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  • 1. REVIEWDavis Langdon Ireland Annual Review 2012
  • 2. AECOM’s global capabilities:ArchitectureBuilding EngineeringConstruction ServicesDesign + PlanningEconomicsEnergyEnvironmentGovernmentMiningOil + GasProgram, Cost, ConsultancyProgram ManagementTransportationWaterWith approximately 45,000employees around the world,AECOM serves clients in morethan 130 countries.
  • 3. ContentsINTRODUCTION 1 BUSINESS INTELLIGENCE 20 Pat Gunne, Green PropertyOVERVIEW 2 Bill Nowlan, W.K. NowlanMedium Term Outlook Maurice Mortell, TelecityConstruction Costs & Tender Prices Donal Murphy, Bank of IrelandWhere now for the Public Sector?NAMA: Is the bottom line everything? GEOGRAPHIES 26 Island of IrelandSECTOR DEVELOPMENTS 8 UKPublic Global MarketsCommercialRetail TECHNICAL DATA 38Residential Indicative Building CostsHotels, Sports & Culture Performance Bond ChecklistInfrastructure & Industry Project Planning Checklist Development Budget DriverINDUSTRY DEVELOPMENTS 14Alternative Funding Sources for the DAVIS LANGDON NEWS 44Property Industry PromotionsWork Outs by Asset Managers Public Sector WorkshopRepair & Maintenance Examples of Recently Completed ProjectsAbnormally Low Tenders DAVIS LANGDON PEOPLE 46
  • 4. Introduction Paul Mitchell Director Head of Office – IrelandWe are delighted to welcome you as getting its just comeuppance for the Some of the ideas or conceptsto this year’s Annual Review of the fallout of the boom. We currently have mentioned above are tried and trustedconstruction industry. We have included an industry that has had 50% of its mechanisms used in the delivery ofa wide range of commentary and top ten contractors become insolvent projects in other jurisdictions andanalysis on the Irish construction since 2007, some remaining contractors solve a real need in delivering criticalindustry, looking at each of the sectors choosing not to bid for certain public infrastructure. We need a champion atand recent industry developments, work due to the cost of procurement the highest levels within governmentplus our colleagues give an update on and risks associated with the public who will work towards delivering awhat’s happening in the global markets. works contract (even in this market!) sustainable construction industry.We have also included a business and ongoing sub-contractor insolvency/intelligence section which features a liquidity issues. Consultancy practices On the brighter side we have seen thenumber of interviews with prominent are experiencing similar difficulties. positive effects of the Foreign Directindustry figures who give us their Some ideas that the Government could Investment secured by the Industrialthoughts on their sectors and areas of consider include: Development Agency (IDA) Ireland,expertise. etc. Also, the recent announcement The easy wins: by National Asset ManagementWhilst on a global level construction - Introduce Procurement Passports Agency (NAMA) to inject €2 billion intooutput is stable, if somewhat stagnated - Review handcuffs of Circular 10/10 construction over a four year periodin the short term, our domestic - Procure projects with committed to complete construction projectsmarket has continued its decline funding and address the shortfall in supplyalbeit at a slower rate. Our estimate - Alter award criteria to deter below of appropriate space is extremelyof construction output for 2012 is cost tenders welcome. This represents a 6% per€7.75 billion, down 9% on last year annum (p.a.) increase in constructioncompared to a reduction of 27% the More difficult but achievable: output if it is delivered. We have alsoprevious year. So, the good news is that - Prioritise labour intensive projects seen some of the large funds enter thethe contraction is slowing; the bad - Deliver the capital programme market with purchases such as Onenews is that the market is operating - Review the Capital Works Warrington Place which is a real sign ofat a completely unsustainable level. Management Framework (CWMF) by confidence and stability.In our overview section we show, even including partnering type contract.with an optimistic 15% year-on-year - Bring the Real Estate Investments We hope you enjoy the read and wouldgrowth from 2014, it could take until Trust (REIT) legislation into law like to take this opportunity to thank2020 to reach the optimum level of all our clients and colleagues for youroutput required for a proper functioning Leadership required; continued support during the yearindustry. - Stimulus Package, e.g. healthcare and look forward to providing more focused business solutions to you in the comingIn last year’s review we called for - Encourage Pension Funds into year.leadership from the Government in market, e.g. Student Accommodation,terms of supporting the construction Social housing Paul Mitchellindustry and acknowledging the - Promote Qualifying Investor Funds crucial role that the construction (QIF’s) in funding property & sector plays in the economy. We were construction programmes, e.g. not alone in our call but apart from primary care centressome behind-the-scene meetings and - Consider Project Bonds to deliver various gestures, there has been little infrastructure, e.g. Broadband and Director, Head of Office – Irelandor no action. It would appear that the Power paul.mitchell@davislangdon.comconstruction sector continues to be - Engage with the Professional viewed in the negative context of the Bodies to generate workable property industry and somehow seen solutions Introduction | 1
  • 5. The Model Arts and Niland Gallery, Sligo.(image courtesy of Paul Tierney Photography) ConsultantsOverview
  • 6. The aftershocks of the financialcrisis continue to dominate theframing of the Exchequer budgetsand domestic demand generally.The last 12 months have certainly Medium Term Outlook levels which are unsustainable even inbeen less “eventful” than the previous Of course what happened yesterday is the short term. We believe there is ancouple of years in terms of economic of relatively little importance compared urgent need to re-visit the strategy inshocks and financial upheavals. The to what happens tomorrow. In this this regard and as we highlight in thefact that we haven’t had any further regard the publication of the public following opinion piece the economysignificant banking debt added to capital expenditure plans in the annual needs an increase in investment inthe already seismic burden or had budget is always keenly awaited. social and productive infrastructure tothe need to introduce mini-budgets As has been the trend for the last provide both increased attractivenessmid-year could be seen as a sense of number of years, the December 2011 to business and to act as a stimulus tostability returning to the economy — if Budget included a multi-annual Public general economic growth levels whichyou take the glass half full approach Capital Programme (PCP) extending out are struggling to stay out of recessionto economics. Certainly we feel that to 2016 (see Table 1). territory.it is imperative that everyone takesthe glass half full approach, however, Unfortunately, the past experience of The construction industry has beenalways remaining mindful of the such multi-annual capital programmes existing on a virtual treadmill forbaseline we are measuring against. has been their propensity to vary the last four years with the resultThat baseline has been tracking very radically as opposed to their reliability that whilst we have not progressed,low since the sheer drop experienced in terms of not changing. Of course this everyone still standing is leaner andin 2008 and the aftershocks of the very characteristic of change could be fitter. The reality is that the race isfinancial crisis continue to dominate used as precedent to instigate positive probably only half run, and with thethe framing of the Exchequer budgets change to the “programme” laid out for passing of the fiscal compact in theand domestic demand generally. the next three years. The PCP for 2013 medium term the requirements of the represents a further 14% reduction (in troika programme and/or the marketsIn addition, as a small open economy, value terms) on that approved for 2012 will demand that public spending willwe are significantly impacted by and this would further reduce output continue to be sharply restrained. Weactivity levels in foreign markets and in in the construction industry below will be reliant on a boost in Foreignparticular Europe. The last 12 monthshave been plagued by the neverending string of crisis summits at the Public Capital Programme - Direct Exchequer Capital Funding €MEuropean level which have furtherunsettled confidence, notwithstanding 2012 2013 2014 2015 2016 2012 - 2016the weakening of the Euro having Transport, Tourism & Sport 1,231 900 879 818 818 4,646some positive impacts in terms of (mostly road maintenance) making our exports more competitivein global markets. Environment, Community 861 726 575 574 574 3,310 & Local Government Jobs, Enterprise & Innovation 514 458 457 454 451 2,334 Education & Skills 430 415 475 475 415 2,210 Health 390 390 390 390 390 1,950 Other 509 484 477 542 605 2,617 TOTAL 3,935 3,373 3,253 3,253 3,253 17,067 TABLE 1 : MULTI-ANNUAL CAPITAL INVESTMENT FRAMEWORK 2012-2016 Overview | 3
  • 7. Tomás KellyRegional DirectorMedium Term OutlookDirect Investment (FDI) and indigenous Figure 1: Construction Output Scenario Trackerexport companies, which we appear to 40,000 Optimumbe seeing the beginnings of, to mitigate 35,000 Construction Outputthe reductions elsewhere in the private (Based on 12% ofsector. We expect output levels to 30,000 GNP) €’000’sbottom out in 2013 before showing low 25,000 Constructionsingle digit growth in 2014 onwards. 20,000 Output €’000’s 15,000 ConstructionThere is a real danger of a skills Output 10,000shortage materializing across a number (Scenario A 10%of the key craftsmen and professional 5,000 p.a. growth) €’000’sgroups. Construction 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Output (Scenario B 15%“To illustrate the long path to recovery p.a. growth) €’000’sfacing the construction industry,Figure 1 shows the sustainable levelof output for the industry (based on TABLE 2 : Construction Output Projections (e) Estimated (f) ForecastThe Society of Chartered SurveyorsIreland (SCSI) Report stating 12% ofGross National Product) based on 2% Construction Output €m €m €mGNP growth and for the purposes of 2011 2012(e) 2013(f)the example two scenarios of 10% perannum and 15% per annum growth CENTRAL BANK 8,822 7,862 7,426in construction output. We know from Tender Prices % -1.10 —experience that the growth/declinerates of construction output are Volume Change % -9.90 -5.50cyclical but even with these ambitious SCSI 8,684 7,448 6,956growth examples it would be 2020or 2023 before the sustainable Tender Prices % — — level would be reached. In respect Volume Change % -14.50 -6.60of our output projections in Table 2, DAVIS LANGDON 8,500 7,755 7,827there are inevitably downside riskshowever, hopefully the recent NAMA Tender Prices % 3.00 3.00announcement of investment of €2 Volume Change % -11.40 -2.00billion over the next four years will go some way to insulating against such industry and those of other services and it didn’t seem to matterrisks. As a measure of the significance commentarys in the industry. too much as people’s incomes wereof this NAMA announcement, if the €2 rising similarly.billion is spread evenly over the four Construction Costs &years the €500 million in 2013, would Tender Prices Needless to say the adjustment hasbe equivalent to the proposed reduction Increased competitiveness was a much been sharp and none more so thanin the Public Capital Programme.” sought after aspiration during the later in the construction industry, however part of the Celtic Tiger period and with in common with other sectors theTable 2 outlines a summary of our some justification as everyone had cost base has been less elastic thanprojections for the construction got used to paying more for goods and prices. Tender prices saw a cumulative4 | Overview
  • 8. National University of Ireland, Galway - New Engineering Building, Galway. (image courtesy of Neil Warner Photography)
  • 9. It is not only consultants and contractors that findpublic projects tough going. Individuals within publicbodies have been faced with their own range ofchallenges, including a moratorium on recruitment,non-renewal of fixed term contract staff, earlyretirements, re-deployments, being forced to acceptbelow cost tendering and decentralisation.37.5% drop between 2007 and 2010 increase at modest levels of on average level of €3.3 billion per annum. Howeverinclusive whereas official statistics circa 3% p.a. in 2012 and similar to consultants and contractors it iswould indicate that costs have been modest increases in 2013, with the seen as an extremely challenginglargely static (and in some instances cautionary note that the industry may environment to do business in.increasing) in the same period. Of experience a shortage of competitioncourse, labour costs have in reality in certain sectors and in particular for Some of the key reasons for this are:dropped further through a combination high value contracts.of salary cuts and reduced overtime 1. Cost of Procurement procedures payments, etc. The announcement Where now for the Public and Tenderingin June 2010 and implementation in Sector? 2. Cost focus of tender process February 2011 of the 7.5% reduction Davis Langdon, an AECOM company’s leading to “race to the bottom”in Registered Employment Agreement estimate of the construction industrywage rates was indicated as a in 2012 is €7.75 billion as compared 3. Risk transferstemporary measure to be reviewed thus to an output in 2011 of €8.5 billion.we would expect murmurings of such The recent SCSI Construction Industry 4. Cost incurred on cancelled projectsa review to emerge in the second half report (prepared by DKM Economic 5. Resources & Skills deficit in public of 2012 with arguments on both sides Consultants) has identified that a sector clients(unions and employers) for upward and sustainable level of constructiondownward movements respectively. output in a mature economy should be It is not only consultants and circa 12% of GNP (or 10% of GDP). contractors that find public projectsOn the materials side, the continuing tough going. Individuals within publicincreasing energy costs, growing Based on GNP of €129 billion/GDP bodies have been faced with theirdemand in developing countries and of €161 billion in 2011 a sustainable own range of challenges, includingweakness in the Euro will keep upward level of output would be in circa € a moratorium on recruitment, non-pressure on imports in particular. 16 billion. This is over double the renewal of fixed term contract staff, current projected output. So the real early retirements, re-deployments andIn summary, we would anticipate question is, in a number of years when decentralisation.construction costs of circa +2% in 2012 (hopefully) stability and a sustainableand +2.5% in 2013. output level returns to the market, what Whilst the number of projects has sort of construction industry will we diminished, the workload on eachIn terms of tender prices, after the have in Ireland? project has increased due to thesharp decline referred to above, 2011 challenges of the economic climatesaw some stability return to the The current industry is characterised and the new procedures and contractsmarket and we recorded an average by uncertainty, insolvency, below cost introduced through the Capital Works3% increase. We would see this return tendering and conflict. This, combined Management Framework. Theseto tender price increases more a with the massive reduction in output, procedures have been introduced withcorrection of prices having overshot any has resulted in a collapse in morale in little training and are subject to change.possible reduction in costs, rather than the industry and a wide-spread skills The introduction of the Departmentthe restoration of profits in 2011. drain, both from the industry and the of Finance Circular 10/10, whilst well country. intentioned, placed another regulatoryWhilst we continue to see tenders being burden on project and procurementsubmitted which could be considered The Multi Annual Capital Investment managers in the public sector.“potentially abnormally low,” their Framework (MACIF) (see Table 1prevalence is reducing. We would on page 3), shows a stable level of The net effect of all these issues isanticipate tender prices to continue to spending over the next four years at a that the area of the Irish construction6 | Overview
  • 10. National Gallery of Ireland, Shaw Room, Dublin.industry that one would expect to price, before embarking on fundingbe the most stable is a very difficult construction projects.place to do business in. The fear is thatdynamic and innovative players in Irish However, NAMA has played some roleconstruction industry will tire of the in getting projects moving, whetherchallenges of public sector projects through supporting the borrowers inand will turn their focus to emerging completing housing schemes, providingelements of the private sector such staple finance to schemes beingas the Foreign Direct Investment (FDI) purchased by investors or completionmarket or growth markets overseas. of schemes using receivers.The potential knock-on effect ofthis would be to leave public sector The previous 12 months have probablyconstruction projects in a place been the most productive in actualcharacterised by confrontation, poor delivery of the individual businessperformance and the associated plan objectives leading to a number ofchallenges to successful delivery of distressed asset disposals that requiregood projects. We are already seeing construction activity during theirexamples of this on the ground. workout phase, albeit not amounting to any appreciable turnover.NAMA: Is the bottom lineeverything? NAMA have approved working andThey certainly have had a busy year. development capital advances ofIn last year’s annual review published €1.1 billion of which €506 millionJune 2011, the focus was on completing relates to Ireland. This expenditurethe transfer of the loans. However, is being advanced through its debtorthe intervening period has seen NAMA companies, i.e. borrowers whose loansmake significant strides in the area of have been deemed eligible and haveenforcement. been transferred to the group.In July, NAMA published a list of 847 In 2012/13 the best prospect one can 1200properties which were in receivership hope for from NAMA in relation to what 1,169 1,119or administration, a number which it can do for the construction industry 1000 1,093 1,040steadily rose throughout the year to is the disposal of assets/sites that 800 8871,169 at the end of March 2012 (see are in demand, e.g. incomplete office 847Figure 2). blocks with ready to go end users/ 600 tenants, unfinished semi-detached, 400NAMA have stated that it has housing schemes that are in demand,completed its loan evaluation of etc. Obviously, the successful entry of 200business plans covering 97% of the these schemes to market is dependentloans on its balance sheet as at the end on the right purchase price as opposed 0 Jul 11 Aug11 Nov11 Dec11 Feb 11 Mar12of March 2012. to any other factor. However, given the demand for offices, for example, from Figure 2:So what does all this mean for the multi-nationals and the limited amount Properties in receivership/administrationconstruction industry? Obviously of suitable stock in the appropriateone of the stated objectives of NAMA areas, it is likely that this year will beis to dispose of assets, at the right more fruitful than the last. Overview | 7
  • 11. The National Gallery of Ireland, Milltown Wing, Dublin. ExpertSectorDevelopments
  • 12. Across all sectors, the key trendhas been the reduction in thecontract values of projects inrecent years.Last year we highlighted the seismic Figure 3: Estimated Sector Breakdown of Construction Industry 2012shift in the construction industry (SCSI/Davis Langdon Estimates)output over the five year period from2006 to 2011. Namely the collapse Industry (6%)of the residential sector and the Commercial (5%)return of the public sector civil and Other Private Non-National (2%)general building programme to being Education (6%)the primary source of output. Not Health (4%)surprisingly then there has been a Energy (13%)sharp focus on movements in thatprogramme which we will review in our Roads (10%)sector review. Water & Sanitary Services (8%) Transport (3%)Last year we also signalled the Telecommunication (2%)emergence of encouraging signs in the Other public Non-Residential (3%)Irish export market as well as Foreign Residential (38%)Direct Investment (FDI) sectors, andthankfully these early signs appear to allocation. Figure 4 illustrates thebe bearing fruit. departmental allocations and the One of the difficulties being percentage adjustment in 2011. experienced in the first half of 2012Across all the sectors, the key trend has been the slow progression of publichas been the reduction in the contract (For further details of Budget 2012 sector projects. There have been avalues of projects; reflecting both the Public Capital Programme please number of reasons, however, the twodecrease in tender prices in the last contact Tomás Kelly at tomas.kelly@ most prevalent relate to the area ofnumber of years combined with the davislangdon.com ) public procurement.reduced scope of works being carriedout. Figure 2 illustrates the sector Figure 4 : Public Capital Programme Budget Direct Exchequer Funding 2011 & 2012breakdown of the industry output in €m 10%2012. 1600 0%Public 1400 -10%The Government announced the broad 1200parameters of their 2012 Public Capital 1000 -20%Programme when they published their -30%Infrastructure and Capital Investment 8002012-2016 document in November 600 -40%2011 and further detail and breakdown 400 -50%was provided in the budget lastDecember. 200 -60% 0 -70%The Multi Annual Capital Investment Environment, Communications, Transport Tourism and Sport Community & Local Government Jobs, Enterprise & Innovation Education & Skills Health Agriculture , Food & Marine Energy & Natural Resources OPW OtherFramework (MACIF) 2012 provisionshowed a 16% drop on the 2011 figures Percentage changewhich has meant every department Output 2011has seen a reduction in their capital Output 2012 Sector Developments | 9
  • 13. Telecity Datacentre, Dublin. JFK Primary School, Limerick.10 | Sector Developments
  • 14. John O’Regan Anthony McDermott Mark SmithDirector Regional Director AssociatePublic Commercial RetailFirstly, there appeared to be a the commercial office fit-out sector From a retailers perspective, thesignificant slowdown in the number of was still reasonably active in 2011. Government’s decision not to proceedetender contract notices in 2011 and with legislation in relation to Upwardthe second half in particular. Due to Activity in the commercial office sector Only Rent Reviews combined with thethe long sequence of events required is looking steady for 2012. Take up increase in the Value Added Tax (VAT)from notice placement, procuring is down for the 1st quarter of 2012 rate has created much angst and aconsultants, obtaining statutory compared to the first quarter of 2011 viewpoint that it will be later ratherconsents and advertising and tendering but this is mainly due to prolonged than sooner for the retail market as amain contract works, any interruption negotiations, the “one off” Montreveto whole to improve.to this cycle is likely to slow down the take up (45,000 square feet) last yearcapital programme. and some businesses looking to curtail Murmurs of planning reform in relation expansion until the economic climate to the current retail size cap to allowThe other factor has been the improves. companies considering large operatingincreasing duration required in store’s such as Wal-Mart and Costcothe tender evaluation phase. This Demand for office space in Dublin is or even Tesco-Extra stores have beenhas arisen for a number of reasons actually up 70% for the first quarter of aired in documents about Ireland’sincluding: 2012. Tenant activity has seen the likes Budgetary and Reform Plans sent to of Google, Central Bank, BNY Mellon, German parliamentary committees.- the prevalence of very low tenders Capita, Goodbody Stockbrokers all requiring greater analysis and looking for office accommodation. However, seeds of optimism can clarification; be seen and for certain retailers, There has also been some office take expansion plans have and are being- on lower value projects the up outside of the Dublin area such as drawn presently. New entrants have shift towards Most Economically PayPal and Prometrics in Dundalk and come into the market or are looking Advantageous Tenders (MEAT) Hewlett Packard in Galway. at entering the market, most notably as opposed to lowest price Banana Republic have been reported (notwithstanding the benefits of There should be continued office fit-out as targeting a larger store on the same) activity in the coming year largely due top of Grafton Street. New franchise- increased number of challenges to FDI announcements. stores have opened such as Eason’s to the procurement process from opening new franchise stores in unsuccessful tenderers In terms of new build office Mullingar, Balbriggan, Kilkenny and developments there is little or no Carlow and AIM, the franchise operatorFrom the construction industry activity nor is there any foreseen for the of Iceland, opening new store’s inperspective, and the wider economy, it next six months at least. One significant Coolock, Clonmel, Ashbourne andis essential that these obstacles are new build development going ahead Carlow, plus other retailers mainly inminimised to ensure value for money is to the design stage is the high-profile the pharmaceutical, food and discountachieved and most importantly that the Central Bank offices in Dublin. sectors pushing expansion and re-economic impact of this investment location strategies.in terms of jobs and stimulus is Retailmaximised. The Irish Retail Market is still very For new entrants and existing retailers, challenging with a number of high- the availability of favourable terms withCommercial profile closures in the first six months regards to rent free periods, period ofAlthough 2011 was another tough year of 2012. lease and rent and/or in certain cases,economically for the property market, the build cost for certain retailers who Sector Developments | 11
  • 15. Andrew Thompson, Eoin DunphyAssociate, Residential, Associate, Data CentresHotels, Sport & Cultureprefer to own their own properties are Again, we would anticipate that most The redevelopment of Pairc Ui Chaoimhproviding the impetus for potential of the existing overhang of housing is unfortunately the only real significantmarket expansion. stock will be first in the shopping list project on a national scale to progress. for local authorities, however, some With limited public funding availableResidential limited public residential developments (€30 million announced recently forIt was another tough year for the will proceed, most notably those in the the “Sports Capital Programme”)residential sector in 2011. In our 2011 regeneration areas such as the north the likelihood of any real significantReview, we projected house completion and south side of Limerick city. projects moving in either the private orunits for both the private and public public sector is slim. Some works willsectors to be 10,000 units. Department also commence at the National Sportsof Environment, Community & Local Hotels, Sports & Culture Campus at Abbotstown.Government statistics show that Continued pressure in these sectors10,480 units were completed for both seems to be the common theme in Culture Sectorthe Private and Public sectors. This is recent years. Whilst there may be some In general, the outlook for the culturea drop of circa. 28% on the 2010 figure small movements in the sports sector, sector in 2012 is for little or no growth.of 14,602 units. Projecting forward for there will be even less in the culture The recent budget shows reductions2012 we would anticipate between sector and the hotel sector not realising in Government spending in this sector5,000 and 7,500 units to be completed. any increase in construction activity. with forecasts of circa €44 million to be given to the Department of Arts,Private Sector Hotel Sector Heritage & Gaeltacht, circa €100Current growth is again being restricted It is worth reminding ourselves that in million going to the Office of Publicby weak consumer demand, unstable 2004 there were circa 48,000 bedrooms Works (OPW) and circa €21 millioneconomic status and the uncertainty but by 2008 there were circa 64,000 — going to tourism. Of this combined totalregarding the availability of finance a 34% increase in capacity to match a of €165 million it remains to be seenand also future capital values. With the demand that rose by just 12-13%. how much will be released into culturalcurrent supply overhang of available type construction projects.units both completed and near With the existing room supplycompleted, it is unlikely to be much outstripping demand, there is unlikelymovement here although in certain to be any real movement in newareas of the Capital, 3 and 4 bed semi- development in this sector in 2012, anddetached houses are in demand. we may in fact witness some partially completed works being demolished.Public Sector One of the eagerly awaited hotels inThe net housing need figure at present Dublin that is scheduled for completionshows that 98,318 households were in early next year is The Marker Hotel inneed of social housing support at 31st the Dublin Docklands.March 2011. Sports Sector 2011 saw the completion of some interesting projects in this sector, including the iconic UCD Student Learning, Leisure and Sports Complex and the University of Limerick Pavilion and Outdoor Synthetic Pitches project with four full-size, fully floodlit pitches.12 | Sector Developments
  • 16. University College Dublin - Student Learning, Leisure & Sports Facility, Dublin. (image courtesy of Donal Murphy Photography)Infrastructure & Industry data centre industry which has seen Multinational global businesses areThe outlook for the civil sector is a phenomenal growth over the past five reviewing strategies and looking forcase of contrasting fortunes — on years throughout Ireland and Europe. growth opportunities from varyingthe one hand roads and rail having The attractive climactic conditions for geographies’ through foreign directdelivered a national motorway optimizing free cooling low seismic investments. The companies thatnetwork and significant investment activity, and sufficient Electricity embark on such initiatives face andin the greater Dublin area with the Supply Board (ESB) supply has helped have to deal with many complex andLUAS respectively, would appear to to guarantee this region as one of the local issues on an ongoing basis.be destined for a number of years of main the areas of choice for long-termsignificantly reduced expenditure. On data centre development. The pharmaceutical sector has shownthe other hand, with the advent of the strong investment in Ireland forgovernment policy on the introduction The challenge for data centre 2012, with companies such as Mylan,of water charges and the establishment developers now is how to keep up with Allergan, Amgen and Eli Lilly, to nameof Irish Water, significant investment the insatiable customer demand for but a few, that are either currentlyshould be made. We are also likely to space and ensure that your business is or planning to invest heavily in theirsee strong investment in the energy ahead of the pack in securing those all operations for 2012. AECOM has asector. important resources required to deliver proven track record in this sector on that demand, whether that be the globally and is expanding its presenceIn terms of industry, as flagged earlier, expertise or the relevant technologies. in this sector in Ireland as well as2012 has seen a renewed stream With time as the driver, data centre maintaining its service with currentof development from indigenous clients need teams that have the Irish pharmaceutical companies.manufacturers performing strongly in proven expertise and track recordsthe export markets and foreign direct in delivering programs in multipleinvestment inflows. This of course is locations concurrently using tried andextremely welcome and a sign that our tested low cost models which meet thecompetitiveness has improved against highest standards.that of some of our competitors.One specific example would be the Sector Developments | 13
  • 17. IndustryDevelopments ProfessionalUniversity College Dublin - Student Learning, Leisure & Sports Facility, Dublin.(image courtesy of Donal Murphy Photography)
  • 18. One of the features of the industry from aclient and consultant perspective in the lastcouple of years, and likely to continue in themedium term, has been the level of activityaside from actual construction works.Every year sees the list of industry Alternative funding sources for not pay tax within the company andissues dominating the agenda change the Property Industry therefore avoids double taxation. Itand evolve as the participants, clients, The primary sources of property must pay out a high proportion (90%consultants and contractors grapple finance are well known and include: in the UK) of its property income towith the challenges of the day. In its shareholders. It works through2011, we looked at subjects such - Private equity, buying shares in a listed propertyas The Capital Works Management - Short-term and long-term finance company that has elected for REITFramework (CWMF), NAMA, Insurance from financial institutions, status and operates in accordanceValuations, etc. - State funding, with REIT regulations. These - Institutional investors, e.g. pension regulations are intended to ensureThis year we summarise a cross funds. the company is primarily engaged insection of some of the key industry property investment, rather than indevelopments that have been the We know that private equity is scarce, development.subject of much discussion and/or debt finance is not available at themarket change this year. levels required, state funding is on the The Government has stated that they decline and that institutional investors will introduce the legislation and it are eager but cautious. Where once is expected imminently. There are we could depend on a significant currently over 20 REITs in the UK, development finance package with a including household names from small amount of equity all wrapped Hammerson to Land Securities with together in a suitably “geared” package, a total market cap in excess of €25 we now know that this is no longer an billion. So, how would REITs help in an option. Irish context? Firstly, Nama could avail of it and transfer some of its €31 billion So, is it just a matter of adjusting the loan book into a REIT for investors. ingredients and changing the recipe? NAMA has recently stated that this Do we have the right ingredients, or would be an attractive option for them, indeed, enough of them? Recent new should the legislation be passed. (and improved) recipes being explored recently include: Secondly, the current international investors who are seeking to purchase - Real Estate Investment Trust (REIT) assets in the Irish market, could - Equity partnerships/Private Rental avail of a transparent and regulated Sector (PRS) investment vehicle that would be - Project bonds professionally managed and generate a return for their investment. This Real Estate Investment Trust would have the effect of restoring the (REIT) international confidence somewhat A REIT is a company that manages a and provide a tried and trusted conduit portfolio of real estate to earn profits through which they would conduct for shareholders. The main benefit their affairs, without having to be and attraction of a REIT is that it does directly involved in the management Industry Developments | 15
  • 19. Paul Mitchell Neil McBethDirector, Head of Office Associate, Due Diligenceof the individual assets. As mentioned Pike Architects, incorporates the countries have been looking at ways toearlier, REITs are not permitted to lend example whereby a promoter (private, fund these projects without such creditinto development. However, one would local authority, housing association) wrapping.expect that in the context of a strong obtains land and develops a residentialcovenant, a REIT providing the long- scheme which is then “bought out” In October of last year, the Europeanterm finance that a bank or banking by an investor (e.g. pension fund, etc). Union adopted a legislative proposalsyndicate would be in a strong position The residents then pay a capital rent launching the pilot phase of the €50to provide development finance. (cost of scheme plus annual return billion Europe 2020 Project Bond to investor), the capital rent being Initiative. The initiative aims to reviveMaybe this Utopian example is not that 10-20% lower than the market rent. and expand capital markets to financefar off when you consider the pent- Any payment above the capital rent is large European infrastructure projectsup investor demand, the impending treated as equity, or buying part of your in the fields of transport, energy andshortage of premium office space to home, with full ownership being the information technology. Although thesatisfy the incoming multi-nationals, ultimate goal. “project bonds” proposal from thethe value in the marketplace and the European Commission is subject to therequirement for the banks to restart Project Bonds approval of European governments,lending into properly geared deals. A project bond is a fund set up to they have indicated that funding would finance a specific project or group be available to upgrade the Dublin-Equity Partnerships/Private of projects. They were typically used Belfast rail link, as well as transportRental Sector (PRS) to fund large infrastructure projects connections in the ports of Dublin andThe basic model for development in and were very common in the United Cork.the residential sector, for the most States and South America. Insteadpart, is Develop and Dispose, i.e. of using traditional bank lending, the As this is only the pilot phase it is likelythe developer purchases the site, project company could raise the senior to take some time before we see aconstructs the residential stock and debt through project bond issues. direct impact on project funding in thethen sells it to homeowners/private Capital market investors would buy the local market.investors. One of the scenarios where bonds if an investment grade creditan equity partnership comes into play rating, preferably at least A-, could be So, in relation to alternative sources ofis when the ultimate purchaser is not achieved. funding it does not appear as thoughin a position to secure the finance we are on the cusp of a breakthroughto purchase their own property, e.g. Owing to the inherent risk in directly in the near future. Looking at the fewpotential purchaser can’t obtain a funding construction projects, they transactions that have taken placemortgage. There are various forms of were insured by “monoline” insurers in over the past year, it would appearEquity partnerships, particularly in the a process known as “credit wrapping.” to be more a case of using the bestUS, whereby the ultimate residents own However, these insurers faltered during ingredients available and sticking totheir homes or shares in the overall the downturn due to guaranteeing grandma’s old tried and trusted recipedevelopment. billions of dollars worth of sub-prime than any type of haute-cuisine. debt, and projects have stalled asA proposal being led in the Irish a result. In response to this andcontext by James Pike, of O’Mahony burgeoning investor coffers, different16 | Industry Developments
  • 20. The National Gallery of Ireland, Dublin. Industry Developments | 17
  • 21. National University of Ireland, Galway - New Engineering Building, Galway. (image courtesy of Neil Warner Photography)At the very least, a detailed Work Outs by Asset Managers modeling of all the inputs under The financial crisis in Ireland has left us the various development/work-outanalysis of a potentially permutations, including critiquing with a significant number of distressedabnormally low tender will and incomplete construction projects the disposal strategy options.assist in developing an and a long list of developer andeffective risk mitigation contractor insolvency casualties. - Unraveling of historical deals and agreementsprogramme. Inevitably, when one goes to open The lack of action on unfinished developments has led to additional up the file on a development that risks for stakeholders that range from has stopped prematurely, there additional costs due to simple neglect will be a myriad of agreements and and lack of upkeep, to health, safety deals. Needless to say it is only and environmental issues. In many those with liabilities attached that cases, the inaction and lack of funding are being brought to your attention, has only served to reduce the value of so a methodical approach and the asset for the long term. The work commercial awareness are key to out path is not for the faint hearted and resolving these. requires intense effort and tenacity from the outset, to ensure a successful - Obtaining certification for disposal outcome. There are many challenges This problem is encountered on for stakeholders, which become most projects and is usually solved apparent from the outset, and these through negotiation with the require experienced professionals to certifiers or, if not possible, using a assist in identifying and navigating new team, exhaustive surveys and a pathway to delivering the project. certificates with certain caveats. Amongst the key challenges are: Activity to date has been predominantly - Self funding mechanisms driven by non-nama institutions that The availability of finance, or lack are intent on exiting the Irish market. of, has been much publicised so it is The recent announcement by NAMA not surprising that this is probably is welcome news and should see a the biggest challenge for funders in sizeable increase in activity in this area. moving a work-out strategy forward. After that it is then important, where Repair & Maintenance possible, that the development With the sharp decline in the level of is phased in such a manner that new build construction, an increasing will generate revenue to fund the amount of the industry focus has remaining phases. turned to the Repairs, Maintenance and Improvement (RMI) sector. The RMI - Getting the disposal strategy right sector has of course also seen a decline Interlinked with the funding in output, but not to the same extent, mechanism is the issue of developing therefore, as a proportion of the overall a sustainable business model. This total it has increased significantly (SCSI will require careful consideration of Construction Industry report estimates the key drivers and then testing it at 41% in 2012 compared to 19% these through thorough financial in 2006 per the DKM Construction18 | Industry Developments
  • 22. Stuart Griffin John O’ReganAssociate, Project DirectorManagementIndustry Review and Outlook 2010 actively managing their real estate and European Union (EU) procurementReport). we are working with others to develop guidelines and directives. These asset registers, including schedules of must be scrupulously followed by theOf course, the need for repairs and condition and planned and preventative client or there is a risk of a successfulmaintenance is ever present. Real maintenance schedules. challenge to the process which wouldestate that is not maintained will start result in the outcome of the processto diminish over time in functionality The improvements segment of RMI has being overturned or damages becomingand become unfit for purpose. As also been experiencing greater activity due to the injured party.soon as the client takes possession than new build, as organisations haveof the building the wear and tear of been downsizing or re-organising to There is detailed guidance available onthe building and its fabric starts. Once sub-let space. In some cases where in the steps to be taken in assessing ALT’sone system or element fails, there is a different climate clients may have and these involve seeking clarificationsgenerally a consequential knock-on chosen the new build option, they are and additional information from theeffect on other elements and systems. now making the decision to refurbish tenderer in question. By demandingFor example, if a hole appears in a roof their existing space. this level of information and employingcovering, there will inevitably be water expert analysis from the quantitydamage on the internal fabric of the Abnormally Low Tenders (ALT’s) surveyor and design team, the clientbuilding and services. Should the plant Have you ever received (or submitted) can obtain a very clear picture of howand equipment and services start to an abnormally low tender for the bid was prepared and how robustfail due to water ingress, the knock-on consultancy services or construction the price is.effect of down time from staff and works?users not being able to use the building Davis Langdon’s experience of publicwill be significant. Have you ever rejected a tender sector tendering is that it is rare for a because it was abnormally low? tender to be rejected as abnormally lowFrequent and regular repair and I think the answer to the first question but that it is critical that the detailedmaintenance is the most cost effective above would be a resounding yes assessment is carried out. Often theway for providing and retaining a good from just about everybody involved investigation results in the bidderfunctional building. The inspection of in tendering in the Irish construction realising the challenges that theirexisting buildings is key to effective market. tender presents and withdrawing theirasset maintenance and management. tender. In other cases, the investigationIdentifying and analysing the problems, The answer to the second question uncovers issues that can be resolvedassessing the risks, and establishing a is harder and the answer may well prior to contract and hence avoidingstrategic way forward for maintaining depend on whether you are operating in potential claims. At the very least,and repairing the building is key. Most the private or the public sector. a detailed analysis of a potentiallyrepair and maintenance of buildings It is not uncommon for the lowest bid abnormally low tender will assist inis reactive, where designers and sub to be passed over in the commercial developing an effective risk mitigationcontractors work to address issues world. Are these decisions always programme. Typical mitigationas they arise, and clients spend little fair — maybe not — but in the private measures include increased provisiontime assessing, scheduling, planning sector, as long as the tender documents of onsite cost, programme, qualityand budgeting to prevent such issues are structured right, it is the clients and safety monitoring, increasedarising. Resources allocated to call. The disappointed contractor or contingency provision, increasedevaluating and putting plans in place to consultant has no come back. focus on project administration andrepair and maintain real estate How about the public sector? structured project managementanticipating and planning to address The position here is much more processes involving principals of all theissues before they become problems, complicated. There are defined bodies involved.is money well spent. Some clients are processes both in national and Industry Developments | 19
  • 23. LeadersBusinessIntelligence7 & 8 St James’ Square, London.
  • 24. We believe it is important to listento and understand the issues fromthe key leaders in the industryDavis Langdon, an AECOM company, Pat Gunne,has extensive knowledge and Managing Director, Green Propertyexperience across the full spectrumof service lines and sectors in the Commercial:industry. However, notwithstanding Q Stamp duty reduction; Upwardthis track record, we firmly believe it is Only Rent Review (UORR) clarity, etc.key to any appointment, big or small, Positive changes but what is theto first listen to and understand our effect?client’s requirements. A The changes you mention are significant to the extent thatIn the same way, when we are writing investment in real estate hadour annual review, we believe it is become a binary issue. Onceimportant to listen to and understand the UORR came on the table forthe issues concerning key leaders discussion, and it was surrounded byin the industry and in the current uncertainty, the market shut down soclimate people who are at the coalface it has been significant to the extentin terms of delivering or facilitating that Ireland is investable again,growth in key sectors in the coming Finance: however, in terms of activity, theyears. Q Debt financing, is there any out market hasn’t started trading in any there? meaningful way.We thought you would like to listen A The Irish banking system is entirelytoo! dominated by NAMA. Bank of Ireland To re-ignite the market, you need (BOI) and Allied Irish Bank (AIB) external capital investment becauseSo we have summarised in question have both said they want to lend the domestic equity has beenand answer format, interviews we to the sector, however, both banks effectively wiped out due to theconducted with a number of thought are trying to reduce their overall extent of the collapse in the market.leaders on what they see as the exposure to commercial property. Netchallenges, solutions, and more lending to real estate in the United Q Poor credit ratings, second rate importantly, the likely trends in their Kingdom (UK) is negative, in Ireland investments — is it a case of no sectors in the short to medium term. it is that multiplied by 10 and we thanks from investors? will be in that net negative lending A Yes and no. The funds will want environment for the next three to five to buy shiny buildings, with shiny years. tenants, in grade A locations. There is only a certain amount of that and it Q Government — if you could ask for represents a tiny part of the market. one wish? A The government can only control the On the other hand, the reason Irish part of the solution; they cannot Ireland is seen as attractive for US control what happens with foreign private equity is that it is seen as “in owned banks, all of which are in distress.” Up to now the pricing gap retreat. has been too wide, but given that we are now in year five of the meltdown, The biggest thing they could do I suspect the level of market activity would be to restructure their deal will slowly begin to improve. with the troika on their own capital Business Intelligence | 21
  • 25. JFK Primary School, Limerick.“ The Government can only structure and accept that a good accepting that they are a long-term chunk of NAMA is a long-term mortgage bank. control the Irish part of the mortgage bank as opposed to a solution; they cannot control grind down agency as it is a constant They also could start selling Irish real what happens with foreign overhang on the market. estate in lot sizes and packaged in a owned banks, all of which are format which meets the investment Q Once the debt and liquidity return, appetite of the major international in retreat.” we will have a sharp upturn in funds. They might not like the price, property in terms of prices. True or however, we either accept that the False? capital is external private equity or A To try doing the crystal ball not. The overriding objective of NAMA gazing when there is so much macro must be to re-create a market and uncertainty is of limited value. At to do so they need to sell. Ultimately the moment we are taking the view the market determines the pricing that the macro is a pronlonged and not the November 2009 entry workout at the European and indeed point which Nama had no control global level, but particularly around over when it was being cast in stone. the euro area. Having said that, if They’re trying their best, but it’s a you buy central Dublin real estate very challenging environment. at below reinstatement cost, with income to get you through however Q Any lessons to be learned from our many years, and with arbitrage on a nearest neighbours? debt package, then that probably is a A Lloyds for me have been very good risk adjusted investment. Who refreshing in their approach, knows whether we are right or wrong, obviously they have taken a lot that is the view we are taking, and of pain but they are dealing with the majority of our investment focus the resolution in a very pragmatic remains in the UK. way. Typically they are avoiding, where possible, in dealing with it Distressed Property: through the courts, and instead are Q What would you change/enhance sitting down and having sensible about the way Nama operates discussions with borrowers in an today? attempt to resolve their problems A The changes at the top have been through a consensual process. very positive and they have done well in the UK, their challenge is around the Irish market. They are trying to be part of the solution in terms of the lack of liquidity by saying that they are willing to put in debt on deals where they are selling which is crucial and one step away from 22 | Business Intelligence
  • 26. “ This is the fourth recession that I have experienced in business. So I would say nothing will change, it will just be different the next time. Lessons do not get remembered for longer than ten years.” Bill Nowlan, Funding Managing Director, W.K. Nowlan & Q When do you foresee the funding Associates impasse resolving itself and what its likely effect will be on property Q What would you see as the key values? lessons from the financial crisis A I believe that the money will be found that should be learned by the because we just cannot, at a political property industry? level, continue to keep grinding A Property booms and busts are facts people down. But I do think that you of life, you can go back generations, have to have the controls in place, go back millennia — Cicero put his so I would think that after this treaty pension fund into property. is in place. Once funding returns, I believe that house prices in Dublin This is the fourth recession that I will spike very rapidly. If you ask me have experienced in business. So where I would actually speculate I would say nothing will change, it my money, now is to buy land in Dun will just be different the next time. Laoghaire or on the Luas line, I think Lessons do not get remembered for that will go like a train. longer than 10 years. NAMA Q In terms of the residential property Q Have you a sense of what the market, what do you see as the fate NAMA strategy is towards managing for the sea of Ghost Estates? their Irish portfolio? A You have to slice and dice this, first A I think what you are beginning to see of all there are ghost estates that happening is that they are dribbling are: property out through the receivers to - well built houses but for which see what will happen. there is no demand because of Q Is the mini boom in Foreign Direct their location and then there Investment (FDI) a saviour for our You can’t push a piece of string and is, ailing property industry? I think NAMA have a problem in that - poor quality accommodation A Saviour is probably not the right they have this huge need to actually in inappropriate locations. word; it is probably going to be get property out there but it has to an important factor. One of the come on the demand side. At the In the first case, the price will fall things we need to do is put in the moment, they are concentrating their to a point at which they will be infrastructure to encourage FDI — I efforts in the UK and overseas and bought, whereas in the second case think this is where our planning the big question is should they just demolition will be the only option in a comes in. drop prices down? lot of instances. So, in short, you have to look at each situation and decide whether this is for holiday homes, the JCB or time. Business Intelligence | 23
  • 27. For example, if you were to set up theequivalent of an IFSC for the IT industry,you are creating an environment makingit easy and competitive to come in and setup business.Maurice Mortell, Q What measures should the Managing Director Ireland, Telecity government implement/maintain Group to assist with this growth? A It is not a labour intensive market;Q Do you envisage data centre if you are going to really look to activity continue at the current pace sustain the industry you need to of growth for the foreseeable future? look at the types of clients that areA The industry has been through attracted to the facilities and how a number of cycles; my view would you best cater for their requirements. be we are on the cusp of a new wave So, for example, if you were to set of development, coming into Dublin up the equivalent of an IFSC for specifically. If you have a league table the IT industry, you are creating an for locations in Europe you would environment making it easy and have: competitive to come in and set up business. - Amsterdam - Paris Q With the sale of state assets on - London the table, have you particular fears - Frankfort for your sector? - Dublin A The big issue would be the distribution grid, I would be very Unfortunately, nationally the reticent to think that they would infrastructure isn’t as good on the privatise that — we need to hold on diversity of Telecoms side. The key to it and keep control of it. One of the selection criteria would be: very big positives is the robustness of the grid. It is a big factor, we are Q We have endured European - Power not that competitive in the price of pressure to broaden and expand - Telecoms infrastructure energy supply. our tax base; how critical is it to (trans-atlantic international the data centre sector that it is connectivity tier 1 routing) Q In terms of capital investment, maintained? - Mature supplier market would you consider Ireland a good A From our perspective it is - Project management companies value for money location? absolutely critical — 65%- - Distribution grid/resilient A From what I have seen we tend 70% would be overseas clients - Number of players in the market to use the same people in the (predominantly US) who would not - Energy efficiency 50% of same locations to get the benefit have a set up and are just availing the year temperature below 6 of it — that doesn’t always work of the taxation regime for their degrees to your advantage — but Ireland transaction based business, but - Self fulfilling prophesy — critical is competitive enough, across the politically it would appear to be mass group the cost/square foot it is in a no-go area so I would not see it and around the mark. happening.24 | Business Intelligence
  • 28. Donal Murphy, months to get through the initial to procure via PPP and stick to themDirector of Project Finance, stages and the fact that there are rather than spreading resources tooBank of Ireland none (bar Schools Bundle 4) at that thinly over a whole range of projects.” early stage, there may well be a In other words, use PPP’s for specificQ Have the Budget 2012 Public- quiet period in terms of contracts sectors in specific circumstances Private Partnership (PPP) being signed during 2013/2014. and then look to the market to postponement announcements However, recent positive engagement deliver on these. By keeping the damaged the reputation of Ireland between ministers and the European projects simple, straight forward as a market for investors/project Investment Bank (EIB), and a sense with a reasonable risk allocation sponsors? of positivity around their role and the and consistent with previousA On the positive side, the two roads use of privately financed projects transactions, the chances of schemes, the N7/N11 & the N17/ to provide economic stimulus, may maintaining project sponsor interest N18, and the schools PPP bundle result in a renewed impetus for the is greatly increased. schemes (bundle three contract use of the PPP model. signing due second half of 2012 and Q There have been some PPP projects bundle four likely in 2013/14) are In terms of funding, at the peak of which have failed for one reason or receiving continued support. the Irish market bank groups were another; are there any lessons that generally dominated by international could be learned from these? The two areas negatively affected banks with the Irish banks playing A Projects such as the co-located by the recent announcements their role; in recent years obviously hospitals and social housing were were the third level bundles and things have changed in so far as hybrid PPP models, taking a range of major flagship public transport Bank of Ireland is effectively the only market related risks without some projects. The third level programme Irish bank operating in the space of the traditional attributes of a was probably the real surprise. It and the international banks (who previously banked projects. was disappointing from a market were typically not based in Ireland) perspective as this programme was have withdrawn from the Irish If there is a lesson to be learned at a well advanced stage in terms market. The role of the EIB will be (for the PPP market generally) from of procurement. There is no doubt absolutely critical because they can these projects it is that there needs that the cancellation of an entire significantly close the funding gap to be early and regular consultation programme has the potential to be on some of these projects (up to 50% between the procuring authorities damaging to sponsor interest for funding) but to be blunt for a long- and the funding market. Dialogue future projects. term sustainable market there needs and market soundings prior to to be more than one domestic bank proceeding with a procurementQ What do you see as the outlook for and more international banks active process present the best opportunity PPP projects in Ireland in the short in the market. of structuring a project with the to medium term? best possible chance of attractingA The overriding constraint will be the Q If you had to give one piece of interest and succeeding. Once you capital spend and what will be advice to the government in respect embark on a procurement process allowed under the programme with of maintaining a sustainable PPP it can be difficult to subsequently the troika. Assuming the current market in Ireland, what would it be? make any meangingful changes to a programme can be delivered, A The key message would be to “pick project structure. given that projects can take 12-24 the specific programmes you wish Business Intelligence | 25
  • 29. The Shard, London.(image courtesy of Sellar Property Group) TeamGeographies
  • 30. Notwithstanding these challenges, theregions are seeing pockets of revival indifferent sectors and we identify a numberbelow which have been particularly active.If we were ever in any doubt that we Island of Ireland are a reduced number of experiencedoperated in a global market we only contractors, difficulty in gettinghave to look back over the last few In larger countries, significant regional specialist sub-contractors, continuedyears at a catalogue of international variations in output can and do prevail presence of abnormally low tendersevents which have impacted on world from time to time, depending on and delays in obtaining performancemarkets and in turn filtered their way differing economic cycles and regional bonds to name a few.through to effecting most economies. needs that exist. In Ireland however,In particular, open economies such as regional variations in output tend to be Notwithstanding these challenges, theour own which are highly dependent more subtle. regions are seeing pockets of revivalon international trade. Unfortunately in different sectors and we identifyfor Ireland we had our own domestic This is largely due to what some might a number below which have beenfinancial and banking collapse which consider a good open democracy or particularly active.decimated any defences we may have others might call parish pump politics.had to such international events. So, typically output has tended to Education correlate with the demographic In response to increased demand thereWith this in mind, it is important to distribution, and by implication votes. has been a sustained primary andlook at the recent industry trends There is a practical purpose to this secondary school building programme.domestically and internationally where also of course in that public services It has also been signalled that inIrish contractors and consultancy will be needed to match the demand the near future the department willpractices are seeing increasing of the demographic distribution, so be devolving delivery of parts of thebusiness for their services. for these reasons when we are looking programme to other agencies such as. at potential trends into the medium the Vocational Educational Committees term it is always useful to study (VEC’s) and possibly the National demographic movements. Development Finance Agency (NDFA). InPercentage population change 2006-2011(Census 2011 Eds, Central Statistics Office) addition, new design team procedures April 2011 saw the national census to reflect this devolved approach will carried out and we have recently also be implemented. seen the first detailed set of results from it published. The map on the In contrast the government’s capital left illustrates the population change programme has sharply cut back movements since census 2006 and on capital spending at third level reflects the increasing urbanisation institutions. Notwithstanding these of the population and the gradual departmental cuts the universities have depopulation of the more remote rural been very proactive in identifying other locations. sources of income and the merger/ clustering of institutes of technology In the short term, all the regions are to form technological universities will experiencing negative trends in terms necessitate investment. of demand, such as a reduction in public spending and a lack of finance Private Healthcare and business confidence for private The economic crisis has seen clients to invest. On the supply side, significant numbers not renewing their the issues prevalent in the market private health insurance. However, Geographies | 27
  • 31. Geographiesthere still remains a sizeable proportion On a positive note, a new landmark significantly and provides highof the population which continue to building, a central headquarters office performance training facilities for elitepay for same. Thus whilst the downturn for the Munster GAA, is well underway athletes.has severely impacted potential new with completion due in the summer ofentrants to the market, existing players 2012. In the private sector the Industrial/such as the Bon Secours and Galway pharma/food/technology sectors haveClinic continue to invest. Education and healthcare projects been the stand out performers with seem to be the only real public sector significant investments being made inIndustrial projects of note that are getting the likes of Boston Scientific, Ely LilyAs noted earlier in the review there underway in the region. Probably the and Pepsi. Also, Leibherr have made ahas been a significant increase most significant public building to be significant investment to their facility in(predominantly FDI driven) in constructed at present in the region Killarney.investment in the industrial would be the new critical care unit inmanufacturing sector and this has been the midwest regional hospital campus With the success of the O2 andwell distributed across the regions, in Dooradoyle, Limerick. This new €20- Grand Canal (now Bord Gais Energy)albeit in the key cities. If we look at the million facility will bring much needed, Theatre in Dublin, there is an appetitefirst quarter announcements from the state of the art, healthcare facilities to for an arena in Cork. Badly neededIDA (summarised below) we can see an the region. The Limerick Regeneration many would argue, currently a raceindication of the range of sectors and Agency (LRA) is also progressing a between the BAM/Heineken Breweryregional spread being achieved. number of projects with tenders just Quarter scheme and the O’Callaghan back on the “Southill Elderly Persons Properties scheme, both of which nowLimerick, Mid-West Region. Accommodation.” have planning permission. In privateSmall scale refurbishments and fit outs healthcare, the Bon Secours Northernhave taken the place of the previous Cork & Southern Region Block project is due to go to site in earlylarge-scale private commercial and Cork and the region generally has got summer, which will provide a muchindustrial developments. Commercial at least its fair share of the school needed boost to construction activityproperty owners are having to work building programme with a number in the city. On the sporting front theharder to find alternative uses for their of new schools, and large stand alone Gaelic Athletic Association (GAA) areproperties in order have any chance of extensions to existing schools, getting making a significant investment insecuring lettings, and in a lot of cases the go-ahead. University College re-developing Pairc Ui Chaoimh, withare succeeding which is encouraging. Cork (UCC) have completed their new design commenced on a new covered extension to the Mardyke Arena which stand and upgrading of the terraces. enhances the offeringTable 3: IDA Ireland Announcements Jan - Apr 2012Region Announcements Jobs IT Financial Pharma OtherGreater Dublin Area 9 1,280 1 8 South 4 230 1 1 2Mid-West 2 32 2Connaught & North West 3 525 1 2 North East 1 1,000 1 28 | Geographies
  • 32. National University of Ireland, Galway - National University of Ireland, Galway -New Engineering Building, Galway. New Engineering Building, Galway.(image courtesy of Neil Warner Photography) (image courtesy of Neil Warner Photography) In larger countries, significant regional variations in output can and do prevail from time to time depending on differing economic cycles and regional needs that exist. In Ireland however, regional variations in output tend to be more subtle. University of Limerick - Pavilion, Limerick. (image courtesy of Donal Murphy Photography) Geographies | 29
  • 33. GeographiesFigure 5: Northern Ireland Construction Galway & Western Region indicated in the pie chart on the left.Industry Output 2011 In common with the rest of the country 2011 saw the progress of a number there is a significant overhang of of significant projects, including the residential accommodation in the Titanic Belfast. 2011 and 2012 will see regions’ provincial towns. However, the appointment of design teams for a 19% Galway city and suburbs does not number of long awaited public sector have an overhang to the same extent health and sports facilities which are and in some areas the next couple of now progressing positively. years could see a shortage of the right 23% properties in the right locations. Whilst the Northern Ireland property 20% market did not see the same extreme In terms of construction activity in the of the southern property bubble, it public sector, education and health does still have its share of distressed continue to be the primary sources. developments. The path of the National University of Ireland (NUI) construction industry will continue Galway continuing on from completion to depend on the public sector 38% of their New Engineering Building in capital programme until the local and 2011 with their research bundle of international economic environment three buildings currently on site. It shows signs of recovery. Residential includes a Clinical & Translational Research Facility on the University Infrastructure Hospital Galway campus in conjunction Britain Public Building with the Health Service Executive (HSE) Private Building and the Health Research Board (HRB). 2011 ended immersed in uncertainty. Whilst the private sector continues to The Eurozone had lurched from crisis struggle and there remains a number to crisis unresolved throughout the of large development sites vacant in autumn and into winter. Galway city, similar to other regions private healthcare (Galway Clinic Although statistics show that continued expansion of facilities) and construction activity picked up in some foreign direct investment (FDI) have areas, it was not enough to cause any proven to buck the trend. In addition to rebound in construction prices after the traditionally strong medical devices the 18% fall that had occurred since sector there have been investments in early 2008. Overall, at the end of 2011, new areas such as gaming with Bioware prices were on average 1% lower than recently establishing a customer at the end of 2010. There remains a services centre in Galway. huge amount of surplus capacity in the industry which is why prices have not Northern Ireland moved upwards even when workload The output of the Northern Ireland picked up last year. construction industry was £2.3 billion in 2011. It is likely that this Low or even cut-throat pricing means will, similar to the Republic of Ireland, that claims are inevitably more to the suffer a decline in 2012. The industry fore. Some contractors are adopting breakdown for 2011 by sector is claims principles on all their contracts30 | Geographies
  • 34. Titanic Belfast (image courtesy of Christopher Heaney Photography) Geographies | 31
  • 35. Qatar Science & Technology Park, Qatar.There remains a strong but many are more discerning, trying down a further 1-2%. In 2013 no to maintain good relationships with significant increase in activity ispipeline of private clients who may have more work to forecast but contractors will try tocommercial work in London offer in the future. Clients and their improve margin wherever they can.(but not elsewhere), consultants and main contractorsprogrammed to start are now even more concerned over Construction output and new orders the stability of the supply chain with Construction output as measured byduring 2012 but developers increasing numbers of subcontractors the Office for National Statistics (ONS)are once again becoming going into administration. The number held up unexpectedly well in 2011.nervous and perhaps of companies going to the wall peaked Output in the public non-housingholding back from actually in 2009 but latest figures show the sector declined by 5% in 2011 but trend increasing again. infrastructure grew by almost 11% andpressing the start button private housing by 8%. There remains a strong pipeline of private commercial work in London (but The decline in new orders in 2011 will not elsewhere), programmed to start lead inevitably to a reduction of work during 2012 but developers are once on site this year and next. Experian again becoming nervous and perhaps are predicting a 1.3% increase in holding back from actually pressing 2013 while the Construction Products the start button. Occupier demand Association (CPA) do not see an is falling. Banks are embarking on a increase before 2014. fresh round of redundancies. Rental expectations have fallen. John Lewis and Sainsbury reported a bumper Global Markets Christmas sales period but most other retailers are finding life hard. Construction Market Overview 2011 was yet another difficult year for The housing market often leads the construction globally. Construction way in the fortunes of the construction spending growth has stalled and industry, whether trending up or 2011 was the fourth consecutive down. House prices in 2011 ended year with little or no growth. Overall, slightly down and there may not be world construction spending grew a consensus for the trend in 2012 by just 0.5% to $4.6 trillion and is but many believe 2012 will be worse still below the levels achieved in than 2011. So infrastructure may be 2007. However, on a positive note, the only show in town that is really 2011 saw the first increases in world looking up but will only be of benefit to construction spending since the start specialist contractors and those that of the recession. Although 2012 is have consciously tried to reposition looking slightly more pessimistic as the themselves over the last few years in developing economies responsible for anticipation. much of the growth in the recent past are starting to slow as their developed In London construction prices will country export markets continue to probably continue to flat-line but decline. elsewhere prices may well be forced32 | Geographies
  • 36. For the second year running China was thelargest construction market in 2011, and isforecast to be the fastest growing marketthrough 2012.On a regional basis, all regions apart Figure 6: US$Bfrom Western Europe and NorthAmerica saw positive construction 0 100 200 300 400 500 600 700 800 900 1000spending growth, although at reduced Chinalevels to those of the recent past. Asiaand Latin America were the fastest USAgrowing regions through 2011 by a wide Japanmargin. Germany BrazilFor the second year running China Indiawas the largest construction market in France2011, and is forecast to be the fastest UKgrowing market through 2012 (Figures Italy6 & 7). KoreaThere were some large regional Mexicodifferences throughout the year. AustraliaConstruction spending in Western SpainEurope was the most affected with Othersa contraction of 3%, with the mostsignificant falls occurring in Portugal,Ireland, Italy, Greece and Spain. Thecontinuing sovereign debt problems 8and Eurozone crises suggest thatWestern Europe will continue to 6struggle in the near term.Regional Overview 4Our review of world construction in2011 and outlook for 2012 and beyond 2concentrates on the six main tradingblocks, namely: Africa; the Americas; 0Asia Pacific, Australasia; Europe andthe Middle East. -2Asia PacificAsian markets are expected to continue -4to exhibit robust construction spendinggrowth through 2012. China (+9%) is -6the standout followed by India (+8%),Indonesia (+8%) and Vietnam (+7%). All -8sectors are likely to exhibit significant USA China Japan Germany Italy France Brazil UK Korea India Mexico Spain Austrailia Othersgrowth, largely led by non-residentialconstruction. Figure 7: Percentage Change Geographies | 33
  • 37. Olympic Stadium, London.(image courtesy of Populous)
  • 38. David CrosthwaiteDavis Langdon, London,an AECOM company.China not only exhibits significant postponement/cancellation of many Middle Eastlevels of growth but is also the largest planned infrastructure projects. In the Middle East, moderatemarket in the world. China accounted construction spending growth (+4.2%)for 41% of the Asia Pacific total in 2011 The fastest growing countries in is expected through 2012. Much of(almost twice the size of the Japanese Western Europe through 2012 are the growth will be led by increases inconstruction market). Construction expected to be Germany (+1.8%) and infrastructure construction spending,spending in China is shifting from the UK (+1.6%). Ireland, Spain, Portugal, in particular energy infrastructure.the coastal cities to the interior and Italy and Greece are likely to experiencewestern provinces. Through to 2015, continuing declines in construction Saudi Arabia, the largest market in theinfrastructure spending is expected spending through to 2015, with little region, is also expected to lead muchto dominate China’s construction optimism about growth later in the of the growth in the region (+5% pa)spending. decade. Indeed through to 2015, their through to 2015. Followed by a return share of the Western European market to growth in the UAE (+4% pa) much ofIndia on the other hand only accounted is expected to decline significantly (by which will be led by Abu Dhabi ratherfor just over 10% of the total Asia as much as 10%) while growth in the than Dubai which remains subdued andPacific market. Given the current remaining countries remains largely is largely expected to remain that wayconstraints on public finances India is stagnant. It is likely that it will be 2020 through the forecast period.seeking increases in private funding before the market in Western Europesolutions in the provision of much of returns to output levels last seen in Preparation for the FIFA World Cupthe new infrastructure needed.Japan 2007. 2022 and upgrading of associatedis expected to see sizable increases infrastructure is expected to makein construction spending through In Eastern Europe there is a more construction spending growth in Qatarto 2015 as the earthquake/tsunami positive picture of construction amongst the fastest in the worldre-construction effort gathers pace. spending growth through to 2015. throughout the next decade.However, the re-construction is only However, it should be noted that theseexpected to provide a short-term spike markets are significantly smaller Africain construction activity which is likely to in terms of volume than those in Following the recent turmoil in muchreturn to trend later in the decade. Western Europe. The fastest growing of North Africa construction spending sector is forecast to be the non- remains constrained, althoughEurope residential sector closely followed by there are expected to be significantSovereign debt crises and the infrastructure. opportunities going forward. Inuncertainty in the Eurozone are particular, re-construction in Libya andcontinuing to constrain construction The fastest growing countries in infrastructure upgrades in Egypt arespending growth in many Western Eastern Europe through 2012 are likely to act as a stimulus for the regionEuropean markets. Only the expected to be Poland (+9.1%) followed through to 2015. However, much of thisScandinavian counties are likely to by Russia (+6.5%) and Turkey (+5.5%), has yet to materialise given the ongoingbe largely immune from the impacts. all with growth levels significantly uncertainty in the region.Infrastructure construction is expected above the average for the region as ato see declines through to 2015 whole. In the rest of the region there is awith only limited growth forecast in mixed picture emerging, with someboth non-residential and residential areas of strong growth particularlyconstruction spending. Austerity Nigeria (+8%) with continuing declinesmeasures in many Western European in others, particularly South Africa.countries have focused on the Infrastructure construction is forecast Geographies | 35
  • 39. Figure 8 : Global Construction Spending to be the fastest growing sector of Australasia construction output through to 2015. Construction spending in Australia is expected to grow by close to 5% in The Americas 2012, boosted by the global demand 31% Construction spending continues to for natural resources. Similarly, be constrained in the US, largely as construction spending in New Zealand 34% a result of the housing crisis and the is forecast to rise as earthquake re- impending election. The construction construction moves forward through to market in the US is expected to remain 2015. stagnant through 2012, with little or no growth forecast, much like construction General Outlook spending in Western Europe. Some In the short term there is expected 1% growth is expected in Canada and to be a degree of stagnation in global 2% Mexico although the problems in the construction spending through 25% 3% US are expected to constrain growth in 2012, with more sustained growth 4% both markets through to 2015. not expected until 2015 onwards. Developing countries are expected2020 In contrast much of South America is to lead any growth through 2012. expected to see significant growth in The strongest construction spending 46% construction spending through 2012. In growth will again be in China, followed particular the larger markets of Brazil, by India and Indonesia. Argentina and Chile are forecast to see 17% construction growth of over 5% through Going forward the outlook for global 2012. Indeed, Brazil and Panama are construction is likely to be dictated likely to have construction spending by development status. Generally, the 24% growth of over 10% pa through to share of global construction spending 2015, significantly above the average continues to shift from developed for the region as a whole. Much of the country markets to developing country growth in South America will be led by markets (Figure 8). In particular, the increases in infrastructure spending Asian market has increased from a (particularly energy and transportation) share of 31% in 2005 to a forecast closely followed by spending on non- share of 46% by 2020. This shift is 5% residential structures. largely at the expense of decline in 4% 2% 2% the Western Europe market which has In Brazil, preparations for the 2014 FIFA shrunk from a share of 35% in 2005 to a Asia Latin America World Cup and the 2016 Rio Olympics forecast share of 24% in 2020. Western Europe Middle east are well advanced and increases in North America Africa construction spending are largely being Eastern Europe led by infrastructure upgrades. David Crosthwaite Davis Langdon, an AECOM company36 | Geographies
  • 40. 2016 Olympic Park, Rio de Janeiro, Brazil. (image courtesy of AECOM)
  • 41. University of Limerick - Pavilion, Limerick.(image courtesy of Donal Murphy Photography) KnowledgeTechnical Data
  • 42. Indicative Building Costs € per square metre The figures quoted are for mid-range buildings in the Dublin area at JanuaryHealthcare 2012 prices. Due to the volatile natureHospitals 1,600 2,500 of the current market and the lowPrimary Care Centres 1,400 1,800 tenders being received, it is possibleNursing Homes 1,400 2,000 that tenders will be received outsideEducation of these ranges. Professional advicePrimary Schools 930 1,100 should be sought for specific projects.Secondary Schools 930 1,100Third Level 1,350 2,500 The Davis Langdon indicative building Commercial costs should NOT be used for fireOffices - Shell & Core (Landlord Fit-Out) 1,300 1,900 insurance valuations or for residual - Owner Occupied 1,500 2,400 valuations for funding purposes.Offices Fit-Out - Basic 300 450 - Medium 450 700 If you require a valuation for fire - High 700 1,050 insurance or more specific information, - Top 1,050 1,800 please contact Davis Langdon.Shopping Centres - Shell & Core 600 1,000 - Mall 1,300 2,400 When considering building costs you - Fit-Out 850 1,400 should check if costs include:Residential Apartments 1,200 1,600 - Value Added TaxApartments (12-16 storey) 1,500 1,950 - Professional FeesSocial Housing 850 1,250 - InflationSheltered Housing 950 1,450 - Fit-OutHousing (Suburban Housing) 800 1,000 - Landlord Fit Out/Landlord Credits Industrial - FurnitureWarehouse/Factory Shell 550 650 - Planning Levies, Fees & ChargesFactory (Basic) 650 900 - DemolitionHigh Spec Factory - Shell & Core 850 1,200 - Abnormal Ground Conditions - Fit-Out 650 1,100 Leisure Cinema 1,500 2,100 Hotels - 3/4 star 1,300 1,950 - 5 star 1,950 3,000Swimming pool (60% wet & 40% dry) 1,600 2,100Car Parks Surface (including drainage & lighting) 100 210Multi-Storey 350 600Single Basement 500 800Double Basement 700 1,100Public Buildings Fire Station 1350 1650Prison 1850 2500Courthouse 1650 2050 Technical Data | 39
  • 43. Key Performance Bond ActionsUnfortunately, the focus on performance bonds hasincreased dramatically in recent years due to marketforces. Broadly, a performance bond is a “contract ofguarantee” whereby one party (the guarantor (the bondprovider) undertakes to pay damages to a second party (theemployer) arising from breach of contract by a third party(the contractor). Set out below is a checklist of actions inacquiring and calling in a bond.Summary of Key Performance Bond ActionsRef Description Checklist Ref Description Checklist1.0 Pre-Tender 5.0 Typical Heads of Claim for Submission to Bond co. 1.1 Agree bond parameters with client 5.1 Procurement & Construction (value, duration etc) 5.11 Cost of re-tendering process 1.2 Seek bond co. confirmation of availability at 5.12 Any premium arising from cost of pre-qualification stage replacement contractor 1.3 Issue bond wording with tender documents 5.13 Other 2.0 Post-Tender/Pre-Contract 5.2 Professional Fees 2.1 Request bond to be provided as part of letter of intent 5.21 Design team 2.2 Respond to bond co. questionnaire 5.22 Legal fees 5.23 Other 3.0 Post-Contract 5.3 Client Direct Costs 3.1 Notify Bond co. immediately upon a default event 5.31 Client direct staff costs (typically insolvency) 5.32 Any additional financing costs 3.2 Actively engage with bond co. 5.33 Insurance costs post default 3.3 Invite bond co. to visit site to make their own cost 5.34 Other assessment of works 3.4 Advise bond co. of your proposed process for 5.4 Security/Health & Safety appointment of replacement 5.41 Any security required post-default 3.5 Agree protocols for managing tender process 5.42 Any emergency H&S works carried out post default 3.6 Other 5.43 Other 4.0 Submission of Claim 4.1 Notify bond co. immediately upon a default event Please contact Anthony McDermott for further information (typically insolvency) anthony.mcdermott@davislangdon.com 4.2 Actively engage with bond co. 4.3 Submit termination valuation 4.4 Invite bond co. to visit site to make their own cost assessment of Works 4.5 Submit claim on completion (see sample heads of claim opposite) Introduction40 | Technical Data
  • 44. Project Planning ChecklistChecklists are perhaps the simplest and most productive An experienced project manager will assist you through thesemeans of building consistency in work practices. In this stages, with development of a project management planproject planning checklist, we summarise a high-level twelve capturing planning strategy, execution strategy and projectpoint checklist of important project planning steps to help management techniques that address items 1 to 9 below thusyou pave the way to successful project management. creating a platform for successful project management and delivery.Ref Description Checklist Ref Description Checklist1. Agree justification for the project, including 7. Establish and implement change control appraisal of business case, commercial viability procedure and technical feasibility checks 8. Plan for risk management and value management 2. Establish project governance at the onset such at appropriate stages/gateways as compliance with EU regulations, national or corporate guidelines/governance relating to 9. Identify and procure the disciplines and procurement or contractual requirement specialisations that will be required on the project including consultants (design, quantity 3. Identify all stakeholder and instil a management surveying, legal, planning advisors, etc.), plan to identify and manage their requirements works contractors of suppliers and concerns throughout the project lifecycle 10. Obtain sign-off on the definitive brief from the 4. Define and agreed project organisational relevant stakeholders and acceptance from the structure, communication and reporting strategy, appointed consultant to deliver same roles and responsibilities 11. Ensure an experienced project manager/project 5. Generate definitive brief that defines the scope, coordinator is acting on your behalf during the overall programme, available budget, quality delivery stage to ensure compliance with project standards, project deliverables, success criteria objectives and manage day-to-day issues that and mission statement/project charter may arise6. Establish appropriate ‘gateways’ for design to 12. Undertake a project review at completion to pass to confirm compliance with definitive brief establish lessons learned, etc. requirements Technical Data | 41
  • 45. University of Limerick - Pavilion, Limerick. (image courtesy of Donal Murphy Photography)42 | Technical Data
  • 46. Development Budget ChecklistIt is critical in establishing a development budget to adopta methodical approach and to ensure those conductingthe exercise have the experience and database of relevantinformation to establish a realistic budget. A sample of theprincipal budget headings are listed in the Table below.Summary of Development Budget ChecklistRef Description Checklist Ref Description Checklist Ref Description Checklist1.0 Land Purchase 4.0 Professional Fees 5.0 Selling & Letting Costs 1.1 Site cost 4.1 Project manager 5.1 Agents 1.2 Stamp duty 4.2 Concept architect 5.2 Legal’s 1.3 Legal costs 4.3 Masterplanning 5.3 Marketing costs 1.4 Agent’s fees 4.4 Architect 5.4 Mock-Up units 1.5 Finance costs 4.5 Quantity surveyor 5.5 Model 1.6 Arrangement fees 4.6 Structural engineer 5.6 Photographic 1.7 Other 4.7 Civil engineer 5.7 Site boards 4.8 Services engineer 5.8 Pre-Opening costs 2.0 Stat. Fees & Contributions 4.9 Health & safety consultant 5.9 Tenant incentives 2.1 Planning fees 4.10 Planning consultant 5.10 Tenant enhancements 2.2 Fire certification 4.11 Fire consultant 5.11 Other 2.3 Planning contributions 4.12 Traffic consultant 2.4 Infrastructure 4.13 Facade Cconsultant 6.0 Financing 2.5 Infrastructure apportionment 4.14 Landscape architect 6.1 Equity 2.6 Works to adjacent properties 4.15 Employers representative 6.2 Senior debt 2.7 Land remediation 4.16 Acoustic consultant 6.3 Mezzanine debt 2.8 Costs to date 4.17 Environmental engineer 6.4 Arrangement fees 2.9 Other 4.18 Archaeologist 6.5 Due diligence 4.19 Resident engineer 6.6 Other 3.0 Construction Costs 4.20 Site survey 3.1 Construction cost estimate 4.21 Structural survey 7.0 Miscellaneous 3.2 Inflation/deflation 4.22 Photographic survey 7.1 Developers management fee 3.3 Costs to date 4.23 Contamination survey 7.2 Tax Advice/accounting 3.4 Phasing costs 4.24 Other 7.3 Adjoining neighbours 3.5 Owner insurances 7.4 Contingency 3.6 Other 7.5 Other Sales Revenues Letting Revenues Technical Data | 43
  • 47. Highfield Hospital, Dublin. PerformanceDavis LangdonNews
  • 48. PromotionsWe are delighted to announce thatwe made two promotions within ourmanagement team this year.Jason Hobson Shaw, who has beenwith us since 1998, was made aRegional Director and is based in theDublin office. Jason, who spent anumber of years working in Australiaand the Far East, leads our healthcareteam.Declan Hegarty, who joined in 2006,has been promoted to Associate inour Dublin office. Declan has a widerange of commercial experience havingdelivered the €200 million Grand CanalTheatre and is currently delivering theGrangegorman HSE facility and theGrand Canal Dock Hotel. Charity at work Public Sector Workshop Our annual get together this year was Davis Langdon held a public workshop made all the more inviting by the baking in April, attended by the various skills of our staff. All proceeds went stakeholders in the industry. Healthy to Cancer Ireland . The event was held debate ensued amongst the hundred in conjunction with AECOM offices or so guests as the tough challenges throughout the UK, who raised money in the industry were deliberated. This in aid of Macmillan Cancer Support. workshop was to provide an opportunity Davis Langdon proceeds went to Cancer to discuss some of the key issues and Ireland opportunities in the delivery of theJason Hobson Shaw Declan Hegarty public sector capital programme. Davis Langdon News | 45
  • 49. Davis LangdonPeople Paul Mitchell Tomás Kelly David Johnston Director Regional Director Associate paul.mitchell@ tomas.kelly david.johnston@ davislangdon.com @davislangdon.com davislangdon.com + 353 1 4320460 + 353 91 530199 + 353 21 436 5006 John O’Regan Jason Hobson-Shaw Neil McBeth Director Regional Director Associate john.o’regan@ jason.hobson-shaw@ neil.mcbeth@ davislangdon.com davislangdon.com davislangdon.com + 353 91 530199 + 353 1 4320434 + 353 1 4320478 Anthony McDermott John Lombard Stuart Griffin Regional Director Associate Associate anthony.mcdermott@ john.lombard@ stuart.griffin@ davislangdon.com davislangdon.com davislangdon.com + 353 1 4320481 + 353 1 4320413 + 353 21 436 5006 Gregory Flynn Mark Smith Eoin Dunphy Regional Director Associate Associate gregory.flynn@ mark.smith@ Eoin.dunphy@ davislangdon.com davislangdon.com davislangdon.com + 353 1 4320498 + 353 1 4320438 + 353 1 4320404 Cathal Barry Andrew Thompson Declan Hegarty Regional Director Associate Associate cathal.barry@ andrew.thompson@ declan.hegarty@ davislangdon.com davislangdon.com davislangdon.com + 353 61 318870 + 353 61 318870 + 353 1 432046546 | Davis Langdon People
  • 50. The Great Western Greenway, Mayo. (image courtesy of Mayo County Council andMichael McLaughlin Photography) Highfield Hospital, Dublin. National University of Ireland, Galway - New Engineering Building, Galway. Davis Langdon People | 47 (image courtesy of Neil Warner Photography)
  • 51. This page and Cover University College Dublin - Student Learning, Leisure & Sports Facility, Dublin. (images courtesy of Donal Murphy Photography)48 | Davis Langdon
  • 52. About AECOM Key offices in IrelandAECOM is a global provider of professional Davis Langdon, an AECOM Companytechnical and management support services Dublin Officeto a broad range of markets, including 24 Lower Hatch Street transportation, facilities, environmental, Dublin 2energy, water and government.  With T: 353 1 676 3671 approximately 45,000 employees around F: 353 1 676 3672 the world, AECOM is a leader in all of the E: paul.mitchell@davislangdon.com key markets that it serves.  AECOM providesa blend of global reach, local knowledge, Davis Langdon, an AECOM Companyinnovation and technical excellence in Galway Officedelivering solutions that create, enhance Heritage Halland sustain the world’s built, natural Kirwan’s Laneand social environments.  A Fortune 500 Galwaycompany, AECOM serves clients in more T: 353 91 530 199than 130 countries and has annual revenue F: 353 91 530 198in excess of $8.0 billion. E: john.o’regan@davislangdon.comMore information on AECOM and its services Davis Langdon, an AECOM Companycan be found at www.aecom.com. Limerick Office Mezzanine Suite Riverpoint Lower Mallow Street Limerick T: 353 61 318 870 F: 353 61 318 871 E: cathal.barry@davislangdon.com Davis Langdon, an AECOM Company Cork Office Douglas Business Centre Carrigaline Road Douglas Cork T: 353 21 436 5006 F: 353 21 436 5160 E: david.johnston@davislangdon.comProgram, Cost, Consultancywww.davislangdon.comwww.aecom.comDesigned and delivered by Baseline CS Ireland