Primary Care Centres in Ireland

Analysis of Emerging Business Opportunities

Mateusz Mrowka










BSc. Construction Economics and Management
Dublin Institute of Technology
2014
I

ABSTRACT

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

Thirteen years since an initial announcement, development of PCC is being reported as
unsatisfactory. Development aims havent been achieved and whole business model is
being criticised as flawed.

The author undertakes the research of the subject, collecting data on underlying policy
and legislature, researches technical output specifications and public-private business
arrangements concerned with development and operation of PCCs. The author believes
that the subject hasnt been comprehensively researched to date and none of the theories
has been formulated and published. The author of these dissertation chose an
explanatory approach to the subject and employs qualitative methods of research. The
compilation of results from literature review, case study and interviews allow the
forming of a personal view and introducing a theory which supports the opinion that
investment in Primary Care Facilities has a potential of profitable business but
unfortunately has been prevented from fulfilment, by flaws in the current
implementation model.













II


DECLARATION


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

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

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

Signed: ______________________________________________________________

Date: ________________________________________________________________













III


ACKNOWLEDGEMENTS


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















IV

List of Tables

Table 2.1 Indicative Financial Requirements15
Table 2.2 Accommodation Project Capital Value.16
Table 2.3 Conventional Procurement.......................... 19
Table 2.5 Operating Lease................................... 21
Table 2.6 PPP.................................... 22
Table 5.1 Area Schedule...41
Table 5.2 Life Cycle Costing....42
Table 5.3 Maintenance cost..43
Table 5.4 NPV analysis....45
Table 5.5 IRR analysis..47
Table 7.1 Variants comparison....56











V


LIST OF FIGURES


Figure 1.1 Sample PCT.. .............................................. .7
Figure 2.1 PPP PCC bundle.. ...13
Figure 2.2 Partners in delivery of PPP..................................................................... 16
Figure 2.3 Construction Stage: Payments....................................................... 17
Figure 2.4 Operational Stage: Payments 18
Figure 2.5 Decision Tree on DBOF PPP Contracts..... 22
Figure 2.6 PPP.......................................... 23
Figure 5.1 Doughiska PCC info request via e-mail ............................ 36
Figure 5.2 Doughiska PCC drawings via e-mail .............................................37
Figure 5.3 Doughiska, Co. Galway, Primary Care Centre- exterior........................... 38
Figure 5.4 Doughiska, Co. Galway, Primary Care Centre- interior.................... 39
Figure 5.5 Take-off panel screen shot. ........................... 39
Figure 5.6 Elemental Cost Plan40
Figures 5.7 IRR graph............. 48









VI


List of Abbreviations

AFL - Agreement For Lease
CPA - Certified Public Accountants
CPI - Consumer Price Index
DBFM - Design Build Finance an Manage
DOE - Department of Education
DPER - Department of Public Expenditure and Reform
EC - European Committee
FDI - Foreign Direct Investment
GCCC - Government Contract Committee for Construction
GP - General Practitioner
HSE - Health Service Executive
IAPC - Irish Association of Primary Care
IAS - International Accounting Standards
IMO - Irish Medical Organisation
IRR - Internal Rate of Return
IT - Information Technology
NDFA - National Development Finance Agency
NPV - Net Present Value
OJ EU - Official J ournal of European Union
OJ HC - Oireachtas J oint Health Committee
VII

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














VIII


TABLE OF CONTENTS


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

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

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

2.6 Accounting in HSE Projects......................................................................... ..19

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

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

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

5.8 NPV & IRR Analysis.................................................................................... 43
5.8.1 Net Present Value................................................................. 44
5.8.2 Internal Rate of Return....................................................... .46

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

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

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

1

Chapter One
1.1 INTRODUCTION

What a difference a year makes? Whilst 2013 represented another tough year in the
construction industry it also marked the first year since the start of the downturn where
certain sectors experienced growth and a real sense of optimism took hold, (Mitchel,
2014).
The Head of Aecom in Ireland, Paul Mitchel, introduces his company annual review of
the construction market, stating that the influx of foreign direct investment continued
unabated and exceeded the investment made in 2012. We saw new corporate brands
enter the market and reduce the percentage of surplus office space in our cities. 2013
saw the first of the new office buildings commence construction towards the end of the
year, signifying the viability tipping point in the market, (Mitchel, 2014). There is a
significant upsurge in further investment in high technology infrastructure data
centres, Intels industrial developments, pharmacology. Increasing Foreign Direct
Investment (FDI) is a strong indication of approval for current reforms and expanding
presence of the worlds largest companies and investors works as the best invitation for
other players to join the Irish stage where it is seen as safe, despite recent years turmoil,
and most importantly, seen as a profitable market again.
This is in stark contrast to stagnant Public sector developments harnessed by limitations
in public expenditure and worryingly unbalanced residential market, which in contrast
with the lack of investment over recent years, enters a so called two-tier market. The
situation characterised by oversupply of dwellings in areas with virtually no demand
and densely populated, urbanized areas where demand exceeds supply yielding
constantly growing prices.
The Government is bound to deliver public infrastructure in transportation, education
and healthcare, revives the concept of involvement of private equity in the delivery of
public infrastructure. The Infrastructure Stimulus Plan, announced in 2012 by the
Minister for Public Expenditure and Reform, Mr Brendan Howlin TD, amounted to
2.25 billion in multi-annual infrastructure investment will be used to facilitate the
2

delivery of Phase I of a Public Private Partnership (PPP) programme and to support
further labour intensive capital projects (DPER, 2012).
Under this plan, there is a designation for 115 Million for development of a bundle of
16 Primary Care Centres under PPP scheme, highlighting controversial issues present
with developments on Health Service Executives reform. The ambitious strategy
described in Primary Care A New Direction(HSE, 2008), where one of most
important tasks of the undergoing reform is supply of new infrastructure is valued in
excess of 1 billion. The rollout of facilities seemingly lags behind the schedule and
also political controversies surround development of the projects.
Unclear information policy,
conflicts among stakeholders,
call out for involvement of private investors and,
Constantly repeated necessity for off balance sheet accounting.
What is a factual situation in PCC rollout? Is there a space for private investors and if
so, can the Health Care be an alternative option for investment opposed to the proven
office or technology sectors? In this dissertation, I will research the issues of PCC
development by utilizing core Quantity Surveying skills and professional expertise in
relevant fields of cost planning, project appraisal and from that formulate the answers.



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

1.3 RESEARCH GOALS
The Author has selected a number of primary objectives for the research:
The review of short history of the PCC infrastructure development, review of
relevant legislation, outline output requirements;
The review of current delivery models, factual progress of implementation and
current status;
3

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


1.4 OUTLINE METHODOLOGY
The Author wishes to establish the outline methodology with the aim to execute the
research in a structured and comprehensive manner;
Stage One: Literature Review.
The Literature Review consisted of research and analysis of publicly available sources
of information on recent history, legislature, technical specifications, economic and
financial basis, relevant statistics, and reports on development of PCC infrastructure in
Ireland.
The primary source contained topical, government publications. The secondary source,
which proved to be an invaluable source for the most current data and opinions:
healthcare, construction journals, newspapers, magazines, online publications, databases
of quantity surveying practice involved in work on PCC projects.
Stage Two: Case Study.
The Author concludes development of a theoretical model for Construction Cost of
development of standard sized building, designed to accommodate three Primary Care
Teams (PCT). The model has been based on an existing building, currently in service of
HSE Board under Operational Lease in Doughiska, Co Galway. The facility was
designed by Cullen Payne Architects for a private operator.
The Model build up consists of:
A Quantity Take-Off assisted by dedicated quantity surveying software CostX
v.3.53 which is a standard software being used in Dublin Institute of Technology
(DIT) and which operating knowledge is a part of current curriculum at DT111.
The Author is a holder of current Student Licence and under its terms is entitled
to use aforementioned software for academic purposes.
Compilation of cost plan by estimation of construction costs of materials in
quantities measured in on screen take-off and relevant works value accordingly
to current, market tendering costs. Costs data sourced from a choice of recently
4

tendered winning bids on similar size and specifications projects administered
by PQS in Dublin.
Data usage restricted by copy rights and identification of projects withheld by
the owner of intellectual property, Aecom, due to commercial sensitivity.
Modelling of life cycle approximate costs of hard maintenance;
Analysing of rental arrangements under HSE operational lease scheme;
Simple financial model for project appraisal identifying financial risks of HSE
operational lease scheme;

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

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

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

1.5 OUTLINE CHAPTERS
This thesis comprises of seven chapters briefly described as follows:
Chapter One:
Here the author outlines the research area, describes the thesis and introduces the
methodology undertaken to execute the research.
Chapter Two:
The author undertakes the literature review of the researched subject. This chapter is a
first part focused on the inception of new Primary Care Centres strategy, adequate
5

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






6

Chapter Two Part One; Literature Review.

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

2.2 PRIMARY CARE A NEW DIRECTION

In line with PCCC Transformation program which outlines changes to national strategy
for delivery of optimal outcome from both health care and cost effectiveness
perspectives. Between 90% to 95% of the health and personal, social service needs of
our population can be delivered in a primary care setting. These services provide first
level contact that is fully accessible by self-referral and have a strong emphasis on
working with communities and individuals to improve their health and social well-
being. (HSE, 2008)
Alsothe aims of the proposed developments are to provide:
A greatly strengthened primary care system which will play a more central role
as the first and on-going point of contact for people with the health care system;
An integrated, interdisciplinary, high-quality team-based and user friendly set of
services for the public;
Enhanced capacity for primary care to complement the existing diagnosis and
treatment focus in the areas of prevention, early intervention, rehabilitation and
personal social services. (HSE, 2008)
New health care network is based on a core Primary Care Team PCT, offering
health services as a hybrid model including co-operating private and public
specialists. A typical PCT consist from 5 GPs, Public Health Nurse,
Physiotherapist, Occupational Therapist and Social Worker and in principle
7

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




Figure 1.1 Sample PCT; source HSE 2008

The reform, initiating an unprecedented scale shift of health care services from existing,
centralised hospitals and small, scattered around the country, obsolete healthcare units
to PCT or networks, require completely new, purpose designed and built infrastructure.
HSE has prepared the list of general indicators to be considered during development of
Primary Care Centres which base on the number of PCT per catchment area principle.
According to guidance notes - space in the facilities shall be divided to those occupied
by private (General Practitioners) and public (Health Service Executive) specialist
allowing ca. 546-670 sq.m per one PCT Centre including 364-535 sq.m for shared area.
A centre accommodating two PCTs - ca. 739-836 sq.m with 466 605 sq.m of shared
area and in case of 3 PCTs - with 518-647 sq.m of shared area. Shared areas - Common
Facilities- include all areas in the building which are accessible by, or in use by both -
8

private and HSE tenants and patients. The size of GPs rooms has not been predefined
but the average required space is 16-20 sq.m
The general division of PCC space between private, public and shared areas has the
implication for facility management and allocation of rental/management costs hence
the need to clearly set out proposed room allocation.

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

9

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


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


2.2.2 RETAIL PHARMACIES & PRIMARY CARE CENTRES

HSE acknowledge an existing trend of co-locating pharmacies in PCC throughout the
country as an attempt to accomplish one-stop-shop set up, but recognises associated
risks.
The potential for an abuse of position of trust among GPs and co-located pharmacists;
can result in possibility of patient recruitment purposes in order to maximise return on
investment, loss of choice of service supplier, inappropriate referral, inappropriate
proximity and access to medicinal products including controlled drugs, inappropriate
professional integration in the care process.
The need for effective regulation of the risk has been addressed by development of the
policy applicable in case of PCC development. Schedule of accommodation for HSE
owned PCC doesnt include an option for a retail pharmacy; dispensary is only subject
to permission. In case of facilities leased by HSE, co-locating a retail pharmacy is to be
10

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

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

2.4 OPERATIONAL (OR OPERATION) LEASE.
Delivery of the Primary Care Teams (PCT) services accommodated in facilities
acquired via Operation (Operating) Lease, are an alternative to Direct Build
11

procurement model pursued since the introduction of the current HSE strategy. This
model involves active participation of commercial entities. The authorities interested in
placing PCT services in a particular area agree to enter in to an operational lease on an
already existing, suitable, privately owned facility or more often agree to enter into the
lease on the facility to be purposely developed in compliance with HSE PC output.
The standard lease of the facility is considered upon fulfilling by the investor strict
criteria. The Board of HSE considers a scheme viable only if the proposed location has
agreed participation of GPs, suitable site possession is secured by the future landlord
(there is no option of private development on HSE owned land and the authority do not
consider land swaps) and required funding for development has been agreed and
guaranteed. The Letter of Intent which is a non-binding document - mere stating an
interest is being issued to the bidding entity or to the Most Advantageous Bidder in case
of competition. The projects design is developed; the interior adheres to HSE criteria
(Board of HSE, 2006) and envelope of a building accordingly to criteria of local
planning authorities. The future tenant have limited influence on the employed
technology or building design in terms of its sustainability. Upon completing pre
construction proceedings, providing HSE requirements are fulfilled, the investor is
awarded with an Agreement for Lease (AFL). This is a legally binding document
opening the way for commencing a construction of a facility, however still not
guaranteeing a lease. Eventually after completion of construction, upon occupation by
GPs the HSE will sign a lease subsequently accommodating its own staff. The lease for
a minimum of 15 years and a maximum of 35, with no break clause in, must offer
significant discount to current local market rents any reviews reserve a continuity of a
discount and depend on fluctuations of CPI. According to HSE in 2008-2010 the
discount achieved equalled 18 per cent however discount on leases entered to from 2011
was closer to five per cent since rents fall in general. (HSE/Comptroller, 2012)
Particular lease agreement might contain option for HSE to acquire a freehold from year
10 onwards. In particular cases the HSE might consider entering in to short term (3-5
years) lease on temporary accommodation if service delivery in the area is urgent while
waiting for construction of a fully suitable facility.
The HSE Board questioned by Office of Comptroller on rationale behind such an
extensive use of Operational Lease model and sustainability, especially versus PPP
model utilized successfully by other departments (Department of Education - Author),
argued however that both models are broadly similar in terms of costs acquired during
12

tenancy. The final outcome, takeover and ownership, is not necessarily desired and
advantageous. The key difference to a PPP is not the ownership in year 25, as this
small residual value is included in Cost Benefit Analysis, but rather it is the ability of
the HSE to break the lease and vacate the building if GPs are not present (i.e. due to
lowering demographic) in the building and participating in primary care teams. [] The
HSE considers the program to be progressing well in current economic climate and the
cost to the Exchequer compares very favourably to traditionally funded health projects.
(HSE, 2012) It is important to note that all currently leased facilities are under
operational as opposed to Financial Lease as HSE has no legal capacity to enter the
latter. I shall discuss the reasons and illustrate accounting implications in simplified
financial model in a dedicated paragraph. Currently, a majority of operating PCC
buildings are privately owned. Since 2006 HSE leased 112 centres and ca. 90 locations
are being considered. (Office of the Comptroller, 2012) Full list of facilities and
locations compiled by the author and current as per March 2014 can be found in
Appendix A.
2.5 PPP DESIGN, BUILD, FINANCE AND MAINTAIN
This is the current model being implemented for delivery of PCC infrastructure through
Public Private Partnership (PPP). Experiences acquired during past developments and
administration of PPP schemes for School Bundles 1, 2 and 3 encouraged the authorities
to introduce this form of development into a new field Primary Care Centres. The
National Development and Finance Agency (NDFA) acting as the States Financial
Advisory body for all public investment projects greater than 20 million (on both PPP
an non PPP projects) on behalf of contracting authority Minister for Health,
sanctioning authority Department of Health and finally the sponsoring authority
Health Service Executive - is in charge of procurement process and management of
construction stage through to Service Commencement. (NDFA, 2012) As mentioned
already in previous chapter a number of PCC facilities have been qualified as suited to
be developed via PPP vehicle. Complete and detailed business case has been carried out
on pre-qualified 30 locations taking to consideration indications of the HSE report on
Accommodation Needs Assessment for Primary Care Teams. Stakeholders
consultations with range of groups including GPs, HSE staff, local communities and
planning authorities has been concluded and resulted with an ultimate choice. Facilities
in sixteen locations with size ranging from 1500 m2 to 5000 m2 have been compiled to
13

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

Figure 2.1 PCC PPP bundle: source: HSE, NDFA
Currently the PCC PPP bundle contract published in Official J ournal of European
Union (OJ EU) Contract Notice accordingly to bounding in such instance Directive
2004/18/EC (as Services Contract) has passed the deadline for formulating queries and
submission of prequalification questionnaires as a form of expression of interest in
participation in the scheme. It is in fact the beginning of the long procurement process
which is best illustrated by a table on the next page.




14


Figure 2.2 Summary of Negotiate process: source: HSE, NDFA
Under the Design, Build, Finance and Maintain (DBFM) scheme the winning bidder,
called the PPP Co, will be presented with the design for facilities based on HSE Output
Specifications advanced to the stage enabling for planning application and then required
to develop and finalise the project. All aspects of financing the investment are the sole
responsibility of the PPP Co and any participation in project costs by the Exchequer are
not considered. Upon completion of the buildings, the PPP Co is required to fit out,
ensure supply of all required medical, technical and social equipment and is bound to
execute on-going maintenance for a period of 25 years post construction including:
15

Contract Management:
Building Management & Maintenance:
Life Cycle replacement;
Limited Grounds maintenance;
Security;
Cleaning;
Pest Control;
Porterage;
Non clinical Waste Management

The operation of the PCCs will continue to be the responsibility of the HSE, including
the provision of GPs (NDFA, 2012).
During prequalification process the Authorities will scrutinise the candidates assessing
their ability to successfully manage simultaneous multi-site operation (portfolio of
previous works however there is no strict requirement to identify preferred contractors
at PQQ stage). Works programme, project management and HR capacity as well as
financial condition. NDFA has published notes on indicative financial requirements
which are illustrated in the table below.

Table 2.1 Indicative financial requirements; Source: NDFA 2012
As already illustrated the complexity of the project and applying criteria makes the
tendering process particularly resource and money exhaustive over 11 months, between
publishing PIM and announcing the preferred Tender. The authorities implemented bid
compensation strategy, the Author presents general conditions in the form of the table.
Minimum Turnover (annual,
averaged over 2 years)
Net Assets
Equi ty provi der
Total (Aggregate) n/a [100million]
Constructi on Contractor
Total (Aggregate) [120 million] [40 million]
Individual [40 million] n/a
FM Servi ces Provi der
Total (Aggregate) [10 million] n/a
Indi cati ve fi nanci al requi rements
16

Table 2.2 Typical Accommodation Project; Source: NDFA 2012

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

Figure 2.2 Delivery partners in PPP; Source: NDFA 2012




Unsuccessful Tender payment: each Tender 300000
Authority decision not to award during Tender period: all 300000
Authority decision not to award during PT period:
Preferred Tender ("PT") payment
900,000 +disbursed cost for
any statutory payment
included
Typical Accommodation Project with capital value euro 100 million or greater
Delivery partners in a PPP
Sherholders to
PPP Co. Equity
Funders Senior
Debt
Contracting Authority
Works Co. Design
& Build Contractor
Services Co Soft
& Hard FM
Design
Team
Works Contractor
FM Contractor
PPP Co.
17

Figure 2.3 Construction stage payments; source: NTFA 2012
As can be seen from the chart above, there is no transfers due from contracting
Authority to PPP Co. in lieu of construction work. Contractors work is deemed to be
fully financed from the PPP Co. shareholders equity. Upon closing Construction Phase
and successful commencing of health services (Operational Phase) the PPP Co. is to be
remunerated by a monthly Unitary Charge including apportioned cost of construction
works and payment for an on-going service. The Contracting Authority assess PPP Co.
actual performance on monthly basis and has a range of administrational-financial
tools available to ensure a satisfying outcome. Service availability and service based
deductions from Unitary Payments are considered a sufficient incentive for service
improvements in case of less than satisfactory performance.
18


Figure 2.4 Operational stage: payments: Source: NDFA 2012
In the final year of lease a joint committee of tenant and landlords agents will assess
the condition of the buildings and agree upon works needed to be executed to bring their
condition to the standard as at the beginning of initial occupancy and the landlord will
be required to procure, execute and cover costs of works. Finally upon exhausting term
of the lease the HSE will take over ownership of the facilities completing the scheme.
As all other previously implemented PPP schemes, the framework created under the
Finance Minister, Mr Charles McCreevey in 2001 is customarily designed to
accommodate both experience from past projects and specific requirements of PCC.
Long and very rigorous prequalifying proceedings do not guarantee tendering process
and the award of the scheme to any potential bidder. As of yet, there is no information
available on an actual interest. It can be viewed as a pilot scheme and the exact outcome
can be anticipated rather than planned or foreseen. The 18 months reserved for
tendering process until the construction phase can begin, combined with 24 months on
average (Aecom, 2013), for a facility construction and fit-out allow to assume that first
results to be available for review not earlier then mid-2017. There is no specific
information available on any plans for subsequent PCC PPP schemes at least not until
19

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

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

Table 2.3 Conventional Procurement; Source: NDFA
The HSE working along the stringent accounting rules for management of Government
Finance consequently follows a strategy of non-accrual of additional capital
expenditure.
Const r uct ion
Tot al
Pr oject
Cost s
Year 1 1 2 et c 25
over 25
year s
GGBalance impact -115 -1 -1 -1 -140.0
EBalance impact
1. Voted Current Expenditure 0 -0.5 -0.5 -0.5 -12.5
2. Voted Capital Expenditure -115 0 0 0 -115.0
3. Central Fund 0 -0.5 -0.5 -0.5 -12.5
Tot al EBalance impact -115 -1 -1 -1 -140.0
Capit al Envelopes impact -115 0 0 0 -115.0
Conventi onal Procurement (On Bal ance sheet)
Oper at ion
20

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

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

The figure below demonstrates typical allocation of accrued costs and balance sheet
disclosure.
21


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

Figure 2.5 Decision Tree: Source: NDFA
Const r uct ion
Tot al
Pr oject
Cost s
Year 1 1 2 et c 25
over 25
year s
GGBalance impact 0 -1 -1 -1 -25.0
EBalance impact
1. Voted Current Expenditure 0 -1 -1 -1 -25.0
2. Voted Capital Expenditure 0 0 0 0 0
Capit al Envelopes impact 0 0 0 0 0.0
Operati ng Lease (Off Bal ance sheet)
Oper at ion
22


The table below demonstrates typical allocation of accrued costs and balance sheet
disclosure on PPP Schemes.

Table 2.6 PPP; Source: NDFA

















Const r uct ion
Tot al
Pr oject
Cost s
Year 1 1 2 et c 25
over 25
year s
GGBalance impact 0 -5.6 -5.6 -5.6 -140.0
EBalance impact
1. Voted Current Expenditure 0 -5.6 -5.6 -5.6 -140.0
2. Voted Capital Expenditure 0 0 0 0 0
Capit al Envelopes impact -115 0 0 0 -115.0
PPP (Off Bal ance sheet)
Oper at ion
23

Chapter Three Literature Review Part Two - Challenges and
Opportunities

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

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

24

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

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

3.4 DEVELOPERS OPINIONS
According to AJ Noonan, the director of Rhonellen Developments (which in summer of
2012 has begun development of a 3.5 million euro PCC in Mayo), was seeking planning
permissions for a number of other facilities; rolling out PCC around the country has
stalled due to difficulties in securing finance and buy-ins from GPs. (Noonan, 2012)
He was very concerned by Minister Shartalls comments on plans to convert empty
Garda stations and other state properties into primary care centres, and commented: we
have had a strategy for ten years, and invested money on the back of that strategythe
backing from international investors for the other projects has been withdrawn
(Noonan, 2012) [after public announcement from Minister Shortall, T.D.- Author].
J ack Nagle, a chairman of the Irish Association of Primary Care (IAPC), stated: It is
safe to say that most are struggling, because the debt mountain they are sitting on has
been made all the more challenging by the fact that services that were due to move into
the primary care environment have not moved as promised,[] many of these centres
were developed on the premise that they would be able to secure more work from the
state. This hasn't happened and made GPs to approach with reserve. (Nagle, 2012)
The Pharmaceutical Society of Ireland a body representing other important
stakeholders creates more uncertainty through its strong opposition to the co-location of
pharmacies and GP practices. Such co-location is critical to the financial success of
one- stop- shop strategy of these projects.
The lease break clause, that allows the HSE to pull out if GPs withdraw from the
project. The HSE argues that this provides flexibility, but Nagle said the clause was
deterring funders. This view was seconded by Malcolm Moss, founding partner of US
private equity firm Beringea. Americans were interested to invest part of their $600
million fund in PCC services in Ireland but the company pulled out after negative
outcome of risk analysis.
26

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

3.5 PHARMACISTS OPINION
According to actively pursued by private developers one-stop-shop strategy locating a
pharmacy in the Primary Care Centre is mutually beneficial for the patients and
medicine supplier. The patients benefit from a central presence of multidisciplinary
specialist and immediately after consultation are able to purchase the prescribed
medication while the pharmacy benefits from PCC induced high footfall.
Seemingly simple, mutually beneficial arrangement can, as noted by HSE, be at least
controversial and potentially can be damaging to healthcare system. According to many
members of the pharmaceutical profession, locating pharmacies in PCC creates grounds
for two main concerns; wellbeing of patients and integrity of the professionals involved.
According to Dr Stack, a local GP based in Killiney, 15 per cent of prescriptions are
new 85 per cent are repeat prescriptions, (2010) that means that the overwhelming
majority of patients are already acquiring their medicine in their local shops. They are
known to personnel. Pharmacies store records of issued medication assuring the highest
level of care for patients wellbeing. Closing existing shops may be one of the outcomes
disturbing the already balanced network. Relocating shops from their current locations
will require transfer of stored data, very possibly leading to mistakes which can affect
patients.
27


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

The Pharmaceutical Society of Ireland (The Pharmacy Regulator), decided to strongly
address reservations mentioned above, more in the form of an advice rather than
prescription. Memorandum of Advice circulated in 2011 by the Pharmaceutical
Society of Ireland (PSI), who 'do not favour' what it describes as a 'hybrid model of
primary care provision involving the co-location of retail pharmacy and GP practices
The retail pharmacy business becomes a significant (and sometimes key) financial
driver for the success of the enterprise (PCC, Author). The disproportionate contribution
which a retail pharmacy business is sometimes called upon to make in terms of the price
paid for a shop premises or the rent offered therefore is an unhealthy one insofar as
patient safety is concerned. The emergence of such a hybrid model also thwarts the
development of primary care units as envisaged by the Government and supported by
the PSI and the profession of pharmacy gen Further the PSI points out to Pharmacy Act
(2007) which is clearly designed to prohibit the creation of improper relationships
between pharmacists and doctors and between retail pharmacy businesses and medical
practices. From a common-sense standpoint it is clear that the two healthcare
professionals, doctor and pharmacist, should be independent of each other in the
treatment of patients. (PSI, 2011)
Business model with retail pharmacy as in opposition to traditional model of medicine
dispensary to be placed in PCC can lead to planning issues as it happened in case of
Killarney Town PCC. Zoning of the land didnt allow for inclusion of commercial
entity and development of health centre - valued at euro 40 million - dependant on
participation of pharmacy, sharing high developments costs, was deemed to be
necessary. The spokesman for Killarney Town Council argued that: There is planning
there for a primary care unit. Their claim is that the commercial element is crucial to the
whole project. Further developments disclosed that applicant submitted updated plans
28

including this time purely dispensary pharmacy which according to Dr Stack changed
the business plan and ultimately they couldnt tender for the land. The decision, taken
because the pharmacy element of the scheme contravened the zoning of the area, had
national implications Quite a number of other primary care centres may be looking
at HSE sites as well, and those sites would be similarly zoned to ours, Dr Stack stated
(Culliton, 2009).

3.6 INCENTIVES
The numbers of existing players in the primary care are frustrated on a number of levels
and Mr Noonan point out that the Oireachtas J oint Health Committee has issued an
entire report on the incentives needed for primary care centres but none of their
recommendations have been implemented (Noonan, 2012).
A new report by the committee says fewer centres that were of higher quality would
encourage engagement by general practitioners (OJ HC, 2012).
The committee says that the provision of primary care centres is essential to the
operation of primary care teams. It acknowledges that there are obstacles, particularly in
relation to funding; to the development of new centres and that a system of incentives is
required to expedite delivery. The committee was of the opinion that a partnership
approach was needed in order to create more primary care centres around the country.
Capital allowances were backed for GP groups that are involved in building such
clinics, as the committee felt that nothing much had happened in respect of this issue.
In view of the current economic situation, the committee team thought that the
timeframe for the rollout of primary care in the community should be extended, so that
the centres can provide a top-quality service. It urged the introduction of a range of
different incentives. They set out a menu of options in this regard:
Capital tax allowances against all income;
Stamp-duty relief on the purchase of a site;
Double rent relief for health professional tenants;
Double the interest relief on all loans, and capital investments, for owner-
occupiers;
The provision of a tax relief for significant innovation and/or delivery of new
clinical services not previously available in primary care, e.g. diagnostic
29

services, chronic -disease services, endoscopy, etcetera. Such relief should be
strictly limited to the first five years to reflect the high set-up costs;
Rates relief should be provided. (At present, the Health Service Executive is
exempt from rates, whereas all other health professionals working from a
primary care centre are subject to the payments.) (Irish Medical Times, 2010)
The committee also suggested that there should be a waiver of local authority
development levies (either in full or in part); there should be direct grants and subsidies;
accelerated capital allowances; and a mortgage rent relief scheme.
However, the committee strongly opposed the corporatisation of the development of
new primary care infrastructure. (Baxter, 2010)

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

30

Chapter Four Methodology


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

4.2 STRATEGY
The literature review outcome disclosed that hard and reliable data necessary to
successfully conduct qualitative studies are virtually not available. There are no
detailed statistical data on PCC development published, neither statistically tracked
development, nor researches concluded to verify issues surrounding particular cases.
The numbers available are confusing, since all available data refers to numerous, often
overlapping periods of time and no records have ever been officially amended and
published. Finally a variation of opinions on PCC issues among stakeholders doesnt
help in formulating a theory. It became clear that exploratory research which is
intertwined with a need for a clear and precise statement of the recognized problem-in
other words formulating the theory is the most suitable model to be adopted in my
research.
The choice of qualitative method above quantitative research was the only natural
consequence emerging from a need for a theory development. Qualitative research
aims in analysis of existing order of the things by quantifying outcomes. It helps to
classify results and enables to issue the statement which might prove or disagree with
tested theory. While secondary sources research already painted a picture of lacklustre
PCC development- I was interested in finding out why this is happening and
qualitative approach is best suited to achieve this aim.
31


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

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

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

Examine proposed development variants HSE led vs. Developer led;

Determine if there is an economic ground to attract private investors;

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

4.3.1 SURVEYS VS. INTERVIEWS
The results of secondary source research indicated aims for further investigation of the
subject. Highlighting issues in the specialized areas of PCC development called for in-
32

depth primary source research and it has been agreed that approaching people involved
in the process is one of the best methods. Seeking professional opinions in the subject
was a priority and the next step was to decide on the most advantageous technique to
be employed.
The surveys are helpful in addressing large number of respondents with fairly similar
backgrounds or approaches to the problem. Results are focused on analysis of the large
sample concerned with generalized opinions, however I felt that there is a potential to
reinforce the patterns already emerging from research of secondary source (Literature
Review) this will most likely not help to gain the deeper in-sight to the issues in
question. Limitations of questionnaires (listed by Naoum, 2008) mention suitability for
asking simple, straightforward questions which usually are succinctly explained and
are seeking only brief answers. Assessment of data sourced by on-line questionnaire
risks shifting the research direction into a quantitative area which wasnt intentional.
Further questionnaires do not offer any opportunity to follow up with additional
questioning, since there is no interaction with respondent. Focus on finding out why
the process is not efficient and why it isnt proving so far as a viable business model
suggested interviews as a method suited for reaching out to specific person in search
of specific information, their view on the subject or issue - enabling more in-depth
studies.
According to Dr Naoum use of personal interviews to utmost benefit requires:
need for interpersonal contact to explain or explore questioned issues;
all targeted participants to share common characteristics which in case of my
research is personal involvement in PCF development, however varied on basis
of profession or stakeholders interest;
advanced knowledge of the subject enabling to question specific issues in
detail;
seeking for detailed views, opinions, clarifications on undertaken Case study
investigation,
designed questions to be too complex to be answered as per questionnaire in
form of short: Yes, No, etc. (Naoum, 2007)
Among three standard types of interview techniques available I have already tested
Unstructured Interviews during strategy design phase and while it proved to be
perfectly suitable to discuss general direction of the research in a form of a friendly
33

chat with only one person involved at the time I have felt I need to employ more
structured form to achieve a common platform among the numbers of different
interviewees for comparison purposes. Structured interviews with a standard set of
questions to be asked people with different approach to the problem seemed tobe too
close in approach to questionnaires and could potentially limit benefits coming from
face to face discussion. Set of standard questions applied equally to all participants
simply wouldnt work as interviewing people with different scope of interest creates
an opportunity to investigate deeper issues which are less familiar to other
participants. Semi-structured interviews allow freedom of catering to suit changes in
order to maximise benefit of questioning a variety of sources. Including closed-end
questions as a starting point or a question leading to further investigation with open
end questions reaching further into details can be utilised and there is no strict order of
questioning required.
Construction costs and risks, HSE led development and Developer/GPs led
developments are three groups of questions designed to address specific stakeholders
and to contain questions designed to investigate relevant issues. The main aim was to
ask all participants the questions from a common framework and possibly follow up in
each persons main interest area.
I have compiled an initial list of 28 questions and reviewed for a merit content with the
help of a professional member from a leading in the field quantity surveying practice.
After narrowing list to optimal length and timing the questionnaire has been submitted
for a further review by a member of an academic staff from DIT to ensure that the
wording of questions complies with the criteria of chosen method.

4.3.2 SAMPLING
As mentioned above the three major categories originate in construction cost/risk,
HSE involvement and private development areas hence the interviews ware targeted at
professionals currently involved or involved in the past. Quantity Surveyors working
on healthcare projects, HSE employees implementing healthcare reform and possibly
GPs or pharmacists participation were considered as a possible resource.
The list of individuals has been prepared, contacts, names, phone numbers and e-mail
addresses have been sourced on-line from various institutional web pages or from
34

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

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

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


35

Chapter Five Case Study

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


5.2 CHOICE OF A MODEL
Research on specialized healthcare infrastructure led me to have a close look at the case
study of feasibility studies/ cost planning undertaken by PQS I was working for at the
time. I thought that an investigation of cost planning process, perhaps construction
phase and operational financial model while having an access to drawings, technical
specifications and contact with professionals involved in the project was a great
research opportunity. Unfortunately data on operational costs were perceived by a client
as commercially sensitive and it turned out that my access would be heavily restricted
and I wasnt able to carry out my research as originally planned;
Use of the original drawings to report on cost planning of construction works;

36

Report on possible Value For Money or Value Engineering, specification level
considerations etc.;
Gain contact with engaged parties (a client, business strategy);
Report on development of any issues and applied solutions;
Link the values of construction costs with benchmarked rents.
I didnt want to abandon this particular project, as this modern building developed
specifically to incorporate HSE output specs and accommodate three PCTs, I deemed to
be close to a generic facility in type for PCC and as such I thought it an ideal model
for a case study. I have tried to gain access to relevant data by approaching the
Architects, unfortunately my request was denied again.
Referring to online data bases for planning permissions and public procurement projects
I have established the following: A project has not been published on e-Tenders web
site indicating that indeed Public sector bodies have not been involved in the
procurement of construction works. Planning permission identified a project but
returned no data whatsoever (usually there are: a copy of planning application, planning
stage drawings, notices, letters of intent, etc.);
I have assumed that the HSE Board should have some information of interest to me on
the subject and I contacted the Facility Manager for HSE West region, Mr J oe Molloy,
with a request for information.

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

37

Facing thus far unsuccessful pursuits of the Doughiska project, and being under rising
pressure of time, I had to look for any other suitable model. Eventually an online search
on e-Tenders database returned PCC development in Glenties, Co Donegal. Opened for
service in 2007, the facility wasnt a perfect choice due to its size, (at730 sq.m and
designed to accommodate just one PCT) but because it was procured in the traditional
way by the public authority, I thought there was a chance that general data would be
more accessible. Subsequent search on Galway city planning authority web site
disclosed a number of drawings available for download. Unfortunately the drawings
havent contain enough details for undertaking a comprehensive cost plan but could be
used with some assumptions for undisclosed details like ground works, finishes etc.
During work on my backup PCC model I have received an email from the Architect of
Doughiska PCC positively addressing my request forwarded to them by Mr Molloy.
Eventually, I had access and permission to use the project which I intended to use
initially.

Figure 5.2 Doughiska PCC drawings via e-mail, source: the authors electronic
correspondence;
An access to architectural drawings and Room Data Sheets was sufficient enough to
undertake a cost planning exercise and investigate approximate cost of building works.

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

38

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



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

39


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


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


Figure 5.5 Take-off panel screen shot; source the Author


40

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

Figure 5.6 Elemental Cost Plan; source the Author


41

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


Table 5.1 Area Schedule- lease division; source the Author

5.6 LIFE CYCLE COST
The life span of all measured elements has been assessed according to industry guidance
and placed in a lifecycle replacement schedule. Apportioned costs projected to accrue in
the future have been transferred to the relevant year of lease as a scheduled outflow.
Assessment of lifecycle costs is one of the key cost factors to be considered while
taking decisions on investment feasibility. The table below is an example of my
projection based on costs estimated in the cost planning exercise. The full lifecycle
schedule can be found in Appendix C
AREA m2 % OF TOTAL AREA m2 % OF TOTAL
GFA 1727 100.00% 1927 100.00%
Shared 425 24.61% 425 22.06%
Division base:
GFA less
shared areas
1302 100% 1502 100%
GPs 240 18.43% 240 15.98%
retail 0 0.00% 200 13.32%
HSE 1062 81.57% 1062 70.71%
Opti on A,B Opti on C
AREA SCHEDULE - LEASE DIVISION

42



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



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43

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


Table 5.3 Maintenance costs build-up; source Aecom & the Author

5.8 NPV & IRR ANALYSIS
The next step in investigation on feasibility of a model PCF which I can greatly benefit
this study, I have planned to undertake the assessment of potential value in rental return.
The exercise is based on application of financial data (sourced from published details for
similar HSE lease arrangements) to rental areas division worked out in the process of
cost planning for the model PCF. Analysis of Net Present Value for projected cash
flows supported by projection of Internal Rate of Return is designed to help answer
questions on feasibility of a business and usually is a part of project appraisal studies.
Feasibility studies of three financial models are based on three scenarios:
Option A where rental area of 1727 m2 from the original project is leased at
maximum rates;
euro/m2 1727 m2 1927
m2
1
Planned Preventative
Maintenance
9
2
Allowance for
Unscheduled Maintenance
5
4 Cleaning 4
5 Utilities 16
6 Administration Costs 7
7 Waste Disposal 3
Total 43.00
8 HSE service charge 5 5310
Estimated Maintenance Costs- - pro rata per m2 (AECOM) monthly
17,343.00
9,635.00
7,708.00
30,832.00
74,261.00 82,861.00
4,817.50
15,543.00
8,635.00
6,908.00
27,632.00
11,225.50
4,317.50
12,525.50

44

Option B as Option A with typical current arrangement with discounted rates
for HSE areas;
Option C Option B arrangement with rental area enhanced to accommodate
additional retail tenants; construction cost respectively adjusted;

5.8.1 NET PRESENT VALUE
NPV analysis for Option A is set out on following assumptions:
Lease on PCF is for 25 years, no periods of vacancy contemplated;
Facility is occupied by GPs and HSE specialists;
No retail outlets included;
Both tenants pay the same rates at current market levels;
Cash inflow includes for shared areas lease and HSE standard maintenance
contribution;
Outflows include for maintenance costs and lifecycle costs.

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

45


Table 5.4 NPV Analysis for Option 1; source the Author


46

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

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


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

47


Table 5.5 IRR analysis for option A; Source: the Author

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


48


Figure 5.7 IRR for investment options; Source: the Author

The IRR graph allows to clearly see difference in NPV values and respective projected
rates of return.
Option A offers return at eight per cent which is four to five per cent above return
guaranteed currently by Irish Government on bonds. The result is comparable with
return delivered by high profile office developments unfortunately it is purely
theoretical scenario and rather not achievable in current economic climate.
Option B projects return at ca. 5.25 per cent which is more than assumed four per cent
of forgone capital investment opportunity and might be enough to ensure flawless
operating of the facility if no financial stress occur in the future.
Option C indicates expansion of a size of PCF and accommodating additional income
generating retail tenants. Projected rate of return at almost seven per cent advocate
additional construction costs and promise healthy business model.
1100
1000
900 Option A
800
700 Option A NPV=0 @ 8%
600
500 Option C Option B NPV=0 @ 5,5%
400
300 Option C NPV=0 @ 6.75%
200 Option B
100
-100
-200 4 % 11 %
-300
-400
-500
-600
-700
-800
x 1000
n
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P
V
IRR for Doughiska PCC
49

Chapter Six Interviews


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

6.2 SUMMARRY OF INTERVIEWS

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

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

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

50

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

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

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

51

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

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

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

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

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

52

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


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

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

53

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


6.3 CONCLUSION

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

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

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

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

54

Chapter Seven Conclusion


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




55

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

56

Table 7.1 Variants comparison; source the Author
The conclusions of the research cannot be compared to any previous studies as I am not
aware of any and I believe it is a very first attempt in format and scale to gather the
information and develop the theory. None the less, it can be said that research proves
validity of points occasionally raised in the public media by people who are involved in
PCC business and had encountered difficulties.

7.3 LIMITATIONS & OBSTACLES TO RESEARCH

One of the criteria crucial for a right choice of the dissertation topic is availability of
information and ease of approach of sources and people involved. The subject chosen
by the Author was deemed to be difficult in this regard, however it was seen as very
interesting, focusing on very current issues very much in the heart of quantity
surveyor interests and expertise, despite the prospects of potential difficulties I
decided to take on this ambitious task.
Undertaking successful case study research depends on continuous and open access to
a chosen model, associated data and people involved. Case Study research carries a
significant risk of possible restrictions on access to required information which I
didnt expect a risk unfortunately has materialised and hindered the authors efforts.
Commercial sensitivity and internal information policies were two major reasons put
up by both: private and public stakeholders to deny access to information required. I
encountered general reluctance in any engagement requiring sharing of information.
Those restrictions were a cause of numerous setbacks and affected the time frame of a
project, in order to gather required data it was important to approach various
institutions, sourcing information piece by piece to be able to eventually create a
Issues HSE led Developer led
Land availability Available from own sources free market sourcing
Finance availability Limited but guaranteed
Available on business terms
& conditions
Construction risk
Limited under GCCC
contract suite
RIAI contracts risk allocation
GP 'buy in' presence guaranteed Availability a risk factor
GPs' own cost euro 4000 per room per year free market rental arrang.
GPs' employment contracts Not limited Limited between 5-15 years
GPs' equipment, including IT Covered by HSE GPs own expense
Retail units Limited presence
seek after due to contribution
value
57

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

7.4 FURTHER RESEARCH RECOMMENDATION
The research undertaken aimed into the development of a general theory on why the
health care reforms PCF development doesnt progress as it is anticipated, and why this
is happening. As it is one of the very first attempts to research the subject, the employed
methodology focused on qualitative results as in opposition to quantitative which in my
opinion would be the next stage of research to be considered in the future. Collecting
detailed data on PCF development case by case and analysis of the results might further
benefit understanding of the problems encountered by private investors and possibly
contribute to finding satisfying solutions.
58

BIBLIOGRAPHY

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





59

Online sources:
http://www.rte.ie/news/2013/1117/487209-primary-care-centres/
http://www.independent.ie/irish-news/just-one-of-the-primary-care-centres-added-to-
list-by-reilly-will-go-ahead-29762680.html
http://www.ndfa.ie/TenderCompetitions/PrimaryCareCentresPPPProgramme.htm
http://www.irishexaminer.com/archives/2012/1204/ireland/hse-pays-1m-for-
aposunusableapos-care-facility-215943.html
http://www.imn.ie/index.php?option=com_content&view=article&id=5230:funding-
fears-for-primary-care-centres&catid=61:news&Itemid=28
http://www.audgen.gov.ie/documents/annualreports/2012/report/en/Report2012.pdf
http://www.businesspost.ie/#!story/Home/News/Roscommon+primary+care+centre+'un
viable'/id/67fccd0e-2ebe-4c52-b24c-8ffa3d0b1812
http://healthupdate.gov.ie/minister-james-reilly/primary-care-centres.html
http://www.merrionstreet.ie/index.php/2013/11/minister-for-health-opens-inchicore-
primary-care-centre/?cat=72
http://www.kildarestreet.com/debates/?id=2012-03-27.37.0
http://www.imn.ie/index.php?option=com_content&view=article&id=4608:minister-
establishes-universal-primary-care-project-team&catid=61:news&Itemid=28
http://www.donegalcdb.ie/eplan/internetenquiry/rpt_ViewApplicDetails.asp?validFileN
um=1&app_num_file=0930172
http://www.donegaldemocrat.ie/news/donegal-news/1-7m-glenties-primary-care-centre-
opened-1-3894444
http://www.merrionstreet.ie/index.php/2012/07/20-new-primary-care-facilities-across-
the-country-reilly/
http://www.medicalindependent.ie/28442/primary_care_planning_criticised_by_icgp
http://www.medicalindependent.ie/2281/new_beginnings_in_developing_an_irish_prim
ary_care_network
http://www.iasplus.com/en/standards/ias/ias17
http://www.independent.ie/opinion/analysis/dr-ruairi-hanley-primary-care-centres-a-
gps-nightmare-and-a-waste-of-money-28818189.html
http://www.roscommonherald.ie/2012/12/04/rental-of-hse-buildings-costing-over-e1m-
every-year/
http://www.saveroscommonhospital.com/?p=9560
60

http://www.careydev.com/health-centre-doughuiska
https://www.icgp.ie/assets/12/41C2F481-19B9-E185-
839D9014590ABB34_document/Practice_centre_15-16.pdf
http://irishcommercialtenants.wordpress.com/2012/07/14/minister-reilly-should-seek-
rent-reductions-on-all-primary-care-clinics/
All online sources were accessed numerous times between December 2013 and May
2014.









Appendix A: List of PCC Development Progress
2001-2008
Count PCT Name / Location Current Status No
Opened/Exp
ected
1 N/A Operational 1 N/A
2 N/A Operational 2 N/A
3 N/A Operational 3 N/A
4 N/A Operational 4 N/A
5 N/A Operational 5 N/A
6 N/A Operational 6 N/A
7 N/A Operational 7 N/A
8 N/A Operational 8 N/A
2008-2013
Count PCT Name / Location Current Status No
Opened/Exp
ected
1 Letterenny Operational 1 2009
2 kinnegad Operational 2 2010
3 Ballogan/Leoparstown Operational 3 2010
4 Watrford City West Operational 4 2010
5 Moate Operational 5 2010
6 Mallow Operational 6 2010
7
Trim Operational 7 2010
8 Newtownmountkennedy Operational 8 2010
9 Mitchelstown Operational 9 2010
10 Gorey/Nixon Operational 10 2010
11 Mountmllick Operational 11 2011
12 Naas Operational 12 2011
13 Roscommon Operational 13 2011
14 Carlow Operational 14 2011
15 Ballina Operational 15 2011
16 Galway City East Operational 16 2011
17 Callan Operational 17 2011
18 Kilkenny Operational 18 2011
19 Portarlington Operational 19 2011
20
Tramore Operational 20 2011
21 Mahon, Cork City Operational 21 2011
22
Macroom Operational 22 2012
23 Gorey (Doherty) AFL Signed 1 2012
24 Cavan AFL Signed 2 2012
25 Malhuddart AFL Signed 3 2012
26 Asbourne AFL Signed 4 2012
27 Kingscourt, Co Cavan AFL Signed 5 2012
28 Kenmare AFL Signed 6 2012
29 Drogheda North AFL Signed 7 2012
30
Longford AFL Signed 8 2012
31 Abbey - St. Mary's Limerick City AFL Signed 9 2012
PCC development progress list
62
32 Castlrea AFL Signed 10 2012
33 Pimlico AFL Signed 11 2012
34 Blanchardstown (Grove Court) AFL Signed 12 2012
35
Athenry Co Galway AFL Signed 13 2012
36 Monksland Co Roskommon AFL Signed 14 2012
37 Schull AFL Signed 15 2012
38 Greystones AFL Signed 16 2013
39 Kilbeggan AFL Signed 17 2013
40 Churchtown AFL Signed 18 2012
41 Newbridge AFL Signed 19 2013
42 Mullingar AFL Signed 20 2013
43 Clondalkin AFL Signed 21 2013
44 Swinford AFL Signed 22 2013
45 Kilcullen AFL Signed 23 2013
46 Athy AFL Signed 24 2013
47 Carnew AFL Signed 25 2013
48 Athlone AFL Signed 26 2013
49 Wcklow AFL Signed 27 2013
50 Summerhill (Meath) AFL Signed 28 2013
51 Portmarnock/Malahide AFL Signed 29 2013
52 Edenmore (Baldoyle) AFL Signed 30 2013
53 Balbriggan AFL Signed 31 2013
54 Droghea South AFL Signed 32 2013
55 Ballyjamesduff AFL Signed 33 2013
56 Arde AFL Signed 34 2013
57 Kells AFL Signed 35 2013
58 Ashtown (Navan Road) AFL Signed 36 2013
59 Summerhill (North Inner City) AFL Signed 37 2013
60 Tipperary Town AFL Signed 38 2013
61 Charleville AFL Signed 39 2013
62 Listowel AFL Signed 40 2013
63 Thomastown AFL Signed 41 2013
64 Cobh AFL Signed 42 2013
65 Newmarket, Co Limerick AFL Signed 43 2013
66 Celbridge AFL Signed 44 2014
67 Leixlip AFL Signed 45 2014
68 Kildare Town AFL Signed 46 2014
69 Mayfild, Cork City AFL Signed 47
70 Dungarvan AFL Signed 48
71 Fairview (Killester/Marino) AFL Signed 49
72 Finglas/Glasnevin AFL Signed 50
73 North Fring/Clongriffin AFL Signed 51
74 Arva/Killashandra AFL Signed 52
75 Killester/Marino AFL Signed 53
76 Monaghan AFL Signed 54
77 Navan LOI with AFL Target 1 2012
78 Adamstown LOI with AFL Target 2
79 Carrigtwohill LOI with AFL Target 3 2012
80 Terenure LOI with AFL Target 4 2013
81 Donnybrook LOI with AFL Target 5 2013
82 Shankill LOI with AFL Target 6 2013
83 Abbeyleix LOI with AFL Target 7 2013
63
84 Castlebar LOI with AFL Target 8 2013
85 Gorey (Kennedy) LOI with AFL Target 9 2013
86 Ballybay LOI with AFL Target 10 2013
87 Airside Swords LOI with AFL Target 11 2013
88 Ballinrobe LOI with AFL Target 12 2013
89 Galway City West (Shantalla) LOI with AFL Target 13 2013
90 Fermoy LOI with AFL Target 14 2013
91 Mohill LOI with AFL Target 15 2013
92 Portumna LOI with AFL Target 16 2013
93 Enniscorthy LOI with AFL Target 17 2013
94 Clifden LOI with AFL Target 18 2013
95 Ballincollig LOI with AFL Target 19 2013
96 Ballyhaunis LOI with AFL Target 20 2013
97 Cahirciveen LOI with AFL Target 21 2013
98 Dun Laoghaire LOI with AFL Target 22 2013
99 Mountbellew LOI with AFL Target 23 2013
100 Kinamanagh LOI with AFL Target 24 2014
101 Claregalway LOI with AFL Target 25 2014
102 Glin (Limerick) LOI with AFL Target 26 2014
103 Kilmallock LOI with AFL Target 27 2014
104 Crumlin Village LOI with AFL Target 28 2013
105 Springfield (Tallaght) LOI with AFL Target 29 2013
106 Kilkenny City (2) LOI with AFL Target 30 2014
107 Cahir LOI with AFL Target 31 2014
108 Blackrock LOI with AFL Target 32 2014
109 Stillorgan LOI with AFL Target 33 2014
110 Rathdrum LOI with AFL Target 34 2014
111 Citywest Rathcoole LOI with AFL Target 35 2014
112 Rathmines LOI with AFL Target 36 2014
113 Firhouse LOI with AFL Target 37 2014
114 Baggot Street LOI with AFL Target 38 2014
115 Lifford LOI with AFL Target 39 2014
116 Tubbercurry LOI with AFL Target 40 2014
117 Abbeyfeale, Co Limerick LOI with AFL Target 41 2014
118 Newcastle West, Co Limerick LOI with AFL Target 42 2014
119 Rathfarnhamxxxxxxx LOI Withdrawn 1 N/A
120 Dolphins Barn LOI Withdrawn 2 N/A
121 Kinsale LOI Withdrawn 3 N/A
122 Bantry LOI Withdrawn 4 N/A
123 Wexford LOI Withdrawn 5 N/A
124 Youghal LOI Withdrawn 6 N/A
125 Midlton LOI Withdrawn 7 N/A
126 Blarney LOI Withdrawn 8 N/A
127 Togher LOI Expired 9 N/A
128 Bandon LOI Withdrawn 10 N/A
129 Rosslare LOI Withdrawn 11 N/A
130 Passage Wst LOI Withdrawn 12 N/A
131 Bishopstown LOI Withdrawn 13 N/A
132 Castlelyons LOI Withdrawn 14 N/A
133 Kanturk LOI Withdrawn 15 N/A
134 Ballincollig 1 Notice of withdrawal of AFL 1 N/A
135 Castleiland LOI Withdrawn 16 N/A
136 Killorglin LOI Withdrawn 17 N/A
64
137 Skries LOI Withdrawn 18 N/A
138 Dundalk LOI Withdrawn 19 N/A
139 Castleblaney LOI Withdrawn 20 N/A
140 Corduff LOI Withdrawn 21 N/A
141 Dublin North Inner City LOI Withdrawn 22 N/A
142 West County Waterford LOI Withdrawn 23 N/A
143 Graignamanagh LOI Withdrawn 24 N/A
144 Clommel LOI Withdrawn 25 N/A
145 Watrford City West LOI Withdrawn 26 N/A
146 Fairhill Bidder Withdrew 1 N/A
147 Croom, Limerick Bidder Withdrew 2 N/A
148 Tralee LOI Withdrawn 27 N/A
149 Glanmire LOI Withdrawn 28 N/A
150 Killarney LOI Withdrawn 29 N/A
151 Oranmore LOI Withdrawn 30 N/A
152 Enniscorthy LOI Withdrawn 31 N/A
153 Castletownbere LOI Withdrawn 32 N/A
154 Roscrea LOI Withdrawn 33 N/A
155 Caheronlish, Tipp LOI Withdrawn 34 N/A
156 Ballina - Killaloe LOI Withdrawn 35 N/A
157 New Ross LOI Not Issued 1 N/A
158 Mountrath LOI Not Issued 2 N/A
159 Blessington LOI Not Issued 3 N/A
160 Clan LOI Not Issued 4 N/A
161 Kilcock LOI Not Issued 5 N/A
162 Sallins LOI Not Issued 6 N/A
163 Ferban LOI Not Issued 7 N/A
164 Portlaoise LOI Not Issued 8 N/A
165 Rathdowney LOI Not Issued 9 N/A
166 Stradbally LOI Not Issued 10 N/A
167 Tulamore LOI Not Issued 11 N/A
168 Ballymahon LOI Not Issued 12 N/A
169 Edgeworthstown LOI Not Issued 13 N/A
170 Patrick St. (Liberties) LOI Not Issued 14 N/A
171 Drimnagh LOI Not Issued 15 N/A
172
Dublin South Inner City Cathedral
PCT
LOI Not Issued 16 N/A
173 Monkstown Dublin LOI Not Issued 17 N/A
174 Cabinteely LOI Not Issued 18 N/A
175 Liffey Valley LOI Not Issued 19 N/A
176 Edenderry LOI Not Issued 20 N/A
177 Birr LOI Not Issued 21 N/A
178 Bray LOI Not Issued 22 N/A
179 Kilybegs LOI Not Issued 23 N/A
180 Donegal Town LOI Not Issued 24 N/A
181 Dungloe LOI Not Issued 25 N/A
182 Buncrana LOI Not Issued 26 N/A
183 Drumcliffe, Co Sligo LOI Not Issued 27 N/A
184 Westport LOI Not Issued 28 N/A
185 Belmullet LOI Not Issued 29 N/A
186 Boyle LOI Not Issued 30 N/A
187 Knocknacara, Galwy City LOI Not Issued 31 N/A
188 Castlgar, Galwy LOI Not Issued 32 N/A
65
189 Oughterard LOI Not Issued 33 N/A
190 Headford LOI Not Issued 34 N/A
191 Ennistymon LOI Not Issued 35 N/A
192 Kilkee, Co Clare LOI Not Issued 36 N/A
193 Rathkeale LOI Not Issued 37 N/A
194 Limerick - Ballinacurra, Weston LOI Not Issued 38 N/A
195
Limerick Market, Garryowen,
Pennywell
LOI Not Issued 39 N/A
196 Limerick Ennis Road LOI Not Issued 40 N/A
197 Limerick Rahen LOI Not Issued 41 N/A
198 Limerick Hospital LOI Not Issued 42 N/A
199 Limerick Castletroy LOI Not Issued 43 N/A
200 Thurles LOI Not Issued 44 N/A
201 Carrickmacross LOI Not Issued 45 N/A
202 East Wall, Dublin LOI Not Issued 46 N/A
203 Grangegorman LOI Not Issued 47 N/A
204 Howth/Sutton LOI Not Issued 48 N/A
205 Athboy LOI Not Issued 49 N/A
206 Donabate LOI Not Issued 50 N/A
207 Ratoah LOI Not Issued 51 N/A
208 Bettystown LOI Not Issued 52 N/A
209 Enfield LOI Not Issued 53 N/A
210 Clons LOI Not Issued 54 N/A
2008-2013
Count PCT Name / Location Current Status No
Opened/Exp
ected
211 Ballymote; PCC PPP 1 2018
212 Boyle; PCC PPP 2 2018
213 Westport; PCC PPP 3 2018
214 Claremorris; PCC PPP 4 2018
215 Tuam; PCC PPP 5 2018
216 Limerick City; PCC PPP 6 2018
217 Dungarvan; PCC PPP 7 2018
218 Carrick-on-Suir; PCC PPP 8 2018
219 Wexford Town; PCC PPP 9 2018
220 Waterford City; PCC PPP 10 2018
221 Kilcock; PCC PPP 11 2018
222 Knocklyon/Rathfarnham; PCC PPP 12 2018
223 Crumlin/Drimnagh; PCC PPP 13 2018
224 Coolock/Darndale PCC PPP 14 2018
225
Summerhill, north inner city
Dublin
PCC PPP
15
2018
226 Ballinrobe PCC PPP 16 2018
66









Appendix B: Take-off Mark-up Drawings



68


69




70



71



72




73



74




75



76


77



78




79



80



81









Appendix C: Cost Plan
Elemental Summary
Description % BC Cost/m2 SubTotal Total
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
Substr uct ur e 7. 03 82. 52 142, 519. 50 142, 519. 50
Ext er nal Wall s 5. 60 65. 70 113, 471. 75 113, 471. 75
I nt er nal Wall s 8. 07 94. 78 163, 680. 00 163, 680. 00
Fl oors 2. 35 27. 55 47, 580. 00 47, 580. 00
St airs - Ramps 0. 30 3. 50 6, 040. 00 6, 040. 00
Roof Str uct ur e 2. 77 32. 43 56, 009. 80 56, 009. 80
Ext er nal Wall Compl eti ons 4. 62 54. 20 93, 600. 00 93, 600. 00
I nt er nal Wall Compl eti ons 3. 65 42. 84 73, 986. 30 73, 986. 30
St airs / Ramps Compl eti ons 0. 28 3. 23 5, 580. 00 5, 580. 00
Suspended Ceili ngs 2. 89 33. 91 58, 567. 00 58, 567. 00
Roof Compl eti ons 0. 88 10. 25 17, 698. 20 17, 698. 20
Wall Fi ni shes Ext er nall y 3. 84 45. 01 77, 726. 85 77, 726. 85
Wall Fi ni shes I nt er nall y 1. 09 12. 79 22, 096. 00 22, 096. 00
Fl oor Fi ni shes 3. 83 44. 88 77, 503. 78 77, 503. 78
Ceili ng Fi ni shes 3. 56 41. 75 72, 096. 00 72, 096. 00
Roof Fi ni shes 0. 80 9. 31 16, 080. 00 16, 080. 00
Mechani cal I nst all ati ons 21. 13 248. 14 428, 536. 75 428, 536. 75
Dr ai nage & Ref use Di sposal 0. 37 4. 34 7, 500. 00 7, 500. 00
El ectri cal I nst all ati ons 16. 60 194. 98 336, 731. 85 336, 731. 85
Sanit ary Fitti ngs 1. 55 18. 16 31, 365. 00 31, 365. 00
St or age Scr eeni ngs & Fitti ngs 5. 97 70. 12 121, 100. 00 121, 100. 00
Str uct ur al St eel 2. 92 34. 30 59, 238 59, 238
100.00 1,174.70 2,028,707
CostX
11/05/2014 18:41:31
EDUCATIONAL VERSION Page 1 of 1
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
1 Substructure
SubstructureGenerally
Allowanceforsubstructurecompleteincluding:excavation
works,disposalofexcavatedmaterial,in-situreinforced
concretefoundations,risingwalls,fillingcavities,DPC
membrane,radonsump&pipework,radonbarrier,appropriate
insulation,powerfloatingfinish.
950 m2 150.00 142,520 142,520 7.03

CostX
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EDUCATIONAL VERSION Page 1 of 22
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
2 External Walls
Ext er nal Wall s
Bri ckwork/ Bl ockwork
Bl ockwork 215mm 100 m2 30. 00 3, 000. 00 3, 000. 00 0. 15
Bl ockwork 100mm 76 m2 24. 00 1, 824 1, 824 0. 09
For mi ng Caviti es; Wall Ti es; I nsul ati on 99 m2 15. 00 1, 485. 00 1, 485. 00 0. 08
I nner Leaf - Composit e It em
Gypr ock Shaft wall Syst emsl ab t o sl ab 3mhi gh 270 m 330. 00 89, 100 89, 100 4. 40
Sundri es
Cl osi ng Caviti es; Cappi ng; DPC- Par apet 50 m 30. 00 1, 500. 00 1, 500. 00 0. 08
Extr a Over f or openi ngs
Cl osi ng Caviti es; L Bl ock; DPC; I nsul ati on - Jambs 335 m 25. 00 8, 362. 75 8, 362. 75 0. 42
Cill s, DPC; Concr et e Backi ng 120 m 35. 00 4, 200. 00 4, 200. 00 0. 21
Li nt el s; Cavit y Tr ay; Angl e 120 m 25. 00 3, 000. 00 3, 000. 00 0. 15
Desi gn Joi nt s 1 it em 1, 000. 00 1, 000. 00 1, 000. 00 0. 05

CostX
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EDUCATIONAL VERSION Page 2 of 22
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
3 Internal Walls
I nt er nal Wall s
Concr et e
I n-sit u rc concr et e 215mmwall 15 m3 130. 00 1, 950 1, 950 0. 10
Bri cwork/ Bl ockwork
215mmBl ockwork 429 m2 60. 00 25, 740. 00 25, 740. 00 1. 27
Extr a f or f or mi ng openi ngs
Li nt el s 6 m 15. 00 90. 00 90. 00 0. 01
Partiti ons 604 m 225. 00 135, 900 135, 900 6. 70

CostX
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EDUCATIONAL VERSION Page 3 of 22
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
4 Floors
Fl oors
Pr ecast Concr et e Fl oor; powerfl oati ng i ncl uded 793 m2 60. 00 47, 580. 00 47, 580. 00 2. 35

CostX
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EDUCATIONAL VERSION Page 4 of 22
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
5 Stairs - Ramps
St airs - Ramps 0 0 0. 00
Pr ecast Concr et e St airfli ght s
St air Fli ght s - 8 Thr eads/ 9 Ri sers

t o Half Landi ng

4 Nr 950. 00 3, 800. 00 3, 800. 00 0. 19

St air Fli ght s - 6Thr eads/ 9 Ri sers

t o Half Landi ng

2 Nr 850. 00 1, 700 1, 700 0. 09

Pr ecast Concr et e Fl oor
Half Landi ngs; tr owelli ng i ncl uded 12 m2 45. 00 540. 00 540. 00 0. 03

CostX
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EDUCATIONAL VERSION Page 5 of 22
Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
6 Roof Structure
Roof Str uct ur e
Roof Str uct ur e
Roof Str ut ur e per Roof Ar ea 883 m2 30. 00 26, 500. 80 26, 500. 80 1. 31
Ki ngspan Multi deck 883 m2 25. 00 22, 084. 00 22, 084. 00 1. 09
Fl at Roof Str uct ur e 135 m2 55. 000 7, 425 7, 425 0. 37

CostX
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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
7 External Wall Completions
Ext er nal Wall Compl eti ons
Wi ndows & Scr eens 156 m2 525. 00 81, 900. 00 81, 900. 00 4. 04
Doubl e Doors 2 Nr 1, 750. 00 3, 500. 00 3, 500. 00 0. 18
Si ngl e Door 4 Nr 1, 350. 00 5, 400. 00 5, 400. 00 0. 27
Doubl e Doors Utiliti es 2 Nr 1, 400. 00 2, 800. 00 2, 800. 00 0. 14

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
8 Internal Wall Completions
I nt er nal Wall Compl eti ons
Second Fi xi ng
Wi ndow/ Door Li ni ng; Pai nti ng 335 m 5. 50 1, 839. 81 1, 839. 81 0. 10
Wi ndow Boar ds; Pai nti ng 140 m 10. 50 1, 470. 00 1, 470. 00 0. 08
Architr ave; Pai nti ng 723 m 5. 50 3, 976. 50 3, 976. 50 0. 20
Fir e Doors
Si ngl e Doors; Fr ame; Pai nti ng; Ir onmongery 38 nr 850. 00 32, 300. 00 32, 300. 00 1. 60
Doubl e Doors; Pai nti ng; Ir onmongery 30 nr 1, 100. 00 33, 000. 00 33, 000. 00 1. 63
I nt er nal Scr een t o Recepti on 8 m2 175. 00 1, 400. 00 1, 400. 00 0. 07

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
9 Stairs /Ramps Completions
St airs / Ramps Compl eti ons
Handr ail s suppl y and pai nti ng 28 m 60. 00 1, 680. 00 1, 680. 00 0. 09
Bal ustr ades suppl y and pai nti ng 20 m 195. 00 3, 900. 00 3, 900. 00 0. 20

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
10 Suspended Ceilings
Suspended Ceili ngs
Suspended Ceili ngs
600 x 600 Ceili ng Til es, i ncl udi ng suspenson gri d 599 m2 45. 00 26, 955. 00 26, 955. 00 1. 33
bul khead ceili ng 1, 129 m2 28. 00 31, 612. 00 31, 612. 00 1. 56

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
11 Roof Completions
Roof Compl eti ons
Roof Compl eti ons
Cox Dome 9 nr 800. 00 7, 200. 00 7, 200. 00 0. 36
Roof Hat ch 2 nr 1, 500. 00 3, 000. 00 3, 000. 00 0. 15
Fall Arr est Syst em 125 m 60. 00 7, 498. 20 7, 498. 20 0. 37

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
12 Wall Finishes Externally
Wall Fi ni shes Ext er nall y
Fl oor Wall & Ceili ng Fi ni shes
Pr e col our ed ' Monocouche" fi ni sh 77 m2 27. 50 2, 126. 85 2, 126. 85 0. 11
Cl addi ng 1, 008 m2 75. 00 75, 600. 00 75, 600. 00 3. 73

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
13 Wall Finishes Internally
Wall Fi ni shes I nt er nall y
Fl oor Wall & Ceili ng Fi ni shes
Pai nti ng t o Bl ockwork Wall s 1, 140 m2 6. 50 7, 410. 00 7, 410. 00 0. 37
Pai nti ng t o partiti ons 2, 118 m2 6. 50 13, 767. 00 13, 767. 00 0. 68
Wall Pr ot ecti on
scr eens 3 Nr 29. 00 87. 00 87. 00 0. 01
cor ner pr ot ect ors 104 m 8. 00 832. 00 832. 00 0. 05

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
14 Floor Finishes
FloorFinishes
Fl oor Wall & Ceili ng Fi ni shes
vi nyl col our A 36 m2 37. 00 1, 332. 00 1, 332. 00 0. 07
vi nyl col our B 885 m2 37. 00 32, 745 32, 745. 00 1. 62
vi nyl col our C 87 m2 37. 00 3, 219 3, 219. 00 0. 16
vi nyl anti sli p 302 m2 40. 00 12, 080 12, 080. 00 0. 60
coved vi nyl skirti ng
vi nyl col our A 37 m 12. 00 444. 00 444. 00 0. 03
vi nyl col our B 766 m 12. 00 9, 192 9, 192 0. 46
vi nyl col our C 80 m 12. 00 960. 00 960. 00 0. 05
vi nyl anti sli p 285 m 15. 00 4, 275 4, 275 0. 22
Car pet 283 m2 38. 00 10, 754 10, 754 0. 54
Pai nti ng & Decor ati ng
Skirti ngs; Pai nt ed 228 m 10. 50 2, 394. 00 2, 394. 00 0. 12
Speci al Coati ng
pl ant ar eas 18 m 6. 00 108. 78 108. 78 0. 01

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
15 Ceiling Finishes
Ceili ng Fi ni shes
Fl oor Wall & Ceili ng Fi ni shes
Pl ast er & Pai nt 1, 074 m2 32. 00 68, 736. 00 34, 368. 00 3. 39
Pl ast er & Pai nt - Undersi de of St airs; Sl oped 48 m2 35. 00 3, 360. 00 1, 680. 00 0. 17

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
16 Roof Finishes
Roof Fi ni shes
Sundri es
Sar nafil st andi ng seamr oof; Sundri es 134 m2 65. 00 8, 710. 00 8, 710. 00 0. 43
Sar nafil st andi ng seamr oof; Upst and & Fl ashi ng 134 m 55. 00 7, 370. 00 7, 370. 00 0. 37

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
17 Mechanical Installations
Mechani cal I nst all ati ons
Per GFA 1, 727 m2 225. 00 388, 536. 75 388, 536. 75 19. 16
Tr ansport Servi ces I nst all ati ons
Lift all owance
1 Item
40, 000. 00 40, 000. 00 40, 000. 00 1. 98

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
18 Drainage & Refuse Disposal
Dr ai nage & Ref use Di sposal
Rai nwat er di sposal syst em, soil s and wast es 1 It em 7, 500. 00 7, 500. 00 7, 500. 00 0. 37

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
19 Electrical Installations
El ectri cal I nst all ati ons
Per GFA 1, 727 m2 195. 00 336, 731. 85 336, 731. 85 16. 60

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
20 Sanitary Fittings
Sanit ary Fitti ngs
Toil et Partiti ons
Door & Fr ont Panel 4 nr 400. 00 1, 600. 00 1, 600. 00 0. 08
Door & Fr ont Panel

Di sabl ed

3 nr 1, 500. 00 4, 500. 00 4, 500. 00 0. 23

Sanit ary Fitti ngs
WC' s 17 nr 300. 00 5, 100. 00 5, 100. 00 0. 26
WHB 39 nr 250. 00 9, 750. 00 9, 750. 00 0. 49
Di sabl e Suit e 2 nr 1, 000. 00 2, 000. 00 2, 000. 00 0. 10
Toil et Roll Hol ders

1 per WC

14 nr 30. 00 420. 00 420. 00 0. 03

Soap Di spensers

1 per WHB

39 nr 45. 00 1, 755. 00 1, 755. 00 0. 09

Mirr ors

1 per WHB

39 nr 160. 00 6, 240. 00 6, 240. 00 0. 31

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
21 Storage Screenings & Fittings
St or age Scr eeni ngs & Fitti ngs
ar mchair 46 nr 450. 00 20, 700. 00 20, 700. 00 1. 03
bed 20 nr 1, 000. 00 20, 000 20, 000 0. 99
scr eens 20 nr 460. 00 9, 200 9, 200 0. 46
coff ee t abl e 12 nr 150. 00 1, 800 1, 800 0. 09
desk l ar ge 8 nr 700. 00 5, 600 5, 600 0. 28
conf er ence t abl e 3 nr 1, 200. 00 3, 600 3, 600 0. 18
s mall st or age 16 nr 400. 00 6, 400 6, 400 0. 32
l ar ge st or age 18 nr 650. 00 11, 700 11, 700 0. 58
t ask chair 59 nr 350. 00 20, 650 20, 650 1. 02
t ask desk 33 nr 650. 00 21, 450 21, 450 1. 06

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Bill of Quantities
Description Quantity Unit Rate Total Subtotal % of
Cost
Project: Default Project
Building: Doughiska PCC Model M Mrowka
Details: Detailed Elemental PCC Doughiska
22 Structural Steel
STEELWORK
Frame
UB 0. 450x0. 190 5. 900 Tn 1, 800. 00 10, 620. 0 10, 620 0. 53
UB 0.203x0.203
2. 430 Tn 1, 800. 00 4, 374 4, 374 0. 22
Roof
br aci ng UB 0. 405x0. 178 3. 600 Tn 1, 800. 00 6, 480 6, 480 0. 32
ceili ng tr UB 0. 410x0. 178 6. 330 Tn 1, 800. 00 11, 394 11, 394 0. 57
purli ns DC0. 250x0. 070 10. 700 Tn 1, 800. 00 19, 260 19, 260 0. 95
ri dge UB 0. 950 Tn 1, 800. 00 1, 710 1, 710 0. 09
Pl at es, hol ers, et c. 3 Tn 1, 800. 00 5, 400 5, 400 0. 27

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Appendix D: Financial Analysis
Lifecycle costs
External Walls:
Completions
Wall Finishes
Externally
Wall Finishes
Internally
Windows and
doors
Doors
Painting Door
Frames and
Architraves
Painting Painting Painting Skirtings
Vinyl & Carpet
Flooring and
Skirting
TOTAL
Year 1
Year 2
Year 3
Year 4
Year 5 2,394.00 2,394.00
Year 6 7,285.00 7,285.00
Year 7 21,500.00 21,500.00
Year 8
Year 9
Year 10 2,394.00 75,000.00 77,394.00
Year 11
Year 12 7,285.00 7,285.00
Year 13
Year 14 21,500.00 21,500.00
Year 15 2,394.00 2,394.00
Year 16
Year 17
Year 18 7,285.00 7,285.00
Year 19
Year 20 2,394.00 75,000.00 77,394.00
Year 21 21,500.00 21,500.00
Year 22
Year 23
Year 24 67,000.00 7,285.00 74,285.00
Year 25 93,600.00 2,126.00 2,394.00 98,120.00
Life Cycle Cashflow Information
Life Cycle Cashflow Information
Floor Finishes Internal Walls: Completions
107
Lifecycle costs Mechanical
Electricity
Centre and Main
Distribution
Roof Finishes
Suspended
Ceilings
Paint Ceilings
Paint Internal
Walls
Replace - selected
items (40% of cost
plan)
Replace -
selected items
(30% of cost
plan)
Sanitary
Appliances
Sanitary Fittings
(Partitions)
Roof Coverings incl
Upstand & Flashing
TOTAL
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 21,000.00 21,000.00
Year 7 9,324.00 9,324.00
Year 8
Year 9
Year 10
Year 11 6,100.00 6,100.00
Year 12 21,000.00 21,000.00
Year 13
Year 14 9,324.00 9,324.00
Year 15
Year 16
Year 17
Year 18 21,000.00 21,000.00
Year 19
Year 20 75,311.00 25,365.00 100,676.00
Year 21 9,324.00 9,324.00
Year 22 171,414.40 6,100.00 26,000.00 203,514.40
Year 23
Year 24 21,000.00 21,000.00
Year 25 101,019.30 101,019.30
Fittings Ceiling Finishes
108
NPV Option A
m2 m2 m2 m2 m2 total lettable area Discount
240 1062 93.5 331.5 425 1727 4%
rate/m2 20 20 20 20
Private hse shared GPs shared HSE HSE maint contr maintenance lifecycle costs total cashflow discount factor PV
now 2,496,323.96 - 1 2,496,323.96 -
1 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 252,029.00 0.961538462 242,335.58
2 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 252,029.00 0.924556213 233,014.98
3 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 252,029.00 0.888996359 224,052.86
4 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 252,029.00 0.854804191 215,435.45
5 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 2,394.00 249,635.00 0.821927107 205,181.77
6 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 28,285.00 223,744.00 0.790314526 176,828.13
7 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 30,824.00 221,205.00 0.759917813 168,097.62
8 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.730690205 184,155.12
9 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.702586736 177,072.23
10 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 77,394.00 16,992.00 0.675564169 11,479.19
11 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 6,100.00 245,929.00 0.649580932 159,750.79
12 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 28,285.00 223,744.00 0.62459705 139,749.84
13 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.600574086 151,362.09
14 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 30,824.00 221,205.00 0.577475083 127,740.38
15 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 2,394.00 249,635.00 0.555264503 138,613.45
16 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.533908176 134,560.34
17 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.513373246 129,384.95
18 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 223,744.00 0.493628121 110,446.33
19 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.474642424 119,623.66
20 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 178,070.00 73,959.00 0.456386946 33,753.92
21 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 30,824.00 221,205.00 0.438833602 97,072.19
22 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 203,514.40 48,514.60 0.421955387 20,471.00
23 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 - 252,029.00 0.405726333 102,254.80
24 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 95,285.00 156,744.00 0.390121474 61,149.20
25 57,600.00 254,880.00 1,870.00 6,630.00 5,310.00 74,261.00 199,139.30 52,889.70 0.375116802 19,839.82
883,425.68
Inflows Outflows
2,496,323.96 -
109
m2
2,496,323.96 - 1727
year total cashflow discount factor PV discount factor PV
now 2,496,323.96 - 1 2,496,323.96 - 1 2,496,323.96 -
1 252,029.00 0.961538462 242,335.58 0.900900901 227,053.15
2 252,029.00 0.924556213 233,014.98 0.811622433 204,552.39
3 252,029.00 0.888996359 224,052.86 0.731191381 184,281.43
4 252,029.00 0.854804191 215,435.45 0.658730974 166,019.31
5 249,635.00 0.821927107 205,181.77 0.593451328 148,146.22
6 223,744.00 0.790314526 176,828.13 0.534640836 119,622.68
7 221,205.00 0.759917813 168,097.62 0.481658411 106,545.25
8 252,029.00 0.730690205 184,155.12 0.433926496 109,362.06
9 252,029.00 0.702586736 177,072.23 0.390924771 98,524.38
10 16,992.00 0.675564169 11,479.19 0.352184479 5,984.32
11 245,929.00 0.649580932 159,750.79 0.317283314 78,029.17
12 223,744.00 0.62459705 139,749.84 0.285840824 63,955.17
13 252,029.00 0.600574086 151,362.09 0.257514256 64,901.06
14 221,205.00 0.577475083 127,740.38 0.231994825 51,318.42
15 249,635.00 0.555264503 138,613.45 0.209004347 52,174.80
16 252,029.00 0.533908176 134,560.34 0.188292204 47,455.10
17 252,029.00 0.513373246 129,384.95 0.169632616 42,752.34
18 223,744.00 0.493628121 110,446.33 0.152822177 34,193.05
19 252,029.00 0.474642424 119,623.66 0.137677637 34,698.76
20 73,959.00 0.456386946 33,753.92 0.124033907 9,173.42
21 221,205.00 0.438833602 97,072.19 0.111742259 24,717.95
22 48,514.60 0.421955387 20,471.00 0.100668701 4,883.90
23 252,029.00 0.405726333 102,254.80 0.090692524 22,857.15
24 156,744.00 0.390121474 61,149.20 0.081704976 12,806.76
25 52,889.70 0.375116802 19,839.82 0.073608087 3,893.11
883,425.68 582,098.66 -
IRR for Option A
4% 11%
discount discount
110
NPV Option B
total lettable area Discount
m2 240 1062 93.5 331.5 425 1727 4%
rate/m2 20 16 20 16
Private hse shared GPs shared HSE HSE maint contr maintenance lifecycle costs total cashflow discount factor PV
now -2,496,323.96 1 2,496,323.96 -
1 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 199,727.00 0.961538462 192,045.19
2 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 199,727.00 0.924556213 184,658.84
3 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 199,727.00 0.888996359 177,556.58
4 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 199,727.00 0.854804191 170,727.48
5 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 2,394.00 197,333.00 0.821927107 162,193.34
6 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 28,285.00 171,442.00 0.790314526 135,493.10
7 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 30,824.00 168,903.00 0.759917813 128,352.40
8 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.730690205 145,938.56
9 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.702586736 140,325.54
10 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 77,394.00 122,333.00 0.675564169 82,643.79
11 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 6,100.00 193,627.00 0.649580932 125,776.41
12 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 28,285.00 171,442.00 0.62459705 107,082.17
13 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.600574086 119,950.86
14 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 30,824.00 168,903.00 0.577475083 97,537.27
15 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 2,394.00 197,333.00 0.555264503 109,572.01
16 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.533908176 106,635.88
17 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.513373246 102,534.50
18 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 28,285.00 171,442.00 0.493628121 84,628.59
19 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.474642424 94,798.91
20 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 178,070.00 21,657.00 0.456386946 9,883.97
21 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 30,824.00 168,903.00 0.438833602 74,120.31
22 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 203,514.40 3,787.40 - 0.421955387 1,598.11 -
23 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 - 199,727.00 0.405726333 81,034.50
24 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 95,285.00 104,442.00 0.390121474 40,745.07
25 57,600.00 203,904.00 1,870.00 5,304.00 5,310.00 74,261.00 199,139.30 587.70 0.375116802 220.46
172,857.61
NOTES: In NPV depreciation must beignored becausethefull cost of theasset is treated as acapital investment at thestart (year 0) of theproject
Inflows Outflows
-2,496,323.96
111
m2
2,496,323.96 - 1727
year total cashflow discount factor PV discount factor PV
now 2,496,323.96 - 1 2,496,323.96 - 1 2,496,323.96 -
1 199,727.00 0.961538462 192,045.19 0.900900901 179,934.23
2 199,727.00 0.924556213 184,658.84 0.811622433 162,102.91
3 199,727.00 0.888996359 177,556.58 0.731191381 146,038.66
4 199,727.00 0.854804191 170,727.48 0.658730974 131,566.36
5 197,333.00 0.821927107 162,193.34 0.593451328 117,107.53
6 171,442.00 0.790314526 135,493.10 0.534640836 91,659.89
7 168,903.00 0.759917813 128,352.40 0.481658411 81,353.55
8 199,727.00 0.730690205 145,938.56 0.433926496 86,666.84
9 199,727.00 0.702586736 140,325.54 0.390924771 78,078.23
10 122,333.00 0.675564169 82,643.79 0.352184479 43,083.78
11 193,627.00 0.649580932 125,776.41 0.317283314 61,434.62
12 171,442.00 0.62459705 107,082.17 0.285840824 49,005.12
13 199,727.00 0.600574086 119,950.86 0.257514256 51,432.55
14 168,903.00 0.577475083 97,537.27 0.231994825 39,184.62
15 197,333.00 0.555264503 109,572.01 0.209004347 41,243.45
16 199,727.00 0.533908176 106,635.88 0.188292204 37,607.04
17 199,727.00 0.513373246 102,534.50 0.169632616 33,880.21
18 171,442.00 0.493628121 84,628.59 0.152822177 26,200.14
19 199,727.00 0.474642424 94,798.91 0.137677637 27,497.94
20 21,657.00 0.456386946 9,883.97 0.124033907 2,686.20
21 168,903.00 0.438833602 74,120.31 0.111742259 18,873.60
22 3,787.40 - 0.421955387 1,598.11 - 0.100668701 381.27 -
23 199,727.00 0.405726333 81,034.50 0.090692524 18,113.75
24 104,442.00 0.390121474 40,745.07 0.081704976 8,533.43
25 587.70 0.375116802 220.46 0.073608087 43.26
172,857.61 967,053.34 -
4% 11%
IRR for Option B
discount discount
112
NPV Option C
total lettable area Discount
m2 440 1062 93.5 331.5 425 1927 4%
rate/m2 20 16 20 16
Private hse shared GPs shared HSE HSE maint contr maintenance lifecycle costs total cashflow discount factor PV
now 2,755,413.11 - 1 2,755,413.11 -
1 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 239,558.29 0.961538462 230,344.51
2 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 239,558.29 0.924556213 221,485.11
3 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 239,558.29 0.888996359 212,966.45
4 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 239,558.29 0.854804191 204,775.43
5 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 2,657.34 236,900.95 0.821927107 194,715.31
6 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 31,396.35 208,161.94 0.790314526 164,513.40
7 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 34,214.64 205,343.65 0.759917813 156,044.30
8 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.730690205 175,042.90
9 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.702586736 168,310.48
10 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 85,907.34 153,650.95 0.675564169 103,801.08
11 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 6,771.00 232,787.29 0.649580932 151,214.18
12 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 31,396.35 208,161.94 0.62459705 130,017.33
13 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.600574086 143,872.50
14 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 34,214.64 205,343.65 0.577475083 118,580.84
15 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 2,657.34 236,900.95 0.555264503 131,542.69
16 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.533908176 127,902.13
17 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.513373246 122,982.82
18 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 31,396.35 208,161.94 0.493628121 102,754.59
19 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.474642424 113,704.53
20 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 197,657.70 41,900.59 0.456386946 19,122.88
21 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 34,214.64 205,343.65 0.438833602 90,111.69
22 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 225,900.98 13,657.31 0.421955387 5,762.77
23 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 - 239,558.29 0.405726333 97,195.11
24 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 105,766.35 133,791.94 0.390121474 52,195.11
25 105,600.00 203,904.00 1,870.00 5,304.00 5,310.00 82,429.71 221,044.62 18,513.67 0.375116802 6,944.79
486,432.24
NOTES: In NPV depreciation must beignored becausethefull cost of theasset is treated as acapital investment at thestart (year 0) of theproject
Inflows Outflows
2,755,413.11 -
113
m2
1927
year total cashflow discount factor PV discount factor PV
now 2,755,413.11 - 1 2,755,413.11 - 1 2,755,413.11 -
1 239,558.29 0.961538462 230,344.51 0.900900901 215,818.28
2 239,558.29 0.924556213 221,485.11 0.811622433 194,430.88
3 239,558.29 0.888996359 212,966.45 0.731191381 175,162.96
4 239,558.29 0.854804191 204,775.43 0.658730974 157,804.47
5 236,900.95 0.821927107 194,715.31 0.593451328 140,589.18
6 208,161.94 0.790314526 164,513.40 0.534640836 111,291.87
7 205,343.65 0.759917813 156,044.30 0.481658411 98,905.50
8 239,558.29 0.730690205 175,042.90 0.433926496 103,950.69
9 239,558.29 0.702586736 168,310.48 0.390924771 93,649.27
10 153,650.95 0.675564169 103,801.08 0.352184479 54,113.48
11 232,787.29 0.649580932 151,214.18 0.317283314 73,859.52
12 208,161.94 0.62459705 130,017.33 0.285840824 59,501.18
13 239,558.29 0.600574086 143,872.50 0.257514256 61,689.67
14 205,343.65 0.577475083 118,580.84 0.231994825 47,638.66
15 236,900.95 0.555264503 131,542.69 0.209004347 49,513.33
16 239,558.29 0.533908176 127,902.13 0.188292204 45,106.96
17 239,558.29 0.513373246 122,982.82 0.169632616 40,636.90
18 208,161.94 0.493628121 102,754.59 0.152822177 31,811.76
19 239,558.29 0.474642424 113,704.53 0.137677637 32,981.82
20 41,900.59 0.456386946 19,122.88 0.124033907 5,197.09
21 205,343.65 0.438833602 90,111.69 0.111742259 22,945.56
22 13,657.31 0.421955387 5,762.77 0.100668701 1,374.86
23 239,558.29 0.405726333 97,195.11 0.090692524 21,726.15
24 133,791.94 0.390121474 52,195.11 0.081704976 10,931.47
25 18,513.67 0.375116802 6,944.79 0.073608087 1,362.76
486,432.24 907,476.41 -
4% 11%
IRR for Option C
discount discount
114
1100
1000
900 Option A
800
700 Option A NPV=0 @ 8%
600
500 Option C Option B NPV=0 @ 5,5%
400
300 Option C NPV=0 @ 6.75%
200 Option B
100
-100
-200 4 % 11 %
-300
-400
-500
-600
-700
-800
x 1000
Figure XXX Internal Rate of Return projection
n
e
g
a
t
i
v
e

N
P
V
p
o
s
i
t
i
v
e

N
P
V
IRR for Doughiska PCC
115
2,496,323.96 175,119.12
5% 14,593.26
25 123,647.26
1 1,881,654.04
4,377,978.00
Year 1 Beginning Balance Payment Principal Interest Cumulative Principal Cumulative Interest Ending Balance
Jan 2,496,323.96 14,593.26 4,191.91 10,401.35 4,191.91 10,401.35 2,492,132.05
Feb 2,492,132.05 14,593.26 4,209.38 10,383.88 8,401.29 20,785.23 2,487,922.67
Mar 2,487,922.67 14,593.26 4,226.92 10,366.34 12,628.21 31,151.57 2,483,695.75
Apr 2,483,695.75 14,593.26 4,244.53 10,348.73 16,872.74 41,500.30 2,479,451.22
May 2,479,451.22 14,593.26 4,262.21 10,331.05 21,134.95 51,831.35 2,475,189.01
Jun 2,475,189.01 14,593.26 4,279.97 10,313.29 25,414.92 62,144.64 2,470,909.04
Jul 2,470,909.04 14,593.26 4,297.81 10,295.45 29,712.73 72,440.09 2,466,611.23
Aug 2,466,611.23 14,593.26 4,315.71 10,277.55 34,028.44 82,717.64 2,462,295.52
Sep 2,462,295.52 14,593.26 4,333.70 10,259.56 38,362.14 92,977.20 2,457,961.82
Oct 2,457,961.82 14,593.26 4,351.75 10,241.51 42,713.89 103,218.71 2,453,610.07
Nov 2,453,610.07 14,593.26 4,369.88 10,223.38 47,083.77 113,442.09 2,449,240.19
Dec 2,449,240.19 14,593.26 4,388.09 10,205.17 51,471.86 123,647.26 2,444,852.10
Year Beginning Balance Payment Principal Interest Cumulative Principal Cumulative Interest Ending Balance
2 2,444,852.10 175,119.12 54,105.50 121,013.62 105,577.36 244,660.88 2,390,746.60
3 2,390,746.60 175,119.12 56,873.40 118,245.72 162,450.75 362,906.61 2,333,873.21
4 2,333,873.21 175,119.12 59,783.15 115,335.97 222,233.90 478,242.58 2,274,090.06
5 2,274,090.06 175,119.12 62,841.77 112,277.35 285,075.67 590,519.93 2,211,248.29
6 2,211,248.29 175,119.12 66,056.87 109,062.25 351,132.54 699,582.18 2,145,191.42
7 2,145,191.42 175,119.12 69,436.47 105,682.65 420,569.01 805,264.83 2,075,754.95
8 2,075,754.95 175,119.12 72,988.97 102,130.15 493,557.98 907,394.98 2,002,765.98
9 2,002,765.98 175,119.12 76,723.22 98,395.90 570,281.20 1,005,790.88 1,926,042.76
10 1,926,042.76 175,119.12 80,648.53 94,470.59 650,929.72 1,100,261.48 1,845,394.24
11 1,845,394.24 175,119.12 84,774.66 90,344.46 735,704.38 1,190,605.94 1,760,619.58
12 1,760,619.58 175,119.12 89,111.89 86,007.23 824,816.28 1,276,613.16 1,671,507.68
13 1,671,507.68 175,119.12 93,671.03 81,448.09 918,487.30 1,358,061.26 1,577,836.66
14 1,577,836.66 175,119.12 98,463.41 76,655.71 1,016,950.71 1,434,716.97 1,479,373.25
15 1,479,373.25 175,119.12 103,500.99 71,618.13 1,120,451.70 1,506,335.10 1,375,872.26
16 1,375,872.26 175,119.12 108,796.29 66,322.83 1,229,248.00 1,572,657.92 1,267,075.96
17 1,267,075.96 175,119.12 114,362.52 60,756.60 1,343,610.52 1,633,414.52 1,152,713.44
18 1,152,713.44 175,119.12 120,213.52 54,905.60 1,463,824.04 1,688,320.12 1,032,499.92
19 1,032,499.92 175,119.12 126,363.88 48,755.24 1,590,187.91 1,737,075.37 906,136.05
20 906,136.05 175,119.12 132,828.89 42,290.23 1,723,016.81 1,779,365.59 773,307.15
21 773,307.15 175,119.12 139,624.67 35,494.45 1,862,641.47 1,814,860.05 633,682.49
22 633,682.49 175,119.12 146,768.13 28,350.99 2,009,409.61 1,843,211.03 486,914.35
23 486,914.35 175,119.12 154,277.07 20,842.05 2,163,686.67 1,864,053.09 332,637.29
24 332,637.29 175,119.12 162,170.18 12,948.94 2,325,856.85 1,877,002.03 170,467.11
25 170,467.11 175,119.12 170,467.11 4,652.01 2,496,323.96 1,881,654.04 -
Mortgage Amortization Schedule Option B
Inputs Key Figures
Loan principal amount Annual loan payments
Annual interest rate Monthly payments
Yearly Schedule of Balances and Payments
Payments in First 12 Months
Loan period in years Interest in first calendar year
Base year of loan Interest over term of loan
Sum of all payments
116
2,759,470.68 193,579.08
5% 16,131.59
25 136,681.37
1 2,080,006.32
4,839,477.00
Year 1 Beginning Balance Payment Principal Interest
Cumulative
Principal
Cumulative
Interest
Ending Balance
Jan 2,759,470.68 16,131.59 4,633.80 11,497.79 4,633.80 11,497.79 2,754,836.88
Feb 2,754,836.88 16,131.59 4,653.10 11,478.49 9,286.90 22,976.28 2,750,183.78
Mar 2,750,183.78 16,131.59 4,672.49 11,459.10 13,959.39 34,435.38 2,745,511.29
Apr 2,745,511.29 16,131.59 4,691.96 11,439.63 18,651.35 45,875.01 2,740,819.33
May 2,740,819.33 16,131.59 4,711.51 11,420.08 23,362.86 57,295.09 2,736,107.82
Jun 2,736,107.82 16,131.59 4,731.14 11,400.45 28,094.00 68,695.54 2,731,376.68
Jul 2,731,376.68 16,131.59 4,750.85 11,380.74 32,844.85 80,076.28 2,726,625.83
Aug 2,726,625.83 16,131.59 4,770.65 11,360.94 37,615.50 91,437.22 2,721,855.18
Sep 2,721,855.18 16,131.59 4,790.53 11,341.06 42,406.03 102,778.28 2,717,064.65
Oct 2,717,064.65 16,131.59 4,810.49 11,321.10 47,216.52 114,099.38 2,712,254.16
Nov 2,712,254.16 16,131.59 4,830.53 11,301.06 52,047.05 125,400.44 2,707,423.63
Dec 2,707,423.63 16,131.59 4,850.66 11,280.93 56,897.71 136,681.37 2,702,572.97
Year Beginning Balance Payment Principal Interest
Cumulative
Principal
Cumulative
Interest
Ending Balance
2 2,702,572.97 193,579.08 59,808.85 133,770.23 116,706.56 270,451.60 2,642,764.12
3 2,642,764.12 193,579.08 62,868.63 130,710.45 179,575.19 401,162.05 2,579,895.49
4 2,579,895.49 193,579.08 66,085.11 127,493.97 245,660.30 528,656.02 2,513,810.38
5 2,513,810.38 193,579.08 69,466.15 124,112.93 315,126.45 652,768.95 2,444,344.23
6 2,444,344.23 193,579.08 73,020.17 120,558.91 388,146.63 773,327.85 2,371,324.05
7 2,371,324.05 193,579.08 76,756.02 116,823.06 464,902.65 890,150.91 2,294,568.03
8 2,294,568.03 193,579.08 80,683.01 112,896.07 545,585.66 1,003,046.98 2,213,885.02
9 2,213,885.02 193,579.08 84,810.90 108,768.18 630,396.56 1,111,815.16 2,129,074.12
10 2,129,074.12 193,579.08 89,149.99 104,429.09 719,546.55 1,216,244.25 2,039,924.13
11 2,039,924.13 193,579.08 93,711.07 99,868.01 813,257.62 1,316,112.26 1,946,213.06
12 1,946,213.06 193,579.08 98,505.51 95,073.57 911,763.13 1,411,185.83 1,847,707.55
13 1,847,707.55 193,579.08 103,545.24 90,033.84 1,015,308.37 1,501,219.67 1,744,162.31
14 1,744,162.31 193,579.08 108,842.81 84,736.27 1,124,151.18 1,585,955.94 1,635,319.50
15 1,635,319.50 193,579.08 114,411.41 79,167.67 1,238,562.59 1,665,123.61 1,520,908.09
16 1,520,908.09 193,579.08 120,264.92 73,314.16 1,358,827.51 1,738,437.77 1,400,643.17
17 1,400,643.17 193,579.08 126,417.90 67,161.18 1,485,245.41 1,805,598.95 1,274,225.27
18 1,274,225.27 193,579.08 132,885.68 60,693.40 1,618,131.09 1,866,292.35 1,141,339.59
19 1,141,339.59 193,579.08 139,684.36 53,894.72 1,757,815.45 1,920,187.07 1,001,655.23
20 1,001,655.23 193,579.08 146,830.88 46,748.20 1,904,646.33 1,966,935.27 854,824.35
21 854,824.35 193,579.08 154,343.03 39,236.05 2,058,989.36 2,006,171.32 700,481.32
22 700,481.32 193,579.08 162,239.51 31,339.57 2,221,228.87 2,037,510.89 538,241.81
23 538,241.81 193,579.08 170,539.99 23,039.09 2,391,768.86 2,060,549.98 367,701.82
24 367,701.82 193,579.08 179,265.14 14,313.94 2,571,034.00 2,074,863.92 188,436.68
25 188,436.68 193,579.08 188,436.68 5,142.40 2,759,470.68 2,080,006.32 -
Mortgage Amortization Schedule Option C
Inputs Key Figures
Loan principal amount Annual loan payments
Annual interest rate Monthly payments
Payments in First 12 Months
Yearly Schedule of Balances and Payments
Loan period in years Interest in first calendar year
Base year of loan Interest over term of loan
Sum of all payments
117









Appendix E: Thesis Proposal
SCHOOL OF SURVEYING AND CONSTRUCTION MANAGEMENT

CONSTRUCTION ECONOMICS AND MANAGEMENT DEGREE
DT111 AND DT155
THESIS PROPOSAL FORM
2013/2014

THESIS PROPOSALS MUST ONLY BE SUBMITTED IN THIS FORMAT.


SUBMISSION DATE: WEDNESDAY 23
rd
OCTOBER 2013

STUDENT NAME: ____Mateusz Mrowka___ STUDENT NO: ___C10726301___

FULL TIME or PART TIME: _Full Time_

MOBILE NO: 083 3400504 HOME PHONE: ______N/A___________

DIT EMAIL: C10726301@mydit.ie OTHER EMAIL: mateuszmrowka@hotmail.com



1. WORKING TITLE OF THESIS


Primary Care Centres in Ireland analysis of emerging business opportunities


2. SUBJECT AREA

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

Cost and Value Management
QS Practice
Sustainable Development
Other (please specify)
Contract Administration and Law
Construction Economics
I.T and QS Software



3. RESEARCH OBJECTIVES

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


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

Examine feasibility of construction projects which development is an integral
part of new HSE strategy;
119

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

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


4. RATIONALE/BACKGROUND TO PROPOSED RESEARCH:


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


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

Development of the new business model which requires expertise in the fields of
project appraisal, construction costs, value management places Quantity Surveyors as
most suitable professionals.


120

5. INDICATIVE CHAPTER HEADINGS

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



Chapter One Introduction to aims and objectives of the Dissertation;
The National Strategy for Primary Care Centres;
Implementation of the new model;
Opportunities for Quantity Surveyors (Cost Modelling, Project Appraisal,
Financial Advice to the Client- Developer)
HSE led development;
Developer led development;

Information:
Official Government & Departmental publications (HSE & Ministry of
Finance);
Public Service officials;
Industry Professionals;
On-line professionally oriented sources;
Industry J ournals;
Methodology:
Documentary research;
Interviews;


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



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



121

Chapter Four Funding Models
Banks - funding guaranteed by the Government;
REIT- investment opportunity in new model of PCC;
Information:
Published sources
Online sources
Industry Professionals
Methodology:
Documentary research
Interviews

Chapter Five Non construction aspects and influence on feasibility of the
project;
Survey addressed to medical Professionals (G.P.) aimed to establish
availability of required Professional resources;
Information:
Compiled statistics;
Interviews;
Methodology:
Questionnaire;
Interviews;


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


Chapter Seven Conclusion and Recommendations;








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


Professionals from leading Quantity Surveying Practice - specialising in
Public Sector, healthcare projects.
Public Service Officials involved in implementation of the new HSE strategy for
PCC;
Members of Medical Profession;


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7. RESEARCH METHODOLOGY.

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


Please Tick
Documentary Research

Interviews

Questionnaire Survey(s)

Case Study

* Other (Specify)


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


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



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


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

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