Element

Summary of Methodology

Literature Review

The Literature Review completed provides an overview of documents relevant to the Review. Literature has been assessed from several sources, including: DoE, DPER, House of Oireachtas, European Commission, European Investment Bank, European Parliament, and the National Audit Office and Department of Finance in the UK.

In addition to informing the detailed methodology to deliver the Review, the Literature Review established:

• Definitions of a successful PPP

• Examples of PPP assessment similar to the review previously undertaken and models in use for such assessments

• The definition of VfM in a PPP Context

• Previous conclusions on PPP market VfM and objective meeting

Document review

Multiple sources of information were collated from various parties, including the DoE, NDFA, school Principals, and the ETBs including:

• PPP Contract

• PPP Financial Model (from Financial Close)

• PPP FM reports

• Conventional School accounts

• DoE summer and emergency works details

• Additional data collated for individual reviews including as built drawings for the condition surveys and Statutory Compliance evidence for the FM/Compliance review

Interviews

Semi-structured interviews were completed with the DoE (with input from the NDFA in relation to the Pilot PPP Schools Bundle), the Project Company, and school Principals/Caretakers. The interviews provided wider context around non-financial aspects of the PPP and Conventional Schools to assess the advantages and disadvantages of each procurement route against cost. The operational benefits, experience of delivering educational services in the facilities and PPP relationships were all topics of discussion.

Questions to the DoE/NDFA focussed on advantages and disadvantages of both models and the objectives of the Pilot PPP Schools Bundle.

Questions to the school Principals focussed on 12 non-financial categories as agreed with the DoE/NDFA during development of the methodology. It is noted that many of these categories have corresponding data collection/analysis and that the interviews are supplementary to conclusions made from actual data; these methods are named in brackets and detailed under the individual methodology sections below).

1. School Condition (Building Condition Surveys and Financial Analysis)

2. School Design (Architectural Review and Financial Analysis)

3. Flexibility of Design (Architectural Review)

4. Flexibility of Contracts (Contract Review)

5. Quality of on-site Maintenance (FM/Compliance Review and Financial Analysis)

6. Quality of FM services (FM/Compliance Review and Financial Analysis)

7. Energy Efficiency (BER/Energy Analysis and Financial Analysis)

8. How well the building promotes Wellbeing and Sustainability

9. Cleanliness (FM/Compliance Review and Financial Analysis)

10. Building User Satisfaction

11. Third Party or Out of Hours Usage (Contract Review and Financial Analysis)

12. Availability (Financial Analysis)

Outputs from the interviews are detailed in the appropriate sections throughout this report.

Building Condition Surveys

A detailed survey of building fabric and M&E installations has been completed for each school. Data has been captured for individual assets on a component by room level (e.g., the floor finish within one classroom, or a single hot water circulating pump present in a plant room) which provides highly granular condition data.

This data has been utilised to inform the Backlog Maintenance and Residual Value calculations within the Financial Analysis, as well as detailed breakdowns of each school condition and the likely future Lifecycle requirements for the facilities.

Facilities Management Review

The FM Review has been completed to compare the FM functions across the PPP and Conventional Schools, and measure compliance against statutory maintenance and health and safety requirements across all schools.

The Review included onsite audits of records, a contract review of the PPP FM services, discussions with key parties such as the Principals, Caretakers, FM technicians and Project Company representatives.

Energy Analysis

Each school has had a thorough energy assessment completed to determine energy efficiency across the two comparator groups including:

• Production of a Building Energy Rating

• Energy performance analysis

• Review of energy management practices

Architectural Surveys

NORR, the architectural sub-consultant for the Review completed a comprehensive Architectural Review including, but not limited to, assessment of the following considerations. This Review will have assisted in determining whether the Pilot PPP Schools Bundle brought innovation and new ideas to school design in line with the original objectives of the Pilot PPP Schools Bundle.

• Site Arrangements

• Construction Quality

• Building Layout

• Internal Learning Space Quality

• Internal Environmental Quality

• Internal Finish Quality

• Overall Architectural Quality

Financial Analysis

The Financial Analysis has been completed to assess if project objectives for the Pilot PPP Schools Bundle are being met and to provide a comparative basis with Conventional Schools. The financial information available for the Pilot PPP Schools Bundle was the Financial Close financial model which is now not reflective of the Unitary Charges paid. Variations, inflation changes and other movements are included on monthly invoices but have not been captured and retained back to commencement of the Concession, rendering the Financial Close model too outdated to allow a full financial comparison. However, it was used to inform the financial analysis undertaken.

The following cost elements have been incorporated in the analysis:

• Transaction Costs

- Pilot PPP Schools Bundle - architect, civil, structural, mechanical and electrical engineers, project management, employer's agent and FM consultant

- Conventional Schools - architect, civil, structural, mechanical and electrical engineers and employer's agent

• Capital Costs

• Third Party Income

• FM Service Delivery

• Lifecycle Costs

• Utilities Costs

• Residual Value of Assets (incorporating the Backlog Maintenance costs as identified within the Lifecycle Model)

Each of the above listed financial inputs is assessed with a discounted cashflow analysis of the annual costs over the construction period and 25 years from the point at which the buildings were operational, using the project specific nominal discount rate (5%) provided by the NDFA in line with the Department of Public Expenditure and Reform guidance.

The following elements have been excluded from the quantitative analysis: debt, tax, shareholder returns, ongoing contract management costs, and financial risk allowances. These elements have been heavily considered in the conclusions and key findings but based on the available information, and particularly in the absence of a PSB, a suitably accurate comparison between the funding costs and returns was not possible. In the financial model it was not possible to include the debt cost while also excluding the other elements listed above. Accordingly, it was not possible, or appropriate, to compare the full Unitary Charge to the Conventional Schools costs as fewer services are provided (e.g., lesser FM services) and therefore it would not be a like-for-like comparison. Inclusion of these costs in future reviews is recommended and will be more likely to be possible due to the requirements for a PSB that was put in place after the Pilot PPP Schools Bundle and some additional financial data that are collected as part of newer PPP contracts. As recommended below, consideration should be given to additional data reporting.

The Financial Analysis assumptions are detailed further in Appendix C.