Davis Langdon Ireland Review 2012

REVIEW
Davis Langdon Ireland Annual Review 2012

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Contents
INTRODUCTION 1 BUSINESS INTELLIGENCE 20
Pat Gunne, Green Property
OVERVIEW 2
Bill Nowlan, W.K. Nowlan
Medium Term Outlook
Maurice Mortell, Telecity
Construction Costs & Tender Prices
Donal Murphy, Bank of Ireland
Where now for the Public Sector?
NAMA: Is the bottom line everything? GEOGRAPHIES 26
Island of Ireland
SECTOR DEVELOPMENTS 8
UK
Public
Global Markets
Commercial
Retail TECHNICAL DATA 38
Residential Indicative Building Costs
Hotels, Sports & Culture Performance Bond Checklist
Infrastructure & Industry Project Planning Checklist
Development Budget Driver
INDUSTRY DEVELOPMENTS 14
Alternative Funding Sources for the DAVIS LANGDON NEWS 44
Property Industry Promotions
Work Outs by Asset Managers Public Sector Workshop
Repair & Maintenance Examples of Recently Completed Projects
Abnormally Low Tenders
DAVIS LANGDON PEOPLE 46

Introduction

Paul Mitchell
Director
Head of Office – Ireland

We are delighted to welcome you as getting its just comeuppance for the Some of the ideas or concepts
to this year’s Annual Review of the fallout of the boom. We currently have mentioned above are tried and trusted
construction industry. We have included an industry that has had 50% of its mechanisms used in the delivery of
a wide range of commentary and top ten contractors become insolvent projects in other jurisdictions and
analysis on the Irish construction since 2007, some remaining contractors solve a real need in delivering critical
industry, looking at each of the sectors choosing not to bid for certain public infrastructure. We need a champion at
and recent industry developments, work due to the cost of procurement the highest levels within government
plus our colleagues give an update on and risks associated with the public who will work towards delivering a
what’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 the
number of interviews with prominent are experiencing similar difficulties. positive effects of the Foreign Direct
industry figures who give us their Some ideas that the Government could Investment secured by the Industrial
thoughts on their sectors and areas of consider include: Development Agency (IDA) Ireland,
expertise. etc. Also, the recent announcement
The easy wins: by National Asset Management
Whilst on a global level construction - Introduce Procurement Passports Agency (NAMA) to inject €2 billion into
output is stable, if somewhat stagnated - Review handcuffs of Circular 10/10 construction over a four year period
in the short term, our domestic - Procure projects with committed to complete construction projects
market has continued its decline funding and address the shortfall in supply
albeit at a slower rate. Our estimate - Alter award criteria to deter below of appropriate space is extremely
of 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 construction
compared to a reduction of 27% the More difficult but achievable: output if it is delivered. We have also
previous year. So, the good news is that - Prioritise labour intensive projects seen some of the large funds enter the
the contraction is slowing; the bad - Deliver the capital programme market with purchases such as One
news is that the market is operating - Review the Capital Works Warrington Place which is a real sign of
at 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 would
growth from 2014, it could take until Trust (REIT) legislation into law like to take this opportunity to thank
2020 to reach the optimum level of all our clients and colleagues for your
output required for a proper functioning Leadership required; continued support during the year
industry. - Stimulus Package, e.g. healthcare and look forward to providing more
focused business solutions to you in the coming
In 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 Mitchell
industry 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 centres
some 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 – Ireland
or no action. It would appear that the Power paul.mitchell@davislangdon.com
construction 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

The Model Arts and Niland Gallery, Sligo.
(image courtesy of Paul Tierney Photography)

Consultants

Overview

The aftershocks of the financial
crisis continue to dominate the
framing of the Exchequer budgets
and domestic demand generally.

The last 12 months have certainly Medium Term Outlook levels which are unsustainable even in
been less “eventful” than the previous Of course what happened yesterday is the short term. We believe there is an
couple of years in terms of economic of relatively little importance compared urgent need to re-visit the strategy in
shocks and financial upheavals. The to what happens tomorrow. In this this regard and as we highlight in the
fact that we haven’t had any further regard the publication of the public following opinion piece the economy
significant banking debt added to capital expenditure plans in the annual needs an increase in investment in
the already seismic burden or had budget is always keenly awaited. social and productive infrastructure to
the need to introduce mini-budgets As has been the trend for the last provide both increased attractiveness
mid-year could be seen as a sense of number of years, the December 2011 to business and to act as a stimulus to
stability returning to the economy — if Budget included a multi-annual Public general economic growth levels which
you take the glass half full approach Capital Programme (PCP) extending out are struggling to stay out of recession
to economics. Certainly we feel that to 2016 (see Table 1). territory.
it is imperative that everyone takes
the glass half full approach, however, Unfortunately, the past experience of The construction industry has been
always remaining mindful of the such multi-annual capital programmes existing on a virtual treadmill for
baseline we are measuring against. has been their propensity to vary the last four years with the result
That 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 and
in 2008 and the aftershocks of the very characteristic of change could be fitter. The reality is that the race is
financial crisis continue to dominate used as precedent to instigate positive probably only half run, and with the
the framing of the Exchequer budgets change to the “programme” laid out for passing of the fiscal compact in the
and 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 markets
In addition, as a small open economy, value terms) on that approved for 2012 will demand that public spending will
we are significantly impacted by and this would further reduce output continue to be sharply restrained. We
activity levels in foreign markets and in in the construction industry below will be reliant on a boost in Foreign
particular Europe. The last 12 months
have been plagued by the never
ending string of crisis summits at the Public Capital Programme - Direct Exchequer Capital Funding €M
European level which have further
unsettled confidence, notwithstanding 2012 2013 2014 2015 2016 2012 - 2016
the weakening of the Euro having Transport, Tourism & Sport 1,231 900 879 818 818 4,646
some positive impacts in terms of (mostly road maintenance)
making our exports more competitive
in 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

Tomás Kelly
Regional Director
Medium Term Outlook

Direct Investment (FDI) and indigenous Figure 1: Construction Output Scenario Tracker
export companies, which we appear to
40,000 Optimum
be seeing the beginnings of, to mitigate
35,000 Construction Output
the reductions elsewhere in the private (Based on 12% of
sector. We expect output levels to 30,000 GNP) €’000’s
bottom out in 2013 before showing low 25,000 Construction
single digit growth in 2014 onwards. 20,000 Output €’000’s

15,000 Construction
There is a real danger of a skills Output
10,000
shortage materializing across a number (Scenario A 10%
of the key craftsmen and professional 5,000 p.a. growth) €’000’s
groups. 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’s
facing the construction industry,
Figure 1 shows the sustainable level
of output for the industry (based on
TABLE 2 : Construction Output Projections (e) Estimated (f) Forecast
The Society of Chartered Surveyors
Ireland (SCSI) Report stating 12% of
Gross National Product) based on 2% Construction Output €m €m €m
GNP growth and for the purposes of
2011 2012(e) 2013(f)
the example two scenarios of 10% per
annum and 15% per annum growth CENTRAL BANK 8,822 7,862 7,426
in construction output. We know from
Tender Prices % -1.10 —
experience that the growth/decline
rates of construction output are Volume Change % -9.90 -5.50
cyclical but even with these ambitious SCSI 8,684 7,448 6,956
growth examples it would be 2020
or 2023 before the sustainable Tender Prices % — —
level would be reached. In respect Volume Change % -14.50 -6.60
of our output projections in Table 2, DAVIS LANGDON 8,500 7,755 7,827
there are inevitably downside risks
however, hopefully the recent NAMA Tender Prices % 3.00 3.00
announcement of investment of €2 Volume Change % -11.40 -2.00
billion 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 matter
risks. As a measure of the significance
commentarys in the industry. too much as people’s incomes were
of 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 has
be equivalent to the proposed reduction
Increased competitiveness was a much been sharp and none more so than
in 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 the
Table 2 outlines a summary of our
some justification as everyone had cost base has been less elastic than
projections for the construction
got used to paying more for goods and prices. Tender prices saw a cumulative

4 | Overview

National University of Ireland, Galway - New Engineering Building, Galway.
(image courtesy of Neil Warner Photography)

It is not only consultants and contractors that find
public projects tough going. Individuals within public
bodies have been faced with their own range of
challenges, including a moratorium on recruitment,
non-renewal of fixed term contract staff, early
retirements, re-deployments, being forced to accept
below 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. However
inclusive whereas official statistics circa 3% p.a. in 2012 and similar to consultants and contractors it is
would indicate that costs have been modest increases in 2013, with the seen as an extremely challenging
largely 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 competition
course, 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 Tendering
in 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 industry
wage rates was indicated as a in 2012 is €7.75 billion as compared 3. Risk transfers
temporary 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 projects
a 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 construction
downward 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 projects
On the materials side, the continuing tough going. Individuals within public
increasing energy costs, growing Based on GNP of €129 billion/GDP bodies have been faced with their
demand in developing countries and of €161 billion in 2011 a sustainable own range of challenges, including
weakness 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 and
In summary, we would anticipate question is, in a number of years when decentralisation.
construction costs of circa +2% in 2012 (hopefully) stability and a sustainable
and +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 each
In terms of tender prices, after the have in Ireland? project has increased due to the
sharp decline referred to above, 2011 challenges of the economic climate
saw some stability return to the The current industry is characterised and the new procedures and contracts
market and we recorded an average by uncertainty, insolvency, below cost introduced through the Capital Works
3% increase. We would see this return tendering and conflict. This, combined Management Framework. These
to tender price increases more a with the massive reduction in output, procedures have been introduced with
correction 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 Department
the restoration of profits in 2011. drain, both from the industry and the of Finance Circular 10/10, whilst well
country. intentioned, placed another regulatory
Whilst we continue to see tenders being burden on project and procurement
submitted which could be considered The Multi Annual Capital Investment managers in the public sector.
“potentially abnormally low,” their Framework (MACIF) (see Table 1
prevalence is reducing. We would on page 3), shows a stable level of The net effect of all these issues is
anticipate tender prices to continue to spending over the next four years at a that the area of the Irish construction

6 | Overview

National Gallery of Ireland, Shaw Room, Dublin.

industry that one would expect to price, before embarking on funding
be the most stable is a very difficult construction projects.
place to do business in. The fear is that
dynamic and innovative players in Irish However, NAMA has played some role
construction industry will tire of the in getting projects moving, whether
challenges of public sector projects through supporting the borrowers in
and will turn their focus to emerging completing housing schemes, providing
elements of the private sector such staple finance to schemes being
as the Foreign Direct Investment (FDI) purchased by investors or completion
market or growth markets overseas. of schemes using receivers.
The potential knock-on effect of
this would be to leave public sector The previous 12 months have probably
construction projects in a place been the most productive in actual
characterised by confrontation, poor delivery of the individual business
performance and the associated plan objectives leading to a number of
challenges to successful delivery of distressed asset disposals that require
good projects. We are already seeing construction activity during their
examples of this on the ground. workout phase, albeit not amounting to
any appreciable turnover.
NAMA: Is the bottom line
everything? NAMA have approved working and
They certainly have had a busy year. development capital advances of
In last year’s annual review published €1.1 billion of which €506 million
June 2011, the focus was on completing relates to Ireland. This expenditure
the transfer of the loans. However, is being advanced through its debtor
the intervening period has seen NAMA companies, i.e. borrowers whose loans
make significant strides in the area of have been deemed eligible and have
enforcement. been transferred to the group.

In July, NAMA published a list of 847 In 2012/13 the best prospect one can 1200
properties which were in receivership hope for from NAMA in relation to what
1,169
1,119

or administration, a number which it can do for the construction industry 1000
1,093
1,040

steadily rose throughout the year to is the disposal of assets/sites that
800
887

1,169 at the end of March 2012 (see are in demand, e.g. incomplete office
847

Figure 2). blocks with ready to go end users/ 600
tenants, unfinished semi-detached,
400
NAMA have stated that it has housing schemes that are in demand,
completed its loan evaluation of etc. Obviously, the successful entry of 200
business plans covering 97% of the these schemes to market is dependent
loans on its balance sheet as at the end on the right purchase price as opposed 0
Jul 11 Aug11 Nov11 Dec11 Feb 11 Mar12
of 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/administration
construction industry? Obviously of suitable stock in the appropriate
one of the stated objectives of NAMA areas, it is likely that this year will be
is to dispose of assets, at the right more fruitful than the last.

Overview | 7

The National Gallery of Ireland, Milltown Wing, Dublin.

Expert

Sector
Developments

Across all sectors, the key trend
has been the reduction in the
contract values of projects in
recent years.

Last year we highlighted the seismic Figure 3: Estimated Sector Breakdown of Construction Industry 2012
shift in the construction industry (SCSI/Davis Langdon Estimates)
output over the five year period from
2006 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 that
programme 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, and
thankfully these early signs appear to allocation. Figure 4 illustrates the
be bearing fruit. departmental allocations and the One of the difficulties being
percentage adjustment in 2011. experienced in the first half of 2012
Across all the sectors, the key trend has been the slow progression of public
has been the reduction in the contract (For further details of Budget 2012 sector projects. There have been a
values of projects; reflecting both the Public Capital Programme please number of reasons, however, the two
decrease in tender prices in the last contact Tomás Kelly at tomas.kelly@ most prevalent relate to the area of
number of years combined with the davislangdon.com ) public procurement.
reduced scope of works being carried
out. Figure 2 illustrates the sector Figure 4 : Public Capital Programme Budget Direct Exchequer Funding 2011 & 2012
breakdown of the industry output in €m 10%
2012. 1600
0%

Public 1400
-10%
The Government announced the broad 1200
parameters of their 2012 Public Capital 1000
-20%

Programme when they published their
-30%
Infrastructure and Capital Investment 800

2012-2016 document in November 600 -40%
2011 and further detail and breakdown
400 -50%
was provided in the budget last
December. 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

Other

Framework (MACIF) 2012 provision
showed a 16% drop on the 2011 figures Percentage change

which has meant every department Output 2011

has seen a reduction in their capital Output 2012

Sector Developments | 9

Telecity Datacentre, Dublin.

JFK Primary School, Limerick.

10 | Sector Developments

John O’Regan Anthony McDermott Mark Smith
Director Regional Director Associate
Public Commercial Retail

Firstly, there appeared to be a the commercial office fit-out sector From a retailers perspective, the
significant slowdown in the number of was still reasonably active in 2011. Government’s decision not to proceed
etender contract notices in 2011 and with legislation in relation to Upward
the second half in particular. Due to Activity in the commercial office sector Only Rent Reviews combined with the
the 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 a
consultants, obtaining statutory compared to the first quarter of 2011 viewpoint that it will be later rather
consents and advertising and tendering but this is mainly due to prolonged than sooner for the retail market as a
main 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 year
capital 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 allow
The other factor has been the improves. companies considering large operating
increasing duration required in store’s such as Wal-Mart and Costco
the tender evaluation phase. This Demand for office space in Dublin is or even Tesco-Extra stores have been
has arisen for a number of reasons actually up 70% for the first quarter of aired in documents about Ireland’s
including: 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 operator
From the construction industry activity nor is there any foreseen for the of Iceland, opening new store’s in
perspective, and the wider economy, it next six months at least. One significant Coolock, Clonmel, Ashbourne and
is essential that these obstacles are new build development going ahead Carlow, plus other retailers mainly in
minimised to ensure value for money is to the design stage is the high-profile the pharmaceutical, food and discount
achieved 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 Retail
maximised. The Irish Retail Market is still very For new entrants and existing retailers,
challenging with a number of high- the availability of favourable terms with
Commercial profile closures in the first six months regards to rent free periods, period of
Although 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


Andrew Thompson, Eoin Dunphy
Associate, Residential, Associate, Data Centres
Hotels, Sport & Culture

prefer to own their own properties are Again, we would anticipate that most The redevelopment of Pairc Ui Chaoimh
providing the impetus for potential of the existing overhang of housing is unfortunately the only real significant
market 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 available
Residential limited public residential developments (€30 million announced recently for
It 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 significant
Review, we projected house completion and south side of Limerick city. projects moving in either the private or
units for both the private and public public sector is slim. Some works will
sectors to be 10,000 units. Department also commence at the National Sports
of Environment, Community & Local Hotels, Sports & Culture Campus at Abbotstown.
Government statistics show that Continued pressure in these sectors
10,480 units were completed for both seems to be the common theme in Culture Sector
the Private and Public sectors. This is recent years. Whilst there may be some In general, the outlook for the culture
a 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 reductions
2012 we would anticipate between sector and the hotel sector not realising in Government spending in this sector
5,000 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 €100
Current growth is again being restricted It is worth reminding ourselves that in million going to the Office of Public
by weak consumer demand, unstable 2004 there were circa 48,000 bedrooms Works (OPW) and circa €21 million
economic status and the uncertainty but by 2008 there were circa 64,000 — going to tourism. Of this combined total
regarding the availability of finance a 34% increase in capacity to match a of €165 million it remains to be seen
and also future capital values. With the demand that rose by just 12-13%. how much will be released into cultural
current supply overhang of available type construction projects.
units both completed and near With the existing room supply
completed, it is unlikely to be much outstripping demand, there is unlikely
movement here although in certain to be any real movement in new
areas of the Capital, 3 and 4 bed semi- development in this sector in 2012, and
detached houses are in demand. we may in fact witness some partially
completed works being demolished.
Public Sector One of the eagerly awaited hotels in
The net housing need figure at present Dublin that is scheduled for completion
shows that 98,318 households were in early next year is The Marker Hotel in
need 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

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 are
The outlook for the civil sector is a phenomenal growth over the past five reviewing strategies and looking for
case of contrasting fortunes — on years throughout Ireland and Europe. growth opportunities from varying
the one hand roads and rail having The attractive climactic conditions for geographies’ through foreign direct
delivered a national motorway optimizing free cooling low seismic investments. The companies that
network and significant investment activity, and sufficient Electricity embark on such initiatives face and
in the greater Dublin area with the Supply Board (ESB) supply has helped have to deal with many complex and
LUAS 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-term
significantly reduced expenditure. On data centre development. The pharmaceutical sector has shown
the other hand, with the advent of the strong investment in Ireland for
government 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 name
of Irish Water, significant investment the insatiable customer demand for but a few, that are either currently
should be made. We are also likely to space and ensure that your business is or planning to invest heavily in their
see strong investment in the energy ahead of the pack in securing those all operations for 2012. AECOM has a
sector. important resources required to deliver proven track record in this sector
on that demand, whether that be the globally and is expanding its presence
In terms of industry, as flagged earlier, expertise or the relevant technologies. in this sector in Ireland as well as
2012 has seen a renewed stream With time as the driver, data centre maintaining its service with current
of development from indigenous clients need teams that have the Irish pharmaceutical companies.
manufacturers performing strongly in proven expertise and track records
the export markets and foreign direct in delivering programs in multiple
investment inflows. This of course is locations concurrently using tried and
extremely welcome and a sign that our tested low cost models which meet the
competitiveness has improved against highest standards.
that of some of our competitors.
One specific example would be the


Industry
Developments

Professional

University College Dublin - Student Learning, Leisure & Sports Facility, Dublin.

One of the features of the industry from a
client and consultant perspective in the last
couple of years, and likely to continue in the
medium term, has been the level of activity
aside from actual construction works.

Every year sees the list of industry Alternative funding sources for not pay tax within the company and
issues dominating the agenda change the Property Industry therefore avoids double taxation. It
and 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 to
with the challenges of the day. In its shareholders. It works through
2011, we looked at subjects such - Private equity, buying shares in a listed property
as The Capital Works Management - Short-term and long-term finance company that has elected for REIT
Framework (CWMF), NAMA, Insurance from financial institutions, status and operates in accordance
Valuations, etc. - State funding, with REIT regulations. These
- Institutional investors, e.g. pension regulations are intended to ensure
This year we summarise a cross funds. the company is primarily engaged in
section of some of the key industry property investment, rather than in
developments that have been the We know that private equity is scarce, development.
subject of much discussion and/or debt finance is not available at the
market 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

Paul Mitchell Neil McBeth
Director, Head of Office Associate, Due Diligence

of the individual assets. As mentioned Pike Architects, incorporates the countries have been looking at ways to
earlier, REITs are not permitted to lend example whereby a promoter (private, fund these projects without such credit
into development. However, one would local authority, housing association) wrapping.
expect that in the context of a strong obtains land and develops a residential
covenant, a REIT providing the long- scheme which is then “bought out” In October of last year, the European
term finance that a bank or banking by an investor (e.g. pension fund, etc). Union adopted a legislative proposal
syndicate would be in a strong position The residents then pay a capital rent launching the pilot phase of the €50
to 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 revive
Maybe this Utopian example is not that 10-20% lower than the market rent. and expand capital markets to finance
far off when you consider the pent- Any payment above the capital rent is large European infrastructure projects
up investor demand, the impending treated as equity, or buying part of your in the fields of transport, energy and
shortage of premium office space to home, with full ownership being the information technology. Although the
satisfy the incoming multi-nationals, ultimate goal. “project bonds” proposal from the
the value in the marketplace and the European Commission is subject to the
requirement 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 transport
Rental Sector (PRS) to fund large infrastructure projects connections in the ports of Dublin and
The basic model for development in and were very common in the United Cork.
the residential sector, for the most States and South America. Instead
part, is Develop and Dispose, i.e. of using traditional bank lending, the As this is only the pilot phase it is likely
the developer purchases the site, project company could raise the senior to take some time before we see a
constructs the residential stock and debt through project bond issues. direct impact on project funding in the
then sells it to homeowners/private Capital market investors would buy the local market.
investors. One of the scenarios where bonds if an investment grade credit
an equity partnership comes into play rating, preferably at least A-, could be So, in relation to alternative sources of
is when the ultimate purchaser is not achieved. funding it does not appear as though
in a position to secure the finance we are on the cusp of a breakthrough
to purchase their own property, e.g. Owing to the inherent risk in directly in the near future. Looking at the few
potential purchaser can’t obtain a funding construction projects, they transactions that have taken place
mortgage. There are various forms of were insured by “monoline” insurers in over the past year, it would appear
Equity partnerships, particularly in the a process known as “credit wrapping.” to be more a case of using the best
US, whereby the ultimate residents own However, these insurers faltered during ingredients available and sticking to
their homes or shares in the overall the downturn due to guaranteeing grandma’s old tried and trusted recipe
development. billions of dollars worth of sub-prime than any type of haute-cuisine.
debt, and projects have stalled as
A proposal being led in the Irish a result. In response to this and
context by James Pike, of O’Mahony burgeoning investor coffers, different

16 | Industry Developments

The National Gallery of Ireland, Dublin.



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-out
analysis of a potentially permutations, including critiquing
with a significant number of distressed
abnormally low tender will and incomplete construction projects the disposal strategy options.
assist in developing an and a long list of developer and
effective risk mitigation contractor insolvency casualties. - Unraveling of historical deals and
agreements
programme. 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 Construction

18 | Industry Developments

Stuart Griffin John O’Regan
Associate, Project Director
Management

Industry Review and Outlook 2010 actively managing their real estate and European Union (EU) procurement
Report). we are working with others to develop guidelines and directives. These
asset registers, including schedules of must be scrupulously followed by the
Of course, the need for repairs and condition and planned and preventative client or there is a risk of a successful
maintenance is ever present. Real maintenance schedules. challenge to the process which would
estate that is not maintained will start result in the outcome of the process
to diminish over time in functionality The improvements segment of RMI has being overturned or damages becoming
and 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 have
of the building the wear and tear of been downsizing or re-organising to There is detailed guidance available on
the building and its fabric starts. Once sub-let space. In some cases where in the steps to be taken in assessing ALT’s
one system or element fails, there is a different climate clients may have and these involve seeking clarifications
generally a consequential knock-on chosen the new build option, they are and additional information from the
effect on other elements and systems. now making the decision to refurbish tenderer in question. By demanding
For example, if a hole appears in a roof their existing space. this level of information and employing
covering, there will inevitably be water expert analysis from the quantity
damage on the internal fabric of the Abnormally Low Tenders (ALT’s) surveyor and design team, the client
building and services. Should the plant Have you ever received (or submitted) can obtain a very clear picture of how
and equipment and services start to an abnormally low tender for the bid was prepared and how robust
fail 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 public
will 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 low
Frequent and regular repair and I think the answer to the first question but that it is critical that the detailed
maintenance is the most cost effective above would be a resounding yes assessment is carried out. Often the
way for providing and retaining a good from just about everybody involved investigation results in the bidder
functional building. The inspection of in tendering in the Irish construction realising the challenges that their
existing buildings is key to effective market. tender presents and withdrawing their
asset maintenance and management. tender. In other cases, the investigation
Identifying and analysing the problems, The answer to the second question uncovers issues that can be resolved
assessing the risks, and establishing a is harder and the answer may well prior to contract and hence avoiding
strategic 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 potentially
repair and maintenance of buildings It is not uncommon for the lowest bid abnormally low tender will assist in
is reactive, where designers and sub to be passed over in the commercial developing an effective risk mitigation
contractors work to address issues world. Are these decisions always programme. Typical mitigation
as they arise, and clients spend little fair — maybe not — but in the private measures include increased provision
time assessing, scheduling, planning sector, as long as the tender documents of onsite cost, programme, quality
and budgeting to prevent such issues are structured right, it is the clients and safety monitoring, increased
arising. Resources allocated to call. The disappointed contractor or contingency provision, increased
evaluating and putting plans in place to consultant has no come back. focus on project administration and
repair and maintain real estate How about the public sector? structured project management
anticipating and planning to address The position here is much more processes involving principals of all the
issues before they become problems, complicated. There are defined bodies involved.
is money well spent. Some clients are processes both in national and


Leaders

Business
Intelligence
7 & 8 St James’ Square, London.

We believe it is important to listen
to and understand the issues from
the key leaders in the industry

Davis Langdon, an AECOM company, Pat Gunne,
has extensive knowledge and Managing Director, Green Property
experience across the full spectrum
of service lines and sectors in the Commercial:
industry. However, notwithstanding Q Stamp duty reduction; Upward
this 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 the
to first listen to and understand our effect?
client’s requirements. A The changes you mention
are significant to the extent that
In the same way, when we are writing investment in real estate had
our annual review, we believe it is become a binary issue. Once
important to listen to and understand the UORR came on the table for
the issues concerning key leaders discussion, and it was surrounded by
in the industry and in the current uncertainty, the market shut down so
climate people who are at the coalface it has been significant to the extent
in terms of delivering or facilitating that Ireland is investable again,
growth in key sectors in the coming Finance:
however, in terms of activity, the
years. 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 entirely
too! dominated by NAMA. Bank of Ireland
To re-ignite the market, you need
(BOI) and Allied Irish Bank (AIB)
external capital investment because
So we have summarised in question have both said they want to lend
the domestic equity has been
and answer format, interviews we to the sector, however, both banks
effectively wiped out due to the
conducted 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. Net
challenges, 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

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

“ 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.


For example, if you were to set up the
equivalent of an IFSC for the IT industry,
you are creating an environment making
it easy and competitive to come in and set
up 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 are
A 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

Donal Murphy, months to get through the initial to procure via PPP and stick to them
Director of Project Finance, stages and the fact that there are rather than spreading resources too
Bank 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 specific
Q 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 previous
A 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 procurement
Q 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 attracting
A 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


The Shard, London.
(image courtesy of Sellar Property Group)

Team

Geographies

Notwithstanding these challenges, the
regions are seeing pockets of revival in
different sectors and we identify a number
below which have been particularly active.

If we were ever in any doubt that we Island of Ireland are a reduced number of experienced
operated in a global market we only contractors, difficulty in getting
have to look back over the last few In larger countries, significant regional specialist sub-contractors, continued
years at a catalogue of international variations in output can and do prevail presence of abnormally low tenders
events which have impacted on world from time to time, depending on and delays in obtaining performance
markets 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, the
our own which are highly dependent more subtle. regions are seeing pockets of revival
on international trade. Unfortunately in different sectors and we identify
for Ireland we had our own domestic This is largely due to what some might a number below which have been
financial 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 there
With this in mind, it is important to distribution, and by implication votes. has been a sustained primary and
look 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 in
Irish contractors and consultancy will be needed to match the demand the near future the department will
practices are seeing increasing of the demographic distribution, so be devolving delivery of parts of the
business 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). In
Percentage 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

Geographies

there still remains a sizeable proportion On a positive note, a new landmark significantly and provides high
of the population which continue to building, a central headquarters office performance training facilities for elite
pay 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 of
entrants to the market, existing players 2012. In the private sector the Industrial/
such as the Bon Secours and Galway pharma/food/technology sectors have
Clinic 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 in
Industrial projects of note that are getting the likes of Boston Scientific, Ely Lily
As noted earlier in the review there underway in the region. Probably the and Pepsi. Also, Leibherr have made a
has 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 in
manufacturing sector and this has been the midwest regional hospital campus With the success of the O2 and
well 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 appetite
first quarter announcements from the state of the art, healthcare facilities to for an arena in Cork. Badly needed
IDA (summarised below) we can see an the region. The Limerick Regeneration many would argue, currently a race
indication of the range of sectors and Agency (LRA) is also progressing a between the BAM/Heineken Brewery
regional 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 now
Limerick, Mid-West Region. Accommodation.” have planning permission. In private
Small scale refurbishments and fit outs healthcare, the Bon Secours Northern
have taken the place of the previous Cork & Southern Region Block project is due to go to site in early
large-scale private commercial and Cork and the region generally has got summer, which will provide a much
industrial developments. Commercial at least its fair share of the school needed boost to construction activity
property owners are having to work building programme with a number in the city. On the sporting front the
harder to find alternative uses for their of new schools, and large stand alone Gaelic Athletic Association (GAA) are
properties in order have any chance of extensions to existing schools, getting making a significant investment in
securing lettings, and in a lot of cases the go-ahead. University College re-developing Pairc Ui Chaoimh, with
are 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 offering

Table 3: IDA Ireland Announcements Jan - Apr 2012

Region Announcements Jobs IT Financial Pharma Other

Greater Dublin Area 9 1,280 1 8
South 4 230 1 1 2
Mid-West 2 32 2
Connaught & North West 3 525 1 2
North East 1 1,000 1

28 | Geographies

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.

Geographies | 29

Geographies

Figure 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 contracts

30 | Geographies

Titanic Belfast (image courtesy of Christopher Heaney Photography)

Geographies | 31

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 is
pipeline of private clients who may have more work to forecast but contractors will try to
commercial work in London offer in the future. Clients and their improve margin wherever they can.
(but not elsewhere), consultants and main contractors
programmed to start are now even more concerned over Construction output and new orders
the stability of the supply chain with Construction output as measured by
during 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-housing
holding 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% and
pressing 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 forced

32 | Geographies

For the second year running China was the
largest construction market in 2011, and is
forecast to be the fastest growing market
through 2012.

On a regional basis, all regions apart Figure 6: US$B
from Western Europe and North
America saw positive construction 0 100 200 300 400 500 600 700 800 900 1000

spending growth, although at reduced
China
levels to those of the recent past. Asia
and Latin America were the fastest USA

growing regions through 2011 by a wide Japan

margin. Germany

Brazil
For the second year running China India
was the largest construction market in
France
2011, and is forecast to be the fastest
UK
growing market through 2012 (Figures
Italy
6 & 7).
Korea

There were some large regional Mexico
differences throughout the year. Australia
Construction spending in Western Spain
Europe was the most affected with Others
a contraction of 3%, with the most
significant falls occurring in Portugal,
Ireland, Italy, Greece and Spain. The
continuing sovereign debt problems 8
and Eurozone crises suggest that
Western Europe will continue to
6
struggle in the near term.

Regional Overview 4

Our review of world construction in
2011 and outlook for 2012 and beyond 2
concentrates on the six main trading
blocks, namely: Africa; the Americas; 0
Asia Pacific, Australasia; Europe and
the Middle East.
-2

Asia Pacific
Asian markets are expected to continue -4

to exhibit robust construction spending
growth through 2012. China (+9%) is -6
the standout followed by India (+8%),
Indonesia (+8%) and Vietnam (+7%). All -8
sectors are likely to exhibit significant
USA

China

Japan

Germany

Italy

France

Brazil

UK

Korea

India

Mexico

Spain

Austrailia

Others

growth, largely led by non-residential
construction.

Figure 7: Percentage Change

Geographies | 33

Olympic Stadium, London.
(image courtesy of Populous)

David Crosthwaite
Davis Langdon, London,
an AECOM company.

China not only exhibits significant postponement/cancellation of many Middle East
levels of growth but is also the largest planned infrastructure projects. In the Middle East, moderate
market 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 in
construction 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 experience
western provinces. Through to 2015, continuing declines in construction Saudi Arabia, the largest market in the
infrastructure spending is expected spending through to 2015, with little region, is also expected to lead much
to 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 of
India on the other hand only accounted is expected to decline significantly (by which will be led by Abu Dhabi rather
for just over 10% of the total Asia as much as 10%) while growth in the than Dubai which remains subdued and
Pacific market. Given the current remaining countries remains largely is largely expected to remain that way
constraints 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 Europe
solutions in the provision of much of returns to output levels last seen in Preparation for the FIFA World Cup
the new infrastructure needed.Japan 2007. 2022 and upgrading of associated
is expected to see sizable increases infrastructure is expected to make
in construction spending through In Eastern Europe there is a more construction spending growth in Qatar
to 2015 as the earthquake/tsunami positive picture of construction amongst the fastest in the world
re-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 these
expected to provide a short-term spike markets are significantly smaller Africa
in construction activity which is likely to in terms of volume than those in Following the recent turmoil in much
return 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, although
Europe residential sector closely followed by there are expected to be significant
Sovereign debt crises and the infrastructure. opportunities going forward. In
uncertainty in the Eurozone are particular, re-construction in Libya and
continuing to constrain construction The fastest growing countries in infrastructure upgrades in Egypt are
spending growth in many Western Eastern Europe through 2012 are likely to act as a stimulus for the region
European markets. Only the expected to be Poland (+9.1%) followed through to 2015. However, much of this
Scandinavian counties are likely to by Russia (+6.5%) and Turkey (+5.5%), has yet to materialise given the ongoing
be 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 a
to see declines through to 2015 whole. In the rest of the region there is a
with only limited growth forecast in mixed picture emerging, with some
both non-residential and residential areas of strong growth particularly
construction spending. Austerity Nigeria (+8%) with continuing declines
measures in many Western European in others, particularly South Africa.
countries have focused on the Infrastructure construction is forecast

Geographies | 35

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 expected
2020
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 company

36 | Geographies

2016 Olympic Park, Rio de Janeiro, Brazil.
(image courtesy of AECOM)


Knowledge

Technical Data

Indicative Building Costs

€ per square metre The figures quoted are for mid-range
buildings in the Dublin area at January
Healthcare 2012 prices. Due to the volatile nature
Hospitals 1,600 2,500 of the current market and the low
Primary Care Centres 1,400 1,800 tenders being received, it is possible
Nursing Homes 1,400 2,000
that tenders will be received outside
Education of these ranges. Professional advice
Primary Schools 930 1,100 should be sought for specific projects.
Secondary Schools 930 1,100
Third Level 1,350 2,500 The Davis Langdon indicative building

Commercial costs should NOT be used for fire
Offices - 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 Tax
Apartments (12-16 storey) 1,500 1,950 - Professional Fees
Social Housing 850 1,250 - Inflation
Sheltered Housing 950 1,450 - Fit-Out
Housing (Suburban Housing) 800 1,000 - Landlord Fit Out/Landlord Credits

Industrial - Furniture
Warehouse/Factory Shell 550 650 - Planning Levies, Fees & Charges
Factory (Basic) 650 900 - Demolition
High 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 3,000
Swimming pool (60% wet & 40% dry) 1,600 2,100
Car Parks
Surface (including drainage & lighting) 100 210
Multi-Storey 350 600
Single Basement 500 800
Double Basement 700 1,100
Public Buildings
Fire Station 1350 1650
Prison 1850 2500
Courthouse 1650 2050

Technical Data | 39

Key Performance Bond Actions

Unfortunately, the focus on performance bonds has
increased dramatically in recent years due to market
forces. Broadly, a performance bond is a “contract of
guarantee” whereby one party (the guarantor (the bond
provider) undertakes to pay damages to a second party (the
employer) arising from breach of contract by a third party
(the contractor). Set out below is a checklist of actions in
acquiring and calling in a bond.

Summary of Key Performance Bond Actions

Ref Description Checklist Ref Description Checklist

1.0 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)

Introduction
40 | Technical Data

Project Planning Checklist

Checklists are perhaps the simplest and most productive An experienced project manager will assist you through these
means of building consistency in work practices. In this stages, with development of a project management plan
project planning checklist, we summarise a high-level twelve capturing planning strategy, execution strategy and project
point checklist of important project planning steps to help management techniques that address items 1 to 9 below thus
you pave the way to successful project management. creating a platform for successful project management and
delivery.

Ref Description Checklist Ref Description Checklist

1. 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 arise

6. 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


42 | Technical Data

Development Budget Checklist

It is critical in establishing a development budget to adopt
a methodical approach and to ensure those conducting
the exercise have the experience and database of relevant
information to establish a realistic budget. A sample of the
principal budget headings are listed in the Table below.

Summary of Development Budget Checklist

Ref Description Checklist Ref Description Checklist Ref Description Checklist

1.0 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

Highfield Hospital, Dublin.

Performance

Davis Langdon
News

Promotions
We are delighted to announce that
we made two promotions within our
management team this year.

Jason Hobson Shaw, who has been
with us since 1998, was made a
Regional Director and is based in the
Dublin office. Jason, who spent a
number of years working in Australia
and the Far East, leads our healthcare
team.

Declan Hegarty, who joined in 2006,
has been promoted to Associate in
our Dublin office. Declan has a wide
range of commercial experience having
delivered the €200 million Grand Canal
Theatre and is currently delivering the
Grangegorman HSE facility and the
Grand 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 the
Jason Hobson Shaw Declan Hegarty
public sector capital programme.

Davis Langdon News | 45

Davis Langdon
People

Paul Mitchell Tomás Kelly David Johnston
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
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@
+ 353 1 4320481 + 353 1 4320413 + 353 21 436 5006

Gregory Flynn Mark Smith Eoin Dunphy
gregory.flynn@ mark.smith@ Eoin.dunphy@
+ 353 1 4320498 + 353 1 4320438 + 353 1 4320404

Cathal Barry Andrew Thompson Declan Hegarty
cathal.barry@ andrew.thompson@ declan.hegarty@
+ 353 61 318870 + 353 61 318870 + 353 1 4320465

46 | Davis Langdon People

The Great Western Greenway, Mayo.
(image courtesy of Mayo County Council and
Michael McLaughlin Photography)

Highfield Hospital, Dublin.

Davis Langdon People | 47

This page and Cover

University College Dublin - Student Learning,
Leisure & Sports Facility, Dublin.
(images courtesy of Donal Murphy Photography)

48 | Davis Langdon

About AECOM Key offices in Ireland
AECOM is a global provider of professional Davis Langdon, an AECOM Company
technical and management support services Dublin Office
to a broad range of markets, including 24 Lower Hatch Street
transportation, facilities, environmental, Dublin 2
energy, 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 provides
a blend of global reach, local knowledge, Davis Langdon, an AECOM Company
innovation and technical excellence in Galway Office
delivering solutions that create, enhance Heritage Hall
and sustain the world’s built, natural Kirwan’s Lane
and social environments. A Fortune 500 Galway
company, AECOM serves clients in more T: 353 91 530 199
than 130 countries and has annual revenue F: 353 91 530 198
in excess of $8.0 billion. E: john.o’regan@davislangdon.com

More information on AECOM and its services Davis Langdon, an AECOM Company
can 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.com

Program, Cost, Consultancy
www.davislangdon.com
www.aecom.com

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