to the location of another pool in Gisborne Option rejected Upgrade or alter another facility in Gisborne such as Enterprise Pool to meet the needs of the community and achieve the investment objectives The goals of improved recreational experience, better participation and improved water safety may not be realised unless extensive changes are made to the other facility. The costs of doing so may well be higher at the new location, for no additional benefit to the community. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Build new facilities at a green fields location Option rejected Construct new facilities in a different location on land that is either owned by the Council or that is purchased specifically for the purpose Building new facilities at a green fields location is likely to meet all the goals of an improved recreational experience, better participation rates and improved water safety. However, the cost and complexity of doing so means that it is unlikely to be affordable or represent value for money for the community. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance economic case > options analysis 35

36 service delivery options Council owned, maintained and operated The Council owns and maintains the facility, and operates all aspects of the complex, including the retail areas and the learn to swim school Council owned and maintained pool facilities, retail areas leased The Council owns and maintains the facility, and operates the aquatic aspects of the complex, including the pools and the learn to swim school. Retail areas are leased to a suitable private sector operator Council owned and maintained, swim school and retail facilities leased Option preferred options analysis The goals of improved recreational experience, better participation and improved water safety cannot be realised unless changes are made to the existing facilities. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Option preferred The goals of improved recreational experience and better participation are unlikely to be realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Option preferred The Council owns and maintains the facility, and operates most of the aquatic aspects of the complex, including the pools. Retail areas are leased to a suitable private sector operator. The learn to swim school is leased to a suitable public or private sector operator The goals of improved recreational experience and better participation will only be partly realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance implementation options Staged implementation across multiple years, facilities remain partially open The facility is upgraded or constructed in stages, with the remainder of the complex remaining open while work is undertaken Option preferred Further developing the existing location delivers the investment goals whilst being costeffective for the community and leveraging other facilities such as the seafront boardwalk. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Complete closure while all work is undertaken in a single stage Option rejected The existing facility is closed while all upgrade or construction work is undertaken in a single stage The goals of improved recreational experience, better participation and improved water safety may not be realised unless extensive changes are made to the other facility. The costs of doing so may well be higher at the new location, for no additional benefit to the community. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance funding options Solely Council funded All capital investments are funded by the Council Option rejected The goals of improved recreational experience, better participation and improved water safety cannot be realised unless changes are made to the existing facilities. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Partial Council funding, external Trust and fundraising contribution Council make a contribution to the capital investments, with the balance made up from external Trusts and community fundraising efforts Option preferred The goals of improved recreational experience and better participation are unlikely to be realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance Solely external Trust and community fundraising All capital investments are funded from external Trusts and community fundraising efforts Option rejected The goals of improved recreational experience and better participation will only be partly realised, and the goal of improved water safety will fail to be met. Critical success factors: Strategic fit Value for money Supplier capacity and capability Potential affordability Potential achievability Regulatory compliance economic case > options analysis 36

37 preferred option Based on the analysis, the preferred option for the Olympic Pool complex is to: Conduct a major upgrade of the existing Olympic Pool site in a staged multiyear project, funded from a mix of Council, Trust and community fundraising sources, aimed at delivering improved user experience, better participation and improved water safety and confidence outcomes. The Council will operate the complex until the completion of the project, at which stage interest can be sought for the operation of the retail areas and the learn to swim school. On the basis of the responses, Council can then make a decision about the right mix of public sector, not-for-profit and private sector service provision at Olympic Pool. This approach is likely to deliver the best outcomes for the Tairāwhiti community, whilst meeting the critical success factors of affordability and achievability. The purpose of this guide is to provide a standardised, step-by-step process for the planning, design, procurement, construction and operation of community sport and recreation facilities. It supports continual improvement in the design and development processes for facility development and responding to community expectations, economic pressures and facility operators feedback. Sport NZ has recognised the varying quality of facility development in New Zealand, so has invested in developing this guide as a tool to enhance community sport and recreation outcomes, including increased participation and quality of experience. The documents, drawings, plans and processes in this guide are aimed at encouraging early community engagement in determining the demand and needs for development, and in the early briefing and design stages of new projects. They aim to give a better understanding of how cost-effective designs and efficiently operated facilities can offer resource savings and help address health, well-being and demographic issues, thereby better serving the specific needs of individuals and local community groups In order to provide the Rough Order of Cost (ROC) estimates for the business case, a possible configuration for Olympic Pool needs to be defined. However, the design of the complex will require considerable community input, along with specialist advice on architecture, engineering, geotechnical issues, water management, heating and ventilation, and a number of other technical considerations. Given the design of the complex will be completed after the business case has been considered by the Council, a mechanism for estimating the likely construction and operation costs for the proposed investment is required. We have therefore relied on the Sport NZ Facilities Guide to provide the analytical framework for the estimates: The Sport NZ Facilities Guide has two elements that have been used to identify the likely scope and costs for the proposed investment at Olympic Pool: 1. An estimation breakdown of the typical elements of a regional aquatic centre, based on costings undertaken in late Case studies of other aquatic centre projects in New Zealand Using these tools, a possible configuration has been created to allow the costs to be estimated. However, the actual design for the complex will need to be agreed with the community, so the configuration should be seen as indicative only. economic case > preferred option 37

38 Sport NZ estimation approach In order to establish the costs of the proposed redeveloped Olympic Pool, the Sport NZ guide has been used as the objective source of data about the likely costs of building and operating the facility. As Sports NZ notes, community sport and recreation usually operates at a net cost to the community. Some of these costs are embedded by decisions made in the planning and design phases. There is a myriad of attributes that will impact on the capital cost and operating cost of the facility and too many to list here. The traditional triangle of cost, quality and time identifies that a project can optimise for two at the expense of the third, but it is impossible to maximise all three at once for each attribute. The scales to the right illustrate that there is a spectrum available for most, if community level of competition/training high performance lower capital cost of provision higher higher flexibility of space lower basic quality of materials (capital cost) high shorter functional life of materials longer higher cost of renewals over the life of the facility lower low use of daylight high higher lighting (operational cost) lower not all, attributes and there are compromises and trade-offs needed to achieve an affordable facility for a community with a limited population or high levels of deprivation, such as in Tairāwhiti. Decisions need to be made as to where on the scale of importance each of the components attributes impact on the affordability of the facility. Bearing in mind the functional trade-offs between the various elements, the Sport NZ analysis then examines two aspects of a proposed facility; the configuration, and the quality of the construction. Each of these has a range of possible options, from a relatively small-scale facility with a basic construction standard to a full metro-sized multi-use complex with high amenity values. The Sport NZ analysis is based on construction of an entirely new facility, rather than the reinvigoration of an existing complex. Nevertheless, the size comparisons and construction quality analysis is relevant for Gisborne, and will allow likely construction costs to be estimated. economic case > estimation approach 38

39 The Sport NZ analysis assumes the construction of a new multi-use facility that incorporates indoor courts in addition to pools for community and sporting use. While this is not directly comparable to the proposed changes to Olympic Pool, both the size and configuration of the medium-sized facility the reference option are relevant for the Tairāwhiti region. Option Small facility Medium facility (reference option) Large facility Metrics % Area % Area % Area % Core sporting areas 70 1, , , Courts ,425 Pool hall 870 1,400 1,905 Fitness centre Essential support areas (storage and changing) Foyer/circulation/public WCs Internal plant areas Core management areas (reception/staff areas) Other areas (cafe and spectator seating) Cafe/vending Spectator seating Retail/wellness Total ground floor area (m2) 100% 2,670 3,720 7,065 Car parking Capital cost range $10,680,000 $15,953,000 $28,260,000 Operating cost range per annum $1,465,000 $1,664,000 $2,195,000 Typical population catchment <10,000 10,000-50,000 >100,000 Bearing in mind the size of the regional population and the current size and configuration of the Olympic Pool complex, the reference option is likely to provide the best indication of likely redevelopment costs, based on a per square metre construction rate. In terms of usage, staffing and operational costs, Olympic Pool is broadly comparable to the Sport NZ reference option. Overall construction costs will also depend on the level of fit-out and construction quality, the alternatives for which are examined on the next page. economic case > facility configuration 39

40 facility quality The Sport NZ report notes that the quality of the construction materials and fit-out chosen for the facility will make a significant impact on the overall costs. In the table below, the reference (medium facility) option from the previous page is assessed, using a range of construction methods and materials. While the core of the building uses the same materials, the bottom line impact of the choices makes a difference of nearly $3 million or some 20% of the value of the project: Quality Low Cost Moderate Cost High Amenity Pool Hall Building fabric Kingspan wall and roof panels Kingspan wall and roof panels Kingspan wall and roof panels Acoustic treatment Nil Limited acoustic panelling Recommended acoustic panelling Wall glazing Nil Limited Wall glazing to provide views to foyer and entry spaces Roof lights (daylighting) Nil Nil Roof lights to provide daylighting and amenity Pool finish with liner Stainless steel Stainless steel Fully tiled Floor finish Broom-finished concrete concourse Epoxy Fully tiled Volume Low 4m high volume 4-6m high volume 5-7m high volume Spectator seating Nil Single bench 2 or 3 rows of bleachers Changing rooms Paint block walls, sealed concrete floor Paint block walls, epoxy or tiled floor Fully tiled floor and walls Foyer and admin areas Carpet tile, paint GIB and suspended ceiling Floor tile, paint GIB and suspended ceiling Polished concrete, wall tiles and feature ceiling Capex cost range $13,962,490 to $15,271,475 $14,146,230 to $15,971,530 $14,837,400 to $16,751,910 Areas of compromise Maintenance Acoustic performance Amenity Daylighting Visual connections Competition level of play Acoustic performance Amenity Visual connections Competition level of play Cost The issue of construction quality and materials selection also impacts the likely operational and maintenance costs of the building as it ages, which is explored in later sections. On the following page, the Huia Pool in Lower Hutt is discussed as a case study for municipal pool redevelopment. economic case > facility quality 40

41 case study: Huia Pool extension Project Client Design Team Huia Pool extension, incorporating LTS, programmes pool and gymnasium Hutt City Council Architecture HDT/Opus Status Construction start May 2016 Construction Procurement Size Pool area as % of new building footprint Cost 18 months (estimated) Traditional 230m2 48% $6.2m construction, $9.3m total m2 rate Approximately $3,540/ m2 including siteworks and landscaping Construction of significant extensions to Huia Pool in the Hutt Valley, Wellington began in May The proposed addition is sympathetic in scale to the existing building. Intensive value management was required to align the scope with the budget. Rather than reduce the size of the building, the decision was made to provide a building that had good bones, where the level of finish could be upgraded later as funding permitted. Key affordable design features were used to achieve the budget, which is $9.3 million. The complex includes a 25m learners pool, 25m hydrotherapy pool and mezzanine floor gym. economic case > estimated costs 41

42 estimated construction costs Using the Sport NZ estimates as a starting point, some assumptions can be made about the likely costs of redeveloping Olympic Pool. These are: While the existing pools will be retained, they will require refurbishment and modification to meet the requirements of the community in the coming decades The current roof structure on the main pool will need to be removed, and will be replaced by a conventional pool hall that meets modern design and construction standards A new learn to swim facility will be constructed, complete with a dedicated learn to swim pool and changing rooms The hydrotherapy pool will be redeveloped to meet the needs of both rehabilitation and recreational users The current buildings will be redeveloped and refurbished to ensure there are adequate changing rooms, bathroom facilities, retail and management areas Some exterior elements such as the hydro-slide will be refurbished to bring the facility up to modern standards and address outstanding maintenance issues The existing water treatment and heating plants will be retained and upgraded as needed to meet increased demand from year-round operation Olympic Pool will remain primarily an aquatic centre, and no indoor sports facilities will be added to the site at the current time Car parking, landscaping and external areas will be refurbished as necessary to ensure there are adequate facilities of a suitable standard to be in the range of $14 million to $17 million, plus contingency for items such as unexpected geotechnical works. This is broadly comparable with the cost per square metre for the Huia Pool extension in the Hutt Valley cited above. Refining the costs will be a multi-stage process, as follows: 1. Once the council decides to proceed with further investigation, an indicative design will be prepared. A quantity surveyor will then be engaged to conduct more detailed costings for the facility. 2. The community will be consulted on the indicative design and costs, so the configuration of the facility and the quality of construction can be agreed. This will then allow the quantity surveyor to complete more detailed and accurate costings, which will be used to inform the procurement process. 3. During the procurement stage, negotiations will refine the specification and the costs of the facility further, until a final contract figure is agreed. Based on the likely scope of work, the redevelopment effort is estimated to be comparable to the reference option described by Sport NZ. A range of choices are then available for the quality of construction and fit-out, from a low-cost option to one with high amenity values. The decisions about the specific configuration and the quality level of the facility will need to be made in consultation with the community. Working from these assumptions, the Rough Order of Cost estimates are likely economic case > estimated costs 42

43 estimated operating costs The Sport NZ research has also been used to estimate the likely operating costs for the Olympic Pool facility. These vary in some key areas from the current operating Administration costs are projected to increase to reflect a more accurate allocation of costs from the council costs, as shown in the table: The Sport NZ facilities guide notes that the revenue return on costs for an aquatic Current Projected centre in New Zealand ranges from as low as 25 percent to just over 100 percent, Operating Revenue $(526,289) $(730,000) with a mean at around 55 percent. Sales Revenue $(125,563) $(150,000) User Fees $(378,225) $(555,000) In this context, the current ratio for Olympic Pool of 37% is towards the lower end Rental Income $(22,501) $(25,000) of the scale. This is expected to increase to around 44% once the redevelopment $1,419,842 $1,664,000 while operating and maintenance costs fall. However, a significant ongoing subsidy Goods for Resale $83,025 $99,000 from rates will be required on an annual basis. As per the Long Term Plan, the Salaries $663,445 $980,000 current operating costs are funded as follows: Staff Training + Travel $11,332 $60,000 Professional Services Costs $64,235 $100,000 Operational Costs $305,494 $270,000 of the complex is complete, as revenues from improved attendance are likely to rise Operating Expenditure 40% Fees and Charges 60% Weighted Differential Targeted Rate based on Capital Value; weighted: Repairs & Maintenance $273,676 $40,000 Administration Costs $18,635 $115,000 Rates subsidy required $893,553 Ratio 37% Inner Zone 1.0 Outer Zone 0.3 $934,000 44% The primary variations between the current operating costs and the Sport NZ projections are as follows: User fees are projected to increase due to improved attendance numbers at the redeveloped facility Salaries and staff training costs are projected to increase due to higher staffing levels Operational costs and repairs & maintenance are projected to fall, due to the more efficient operation and considerably better condition of the facility once redevelopment is complete economic case > operating costs 43

44 olympic pool redevelopment part three: financial case The purpose of the financial case is to identify the available sources of funding for the proposed facility, articulate how the funding will be obtained and any conditions that are likely to be attached to it, and to assess the impact of the proposed investment on the Council s financial statements. 44

45 funding sources capital funding sources Funding sources for the construction costs of the project are: Regional stakeholders External contributors as per a Revenue Generation Strategy The Gisborne District Council The purpose of a Revenue Generation Strategy is to assess the likely funding available for the facility from a range of sources, including corporate naming rights and sponsorship, central government contributions, charitable trust donations and others, and to articulate a plan for acquiring external funding for the project. regional stakeholders There may be the opportunity to discuss co-funding opportunities with specific regional stakeholders, such as the DHB, for either the capital or operating costs associated with specialist facilities such as the hydrotherapy pool. These negotiations should take place during the detailed design phase. revenue generation strategy There are a number of options are available to the Council for funding the capital costs of construction. These include: Central government funding e.g. Lotteries funding Trust funding (Community/Philanthropic, Private and Gaming) Corporate Sponsorship Partners e.g. Comet Swimming Club Community fundraising Revenue Generation Strategy. The RGS will set out a comprehensive and strategic plan for maximising funds from a range of diverse sources for the development and operational funding of the facility. council funding As noted in the Council s Long Term Plan: With regards to the Olympic Pool the scope of the works to be undertaken is not yet confirmed. The Pool redevelopment can be considered and undertaken in smaller component parts. The scope and staging of these component projects is an option the Council has to make the redevelopment more affordable. This option would also balance the need to address a number of remedial works at the Pool with the desire for overall improvements to the facilities. We have anticipated capital expenditure of $10.5m for redevelopment of the Olympic Pool over 5 years. We anticipate to receive $10.5m (100% of cost) in grant funding for the Olympic Pool redevelopment. Advice from funding specialists indicates that the Council will need to supply around a third of the capital funding as an indication of the regional commitment to the project in order for other parties to participate. This means that Council funding of approximately $5.5 million would be required in the period While the Council regularly uses some of these options such as local and central government funding sources others require a degree of specialist expertise to develop the case and collateral for applying to the various corporate and not-forprofit entities if there is to be a reasonable chance of obtaining funding. It s this requirement for specialised expertise that is likely to require the development of a financial case > funding sources 45

46 affordability and funding constraints council funding strategy debt funding cap The Council s current Financial Strategy was adopted in the Long Term Plan (LTP), and outlines the fiscal envelop that matches the Tairāwhiti community s ability to pay. Under the Financial Strategy, external debt levels are to be kept within the range of $18-$55m, while rates increases are targeted to stay within the range of 2%-3% over the duration of the LTP. In the LTP, the Council s external debt is forecast to peak at $54m to $55m in This debt profile reflects the proposed capital works programme and its funding as agreed in the Long Term Plan, and results in the Council s financial position being very close to the affordability limits that have been set. The proposed $5.5 million in capital investment for Olympic Pool has not been included in the debt estimates above, and would constitute new borrowing. Using the likely capital and operational costs for the redevloped Olympic Pool estimated from the Sport NZ guidelines, the impacts are as follows: Operating costs rise from approximately $890,000 per annum to approximately $935,000 per annum, with a resulting increase in rates of 0.08% The capital contribution projected by Council of $5.5 million would require a rates increase of 0.85% to repay. These figures do not include allocated Council overhead costs. In total, a rates increase of approximately 1% is likely to be required to fund the investment. In assessing whether to proceed with the investment, consideration will need to be given to whether the additional capital investment can be accommodated within the overall debt limits of the Council. Based on the current debt forecast, the investment cannot be accommodated in the timeframe. Three alternatives therefore exist: 1. The Council can choose to prioritise the redevelopment of Olympic Pool over other proposed investments in the LTP, thus allowing the investment to be accommodated within the existing debt cap or any future adjusted debt cap 2. The Council can delay the redevelopment of Olympic Pool until sufficient headroom is available within the debt cap 3. The Council can choose to not invest in the redevelopment of Olympic Pool in order to keep within the debt cap, on the basis that other investments have a higher priority. A decision on these matters will need to be made by elected members as part of the overall LTP capital works programme. financial case > funding constraints 46

47 olympic pool redevelopment part four: commercial and management cases 47

48 As noted in the Long Term Plan, it is anticipated that the redevelopment of Olympic Pool will be conducted over a 3-5 year period, which will allow parts of the facility to remain open while work is undertaken. However, the sequencing and timing of each stage will depend on the final design, which has yet to be decided. The timeline below shows the steps necessary to get from initial business case to the likely completion of the first stage. Following completion and approval of the business case, conceptual designs will be prepared, which can then be consulted on with stakeholders (such as the Comet swimming club and the District Health Board) as well as with the wider community throughout the Council s Long Term Plan process. Following feedback and input from the consultation, the detailed design can be finalised in parallel with the initial stages of the procurement process. This will allow for potential early contractor involvement in the design depending on the procurement approach used which can provide useful refinement of the construction methods for the chosen design. Early contractor involvement is an increasingly frequent way of using the knowledge and expertise of the construction industry to reduce the risks and costs of major projects. Once the design has been finalised and the consultation completed, the construction stages can commence. The sequencing of the work will be negotiated as part of the procurement phase, so the timeline for the first stage shown below should be regarded as indicative only. Business case development and approval Requirements and design Community consultation Detailed design, engineering and consenting Procurement and contracting Construction Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 commercial case > project sequencing 48

49 procurement strategy The procurement strategy considers the procurement options through the design and construction phases to deliver affordable solutions. It is considered best-practice for councils to use the government s approved procurement framework, as this can significantly reduce the time taken to select and appoint suitable suppliers. There are a variety of methods for tendering, which include open, pre-selected, closed, negotiated and sole-source tendering. In turn, there are several delivery models available, which represent varying degrees of complexity, risk, innovation, client involvement and programme influence. The necessary consultants can be selected by tender or from an existing panel, which will be based on pre-established criteria. Typical selection criteria include the previous experience of the company and people in the design of facilities, as well as price. 7. Selection of contractor the process for contractor selection and the criteria for selection. 8. Contract form and payment mechanism the most appropriate contract form to manage the project risks, and how the payment mechanism will be defined within that contract. 9. Specific contract mechanisms specific contract mechanisms for this type of facility. 10. Roles and responsibilities delegations and clarity of authority and responsibility. 11. Key requirements and documents specific documents for this type of facility. roles and responsibilities There are a number of roles required for the procurement of the proposed investment. The project manager will typically prepare the procurement strategy, tender documentation and scope, and manage technical inputs to the procurement documentation. The procurement strategy defines the procurement process for the project. This may be prepared internally by the Council or externally, such as by the project manager or architect. The procurement strategy will consist of the following elements: A critical role is the Council s Senior Responsible Officer, who has suitable delegation and authority to approve the procurement steps. Another critical role is the interface between design and operations. This role should focus on providing clarity for approvals to handover the facility to the Council. 1. Investment objectives definition of the project objectives, risks and constraints and their effects on the procurement process. 2. Policy frameworks definition of the guiding policies and frameworks that relate to the scope of the project, from both the Council and government. 3. Project scope a clear description of the project scope required to achieve the objectives. 4. Tendering approach open, pre-selected, closed, negotiated, sole-source. 5. Contracting type the delivery method that is best suited to achieve the project objectives and mitigate project risks. 6. Selection of consultants the process for consultant selection and the criteria for selection. Other key roles include technical and consultant support: Project management and reporting. Sport and leisure facility planning and operating advice. Technical advice (architect/cost consultant/other technical disciplines). Financial advice Legal advice. commercial case > procurement methodology 49

50 required services In order to successfully deliver the project, a number of services will need to be procured by the Council as follows: Service Project Manager Project Engineer Quantity Surveyor Architect Structural Engineer Fire Engineer Mechanical/HVAC/hydraulic/ electrical engineer Acoustics Engineer Pool Water Specialist Civil Engineer Geotechnical Engineer Planning Officer Legal Advisor Construction Contractor Required scope Responsible for delivery of the project scope, cost, time and quality, including procurement of the team to achieve the outcomes. Reports to the SRO. Involved from initiation through to handover to operations. Can be an internal resource or externally procured. Can sometimes include design management to support the design coordination role Responsible for the administration and management of the construction contract Responsible for developing and agreeing the capital cost estimation methodology. Also updating the project control budget and providing assessments for variations and progress claim certificates. Scope to include whole-of-life costs for plant selection Typically lead consultant, and responsible for the provision of detailed design drawings and technical specifications and monitoring the construction in accordance with New Zealand Institute of Architects observation levels 1-5 to achieve the intent of the design. Responsible for building consent process, lodgement, responses and obtaining approvals. Key role is design coordination of all of the consultants Provides detailed design drawings, technical report and technical specifications Provides construction monitoring during the construction phase, assists with design-related issues in accordance with IPENZ construction monitoring levels 1-5, and as per scope of services Provides certification of design in accordance with relevant standards and to achieve the Code Compliance Certificate (CCC) Provides detailed design drawings, technical report and technical specifications Provides construction monitoring during the construction phase, assists with design-related issues in accordance with IPENZ construction monitoring levels 1-5, and as per scope of services Provides certification of design in accordance with relevant standards and to achieve CCC Provides detailed design drawings, technical report and technical specifications Provides construction monitoring during the construction phase, assists with design-related issues in accordance with IPENZ construction monitoring levels 1-5, and as per scope of services Provides certification of design in accordance with relevant standards and to achieve CCC. Provides report with design recommendations and drawings for incorporation into the architect s documentation Provides specialist advice with recommendations for incorporation into the design Provides detailed design drawings, technical report and technical specifications Provides construction monitoring during the construction phase, assists with design-related issues in accordance with IPENZ construction monitoring levels 1-5, and as per scope of services Provides certification of design in accordance with relevant standards and to achieve CCC Provides detailed design drawings, technical report and technical specifications Provides construction monitoring during the construction phase, and is responsible for dealing with the site ground conditions, foundations and groundwork required Provides certification of design in accordance with relevant standards Provides consenting strategy, schedule of consents required, specific planning advice, assessments of environmental effects and scoping of technical assessments, and includes lodgement and processing support for the resource consents Provides legal advice as required for planning, consenting and compliance purposes Constructs the facility to the supplied designs, managing all subcontractors as required commercial case > required services 50

51 procurement phases The following table shows the various phases of the procurement process: Milestone Description Purpose Pre-Procurement Prepare strategy and documentation Procurement Industry briefing Request for tenders/proposals Preparation of all tender documentation including: Agreed procurement strategy Consultant request for proposals Contractor request for tenders Tender evaluation criteria Meeting with consultants/contractors/ operators to present project scope and objectives Invitation to tender to select group of contractors/ consultants/ operators Clarify the scope and requirements of the procurement process Consult parties prior to tender with the intent that planning for the preparation of a tender can commence Formal tender process to a select group of contractors/ consultants/ operators to bid competitively for the relevant contract Receipt of tenders Close of tender period Tender evaluation Process implemented to assess the preferred contractors/ consultants/ operators Determine the most suited contractors/consultants/operators to achieve the project objectives Tender interviews Interviews of preferred and next preferred contractors/ consultants/ operators Understand proposition in more detail and discuss key points of tender Contract negotiation Final negotiations once preferred contractors/consultants/ Agree on terms of contract operators selected Contract award Award of consultant/construction/ operator contracts Enables preferred party to organise resources Contract execution Signing of contracts Official start date Early operator involvement Approach implemented to include operator in design Supports improved teamwork, innovation and delivery commercial case > procurement approach 51

52 procurement approach There are a number of options available to the Council to procure the correct services for the proposed redevelopment of Olympic Pool. The options and their likely suitability for the project are as follows: Approach Summary Rating Open tender Pre-selected tender Existing procurement panel Competitive dialogue Closed tender Negotiated tender Sole source tender The open procedure is suitable where the contract is straightforward, with a limited requirement for specific skills/technical capacity, and where there is a limited number of potential contractors/consultants. It allows for a combined pre-qualification and tender assessment The pre-selected tender is suitable when specific skills/technical capacity are needed and there is a limited number of potential contractors/consultants. Advice should be sought from specialists in procurement or sports facilities Typically, an existing procurement panel will have a pre-qualification for specific skills/ technical capacity. This is a potential approach if access to an existing panel, with a specific facility skill-set, is demonstrated This procedure should only be used for complex contracts where the local authority does not have defined service requirements or is not able to identify clearly its legal and/or financial requirements. This procedure is most commonly used for high-value and innovative contracts Similar to the pre-selected tender and suitable for when specific skills/technical capacity are needed and there is a limited number of potential contractors/consultants. Advice should be sought from specialists in procurement or sports facilities Subject to relevant procurement policies, a negotiated tender between no more than two parties may be a suitable procurement approach when specific skills/technical capacity are needed and there is a limited number of potential contractors/consultants. Both parties would need to have specific sports facility experience Subject to relevant procurement policies, a negotiated sole source tender may be a suitable procurement approach when specific skills/technical capacity are needed and there is a limited number of potential contractors/consultants. The party would need to have specific sports facility experience. Irrespective of the process to select the required consultants and the construction company for the project, an evaluation framework will be used to assess the offerings available from the various interested parties. This uses four criteria: Price - has the tenderer demonstrated good value for money? Knowledge and experience - Has the tenderer demonstrated good knowledge of the sport and recreation sector? Have they demonstrated their skills through the completion of other/similar projects? What were the outcomes of those projects? Have references from those projects been provided? Methodology - Has the tenderer demonstrated a good understanding of the project? And does the process they have outlined make sense and is likely to work? Personnel - Is the tenderer able to call upon people with different/necessary skill-sets to complete the project? And what is the risk to your investment should the lead consultant or nominated key personnel leave mid-project? commercial case > procurement approach 52

53 payment mechanisms It is likely that almost all facilities will be delivered as lump sum payments, but there may be scope items that can be undertaken on a measure and value basis (eg, plant). A description of the payment mechanisms is included below. Payment mechanism Description Lump sum Where the scope is clearly defined Where risks are small and identifiable Schedule of prices can be used, but is not necessary Tenderer does own measure for pricing Longer tender period Variations likely to be minimal Higher risk to contractor may be reflected in higher tender price Where the client needs early knowledge of the final project cost Measure and value Where the scope is defined Where quantities may vary Schedule of prices is necessary Allows an early start to construction activities Normally equitable to both client and contractor May allow for variations in construction methods to suit variable conditions encountered during the work, especially for civil engineering work Cost reimbursement Allows an early start to construction activities before design and documentation are complete Requires selection/negotiation with one preferred contractor (usually on the basis of reputation or resource availability) Allows great flexibility to vary the work or to speed up/slow down the project Final costs are not fixed and it can be difficult to forecast out-turn costs for project unless suitable project controls in place Commonly used for high-risk work so that the client carries the risks, paying the actual resultant costs rather than a premium for risk protection Much higher level of client involvement in the day-to-day decisions Short tender/negotiation period possible Combination A cost reimbursement contract with a lump sum for overheads and profit. The lump sum may be extended to cover such identifiable items as; construction equipment; scaffold and supervision A cost reimbursement contract with a lump sum for overheads and profit, plus a lump sum and/or measure and value items for appropriate sections of the work. For example, a project may have: lump sums for specified buildings; measure and value items for civil/structural work; and cost reimbursement for the mechanical/electrical and plant installation A measure and value contract for civil and building trades, with a series of lump sums for specialist trades electrical, heating and ventilation, floor coverings etc commercial case > payment mechanisms 53

54 The project will be managed using the project management methodology used by the Council for all major projects. The project will involve four stages: Project initiation (of which this Business Case process is part) Project planning Project execution Project completion and evaluation A Project Sponsor, Project Manager and Project Steering Group will oversee the project, in accordance with the Council s delivery methodology. The proposed governance structure is shown in the diagram below. Group or Individual Project Steering Group (PSG) Senior Responsible Owner (SRO) Project Manager Role and key responsibilities The primary role of the Project Steering Group is to set the direction of the project, and ensure that the investment realises the expected benefits. The SRO has accountability for the delivery of the programme and ultimately the realisation of the investment benefits. The SRO will have the authority to make decisions affecting the progress of the project. Responsibility for the day-today management of the programme is delegated to the Project Manager The Project Manager is responsible for the set-up, management and delivery of the work. They provide free and frank advice to the Project Steering Group on progress, risks and issues They work with other members of the project team to manage and mitigate stakeholder risks and issues management case > project management 54