preliminary evaluation -...

Cairns Entertainment Precinct Preliminary EvaluationPreliminary EvaluationPreliminary EvaluationPreliminary Evaluation

Prepared for Cairns Regional Council

Final

contents Controlled Document Register 3

List of Tables 4

List of Figures 5

Glossary of Terms 6

Executive Summary 7

1.0 Introduction 17

1.1. Project Assurance Framework 17

1.2. Preliminary Evaluation (PE) 17

1.3. Purpose and Approach 17

1.4. The Project Opportunity 18

1.5. Site and Ownership Context 19

1.6. Project Goals 20

2.0 Outcomes Sought 21

2.1 SASR 21

2.2 Community Need 21

2.3 Cultural Need 22

2.4 Existing Cultural Infrastructure in Cairns 23

2.5 Drivers of the Need for Change in Cultural Infrastructure 25

2.6 Stakeholder consultation and Research 25

2.7 Alignment with Government Policy 26

2.8 Outcomes Sought 27

2.9 Project Objectives and Success Criteria 28

3.0 Options to be Evaluated 30

3.1 Options considered during the SASR 30

3.2 Masterplan Development Phase 31

3.3 Concept Development Phase 34

3.4 Description of Options for Preliminary Evaluation 37

4.0 Options Evaluation 42

4.1 Financial and Economic Appraisal 42

Summary of Key Assumptions 43

4.2 Preliminary Financial Analysis 45

4.3 Preliminary Economic Appraisal 47

4.4 CRC Budget Analysis 53

4.5 Preliminary Market Sounding 54

4.6 Preliminary Consideration of Legislative Approval Issues 56

4.7 Preliminary Consideration of Whole-of-Government Issues 57

4.8 Preliminary Consideration of Regulatory Issues 59

4.9 Preliminary Public Interest Assessment 59

4.10 Needs, Outcomes Sought & Cultural Vitality 60

5.0 Project Procurement Strategy 61

5.1 Consideration of Procurement Options 61

6.0 Risk Management 65

6.1. Risk Management 65

6.2. Preliminary Risk Analysis 67

7.0 Options Comparison 68

7.1 Comparison 68

7.2 Conclusion and Recommendation 68

8.0 Implementation 69

8.1 Funding Strategy 69

8.2 Project Plan 74

8.3 Governance Arrangements 75

8.4 Change Management Strategy 76

8.5 Benefits Realisation Strategy 77

8.6 Community engagement strategy 77

8.7 Project Resourcing 78

8.8 Quality Management 79

8.9 Operating Model 80

9.0 Business Case Development 83

9.1. Programme and Approach 83

9.2. Resourcing 83

9.3. Skills and Capabilities 83

9.4. Budget 83

Appendices 84

Appendix 1 Programme

Appendix 2 PE Comparison Tables

Appendix 3 Concept Design Report

Appendix 4 Community Engagement Strategy (Communications Plan)

Appendix 5 Government Policy Alignment

Appendix 6 Preliminary Client Project Brief

Appendix 7 Masterplan Options Report

Appendix 8 SASR (Excluding Appendices)

Appendix 9 Market Sounding Report

Appendix 10 Performing Arts Centre Analysis

Appendix 11 Urbis Planning Advice

Appendix 12 Options Analysis (Ex. EA&FA)

Appendix 13 Procurement Strategy

Appendix 14 Risk Management Plan

Appendix 15 Financial & Economic Appraisal

Appendix 16 Options Cost Estimates

Appendix 17 Project Management Plan

Appendix 18 Probity Plan

Appendix 19 Change Management Plan

Appendix 20 Museum Operations Analysis

Appendix 21 CRC Budget Analysis – Options 2, 6 and 7

Cairns Regional Council | Cairns Entertainment Precinct | September 2011

Controlled Document Register

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01 Linda Cardew Cairns Regional Council

00 File Savills Project Management

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List of Tables

TABLE TITLE PAGE

Table 1 – Options Scope and staging summary 8

Table 2 – Evaluation Summary 9

Table 3 - NPV and BCR for each option (calculated based on incremental, discounted cash flows) 14

Table 4 – CEP Vision and Uses 18

Table 5 – CEP Cultural Uses 18

Table 6 – Existing infrastructure (capacity and occupancy) 23

Table 7 – Existing cultural and entertainment infrastructure (main venues) 24

Table 8 – Alignment of Needs and Outcomes (CEP and PAC) 27

Table 9 – Alignment of Needs and Outcomes (Museum) 28

Table 10 - Cultural vitality indicators 29

Table 11 – Masterplans comparison 32

Table 12 – Disadvantages with Staging Masterplan Option 1 33

Table 13– Cultural Activities Undertaken 44

Table 14– CEP Visitation 45

Table 15– Renewals Capex 45

Table 16 - NPV and BCR for each option (calculated based on incremental, discounted cash flows) 49

Table 16 – CRC Budget Analysis for Option 2 53


Table 18 – CRC Budget Analysis for Option 6A 54

Table 19 – CRC Budget Analysis for Option 6 (Stage 1) - referred to by PWC as Option 7 54

Table 20 – Private sector involvement 54

Table 21 – PAC market sounding results 55

Table 22 –Whole of Government Policy 58

Table 23 – Assessment Scale 59

Table 24 – Rating criteria 59

Table 25 – Public Interest Assessment 60

Table 26 – Assessment Scale 60

Table 27 – Needs, Outcomes, Cultural Vitality Assessment results 60

Table 28 – Procurement Workshop Outcomes 62

Table 29 – Project Phase Risk framework 65

Table 30 – Preliminary Risk Analysis 67

Table 31 – Comparison assessment results 68



Table 34 – CRC Budget Analysis for Option 6A 74

Table 35 – CRC Budget Analysis for Option 6 (Stage 1) - referred to by PWC as Option 7 74

Table 36 – Communications Strategy (2011) 78

Table 37 – PAC Operating Model 80

Table 38 – BC Programme 83


List of Figures

FIGUREFIGUREFIGUREFIGURE TITLETITLETITLETITLE PAGEPAGEPAGEPAGE

Figure 1 - Net present value and incremental net present value for each option 12

Figure 2 - Revenue forecast for each Option (in $’000s) 12

Figure 3 - Expenditure at the arts and cultural facility under each Option. 13

Figure 4 – Site and its context 19

Figure 5 – Previous CEP site area with ’Area A’ 19

Figure 6 – Preferred revised CEP site area 19

Figure 7 – Cairns City Masterplan Context 20

Figure 8 – CRC Masterplan nodes 20

Figure 9 – Options analysis process 30

Figure 10 – Masterplan 1 Site Section 31

Figure 11 – Masterplan 1 31

Figure 12 – Masterplan 2 Site Section 31

Figure 13 – Masterplan 2 31

Figure 14 – Long Section 34

Figure 15 – Roof Plan 34

Figure 16 – Long Section 35

Figure 17 – Roof Plan 35

Figure 18 – Performing Arts Concept (based on Masterplan Option 2) 36

Figure 19 – Museum / White’s Shed Concept Plan 37

Figure 20 – White’s Shed internal perspective 37

Figure 21 – Theatre door 38

Figure 22 – Theatre seating 38

Figure 23 – Back of house 38

Figure 24 - Foyer 38

Figure 25– Overarching Appraisal Framework 43

Figure 26 - Net present value and incremental net present value for each option 46

Figure 27- Revenue forecast for each Option (in $’000s) 46

Figure 28 - Expenditure at the arts and cultural facility under each Option. 48

Figure 29 - Number of workers on site during the construction phase of the project (for each project option) 50

Figure 30 – Risk classification 66

Figure 31 - Risk ranking and action 66

Figure 32 – Overarching governance Structure 75


Glossary of Terms

AQ Arts Queensland

BC Business Case

CBRC Cabinet Budget Review Committee

CE Creative Economy

CEP Cairns Entertainment Precinct (formerly the Cairns Cultural Precinct)

Cox CA-Cox Rayner Architects

CM Construction Management

CCT Cairns Civic Theatre

CRC Cairns Regional Council

DA Development Application

DDA Disability Discrimination Act 1992

DIP Department of Infrastructure and Planning

DIT Department of Infrastructure and Transport

DPW Department of Public Works

D&C Design and Construct

FSR Financial Sustainability Review

FNQ Far North Queensland

NBN National Broadband Network

PCG Project Control Group

PAF Project Assurance Framework

PAC Performing Arts Centre

PE Preliminary Evaluation

PMP Project Management Plan

PN Far North Queensland Ports Corporation (Ports North)

PPP Public Private Partnership

PWC PriceWaterhouseCoopers

QM Queensland Museum

QMP Quality Management Plan

QT Queensland Treasury

RMP Risk Management Plan

RMR Risk Management Register

SASR Strategic Assessment of Service Requirements

SPM Savills Project Management

TNQ Tropical North Queensland

WTP WT Partnership Quantity Surveyors


7

Executive Summary

Cairns Regional Council (CRC) is proud to present Arts Queensland (AQ), the Queensland Government and the community of Far North Queensland (FNQ) with this Preliminary Evaluation (PE) for a new and exciting Entertainment Precinct in the heart of Cairns.

For too long the region’s community has been disadvantaged with social infrastructure that is inadequate to showcase the rich cultural diversity and heritage on offer in this part of Australia.

The need is clear, the case for change compelling.

� At a time of high unemployment in Cairns (8.3% for the March quarter 2011 - Source: ABS, 2011) and with the business community attempting to recover from natural disaster and the ravages of a global financial crisis, the Cairns Entertainment Precinct (CEP) offers all levels of Government an opportunity to invest in a sustainable future for the city and wider environs. It is estimated that as a direct result of Government investment in this project, up to 250 new jobs will be created on site during the construction phase with the flow-on of many indirect additional positions related to the construction. Furthermore, many more jobs will be created indirectly through the life of the CEP, in arts, cultural, retail and catering industries however it is the opinion of PWC that the AEC Group (2009) estimates of employment under both the construction and operational phases of the CEP may have been overstated.

� The community, as performers, exhibitors, entertainers and visitors, has been widely canvassed for its input and contribution to this project. The community has voiced its displeasure at the lack of appropriate and adequate social infrastructure currently available in the region. The opportunity for cultural growth, education and celebration has been constrained by lack of opportunity for many years.

� The Cairns Civic Theatre is inadequate. Opened in 1974, the building has exceeded its useful life and fails to accommodate many of the locally-produced, entrepreneurial performances or larger visiting groups. The theatre does not meet current minimum building code requirements and discriminates against patrons with disabilities. The risk of claims against CRC will only increase as the theatre ages. The cost of maintaining the theatre continues to grow every year. This is clearly an unsustainable position.

� Cairns is unique, attracting 1,968,000 international and domestic tourists to the Tropical North Queensland (TNQ) region in the year ending December 2010. This number will continue to grow. Of total annual visitation to the region, 47% of international visitors and 11% of domestic visitors may be described as cultural tourists, tourists seeking personal experience and exposure to museums, the arts, music and artistic performance. Cultural tourists typically spend 70% more than non-cultural tourists with a length of stay double that of their counterparts. The opportunity for cultural tourists to view and invest in locally produced product and performance is lost. (Source: Cultural Tourism in the Regions of Australia – Tourism Research Australia. 2005)

� In May 2011 the Queensland Treasury’s Office of Economic and Statistical Research estimated the population of Cairns Regional Council region as 168,251. This represents an increase of 3,897 persons or 2.4% over the year. By 2031, this number is forecast to be between 215,805 and 264,208. Far North Queensland has also grown over the four years to 2010 by 2.7%. The population of FNQ is projected to increase from 281,000 to 373,000 by 2031 (Source: Office of Economic and Statistical Research, Queensland Government population projects to 2031. 2011 edition).The demand for greater and improved social infrastructure will only increase as the population of Cairns and FNQ grows.

Options Evaluation and a Preferred Option

In collaboration with the local community, CRC and its team of consultants has developed concept design options for a new CEP that respond to community need as expressed in the Strategic assessment of service requirements (SASR), and the existing social infrastructure failings evident in Cairns today. All design and staging options presented in this report are based on a dual level masterplan option. This option (Masterplan 2) was viewed by Council as achieving a superior outcome in terms of urban design, user amenity, flood and storm surge protection, and the ability to stage construction.


8

In all, eight (8) options, including construction staging options, were considered and evaluated. Options included:

� Option 1 - Base Case (Status Quo – Do nothing)

The Do Nothing option does not involve any development, upgrade or refurbishment to the CCT as it will not meet the needs identified and would have a serious impact on groups that currently use the facility during the refurbishment construction phase. Further, this option does not address the need for a regional museum or community meeting place. The current CCT site does not provide for future expansion to fully accommodate the required refurbishment including museum and meeting place requirements. Nor does it provide for the additional parking requirements.

� Option 2 - Complete development, comprising:

� 1,100 seat proscenium theatre

� 450 seat theatre

� Stabilisation and adaptive reuse of the heritage-listed White’s Shed

� Community Hub supporting a range of community and cultural activities

� Extensive covered public domain and outdoor performance space

� Museum

� Pedestrian bridge link to Convention Centre

In recognition of the need to possibly stage the CEP development to meet funding constraints a number of staging options were also considered, namely Options 3 and 4. These options were further rationalized, which are Options 5 and 6. These are represented in Table 1 below:

OPTIONOPTIONOPTIONOPTION STAGINGSTAGINGSTAGINGSTAGING

� Option 3 Option 3 Option 3 Option 3 ----2 stage 2 stage 2 stage 2 stage developmentdevelopmentdevelopmentdevelopment

� Stage 1 – Carpark, PAC, Public Domain, Restaurant, White’s Shed (including retail) and bridge to Convention Centre

� Stage 2 – Museum

� OptionOptionOptionOption 4 4 4 4 ---- 3 stage 3 stage 3 stage 3 stage developmentdevelopmentdevelopmentdevelopment

� Stage 1 – Carpark, PAC (Ex. Performance Space 2 & Rehearsal room), Public Domain, White’s Shed (including retail) and bridge to Convention Centre

� Stage 2 – Performance Space 2 (Base build and fit-out), Rehearsal (Base build and fit-out) and Restaurant


� Option 5 Option 5 Option 5 Option 5 ---- 2 stage 2 stage 2 stage 2 stage development development development development (rationalised*)(rationalised*)(rationalised*)(rationalised*)

� Stage 1 – Carpark (including turf/landscape to roof of carpark and PAC location) White’s shed, Museum, Public Domain (lower plaza only) and bridge to Convention Centre

� Stage 2 – PAC, upper plaza and restaurant

� Option 6 Option 6 Option 6 Option 6 ---- 3 stage 3 stage 3 stage 3 stage development development development development (rationalised*) (rationalised*) (rationalised*) (rationalised*)

� Stage 1 – Carpark, White’s shed, turf/landscape to future museum space, Public Domain, Performance Space 1 and bridge to Convention Centre

� Stage 2 – Performance space 2 (Base build and fit-out), Rehearsal Space (Base build and fit-out) and Restaurant


� Option 6A Option 6A Option 6A Option 6A ---- 3 stage3 stage3 stage3 stage, 10 year development development development development (alternate (alternate (alternate (alternate and lagged stagingstagingstagingstaging, rationalised*)rationalised*)rationalised*)rationalised*)


� Stage 2 – Museum (Start 3 years after completion of Stage 1)

� Stage 3 – Performance space 2 (Base build and fit-out), Rehearsal Space (Base build and fit-out) and Restaurant (Start 3 years after completion of Stage 2)

� Option 6 (Stage 1) Option 6 (Stage 1) Option 6 (Stage 1) Option 6 (Stage 1) ---- referred to by PWC as referred to by PWC as referred to by PWC as referred to by PWC as Option 7 Option 7 Option 7 Option 7 ---- 1 stage only1 stage only1 stage only1 stage only

� Stage 1 – Carpark, White’s shed, turf/landscape to future museum space, Public Domain, Performance Space 1 and bridge to Convention Centre Table 1 – Options Scope and staging summary

Rationalised (*) – value management process which reviewed all back of house and support areas to identify the minimum area and scope inclusions required to still meet the brief but provide a more cost-effective outcome.


9

Each option has been subjected to detailed analysis against the range of evaluation criteria required by the PAF and Arts Queensland (AQ), including:

� Financial Analysis (FA) – Net Present Value (NPV)

� Economic Analysis (EA) – Net Economic Present Value (NEPV) and Benefit Cost Ratio (BCR)

� CRC Budget Analysis (CRCBA) – Funding Gap Analysis

� Public Interest Assessment (PIA)

� Needs and Outcomes Sought (NOS)

� Cultural Vitality (CV)

Against the evaluation criteria, options were ranked 1 (highest) through 8 (lowest) to determine an overall ranking. The table below summarises ranking results.

Table 2 – Evaluation Summary OPTION FA

(NPV) EA

(NPEV) EA

(BCR) CRCBA PIA NOS CV OVERALL OVERALL OVERALL OVERALL

RANKINGRANKINGRANKINGRANKING

Option 1 – Base Case 1 - - - 8 7 8 8888

Option 2 -Complete development

5 5 1 3 1 1 1 1111

Option 3 – 2 stage development

6 3 2 - 2 2 2 2222


3 4 3 - 4 4 3 3333

Option 5 – 2 stage development, rationalised

7 7 4 - 3 3 5 4444


4 6 5 4 4 5 3 5555

Option 6A – 3 stage development, alternate staging and rationalised

8 2 6 2 6 6 6 7777

Option 6 (Stage 1) 1 stage only

2 1 7 1 7 8 7 6666


10

Option 2 consistently ranks as the highest ranking option against the nominated evaluation criteria. Option 2 is also the most economically feasible option and ranks as the highest in terms of meeting community need and outcomes sought from the project. Option 2 is the preferred option.

However, it is recognized that with the current economic restraints on all levels of Government, the only feasible option for immediate realization of this project, is the first stage of Option 6 and it is this option that will be analysed in the Business Case. An economic analysis of stages 2 and 3 of Option 6 will also be undertaken as part of the BC.

The Benefits

The fully developed Option 6 will produce significant benefits to the communities of Cairns and FNQ, including;

� NPEV of -$281.680 million and BCR of 0.1148. Stage 1 of Option 6 generates a NPEV of -$193.499 million and BCR of 0.1018.

� Across the construction period, the average number of persons employed on the project may be around 140 persons, peaking at over 250 persons in 2013-14. It is the opinion of PWC that the AEC Group (2009) estimates of employment under both the construction and operational phases of the CEP may have been overstated.

� Employment will be directly supported by the CEP in the operational phase, with, for example, 34 persons employed in the Performing Arts Centre and 14 persons employed in the Museum, when delivered as part of the full realisation of Option 6.

� In addition to direct expenditures, there will be significant indirect expenditures associated with the CEP which will accrue to both the Cairns and regional economies. The ongoing expenditures throughout the life of the project evidences ongoing support for activity and employment in the arts and cultural industries, together with activity and employment in Retail Trade and Restaurant/Catering industries.

� The flow on effect of the project may impact positively on economy-wide employment, at least in the short to medium run. For example, increased tourism activity will provide support for economy-wide employment in retail trade, accommodation and restaurant / catering related industries. A significant portion of the direct (and indirect) expenditure that may be anticipated in the operational phase will be driven by tourism activity.

� There will be significant social and educational benefits. In particular, the CEP will have the capacity to increase social cohesion and enhance health and well-being for both those in the Cairns community and those attracted to the area. It will promote stable, co-operative and sustainable communities that encourage intergenerational and intercultural interaction.

� The CEP will also create greater awareness, within both the local community and wider Queensland and Australian communities, of the historical significance and the value of FNQ’s rich cultural diversity.

� Participation in arts and cultural activities can have a direct impact on the improvement of education and training outcomes, not only for performers and artists, but also for consumers whose participation is merely receptive. It promotes knowledge sharing, increased collaboration, cultural appreciation and skills development. The CEP will likely foster and encourage participation in arts and cultural activities, thereby harnessing these associated benefits.

� The development of the CEP will enhance urban amenity of the site, areas adjacent to the site and more broadly within the Cairns CBD. It will contribute to the sustainable development of the Cairns City through integration of sustainable design values, enhancement of the natural landscape and appropriate utilisation of the land. Its location has the ability to stimulate development in the southern areas of the CBD.

� The financial results may be improved through consideration of productivity improvements in the operation of the facilities in the medium to long term, and joint marketing opportunities with tourism groups reducing the additional promotional costs that have been identified to achieve higher revenues. These are not easy to quantify and have not been included in the financial assessments at this stage, but will be reviewed in greater detail in the Business Case.


11

Community Consultation

Community consultation continues to feature as the backbone to the CEP project. Significant community and stakeholder consultation was undertaken prior to the commencement of the design phase, including;

� Positive Solutions research 2009/2010

� Information Sessions 2010

� Access advisory committee Council 2010

� Local architects input into design brief 2010

� Schools and tertiary

� Ports User groups

� Traditional Owners and Indigenous groups, including Indigenous performers

� Multicultural groups

A further consultation process involving the community, user groups, FNQPC, AQ, DPW and DIP has been undertaken since the SASR was endorsed. This process will continue throughout the preparation of the BC and during design development. A summary of this process is included below with the detailed outcomes of this most recent consultation process included within the Concept Design Report, which is included at Appendix 3.

During preparation of the PE, eight separate sessions were held to inform and solicit input and feedback from the community.

� 3 May 2011 – two inception workshops

� 24 May 2011 – two masterplan workshops

� 14 June 2011 – two preliminary concept design workshops

� 12 July 2011 – two concept design and architectural options workshops

At its meeting of 17 August 2011, Council resolved to no longer pursue Masterplan Option 1 for the purpose of the Project Assurance Framework, as Masterplan 2 provides the following superior outcomes:

� it has the potential to deliver a superior urban design outcome

� it has attracted greater community support through the community and other stakeholder consultations to date

� it has a greater level of functionality and user amenity, and a higher degree of flexibility to meet the needs of a growing population

� it offers a superior level of protection against storm surge and flooding

� it has the potential to achieve more commercial revenue

� it will provide a superior level of “buffering” between the Cityport South and Seaport precincts; and

� it provides significant advantages in the staging of construction.

Further sessions with the community and the ongoing implementation of the communication and awareness program are planned for the Business Case phase of the CEP project.

Financial & Economic Analyses Summary

Preliminary Financial Analysis

The discounted cash flow analysis showed that no option, including Option 1 under which the Cairns Civic Theatre continues operating, is self-funding on a purely commercial/financial basis. The NPV results for each option are presented below.


12

Figure 1 - Net present value and incremental net present value for each option

Under Option 1, the continued operation of the Civic Theatre results in an NPV of -$18.47 million. Options 2 to 6A all

provide similar valuation results; the incremental NPV ranges from -$50.5 million (for Option 6) to -$57.1 million (for Option

6A). Option 6 (Stage 1) – referred to by PWC as Option 7 has an improved NPV of -$40.7 million in comparison with

Options 2 to 6A, reflecting the lower construction and renewal costs.

Revenue profiles under each option are as follows:

Figure 2 - Revenue forecast for each Option (in $’000s)

Option 1 provides the lowest forecast revenues of the options considered. However, Option 6 (Stage 1) – referred to by PWC as Option 7 has a revenue profile which is closer to the Cairns Civic Theatre’s operations, reflecting that only one theatre is being operated. Options 2 to 6A provide vey similar revenue profiles, reflecting that each of these options comprise facilities capable of generating revenues from the same sources.

Option 6 (Stage 1) – referred to by PWC as Option 7 represents the most attractive option on the basis of the financial appraisal results described above. While this option results in a worse operating result, the lower renewal cost associated with the smaller development area (representing only -$35 million of the NPV) results in the highest NPV.

(18,470)

(70,470) (71,116)(68,225)

(73,148)(69,004)

(75,598)

(59,198)

-

(52,000) (52,646)(49,755)

(54,678)(50,534)

(57,128)

(40,728)

(80,000)

(70,000)

(60,000)

(50,000)

(40,000)

(30,000)

(20,000)

(10,000)

-

Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Option 6A Option 7

NPV ($'000s) by Case

NPV Incremental NPV

0

2,000

4,000

6,000

8,000

10,000

12,000

FY11 FY13 FY15 FY17 FY19 FY21 FY23 FY25 FY27 FY29 FY31 FY33 FY35 FY37 FY39 FY41

Revenues ($'000s) by Case

Option 1

Option 2

Option 3

Option 4

Option 5

Option 6

Option 6A

Option 7


13

Preliminary Economic Analysis

The impact of each option on expenditures, both in the facility and external to the facility, can be classified into two key categories – direct and indirect expenditures. “Direct expenditures” refers to economic activity that is directly related to the facility, while “indirect expenditures” refers to any flow-on or economy-wide effects. The latter are subject to qualitative assessment in the economic appraisal.1

During the construction phase, a significant portion of the $240 million of direct expenditure will accrue to the Cairns region as a result of the CEP development. During the operational phase, expenditures under Options 2 through 6A are projected to grow steadily throughout the life of the project, peaking at levels between $44 million and $50 million (in 2041). Option 7 is the clear outlier, peaking at $30 million. Direct expenditures under the Option 1 - Base Case, peak at just over $8 million.

Figure 3 - Expenditure at the arts and cultural facility under each Option.

The significance of the direct expenditure under each option can be summarised by two key metrics – the net present economic value (NPEV) and the benefit-cost ratio (BCR). If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option may bemay bemay bemay be considered to be economically viable if the considered to be economically viable if the considered to be economically viable if the considered to be economically viable if the BCR is greater than one. However, as discussed in the PAF, for culturaBCR is greater than one. However, as discussed in the PAF, for culturaBCR is greater than one. However, as discussed in the PAF, for culturaBCR is greater than one. However, as discussed in the PAF, for cultural projects like the Cairns Entertainment l projects like the Cairns Entertainment l projects like the Cairns Entertainment l projects like the Cairns Entertainment Precinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of the economic Precinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of the economic Precinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of the economic Precinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of the economic viability of a project.viability of a project.viability of a project.viability of a project.

While the metrics provided in Table 3, when considered in isolation, might suggWhile the metrics provided in Table 3, when considered in isolation, might suggWhile the metrics provided in Table 3, when considered in isolation, might suggWhile the metrics provided in Table 3, when considered in isolation, might suggest that none of the Project est that none of the Project est that none of the Project est that none of the Project

Options are economically viableOptions are economically viableOptions are economically viableOptions are economically viable, it is important to note that these metrics have only been calculated based on the

impacts that have been monetised in this assessment – that is, the direct expenditures under the construction and

operational phases of each Option. The indirect and non-market benefits that may accrue to the local, regional and, to a

lesser extent, State communities if the Cairns Entertainment Precinct is constructed, include increased social cohesion

and quality of life; incresed arts and cultural heritage appreciation; education and training benefits; and health benefits.

The inability to capture, in monetary terms, these significant community and cultural benefits expected from the Precinct,

means that the BCRs and NPEVs alone should not be regarded as a comprehensive view of each project option’s economic performance.

1 PwC has received guidance from Queensland Treasury regarding the most appropriate methodology for the economic appraisal component of the PE. The methodology presented in this report is, in PwC’s understanding, acceptable for Queensland Treasury’s purposes.

0

10,000

20,000

30,000

40,000

50,000

60,000


Option 1

Option 2

Option 3

Option 4

Option 5

Option 6

Option 6A

Option 7


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The social and educational benefits associated with the Entertainment Precinct will be similar for Option 2 to 6. However,

these benefits would be maximised through the early development of facilities, particularly the performing arts and

museum facilities given the current limitations of the existing Civic Theatre, and absence of a regional museum. The same

level of social and educational benefit would not be achieved under Option 7 whereby the performing arts complex would comprise only a single performance space, and the museum facility would not be constructed.

Combining the higher BCR for Option 2 with this option’s expected superior performance (relative to Option 7) on social and educational benefit outcomes, Option 2 presents as the preferred option from the economic appraisal.

Option Net Present

Economic Value

($’000s)

Benefit-Cost Ratio

Option 1 0 -

Option 2 -279, 955 0.1202

Option 3 -275, 044 0.1194

Option 4 -277, 578 0.1161

Option 5 -284, 757 0.1160

Option 6 -281, 680 0.1148

Option 6A -269, 675 0.1042

Option 6 (Stage 1) –

Option 7 -193, 499 0.1018 Table 3 - NPV and BCR for each option (calculated based on incremental, discounted cash flows) 2

The Way Forward

Procurement and risk management workshops have been convened in recent weeks, with representation from key stakeholders and government agencies. Two shortlisted procurement options have been identified - Construction Manager and Managing Contractor – with further analysis required during the Business Case phase to identify a preferred option and discussion of the procurement is included at Appendix 13.

CRC is targeting the submission of the CEP Business Case in accordance with the requirements of the Project Assurance Framework to Arts Queensland by the 21st October 2011. Given this tight timeframe, consideration has already been given in this PE to a range of implementation initiatives generally reserved for the Business Case phase of the project. This PE contains and considers:

� A Project Plan

� Governance Arrangements

� Change Management Strategy

� Benefits Realisation Strategy

� Stakeholder and Communication Strategy

� Project Resourcing

2 The NPEV and BCR are calculated off incremental cash flows. “Incremental” means that the cash flows under Option 1 (the Base Case) are subtracted from the cash flows for each Option to determine the benefit over and above the status quo. The incremental cash flows for Option 1 would therefore be zero and the NPEV and BCR would also be zero.


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� Quality Management

� Operating Model

The outcomes of the SASR can only be fully achieved through the full development of the preferred Design Concept. The best financial outcomes are achieved if these buildings are developed together. This is Option 2. However, it is unlikely that the $240m of funding is currently available. Therefore, the lowest cost option, to provide as a minimum a performing arts centre, has been developed. This is stage 1 of Option 6.

This also includes making Whites Shed acceptable as an entrance statement to the precinct and constructing a pedestrian bridge to the Convention Centre. This bridge will tie the Convention Centre to the PAC and through Whites Shed to the Cairns tourist waterfront. Therefore the CRC is seeking funding at this time from the Commonwealth and Queensland Governments for Stage 1 only of Option 6. The CRC is also only considering at this stage, meeting its obligation in relation to stage 1 of Option 6.

The consequences of a long delay in realising stages 2 and 3 of Option 6 have been considered by PWC. As a worst case scenario it has analysed the financial consequences of stages 2 and 3 being outside the scope of this study. PWC has referred to the analysis of this scenario as Option 7.

A pre-opening and development budget of up to $7 million is outlined in the report by Creative Economy to develop product; and market and launch the new PAC, however this can be reduced to $3.5 million for Option 6 (Stage 1). $1.0 million of this has been included in the Capex used in the PWC financial analysis, which is in addition to the building Capex estimates prepared by WTP.

Securing the additional support that is required to achieve a successful launch of the PAC as a major driver of additional tourism revenue to the FNQ region, will be identified as part of the BC. “Piggy backing” existing programs run by tourism, commercial and cultural organisations external to Council, is seen as a cost effective way of realising this outcome, minimising the direct cost to Council.

To date the following funding sources and amounts have been identified or requested for the Capital Expenditure (Capex) element of CEP project. The resulting shortfall for what is required to deliver Option 2 is $148148148148,,,,095,5095,5095,5095,500000000 (Excluding GST). The funding identified or requested would be suitable to deliver Option 6 (Stage 1). For stage 1 of Option 6 CRC is requesting a contribution of $57,305,500 (Excluding GST) from the State. Should this funding be provided, the resulting shortfall would be reduced to $90,790,000 (Excluding GST).

SOURCE AMOUNT ($)

Commonwealth Government 40,000,000

State Government 57,305,500

CRC 57,305,500

TOTALTOTALTOTALTOTAL $$$$151515154444,,,,611611611611,000,000,000,000

The funding proposed is in addition to contributions already made by the Queensland Government including those made to provide the agreed site.

The total Capex required for the preferred Option 2 is $245,401,000$245,401,000$245,401,000$245,401,000 (excluding GST). This amount includes the construction of a pedestrian walkway connecting the CEP to the State-owned Cairns Convention Centre. This represents a funding shortfall (gap) of $$$$148148148148,,,,095095095095,000,000,000,000 (excluding GST).

The total Capex required for Option 6 is $$$$252525258888,974,000,974,000,974,000,974,000 (excluding GST), of which $$$$151515154444,611,000,611,000,611,000,611,000 (excluding GST) relates to Stage 1. This higher Capex reflects the additional cost of staging and represents a total funding shortfall (gap) of $$$$111166661111,,,,668668668668,,,,555500000000 (excluding GST). Should the requested State funding of $57,305,500 (Excluding GST) be provided, the resulting shortfall would be reduced to $104,363,000 (Excluding GST). Securing the State funding identified above would ensure there are sufficient funds identified or requested to complete Stage 1 of Option 6.

Additional funding would need to be sourced from existing and future Local, State and Commonwealth Government funding programs to secure the balance of Option 6 Capex. CRC has commenced investigations into the additional funding sources and will provide further detail of likely quantum and timing, as part of the Business Case. The Business


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Case will also consider Operational Expenditure (Opex) funding requirements, where a similar, albeit more manageable funding gap, exists.

CRC has developed a budget and procured all independent services necessary for completion of the next phase of the Project Assurance Framework process, the Business Case.

Closing Statement

The CEP project represents a unique opportunity for all levels of government to invest in a sustainable future for Cairns and FNQ. Through this PE, CRC has compiled a robust case for change, and having considered the needs of the community, has responded with a credible and economically viable solution, representing value for money,

Realisation of an opportunity for the people of the region to showcase and share their rich cultural heritage for all to enjoy, is now much closer.

CRC looks forward to receiving further and ongoing support from the Queensland and Commonwealth Governments for this important project.


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1.0 Introduction

1.1. Project Assurance Framework

Cairns Regional Council (CRC) is applying to the State and Commonwealth Governments for contributions to the funding of the proposed Performing Arts Centre (PAC), Museum and other facilities in the Cairns Entertainment Precinct (CEP). For funding applications to be considered by Government, the proponent (CRC) is required to substantiate the need for the facilities and to demonstrate that proposed solutions offer value for money to Government. The Preliminary Evaluation (PE) facilitates an assessment of the priority and affordability of the project options. This PE embodies the outcome of this requirement and has been prepared in accordance with the Queensland State Government Project Assurance Framework (PAF) guidelines.

The first stage of the PAF is the Strategic Assessment of Service Requirements (SASR). The SASR is complete and was endorsed by Arts Queensland on the 21st June 2011.

The second stage of the PAF is the PE – this document.

The third stage of the PAF process is the Business Case (BC) which will be submitted in October 2011. CRC will be commencing the preparation of the BC immediately following submission of the PE in recognition of the PAF Grant Funding milestones and the funding timeframe proposed by the Commonwealth Government.

The PAF programme is included at Appendix 1.

1.2. Preliminary Evaluation (PE)

The key activities that have been undertaken as part of this PE include:

� Confirming the outcomes identified in the SASR.

� Defining the options to achieve these outcomes.

� Development of two (2) masterplan options.

� Development of two (2) concept design options.

� Conducting a preliminary evaluation of the costs, risks, and benefits associated with the identified project options.

� Determining the appropriate procurement strategy (considering traditional and Public Private Partnership (PPP) models).

� Establishing initial project organisation and governance arrangements for leading and managing the project.

� Developing a detailed plan and budget for the BC, the next stage of the PAF.

A “Review Schedule” checklist is included in Appendix 2 confirming compliance with the requirements of the PE Products and Processes. The schedule accords with Section 4 – Checklist of the PAF – Preliminary Evaluation Guidelines Purpose and Approach.

1.3. Purpose and Approach

The purpose of this document is to demonstrate that the CEP should be delivered as a priority to satisfy the current need within the community. Further, the PE demonstrates that the CEP is viable and represents value for money to Government.

This PE provides sufficient information to Government decision makers to enable them to make an informed decision as to whether to proceed further with the project, and will specifically allow consideration of the project by the Queensland Government Cabinet Budget Review Committee (CBRC). The information generated in this PE aims to be sufficiently detailed to assist project decision makers to determine the priority and likely affordability of the potential project and the form it should take to deliver best value for money.


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The development of this PE has followed an iterative and collaborative approach involving working sessions with Arts Queensland, QLD Department of Infrastructure & Planning and Queensland Treasury, to ensure that relevant stakeholder issues and PAF guideline requirements are addressed.

1.4. The Project Opportunity

An opportunity exists for Cairns to finally deliver flexible facilities that meet both the needs of the community, and also the needs for domestic and international visitors. Further, the CEP will enable Cairns to host and showcase performing and visual arts unique to the region which has a rich indigenous and multi-cultural heritage, and for the CEP to become a significant cultural asset for the far north of Queensland, Australia and the Pacific Rim. The CEP will also provide retail opportunities, be a hub for community activities, a link to the existing convention centre, and additional off-street parking.

The eight key drivers for the CEP are included in Table 4 below.

CEP VISION CEP VISION CEP VISION CEP VISION ---- The vision for the PThe vision for the PThe vision for the PThe vision for the Perfoerfoerfoerforming Arts Centre and the museum at the CEPrming Arts Centre and the museum at the CEPrming Arts Centre and the museum at the CEPrming Arts Centre and the museum at the CEP is that it should be: is that it should be: is that it should be: is that it should be:

� A performing arts centre and museum for the whole of Northern Queensland and for the Pacific Rim.

� Sensitive to the unique requirements of Indigenous and multi-cultural artists and audiences.

� Technologically advanced – ability to connect to remote communities via the NBN.

� A living cultural space – accessible to local artists and groups.

� A hub that reflects Cairns’ unique cultural diversity.

� A place for teaching, storytelling, learning and cultural education.

� A place that positions Cairns as a respected centre for the creative arts.

� A driver for attracting additional tourist to Cairns, generating additional tourist nights, and generating additional spend per visitor to

Cairns. Table 4 – CEP Vision and Uses

The CEP is to accommodate the following potential cultural uses, described below in Table 5.

CULTURAL USES CULTURAL USES CULTURAL USES CULTURAL USES –––– Examples of cultural use may include:Examples of cultural use may include:Examples of cultural use may include:Examples of cultural use may include:

� Indigenous performance and celebration, including Multicultural community celebration and performance.

� A place for story-telling, education, employment, research, heritage within the museum facilities.

� Western performance including performances by Queensland Symphony Orchestra.

� Music, Cabaret, Film Festival events, new media arts events.

� Theatre performance.

� Dance, including performances by Bangarra Dance Company.

� Chamber music, including performances by Musica Viva.

� Temporary art exhibitions and displays curated by professional organisations. Table 5 – CEP Cultural Uses


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1.5. Site and Ownership Context

The site is owned by Far North Queensland Ports Corporation Limited trading as Ports North (PN). PN is the land owner and the Assessment Manager for the CEP site (Lot 9, SP113632 and Lot 10, SP214821) which is to be leased (on a peppercorn rent) to CRC for 99 years. The definition of the site and its context is represented in Figure 4 below.

Figure 4 – Site and its context

Site Area

The CEP site area offered by PN had a total area of 1.5572 hectares (refer Figure 5 below) comprising a major parcel and a minor parcel called ‘Area A’ which was described as an additional site area that would be made available for the CEP if it was deemed necessary for the project. The shape of the Lease Area was insufficent for the required project planning, and the additional ‘Area A’ proved necessary for the CEP to function in its final form. ’Area A’ also straddled the existing port service road, linking Wharf Street to the wharf area, which must continue to function at all times.

PN gave permission for the CEP project team to investigate an alternative road alignment and the additional ‘Area A’ on the basis that overriding functionality of the port was uncompromised. The heritage-listed “White’s Shed” is located on the northern part of the site, further limiting the development of site planning options.

Figure5 – Previous CEP site area with ’Area A’ Figure 6 – Preferred revised CEP site area


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The solution agreed in principle with PN is a new road running straight out from, and broadly perpendicular to, Wharf Street. The alignment provides a new site area of 1.5649 hectares (Refer Figure 6 above). The CEP site boundary encroaches into areas leased by Quicksilver, for which solutions have been identified for further investigation.

PN has provided in-principle agreement to the reconfiguration of the site and boundary realignment, which will also include some very minor adjustments on the eastern and western boundaries of the site (centimetres only) when the final survey is prepared.

The site is surrounded by:

� Wharf Street to the West, which curves to connect into Sheridan Street

� Port service road to the East (which connects the Cruise Liner Terminal to the industry working port)

� Wharves 4 and 5 to the East, owned and operated by PN

� PN land to the North, which is intended for future development

The relationship of the CEP site to the Cairns City Masterplan and key nodes is illustrated in Figure 7 and Figure 8 below.

Figure 7 – Cairns City Masterplan Context Figure 8 – CRC Masterplan nodes

1.6. Project Goals

There are eleven (11) key project goals established by CRC, which guide the planning, design and delivery of the CEP and which will underpin future operation and management. The eleven goals are listed below:

� To meet community need

� To achieve the highest and best use for the land

� To ensure design excellence and accessibility

� To encourage community critique and comment

� To reflect the character of the Cairns region and FNQ

� To support economic growth

� To ensure responsible financial management

� To identify and manage risk

� To deliver the project efficiently through solid governance and administration

� To plan for efficient, cost effective operations

� “The world’s most liveable city... – part of a vision for a sustainable and liveable city, a thriving CBD, and a special place accessible by all.”


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2.0 Outcomes Sought

This section provides details of the outcomes sought, including:

� Summarising the outcomes of the SASR

� Describing the community and cultural needs

� Detailing stakeholder and community consultation undertaken, and

� Describing the existing cultural infrastructure located in Cairns.

2.1 SASR

This following section summaries the previously published SASR and seeks to provide context to the PE.

The following key activities were undertaken during the preparation of the SASR, which was endorsed by Arts Queensland on 21 June 2011.

� Define the need to be addressed and outcome sought, and identify its contribution to Government priorities and outcomes.

� Scope the outcome sought.

� Identify potential solutions to achieve the outcome.

� Develop a detailed plan and budget for the PE of the potential solutions which is the next stage of the PAF.

Further, the SASR documented the work undertaken specifically for the CEP, namely:

� Demonstrating the need for the facilities by highlighting the need for a major PAC which is not met by the Cairns Civic Theatre as well as a regional museum.

� Outlining the ways that the proposed facilities will support CRC, State and Commonwealth policies.

� Showing that the facilities will meet the needs of stakeholders.

� Considering the options to achieve the desired outcomes.

� Establishing success criteria and measurement.

2.2 Community Need

The overarching needs, established in a series of community workshops, include:

� Promotion and Enhancement of Cultural Vitality – improvement of Cultural Infrastructure to the city of Cairns and the region of FNQ that identifies and defines the community’s cultural diversity.

� A Community Meeting Place – a place for the Cairns community to meet, to share ideas, converse and to be entertained and educated.

� Performing Arts Infrastructure – that meets the needs of

� A growing population

� Provision for fifty years growth

� Members of the community with a disability

� Touring performing groups that have a need for larger venues with appropriate Back of House (BOH)

� Performances that require modern acoustics

� Space for rehearsals


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� Flexible stage arrangements

� Orchestra pit(s) commensurate in size for larger performances

� Industry standard ancillary facilities, and

� Whole-of-school performances and events.

� Museum – there is a need to present programmes, and exhibits and collections, both permanent and temporary, which are representative of the cultural heritage and diversity of FNQ, to the local community and visitors in one recognised and identifiable location. There is currently only one full-time paid employee for all historical societies and small local museums in FNQ.

� Business Community – there is a need to support the local business community by providing and promoting employment opportunities, including support for existing convention centre business.

� Tourism –there is a need to enhance the diversity of offering to international and domestic tourists in order to maintain and potentially grow the tourism industry in FNQ

� Catalyst – there is a need to provide Cairns with a catalyst project to stimulate growth and economic prosperity, consistent with the current CBD Masterplan as well as drive the revitalisation of the local construction industry, which is a key objective of the Federal Government Economic Stimulus plan. Refer to following quote from Minister Albanese 7 July 2010:

Mr Albanese said the Federal Government was "determined to put Far North Queensland on the map as a cultural destination and add to the enjoyment visitors to the region already experience". "Equally, this project would be a great example of our economic stimulus plan at work, creating economic activity in a region particularly hit hard by last year’s global recession."

There is a clear requirement for a well-defined and delivered outcome which considers these needs. This has been reinforced during extensive community consultation which is included within the Concept Design Report included at Appendix 3 and the public interest assessment which is included at Section 4.

2.3 Cultural Need

There is worldwide recognition of the important role that culture plays in peoples’ lives as it shapes society and determines how it functions. Cities that are known for their strong sense of identity and heritage, are rich in cultural expression and creativity. It is widely accepted that Government support and investment in culture, produces numerous social and economic benefits.

It is recognised that arts and cultural participation is valuable and integral to everyday life, community dynamics, and community living conditions in that it significantly contributes to, and defines, a community’s quality of life. It recognises that arts and culture are also resources that come out of communities, rather than merely resources that are brought to communities from the outside.

CRC recognises its obligations to engage with the community and understands its needs in respect to the provision of the policies, plans and infrastructure that are required to meet the community’s cultural needs. In response to this, CRC developed the Cultural Plan: Strengthening Our Cultural Vitality 2009-2014.

The Urban Institute of Arts and Culture Indicators Project (ACIP) which is adopted by Arts Queensland as an appropriate authority, defines Cultural Vitality as;

‘Evidence of creating, disseminating, validating, and supporting arts and culture as a dimension of everyday life in communities.’

The ACIP definition allows the creation of a measurement framework which communities can use to track and measure cultural vitality. The four overarching measurement criteria which provide an indication of cultural vitality (specifically when benchmarked with other communities) are as follows:

� Presence – The existence of cultural and creative expressions, which a given community defines and values as community assets

� Participation – The many ways in which people participate in these cultural expressions (as creators, teachers, consumers, supporters, etc)


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� Impacts – The participation and contribution of the cultural expressions to the community building outcomes (community pride, stewardship of place, racial tolerance, improved public safety, etc)

� Systems of Support – The resources (financial in-kind, organisational and human) required to bring opportunities for participation in these creative expressions to fruition

CRC understands that communities that participate in creative and cultural activities are generally healthier as participation increases skill development, social interaction, cultural cohesion and social capital. Cultural participation positively contributes to the following:

� Catalysing economic development

� Improving the built environment

� Promoting stewardship of place

� Augmenting public safety

� Preserving cultural heritage

� Bridging cultural/ethnic/racial boundaries

� Transmitting cultural values and history

� Creating group memory and group identity

This PE aims to provide Government with assurance that the outcomes sought are clearly definable and measureable. As such, the above guidance criteria of measurement of cultural vitality will be an important reference in later sections of this document.

2.4 Existing Cultural Infrastructure in Cairns

The extent of existing cultural and entertainment infrastructure is broadly described in Table 6 below. Additional information relating to the four main venues in Cairns is included in Table 7. These venues are inadequate to meet the needs of the community for the reasons outlined in the SASR and summarised in this report.

VENUEVENUEVENUEVENUE LOCATIONLOCATIONLOCATIONLOCATION OWNEROWNEROWNEROWNER CAPACITYCAPACITYCAPACITYCAPACITY

Cairns Civic TheatreCairns Civic TheatreCairns Civic TheatreCairns Civic Theatre Cairns City Centre CRC 669 Tanks Art Centre Tanks Art Centre Tanks Art Centre Tanks Art Centre –––– Tank 3Tank 3Tank 3Tank 3 Adjacent to the Botanical

Gardens CRC 390

Tanks Art CentreTanks Art CentreTanks Art CentreTanks Art Centre –––– Tank 4Tank 4Tank 4Tank 4 Adjacent to the Botanical Gardens

CRC 497

Tanks Art Centre Tanks Art Centre Tanks Art Centre Tanks Art Centre –––– Tank 5Tank 5Tank 5Tank 5 Adjacent to the Botanical Gardens

CRC 400

Tanks Art Centre Tanks Art Centre Tanks Art Centre Tanks Art Centre AmphitheatreAmphitheatreAmphitheatreAmphitheatre

Adjacent to the Botanical Gardens

CRC 250

Botanical Gardens Visitors Botanical Gardens Visitors Botanical Gardens Visitors Botanical Gardens Visitors Centre AmphitheatreCentre AmphitheatreCentre AmphitheatreCentre Amphitheatre

Botanical Gardens CRC 150

Forgarty Park SoundstageForgarty Park SoundstageForgarty Park SoundstageForgarty Park Soundstage Fogarty Park, the Esplanade CRC 6,000

City Place Sound ShellCity Place Sound ShellCity Place Sound ShellCity Place Sound Shell City Place Plaza CRC 300

Jute TheatreJute TheatreJute TheatreJute Theatre 96 Abbott Street Cairns Queensland Government 248

Rondo TheatreRondo TheatreRondo TheatreRondo Theatre Greenslopes Street Cairns Cairns Little Theatre Inc. 191

Tjapukai Dance Theatre and Tjapukai Dance Theatre and Tjapukai Dance Theatre and Tjapukai Dance Theatre and Cultural ParkCultural ParkCultural ParkCultural Park

Cairns Western Arterial Road, Caravonica

Indigenous Business Australia 300

Brothers League ClubBrothers League ClubBrothers League ClubBrothers League Club 99 – 105 Anderson Street, Manunda

Brothers Rugby League Football Club

600 (theatre) and 1,200 (standing)

Great Hall and Hall Two of Great Hall and Hall Two of Great Hall and Hall Two of Great Hall and Hall Two of the Cairns Convention Centrethe Cairns Convention Centrethe Cairns Convention Centrethe Cairns Convention Centre

Sheridan Street Cairns Queensland Government 2,070 + 4,500 seating Table 6 – Existing infrastructure (capacity and occupancy)


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VENUEVENUEVENUEVENUE IMAGEIMAGEIMAGEIMAGE DESCRIPTIONDESCRIPTIONDESCRIPTIONDESCRIPTION

Cairns Civic TheatreCairns Civic TheatreCairns Civic TheatreCairns Civic Theatre

669 seat theatre opened in 1974 and managed by CRC, which presents professional touring product, entrepreneur’s productions, and is available for hire by a range of cultural, educational, entertainment and other users. It is an established and popular regional theatre venue, but is limited by outdated functionality, poor technical infrastructure, and inadequate front-of-house and support services and does not cater for future performing arts and cultural needs or meet the minimum level of access standards.

Tanks Art TheatreTanks Art TheatreTanks Art TheatreTanks Art Theatre (Tanks)(Tanks)(Tanks)(Tanks)

Tanks is operated by CRC and presents a range of small contemporary performing and visual arts activities in and around three tanks (world war two heritage listed facilities), and hosts corporate events and other functions. The seating capacity of Tank 3 is 350, Tank 4 – 150, and Tank 5 – 400. An amphitheatre is also available which seats 250+. It has focused on development of its music program in recent years. While it enjoys a distinctive ambience, its technical and environmental-control limitations are significant.

JUTE Theatre at the JUTE Theatre at the JUTE Theatre at the JUTE Theatre at the Centre for Centre for Centre for Centre for Contemporary Arts Contemporary Arts Contemporary Arts Contemporary Arts (CoCA)(CoCA)(CoCA)(CoCA)

Jute is a 240 seat studio theatre, opened in 2004. CoCA is housed in a State Government-owned building (the ‘Main Roads’ building), and is currently undergoing further development, including the addition of a dedicated rehearsal space. It is managed by the Jute Theatre Company.

Cairns Little Theatre Cairns Little Theatre Cairns Little Theatre Cairns Little Theatre (the (the (the (the ‘Rondo Theatre’)‘Rondo Theatre’)‘Rondo Theatre’)‘Rondo Theatre’)

With a seating capacity of 191, the Cairns Little Theatre is a community-driven theatre. It incorporates an amateur theatrical company, whose charter is to choose, produce and stage the works of the finest Australian and international playwrights in a professional manner for the training, benefit and appreciation of its membership at all levels. It is run by Cairns Little Theatre Inc. Table 7 – Existing cultural and entertainment infrastructure (main venues)


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2.5 Drivers of the Need for Change in Cultural Infrastructure

The following drivers of the need for change in Cultural Infrastructure have been identified and have been interrogated as part of the options evaluation.

� Community need for adequate facilities

� Population growth

� Tourism

� Stakeholder needs (demand influencers)

� Culture and arts industry trends

In May 2011 the Queensland Treasury’s Office of Economic and Statistical Research estimated the population of Cairns Regional Council region as 168,251. This represents an increase of 3,897 persons or 2.4% over the year. By 2031, this number is forecast to be between 215,805 and 264,208. Far North Queensland has also grown over the four years to 2010 by 2.7%. The population of FNQ is projected to increase from 281,000 to 373,000 by 2031 (Source: Office of Economic and Statistical Research, Queensland Government population projects to 2031. 2011 edition).The demand for greater and improved social infrastructure will only increase as the population of Cairns and FNQ grows.

This is placing cultural infrastructure of FNQ under pressure. Despite cultural tourism being a growing industry sector, Cairns is experiencing lost opportunities as there are clear ‘gaps’ in the provision of cultural infrastructure in the third most visited destination in Australia. Appropriate cultural infrastructure can increase tourist numbers, nights stayed and direct expenditure. There are also trends reflecting growing interest in participating in the arts. (Reference?) Cultural infrastructure planning must consider this growing interest and population growth, and ensure that there is sufficient capacity to enable participation in the arts by the progressive Cairns community.

2.6 Stakeholder consultation and Research

The needs and expectations of all key stakeholders were documented for the SASR. Significant community and stakeholder consultation was undertaken prior to the commencement of the design phase, including:

� Positive Solutions research 2009/2010

� Information Sessions 2010

� Access advisory committee 2010

� Local architects input into design brief 2010

� Schools and tertiary

� Ports User groups

� Traditional Owners and Indigenous groups, including Indigenous performers

� Multicultural groups

A further consultation process involving the community, user groups, PN, AQ, DPW and DIP has been undertaken since the SASR was endorsed. This process will continue throughout the preparation of the BC and design development. A summary of this process is included below with the detailed outcomes of this most recent consultation process included within the Concept Design Report at Appendix 3.

All consultation and communications have been undertaken in accordance with the Communications Plan which is included at Appendix 4.

Community Consultation

Four separate sessions have been held during the preparation of the PE.

� 3 May 2011 Two Inception Workshops

� 24 May 2011 Two Master Plan Workshops


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� 14 June 2011 Two Preliminary Concept Design Workshops

� 12 July 2011 Two Concept Design + architectural Options Workshops

Community consultation has formed an intrinsic part of Masterplan and Concept Design development, and has been highly productive, informing and influencing overall strategies as well as specific components of the project.

Community consultation will be maintained throughout the development application phase in a variety of forms which will include:

� Additional broad Cairns community workshops

� Ongoing consultations with Indigenous peoples

� Community representative workshops

� User groups including ports users

User Group Consultation

The following groups have been consulted. It is anticipated that a number of additional User Groups will be formed during future project phases.

� Multicultural advisory group (mag)

� Performing arts centre group (pacg)

� School user group (sug)

� Port Douglas community group (pdcg)

Indigenous Consultation

In January and February 2011, CRC met with a number of indigenous organisations, Traditional Owners, and Indigenous performers for the purpose of spatial and facilities planning. While members of the Cairns Indigenous community have attended a number of the community consultation workshops, more focused Indigenous consultation commenced toward the end of the Concept Design phase. To assist the process, CRC has engaged the Indigenous architectural design consultancy, Indij Design and one of the Traditional Owners as consultants.

A meeting with these consultants was held on 12 July 2011 to outline the Indigenous community consultation process. This workshop included the four relevant Cairns tribal groups, as well as the broader Cairns Indigenous community and will extend out to peoples in the wide FNQ and Torres Strait region.

A summary of outcomes of the first Indigenous Community Consultation Workshop is as follows:

� Physical connections – identification of physical things that make a place feel special, which materials, trees or symbolic objects could be incorporated into the CEP, and identification of sight lines and places of significance.

� Spiritual connections – understanding the public and private knowledge of storylines that connect country to people and whether there was comfort on sharing elements of song lines or story lines for consideration in the CEP.

� Cultural practices – identification of cultural practices that would not fit under the banner of performance that may be accommodated at the CEP, and day to day activities (related to connection to country) that the CEP could facilitate.

� Further Questions – discussion of site history of the precinct that should be shared or represented in the CEP, how the CEP could be inclusive of the Indigenous community and be welcoming, including any impediments.

2.7 Alignment with Government Policy

The outcomes sought as detailed in this PE, the Preliminary Client Project Brief and resultant preferred option are aligned with, and give effect to a wide range of Commonwealth and State Government, policies, guidelines, strategies and plans.

This project gives effect to a number of significant Government policies identified as a high priority for Government.


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For detailed assessment of alignment refer to Appendix 5.

2.8 Outcomes Sought

Table 8 below aligns the outcomes sought with the identified needs. These needs are representative of the eleven CRC project goals described in Section 1.6 and reflect the basis of community consultation and design processes to date.

IIIIDENTIFIED NEEDDENTIFIED NEEDDENTIFIED NEEDDENTIFIED NEED OUTCOME SOUGHTOUTCOME SOUGHTOUTCOME SOUGHTOUTCOME SOUGHT

Promotion and Enhancement of Promotion and Enhancement of Promotion and Enhancement of Promotion and Enhancement of Cultural VitalityCultural VitalityCultural VitalityCultural Vitality ––––

Improvement of Cultural Infrastructure to the city of Cairns and the region of FNQ that identifies and defines the community’s cultural diversity.

� Social cohesion.

� Social capital through engagement and participation of the community.

� Educational opportunities through expression and participation.

� Employment and economic benefits.

� Health through active participation and cognitive stimulation.

� Sense of place, identity and pride in the community.

� Promotion of community cultural diversity and tolerance.

A Community Meeting Place A Community Meeting Place A Community Meeting Place A Community Meeting Place

� A focal point for the community – a meeting place which enjoys a high level of community

ownership.

� Creation of new cultural and shared community experiences.

� Welcome and profile cultural expression from the Indigenous communities of the region, and

from the surrounding communities.

� A place for multicultural celebration, events and performance.

Performing Arts Infrastructure Performing Arts Infrastructure Performing Arts Infrastructure Performing Arts Infrastructure that meets the needs of that meets the needs of that meets the needs of that meets the needs of ––––

� a growing population,a growing population,a growing population,a growing population,

� members of the community members of the community members of the community members of the community with a disability,with a disability,with a disability,with a disability,

� touring touring touring touring performing groups performing groups performing groups performing groups that need larger venues,that need larger venues,that need larger venues,that need larger venues,

� performances that require performances that require performances that require performances that require modern acoustics,modern acoustics,modern acoustics,modern acoustics,

� space for rehearsals and space for rehearsals and space for rehearsals and space for rehearsals and flexible stage arrangements,flexible stage arrangements,flexible stage arrangements,flexible stage arrangements,

� orchestras commensurate in orchestras commensurate in orchestras commensurate in orchestras commensurate in size with larger size with larger size with larger size with larger performances,performances,performances,performances,

� industry standard ancillary industry standard ancillary industry standard ancillary industry standard ancillary facilities, andfacilities, andfacilities, andfacilities, and

� whole of schowhole of schowhole of schowhole of school ol ol ol performances or events.performances or events.performances or events.performances or events.

� Present music, dance and drama that meet the needs of a modern, diverse Queensland

community both now and into the future.

� Present performances that are appealing to the tourist market and which increase the

length of stay and/or experience of tourists visiting Cairns.

� Broadcast performance to regional communities using broadband.

� Present new and hybrid art-forms, including digital media work.

� Present large commercial entertainment events that require significant box office revenues

to be feasible.

� Welcome and profile cultural expression from the Indigenous communities of the region,

and from the surrounding communities.

� Create a cultural hub for the whole region – encouraging artistic and cultural exchange and

collaboration.

� Creation of new cultural and shared community experiences.

� Provide a focal point for the community – a meeting place which enjoys a high level of

community ownership.

� Increase the economic impact of performing arts to the regions GRP. Table 8 – Alignment of Needs and Outcomes (CEP and PAC)


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IDENTIFIED NEEDIDENTIFIED NEEDIDENTIFIED NEEDIDENTIFIED NEED OUTCOME SOUGHTOUTCOME SOUGHTOUTCOME SOUGHTOUTCOME SOUGHT

Museum Museum Museum Museum ----There is a need to present programs, and exhibits and collections, both permanent and temporary, which are representative of the cultural heritage and diversity of FNQ to the local community and visitors in one recognised and identifiable community ‘owned’ location.

� Develop a greater awareness within the local community of the historical significance and

value of FNQ.

� Present exhibitions that are representative and inclusive of indigenous and the cultural

diversity of FNQ.

� Present the cultural tourist with the evidence of the multifaceted, unique cultural heritage that

defines FNQ.

� Present the many historically significant artefacts from FNQ that are in storage in other

museums and never placed on display for the enjoyment and benefit of the FNQ community.

� Increase the economic impact of performing arts to the regions GRP.

� Build partnerships with FNQ’s many volunteer museums, and the state and national

Museums.

� Attract young people and school groups to identify with and learn from the cultural heritage

and significance of the community.

� Increased awareness, both locally and internationally, of the significance of the local world

heritage listed reef and rainforest to the community and tourist. Table 9 – Alignment of Needs and Outcomes (Museum)

2.9 Project Objectives and Success Criteria

In order to select and assess potential solutions and detailed options it is important to first develop a framework to measure cultural vitality and its associated benefits. Arts Queensland has developed a draft framework to assist in measuring the contribution of arts and cultural infrastructure and includes three major outcome areas.

� Arts and cultural development outcomes – evidence of creation, sharing, valuing and supporting both local and imported artists, arts organisations, and arts and cultural work (both professional and amateur).

� Community engagement outcomes – supporting opportunities for brand based participation at a community level and the role of arts and culture in achieving social cohesion and social capital through arts and culture.

� Economic outcomes – contribution of arts and cultural vitality to local economy.

For the purposes of this PE the cultural vitality indicators in Table 10 overleaf will be used as the basis of option assessment.


29

INDICATORINDICATORINDICATORINDICATOR ASSESSMENASSESSMENASSESSMENASSESSMENT CRITERIAT CRITERIAT CRITERIAT CRITERIA

Arts and Cultural MeasuresArts and Cultural MeasuresArts and Cultural MeasuresArts and Cultural Measures � Increase number of existing cultural venues and facilities.

� Increase number of new works developed locally.

� Increase number of new works presented locally.

� Increase number of touring products presented locally.

� Increase number of attendances at ticketed/free or low cost events.

� Increase satisfaction of local artists, hirers, arts organisations with the arts and cultural venues.

Community EngagementCommunity EngagementCommunity EngagementCommunity Engagement � Increase participation of arts and cultural volunteering (number of venue volunteers, frequency

and hours).

� Increase participation of non-arts groups and organisations in arts and cultural events and

activities (e.g. schools, seniors groups, social service / welfare / health organisations, sporting

groups, etc.)

� Increase opportunities for community story telling / community history and heritage.

Economic OutcomesEconomic OutcomesEconomic OutcomesEconomic Outcomes � Increase in employment generated by existing cultural venues.

� Increase on the local expenditure on arts and culture.

� Increased tourist expenditure on arts and culture.

� Increase funds injected into local businesses through contracting with arts and cultural

venues. Table 10 - Cultural vitality indicators

Cairns Regional Council | Cairns Entertainment Precinct | Seotember 2011

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3.0 Options to be Evaluated

This section of the PE identifies the eight (8) options to be evaluated.

A detailed ‘shortlisting’ process has been undertaken since the SASR which concluded with nomination of eight (8) options (including the base case). This included the development of two masterplans, followed by further development of two concepts based on masterplan 2. The two concepts were subject to additional development which resulted in seven alternative options which included various staging options.

3.1 Options considered during the SASR

Three possible options were considered and assessed during the preparation of the SASR, including;

� Option Option Option Option AAAA ---- Base Case (maintain the Status Quo Base Case (maintain the Status Quo Base Case (maintain the Status Quo Base Case (maintain the Status Quo –––– Do nothing)Do nothing)Do nothing)Do nothing)))))

� Option BOption BOption BOption B –––– Redevelopment / refurbishment of Cairns Civic TheatreRedevelopment / refurbishment of Cairns Civic TheatreRedevelopment / refurbishment of Cairns Civic TheatreRedevelopment / refurbishment of Cairns Civic Theatre

� Option C Option C Option C Option C –––– Development of a new coDevelopment of a new coDevelopment of a new coDevelopment of a new co----located performing arts centre, regional museum and civic placelocated performing arts centre, regional museum and civic placelocated performing arts centre, regional museum and civic placelocated performing arts centre, regional museum and civic place

A detailed and quantitative assessment of the above options was undertaken as part of the SASR which resulted in the confirmation of Option C as the only option which meets all of the identified needs. This was confirmed during the assessment and endorsement of the SASR by Arts Queensland.

Figure 9 describes options development and the analysis process undertaken since completion of the SASR.

Figure 9 – Options analysis process


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3.2 Masterplan Development Phase

The Preliminary Client Project Brief was prepared (based on Option C – the development of a co-located Cultural and Entertainment Precinct) including supporting planning briefs for theatre design, acoustics and museum. This Brief was the basis for the two masterplans which are discussed below and are included at Appendix 6.

The consultant team was required to prepare two masterplans (based on Option C) with the purpose of enabling the community, in workshop consultation, to participate in stating preferences by comparative analysis, and to provide options for the site, considering the limitations and constraints.

Due to site restrictions, the two masterplans have similar footprints but quite different cross-sections. A brief description of each masterplan is provided below with a more detailed description provided within the Masterplan Options Report included at Appendix 7.

Single Level Plaza Masterplan Option 1

This option creates the major public space (plaza) and circulation at near-ground level (RL 3.35), with the theatres and their foyers also at this level. The masterplan provides a mezzanine level for access to the upper seats of the main theatre with a small external plaza.

Figure 10 – Masterplan 1 Site Section Figure 11 – Masterplan 1

Dual Level Plaza Masterplan Option 2

This option raises the main plaza up some 5.3 metres higher than in Option 1 to RL 8.65. The aim of this masterplan is to improve the flood and storm surge resilience of the theatres and their support facilities. This option also aims to provide the public with elevated views over the port service road and wharf to Trinity Inlet, as well as a further mezzanine level and foyer.

Figure 12 – Masterplan 2 Site Section Figure 13 – Masterplan 2


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A summary of the major differences between these two masterplan options is detailed in the Table 11 below.

ITEMITEMITEMITEM MASTERPLAN 1 MASTERPLAN 1 MASTERPLAN 1 MASTERPLAN 1 –––– SINGLE LEVEL PLAZASINGLE LEVEL PLAZASINGLE LEVEL PLAZASINGLE LEVEL PLAZA MASTERPLANMASTERPLANMASTERPLANMASTERPLAN 2222 –––– DUAL LEVEL PLAZADUAL LEVEL PLAZADUAL LEVEL PLAZADUAL LEVEL PLAZA

Plaza LevelPlaza LevelPlaza LevelPlaza Level RL 3.35 Dual plaza, with lower plaza at RL 3.35 and upper plaza at RL 8.65. The nature of a dual plaza will allow for more community activities to happen simultaneously.

Back of house space Back of house space Back of house space Back of house space

Compromised Back of House (BOH) space to the rear of the main venue, due to lack of available floor area

Opportunity for BOH space below the main plaza level, providing greater opportunity at upper plaza level for outdoor performance space, some complementary income producing retail space / essential BOH space.

FoyersFoyersFoyersFoyers All foyers are accessed off plaza at RL 3.35 Rehearsal Studio is accessed of lower plaza RL 3.35. PAC Venue 1 has the potential to be accessed off a double level foyer with access from lower and upper plaza, and PAC Venue 2 is accessed off upper plaza RL 8.65.

Additional spaces Additional spaces Additional spaces Additional spaces

Not applicable – not enough floor area.

The introduction of a lower plaza level, allows the inclusion of a community kitchen on this level, as well as a number of other community spaces such as a recording studio and multi-media room. There is greater potential for some of these extra areas to be part of a staging plan.

ViewsViewsViewsViews Plaza and venue foyers’ view will be impeded by the Ports activity.

View from the upper plaza including associated cafes/restaurants, as well as PAC Venues 1 and 2 foyers are raised above the Ports operations giving unimpeded views of Trinity inlet. Table 11 – Masterplans comparison

The masterplans were presented to PN Management, Board for Urban Places, QLD Chapter President – Institute of Architects, and the Government Architect, all of whom expressed a preference for Masterplan Option 2. The masterplans were also presented during community consultation sessions. The results of these consultations indicated a clear preference for Masterplan Option 2, however it was agreed to continue to develop both Masterplan options in order to compare and analyse a range of criteria including; cost, staging, technical criteria (such as acoustic exposure to the port), risks (such as damage from climatic events), programme, and sequence of development.

A recommendation that Masterplan Option 2 form the basis for the preparation of the two required Concept Design Options was included in a report issued to CRC, AQ, Treasury, DIP, and DPW on 24 June 2011 which is included at Appendix 7. The recommendation is as follows;

“That Arts Queensland endorse the recommendation of Cairns Regional Council project team, the Queensland Chapter president of the AIA, and the CRC consultant team to proceed with Masterplan Option 2, as the preferred option for the Preliminary Evaluation, noting two design concept options will be provided as required by the Deed for Grant Funding between the State of Queensland and Cairns Regional Council. “

Options were formally presented to PN on 31 May 2011 and CRC on 27 July 2011.


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Since then staging options have been considered for the two Masterplan Options. The difficulties associated with staging of Masterplan Option 1 are provided in Table 12 below.

REHEARSAL SPACE PERFORMANCE SPACE 2

� The Rehearsal Space is located a significant distance along the eastern boundary of the site. Access along this road is restricted by PN at various times and any use would need to be negotiated with them.

� The Performance Space 2 is located on Wharf Street, on the Western boundary of the site. Access along this road will be restricted by the use of Wharf Street, which is owned by CRC.

� The stage level is approximately at street level, directly adjacent to the main theatre auditorium, therefore acoustic separation during future staging works will be critical

� The stage level is approximately at street level, directly adjacent to the main theatre auditorium, therefore acoustic separation during future staging works will be critical

� There are limited options available (if any) for staging areas in the vicinity of the Rehearsal Space

� There is one option for a staging area available in the vicinity of the Performance Space 2, however this is not a significant size compared to the work area

� The works hoarding will be partially visible from the main foyer � The works hoarding will be directly visible from the main foyer Table 12 – Disadvantages with Staging Masterplan Option 1

Funding for the total project has not been confirmed. Therefore it is critical to effectively stage the project. Masterplan Option 1 is difficult and costly to stage. Design concept options have therefore only been developed for Masterplan Option 2.

At its meeting of 17 August 2011 Council (through its Standing Committee, the Entertainment Precinct Committee), resolved as follows:

That the Entertainment Precinct Committee:

1. Receives the Masterplan and Concept Design Report for the Entertainment Precinct Site dated July 2011

prepared by CA Cox Rayner Architects and the supporting design and advisory consultants.

2. Resolves to no longer pursue Masterplan Option 1 for the purpose of the Project Assurance Framework, as

Masterplan 2 provides the following superior outcomes:

a. it has the potential to deliver a superior urban design outcome

b. it has attracted greater community support through the community and other stakeholder consultations

to date

c. it has a greater level of functionality and user amenity, and a higher degree of flexibility to meet the needs

of a growing population

d. it offers a superior level of protection against storm surge and flooding

e. it has the potential to achieve more commercial revenue

f. it will provide a superior level of “buffering” between the Cityport South and Seaport precincts; and

g. it provides significant advantages in the staging of construction.

3. Directs the design team to investigate how Masterplan Option 2 can support staging solutions compatible with

available and anticipated funding.

4. Directs the CEO, through the project team, to prepare the development application, taking into account staging

solutions, and to report to Council on the outcomes, prior to lodgement.

For the reasons cited above, Master Plan Option 1 was discarded from further consideration.


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3.3 Concept Development Phase

Masterplan Option 2 was used as the basis for development of Concept Options 1 and 2. Concept Options 1 and 2 are fully detailed within the Concept Design Report provided at Appendix 3. The main features of Concept Options 1 and 2 are summarised below.

Concept Option 1: ‘Architectural Rainforest’

This concept creates a dramatic roof canopy that focuses attention on the central public space rather than on the mass of the theatre complex – this is indicated in Figure 14 below. The canopy is a response to the tropical climate of Cairns.

Figure 14 – Long Section

The intent of the scheme is to extend and culminate the Grafton Street tropical boulevard proposed by the Cairns CBD masterplan, in an organic environment to generate a sense of tropical place-making. The canopy form is based on the art of ‘crumplage’ which forms irregular geometries. The roof geometry and structure will be developed in conjunction with specialist consultants and subjected to wind tunnel testing to meet a range of criteria including cyclone resistance and public amenity.

The canopy can accommodate a range of environmental elements including the visible draining of rainwater down through structural columns and the use of solar photovoltaic panels or film to, for example, power the external lighting. The concept produces an urban tropical identity for the precinct, unique to Cairns.

There is great potential for design development in terms of structure, materials, acoustic performance and relationships to specific spaces for performances, recreation and community activities.

Figure 15 – Roof Plan

Concept Option 2: ‘Layered Roof-scape’

The ‘Layered Roof-scape’ concept addresses the community’s concerns in relation to the scale and dominance of the fly-tower to the Main Theatre.


35

The architectural idea of this concept is to create a series of ‘ribs’ across the precinct which undulate through the length of the precinct to disguise the scale of the fly-tower.

Figure 16 – Long Section

This option proposes consistent roof geometry over the new buildings and spaces of the entire precinct.

The actual shapes of the layered roof-scape refer abstractly to containers stacked along the wharf, as well as the hills across Trinity Inlet and to the west of the Cairns.

The large troughs could be utilised to efficiently collect rainwater for reuse. The north-south orientation of the ribs is potentially ideal for incorporating a regular system of solar photovoltaics. As per Concept Option 1, the roof geometry and structure will be developed in conjunction with specialist consultants.

The ‘Layered Roof-scape’ does not generate as unique an architecture as Concept Option 1, however it would create a highly distinctive and dramatic silhouette at the city’s water edge.

Figure 17 – Roof Plan

A brief description of all major components of the CEP which are common to both concept design options are included below.

It was determined to further develop the concepts into a number of staging options for consideration and evaluation. Community consultation and the results arising from the assessment of staging, resulted in Concept Option 1 (the architectural rainforest) being preferred over Concept Option 2 (the layered roofscape).

Precinct Components (consistent with both Concept options)

Performing Arts Centre Concept

The Main Theatre (between 1,100 and 1,200 seats) and the Flexible Theatre (450 seats) are able to operate concurrently utilising their contiguous foyer spaces, or independently as required. The Rehearsal Space is accessed from the lower level foyer of the whole PAC. It is served from the rear via the lower level loading dock.


36

Loading and delivery services are provided on two levels. Both docks deliver into the centre of the BOH area, providing direct and efficient service access to the Main Theatre and Flexible Theatre.

Figure 18 – Performing Arts Concept (based on Masterplan Option 2)

Museum – “Cairns Regional Museum” (working title)

The Museum concept design comprises approximately 4,400sqm of total museum building, including administration over 3 levels.

Ground Level - The Concept Design locates a Children’s Activity Centre and an Aboriginal and Torres Strait Islander Cultural Centre at Ground Level where they can have access to outdoor spaces. Also at Ground Level are entrance facilities, loading dock and retail outlets. The retail spaces are shown on the plan as connecting the Museum to White’s Shed.

Level One - The Level One Plan coincides with the Upper Plaza Level of the PAC. This level would be the main exhibition level, and includes a Science Centre, Travelling Galleries, Permanent Exhibition area, Social Memories Gallery, Environmental Science Centre and Queensland Centre for Cultural Diversity.

Level Two - This level would primarily comprise Administration and Support functions for the Museum. It may be that voids and atrium spaces are inserted into the planning to visually and / or physically connect the levels. Almost adjacent to Cairns Cruise Liner Terminal, it may be the first or last place that cruise passengers visit in the city. If it is the first place, it is likely to act as an information and interpretive centre for Cairns and the wider FNQ region.

The Museum’s pivotal siting also generates its potential to be a hub of cultural and public life in Cairns, associated with the adjoining public spaces, and with White’s Shed.

White’s Shed

White's (Sugar) Shed is a place which demonstrates an evolutionary stage of the North Queensland sugar industry and wharf practices dating to the 1920’s through 1950’s.

Two alternative options are currently being considered for White’s Shed.

Alternative 1 is for it to act as the major public arrival space into the CEP from Cairns Cityport. Along the arrival ‘corridor’ would be a series of community ‘rooms’ such as for arts and crafts workshops, community meeting venues, rehearsal spaces, and possibly retail space.

Alternative 2 is for a venue of less dependence as a movement spine, which could comprise the abovementioned facilities but also be separable as an exhibition / functions venue such as might be utilised by the Cairns Convention Centre.

Concept Option 1 is capable of accommodating either alternative, subject to review of several issues including;


37

� The physical condition of the structure, and whether or not it needs to be fully enclosed

� The level of demand for different community uses

� Security issues, such as at night if the space is used as a public thoroughfare

� Heritage considerations and the precise techniques to be employed for stabilisation, restoration and conservation.

The Museum concept is illustrated in Figure 19 and the White’s shed concept is illustrated in Figure 20 below.

Figure 19 – Museum / White’s Shed Concept Plan

Figure 20 – White’s Shed internal perspective

3.4 Description of Options for Preliminary Evaluation

Concept Option 1 was further developed into seven (7) staging options plus the Do Nothing option. These eight (8) options are described below, evaluated in subsequent Section 4, and include;


� Option 2 - Complete development (no staging)

� Option 3 - 2 stage development


� Option 5 - 2 stage development (rationalised*)

� Option 6 - 3 stage development (rationalised*)

� Option 6A - 3 stage, 10 year development (alternate and lagged staging, rationalised*)


38

� Option 6 (Stage 1) – referred to by PWC as Option 7

Rationalised (*) – value management process which reviewed all back of house and support areas to identify the minimum area and scope inclusions required to still meet the brief but provide a more cost-effective outcome.

Option 1 – Base Case (Status Quo – Do nothing)

This option anticipates the ongoing management and operation of the existing Cairns Civic Theatre (CCT) on the current site for a period of 30 years and the indefinite ongoing absence of a Regional Museum. The Do Nothing option does not involve any development, upgrade or refurbishment to the CCT.

The refurbishment of the existing CCT will not meet the needs identified and would have a serious impact on groups that currently use the facility during the refurbishment construction phase. Further, this option does not address the need for a regional museum or community meeting place. Insufficient site area and significant redevelopment expenditure would still not provide modern standards of performing arts infrastructure. As discussed in the SASR, this option would involve removing a significant element of the cultural infrastructure of Cairns from community participation for a period of at least 24 months during construction. Many existing performance groups that currently use the CCT would not be able to sustain such a loss.

Additionally, it is recognized that the current CCT site does not provide for future expansion to fully accommodate the required refurbishment including museum and meeting place requirements. Nor does it provide for the additional parking requirements.

Details of areas, capacity, condition and infrastructure of the existing theatre were provided in the SASR which is included at Appendix 8.

Figure 21 – Theatre door Figure 22 – Theatre seating Figure 23 – Back of house Figure 24 - Foyer

Options 2 – 6 (Stage 1) – referred to by PWC as Option 7, are described briefly overleaf. Further detail is included within the Concept Design Report at Appendix 3.


39

Option 2 – Complete Development

� All works � No staging

Option 3 – 2 Stage Development

� Stage 1 – Carpark, PAC, Public Domain, Restaurant, White’s Shed (including retail) and bridge to Convention Centre

� Stage 2 – Museum (

Option 4 – 3 Stage Development

� Stage 1 – Carpark, PAC (Ex. Performance Space 2 & Rehearsal room), Public Domain, White’s Shed (including retail) and bridge to Convention Centre

� Stage 2 – Performance Space 2 (Base build and fit-out), Rehearsal (Base build and fit-out) and Restaurant


Stage 1

Stage 1

Stage 1

Stage 2 Stage 3

Stage 2


40

Option 5 – 2 Stage

Development (rationalised)

� Stage 1 – Carpark (including turf/landscape to roof of carpark and PAC location) White’s shed, Museum, Public Domain (lower plaza only) and bridge to Convention Centre

� Stage 2 – PAC, upper plaza and restaurant

Option 6 – 3 Stage

Development (rationalised) � Stage 1 – Carpark, White’s

shed, turf/landscape to future museum space, Public Domain, Performance Space 1 and bridge to Convention Centre

� Stage 2 – Performance space 2 (Base build and fit-out), Rehearsal Space (Base build and fit-out) and Restaurant


Option 6A – 3 Stage, 10 year

Development (alternate and

lagged staging, rationalised)


� Stage 2 – Museum (3 yr lag)

� Stage 3 – Performance space 2 (Base build and fit-out), Rehearsal Space (Base build and fit-out) and Restaurant (3 yr lag)

Stage 1

Stage 1

Stage 1 Stage 2

Stage 2 Stage 3

Stage 2 Stage 3


41

Option 6 (Stage 1) - referred to by PWC as

Option 7 – 1 Stage Only


Stage 1


42

4.0 Options Evaluation

This section of the PE discusses the results and recommendations arising from the evaluation of each of the eight (8) options described in the proceeding section and listed below;





� Option 5 - 2 stage development (rationalised)


� Option 6A - 3 stage, 10 year development (alternate and lagged staging, rationalised)

� Option 6 (Stage 1) - referred to by PWC as Option 7 - 1 stage only

Analysis and evaluation of each option has been undertaken in respect of the following:

� Preliminary Financial Analysis

� Preliminary Economic Analysis

� CRC Budget Analysis

� Preliminary Market Sounding

� Preliminary Consideration of Whole-of Government Issues

� Preliminary Consideration of Regulatory Issues

� Preliminary Public Interest Assessment

� Needs, Outcomes Sought and Cultural Vitality

Findings emanating from this analysis and evaluation have then been summarised in subsequent Section 7.0 Options Comparison, and form the basis for determining a preferred option.

4.1 Financial and Economic Appraisal

PricewaterhouseCoopers (PwC) has been engaged by CRC to undertake a financial and economic appraisal of Options 1-7 for the CEP.

The scope of the financial and economic appraisal is to:

� determine the commercial viability of options, specifically whether the options generate an acceptable financial return and to identify a least cost option;

� identify additional minimum project funding requirements for both construction and operation of the CEP; and

� assess the broader impacts resulting from the options on the broader community and economy, including the economic, social, cultural and environmental costs and benefits.

The financial and economic appraisal has been undertaken in accordance with Queensland Government’s Project Assurance Framework.


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Appraisal Methodology

Discounted cashflow analysis has been used to determine the financial and economic feasibility of the options. There are also a number of social and environmental costs and benefits which cannot be monetised, and these impacts have been described in quantitative and qualitative terms. The appraisal framework is presented below at Figure 25.

Figure 25– Overarching Appraisal Framework

In evaluating options, it is necessary to consider the results of the discounted cash flow analysis, and quantitative/qualitative assessment in parallel. Significant weight should be given to the social and environmental (non-market) costs and benefits that have been qualified in the economic appraisal, particularly in light of Council and Queensland Government’s key outcomes and objectives for the Entertainment Precinct. As Queensland Government’s Project Assurance Framework states, “Important cultural projects seek to promote Queensland and should not be assessed by using possible economic and employment benefits. Rather, it may be better to rank options by their ability to deliver specific outcomes and assess them against the performance criteria for promotional success rather than their economic impact.”

Summary of Key Assumptions

Capex

� Construction Costs Refer WTP Options Cost Estimates – Appendix 15

� Pre-Opening Budget (PAC) Refer Creatve Economy Report – Appendix 10

(Museum) Refer Queensland Museum Report – Appendix 20

Escalation Rates

� Revenue Escalation Rates 2.5%p.a.

� Renewal Capex Escalation Rates 5.0%p.a.

Financial appraisal

Economic appraisal

Direct and indirect expenditures

Labour

Education and skills training

Social benefits / quality of life

Environment

Direct project expenditures

Qualitative

assessment

Quantitative

assessment

Discounted cash

flow analysis

��

�

��

�Direct expenditures

�

�

��

Indirect expenditures


44

� Opex Escalation Rates (Excluding Headcount Costs) 2.5%p.a.

� Headcount Escalation Rates 4.4%p.a.

Population Assumptions – CRC Area

� Population 168,000 FY11

� Expected Growth Rate 1.9%

Tourism Visitation to Tropical North Queensland

� Domestic Day Visitors 1,845,000

� Domestic Overnight Visitors 1,474,000

� International Visitors 778,000

Cultural Tourism Participation Rates

� Domestic Day Visitors 4.1%

� Domestic Overnight Visitors 15.4%

� International Visitors 61%

Visits to Cultural Facilities – Local Population

� Performing Arts 47.3%

� Museums 22.2%

Cultural Activities Undertaken

Domestic Day Cultural Domestic Day Cultural Domestic Day Cultural Domestic Day Cultural TouristsTouristsTouristsTourists

Domestic Overnight Domestic Overnight Domestic Overnight Domestic Overnight Cultural TouristsCultural TouristsCultural TouristsCultural Tourists

International Cultural International Cultural International Cultural International Cultural TouristsTouristsTouristsTourists

Performing & Visual ArtsPerforming & Visual ArtsPerforming & Visual ArtsPerforming & Visual Arts 18.2% 20% 25%

MuseumsMuseumsMuseumsMuseums 24.6% 39% 55%

Visit Historical / Heritage BuildingsVisit Historical / Heritage BuildingsVisit Historical / Heritage BuildingsVisit Historical / Heritage Buildings 28% 35% 62% Table 13– Cultural Activities Undertaken Civic Theatre Visitation

� Local Visitors 50%

� Domestic Cultural Tourists 2.0

� International Cultural Tourists 0.5%


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CEP Visitation

Local VisitorsLocal VisitorsLocal VisitorsLocal Visitors Domestic Day Domestic Day Domestic Day Domestic Day Cultural TouristsCultural TouristsCultural TouristsCultural Tourists

Domestic Domestic Domestic Domestic Overnight Cultural Overnight Cultural Overnight Cultural Overnight Cultural TouristsTouristsTouristsTourists

International International International International Cultural TouristsCultural TouristsCultural TouristsCultural Tourists

Basement CarparkingBasement CarparkingBasement CarparkingBasement Carparking 0.0% 0.0% 0.0% 0.0%

MuseumMuseumMuseumMuseum 70% 40% 40% 30%

White’s ShedWhite’s ShedWhite’s ShedWhite’s Shed 50% 25% 25% 25%

Community HubCommunity HubCommunity HubCommunity Hub 50% 25% 25% 25%

Performing Arts CentrePerforming Arts CentrePerforming Arts CentrePerforming Arts Centre 70% 30% 30% 15%

Public PlazaPublic PlazaPublic PlazaPublic Plaza 0.0% 0.0% 0.0% 0.0% Table 14– CEP Visitation Renewals Capex

As percentage of Total As percentage of Total As percentage of Total As percentage of Total CapexCapexCapexCapex

Estimated Useful LifeEstimated Useful LifeEstimated Useful LifeEstimated Useful Life Proportion considered Proportion considered Proportion considered Proportion considered routine maintenanceroutine maintenanceroutine maintenanceroutine maintenance

Basement CarparkingBasement CarparkingBasement CarparkingBasement Carparking 2.5% 40 Years 40%

MuseumMuseumMuseumMuseum 2.5% 40 Years 0.0%

White’s ShedWhite’s ShedWhite’s ShedWhite’s Shed 2.5% 40 Years 40%

Community HubCommunity HubCommunity HubCommunity Hub 2.5% 40 Years 40%

Performing Arts CentrePerforming Arts CentrePerforming Arts CentrePerforming Arts Centre 2.5% 40 Years 40%

Public PlazaPublic PlazaPublic PlazaPublic Plaza 2.5% 40 Years 40%

Civic TheatreCivic TheatreCivic TheatreCivic Theatre 2.5% 40 Years 40% Table 15– Renewals Capex Performing Arts Centre assumptions are included in the Creative Economy Report, included at Appendix 10.

Museum assumptions are included in the Queensland Museum Report, included at Appendix 20.

PwC’s Financial and Economic Appraisal Report is provided at Appendix 15 with key extracts included below.

4.2 Preliminary Financial Analysis

The discounted cash flow analysis showed that no option, including Option 1 under which the Cairns Civic Theatre continues operating, is self-funding on a purely commercial/financial basis. The NPV results for each option are presented below.


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Net present value

Figure 26 - Net present value and incremental net present value for each option

Under Option 1, the continued operation of the Civic Theatre results in an NPV of -$18.47 million. Options 2 to 6A all

provide similar valuation results; the incremental NPV ranges from -$50.3 million (for Option 6) to -$57.1 million (for Option

6A). Option 2 has an NPV of -$52 million and Option 6 (Stage 1) - referred to by PWC as Option 7 has an improved NPV

of -$40.7 million in comparison with Options 2 to 6A, reflecting the lower construction and renewal costs.

The capital costs for Options 2 to 6A are between $245 million and $267 million. With contributed funding of $40 million

from the Commonwealth Government and $55 million from the State Government ($57.305 million for Option 6 (Stage 1) -

referred to by PWC as Option 7), the development costs to be borne by Council are between $150 million and $164

million. The development cost for Option 6 (Stage 1) would be $57.305 million.

All options generate negative free cash flows (incremental over the base case) for the period of the analysis. For the base

case, free cash flows averaged -$616,000 per year. For Option 2 to 6A, incremental free cash flows averaged between -

$2.0 million (Option 2) and -$2.2 million (Option 6A) per year. The average incremental free cash flow for Option 6 (Stage

1) - referred to by PWC as Option 7 was lower at -$1.6 million, reflecting low capital, operating and renewals costs.

Revenue

Revenue profiles under each option are as follows:

Figure 27- Revenue forecast for each Option (in $’000s)

(18,470)

(70,470) (71,116)(68,225)

(73,148)(69,004)

(75,598)

(59,198)

-

(52,000) (52,646)(49,755)

(54,678)(50,534)

(57,128)

(40,728)

(80,000)

(70,000)

(60,000)

(50,000)

(40,000)

(30,000)

(20,000)

(10,000)

-

Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Option 6A Option 7

NPV ($'000s) by Case

NPV Incremental NPV

0

2,000

4,000

6,000

8,000

10,000

12,000


Revenues ($'000s) by Case

Option 1

Option 2

Option 3

Option 4

Option 5

Option 6

Option 6A

Option 7


47

Option 1 provides the lowest forecast revenues of the options considered. However, Option 6 (Stage 1) - referred to by PWC as Option 7 has a revenue profile which is closer to the Cairns Civic Theatre’s operations, reflecting that only one theatre is being operated. Options 2 to 6A provide vey similar revenue profiles, reflecting that each of these options comprise facilities capable of generating revenues from the same sources.

Sensitivity analysis

The results of the PWC sensitivity analysis are presented below.

� Discount rateDiscount rateDiscount rateDiscount rate – Discount rates were tested under three scenarios: low - 6.00% nominal, at the request of Queensland Treasury (3.42% real), medium - 9.67% nominal (7.00% real) and high - 12.75% nominal (10.00% real). Under the low case, the continuous negative cash flows generated under all eight scenarios had the effect of decreasing the NPV by an average of 92% across Options 2 to 7. The higher discount rate increased the NPV by an average 37% across the development options, although in no instance did the NPV become positive.

� EscalatiEscalatiEscalatiEscalation rateson rateson rateson rates – The impact of changing escalation rates was very similar across Options 2 to 7. The Low Case had an average positive impact of approximately 17% and the High Case had an average negative impact of approximately 20% on NPV. The NPV of Option 1 improved by 9.0% under the Low Case, and declined by 10% under the High Case. The Civic Theatre is less sensitive to escalation rate increases, as it is expected to run at a smaller operating loss than the Entertainment Precinct over the thirty year forecast period.

� VisitationVisitationVisitationVisitation – Low visitation has a negative impact on incremental NPV of approximately 2% across Options 2 to 6A. High visitation also has a negative impact on NPV, albeit it is very small. The potential upside in revenues generated from additional visitors is offset by higher forecast Entrepreneurial Programming Costs and Marketing & Promotion Costs required by the Performing Arts Centre.

� PPPPerforming Arts Centreerforming Arts Centreerforming Arts Centreerforming Arts Centre and Museum and Museum and Museum and Museum staff award ratesstaff award ratesstaff award ratesstaff award rates - Using current wage rates instead of industry award rates has an average negative impact of 4% on project NPV for Options 2 to 7. Based on the above, the salary wage scheme employed by the Precinct is not considered to be a key driver to the financial success of the Precinct.

Conclusion and Findings

� Option 7 represents the least cost solution on a NPV basis reflecting lower construction, operating and renewal

maintenance costs. While this option results in a worse operating result, the lower renewal cost associated with

the smaller development area (representing only -$35 million of the NPV) results in the highest NPV.

� For Options 2 to 6A, project staging has only a minor effect on the valuation and operating results. Staging

Options 3 to 6A produced a higher NPV and there was a negligible difference in the operating loss (compared

to Option 2 - no staging). This reflects that the expected cost savings from delaying construction do not

outweigh the additional construction costs incurred, and associated loss of revenues.

� The choice of discount rate can have a significant impact on the project appraisal, while escalation rates have a

moderate impact. The visitation scenarios have only a minor impact on results, reflecting that these have been

set very conservatively and there is only a minor variation across each scenario. The impact of changes in

Performing Arts Centre staff award rates is not significant.

� Option 6 (Stage 1) – referred to by PWC as Option 7 represents the most attractive option on the basis of the financial appraisal.

4.3 Preliminary Economic Appraisal

The economic appraisal considers a broad range of costs and benefits relating to social, cultural, economic and environmental factors associated with each option. As many of the associated costs and benefits are ‘intangible’, and do not have a market price, the economic appraisal has been undertaken using a combination of discounted cash flow analysis, quantitative analysis and qualitative assessment. In evaluating options, it is necessary to consider the results of these analysis/assessments in parallel.


48

In light of the key outcomes and objectives sought by Council and Government in developing the Precinct, significant

weight must be given to the key indirect and non-market benefits that may be realised as a result of the Precinct

development – for example, increased social cohesion and quality of life, arts and cultural heritage appreciation, increased

education and training facilities and health improvement.

Direct and Indirect Expenditures

The impact of each option on expenditures, both in the facility and external to the facility, can be classified into two key categories – direct and indirect expenditures. “Direct expenditures” refers to economic activity that is directly related to the facility, while “indirect expenditures” refers to any flow-on or economy-wide effects. The latter are subject to qualitative assessment in the economic appraisal.3

During the construction phase, a significant portion of the $240 million of direct expenditure will accrue to the Cairns region as a result of the CEP development. During the operational phase, expenditures under Options 2 through 6A are projected to grow steadily throughout the life of the project, peaking at levels between $44 million and $50 million (in 2041). Option 7 is the clear outlier, peaking at $30 million. Direct expenditures under the Option 1 - Base Case, peak at just over $8 million.

Figure 28 - Expenditure at the arts and cultural facility under each Option.

The significance of the direct expenditure under each option can be summarised by two key metrics – the net present

economic value (NPEV) and the benefit-cost ratio (BCR). If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and If a project’s costs and benefits can be fully quantified and

captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option captured in the discounted cash flow analysis, a project option may bemay bemay bemay be cccconsidered to be economically viable if the onsidered to be economically viable if the onsidered to be economically viable if the onsidered to be economically viable if the

BCR is greater than one. However, as discussed in the PAF, for cultural projects like the Cairns Entertainment BCR is greater than one. However, as discussed in the PAF, for cultural projects like the Cairns Entertainment BCR is greater than one. However, as discussed in the PAF, for cultural projects like the Cairns Entertainment BCR is greater than one. However, as discussed in the PAF, for cultural projects like the Cairns Entertainment

Precinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of thePrecinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of thePrecinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of thePrecinct, summary CBA metrics (like NPEVs and BCRs) are not sufficient to provide an indication of the economic economic economic economic

viability of a project.viability of a project.viability of a project.viability of a project.

While the metrics provided in Table 16 might, While the metrics provided in Table 16 might, While the metrics provided in Table 16 might, While the metrics provided in Table 16 might, when considered in isolationwhen considered in isolationwhen considered in isolationwhen considered in isolation, suggest that none of the Project , suggest that none of the Project , suggest that none of the Project , suggest that none of the Project

Options are economically viable,Options are economically viable,Options are economically viable,Options are economically viable, it is important to note that these metrics have only been calculated based on the

impacts that have been monetised in this assessment – that is, the direct expenditures under the construction and

operational phases of each Option. Again, we stress that the inability to capture in monetary terms the significant

community and cultural benefits expected from the Precinct, means that the BCRs alone should not be regarded as a

comprehensive view of each project option’s economic performance.

3 PwC has received guidance from Queensland Treasury regarding the most appropriate methodology for the economic appraisal component of the PE. The methodology presented in this report is, in PwC’s understanding, acceptable for Queensland Treasury’s purposes.

0

10,000

20,000

30,000

40,000

50,000

60,000


Option 1

Option 2

Option 3

Option 4

Option 5

Option 6

Option 6A

Option 7


49

The supplementary qualitative analysis around the key non-market impacts of this sort of cultural project illustrates a

broad range of benefits (and some costs) that have not been quantified and the NPEV and BCR for each Option must be

considered in line with this qualitative analysis. The indirect and non-market benefits that may accrue to the local, regional

and, to a lesser extent, State communities if the Cairns Entertainment Precinct is constructed, provide sufficient economic

justification for the development.

Option Net Present Economic Value

($’000s)

Benefit-Cost Ratio

Option 1 0 -

Option 2 -279, 955 0.1202

Option 3 -275, 044 0.1194

Option 4 -277, 578 0.1161

Option 5 -284, 757 0.1160

Option 6 -281, 680 0.1148

Option 6A -269, 675 0.1042

Option 6 (Stage 1) – Option 7 -193, 499 0.1018 Table 16 - NPV and BCR for each option (calculated based on incremental, discounted cash flows) 4 The direct expenditures throughout the life of the project evidences ongoing support for activity and employment in the arts and cultural industries, together with activity and employment in Retail Trade and Restaurant/Catering industries. A significant portion of the direct (and indirect) expenditure that may be anticipated in the operational phase will be driven by tourism activity.

As the FNQ economy is currently experiencing an underutilisation of resources (as evidenced by a relatively high unemployment rate), it is likely that construction of the CEP will stimulate economic activity in the Cairns region and, hence, the FNQ statistical division and the State.5

While growth in tourism activity that may arise as a result of the CEP is likely to contribute positively to economic activity in the Cairns region, the flow-on benefits from the CEP expenditures in the operational phase, particularly at a State and National level, may be minimal. This is largely because the directly affected industries are only a small proportion of the State and National economies.

Labour

It is the opinion of PWC that the AEC Group (2009) estimates of employment under both the construction and operational phases of the CEP may have been overstated.

PWC report that across the construction period, the average number of persons may be around 140 persons for Options

2 through 6. The maximum number of persons potentially employed at any one point in time during the Construction of

the Precinct is under Option 2 in 2013-14 (over 250 persons). Option 6A peaks in 2017-18 at around 230 workers, while

Options 3 through 6 peak at over 200 persons in 2013-14. Option 6 (Stage 1) - referred to by PWC as Option 7 has a

lower employment profile due to the lower expenditure in the construction phase.

4 The NPEV and BCR are calculated off incremental cash flows. “Incremental” means that the cash flows under Option 1 (the Base Case) are subtracted from the cash flows for each Option to determine the benefit over and above the status quo. The incremental cash flows for Option 1 would therefore be zero and the NPEV and BCR would also be zero. 5 Assuming the underutilisation of resources continues for the next few years.


50

Figure 29 - Number of workers on site during the construction phase of the project (for each project option)

As the Far North Queensland economy has recently experienced an underutilisation of resources (as evidenced by a

relatively high unemployment rate), it is possible that the construction activity will indirectly support employment in the

wider Cairns and Far North Queensland regions also.

Employment will be directly supported by the CEP in the operational phase, with, for example, 34 persons employed in the PAC and 14 persons employed in the Museum.

The flow-on effect of the project may impact positively on economy-wide employment, at least in the short to medium

run. For example, increased tourism activity will provide support for economy-wide employment in retail trade,

accommodation and restaurant/catering related industries. However, it is important to note that, even in the operational

phase, any expenditure that may support employment in the Cairns and Far North Queensland regions may simply be

drawing labour away from other areas.

Social Cohesion and Quality of Life

The social benefits that may accrue to Cairns and FNQ (and, to a lesser extent, the State) may be classified into five broad categories:

� Social cohesion:Social cohesion:Social cohesion:Social cohesion: Research indicates that arts and cultural services can contribute significantly to the social cohesion of a community[1] and, as such, arts and cultural policies and programs have been developed throughout Australia with a primary objective of enhancing social cohesion.[2] The CEP has been designed to provide state-of-the-art cultural and arts facilities, together with public gathering space for everyday recreational use, encouraging community networks that are inclusive and equitable. By providing a connection to the NBN, the CEP will allow the benefits from connecting communities to be potentially realised on a more significant scale, both in exporting and promoting cultural performances to a wider audience, and in providing an increase in the amount of content able to be imported to the precinct from the wider Queensland community and beyond. It will foster creative participation; intergenerational interaction and intercultural interaction.

� Local image and identity:Local image and identity:Local image and identity:Local image and identity: One of the objectives of the CEP is to develop greater awareness, within both the local community and the wider Queensland community, of the historical significance and value of FNQ. This will be achieved through the various facilities on offer in the CEP, including the connection to the NBN. Research has

[1] Matarasso, F., 1997. Use or Ornament? The Social impact of participation in the arts, Comedia, Stroud. [2] Australian Government, Department of Immigration and Citizenship, 2011. The Diversity and Social Cohesion Program, [online] Available at: http://www.harmony.gov.au/dscp/ [Accessed 8 July 2011].

0

50

100

150

200

250

300

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Option 2

Option 3

Option 4

Option 5

Option 6

Option 6A

Option 7


51

shown that the arts help people to express and define what it means to be Australian.[3] Additional arts and cultural facilities may therefore strengthen the Australian image and identify and provide a connection to our past and to our nation.

� Appreciation of the arts and cultural heritage:Appreciation of the arts and cultural heritage:Appreciation of the arts and cultural heritage:Appreciation of the arts and cultural heritage: A heightened appreciation of arts and cultural heritage may be achieved as a result of events or festivals that occur in the public plaza and open space at the CEP. Due to the FNQ’s rich indigenous and multi-cultural heritage, there is a great opportunity in Cairns to develop performing and visual arts unique to the region, and to export it via the NBN. Increased exposure to this cultural heritage will no doubt lead to an increased appreciation and tolerance of the arts.

� Health and wellHealth and wellHealth and wellHealth and well----being:being:being:being: Health and well-being benefits of arts and cultural activities accrue to both creative participants and receptive participants. There is widespread recognition across literature that, at the basic level, arts and cultural activities provide a unique and deep source of enjoyment, resulting in increased levels of happiness and the ability to cope with everyday pressures of life.6

� NonNonNonNon----user benefits:user benefits:user benefits:user benefits: For the CEP, ‘non-user value’ is also relevant. Non-use value is value accruing to persons who do not visit the facilities or participate in related cultural activities but place value on the option to visit such facilities. The community will also value the assurance that cultural assets are maintained for future generations.

Education and Training

Participation in arts and cultural activities can have a direct impact on the improvement of education and training outcomes for communities. The benefits of participation at arts and cultural facilities accrue to a number of groups within the community, from professional performers themselves (creative participants) to consumers whose participation is merely receptive. These benefits accrue through a variety of forms, such as:

� knowledge sharing;

� increased collaboration;

� cultural appreciation; and

� skills development.

The CEP will likely foster and encourage further participation in arts and cultural activities (both creative and receptive participation), thereby harnessing these associated benefits.

Environmental Effects

The environmental benefits and costs associated with the CEP include:

� Site enhancement:Site enhancement:Site enhancement:Site enhancement: The development of the CEP will result in a number of enhancements to this site. These include the removal of contamination as a result of former uses associated with the port, ground works (e.g. site clearance, dewatering and sediment control), construction of stormwater management infrastructure, and landscaping and other final site improvements.

� Urban development:Urban development:Urban development:Urban development: The CEP will create a third node in the urban framework of the CBD, connecting land use, clusters, public spaces and transport. The CEP will provide for higher levels of connectivity between inner city and outer city by anchoring the city centre with the shopping centre, Shields Street, the lagoon, and the Port lands boardwalk. This triangle also defines a circuit of high-amenity public spaces along the waterfront and CBD. It is a key element in the CBD Masterplan and is viewed as a catalyst project for CBD development.

� Sustainable design:Sustainable design:Sustainable design:Sustainable design: The CEP facilities will be designed to achieve high standards to energy efficiency and water conservation, life cycle analysis for a selection of materials, waste minimisation, low greenhouse gas emissions and an operational plan to maintain the standards for the life of the building.

[3] Australian Council of the Arts, 2010. More than bums on seats: Australian participation in the arts, Australian Council for the Arts, Sydney. 6 Australian Expert Group in Industry Studies (AEGIS), 2004. Social Impacts of Participation in the Arts and Cultural Activities- Stage 2 Report, Sydney.


52

The environmental issues do not form key considerations in the PE. Additional detailed design information is necessary to assess some environmental issues. A more comprehensive assessment of costs and benefits will be performed for the detailed Business Case.

Conclusion and Findings

� The discounted cash flow results must be read in line with the qualitative assessment of key indirect and

non-market benefits that cannot be appropriately quantified in a CBA of a cultural project like the Cairns

Entertainment Precinct. While all of the project options generate a negative NPEV and a BCR less than 1,

these metrics have only been calculated on the basis of the impacts that have been able to be monetised in

this assessment – that is, the direct expenditures under the construction and operational phases of each

Option. Conclusions regarding the economic viability of the Precinct cannot be made by considering the

BCRs and NPEVs in isolation.

� As stated in the PAF, if an economic argument is to be made for this sort of facility, the greatest weight

should be given to the significant non-market impacts (such as increased social cohesion and quality of life,

arts and cultural heritage appreciation, increased education and training facilities and health improvement)

regardless of whether they are quantifiable.

� Direct expenditures associated with operation of the Cairns Civic Theatre (Option 1 – Base Case) peak at just over $6.5 million (year 2034). Expenditures associated with the construction and operation of the CEP under Options 2 through 6A grows steadily throughout the life of the project, peaking at levels between $44 and $50 million (in 2041). Option 6 (Stage 1) - referred to by PWC as Option 7 peaks at $30 million.

� In addition to direct expenditures, there will be significant indirect expenditures associated with the CEP which will accrue to both the Cairns and regional economies. The ongoing expenditures throughout the life of the project evidences ongoing support for activity and employment in the arts and cultural industries, together with activity and employment in Retail Trade and Restaurant/Catering industries. A significant portion of the direct (and indirect) expenditure that may be anticipated in the operational phase will be driven by tourism activity.

� While only a portion of the costs and benefits (i.e. direct expenditures) accruing to the CEP have been quantified in this economic assessment, supplementary qualitative analysis suggests that there is significant economic benefits (i.e. just indirect expenditures) that may be harnessed in both the construction and operational phases of the project.

� In light of the key objectives sought by CRC and Government, particular weight should be given to the social and educational benefits that have been described. In particular, the CEP will have the capacity to increase social cohesion and enhance health and well-being for both those in the Cairns community and those attracted to the area. It will promote stable, co-operative and sustainable communities that encourage intergenerational and intercultural interaction.

� The CEP will also create greater awareness, within both the local community and wider Queensland and Australian communities, of the historical significance and the value of FNQ’s rich cultural diversity.

� Participation in arts and cultural activities can have a direct impact on the improvement of education and training outcomes, not only for performers and artists, but also for consumers whose participation is merely receptive. It promotes knowledge sharing, increased collaboration, cultural appreciation and skills development. The CEP will likely foster and encourage participation in arts and cultural activities, thereby harnessing these associated benefits.

� The development of the CEP will enhance urban amenity of the site, areas adjacent to the site and more broadly within the Cairns CBD. It will contribute to the sustainable development of Cairns city through integration of sustainable design values, enhancement of the natural landscape and appropriate utilisation of the land.

� The social and educational benefits associated with the CEP will be similar for Options 2 to 6A. However, these benefits would be maximised through the early development of facilities, particularly the PAC and Museum facilities given the current limitations of the existing Cairns Civic Theatre, and absence of a regional museum. The same level of social and educational benefit would not be achieved under Option 6 (Stage 1) - referred to by PWC as Option 7 whereby the PAC would comprise only a single performance space, and the museum facility would not be constructed.


53

Combining the higher BCR for Option 2 with this option’s expected superior performance (relative to Option 7) on social and educational benefit outcomes, Option 2 presents as the preferred option from the economic appraisal.

4.4 CRC Budget Analysis

The question of affordability is important to CRC. As such, and in addition to the Financial Appraisal and Economic Appraisal, PwC has prepared a CRC Budget Analysis for Options 2, 6, 6A and 6 (Stage 1) – referred to by PWC as Option 7. This analysis has been undertaken to:

� determine the Net Operating Impact (NOI) on CRC for each of the three options listed above;

� allow direct comparison with Financial Sustainability Report (FSR); and

� inform CRC and Government of any likely Operational Expenditure (Opex) funding gap.

The results emanating from this analysis have informed the funding strategy detailed at Section 8.1 of the PE.

Free cash flows for Options 2, 6, 6A and 6 (Stage 1) have been modified to include depreciation and the interest expense on borrowings to allow a direct comparison with CRC’s FSR. The FSR is representative of a financially sustainable position for CRC and provides for future identification and allocation of funds for a range of social programs including the CEP. The FSR assumes a total Capex funding requirement of $180,000,000 made up of equal contributions from Local, State and Commonwealth Government, with the existing CRC share coming from existing CRC reserve, sale of CRC assets and loans. At the point in time when the FSR was prepared, it made no allowance for the provision of a museum, nor its operating costs.

The CRC Budget Analysis is detailed in full at Appendix 21 and summarised in tables 16-19 below.

Option 2 - Complete development

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)

NOI (incl. depreciation and interest expense)

(10,450) (11,243) (11,411) (11,613) (11,855)

FSR (incl. depreciation and interest expense)

(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap ((((2,0822,0822,0822,082)))) ((((3333,,,,328328328328)))) ((((3333,,,,951951951951)))) ((((4444,,,,359359359359)))) ((((4444,,,,855855855855)))) Table 16 – CRC Budget Analysis for Option 2 Option 6 - 3 Stage development (rationalised)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(7,926) (12,828) (12,998) (13,155) (13,348)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap 442442442442 ((((4444,,,,913913913913)))) ((((5,5385,5385,5385,538)))) ((((5555,,,,901901901901)))) ((((6666,,,,348348348348)))) Table 17 – CRC Budget Analysis for Option 6


54

Option 6A - 3 Stage, 10 year development (alternate and lagged staging, rationalised)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(5,267) (8,691) (9,614) (10,681) (11,022)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap 3,1013,1013,1013,101 ((((776776776776)))) ((((2222,,,,154154154154)))) ((((3333,,,,427427427427)))) ((((4444,0,0,0,022222222)))) Table 18 – CRC Budget Analysis for Option 6A Option 6 (Stage 1)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(3,514) (9,177) (9,413) (9,631) (9,881)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap 4,84,84,84,854545454 (1,262)(1,262)(1,262)(1,262) ((((1111,,,,953953953953)))) ((((2222,,,,377377377377)))) ((((2222,,,,881881881881)))) Table 19 – CRC Budget Analysis for Option 6 (Stage 1) - referred to by PWC as Option 7 Conclusion and Findings The results indicate that beyond FY 17 additional funding over that currently identified in the FSR will need to be identified and secured for Options 2, 6 and 7, in order to maintain operational viability of the CEP. For Option 6 (Stage 1) - referred to by PWC as Option 7, a theoretical surplus is evident in FY 16 and FY 17, which may be rolled over to subsequent years.

4.5 Preliminary Market Sounding

The Table below details the nature and extent of existing and potential private sector involvement in the planning, delivery and operational phases of the CEP.

PLANNING & PLANNING & PLANNING & PLANNING & DESIGNDESIGNDESIGNDESIGN

CONSTRUCTIONCONSTRUCTIONCONSTRUCTIONCONSTRUCTION POSTPOSTPOSTPOST----CONSTRUCTION CONSTRUCTION CONSTRUCTION CONSTRUCTION

OCCUPATION & OCCUPATION & OCCUPATION & OCCUPATION & OPERATIONOPERATIONOPERATIONOPERATION

Consultants Consultants Consultants Consultants ��

Contractor Contractor Contractor Contractor –––– Early worksEarly worksEarly worksEarly works ��

Contractor Contractor Contractor Contractor –––– Main works Main works Main works Main works ��

PACPACPACPAC ManagerManagerManagerManager ��

Museum OperatorMuseum OperatorMuseum OperatorMuseum Operator ��

Retail TenantRetail TenantRetail TenantRetail Tenant ��

Commercial TenantCommercial TenantCommercial TenantCommercial Tenant �� Table 20 – Private sector involvement

Specific market soundings were undertaken with respect to organisations considered capable of building the CEP and managing the PAC. Summary outcomes of this sounding exercise are described below. Details of the specific questions and individual responses are included at Appendix 9.


55

Building Contractor

A preliminary sounding of possible building contractors for the CEP was undertaken by way of telephone calls to the following ten organisations;

� Bovis Lend Lease � Leighton Contractors � Thiess � Brookfield Multiplex

� Laing O’Rourke � Baulderstone � Abigroup � Watpac

� Hutchison � John Holland

This is not necessarily an exhaustive list of potential building contractors, but it does provide an adequate sample to establish that a competitive market exists for all forms of proposed contract delivery, albeit with concerns in relation to risk allocation for a Public Private Partnership (PPP) delivery model. All building contractors were asked to respond to five set questions.

PAC Manager

The current CRT is managed by CRC. The FSR operating position assumes a continuation of that arrangement. However, a sounding of potential non CRC managers for the PAC was undertaken by Creative Economy (CE). Five companies were identified and contacted, including; The Marriner Group, Pegasus, Century Venues, QPAC and Ogdens AEG. QPAC, Pegasus and Ogdens AEG expressed interest. Marriner was not interested, while Century Venues did not respond. A summary of market sounding results for Ogdens AEG, Pegasus and QPAC is provided in Table 21 below.

Table 21 – PAC market sounding results CE suggests that Ogdens and QPAC have differing reasons for their interest in managing the PAC. Potentially, Ogdens see an opportunity to leverage their existing presence at the Cairns Convention Centre to create a more complete service offering, creating improved levels of operating efficiency. Whilst not the typical venue that Ogdens would manage, they would still bring venue management experience particularly in the areas of accounting and finance, food & beverage, and human resources. With their potential involvement, Ogdens would expect CRC to pay a management fee based on a business plan and sufficient budget allocation to engage and support local community participation.

QPAC has the expertise and capability to manage the PAC but would need to understand the expectations of CRC, as well as the differences between Cairns Convention Centre and the PAC from an operational and management viewpoint. QPAC see substantial opportunities for development of industry in the region. CE highlighted the requirement of a CRC budget for development of local and regional performing arts and a sinking fund inclusive of an allocation for ongoing facilities maintenance and capital expenditure. The structure and amount of this budget could have a bearing on the level of interest from potential operators and should be considered in more detail during the BC phase of the CEP project.

NONONONO LOWLOWLOWLOW MEDIUMMEDIUMMEDIUMMEDIUM HIGHHIGHHIGHHIGH VERY HIGHVERY HIGHVERY HIGHVERY HIGH

LEVEL OF INTERESTLEVEL OF INTERESTLEVEL OF INTERESTLEVEL OF INTEREST

YES – QPAC YES – Ogdens

YES – Pegasus

FEASIBLEFEASIBLEFEASIBLEFEASIBLE

YES – QPAC YES – Pegasus

YES – Ogdens

CAPABILITYCAPABILITYCAPABILITYCAPABILITY

YES – Pegasus YES – Ogdens

YES – QPAC

CAPACITYCAPACITYCAPACITYCAPACITY

YES – QPAC

YES – Pegasus

YES – Ogdens

MMMMATURITYATURITYATURITYATURITY YES – Pegasus YES – Ogdens

YES – QPAC

SUPPLY CHAINSUPPLY CHAINSUPPLY CHAINSUPPLY CHAIN YES – Pegasus YES – Ogdens

YES – QPAC

TRADITIONS, ATTITUDETRADITIONS, ATTITUDETRADITIONS, ATTITUDETRADITIONS, ATTITUDES &S &S &S &

PRACTICSEPRACTICSEPRACTICSEPRACTICSE

YES – QPAC

YES – Pegasus

YES – Ogdens


56

Pegasus has experience in initiating venues from the initial concept through to operation and management. Pegasus has provided similar services for Hills Performing Arts Centre and various other community halls. Pegasus has the ability to work with an advisory board and can work either for a contract fee or under license for a subsidy.

Conclusion

The market sounding resulted in a number of positive comments and identified some areas for further consideration during the BC, including further consideration of operating models. In summary, the sounding confirmed;

� A high level of interest for involvement in the management of the CEP PAC

� Recognition of a high level of maturity for the PAC and potential to increase the industry’s development

� A medium (on average) response to the need for the proposed capacity

� A medium / high opinion of the feasibility of the CEP

Further detail of the PAC Manager market sounding is included in the CE Report which is included at Appendix 10.

4.6 Preliminary Consideration of Legislative Approval Issues

Urbis is engaged to provide statutory and legislative planning advice. Urbis has undertaken a review of the planning framework relevant to the site and development. A preliminary briefing note detailing a recommendation for achieving a timely and efficient development approval for the CEP was submitted on 17 June 2011 and is included at Appendix 11.

The briefing note contains a detailed review of key planning framework elements and provides preliminary findings and recommendations related to each. The key elements include;

� State and Regional Planning framework

� Local Planning Framework

� Draft Framework Agreement

� Future Planning Frameworks

� Infrastructure Charges and Planning

� Project Timeframes

In summary, two options to secure necessary planning approvals were considered.

Option 1 – Make a development application to PN

This option involves the preparation of a code-assessable development application. The application would be submitted to PN as the “Assessment Manager” for their assessment and approval with conditions. The following concurrent State agencies will have the ability to approve, refuse and apply conditions of development approval – QLD Department of Environment and Resource Management and the QLD Department of Transport and Main Roads.

Option 2 – Seek a Ministerial Community Infrastructure Designation

Designated land must pass a public benefit test to ensure the designation is justified and is subject to satisfaction that the community infrastructure will contribute to environmental protection or ecological sustainability, or satisfy community expectations for the efficient and timely supply of infrastructure in accordance with Section 2.6.7 of State Planning Act (SPA).

Recommendation

Option 1 is recommended as the preferred option given that it is a much simpler process which provides significant time and resource efficiencies compared to Option 2.

The CRC project team has confirmed it is agreeable to pursing Option 1 and has established a strategy which targets the achievement of approvals to allow commencement of works in early 2012, including consultation with the assessment manager, RPS.


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CRC will submit the development application in early December 2011 and seek approval for commencement of early works in March 2012.

Further, Urbis issued additional advice on 21 July 2011 following a review of the two Concept Options. This advice provides comment on the suitability of the proposed concepts against the current town planning framework.

In summary, Urbis notes that;

� No State planning framework considerations are identified that significantly prejudice the project or would impact on achieving a successful development approval.

� It is likely that a development application can be prepared to satisfactorily respond to the Local Planning objectives subject to further analysis relating to:

� Traffic volumes, network impacts and intersection designs

� Car parking and transport strategy

� Conservation of White’s Shed

� Acoustic considerations (impact of PN operations)

� Potential infrastructure charges or agreements with PN

� Provision of adequate infrastructure (incl. Water, sewer and stormwater)

The complete Urbis report is included at Appendix 11.

4.7 Preliminary Consideration of Whole-of-Government Issues

The masterplan and concept options have been developed to be consistent with the principles and objectives of the following Commonwealth, State and Local Government Plans, Policies and Strategies:

GOVERNMENT LEVEL GOVERNMENT LEVEL GOVERNMENT LEVEL GOVERNMENT LEVEL / DEPARTMENT/ DEPARTMENT/ DEPARTMENT/ DEPARTMENT

PLAN, POLICY, STRATEPLAN, POLICY, STRATEPLAN, POLICY, STRATEPLAN, POLICY, STRATEGYGYGYGY

Commonwealth Government

Regional Development Regional Development Regional Development Regional Development AustraliaAustraliaAustraliaAustralia

� Regional Road Map – FNQ & Torres Strait.

Australia CouncilAustralia CouncilAustralia CouncilAustralia Council � Mission, vision and goals generally.

� Community Partnerships sector plan 2010-2012.

� Dance sector plan 2010-2012

� Inter-arts sector plan 2010-2012

� Literature sector plan 2010-2012

� Music sector plan 2010-2012

� Theatre sector plan 2010-2012

� Visual Arts sector plan 2010-2012.

OtherOtherOtherOther � Disability Discrimination Act

� Disability Services Act 1992

� Building Code of Australia

� Australian Standards


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State Government

Arts QueenslandArts QueenslandArts QueenslandArts Queensland � Queensland Arts and Cultural Sector Plan 2010 - 2013

� The Aboriginal and Torres Strait Islander Arts Policy 2009-2013

� Creative Queensland

� Visual Arts and Craft Strategy

� arts, culture + me

� Touring Strategy

� Contemporary Music Strategy

� Design Strategy 2020

� Regional Arts Strategy

� Queensland Museum Strategic Plan 2009-13

Department of Infrastructure Department of Infrastructure Department of Infrastructure Department of Infrastructure & Planning& Planning& Planning& Planning

� FNQ Regional Plan 2009-2031

Department of Employment, Department of Employment, Department of Employment, Department of Employment, Economic Development and Economic Development and Economic Development and Economic Development and InnovationInnovationInnovationInnovation

� Cairns’ Economic Future: A plan for jobs and the economy 2009-2011

Queensland GovernmentQueensland GovernmentQueensland GovernmentQueensland Government � Toward 2 – Tomorrows Queensland

� Indigenous Employment Policy

� Smart State Strategy – Queensland’s Smart Future 2008 – 2012

� Queensland Tourism Strategy 2006-2016

� Local Industry Policy – A fair go

� Aboriginal Cultural Heritage Act 2003

� Torres Strait Islander Cultural Heritage Act 2003

� Sustainable Planning Act 2009

� Vegetation Management Act 1999

Local Government

Cairns Regional CouncilCairns Regional CouncilCairns Regional CouncilCairns Regional Council � CRC Cultural Plan: Strengthening our Cultural Vitality 2009 – 2014.

� CRC Corporate Plan 2009-2014

� CRC draft community plan 2011-2031

� Indigenous Employment Strategy

� Draft Cairns City Centre Masterplan

� Cairns Plan Planning Scheme

Department of Environment & Department of Environment & Department of Environment & Department of Environment & Resource ManagementResource ManagementResource ManagementResource Management

� Environmental Protection (Water) Policy 2009

� Trinity Inlet environmental values and water quality objectives - Basin No. 111 (part)

Ports NorthPorts NorthPorts NorthPorts North � Ports North Masterplan Table 22 –Whole of Government Policy

A preliminary review of these policies is included at Appendix 5.


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4.8 Preliminary Consideration of Regulatory Issues

At this time it is not considered that any change is required to regulations which currently apply to the site or the proposed development.

4.9 Preliminary Public Interest Assessment

A Preliminary Public Interest Assessment has been prepared based on the identified public interest elements and criteria identified in Table 24. Each option was rated against the defined public interest elements using the assessment scale set out in Table 23 below.

RATING (Scope v Need/Outcome) WEIGHTING Further Weighting discounts

0 Does not meet 1 No staging -0.1 Part PAC only, PAC/Museum not in Stage 1

1 Partially meets 0.8 2 Stages -0.1 Staging lag

2 Meets 0.6 3 Stages -0.1 PAC / Museum not delivered

0.4 1Stage only Table 23 – Assessment Scale

Table 24 – Rating criteria

RATINGRATINGRATINGRATING 0000 1111 2222

EFFECTIVENESS CRITEREFFECTIVENESS CRITEREFFECTIVENESS CRITEREFFECTIVENESS CRITERIAIAIAIA

Service requirement Fails to meet requirement

Partially meets requirement

Meets or exceeds requirement

Stakeholder impact Significant disruption to services including, adverse cultural impacts

Minimal measurable improvement to cultural outcomes or services

Improvement of existing services and increased cultural benefit

Accountability / transparency (Probity) Regime not in place Regime poorly structured Regime exists including monitoring and reporting procedures

Public access and equity Fails to comply with key legislative requirements

Some areas of non-compliance with some barriers remaining

Removes barriers currently experienced

Consumer rights Severely compromised Partially compromised Not affected

Security Security provisions inadequate

Security considered but with system / monitoring limitations

Security provisions adequate

Privacy Severely affected Partially affected Not affected


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A summary of the results is provided in Table 25 below and the full assessment is included at Appendix 12.

OPTION Public Interest Score

Option 1 8

Option 2 24

Option 3 22.4

Option 4 20.8

Option 5 21.6

Option 6 20.8

Option 6A 17.8

Option 6 (Stage 1) 10.8 Table 25 – Public Interest Assessment Conclusion

The results of the public interest assessment showed that Option 2 was superior to all other options in terms of its ability to meet the defined public interest. Options 2-7 scored higher than Option 1, which reflects Option 1 as being unable to meet the needs previously identified. Options 3-7 scores varied slightly due to the effects of staging and delay to the provision of services, and incomplete status of the development at completion of each stage.

4.10 Needs, Outcomes Sought & Cultural Vitality

A separate preliminary evaluation of each of the eight options have been undertaken against the needs, outcomes sought and cultural vitality indicators previously defined in Sections 3.7 & 3.8, using the below rating and weighting scales which placed a premium on the timely delivery of the project and ultimately, meeting the need and outcomes sought.

RATING (Scope v Need/Outcome) WEIGHTING Further Weighting discounts

0 Does not meet 1 No staging -0.1 Part PAC only, PAC/Museum not in Stage 1

1 Partially meets 0.8 2 Stages -0.1 Staging lag

2 Meets 0.6 3 Stages -0.1 PAC / Museum not delivered

0.4 1Stage only Table 26 – Assessment Scale A summary of the assessment is included in Table 27 below and the assessment score sheets are included at Appendix 12.

OPTION Need / Outcomes Sought Cultural Vitality

Option 1 15 2

Option 2 56 26

Option 3 48 20.8

Option 4 43 15.6

Option 5 44 10.4

Option 6 32 15.6

Option 6A 22 7.8

Option 6 (Stage 1) 4 2.6 Table 27 – Needs, Outcomes, Cultural Vitality Assessment results


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5.0 Project Procurement Strategy

This section discusses the various options available for procurement of;

� Consultants

� Building Contractors

� Operations and Management Capability

5.1 Consideration of Procurement Options

Consultants

Consultants have been (or will be) invited to submit tenders to undertake the future design associated with DA documentation, design development, tender preparation and detailed design. A two stage process will be adopted whereby consultants will be invited to submit and Expression of Interest (EOI), followed by a Request for Tender (RFT).

EOIs will be assessed against predetermined evaluation criteria, and in accordance with CRC’s procurement and probity guidelines. A shortlist of consultants will then be requested to provide a lump sum tender (RFQ). Again, submissions will be assessed against predetermined evaluation criteria.

Following initial negotiations with a preferred party, a consultant will then be appointed. This process will be adopted for all consultancies.

Construction

In order to ascertain the most appropriate procurement model for the CEP, a Procurement Workshop was held on 11 August 2011 with CRC, members of the consultant team, State agencies including AQ, DPW, Treasury and the Commonwealth Department of Infrastructure and Transport. At the workshop six (6) procurement options were assessed against pre-determined evaluation criteria and given an overall rating.

The six options considered for the CEP project include

� Traditional Lump Sum

� Construction Management with Early Contractor Involvement and Guaranteed Maximum Price Contract (CM with ECI and GMP)

� Managing Contractor, Design and Construct Contract with Early Contractor Involvement, Guaranteed Maximum Price and Consultant Novation (D&C with ECI, GMP & Consultant Novation)

� Alliance

� Public Private Partnership (PPP)

� Design and Construct (D&C)

A discussion of each of the procurement options, as well as a summary of advantages and disadvantages is included at Appendix 13.

The results of the workshop assessment are provided in Table 28 overleaf.


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RATINGRATINGRATINGRATING

NO EVALUATION CRITERIAEVALUATION CRITERIAEVALUATION CRITERIAEVALUATION CRITERIA

PRIORITYPRIORITYPRIORITYPRIORITY

High/High/High/High/

Medium/Medium/Medium/Medium/

LowLowLowLow

Traditional Lump Sum




CM, with ECI, and G

MP

CM, with ECI, and G

MP

CM, with ECI, and G

MP

CM, with ECI, and G

MP

MC , D and C w

ith ECI,

MC , D and C w

ith ECI,

MC , D and C w

ith ECI,

MC , D and C w

ith ECI,

GMP and Consultant

GMP and Consultant

GMP and Consultant

GMP and Consultant

Novation

Novation

Novation

Novation

Alliance

Alliance

Alliance

Alliance

PPP

PPP

PPP

PPP

D and C

D and C

D and C

D and C

1111 � TimingTimingTimingTiming. To utilise available funding within the allocated timeframe there is an urgent need to start work as quickly as possible.

Very high to Critical to the

project **** �� **** ��

2222 � Early Works. Early Works. Early Works. Early Works. Because of time restraints it may be desirable to undertake early works. Ability of delivery option to incorporate early works.

High **** �� **** ��

3333 � Design ControlDesign ControlDesign ControlDesign Control. These are complex buildings, particularly the PAC. It is important that the client has certainty in relation to the design.

High ��

4444 � Performance. Performance. Performance. Performance. The buildings have very high performance standards that must be met if they are to achieve the agreed outcomes.

High ��

5555 � BuildabilityBuildabilityBuildabilityBuildability. Due to building complexity and location, there are likely to be significant buildability issues.

Medium **** ��

6666 � InnovationInnovationInnovationInnovation. These are complex buildings that must accommodate the latest technology, and significant scope for innovation.

Medium ��

7777 � Budget CertaintyBudget CertaintyBudget CertaintyBudget Certainty. It is likely that commitments from State and Commonwealth Governments will be fixed. Cost overruns will not be acceptable to the CRC.

High ��

8888 � Value for Money. Value for Money. Value for Money. Value for Money. This is a high profile project which is required to demonstrate value for money.

Medium ��

9. 9. 9. 9. � VariationsVariationsVariationsVariations. This type of building is hard to fully document and there are likely to be changes to the design as it evolves. Changes must be accommodated within the agreed budget.

High �� N/AN/AN/AN/A ��

10101010 � Risk. Risk. Risk. Risk. The contract must transfer and mitigate identified risks appropriately.

High ��

11111111 � OperationOperationOperationOperation. It is anticipated that the CEP will have a long life span with the CRC remaining responsible for the operation.

High �� N/AN/AN/AN/A ��

12121212 � Market AppetiteMarket AppetiteMarket AppetiteMarket Appetite. Refer market sounding. Medium ��

13131313 � Stakeholder involvementStakeholder involvementStakeholder involvementStakeholder involvement. It is likely that the CRC and other stakeholders will wish to have “ownership” of the project and therefore have input as it evolves.

Medium **** �� **** **** Table 28 – Procurement Workshop Outcomes


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Ratings:

**** Does not satisfy

�� Just satisfies

�� Is effective

�� Is very effective

Conclusion

It was agreed that the only funding strategy for this project is based on accessing $40m from the Commonwealth Government under its stimulus program – Infrastructure Employment Program, which requires the funds to be expended by 30 June 2012. It is therefore critical that work commences on site in early 2012. It was agreed that Traditional Lump Sum, Alliance and PPP options could not be structured to meet this mandatory criteria. It is not possible, based on the extensive experience of the workshop members to have agreements in place for these options, to allow work to start until well after June 2012.

The PPP option was also considered inappropriate because, in the market sounding of building contractors there was little, if any, appetite for this option. The significant upfront costs in preparing bids, were considered by the contractors to be excessive for this size project, particularly if it is staged, and there was an expectation that CRC would still have to accept significant risk.

Likewise in the market sounding of PAC operators it was found that there was no appetite to operate the venue without significant CRC support. The level of CRC support for the PPP was not assessed in detail compared to CRC support for a traditional service delivery option. However, preliminary discussions indicate that the PPP support will not be less than the traditional support.

Finally, in relation to the PPP, it was agreed that it is very difficult for CRC to meet its community obligations and have the required cultural services delivered in a venue that is operated through a PPP. Community needs change and the CRC needs to have the flexibility to respond to these changing needs which is very difficult when working through a third party PPP contractor.

As is shown in Table 28 there is little difference in the ratings from the Construction Manager (CM) and Managing Contractor (MC) options which are considered better based on the ratings in the table, than the traditional D&C option.

In the CM model the design risk remains with CRC and whilst this can be passed through to the lead designer – Cox Rayner, a potentially adversarial situation arises with the contractor having an interest in increasing the number and value of variations and not trying to identify ways of minimising their impact.

In the proposed MC model the consultants should not be transferred until the design is progressed to a stage that CRC considers that it will, if implemented to the minimum standards defined, still meet CRC needs. This may mean that some elements of the works may be defined through a performance brief.

Additional protection can be provided in the MC model through allowing CRC to meet directly with the design team to obtain required information, albeit without the right to direct the designers. The designers can also be required to certify each month that the developed design is in accordance with the agreed Principal Project Requirement (PPR) or its equivalent with any agreed variation(s). A table of minor changes, made to the PPR that the designers consider do not affect the intent of the PPR, should also be tabled at least monthly.

A final decision between the CM and the MC procurement options is yet to be made and will be considered further as part of the BC.

The Procurement Report (including evaluation spreadsheet) is included at Appendix 13.

Operations / Management

PAC

The current assumed operational model for the PAC is via a separate CRC owned management entity – this is discussed in further detail at Section 8. CRC would retain the option of utilising external management expertise, with the advantages and disadvantages of each model to be investigated further during the preparation of the BC. Procurement of the said management expertise would be undertaken in compliance with procurement and probity guidelines and likely consist of the following stages:


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� Review and update market sounding

� Develop operational brief and define operational financial hurdles

� Undertake EOI / Tender

� Assess and appoint

Precinct Management

With respect to the wider precinct management, the following process would be followed to ensure an appropriate manager is appointed:

� Review Operational and Maintenance manuals

� Develop management brief, define operational budgets and specialist sub-contractor requirements

� Undertake EOI / Tender

� Assess and appoint


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6.0 Risk Management

6.1. Risk Management

A Risk Management Plan (RMP) has been prepared and extends to the identification, analysis, evaluation and proposed treatment of risks related to the CEP. Overall project phases and tasks are defined within Table 29 below. The management of risks associated with the phases and tasks described will be undertaken in accordance Risk Management Plan which is included at Appendix 14.

PHASEPHASEPHASEPHASE TASKTASKTASKTASK

Phase One: Phase One: Phase One: Phase One: Masterplan and Concept & Schematic Design / Business Case (Jan 2011 – July 2011)

� Identification of demand / stakeholder needs

� Finalise project objectives and scope

� Clarification of project funding options

� Acceptance of designs by the community

� Consultant appointments

Phase Two: Phase Two: Phase Two: Phase Two: DA & Design Development/ Funding including staging options (July 2011 – October 2011)

� DA submission and negotiation of approval

� Design development finalisation and cost review

Phase Three: Phase Three: Phase Three: Phase Three: Tender Process (November 2011 – January 2012)

� Secure funding

� Tender documentation, cost reviews and pre-tender estimate

� Establish tender shortlist, prepare contract particulars, tender, assess tenders, negotiate, prepare tender report and approvals

Phase Four: Phase Four: Phase Four: Phase Four: Construction (February 2012 – February 2015)

� Award contract

� Site establishment

� Construction works, including early works

� Fit-out

� Commissioning and defects rectification

Phase Five: Phase Five: Phase Five: Phase Five: Operational (March 2015 onwards)

� Marketing of the facility to the community and various potential user groups

� Maintenance cost to be managed

� Operational cost to be managed Table 29 – Project Phase Risk framework The process of risk management is described in detail below.

Risk Criteria

Project risks have been allocated under the following Risk Criteria headings:

� People � Programme

� Business process & systems � Scope

� Financial � Quality


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Risk Consequence

The consequence of risk events occurring has been classified as follows, with guidance as to the meaning of each classification also included:

� Rare – may occur, but only in exceptional circumstances

� Unlikely – could occur but doubtful

� Moderate – may occur at some point in the future

� Likely – will probably occur

� Almost Certain – is expected to occur in most circumstances

The consequence of risk events occurring has been classified and is included at Appendix 14.

Risk Ranking

LikelihoodLikelihoodLikelihoodLikelihood

ImpactImpactImpactImpact

Insignificant Minor Moderate Major Catastrophic

1 2 3 4 5

A (almost certain)

M H H EEEE EEEE

B (likely) M M H H EEEE

C (moderate) L M M H EEEE

D (unlikely) L L M H H

E (rare) L L M H H

Figure 30 – Risk classification

The required actions emanating from risk rankings may be generally described as follows:

RANKING ACTION

Low Mange by routine procedure

Medium Specify management responsibility

High Required action of the Project Control Group

Extreme Risk Treatment Plan required

Figure 31 - Risk ranking and action

Risk Treatment

Specific actions for individual risks, together with proposed treatment, responsibility, cost and time impact are detailed within the Risk Register which is included at Appendix 14. The aim, through adoption of the required actions, is that high and extreme risks may be downgraded to Medium and Low risks.


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6.2. Preliminary Risk Analysis

In accordance with AS/NZ 4360:2004, ongoing risk analysis has been conducted to identify and assess the risks involved with the CEP. The Risk Register was reviewed throughout the masterplan and concept plan development phases and will continue to be reviewed on a monthly basis during design development, tender and construction phases.

A risk workshop was conducted on 11 August 2011 attended by CRC, members of the consultant team and State agencies including; AQ, DPW, QTC and the Commonwealth Department of Infrastructure and Transport. A summary of the extreme risks is included in Table 30 below. A comprehensive schedule of project risks is contained in the Risk Register at Appendix 14

RISK LIKELIHOOD IMPACT LEVEL OF RISK

TREATMENT

Required State funding not provided

MODERATE CATASTROPHIC EXTREME Commence early dialogue with current State Government and potential new Government to secure additional funding required. Develop staging plan to support future funding priority.

Federal funding committed not spent by June 2012, and subsequently lapses

MODERATE CATASTROPHIC EXTREME Programme to be developed that clearly identifies the ability to achieve the required expenditure within the allocated timeframe. Clarify requirements of the funding agreement to team members. Meet with Commonwealth Government regularly to provide updates.

Additional Commonwealth funding not provided in time for initial stage of project for Option 2 and Option 6 (Stage 1)

LIKELY CATASTROPHIC EXTREME Commence early dialogue with current Federal Government and potential new Government to secure additional funding required. Target potential funding programs. Develop a staging plan to support future funding priority.

Approval from PN is delayed or conditions are unacceptable to support the development

MODERATE CATASTROPHIC EXTREME Commence early discussions with PN and their planning consultant (RPS). Provide updates during DA design development. Draft conditions to be sought and discussed with PN and RPS to reduce approval timeframes.

Approval by CBRC of PAF causes delays to project

MODERATE CATASTROPHIC EXTREME Regular reviews with AQ, QT and CBRC.

Failure to reach agreement regarding the costs of remediation and removal of hazardous materials in ground

MOERATE CATASTROPHIC

EXTREME Obtain agreement with lessor to fund costs of remediation. Studies have been commissioned with findings (including recommendations, methodology and costs) to be reviewed.

Change in funding policy of State or Commonwealth Government

MODERATE CATASTROPHIC EXTREME Maintain regular contact with funding bodies. Maintain dialogue with State / Commonwealth members of Parliament.

State Government going into caretaker mode affects ability to make decisions on PAF submission

MODERATE CATASTROPHIC EXTREME Work to current programme, and attempt to develop alternate plans to mitigate potential impact of State Government “caretaker mode”.

CRC goes into caretaker mode and affects ability to sign contracts / make decisions

MODERATE CATASTROPHIC EXTREME Work to current programme, and attempt to develop alternate plans to mitigate potential impact of CRC “caretaker mode”. Ministerial approval may be sought. Table 30 – Preliminary Risk Analysis


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7.0 Options Comparison

This section of the PE compares and ranks the findings and results emanating from Options Evaluation to assist in the nomination of a preferred option, for further consideration in Business Case development.

7.1 Comparison

A comparative analysis has been undertaken of all options against the following criteria.

� Financial Analysis (FA) - NPV

� Economic Analysis (EA) - NPV and BCR

� CRC Budget Analysis (CRCBA) – Funding Gap

� Public Interest Assessment (PIA)

� Needs and Outcomes Sought (NOS)

� Cultural Vitality (CV)

Against each criterion, options are then ranked 1 (highest) through 8 (lowest). An overall ranking is then determined.

Ranking results are summarised in table 31 below.

Table 31 – Comparison assessment results 7.2 Conclusion and Recommendation


However, it is recognized that with the current economic restraints on all levels of Government, the only feasible option for immediate realization of this project, is the first stage of Option 6 and it is this option that will be analysed in the Business Case.

OPTION FA (NPV)

EA (NPEV)

EA (BCR)

CRCBA PIA NOS CV OVERALL OVERALL OVERALL OVERALL RANKINGRANKINGRANKINGRANKING

Option 1 – Base Case 1 - - - 8 7 8 8888

Option 2 -Complete development

5 5 1 3 1 1 1 1111


6 3 2 - 2 2 2 2222


3 4 3 - 4 4 3 3333


7 7 4 - 3 3 5 4444


4 6 5 4 4 5 3 5555

Option 6A – 3 stage development, alternate staging and rationalised

8 2 6 2 6 6 6 7777

Option 6 (Stage 1) 1 stage only

2 1 7 1 7 8 7 6666


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8.0 Implementation

8.1 Funding Strategy

Introduction

The options described in the proceeding sections 3, 4 and 7 are listed below;







� Option 6A - 3 stage, 10 year development (alternate and lagged staging, rationalised)

� Option 6 (Stage 1) - referred to by PWC as Option 7 - 1 stage only

Below is an outline of the specific issues relating to the implementation of the Options described in Section 3.

The Capex for each option comprises the construction cost estimate provided by WTP and $1.0m of the PAC pre-opening budget.

Option 2 - Complete development

This option ranked highest in Section 7 demonstrating a clear, superior outcome when evaluated against the criteria defined in Section 4. It is therefore the preferred option.

Both the State Government and the Council have stated that the funding for this project should be equitably shared between the three levels of government. Therefore for this option this would require an $81,800,000 contribution from each level of government received over a three and a half year period.

The assumed cash flow for the contributions from government is:

CAPEXCAPEXCAPEXCAPEX TotalTotalTotalTotal FY12FY12FY12FY12 FY13FY13FY13FY13 FY14FY14FY14FY14 FY15FY15FY15FY15 FY16FY16FY16FY16

Option 2 245,401245,401245,401245,401 42,40942,40942,40942,409 106,967106,967106,967106,967 78,33878,33878,33878,338 16,65816,65816,65816,658 1,0291,0291,0291,029

FED 81,800 40,000 35656 6144

STATE 81,800 2409 35656 36097 7638

CRC 81,801 35655 36097 9020 1029

For the CRC this would require borrowing $21,800,000 more than it has included in its FSR or contributing $5-6,000,000 per annum for 4 years from its Capital works budget. Option 2 also requires up to $5,000,000 of ongoing funding per annum, in addition to that included in its FSR.

The Commonwealth Government has advised through its Department of Infrastructure and Transport officers, that $40,000,000 from the Employment Infrastructure Projects program is all the funding that can reasonably be assumed to be available from the Commonwealth Government, at least through to the end of the 2012/13 financial year.

CRC does however intend to actively pursue further capital works funding through other Commonwealth programs given the alignment of the CEP project with many of the Commonwealth Government’s policies. Noting that the delivery program will extend beyond the 2012/13 year, the timing of further grant funding applications will be consistent with an implementation program for Option 2.

The State Government has not indicated its level of funding.


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The Staging Options presented below offer alternative implementation strategies to the preferred option. While staging the construction is more expensive, it does allow delivery of discrete elements of the development, aligned with identified funding in any given budget cycle.

To assist in the staging it is proposed to undertake some reconfiguration of the theatres and this work will be done in the next phase of the design process. This will not affect the cost estimates presented in this report.

It should be noted that if funding can be secured for Option 2 as outlined above, in the early stages of the implementation of these other options outlined below; then it may be possible to avoid the cost penalties associated with these other options. In other words it may be possible to revert to option 2.

All of the options below except for Option 6 (Stage 1) - referred to by PWC as Option 7, ultimately achieve the same outcomes as option 2. They are all staging variations of the same concept plan.

Option 3 - 2 Stage development

This is the next highest rating option from section 7

This option requires an initial funding for stage 1 of $208,989,000 i.e. $69,662,666 from each level of government.


CAPEXCAPEXCAPEXCAPEX TotalTotalTotalTotal FY12FY12FY12FY12 FY13FY13FY13FY13 FY14FY14FY14FY14 FY15FY15FY15FY15 FY16FY16FY16FY16 FY17FY17FY17FY17

Option 3Option 3Option 3Option 3 248,259248,259248,259248,259 40,24840,24840,24840,248 90,83190,83190,83190,831 59,52059,52059,52059,520 11,32511,32511,32511,325 44,84544,84544,84544,845 1,4911,4911,4911,491

FEDFEDFEDFED 82,753 40,000 30277 12476

STATESTATESTATESTATE 82,753 248 30277 23522 5662 23,044

CRCCRCCRCCRC 82,753 30277 23522 5663 21801 1491

It should also be noted that due to staging costs the total Option 3 cost represents an additional $2,858,000 compared to option 2.

Option 4 - 3 Stage development

This was the third ranking option. It does not however, deliver performance space 2 or the rehearsal space within the PAC in Stage 1, but instead delivers the Main Theatre, public domain and refurbishment of White’s Shed as Stage 1; Performance Space 2, rehearsal space and restaurant as Stage 2 and the Museum as Stage 3.

There was only a modest reduction in the funding requirement for stage 1 which was reduced to $194,484,000.



Option 4 255,126255,126255,126255,126 40,20640,20640,20640,206 87,93987,93987,93987,939 65,55265,55265,55265,552 20,09620,09620,09620,096 41,33241,33241,33241,332

FED 85,042 40,000 29313 15729

STATE 85,042 206 29313 24911 10048 20564

CRC 85,042 29313 24912 10048 20768


Option 5 - 2 Stage development (rationalised)

This was the fourth ranking option. It does not however deliver any element of the Performing Arts Centre in Stage 1, but instead delivers the Refurbishment of White’s Shed and the Museum.

Stage 1 of this option is significantly less than stage 1 in options 3 and 4 being $122,531,000. This would require a commitment of $40,843,333 from each level of government.


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CAPEXCAPEXCAPEXCAPEX TotalTotalTotalTotal FY12FY12FY12FY12 FY13FY13FY13FY13 FY14FY14FY14FY14 FY15FY15FY15FY15 FY16FY16FY16FY16 FY17FY17FY17FY17

Option 5 258,194258,194258,194258,194 39,28239,28239,28239,282 93,72093,72093,72093,720 64,92464,92464,92464,924 13,05913,05913,05913,059 45,49845,49845,49845,498 1,7101,7101,7101,710

FED 86,064 39,282 31240 15542

STATE 86,064 31240 24691 6529 22,749 855

CRC 86,066 31240 24691 6530 22,749 855

This option does not meet the pressing need to replace the Cairns Civic Theatre until stage 2 is completed. It will therefore also delay the income from the possible sale of the Cairns Civic Theatre site if the CRC decides to sell this site. The staging of the development under Option 5 also carries the risk that the PAC may never be built should further sufficient funding not eventuate.


Option 6 - 3 Stage development (rationalised)

This option reduces the cost for stage 1 to $154,611,000 whilst still including part of the PAC, being the main theatre only in this first stage. This option maintains the integrity of the masterplan and the outcomes detailed in the PE by assuming that the remaining stages will be completed by June 2016 The total cost increases by $13,573,000 compared to Option 2.

This option requires a commitment for stage 1 assuming $40,000,000 Federal contribution, of $109,487,000 each from State Government and CRC.

If however, the Commonwealth Government is able to contribute more than $40,000,000 then a possible funding arrangement would be to seek the additional funding over a three and a half year period – to result in an equal sharing by all parties of the total Capex.



Option 6 258,974258,974258,974258,974 41,23841,23841,23841,238 89,84489,84489,84489,844 66,10166,10166,10166,101 19,94819,94819,94819,948 41,84441,84441,84441,844

FED 40000 40,000

STATE 109487 1238 44922 33050 9974 20303

CRC 109487 44922 33051 9974 21541

It should also be noted that due to staging costs, the total Option 6 cost represents an additional $13,573,000 compared to option 2.

The initial funding for the first stage of Option 6 is reflected in Option 6 (Stage 1) - referred to as Option 7 by PWC and outlined on page 71.

Option 6A - 3 stage, 10 year development (alternate and lagged staging, rationalised)

This option is similar to Option 6 in that the cost for stage 1 is $153,611,000 whilst still including part of the PAC, being the main theatre only in this first stage. This option varies from Option 6 in that the Museum is delivered in Stage 2 (commenced 3 years after completion of Stage 1) with the remaining works being completed as part of Stage 3 (commenced 3 years after completion of Stage 2). Option 6A maintains the integrity of the masterplan and the outcomes detailed in the PE by assuming that the remaining stages will be completed by May 2022 – 6 years later than Option 2 or Option 6. The total cost increases by $22,749,000 compared to Option 2 and by $9,176,000 compared to Option 6.

This option requires a commitment for stage 1 assuming $40,000,000 Federal contribution, of $57,306,000 each from State Government and CRC.

If however, the Commonwealth Government is able to contribute more than $40,000,000 then a possible funding arrangement would be to seek the additional funding over a nine and a half year period – to result in an equal sharing by all parties of the total Capex.


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The assumed cash flow for the contributions from government for Option 6A is:

CAPEXCAPEXCAPEXCAPEX TotalTotalTotalTotal FY12FY12FY12FY12 FY13FY13FY13FY13 FY14FY14FY14FY14 FY15FY15FY15FY15 FY16FY16FY16FY16 FY17FY17FY17FY17 FY18FY18FY18FY18 FY19FY19FY19FY19 FY20FY20FY20FY20----22222222

Option 6A

267,351267,351267,351267,351 38,76138,76138,76138,761 41,22541,22541,22541,225 27,92327,92327,92327,923 25,31225,31225,31225,312 21,99221,99221,99221,992 94,95494,95494,95494,954 10,14910,14910,14910,149 4,5064,5064,5064,506 2,5292,5292,5292,529

FED 40000 38,761 1239

STATE 113675 19993 13961 12656 10996 47477 5074 2253 1265

CRC 113676 19993 13962 12656 10996 47477 5075 2253 1264

It should also be noted that due to staging costs, the total Option 6A cost represents an additional $22,749,000 compared to Option 2 and $9,176,000 compared to Option 6.

The initial funding for the first stage of Option 6A is reflected in Option 6 (Stage 1) - referred to as Option 7 by PWC and outlined below.

Option 6 (Stage 1)

This is the first stage of Option 6 and 6A with no further stages. It has been modelled to present the outcomes should no further funding be received and the remaining stages are abandoned. This is referred to by PWC as Option 7 and is the sixth ranked option in Section 7.

The initial funding for this option is:

� Commonwealth Government $40,000,000

� State Government $57,305,500

� CRC FAA Reserve $11,000,000

� CRC Loan Facilities $30,305,000

� CRC Asset Sales $16,000,000

TOTAL $155,000,000



Option 6 (Stage 1)

154,612154,612154,612154,612 39,60839,60839,60839,608 66,31366,31366,31366,313 38,35138,35138,35138,351 9,3189,3189,3189,318 1,0231,0231,0231,023

FED 40000 39,608 392

STATE 57306 32960 19175 4659 512

CRC 57306 32961 19176 4659 511

The funding identified is in addition to contributions already made by the Queensland Government including those made to provide the agreed site.

Summary

While a detailed funding strategy has yet to be developed, it is proposed to develop this strategy and work with the State and Commonwealth Government to identify and secure additional funding required for the preferred Option 2, even if this additional funding is secured when work has started on implementing Stage 1 of Option 6.

The outcomes of the SASR can only be fully achieved through the full development of the preferred Design Concept. The best financial outcomes are achieved if these buildings are developed together. This is Option 2. However, it is unlikely that the $240m of funding is currently available. Therefore, the lowest cost option, to provide as a minimum a performing arts centre, has been developed. This is stage 1 of Option 6.

This also includes making Whites Shed acceptable as an entrance statement to the precinct and constructing a pedestrian bridge to the Convention Centre. This bridge will tie the Convention Centre to the PAC and through Whites Shed to the Cairns tourist waterfront. Therefore the CRC is seeking funding at this time from the Commonwealth and Queensland Governments for Stage 1 only of Option 6. The CRC is also only considering at this stage, meeting its obligation in relation to stage 1 of Option 6.


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The consequences of a long delay in realising stages 2 and 3 of Option 6 have been considered by PWC. As a worst case scenario it has analysed the financial consequences of stages 2 and 3 being outside the scope of this study. PWC has referred to the analysis of this scenario as Option 7.

A pre-opening and development budget of up to $7m is outlined in the report by Creative Economy to develop product; and market and launch the new PAC. $1.0M of this has been included in the Capex used in the PWC financial analysis, which is in addition to the building Capex estimates prepared by WTP.

Securing the additional support that is required to achieve a successful launch of the PAC as a major driver of additional tourism revenue to the FNQ region, will be identified as part of the BC. “Piggy backing” existing programs run by tourism, commercial and cultural organisations external to Council, is seen as a cost effective way of realising this outcome, minimising the direct cost to Council.


However, it is recognized that with the current economic restraints on all levels of Government, the only feasible option for immediate realization of this project, is the first stage of Option 6 and it is this option that will be analysed in the Business Case. An economic analysis of stages 2 and 3 of Option 6 will also be undertaken as part of the BC.

Operational Expenditure (Opex)

Operational expenditure will be funded through a variety of means including;

� Revenue generated from the CEP

� Additional funding from CRC

� Additional funding from Government.

Tables 32-35 below depict the estimated Opex funding gap for Options 2, 6, 6A and 6 (Stage 1).

Option 2 - Complete Development

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(10,450) (11,243) (11,411) (11,613) (11,855)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap ((((2,0822,0822,0822,082)))) ((((3333,,,,328328328328)))) ((((3333,,,,951951951951)))) ((((4444,,,,359359359359)))) ((((4444,,,,855855855855)))) Table 32 – CRC Budget Analysis for Option 2 Option 6 - 3 Stage development (rationalised)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(7,926) (12,828) (12,998) (13,155) (13,348)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap 442442442442 ((((4444,,,,913913913913)))) ((((5,5385,5385,5385,538)))) ((((5555,,,,901901901901)))) ((((6666,,,,348348348348)))) Table 33 – CRC Budget Analysis for Option 6


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Option 6A - 3 Stage, 10 year Development (alternate and lagged staging, rationalised)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(5,267) (8,691) (9,614) (10,681) (11,022)


(8,368) (7,915) (7,460) (7,254) (7,000)

OpexOpexOpexOpex Funding GapFunding GapFunding GapFunding Gap 3,1013,1013,1013,101 ((((776776776776)))) ((((2222,,,,154154154154)))) ((((3333,,,,427427427427)))) ((((4444,0,0,0,022222222)))) Table 34 – CRC Budget Analysis for Option 6A Option 6 (Stage 1)

FY 16

($’000)

FY 17

($’000)

FY 18

($’000)

FY 19

($’000)

FY 20

($’000)


(3,514) (9,177) (9,413) (9,631) (9,881)


(8,368) (7,915) (7,460) (7,254) (7,000)

Opex Funding GapOpex Funding GapOpex Funding GapOpex Funding Gap 4,84,84,84,854545454 (1,262)(1,262)(1,262)(1,262) ((((1111,,,,953953953953)))) ((((2222,,,,377377377377)))) ((((2222,,,,881881881881)))) Table 35 – CRC Budget Analysis for Option 6 (Stage 1) - referred to by PWC as Option 7 Once again, additional funding would need to be sourced from existing and future Local, State and Commonwealth Government funding programs to secure the balance of the Option 2, 6, 6A and 6 (Stage 1) Opex.

It is noted that the FSR is representative of a financially sustainable position for CRC and provides for future identification and allocation of funds for a range of social programs including the CEP. The FSR assumes Opex funding requirements for the PAC as detailed above. At the point in time when the FSR was prepared, it made no allowance for the provision of a museum, nor its operating costs.

8.2 Project Plan

The Project Management Plan (PMP) contains all of the relevant information about how the project is to be managed and delivered. It is a dynamic document that has been developed as part of the planning stage of the CEP project, and will be continued to be modified and updated throughout the course of the CEP project.

The purpose of the PMP is to:

� Provide an overview of the project including an outline of the major project deliverables

� Define the methodology and approach for delivering the project

� Define the scope of the project and scope management processes

� Identify success criteria and critical success factors

� Define the approved budget and management of costs

� Detail who is involved in the management of the project and what their skills, roles and responsibilities are

� Identify the project risks and risk management strategies; and

� Provide a summary record of all pertinent project information and documents that may be produced during the project.

The PMP is a controlled document and will be implemented by an external construction project manager, engaged by CRC for the management of the project. The current PMP is included at Appendix 17.


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8.3 Governance Arrangements

Governance Framework

A management framework (Figure 32) has been developed within which project decisions are made. Project governance is a critical element of any project and the existing structure provides a decision-making framework that is logical, robust and repeatable to govern delivery of the CEP by CRC. The framework provides a structured approach for CRC in conducting both business-as-usual activities and its project activities.

Figure 32 – Overarching governance Structure

PAF Management Committee

A management committee comprising CRC, AQ, and DPW meet monthly to discuss specific issues relating to the PAF process as well as broader whole of Government matters which directly relate to the CEP.

Cultural Precinct Committee (CEP Committee)

This committee has been established under the Local Government Act 2009 as a formal Standing Committee of CRC to ensure the governance of the project is transparent, publicly reported, with decision-making documented and readily available for reference by the public. The standing committee structure enables public observation of the debate and management of all project issues and to monitor the progress of the project. The Committee deals solely with the delivery of the CEP project. It receives monthly reports from the Project Control Group and as required, receives independent reports from CRC’s finance and probity auditors.

CRC has resolved that in accordance with section 257 of the Local Government Act 2009 that the CEP Committee has delegated authority to resolve matters tabled at its meeting as if it were a full meeting of CRC.

Project Control Group (PCG)

The PCG comprises representatives from CRC, Savills, and Cox. The PCG meets monthly in Cairns. Standing agenda items include;

� Project Manager’s Report

� Project Assurance Framework (PAF)

� Procurement


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� Probity

� Risk Management

� Design

� Programme

� Arts Queensland coordination matters

� Financial

Details and functions of the PCG and Project Management framework, roles and responsibilities are included within the PMP at Appendix 17.

Probity Plan

This Probity Plan (PP) sets out the principles and processes adopted by CRC in its advertising, assessment, selection and contracting of tenderers for the CEP. In its commercial dealings, the CRC will observe the highest standards of probity. CRC business must be fair, open and demonstrate the highest levels of integrity consistent with the public interest.

The key probity principles supporting all stages of the CEP are:

� Fairness and impartiality

� Use of a competitive process

� Consistency and transparency of process

� Security and confidentiality

� Identification and resolution of conflicts of interest

Adherence to probity principles also means meeting the requirements of the Local Government Act (Qld) 2009 and the CRC Code of Conduct. All employees will:

� act impartially; and

� act with integrity including avoiding real or apparent conflicts of interest

A number of key steps are identified within the PP and are to be undertaken to ensure the process is conducted with openness and fairness. Records are to be maintained throughout the process to provide sufficient information to enable audit and independent review functions to be carried out. Departure from established procedures may only be for sound and well-documented reasons. Production of documents listed within the PP is anticipated to establish that probity was achieved.

At all times throughout the selection and tender processes, Councillors, Executive and project staff, and expert consultants engaged by CRC to support the assessment process, are to take all steps to ensure that the information provided by proponents and tenderers is not disclosed to third parties, or to the public in general. Further to a competitive process Council has appointed consultants BDO (North Qld) as probity advisers to the CEP project.

The PP is included at Appendix 18.

8.4 Change Management Strategy

The fundamental driver for the change management strategy is to provide an overarching framework to manage the changes arising from the CEP and to cause CRC to proactively develop strategies and action plans to manage the impact of that change.

The following methodology will be adopted to support the change process;

� Identify and categorise changes (service, design, operational and workforce)

� Classify change (non-negotiable, controllable, unknown, and negotiable)

� Rank the impact of changes

� Review implementation timeframes

� Allocate responsibility


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� Implement and manage

The Change Management Plan (CMP) is an iterative document subject to review and change as the CEP delivery programme progresses.

A draft change management strategy has been prepared for the CEP and is included at Appendix 19.

8.5 Benefits Realisation Strategy

A benefits realisation strategy will be created to clearly show what will happen as a result of the development of the CEP, where and when the benefits will occur and who will be responsible for their delivery.

Key measures of benefits will relate to community stakeholders and cultural groups.

The strategy will also focus on establishing Key Performance Indicators (KPI’s) relating to project objectives and sustainability objectives, as detailed in this PE.

The plan will be integrated into, and coordinated with, the PMP and will clearly detail handover and responsibilities for the ongoing management and operation of the CEP.

There will also be a tracking process which monitors achievements of benefits against expectations and targets. The tracking process will be capable of tracking both “hard” (number of visitors, amount of spend, etc) and “soft” (safety, functionality, etc) benefits.

In addition, there will be evidence of realisation of actual benefits, through the tracking process.

8.6 Community engagement strategy

Effective communication and engagement has, and will continue to occur directly with local residents, Government (including; DIP, AQ, DPW, QT and PN), as well as community stakeholders as diverse as small dance groups, big business and influential local groups. All stakeholders will continue to be included and encouraged to participate in the CEP project, and learn about the opportunities it presents to them.

The overarching communication goals, both immediate and ongoing are listed below;

� To engage residents in plans for the CEP: to give them a sense of ownership and enthusiasm in the project

� To tailor specific answers to various community groups to the question: “what’s in it for me?”

� To inform individuals and groups what has happened so far on the project and what is happening now

� To inform the community about on-going project milestones as they happen

� To answer any criticism with real facts

� To identify and engage with potential ambassadors and get them positively promoting the CEP as spokespeople or ambassadors

� To ensure residents and all stakeholder groups are - and feel they are - a meaningful part of the planning process

� To gain residents’ and stakeholder feedback on how the CEP can meet their needs now and in the future

� To bridge the gap of understanding between community desire for a PAC and what is on offer from the CEP

� To consult with the community on the preferred option produced by the architectural team

� To communicate the final chosen design


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Table 36 below defines the process over the coming 12 months including the aims of each major planning phase of the CEP development. The results of this process will continue to be measured and reviewed.

TIMING AIM

Intermediate To influence and excite people by explaining what the CEP will mean to their life; outline what has happened so far; what is happening now; when they can comment and how they can familiarise themselves with the major features. Further, to outline key results of the research, and respond to feedback which showed that people see a need for new facilities but want to know more about the project and want to feel more involved – ONGOING

At completion of Masterplanning To generate excitement about the masterplans and the new facilities coming for the Cairns region, residents and visitors. - COMPLETE

Following Masterplanning consultation

To tell people the initial consultation period has ended, the feedback is now being collated and discussed with the Project Team, that any necessary changes will be made to the preferred design, and a final concept will be announced soon.- COMPLETE

When the preferred design is finalised

To showcase the final design and explain the next stage of the process.

Other milestones before end of 2011

To continue to openly communicate with the public about what’s happening, when and why. Table 36 – Communications Strategy (2011)

The Community Engagement Strategy, detailed in the attached Communications Plan is an iterative document and will be revised to accommodate the future tender, delivery and operational phases of the CEP. The Communications Plan is included at Appendix 4.

8.7 Project Resourcing

The resourcing profile for the CEP will include internal CRC staff, external consultants and contractors, as detailed below.

Internal Resourcing

CRC has a dedicated project manager for the CEP who manages and utilises the input of various CRC internal and external resources, including;

� Consultant Project Manager

� Probity Advisor

� Marketing and Communications

� Financial Services

� Legal Advisor

� Administrative and support resources

� Strategic and Town Planning

� Councillors

The CRC project manager is responsible for the planning, PAF process and delivery of the project, including preparation and distribution of all internal reports, minutes, papers to the various committees and working groups as well as the PCG and Government stakeholders.

Operational and administrative staff of the existing CCT have been, and will continue to be involved in the planning of the CEP and throughout the preparation of the SASR, this PE, BC, and during the early phases of the CEP operation. The funding of the preparation of the BC is discussed in section 9.


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External Resourcing

Together with CRC’s project manager, the consultant project manager will drive the project forward during the key approvals, tender, delivery and post construction phases incorporating additional and specific resourcing assistance as required.

The consultant project manager will be responsible for the management of the specialist consultant team. CA Cox Rayner is the only consultant engaged for the full duration of the design and construction phases of the CEP project. All other consultancy disciplines will need to be engaged progressively through the CEP project.

The existing PAF consultant team will prepare the Business Case, which will ensure consistency of document form, compliance with the PAF guidelines, and will build on the successful collaboration with Government during the SASR and PE phases.

� PAF consultant Savills Project Management

� Financial & Economic Analyses PwC

� Performing Arts Operations Creative Economy

� Museum Operations Queensland Museum

Building Contractors

Construction activities will be undertaken by a Tier One contractor. The organisational structure of the Contractor is anticipated to include a combination of senior management, design managers, construction managers, contract administrators, leading hands, site supervisors, general administration and sub-contractors

Site and Venue Management

Details of the preferred operating modes for each specific venue and anticipated scope of service requirements for site management (including carpark) are described in Section 8.9.

8.8 Quality Management

The approach to quality management for each significant development phase is described below.

Design Management

Savills’ Business Management System (BMS) comprises Quality, Environmental and Occupational Health & Safety management plans and procedures compliant with ISO9001, ISO 14001, and AS4801.

This quality framework is to be utilised to manage the design process and as a means of ensuring appropriate levels of design quality.

Periodic peer review will also be conducted for select disciplines during design development.

Construction

The level of quality required to be delivered by the successful contractor, in terms of output and process, will be monitored by the Project Manager and Superintendent as prescribed in the construction contract documents. Documentation will comprise:

� Client Brief

� Tender Documentation

� Consultant Performance Specifications

� Conditions of development consent (including referral agencies)

� Conditions of Contract.


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Operational / Management

The level of quality required during the operational and management phases will be monitored by an officer or division nominated by CRC or external contractor, as prescribed in the Management Contract documents, comprising:

� Client Brief

� Tender Documentation

� Performance Specifications

� Contractor Operational & Maintenance Manuals (including structural and other warranties).

8.9 Operating Model

This section discusses the operational models considered and preferred for the major components of the CEP, including PAC, Museum, Public Domain and CEP as a whole.

PAC Operations (preliminary)

A detailed review of four operating model options commonly used for similar facilities, including documentation of advantages and disadvantages, was undertaken by Creative Economy (CE). The four options include:

� Option 1 – Status Quo (Business Unit within CRC)

� Option 2 – Sole purpose company with CRC as sole shareholder

� Option 3 – Outsource Management of the Centre

� Option 4 – Hybrid Operation and Management involving CRC and external parties

Option 2 is the preferred operating model for the PAC. A description of this model is provided below;

“A separate entity with Government as sole shareholder is a common model for management of performing arts centres. Capital city venues tend to be operated under statutory authorities with the State Government as the shareholder. Major regional venues tend to be operated as public companies limited by guarantee or private companies with Council as the sole shareholder. A foundation and trust are often established alongside these entities for philanthropic purposes.”

Key advantages and disadvantages of this model are described in Table 37 below;

ADVANTAGES DISADVANTAGES

� Ownership of management entity by CRC � Establishment costs of separate entity

� Alignment of facility and management ownership � Change management required from existing operations

� Management company bears risk and liabilities � Termination, redeployment or transitional arrangements such as work conditions payout may be needed for existing Cairns Civic Theatre staff

� Broader expertise and skills base through independent directors

� Independent financial management to drive efficiency

� Flexible employment costs and savings passed to clients and CRC

� Lower employment costs and savings passed to clients and CRC

� Benefits of CRC procurement when there are cost advantages

� Balance of community and entrepreneurial activity Table 37 – PAC Operating Model Further review of operating models will be undertaken during the preparation of the BC. The full CE report is included at Appendix 10.


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Museum Operations

The current proposed model (as reflected in PWC financial modelling) is as follows;

� The museum is owned by Council but is operated by the Museum Operator

� Associated museum retail/cafe space is leased to third-parties

� Ongoing operating (incl. outgoings) and maintenance costs are met by the Museum Operator, and the third-parties for the retail/cafe space

� Renewals maintenance costs are met by Council as facility owner

� Museum revenues (admission fees etc) are retained by the Museum Operator

� The Museum Operator pays a 'contribution' to Council for use of the facility (akin to lease amount) - this is set as the depreciation expense of the facility

� Council receives rental income from the retail/cafe spaces

Further review of this option and alternate structures will be undertaken during the preparation of the BC.

The complete QM Report is included at Appendix 20.

Public Domain Management

It is recommended that a site management resource will be present to attend to general maintenance duties (outside of building contractor warranty requirements), to facilitate the rectification of site maintenance issues and to coordinate regular maintenance activities to landscaping, the building envelope and building services.

Additional duties may include those listed below, subject to review of building management and facilities management scope of works.

� Facilities Management

� Maintenance Planning & Management

� Budget Preparation (Capex, R&M & Non Routine)

� Building Operations and Supervision

� New Building Handover and Set-Up

� Occupational Health and Safety

� OH&S Compliance Management and Audits

� Hazard Identification and Risk Assessments

� Indoor Air Quality Surveys

� Contractor Inductions and Management

� Energy

� Energy Management

� Energy Audits

� Benchmarking

� Compliance

� Building Code of Australia Audits

� Essential Safety Measures Management

� Emergency Evacuation Plans

� Cooling Tower Management

� Environmental

� Ecological Sustainable Development Management

� Sustainable Asset Management Plans

� Environmental Compliance Management

� Energy and Water Conservation Plans

� Consulting

� Pre-Purchase / Condition & Dilapidation Reports

� Life Cycle Costing Analysis

� Specification / Tender Preparation and Contract Procurement

� Equipment Failure Investigations and Correction

� Asset Registers

� Engineering / Building Services Project Management

� Vertical Transportation Audits and Consultancy

� Emergency and Business Contingency Plans

� Office and Retail Fit out Management


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Carpark

The carpark has been modelled to be operated by an external management firm This would typically involve the installation of ticketing and auto-pay machines on site to manage entry and exit security, with the majority of issues resolvable at the intercom via an external monitoring control room. This minimises the need for site based carpark management staff.

A formal EOI and RFT process would be undertaken closer to the opening date of the CEP to source a carpark operator with the required attributes for the development, the site-wide operational models and CRC.

Further consideration of this model and a Council operated carpark model will be undertaken during preparation of the BC.


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9.0 Business Case Development

The intent of this final section of the PE is to provide advance detail relating to the programme, approach, resourcing and budget for the development of the Business Case (BC) stage of the PAF.

9.1. Programme and Approach

The development of the BC will be an iterative and consultative process undertaken in a similar manner to the SASR and PE, involving all key stakeholders including; DPW, AQ, Treasury, DIP, and CRC. The key dates for the development of the BC are as follows;

Action Date

� Submit PE to AQ 22 August 2011

� CBRC Endorse PE 26 September 2011

� Commence BC 23 August 2011

� Draft BC to AQ 21 October 2011

� AQ Submit BC to CBRC 14 November 2011

� CBRC Endorse BC 5 December 2011 Table 38 – BC Programme The complete programme is included at Appendix 1.

9.2. Resourcing

The existing PAF consultant team will prepare the Business Case, which will ensure consistency of document form, compliance with the PAF guidelines, and will build on the successful collaboration with Government during the SASR and PE phases.

� PAF consultant Savills Project Management

� Financial & Economic Analyses PwC

� Performing Arts Operations Creative Economy

Additional consultants will be engaged to perform discrete services, as required.

9.3. Skills and Capabilities

All consultants have the necessary skills, competence and specific experience to prepare the BC, compliant with PAF guidelines.

9.4. Budget

The total consultant budget for the CEP (based on preferred Option 2) is $23,853,310 excluding GST, which is inclusive of $2,500,000 for the PAF process.

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Appendices

Appendix 1Appendix 1Appendix 1Appendix 1 ProgrammeProgrammeProgrammeProgramme

Appendix 2Appendix 2Appendix 2Appendix 2 PE Comparison Tables PE Comparison Tables PE Comparison Tables PE Comparison Tables

Appendix 3Appendix 3Appendix 3Appendix 3 Concept Design ReportConcept Design ReportConcept Design ReportConcept Design Report

Appendix 4Appendix 4Appendix 4Appendix 4 Community Engagement Strategy (Community Engagement Strategy (Community Engagement Strategy (Community Engagement Strategy (Communications PlanCommunications PlanCommunications PlanCommunications Plan))))

Appendix 5Appendix 5Appendix 5Appendix 5 Government Policy Alignment Government Policy Alignment Government Policy Alignment Government Policy Alignment

Appendix 6Appendix 6Appendix 6Appendix 6 Preliminary Client Project BriefPreliminary Client Project BriefPreliminary Client Project BriefPreliminary Client Project Brief

Appendix Appendix Appendix Appendix 7777 Masterplan Options ReportMasterplan Options ReportMasterplan Options ReportMasterplan Options Report

Appendix 8Appendix 8Appendix 8Appendix 8 SASR (Excluding Appendices)SASR (Excluding Appendices)SASR (Excluding Appendices)SASR (Excluding Appendices)

Appendix 9Appendix 9Appendix 9Appendix 9 Market Sounding ReportMarket Sounding ReportMarket Sounding ReportMarket Sounding Report

Appendix 10Appendix 10Appendix 10Appendix 10 Performing Arts Centre AnalysisPerforming Arts Centre AnalysisPerforming Arts Centre AnalysisPerforming Arts Centre Analysis

Appendix 11Appendix 11Appendix 11Appendix 11 Urbis Planning AdviceUrbis Planning AdviceUrbis Planning AdviceUrbis Planning Advice

Appendix 12Appendix 12Appendix 12Appendix 12 Options Analysis (Ex. EA&FA)Options Analysis (Ex. EA&FA)Options Analysis (Ex. EA&FA)Options Analysis (Ex. EA&FA)

Appendix 13Appendix 13Appendix 13Appendix 13 Procurement StrategyProcurement StrategyProcurement StrategyProcurement Strategy

AppAppAppAppendix 14endix 14endix 14endix 14 Risk Management PlanRisk Management PlanRisk Management PlanRisk Management Plan

Appendix 15Appendix 15Appendix 15Appendix 15 Financial & Economic Financial & Economic Financial & Economic Financial & Economic AppraisalAppraisalAppraisalAppraisal

Appendix 16Appendix 16Appendix 16Appendix 16 Options Cost EstimatesOptions Cost EstimatesOptions Cost EstimatesOptions Cost Estimates

Appendix 17Appendix 17Appendix 17Appendix 17 Project Management PlanProject Management PlanProject Management PlanProject Management Plan

Appendix 18Appendix 18Appendix 18Appendix 18 Probity PlanProbity PlanProbity PlanProbity Plan

Appendix 19Appendix 19Appendix 19Appendix 19 Change Management Plan Change Management Plan Change Management Plan Change Management Plan

Appendix 20Appendix 20Appendix 20Appendix 20 Museum Operations AnalysisMuseum Operations AnalysisMuseum Operations AnalysisMuseum Operations Analysis

Appendix 21Appendix 21Appendix 21Appendix 21 CRC Budget Analysis CRC Budget Analysis CRC Budget Analysis CRC Budget Analysis –––– Options 2, 6 and 7Options 2, 6 and 7Options 2, 6 and 7Options 2, 6 and 7

preliminary evaluation -...

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