Data Inclusions
Construction costs, transaction costs, third party income, FM Service costs, lifecycle costs, utilities costs, residual value of assets (incorporating the backlog maintenance costs identified within the lifecycle cost models produced).
Exclusions
Financing costs, tax, shareholder returns, ongoing contract management costs (Project Company), and risk pricing.
Discount Rate
Each of the above listed financial inputs is calculated with a discounted cashflow analysis of the annual costs over 25 years (PPP Concession period) using the project specific discount rate provided by the NDFA in line with the DPER guidance (5%). All figures referenced as "NPV", the preferred form of cost assessment, are subject to the same discount rate.
Inflation
The actual HICP inflation index has been used to date, with the estimated HICP utilised from 2019 to 2024 as per the Department of Finance Budget 2020 Economic & Fiscal Outlook. From 2024, a flat estimated increase of 2% has been utilised. This inflation index has been utilised across both the Conventional and the Pilot PPP Schools Bundle to enable a direct comparison except for Energy Costs.
The energy costs use an energy specific inflation rate as agreed with the Project Team due to the volatility of energy prices. Due to the significant change in prices year on year, a ten-year average has been used to estimate energy prices in the future.
CAPEX Costs
Conventional Schools construction and transaction costs are spread across the periods in which the costs were incurred (as detailed in the expenditure breakdown provided by the DoE). Costs are spread evenly unless broken down by year in the data provided. The Conventional Schools capital costs are considered in a 'pre-operational' period within the model, operational costs are then considered for 25 years following the operational date to enable a direct comparison with the PPP contract term costs. This means no operation costs are included for the construction phase and it is assumed that only following practical completion did operation costs commence.
Construction and transaction costs for the Pilot PPP Schools Bundle are as per the figures stated within the Financial Model and have been spread over the 25-year Concession period in line with the actual payments.
Source of Costs (FM, Lifecycle, Utilities, Third Party Income)
Conventional School costs are sourced from the School Accounts which have been provided for the past eight to ten years in most instances. Where data is not available (both in the past and all future years) the calculated average of the figures has been used.
Figures have been sense checked by AAP and the Project Team to remove anomalies, non-related costs, or duplication of costs, and include an assumption (calculated average from available data) where costs are missing. This is clearly auditable back to the source information within the model and the supporting input sheets.
Pilot PPP Schools Bundle costs are all sourced from the Financial Model at Financial Close, except for the energy costs which have been sourced from the Project Company energy reporting. As such, no assumptions are needed save for the future estimated energy costs (an average has been used).
VAT
The Financial Analysis excludes VAT costs. Whilst the Conventional School accounts costs included VAT, the costs have been amended to exclude VAT based on actual VAT rates per service/purchase types. The categories and rates are detailed within the input sheets for the analysis.
Residual Value Assumptions
The re-build costs for the Conventional Schools use a €/m2 rate provided by the DoE based on recent builds (this cost is then uplifted to the end of the 25-year period based on the inflation assumptions within the model). Whilst original build costs for the Pilot PPP Schools Bundle were over 40% higher (nominal) than the Conventional Schools, this is considered unrepresentative of the difference in specification. As such the PPP €/m2 costs are 20% higher than the Conventional Schools costs to allow for the higher specification evidenced through the design and condition reviews.