5.4  Worksheet: Time-based Inputs (I (Time))

5.4.1  Profiled Number of Dwellings - Whilst the Model does not look to build up costs on a number of properties basis, the Model will be acting as a central source for reference data for the DCLG. As such, the Authority is required to input the status of the development in terms of the initial properties, those renovated, new build properties and any demolitions. The user should note that demolitions should be entered as a negative number.

5.4.2  Profiled Construction Costs - Construction Costs relate to the initial development phase of the project, and include both New Build, Renovation and other (typically demolition) elements. The duration of this initial phase is discussed in section 5.3.2.4. The user is required to input the cost profile for New Build in the yellow cells on row 19, Renovation in the yellow cells on row 20, and other costs in the yellow cells on row 21.

In addition, PSC construction costs need to be input in the yellow cells on rows 23 to 25. This is required to complete the VfM assessment of the Model (see section 5.8). Whilst the inputs in the HMT VfM model only provide for this as a single value, the approach to modelling the PSC construction costs adopted in this Model has been to present the same template for both PFI and PSC costs. This provides greater transparency and should enable Authorities to make a more accurate comparison between the two procurement methods. This duplication of the PFI input template approach is applied throughout sections 5.4.3 to 5.4.6.

5.4.3  Profiled Pre-Operating Costs - PFI bid costs and other Capitalised Pre-Operating Costs are required to be entered in the yellow cells in rows 30 and 31 respectively.

5.4.4  Profiled Lifecycle Costs - The Authority will be expected to have considered the Lifecycle costs associated with the 5 major categories identified in rows 41 to 45: kitchens; bathrooms; roofing; windows and; heating. There is also the flexibility for the user to input up to 3 additional lifecycle cost lines in rows 46 to 48. It is intended that costs be entered here as they are incurred with any smoothing achieved via the MRA method described in section 5.3.9.10.

Finally, the user is required to input the equivalent Lifecycle Costs under the same categories for the PSC procurement scenario in rows 50 to 57.

5.4.5  Profiled Operating Costs - As with Lifecycle Costs, the Authority will be expected to have considered the Operating Costs associated with Maintenance, Housing Management and Insurance (rows 62 to 64). Rows 65 to 68 also allow the user the flexibility to insert additional cost lines as appropriate. Completing the Operating Costs, the Insurance Risk Premium is calculated in row 69 (see section 5.3.9.4 for further details).

Finally, the user is required to input the equivalent Operating Costs under the same categories for the equivalent public sector procurement scenario in rows 71 to 78.

5.4.6  Profiled Revenue - For non-HRA schemes, rent will be collected and retained by the contractor, which has the impact of suppressing the UC. This is required to be entered in the Model in row 83, with row 84 providing flexibility for Authorities to incorporate an additional income stream if applicable. In addition to these revenue streams, there are two additional revenue related items to be considered:

5.4.6.1  Dowry Contribution - As mentioned in section 5.3.5.7, Authorities are sometimes able to make initial cash injections to the Contractor to improve affordability.

If the Authority decides to use these revenues to improve the affordability of the project, the user inputs the value of this "Dowry Contribution" in the yellow cells in row 90. This has the impact of reducing the net Capital Expenditure requirements for funding in the Model. Row 91 is a check to ensure that Dowry Contribution is not in excess of the Capital Expenditure for the year. If this were the case, the Authority would in essence be pre-funding the Contractor and is not permitted.

5.4.6.2  Unitary Charge ramp-up profile - It is in the nature of housing PFI projects that delivery of service can start from contract award and ramp up incrementally as properties are built/renovated during the initial capital investment phase. The profile of this ramp-up is defined by the user in the yellow cells in row 93.

The ramp-up profile applied excludes the impact of the Handover reserve (see section 2.5.2). The impact of the Handover reserve is modelled in row 93, resulting in a final ramp-up profile that is displayed in row 95.

5.4.7  Affordability (Authority Revenue Resources) - Revenue resources are considered to be available from a number of sources in addition to the RSG. Authorities are required to enter their projected revenue streams from each of the following sources:

5.4.7.1  Rental Income - In HRA schemes, rental is collected on behalf of the Authority and passed on by the Contractor. As such, Rental Income does not reduce the Unitary Charge, and is available to the Authority as a means to meet their affordability targets (cells L99:AY99) as Rental Income is passed back into the HRA and held centrally. In the case of non-HRA schemes, Rental Income is captured as a revenue stream for the contractor (see section 5.4.6) and has the impact of reducing the UC that the Authority needs to make affordable.

5.4.7.2  HRA Subsidy - At central government level, there is cross-subsidy between the different HRAs nationwide.  The level of funds taken out of/paid into the HRA are given in row 100 'HRA Subsidy'.  Note that if subsidy is taken out of the HRA, this should be modelled as negative values in row 100.

5.4.7.3  Other HRA Contributions - Once the HRA Subsidy has been removed from/added to the HRA, the Authority is able to cross-subsidise schemes projects within their HRA.  As such, were the values in row 101 to be negative, this would imply that the scheme being modelled was cross-subsidising other projects within the HRA.

5.4.7.4  Other General Fund Contribution - This line represents the "affordability gap" that the Authority will be required to meet in order to make the project affordable. This can apply to both HRA and non-HRA projects. Bridging this gap is required to be completed by the Authority as part of the Model to demonstrate their commitment to the affordability of the project.

5.4.7.5  Other Funds made Available - This is an optional input series, which the Authority is required to use if there are additional revenue sources not captured in sections 5.4.7.1 to 5.4.7.4. If this line is used, the Authority is required to provide supporting details as to the nature of this revenue stream.

5.4.8  Affordability (Costs to be Netted Off) - In addition to the UC, there are a number of additional costs that need to be considered by the Authority in the assessment of affordability.

5.4.8.1  PFI Contract Monitoring - A level of resource will need to be identified by the Authority to manage the partnership with the Contractor. The cost of this is required to be identified and entered in cells L107:AY107.

5.4.8.2  Other Internal Costs - This allows the user the option to add an additional cost line if appropriate. If this is used, the Authority would be required to provide supporting details as to the nature of these costs.

5.4.9  Affordability Check (Nominal) - This line has been included for ease of completion of the Model. It is presented graphically on the worksheet 'O (Summary)', but instead of the user having to switch to this worksheet and back each time they make changes to the affordability inputs covered in sections 5.4.7 and 5.4.8, the user is able to see the impact of their changes on the cumulative affordability position to the Authority.