Facilities & Property Capital Expenditure

Transcription

1 Irish Water Facilities & Property Capital Expenditure Interim Price Control Submission Document No: IW-IPC-004

2 Contents 1 Executive Summary 1 2 Assumptions Activity Metrics LA Legacy Building Capital Projects Standards/Regulations Specific Asset Requirements Building Energy Management Fleet Management 6 3 Projected Property & Facilities Capex Capital Expenditure Budget for Irish Water

3 1 Executive Summary The Facilities function in Irish Water plays a crucial role in supporting the organisation to attain its goals and objectives. The management of strategic resources is vital to ensuring that facility and fleet assets are optimised across the organisation. This can be achieved by providing in the most cost effective way, the necessary property, facilities and fleet of a national utility, in dealing efficiently with everyday operational issues whilst keeping a sharp focus on the best use of assets. This document outlines the proposed Capital expenditure budget for Irish Water (IW) Property and Facilities services during the Interim Price Control period 2014 to These budgets have been determined using best practice industry facility standards and processes, incorporating known data from Bord Gáis Éireann (BGÉ) current actual annual expenditure in this area. Facilities have where possible, identified existing assets to be reused and refurbished, in order to minimise capital expenditure costs to Irish Water. This includes the re-use of the Foley Street building, from the Irish Water Programme, in addition to the identification and proposed reuse of Local Authority property assets in Cavan, Kilkenny and Mullingar. In order to deliver on IW s commitment to provide safe, affordable and environmentally compliant water services to all customers, the following capital expenditure on facilities and fleet nationwide will be required over the Interim Price Control period. The Facilities and fleet operational costs (opex) for the period are discussed in the Target Operating Model submission (IW-IPC-007). Key Property and Facilities requirements across the interim price control period include ; Activity No of Office Properties (no.) Headcount Accommodated (FTE) Floor Area (m 2 ) Fleet Vehicles (no.) Total Facilities Capex (inc Vat) ( m) end 2013 end 2014 end 2015 end c.9,150 c.13,000 c. 12,900 c. 12,900 na na Table 1 Key Property, Facilities and Fleet requirements across the period 2014 to 16 Capital expenditure (Capex) across the period is required for a number of large facilities projects such as refurbishment upgrades, critical building plant replacement, and technology upgrades as IW roll out its property, facilities and fleet footprint from go live, in line with the target operating model (ToM). The Capex budget refers to capital expenditure which will provide long-term business benefits. During the Interim Period these benefits will be associated with reuse and refurbishment of existing assets, acquiring and occupying new office space at the best possible costs. Some new assets will also have to be provided for IW, where assets from the LAs were not available and these will be done as efficiently as possible, leveraging BGE competence, experience and under open competitive tender. 1 Irish Water

4 2 Assumptions This section will identify the key activity metrics used to determine cost estimations relating to Property and Facilities Capex. It will then describe the Capex requirements for the Interim Price Control period; and define cost drivers, how these have been applied and the assumptions surrounding them. 2.1 Activity Metrics The budget amounts apportioned to the Capex budget have been calculated based on costs historically incurred by BGÉ to deliver similar services and activities. These costs have been scaled upwards or downwards based on: Asset Size; Occupancy Rate; Asset Type and Use; Assumed Asset Age and Condition; Statutory Requirements; Satisfying Existing and Emerging Legislation. The known property metrics are determined in Table 2 below - where a budgetary cost has been estimated based on a building activity metric, these values have been applied to generate that estimation. The current costs include resources, materials and the equipment required to undertake the defined activities. Building No. of buildings Headcount Capacity Floor Area (m 2 ) HQ Dublin (Colvill House) ,100 Foley Street, Dublin ,950 Harbourmaster 5, Dublin ,100 Large Regional Offices - Mallow - Castlebar - Dublin to 800 Satellite Regional Offices - Limerick - Kilkenny - Donegal - Cavan - Mullingar to 450 Operations Command / SCADA Control Centre ,000 Table 2 - Detailed Activ ity Metrics per property 1 This building will transfer from Irish Water Programme (IWP) to Irish Water (Dublin Regional Office) in 2014 as the IWP progresses to completion. 2 Harbourmaster will continue to be utilised until space becomes available in other IW office locations, it is currently planned to release this building at a lease break point and to carry out a schedule of dilapidations. 2 Irish Water

5 2.2 LA Legacy Building Capital Projects In the capital budget submission, IW has analysed the space inherited by IW ( in the reuse of legacy and LA property assets) and identified that it will not be fully statutory compliant, or that there will be some retrofitting required to ensure that the space adequately meets the business requirements of IW. Furthermore, it is necessary as part of the asset transfer process, that all properties will require a certain amount of due diligence to map out areas of targeted spend to ensure fitness for purpose and full statutory compliance. An estimation of the cost associated with this work in dealing with the LA legacy buildings, is included in the table below. It has been prepared on a best available information basis, based on the high level of uncertainty of assets being transferred across to IW. Building No. of buildings Headcount Capacity Floor Area (m 2 ) LA Legacy Buildings (per facility) Table 3 LA Legacy Building estimation Key Cost Drivers The LA legacy building capital budget is influenced by the scale and nature of: Uncertainty around assets being transferred across Space Requirements; Inherited Asset Age and Condition; and Inherited Asset Statutory Compliance Level and the size of gap to achieve full compliance. 2.3 Standards/Regulations Changes in regulations will significantly impact the need for new capital works programmes on all new and legacy buildings, these specifically include: National Energy Efficiency Action Plan (NEEAP); EU - Energy Efficiency Plan 2011; Re-cast Energy Performance of Buildings Directive 2010/31/EU; Technical Guidance Document Part M Compliance (Access and Use); FGas Regulations; Emergency Lighting Standard I.S. 3217; Fire Detection and Alarm Systems I.S. 3218; and Passenger Lift Regulations. The offices in Foley Street and Colvill House, Dublin were built in 2000 and 2002, respectively, so all equipment (e.g. HVAC), originally installed in is now 10 to 15 years old. It is envisaged that much of the building systems equipment will require major upgrade or replacement at intervals over the Interim Price Control period based on the life expectancy of specific equipment. 3 Irish Water

6 Key activities/programmes of work planned for during this period include: Buildings and Equipment; HVAC Replacement (CHP, LPHW, Boilers, Pumps, Chillers, FCU, AHU, Extract Fans etc.); Mechanical and Electrical Upgrade of the Data Centres/Communications Rooms; Energy Efficiency Compliance; Part M (Access & Use) Compliance; Building System Upgrades (Fire Detection & Alarm Panels, BMS etc.); Building Fabric Upgrades; Security System Upgrades (Access Control, CCTV etc.); Lamp Replacement & Emergency Lighting Upgrades ; Kitchen Equipment Replacement; Lift Refurbishment, Interior Alterations and office equipment; Furniture and Chairs; Plumbing and Drainage; General upkeep and refurbishment of sites. 2.4 Specific Asset Requirements Dublin HQ (Colvill House) Fit Out IW personnel in Dublin are currently accommodated in buildings in Colvill House, Foley Street and Harbourmaster 5. The capital costs for 2014 include a proportion of the costs associated with the completed fit out works for Colvill House which is currently providing the accommodation for the IW HQ. The remaining allocation of the costs associated with Colvill House are accounted for in the Shared Services Price Control Submission (IW-PC-008). There are no fit out capital expenditure costs budgeted for 2015 and Dublin Offices Capital Upgrades There is an on-going requirement for capital works upgrades to maximise the operational life of various assets in the IW Dublin offices. It is expected that expenditure will also be required for miscellaneous works needed to meet the business needs of the organisation as it develops. In line with the ToM rollout, it is envisaged that the lease in Harbourmaster 5 will not be renewed after There will however be some cost associated with the residual schedule of dilapidations of the building after this period Regional Offices Fit Out and Upgrades IW will require three regional offices in Dublin, Mallow and Castlebar and an additional five satellite offices in Kilkenny, Limerick, Donegal, Cavan and Mullingar, to ensure it can effectively manage the water services infrastructure across all regions. The multi office locations will assist with the implementation of systems and processes that best manage the water services infrastructure at a regional and national level. Currently there are temporary facilities in place in these locations to serve the immediate/short term needs for IW. IW will secure enduring properties for all locations in 2014 and fit them out for occupation in Q2 and Q Expressions of Interest are currently being assessed for office space in the various regions where LAs cannot offer suitable accommodation. The completion of the enduring regional offices is a critical activity for 2014 and must be completed to meet the needs of the fully operational organisation. There will also be a requirement for on-going capital work upgrades to maximise the operational life of the various assets in the regional offices. These works are required to ensure the facilities meet the 4 Irish Water

7 requirements of the business throughout their operational life. It is expected that capital expenditure will also be required for miscellaneous works in regional facilities to meet the business needs as the organisation develops Local Authority Legacy Building Maintenance As part of the transfer of assets from 34 LAs to IW, it is expected that some facilities, such as laboratories and smaller office accommodation/control centre buildings will become the responsibility of the Facilities Team. The scale and condition of these assets is currently unknown, however IW assumes that six buildings per year over the Interim Price Control period will be taken on board. IW will make capital allowance provisions for detailed due diligence assessments and a budgetary allowance for capital works has also been allocated to make these buildings compliant with all necessary statutory requirements in particular life safety systems (fire alarms, emergency lighting, means of escape etc.). IW also believes there is the possibility that some of these buildings may have environmental remediation requirements, such as asbestos removal, contaminated soils, etc., the extent of the works is completely unknown at the time of submission. A provisional estimate has only been included, within our budget request for this area Operations Command Centre IW plans to establish a centralised Control Room in the greater Dublin Area to provide for one centralised Operations Command Centre. The new Command Centre will centrally monitor and control the SCADA systems for all water services infrastructure located across Ireland. Supervisory Control and Data Acquisition (SCADA) refers to centralized systems which monitor and control entire sites, or complexes of systems spread out over large areas. Similar facilities are already in place for the Gas Network operated by Bord Gáis Networks (BGN) and the Electrical Transmission System operated by EirGrid. The new Command Centre facility will operate on a 24/7 basis as is the case with the BGN and EirGrid command centres. This will be critical to Asset Operations effective management of the national network infrastructure going forward. 2.5 Building Energy Management In order to meet legislative and regulatory requirements of Irelands 2nd National Energy Efficiency Action Plan (NEEAP) IW will be required to initiate and maintain a proactive Energy Management System (EnMS). Under this plan the public sector has been challenged to reach verifiable energy-efficiency savings of 33% by Since January 1 st, 2011 public sector bodies are required to report annually on their energy usage and actions taken to reduce consumption in accordance with S.I. 542 of 2009 to SEAI. From January 9 th, 2013 publicly owned buildings over 500m2 are required to exhibit a Display Energy Certificate (DEC) to encourage public authorities to adopt environmentally responsible and efficient use of energy in buildings in accordance with S.I. 243 of 2012 and S.I. 666 of As per Table 2 the majority of IW offices are over 500m 2. The Building Energy Management budget includes capital expenditure to meet these requirements Key Cost Drivers The energy management capex budget is influenced by the scale and nature of the following items: Capturing energy performance of property through metering, including installing meters ; Tracking and reporting energy consumption; and 5 Irish Water

8 Defining baseline consumption to help identify reduction target actual values. 2.6 Fleet Management The responsibility for Fleet Management is carried out by the Facilities function in IW. IW will require a properly managed fleet (of similar scale and type to BGE) to enable IW operational staff to inspect, service, maintain and respond to emergencies of assets in a timely and safe manner. The fleet will be crucial to IW s objective of improving customer service quality. Fleet Management assumes a set of vehicles and associated costs for the purchase and capital fit out of those vehicles for IW. The budget costs are built up based on a schedule of rates per activity. The volume of vehicles is based on an assumed number of vehicles similar to current volumes at BGÉ. This submission assumes that the vehicles are maintained in a road worthy condition but require some expenditure for branding and fit-out in order to deliver critical IW business functions. A total fleet expectation of 80 vehicles will be required nationwide, with a procurement profile of 40% of fleet in year 1 and year 2, with the residual 20% in year Key Cost Drivers The Fleet Management Capex budget incorporates the following items: Number of Fleet Vehicles to be purchased and maintained; and The fit-out requirements to deliver IW business critical functions. 6 Irish Water

9 3 Projected Property & Facilities Capex 3.1 Capital Expenditure Budget for Description Dublin HQ Fit Out (Colvill House) Dublin HQ Capital Upgrades Foley Street Capital Upgrades Regional Offices Fit Out, UpGrades & Schedule of Dilapidation Building Energy Management LA Legacy Building Due Diligence and Essential Capital Works Operations Command / SCADA Control Centre Enduring 2014 (Q1 - Q3) Enduring 2014 (Q4 ONLY) 2014 Inc VAT 2015 Inc VAT 2016 Inc VAT Total 3,372,513 1,215,521 4,588, ,588, , ,500 1,135, ,813 70, , , , ,250 2,927, ,688 3,902,750 1,409, ,350 5,777,850 32,288 10,763 43,050 43,050 43, , , , ,990 1,476,000 1,476,000 3,721, ,500 61, ,000 1,722,000 61,500 2,029,500 Fleet 553, , , , ,000 1,845,000 Totals Facilities CapEx (Inc VAT) 7,860,168 2,711,406 10,571,574 6,240,050 3,266,150 20,077,774 Table 4: Property and Facilities Capex Breakdown for the Interim Price Control period. Note: The above table outlines that that the largest capital expenditure requirement for this period is during the enduring 2014 period. This is due to large set-up capital expenditures, specifically relating to the Dublin HQ and regional offices. It should be noted that IT costs associated with each capital asset listed above are excluded from these budgeted figures, but are included in the IT and Business Change Capex submission (IW-IPC-003). There is no contingency headcount capacity within these figures. 7 Irish Water