reviewAECOM Ireland Annual Review 2016 CoverOweninny photo: Wind Farm, LaganBellacorrick, Weir Bridge,Co. Mayo. DonegallAECOM services: Quay, Belfast. Landscape architecture, digital media. AECOM services: Architecture, civil and structural engineering, mechanical and electrical consultancy, resident engineering, cost management. Image courtesy of Rory Moore Photography. AECOM Ireland Annual Review 2016

Introduction 3

Industry review: Republic of Ireland 5

2015 performance and medium term outlook 7 Sector performance 8 Construction costs and tender prices 11

Industry review: Northern Ireland 12

Business intelligence 15 Martin Shanahan, CEO, IDA Ireland 16 Professor Neil Gibson, Director of the Ulster University Economic Policy Centre 18

AECOM Ireland profi le

Geographies 21 Ireland 22 UK market focus: A change of mood 26

Thought leadership 28

Procurement strategies: Think before you leap 30 Congestion relief requires public transport investment 32 The changing workplace 34 Indicative building costs 36

AECOM 37 AECOM Ireland 38

AECOM 1 AECOM Ireland Annual Review 2016

Capital Dock, Sir John Rogersons Quay, Dublin 2. AECOM services: Cost management, environmental services.

2 AECOM Introduction 2016 — New business dynamic accompanies robust recovery

Last year was good news for capacity issues will be dependent delivers innovative solutions that Ireland’s economy. With the low on returning emigrants, a new wave improve lives. euro continuing to boost the export of European migrants, and tier two market, the Republic of Ireland’s contractors rapidly increasing their In Ireland, we are now over 600-strong (ROI) economy grew by around six resources and output. Successful with the full range of skills to support percent, making it the fastest growing Northern Ireland contractors who Ireland’s booming economy — from economy in the European Union for have expanded into Scotland and the outset of the planning and the second year running. It means the rest of the UK may also consider environmental aspects of projects, the ROI economy has reached pre- redirecting some of their efforts back through to design and construction. recession growth levels, with the to Ireland. Constituent parts of the business strongest growth focused in the have a deep history here, with the Greater Dublin Area. The Republic of Ireland government project and cost management can be congratulated for managing business having its origins in Northern Ireland’s economy in the economy to the current point. Patterson Kempster & Shortall, the same period also grew by two However, there still remain significant who were already over 50 years old percent. Of course still good, but deficits in social infrastructure; none in 1916 and were involved in the whilst it would appear that the rising more prevalent than that of housing. reconstruction of O’Connell Street in tide is lifting all boats, the disparity In this sector, there has clearly been a 1917. Today, we continue to work with between regions is clear. lack of foresight, hence the need for some of the island’s most ambitious swift implementation of the recently and forward-looking clients, helping This continued surge in growth in announced policies and programme to cut through complexity, and Dublin and across the Island of Ireland for delivery. transform the communities in which means that those looking ahead at we live and work. procuring projects in 2016 can expect In Northern Ireland, the recent rising tender prices and shortages agreements in the assembly are Here’s a slice of what we’ve been of resources in certain areas. In positive and should trigger the release doing over the last year and analysis fact, many specialist contractors in of a number of social infrastructure of some of the key trends. Let’s now façades, steel and concrete already projects as well as investment look forward to what will hopefully have their books full well into 2016. prompted by the proposed reduction be another promising year for the in corporation tax. industry. Our sleeves are rolled up and For the survivors of the worst we’re ready to go. recession in living memory the Built to deliver a better world, it appetite for renewed growth is has also been a year of growth for John O’Regan definitely present, but this time the AECOM — we are now the world’s Programme, Cost, Consultancy Lead, approach to risk will almost certainly No. 1-ranked engineering design Ireland be different. It may also be difficult firm*. Experts in all phases of the for tier one contractors to deliver the development lifecycle — design, build, john.o’[email protected] likely number of major projects, with finance, operate and manage — the large international contractors still diversity of our capabilities and global *According to Engineering News-Record drawn to the vibrant London market. network of 85,000 professionals 2015 rankings. The short-term solution to these

AECOM 3 AECOM Ireland Annual Review 2016

4 AECOM Institute for Lifecourse and Society, NUI Galway, University Road, Galway. AECOM services: Project management, cost management and employer’s representative. Image courtesy of Neil Warner Photography.

Industry review: Republic of Ireland

AECOM 5 AECOM Ireland Annual Review 2016

Key statistics at a glance

Construction output breakdown 2015 Non-residential planning permission AECOM estimates (€m) granted July 2014–June 2015 (‘000 sq m) Source: Central Statistics Offi ce 5,000

Commercial 4,000 buildings (306)

3,000 Buildings for agriculture (594)

2,000 Industrial (275)

1,000 Government, health and education (399) 0 Civil Social Private Residential engineering infrastructure non-residential Other buildings €5,000m €3,250m €1,500m €2,500m for social use (68)

Employment in construction sector House completions Domestic construction workers and January-September 2015 non-domestic construction workers Source: Department of Environment, Community & Local Government Source: Central Statistics Offi ce

Domestic Non-domestic

226,100

Private housing 8,668

110,600

Social housing 47,800 246

15,300

Total 8,914

Peak (Q2 2007) Current (Q2 2015) Total: 273,900 Total: 125,900

6 AECOM 2015 performance and medium-term outlook

The sporting analogy of ‘a game of two of entities considered capable of - The residential property market halves’ could possibly be applied to the delivering on projects of this nature has come under significant strain, construction industry in 2015; however, and the resultant tendering in a particularly in the greater Dublin whilst it is most commonly used to restricted list. During the downturn area, and throughout the year describe two periods of contrasting a considerable number of the larger the pressure has also mounted in fortunes, its application here is of a organisations went out of business respect of social housing. more subtle nature. and others scaled back significantly, thus the willingness and ability to ramp In summary, confidence has returned We saw the industry gradually return up will undoubtedly be a factor in the to the construction sector and to growth in 2014 after the dramatic coming years. economy generally as evidenced drop between 2007–2011 and this by the Ulster Bank Construction growth pattern has continued in In Figure 1 we see double digit growth Purchasing Managing Index Report, 2015. We would estimate the value of in output in the last couple of years and whose October results indicated construction output to have been circa it is anticipated to continue in 2016. a sharp increase in new business €12.25 billion in 2015, a 14 percent rise Whilst employment has also increased which was central to improvements in on 2014. strongly, it can be seen that it is less activity, employment and confidence. volatile. There is a risk, and some signs However, our note of caution in last However, whilst the first half of 2015 in the last 12 months, that if this lack year’s Annual Review — that the upturn continued in a similar manner to of equilibrium continued or widened, it has been concentrated in the greater 2014, we started to see some stress may cause a spike in tender prices. Dublin area — continues to hold true. fractures appear in segments of the Notwithstanding this, we have seen the Other buildings for social use (68) industry during the second half of Two key developments in 2015 beginnings of recovery in the regions the year. In particular, a number of included: with an increase in the number of capacity concerns have arisen in enquiries, along with previously shelved the Dublin market which in turn can - The Office of Government projects being revisited. This all bodes have a knock-on effect nationally. Procurement (OGP) instigated well for 2016 and beyond. Curtain walling and façade system consultations with industry in specialists would appear to have very respect of the Public Works strong order books arising from the Contracts (PWC) and the increase in commercial and multi- proposed interim measures to be storey residential schemes which implemented in the near future.

are on site or have obtained planning Figure 1 permission. Combined with similar Change in tender prices, and construction output demand pressures internationally, the and employment (%) impact can be programme delays and/ 30 or, increased prices over and above

standard industry levels. 20

In a similar context, we would have 10 capacity concerns heading into 2016 in respect of main contracting and 0

specialist contracting (mechanical -10 and electrical). Specifically in respect of high value fast-track projects and -20 Social housing highly serviced €100 million+ projects 246 in the Foreign Direct Investment (FDI) -30 sectors. The primary reason for this -40 concern would be the limited number -50 2007 2008 2009 2010 2011 2012 2013 2014

Employment data source 2007-2014: 2016(f) 2015(e) Central Statistics Office Tender price Construction output Construction employment change change change AECOM 7 AECOM Ireland Annual Review 2016

Sector performance

In any recovery there is a train of Recovery: Infrastructure and Capital increase in demand from a growing thought that a rising tide lifts all Investment 2016–2021’ included a cohort of would-be purchasers unable boats and indeed ‘everything else -1.5 percent decrease on 2015 in to meet the Central Bank’s revised being equal’, the general principle of exchequer capital investment. The mortgage lending ratios, housing an economic recovery benefitting investment plan shows increases in benefit individuals/families unable to all should apply. Of course the subsequent years to 2021, see Table 1 meet rising rent in the private sector ‘everything else being equal’ is opposite. Figure 2 below illustrates the and the homeless. the difficult piece and, just as split across the key capital spending reflected in the rate of recoveries in departments. In the first half of 2015 we started the regions referred to earlier, the to see the cost of developing new performance of different sectors, and An increasing area of importance residential units start to make asU.S. a consequence Army Base Camp the Carroll construction is non-exchequer capital spending economic sense when compared activity in same, also varies. In arising from the re-commencement against the cost of buying surplus the following sections, we take an of the public-private partnerships stock. In addition, the better located overview of the key sectors and the programme and spend by semi-state and quality surplus stock or work outlook for 2016. bodies. In the case of the latter a in progress which was idle in the significant proportion of capital spend immediate aftermath of the crash had Public sector can relate to supply of plant and been purchased at that point, thus a The public finances have shown good equipment, nonetheless semi-state shortage was emerging in key markets, recovery in 2015 with employment up activity is an important contributor to particularly in Dublin. However as noted and consumer spending increasing, the construction industry. above, with rising rents exasperating leading to increased tax revenue as a social housing problem a public well as a reduction in social welfare Residential debate ensued in the second half of payments. However, coupled with this, The residential sector would still appear the year leading to general uncertainty. the growth in the economy in 2015 of to be in a dysfunctional state. Since circa 6 percent increases the potential the economy came out of the crash it In response to this growing problem, amount of borrowing in absolute has been struggling to cope with the the government announced a series terms which the government can take stresses of oversupply in some areas, of measures in early November aimed on in 2016. The Irish government’s undersupply in others and in particular at bringing stability to the market. Budget 2016, which was preceded by a severe shortage of social housing These included rent reviews every two the publication of the government’s provision. Social housing has suffered years as opposed to every year. They six-year Capital Plan ‘Building on the from years of under-investment, an also introduced measures aimed at

Figure 2 Other (216) Agriculture (217) 2016 exchequer funded public Transport, Tourism Communications, Energy capital programme (€m) and Sport (1016) and Natural Resources (107) Source: Department of Finance Budget 2016 Education and Skills (545)

Office of Public Environment, Community Works (102) and Local Government (539) Justice (130)

Health (414) Jobs, Enterprise and Innovation (495)

8 AECOM West Cork Arts Centre, Uillinn, Co Cork. AECOM services: Project management, cost management, employers representative. Image courtesy of F22 Photography.

priming supply by reducing the costs of development will be in the starter advanced in 2015, and we expect development, with rebates on levies of home market. this trend to continue through 2016 starter homes in Dublin and Cork, and and 2017 as Dublin city centre Grade standardising apartment standards. Finally, it should be noted that we A accommodation remains in short had a number of reminders in 2015 supply, with the majority of that under Undoubtedly the number of of the legacy quality issues that lay construction being pre-let. Investment completions in 2015, estimated to undiscovered during the building boom funds continue to be active, and we be circa 12,000 units, was adversely which demonstrates the importance anticipate they will continue to seek out affected by the uncertainty of the of the current building control opportunities for further acquisitions second half of the year. We expect amendment regulation requirements. and to maximise the value obtainable the recent measures will first and through re-development where foremost provide a level of certainty Commercial market necessary and achievable. and an impetus to kick start some The pending shortage of large residential development however, footprint commercial offices led to Outside of Dublin new build activity given the Central Bank restrictions on a noticeable increase in office floor is restricted. Demand for space is lending ratios and the rebates being on space granted planning in 2014. increasing and similar to Dublin, large, units under €300,000, the bulk of the A number of these schemes were good quality accommodation is limited.

Table 1 Multi-Annual Capital Investment Framework 2016-2021 (€m)

2016 2017 2018 2019 2020 2021 Total Agriculture, Food and the Marine 217 208 208 208 208 208 1,257 Communications, Energy and Natural Resources 107 107 137 192 192 192 927 Education and Skills 545 599 623 654 700 700 3,821 Environment, Community and Local Government 539 623 709 685 700 700 3,956 Health Group 414 454 473 550 570 600 3,061 Jobs, Enterprise and Innovation 495 525 490 500 500 500 3,010 Justice Group 130 157 118 150 160 160 875 OPW 102 102 127 137 147 157 772 Transport, Tourism and Sport 1,016 1,015 1,167 1,238 1,607 2,000 8,043 Other 216 180 178 286 216 183 1,259 TOTAL 3,781 3,970 4,230 4,600 5,000 5,400 26,981

Source: Department of Finance Budget 2016

AECOM 9 AECOM Ireland Annual Review 2016

Newcastle Promenade, Newcastle, Co. Down. AECOM services: Landscape architecture, civil engineering, structural engineering, quantity surveying and resident engineering.

Industrial considerably less than that of a maintenance of circa 2,000 kilometres, Similar to the residential sector, the decade ago. and improving over 2,000 kilometres of crash resulted in a large stock of local and regional roads. In addition a vacant units and as a result investors Tourism, sport and culture number of key national route schemes or occupiers can purchase units at a The tourism sector has become an such as the N17/N18 Gort to Tuam will lower cost than new build and even increasingly important sector in the continue, and new projects like the New allowing for modifications, can obtain Irish economy. Estimated to have Ross bypass and Gorey to Enniscorthy better speed to market. generated more than €6 billion revenue route will get underway. in 2014 it is a key stimulator of activity Thus, construction activity in the in the construction sector. In particular The seven year programme also industrial sector in 2015 has been given the number of transactions in includes €3.6 billion for public transport. almost entirely owner occupier new the hotel market, new owners and/or The headline project in this sector is build and/or expansion of existing operators bring new investment in Metro North which is planned to be facilities. With exports continuing to the refurbishment or re-positioning operational by 2026/27. The current grow strongly in 2015 (17.5 percent of the property. seven year plan includes the completion increase in first nine months of of the LUAS cross city project, the 2015 compared to same period in Again, Dublin features strongly in this re-opening of the Phoenix Park tunnel 2014) and a steady stream of new sector with room rates increasing as and completion of Dublin city centre re- announcements from IDA Ireland the bed shortage intensifies. As such signalling programme. backed foreign direct investment, the there will be an appetite for building prospects for construction activity in new hotels or extensions in the Dublin The Irish Water €1.77 billion Capital the industrial sector are strong. market. Regionally the focus is more Investment Plan 2014–2016 is on- likely to continue to be transactional. going and we are now seeing regular Retail Following on from the huge success announcements of contracts being Consumer spending in 2015 continued of the Wild Atlantic Way, Failte Ireland awarded for a range of schemes across on the upward trend and boosted have embarked on a significant the country including Roscommon, confidence within the sector. This investment programme providing grant Kildare and Donegal announced in confidence in turn has helped to assistance to a range of projects to the first week of the year. The recently boost retail construction activity with promote their new initiative — The published Water Services Strategy Plan expansion plans announced for out of Ancient East. This will provide an lays out Irish Water’s short, medium and town locations such as Liffey Valley, important stimulus to economic long term goals over the next 25 years. Dublin, continued expansion of budget activity and in turn construction. supermarket chains, and investment The recent onslaught of bad weather in renewing a number of high street Civil infrastructure has brought the subject of flood brands and forecourt convenience In the recent government “Capital defences back front and centre when stores. Plan 2016–2021” a capital investment similar events of 2009 are still fresh envelope of €9.6 billion was identified in people’s memories thus we will Notwithstanding this improved for the next seven years. undoubtedly see efforts to accelerate confidence, the challenging financial a number of the schemes which have environment makes capital investment Of this, €6 billion relates to investment been progressing through planning and decisions more difficult thus, whilst in national, regional and local road design. we would expect further growth in networks including a 2016 capital this sector in 2016, it will remain programme with provision for the

10 AECOM Construction costs and tender prices

Competitiveness is key to sustaining of labour rates. In response to this It is important however that the any recovery and the Irish construction the government introduced ‘The competitiveness and value for money industry has, whether by necessity Industrial Relations (Amendment) that has been available over the last or design, maintained tender inflation Act 2015’ in August. It provides for couple of years is not eroded with at modest levels over the last five the establishment of Registered high inflation rates. In that regard 2015 years. Of course the ability to do this Employment Agreements and saw tender price increases of circa 5 is heavily dependent on costs similarly Employment Regulation Orders (ERO). percent which, if exceeded or repeated being contained. We review the trends It is likely that industries such as the over a number of years, would emerging in 2015 and look ahead to construction industry will move to reduce that competitive advantage. anticipated activity in 2016. introduce ERO’s, and we have seen Similar to the cost index, tender examples of this in October when two indices represent average figures, Construction costs ERO’s were introduced for the security and individual elements and location The euro was weakened against both and contract cleaning sectors. It is factors will combine to generate sterling and US dollar through 2015 also likely that there will be pressure same. Among the cost drivers which which put pressure on the price of to increase pay rates in 2016 in have shown most volatility have been imports. Notwithstanding this, the conjunction with the establishment preliminaries for both main contractors overall level of increase in construction of an ERO. and specialist sub-contractors. In material prices averaged 1.1 percent addition, contractors approach to risk in the 12 months to September We anticipate that construction costs and pricing of same has hardened over 2015. This included a range of price will on average increase by circa 2.5 the last 12 months. increases including stone at +9.3 percent in 2016. percent, bituminous macadam Looking forward to 2016 we anticipate and asphalt +6.4 percent, lighting Tender prices that tender price inflation will continue equipment +5 percent, decreases of As noted earlier and illustrated below, at an average of circa 6 percent with -6.3 percent in sand and gravel, and tender price increases over the past variation dependent on location. ready mix concrete -2.4 percent. five years have remained at modest The regions should have inflation of levels. This has contributed to restoring circa 5 percent whereas the greater Since the Supreme Court ruled against sustainable competitiveness after a Dublin area will have circa 6 percent– the system of Registered Employment number of years where the prevalence 8 percent. Agreements in 2011 there has been of abnormally low tenders was a feature a degree of uncertainty in respect of the industry.

Figure 3 AECOM Tender Price Index (%)

20

15

10

5

0

-5

-10

-15 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016(f) 2015(e)

AECOM 11 AECOM Ireland Annual Review 2016 Visit Belfast, 9 Donegall Square North, Belfast. AECOM services: Architecture, interior design, civil and structural engineering, mechanical and electrical, project management, cost management. Image courtesy of Rory Moore Photography.

Industry review: Northern Ireland

12 AECOM Northern Ireland Grade A commercial office York Street Interchange, Belfast. The Northern Ireland (NI) economy accommodation remains in short is expanding at an annualised rate of supply in Belfast and this is driving AECOM services: Engineering design, 1.3 percent to Quarter 2 2015. This rental costs up. Headline rentals are digital media. is lower than the United Kingdom up approximately 20 percent over the (UK) and Republic of Ireland trend, but last twelve months with less attractive growth none the less. The brighter side rent free periods or contributions. The the opportunities they are tendering of this statistic is that construction market is beginning to respond to this for locally. It is likely this will encourage contributed up to 1 percent of the total with the construction of new space in some inflation within tender prices over 1.3 percent growth. The economy has Belfast; however more space will be the next twelve months. still some way to go to get back to the required over short and medium terms. peak output achieved in 2007/2008, The residential market has started to and a sustained recovery will remain Retail space in NI still has relatively gain momentum with house prices up dependent on recovery in the UK and high vacancy rates, however, there is more than 10 percent year-on-year the Republic of Ireland. an obvious recovery taking place in and this trend looks set to continue. Belfast with the change in rating policy It is noted that house prices are Having lost twelve months in deadlock, — therefore town and city centre still significantly below their peak of the recent political agreement on locations are becoming more attractive 2007/2008. departmental spending and devolution again. of corporation tax will allow business In conclusion, it is expected that the and government departments to There has been some consolidation recovery in the NI construction and better plan their capital expenditure amongst building contractors which is property will continue at a modest but for the future years. It is hoped this will thought will lead to more sustainable sustainable pace. give both business and government companies for the future. As with last fresh confidence to push shovel ready year the local tier one contractors projects out to market. In our opinion, it have built successful relationships in cannot be overestimated the positive Great Britain and much of their work is effect of reducing corporation tax to now centered on delivering within that 12.5 percent from April 2018 will have market. To an extent this has led to the on private investment in NI. contractors being more selective about

AECOM 13 AECOM Ireland Annual Review 2016

Key statistics at a glance

Construction output (£m) Overall construction output, broken down into new work and repair and maintenance

Repair and 4,000 maintenance (26.5%)

3,000

2,000

1,000

0 New work (73.5%) 2006 2008 2010 2012 2014

Sub categories of construction output Overall construction broken down into Q2 2015 housing, infrastructure and other work

Infrastructure Other work (22%) (42.3%)

(8.5%) Infrastructure (4.9%) maintenance Repair and (1.6%) Other work (11.9%) Housing (4.7%) New work

Housing (35.2%)

Source: Department of Enterprise, Trade & Investment Percentages do not always tally to 100 as each category is Construction Output Statistics. individually defl ated and seasonally adjusted.

14 AECOM Green Room Restaurant, LIT, Moylish Park, Limerick. AECOM services: Project management and cost management services. Image © Bowe O’Brien Photography.

Repair and maintenance (26.5%)

Other work (42.3%)

Business

Tointelligence assist in understanding the wider economic and political context in which the construction industry sits, and to picture some of the diff erent perspectives, we have spoken to key industry leaders for their thoughts on major questions. AECOM Ireland Annual Review 2016

Martin Shanahan, CEO, IDA Ireland

IDA Ireland continues to be very Dublin is seen as a tech hub. We see that you have a turnkey solution, the successful in attracting foreign that success continuing with on- more it puts Ireland on the map in the direct investment. Do you anticipate going announcements from the large first instance and then the regions continued growth in the volume of tech companies and a range of small the solutions are in. You are right also investments in the next couple of companies, which we expect to be that there is a regional policy aspect years, and if so, what level of growth the next Facebook, Google, Amazon, to it, in that we want to attract more do you see as being achievable? Microsoft etc. investment to the regions.

We set out a very clear strategy in Life sciences, which can be broken Just to be very clear the reason we are March of 2015 with our goals for the down as pharma, bio-pharma and back in that market of building advance next five years. This included 900 new medical devices, is also performing units and office buildings, nine of investments, and 80,000 jobs gross strongly and in particular bio-pharma, which are planned over the next three associated with those investments, in where we have seen some really years, is because the private sector that period. Ireland by any objective significant announcements, such has not stepped up to deliver those measure achieves much more foreign as BMS, Alexion and Regeneron to solutions. The more the private sector direct investment than one might name a few. We are also seeing strong can deliver solutions the better, and it expect given our relative size, IDA has performance in the sub-supplies is not necessarily an area we want to always set itself a high bar in terms of sector such as Abec in Fermoy and be actively involved in the delivery. That attracting investment and we have set Optel Vision in Limerick which supply is not to say we are not in constant ourselves a high bar again. this market. discussion with clients about property. We have a large property division in IDA Within these goals it is also important About 70 percent of our investments however it isn’t just about property, it to state that as well as achieving high come from the United States, followed is also about strategic sites and land levels of investment we have also set by Europe at 20 percent and 10 availability. We have invested in the new targets around the dispersal of percent from the rest of the world. acquisition of land banks and utility those investments across the regions. We would like to see them all grow in intensive strategic sites, and that has We have said we will aim to increase absolute terms but we would like to see worked extremely well for us. investments in the regions outside of Europe and the growth markets of Asia, Dublin by 30 percent to 40 percent South America, Russia and BRIC (Brazil, Competitiveness and future skills over the lifetime of the strategy, which Russia, India and China) countries needs are both subjects which the again is a stretch target, and that we essentially growing faster which would construction industry is acutely will achieve the same high level of balance the portfolio. aware of and they are often investment into Dublin as we have in intrinsically linked. How is Ireland the past five years. In recent years IDA Ireland has performing in this regard and adopted a policy of developing are there any areas of particular What sectors do you see driving a number of Advance Units in concern from an IDA Ireland growth in investment and will the regional locations. Has this policy perspective? United States continue to be the been an initiative to meet client pre-dominant origin of inward requirements for speed to market In terms of what we do, attracting investment? or an initiative to promote regional foreign direct investment, it is locations or both? Is the policy likely extremely competitive. We are We concentrate on a small number of to expand in the coming years? competing with a multitude of core sectors; technology, life sciences, countries and I’m not sure it is fully financial services, engineering and It is a bit of both. Certainly in terms understood the level of competition food. We have been extremely of winning investments the easier there is; it is all hard won. In order for us successful in the technology area and you can make it for clients and show to continue to be competitive we need

16 AECOM to ensure we have the talent, the right people and they are aligned through the education system that enterprise needs. There has been good work done in this, but I think there is always room for improvement in that space.

Keeping costs competitive is a really important issue for us and that is all costs, including labour. One of the concerns is, having gone through a difficult economic period where cost competitiveness rectified itself, that now as an economic recovery takes hold we don’t become un-competitive again; that is hugely important.

Are there any other infrastructural problems which are emerging as road blocks to investment?

As I look at the pipeline going forward the availability of commercial and whether it is pharma and medical to be done close to market are now residential properties is potentially a devices or technology and financial absolutely mobile so we look at those limiting factor in the future. If I look at services. trends all of the time. Dublin I can see enough Grade A office accommodation coming on stream We are also looking at attracting over the next 18–24 months which foreign direct investment in new areas is going to help us greatly. What we such as marine, arts and culture. need is a steady supply, and not peaks The global explosion of the business and troughs. services sector has been empowered by rapid technological developments, On the residential side it is potentially which have allowed traditional services, a limiting factor in Dublin, so what I such as financial and globally traded would say from a competitiveness business, to be dispersed worldwide perspective, both commercial and and new categories of service activities residential property are very important. to develop.

Are there any new areas of interest In this regard property led investment or initiatives which you see IDA in managing portfolios outside of Ireland pursuing in the coming Ireland is an area we are focussed years? on. Technology is having an impact on everything and making a lot of In relation to sectors, one area that the convergence happen, so where we are extremely interested in is things which were not internationally convergence between sectors, mobile previously because they had

AECOM 17 AECOM Ireland Annual Review 2016

Professor Neil Gibson, Director of the Ulster University Economic Policy Centre

2015 saw significant political sector is the size it is, it remains a ‘two activity and expansion of existing firms. impasses in Northern Ireland. percent economy’ without the potential The danger with corporation tax from What impact, if any, has this had to match the rates of growth in its a Northern Ireland perspective would on economic activity in Northern southern neighbour. be if we saw it as the solution to all our Ireland (NI)? problems, it is one part of the tool kit. In terms of the Republic of Ireland, Any form of instability can’t be good one of the significant risks is money Has the economy in Northern but we should start by reflecting on the is too cheap for a six percent growth Ireland got a two tier market vis-à- fact that it is now behind us, and the economy and it won’t be able to put vis Belfast and the regions? ‘Fresh Start’ agreement unusually came rates up when it needs to, rather they with a change in policy direction about will go up when Europe needs them. Yes it has, similar to that in the corporate tax which sent a message So although these are good problems, Republic of Ireland. However, there has that they were back in government with overheating problems, they present a been investment in industry — the some business-focussed changes. different set of challenges. agriculture sector has done quite well on the island, and industry such as I think we are actually in quite a good Do you expect the recent devolution pharma in the Republic or transport place at the end of the journey in of corporation tax powers from the equipment in Northern Ireland around 2015. During the year, the impasses UK government to the NI Assembly aircraft, heavy machinery/quarrying and had a marginal effect perhaps on to have a significant impact in terms tourism. That sectoral composition has investors who were just about to make of Foreign Direct Investment? been more of a tapestry than people a decision. In terms of people already might have thought and has allowed doing business in Northern Ireland There should be some announcements some regional opportunities. it’s more tangential. The 2015 growth from companies that are already here figures are not hugely affected by the in Northern Ireland. In terms of new That said, the heavy lifting in job political instability. green field announcements, you are creation remains professional services. expecting more of that effect to come Although a two tier market has come when the power is actually here. If you to pass, it hasn’t been as acute as What is the Economic Policy Centre could go somewhere very close to here I thought it would because of this forecasting in terms of economic where they already have a low rate you eclectic mix of sectoral growth, and growth in Northern Ireland and would need to have a very compelling that has to be something that inward the Republic of Ireland for 2016 reason to go somewhere that will have investment agencies and government and 2017? one in three years. policies continue to promote.

I would see the prospects for growth That said, Northern Ireland has a What is the current status in as fairly modest for Northern Ireland number of other advantages; it is Northern Ireland in terms of because austerity is very difficult. We very competitive from (a) a salary availability of finance for both are only arguably in the middle of the perspective in some sectors, (b) rent, property developers and the journey that the Republic of Ireland (c) cost of living, and (d) because we consumer seeking to get on the has finished. We now have to deal with don’t have the European parent to property ladder? cuts in the public sector, which is the the same degree that the Republic of biggest employer in Northern Ireland. Ireland has, we can offer more flexibility Taking the consumer first, conditions which has the potential to be quite have improved considerably, we are If Northern Ireland can get to two crucial and changes the dynamic about back to fairly normal consumer lending. percent growth, that would be an what Northern Ireland is. achievement. I don’t think austerity will On the commercial side, it is more drive us back into recession territory Our modelling work would suggest difficult because there is very little unless rapid interest rate rises were that the corporation tax will be a very support in off-the-shelf finance for to come. For so long as our private important driver of inward investment speculative build. There is almost

18 AECOM nobody in that space and no sign that any of the institutions want to be there. You might see the public sector getting involved to some degree although they will be very cautious; they are not awash with money either to do speculative build. It might involve some public sector underwriting of the risk market. If that is the case it will be a very unfortunate outcome but not one that we could rule out at this time if it takes rapidly escalating rental costs to finally drive investment in the market.

Are there any policy initiatives which you would advocate to the NI Assembly which would stimulate activity in the NI construction industry?

A couple would spring to mind for me; invest and improve. Radical change in one of the critical changes is planning this area could be transformative. going to local councils, it is finely balanced as to whether this will be What advice would you give to hugely beneficial or damaging to local construction firms in terms of development. So the executive should how they can better structure be collecting good data on planning themselves to promote innovation permission statistics and quickly and, in turn, generate higher decide if we need to give councils any growth? support. Partnerships are critical. I think for all The second thing I would think about organisations, you will not have all the is an appropriate rating policy. For skills sets within your own organisation example, Northern Ireland has very necessarily. You will need skills you generous rating reliefs on vacant never thought you would — be it property; you want to start to think Information Technology, leadership or about rising rates quite quickly on organisation structure skills — so the vacant properties. More controversial conversations that needs to take place measures might include making are with the local further education existing sites with planning permission colleges and higher education but not in productive use more institutions or trying to avail of the expensive to hold onto. Rates have multitude of programmes that Invest the potential to significantly influence NI run. Often it takes someone from behavior and consequently economic outside to tell you what you need, so development. It is a fully devolved bring in experts to review your firm. matter, and the current systems of reliefs and exemptions is not strategic, and in fact acts as a disincentive to

19 AECOM Ireland Annual Review 2016

West Cork Arts Centre, Uillinn, Co. Cork. AECOM services: Project management, cost management, employers representative. Image courtesy of F22 Photography.

20 AECOM Clancy Quay, Islandbridge, South Circular Road, Dublin 8. AECOM services: Cost management, environmental services.

Geographies

AECOM 21 AECOM Ireland Annual Review 2016

Ireland

The performance of the construction On the commercial side, Cork is still years. We may also see construction industry across the different lagging behind Dublin; however, 2016 activity in early 2016 on their current regions of Ireland will have a lot will see the first commercial building of sites in Ballincollig, Mount Oval, Belfield of commonality as the underlying notable size being completed by John Abbey and Crosshaven. general economic performance Cleary on Albert Quay in Cork City. feeds through the economy. However, There are also plans for construction In education, plans for an €18.5 million regions outside the greater Dublin to begin on the old Capital Cinema site extension to Scoil Mhuire Gan Smal in area are more dependent on public and Apple has announced 1,000 more Blarney are underway with construction capital spending and thus these jobs for their headquarters in Cork. planned to start in 2017. regions will tend to lag behind any Dublin based private investment Demolition has started for the In healthcare, the Health Service drivenU.S. Army development. Base Camp Carroll redevelopment of Páirc Uí Chaoimh Executive are hoping to break ground and we can expect construction to in early 2016 with a new primary care We summarise below our overall start on the €70 million redevelopment centre in St. Mary’s Health Campus. prognosis and identify some of the in early 2016. On the private side, the Bon Secours key projects in the regions. Hospital recently announced that it In the residential sector, NAMA is plans to begin construction of the Cork and the southern region currently building out properties in eagerly awaited North Block extension The Cork construction industry has Carrigaline and other locations. There on College Road, Cork. stablised and started to grow over the are also pockets of small private course of 2015, and we are seeing the residential developments but these The foreign direct investment market return of sustained construction tender are insufficient to supply the current continues to be a cornerstone of the price inflation. Cork sub-contractors demand. Viability is still an issue industry in the regions and we have downsized considerably in the when cost of construction, levies and continued to see a string of IDA Ireland downturn and with a few large projects contributions are factored in, thus announcements in the region recently planned in 2016, we are anticipating a the inclusion of Cork in the proposed including international brands such shortage of suitable sub-contractors abolition of development levies is to be as Apple, GE Healthcare and Pfizer to for trades such as concrete, formwork, welcomed. O‘Flynn Construction has name a few. plastering, façade systems, mechanical announced plans for 10,000 homes and electrical. in Dublin and Cork over the next eight

22 AECOM Below left: Curragh Racecourse, Above: Maree National School, Curragh, Co. Kildare. Maree, Oranmore, Co. Galway. AECOM services: Civil and structural engineering, cost AECOM services: Cost management. management, mechancial and electrical engineering, fire safety consultancy, project supervisor design process, façade and assigned certifier role. Image copyright (c) Grimshaw.

Limerick and the mid-west region The Limerick Regeneration programme and the South Campus Sports Pitches In 2016 construction activity in continues apace, particularly in Improvement Plan. Limerick and the mid-west is primed the housing sector. Phase 1 of the to take a major step towards catching Churchfield project in Southill should In the healthcare sector, the joint up with other regions that experienced commence early in 2016 with further venture CERC project with UL is economic recovery more quickly. While projects in Southill, Cosgrave Park, currently under construction and there is still a reliance on public sector Weston Gardens, Carew Park and Kings the fit-out of the new emergency projects, there is also optimism that Island to follow. department has recently commenced. the levels of private sector activity will accelerate significantly in 2016. The local third level institutions The Shannon Airport Authority will continue to develop their campuses. be carrying out substantial runway The Limerick City & County Council Mary Immaculate College is refurbishment works in 2016. Work draft budget includes a capital expanding its campus by acquiring recently commenced on Shannon programme for 2016 to 2018 that and refurbishing the nearby Mount Commercial Properties’ new €6 million will see €219 million spent on major St Vincent complex and is looking to purpose-built facility for a leading projects in the city. The programme develop a major new learning resource global operator and employer in the includes proposals to complete centre to replace the existing library. Shannon Free Zone. This is the first vital projects and key pieces of Limerick Institute of Technology major investment as part of a €21 infrastructure such as the Opera is proceeding with its Campus million first phase of a programme Centre and the redevelopment of Masterplan 2030 with the recent of new builds and upgrades of its Arthur’s Quay, the ‘Hanging Gardens’ acquisition of the vacant Coonagh property portfolio. site on Henry Street and a proposed Cross Shopping Centre for phased conference centre on the site of the re-purposing and fit-out as higher Regeneron is investing an additional former Cleeve’s factory. Also included education facilities. The University of €330 million in Limerick creating is funding for various infrastructure Limerick (UL) is currently constructing 200 more jobs, bringing the total projects such as the landmark a ‘Single Training Centre’ for Munster investment to €610 million and total Shannon Pedestrian Bridge. Rugby, and imminent projects are the expected job creation in the mid-west extension to the Glucksman Library area of 500 jobs.

AECOM 23 AECOM Ireland Annual Review 2016

Council Chambers, Galway County Council, County Hall, Prospect Hill, Galway. AECOM services: Cost management, assigned certifier role.

Galway and the western region infrastructure project is still some numbers and this in turn raises Private sector construction activity distance away. On a more positive note, confidence amongst investors. There has remained stubbornly slow in the M17/M18 Gort to Tuam motorway has been strong activity with hotel western region through 2015 and the extension and intersection with the M6, transactions across the region and industry has been reliant on the public near Athenry is advancing well on site. investment in facilities such as the capital programme as the primary recently completed restoration and driver of output. It is likely that any In common with other regions, other refurbishment of Ashford Castle. On growth in exchequer funding for capital public sector departments have an the retail side vacancy rates remain projects will remain constrained over active public capital programme across very low in Galway city centre and no the next few years, thus we will need to the region. Examples include a 75 new significant developments have see an improvement in private sector bed ward block at University Hospital emerged. 2016 may see the market activity in order for the industry to show Galway. The recently announced respond to the growing economy and an improvement in the region. Department of Education & Skills consumer confidence. schools building programme including 2015 saw a number of significant seven school projects to go to site in Similarly, office accommodation announcements which will impact Galway during 2016 in areas such as vacancy rates are in single digit positively in construction activity in Monivea and Lackagh, and a further percentages, and this low level of 2016 and subsequent years. Among four planned for 2017. In the third level available Grade A accommodation may the most significant announcements sector, NUI Galway has lodged plans be making potential businesses look was the €850 million data centre for a 450 bed student accommodation elsewhere. It remains to be seen if the announcement for Athenry, Co. Galway. development on campus. domestic and international investors Planning permission was granted in who have been actively developing September and it is currently with An In the private sector the hotel commercial property in Dublin will Bord Pleanala. and tourism sector remains a key start to invest in regional cities such economic driver in the region and as Galway which has a combination The Galway City Transport Project N6 2015 was another strong year. The of strong business base and a highly Route Selection Report was published strong dollar and sterling currencies educated work force. in August however this much needed have contributed to increasing

24 AECOM Central Bank of Ireland, North Wall Quay, Dublin. AECOM services: Cost management, civil and structural engineering service, façade engineering. Image courtesy of Visual Lab.

AECOM 25 AECOM Ireland Annual Review 2016

UK market forecast: A change of mood

Trends and forecasts around again, the idea of single-stage Non-housing sectors are beginning to With demand outstripping supply, tendering or anything other than a contribute more to overall output, just selectivity was the dominant theme negotiated procurement route is no as housing activity moderates. Output for contractors in 2015. This was longer unspeakable. The increasingly changes are particularly acute in while enquiries and new orders flowed common complaint with a negotiated public sector housing, seeing a 29 strongly. Market conditions around the or a two-stage tendered approach percent yearly decline in August (in country followed similar trends. is that it can take too long to reach a constant prices). contract agreement. Feedback from every region confirmed Construction output excluding housing the common trend for contractors Activity indicators increased in excess of 8 percent year- to decline complex work while more Recently published construction on-year. That said it is still not enough straightforward, less risky opportunities output data by the Office for National to offset overall output changes proliferated. Further, commercial Statistics (ONS) saw a fall in all work posted in August. This underlines the positions changed significantly among (new work, as well as repair and effect of the housing sector’s influence all the major contractors with regard to maintenance) of 1.3 percent on a on recent industry conditions. overheads, and profit and allowances yearly basis at August 2015, yet the for risk. data posted an increase in new work Looking at the data in more detail of 3.1 percent over the same period (in reveals the changing fortunes of sector Extra tendering time was more constant prices). Fluctuation in monthly activity. New infrastructure work has frequently requested, a higher number data movements therefore continues. increased strongly in the last year, of projects were negotiated rather posting a yearly change exceeding 31 than tendered, along with a general Despite the volatility, the data set percent in August. It now accounts for reluctance to tender due to the time comprises a large survey sample and just under a quarter of all new industry and cost involved. Difficulties in arguably yields sound insights into work, up from around 17 percent a year attracting tenderers resulted in the underlying trends in the construction ago. Although the base effects play a need for packaging work or using more sector. Removing noise in the ONS part in the yearly change calculation, it creative procurement approaches. data and attempting to mitigate its is more likely to do with much greater perceived volatility, rolling quarterly volumes of infrastructure workload But the summer brought the first averages recorded similar trends to emerging in the sector. signs of a shift in mood among main those at a monthly level, albeit with contractors. Like the seasons coming smaller percentage changes.

Figure 4 AECOM Tender Price Index: % Change Forcasts at Q3 2015 on the same period in 2014 10

8

6

4

2

0

-2

2010 2011 2012 2013 2014 2015 2016 2017 -4

26 AECOM The commercial sector, specifically ultimately damaging to overall output Though tender price increases have in London, is set to contribute sound in the medium-term, there should be been remarkable, input cost trends construction growth over the next complementary developments and have not moved to anywhere near the two years. This expected rise in investment in skills, apprenticeships same degree. Building materials costs office construction is the response and training. have increased by approximately to demand for new space in London, 1 percent on average over the last on the back of positive UK economic Building costs and prices 12 months. developments. Rising rents make the Despite annual consumer price fundamentals for office construction inflation turning negative again, tender Wages continue to climb on the year, tenable, with rental growth in London prices continue to rise strongly. though there remains variability across predicted to improve further still. AECOM’s Tender Price Index shows trades. Generally, they are up 5-6 Declining availability and rising City that building price inflation in Greater percent over the last 12 months, which and West End rents both support London accelerated once again in is a slightly slower rate of average the supply and demand sides of the the first half of 2015, increasing at change than that seen earlier in 2015. market. Further tender price pressure the fastest rate since 2002 as the AECOM’s central forecasts for tender can be expected in London as a result construction industry remained in price inflation are 6.1 percent to 8.4 of this increase in demand. bullish mood. More than this, many percent from Q3 2015 to Q3 2016 and price metrics have surpassed those 3.5 percent to 6.3 percent from Q3 Forecasts for construction work over of 2008. 2016 to Q3 2017. coming years are still positive, although output growth is not expected to be Tender prices increased 8.8 percent on The fan chart (on the previous page) as frenetic as the near double-digit the year Q2 2015. Provisional figures highlights three key criteria: the increases seen in the last 12 months. for Q3 2015 indicate an annual change baseline forecast for the current The last 18 months of sustained of 9.5 percent over the previous year and the following year; the level activity still does not answer the 12-month period. The increase in of uncertainty surrounding these question of whether this is a rebound prices was underpinned by plenty of forecasts; and where the balance of in activity or a sustainable recovery available work, a lack of capacity risks lies. over the medium and long-term. and strong labour cost increases Nonetheless, increased cyclicality (Q3 each year usually sees the in the industry is very likely to be the implementation of wage awards). This Michael Hubbard is an Associate in noticeable outcome over this and is despite building materials price AECOM London and is a specialist future periods. If higher prices are inflation posting much lower rates of cost researcher. not to become self-defeating and annual change.

AECOM 27 AECOM Ireland Annual Review 2016

One World Trade Center, New York City, United States. AECOM services: Construction management. Image courtesy of Michael Mahesh.

28 AECOM Thought leadership

AECOM 29 AECOM Ireland Annual Review 2016

Nenagh Town Park and Leisure Centre, Dublin Road, Nenagh, Co. Tipperary. AECOM services: Cost management. Image courtesy of Paul Tierney.

Opposite page: Telecity, Data Centre, Dublin. AECOM services: Contract administration, health and safety advisor. Image courtesy of Andrejs Sahovs.

Procurement strategies: Think before you leap!

With the construction industry showing to carefully consider the strategies One particular procurement strategy strong signs of recovery it is worth adopted as what worked 10 years ago which has seen a resurgence is considering will it return to the same as a strategy may no longer be the that of management contracting. operating models that existed before best fit. Management contracting has the crash, or will it function differently? traditionally been selected for fast- Equally from a client’s perspective track, programme critical projects such Of course it is problematic to make attitude to risk is likely to have as office fit-outs, and indeed it is still generalisations about the likely path changed. Whilst an increase in the being selected for such projects today. of any industry, and particularly one cost of a capital project over a budget However, we are also beginning to see as broad and volatile as the Irish allocation has always been a significant it emerge for consideration in other construction industry, however there adverse event — depending on the non-traditional sectors. The reasons are a number of trends emerging which corporate structure — it may now have for this are linked to the points made are likely to have an impact. repercussions which would have in the above, namely a combination of a past seemed disproportionate to the client desire to set an early cap on their Unsurprisingly, the single biggest trend scale of the overrun. expenditure and contractors’ desire to emerging is the attitude to risk, both minimize risk exposure. from a client and funder perspective There is considerable change in terms but even more so from the contractor of risk, the availability of finance and The traditional procurement route may perspective. The approach on the capacity of contracting organisations. involve fully designing a project over contractor side is seeing a significant It is critical that consultants advising six months, tendering over two months reduction in both the willingness and/ clients carefully review the available and agreeing a contract, at which point or ability of contractors to take on procurement strategies. This must take the contractors estimator hands it risk. One of the ways in which this is into account the conditions current over to their quantity surveyor to manifesting itself in the industry is in in the market and knowledge of the confirm sub-contract quotes or often terms of procurement, and clients need sector and regional factors.

30 AECOM going back out to the market to get carry the risk on. The contractor is also firm tenders. assured of its preliminary costs which again are firmed up at this stage and Under the management contracting included in the GMP. approach the client develops the design to a defined stage over So on the face of it, it would appear . three months, after which the main to be an ideal solution with the added contractor starts to procure the high benefit of less confrontation between value packages and once firm prices the parties. However, we would sound are achieved for circa 70 percent, a a word of caution before adopting this Guaranteed Maximum Price (GMP) strategy, that being that the imposition is agreed inclusive of the remaining of a GMP or Not To Exceed (NTE) cap 30 percent. So there are obvious is likely to result in a premium being programme benefits and the client included in the budget to cover same. doesn’t fix its budget until it gets It is unlikely that the subsequent a GMP. process will eliminate that premium thus ultimately the strategy selection From the contractors perspective it will impact on cost. Finally, we would doesn’t carry the risk of a tender, which say that it is the outturn cost, which it may or may not be able to match in matters most and eventually feeds into the market, instead it waits until 70 determining value, hence each project percent is determined and then seeks needs to be judged on its own merits. to add a premium to carry a GMP on same and the remaining 30 percent of Tomás Kelly, Director, routine packages which it is happy to Cost management and Consultancy.

AECOM 31 AECOM Ireland Annual Review 2016

Congestion relief requires public transport investment

The Greater Dublin Area (GDA) congestion levels. Dublin’s current for significant increase in road network Transport Strategy was released for public transport network offers capacity, therefore heavy investment in public consultation in October 2015 considerably less capacity than cities public transport infrastructure needs to and is due to be finalised in 2016. of a similar size across Europe. In be urgently prioritised. The plan, developed by the National the GDA, 15 percent of trips in the Transport Authority (NTA), proposes morning peak hour of 8-9 a.m. are by Now, rail schemes such as Metro a strategic vision for development of public transport compared to Helsinki North which were put on hold during the capital’s transport network up to (population 1.2 million) where 34 the recession are being reviewed for the year 2030. percent of trips are made using public future delivery. Since the scheme transport. was put on hold in 2011, AECOM Release of the Transport Strategy was commissioned by the NTA to is timely in light of the increasing In addition to recent growth in travel undertake a fresh review of public transport network delays being demand, the GDA Transport Strategy transport options for a north-south experienced in the city. Traffic levels is forecasting 39 percent growth in corridor from the city centre to the experienced in many parts of the city population and employment by 2030 airport and Swords, including Metro are now well beyond those experienced with a corresponding 25 percent North. Six potential schemes for at the height of the ‘boom’. On the M50 increase in travel demand. Although a the corridor were shortlisted which for example, the monthly average daily certain proportion of this growth can included light rail, heavy rail and bus traffic volumes between the M3 and be absorbed by the existing public rapid transit. It was concluded that M4 have grown by nearly 45 percent transport network, the road network is light rail infrastructure still presents the between 2007 and 2015 with traffic likely to experience the highest growth best opportunity to respond to travel volumes increasing from 90,000 to in demand. As a result, increased demand along the corridor and would over 130,000. This increase in traffic demand for car travel by 2030 could generate the most benefit for the delay has contributed to Dublin being result in reductions in average road existing transport network, economy, ranked as one of the most congested network speeds of 19 percent with environment and communities. cities in the world. overall delay on the road network increasing by 72 percent. A variant of Metro North was The low mode share for public recommended by the study which transport in Dublin, a symptom of Clearly, the scale of this growth could includes less tunnelling and less chronic under-investment for many have adverse economic impacts on stations than the original scheme. decades, is a major factor influencing Dublin, where there is limited potential These amendments have reduced

Figure 5 World’s most congested cities New Metro North: Key facts (% = congestion level)

Moscow 74% 17 kilometres in length Istanbul 62% Rio de Janeiro 55% 14 stations, six of which are underground Mexico City 54% Sao Paulo 46% Travel time of 19 minutes from the city Warsaw 39% centre to the airport and 30 minutes to Palermo 39% Swords Rome 37% Los Angeles 36% Demand of 30 million passengers per year Dublin 35%

Source: Tom Tom Global Traffic Index 2014.

32 AECOM The M50 Layout Changes, M50, Dublin. AECOM services: Intelligent Transport Systems (ITS), highway engineering

These amendments have reduced transport, land use and economic Uncertainty about the future the cost estimate for delivery from an development proposals. development of Metro North has estimated €3 billion to €2.4 billion. The impacted progress to date in unlocking ‘new Metro North’ alignment runs along The ‘Metro North Economic this land for development and, in the the same alignment originally proposed Corridor’ was proposed in the Fingal interim, development has occurred from St. Stephens Green to Swords via Development Plan 2011-2017 as in areas outside the ‘Metro North Dublin airport. The scheme will provide an area which should facilitate an Economic Corridor’ which do not access to a significant residential area of ‘high density, employment support sustainable travel patterns. catchment as well as many important generating activity focusing on key Following the recent announcement of trip generators such as Swords Town sectors including IT, financial and an estimated 2026 completion date, Centre, the airport, Ballymun, Dublin business services, science and there are continued concerns about City University, Mater hospital and technology, and health and education’. the timing of potential development Dublin city centre. The use of ‘clustering’ is proposed to along the corridor. There are also concentrate employment along the concerns that a response to increasing In September 2015, the Minister for corridor to maximise cost efficiencies travel demand within the corridor Transport, Tourism & Sport Paschal and economies of scale, innovation, is needed much sooner than the Donohoe confirmed the government’s partnership opportunities, improve timeframe proposed. commitment to the scheme through access to raw materials and availability the announcement of €3.6 billion of a skilled workforce. With development plans for Fingal investment in public transport up to and Dublin City currently being 2021 which includes advanced works Along the corridor, development within reviewed, there is a need for solid for the new Metro North. a number of areas is subject to the commitment to the delivery of the delivery of Metro North. This includes a new Metro North. This commitment Although some amendments have significant amount of housing stock as should be demonstrated by an early been proposed to the scope of the well as commercial development within commencement of planning and original Metro North, the alignment the South Fringe and Swords areas. design of the scheme, but also in has largely remained unchanged and One third of the proposed new housing opening up land for much needed therefore still corresponds with the stock in Fingal has been designated new communities and employment policy context adopted by the regional towards Metro Economic Corridor opportunities. planning guidelines for the GDA, zoned lands where the plan estimates Dublin City and Fingal development that an additional population of almost Elaine Brick is an Associate in the plans. Each of these plans has 20,000 can be accommodated along AECOM Transportation Team. firmly embedded Metro North within a one kilometre radius of the Metro North alignment.

AECOM 33 AECOM Ireland Annual Review 2016

The changing workplace

It’s a well-worn saying but it’s true - no the organisation and aligning their matter which industry, sector or part behaviours, technology and workplace of the world you’re in, change is a strategies in support of them. This can constant. Coupled with this, change is mean anything from seeking ways that getting harder to predict, and in many the workplace can support the desired arenas, happens at an exponential leadership qualities and capabilities rate. New companies spring up within the organisation, exploring how seemingly overnight. Products and the workplace can help respond to a services that were revolutionary two changing regulatory environment, or years ago are rendered obsolete if using the workplace to change how they don’t adapt to market changes teams operate and make decisions in fast enough. order to increase the speed to market.

Change management But no change can be successful Identifying the need to change if it isn’t managed successfully. the workplace is one thing, but its People tend to have deep emotional implementation is often fraught with attachment to existing ways of challenges, and few change eff orts working, and this can lead to resistance are entirely successful. They often and suspicion of change. The lost take more time than is anticipated, productivity due to disengaged they can negatively impact morale and employees far outweighs the they often cost a great deal in terms of investment up-front in managing money, time or emotional upheaval. change well. By investing time in the AECOM’s work with clients in this process of change, an organisation is regard is centred on aligning people, not just preparing for the upcoming technology and the physical space to event, but increasing the overall create a climate for change. change capability across the organisation, meaning people are more Whilst traditionally the working able to respond to the next, inevitable environment reacted to organisational change coming down the line. change, the most forward thinking Top and above: Hewlett Packard, organisations now recognise that it Workplace consultancy European Software Centre, Ballybrit Business Park, Galway can be a powerful enabler for change. AECOM’s Workplace Consultancy Seeing the workplace as a tool in converts knowledge to value by AECOM services:Project management, employers representative, project supervisor the transformation toolbox, means maximising the return on space and for design process. organisations like National Grid and its use. This helps inform strategic Image courtesy of Paul Moane. Rolls Royce are constantly working to decision-making and generates identify change opportunities within project briefs.

Figure 6 Change management

Corporate culture Group task

Enclosure Group structure Knowledge sharing Multiple/single Rate of change membership of teams Investment in staff Project/process Staff turn over Enclosure Churn

Individual attitudes Individual tasks

Change Physical space Work Mobility Environment Resource variety Interaction Enclosure Ergonomics Access to information

34 AECOM The drives for undertaking projects can vary but frequently include:

– optimisation of space utilisation; – workplace to fit work practices; – design for the knowledge economy; – implementation new ways of working; – measurement of the effectiveness of buildings; – change Management.

Optimisation of space utilisation Even the most hard driven work environments don’t achieve 100 percent desk utilisation, typically utilisation is 40 -75 percent, but does this mean flexible working is viable? that is often built around outmoded LIT Strength and Conditioning, Nenagh Road, Thurles, Co. Tipperary. technology, furniture and ways of conceiving the work process. AECOM services: Project management, cost Undertaking observation and activity management. studies can determine utilisation levels The use of activity studies, Image courtesy of Bowe O’Brien Photography. and work patterns. From these, the questionnaires and workshops can requirements for workstations and build an understanding of the physical other work-settings, including requirements of the work practices a new environment will work as well meeting room sizes and numbers undertaken. With this knowledge, as acting as test beds for furniture can be quantified. appropriate work-settings can products and IT systems. be designed. This can result in considerable space It is also important to work closely with savings or in the provision of more Implementation client’s HR teams to prepare multi- appropriate work-settings. It is also useful to undertake attitude media presentations and focused and opinion surveys in conjunction with contact with staff to get the benefit of Workplace to fit work practices other workshops and questionnaires their experience of staff sensitivities, The work practices of most that can yield useful information and to keep in line with other initiatives in organisations have been undergoing provide positive communication for the organisation, and to ensure the technology and work process driven change management programmes. best possible outcome for that specific changes. These are often not well Trial work environments can be very business as it implements its latest reflected by the physical environment valuable ways of demonstrating how change in the workplace.

John Harrison, RIBA, Architecture, Interior Designer + Space Planner. Figure 7 Portsmouth, Leech Building, United Kingdom: Third floor occupancy Peak use Wednesday morning 250

180

160 Peak utilisation including ‘appearing occupied’ 152 desks (66%)

140

120 Peak utilisation 106 desks (46%)

100

80 Average utilisation 74 desks (32%)

60 Occupied 40 Appearing occupied 20 Unoccupied

0 Mon 9.30 Tue 9.00 Wed 9.00 Thu 9.00 Fri 9.00 to16.00 to16.00 to16.00 to16.00 to14.00

AECOM 35 AECOM Ireland Annual Review 2016

Indicative building costs

Indicative building costs Republic of Ireland Northern Ireland € per square metre Stg £ per square metre Healthcare Hospitals 2,000 – 3,200 1,800 – 3,500 Primary care centres 1,700 – 2,100 1,200 – 1,800 Nursing homes 1,700 – 2,200 1,100 – 1,800

Education Primary schools 1,150 – 1,450 1,100 – 1,200 Secondary schools 1,150 – 1,450 1,100 – 1,250 Third level 1,650 – 2,650 1,200 –2,100

Commercial Offi ces Shell & core (landlord fi t-out) 1,550 – 2,400 1,100 – 1,650 Owner occupier 1,800 – 2,850 1,400 – 2,500 Offi ces fi t-out Basic 350 – 700 220 – 450 Medium 700 – 1,000 450 – 800 High 1,000 – 1,250 800 – 1,000 Top 1,250 – 1,950 1,000 – 1,900

Shopping centres Shell & core 800 – 1,300 600 – 1,200 Mall 1,600 – 2,800 1,270 – 1,500 Fit-out 950 – 1,700 600 – 1,600

Residential Apartments 1,350 – 1,750 900 – 1,500 Apartments (12–16 storey) 1,800 – 2,400 1,450 – 1,900 Social housing 1,100 – 1,550 750 – 1,050 Sheltered housing 1,100 – 1,650 800 – 1,050 Housing (suburban housing) 950 – 1,300 700 – 1,100

Industrial Warehouse/factory shell 650 – 850 550 – 800 Factory (basic) 800 – 1,150 600 – 1,200 High spec factory Shell & core 1,000 – 1,400 700 – 1,100 Fit-out 750 – 1,250 500 – 900

Leisure Hotels 3 to 4 star 1,600 – 2,300 1.200 – 1,800 5 star 2,300 – 3,400 2,200 – 3,500 Swimming pools 60% wet/40% dry 1,850 – 2,400 1,800 – 2,200

Car parks Multi-storey 400 – 700 350 – 650 Single basement 575 – 950 450 – 800 Double basement 800 – 1,250 600 – 1,000

The fi gures quoted are for mid-range buildings in the Dublin and Belfast When considering building costs, you should check if areas at January 2016 prices. It is possible that tenders will be received costs include: outside these ranges dependent on a range of factors including scale, complexity and specifi cation. Professional advice should be sought for – Value added tax (at the applicable rate in each jurisdiction) specifi c projects. – Professional fees – Infl ation The AECOM indicative building costs should NOT be used for fi re – Fit-out Capitalinsurance Dock, valuations or for residual valuations for funding purposes. – Landlord fi t-out/landlord credits Sir John Rogersons Quay, Dublin 2. – Furniture AECOMIf you require services: a valuation Cost management. for fi re insurance or more specifi c information, – Planning levies, fees and charges please contact AECOM. – Demolition and disposal of any deleterious materials – Abnormal ground conditions

36 AECOM AECOM

AECOM 37 AECOM Ireland Annual Review 2016

AECOM Ireland

AECOM Programme, Cost, a wide range of projects as well as continue to strengthen our project and Consultancy growth leading our research department and cost management team which has During 2015, our Programme, Cost providing specialist consultancy advice been to the fore in delivering projects Consultancy team were pleased to to clients. for more than 150 years in Ireland. announce the appointment of Jason Hobson-Shaw and Tomás Kelly as In addition, Mark Smith and Colin Directors. Cleary were promoted to Regional Director, and Nick McPhilemy and Based in Dublin, Jason has a wealth of Ciaran Timpson joined AECOM Ireland experience in the delivery of complex as Associates. healthcare projects and fast-track commercial projects. Tomás is based in We are pleased to announce the Front row: Mark Smith, Colin Cleary, Greg Flynn, John O’Regan, Jason Hobson-Shaw our Galway office and over his 19 years promotion of David Coleman, Patrick with the company has led the delivery Dooley and James Fee to Associate Back row: John Lombard, Nick McPhilemy, of our cost management service on in January 2016. These promotions Tomás Kelly, Ciaran Timpson

38 AECOM AECOM win Active Belfast Challenge! During 2015 the AECOM Belfast offices won 1st prize in the 250–499 staff category. The Challenge aims to get as many people as possible choosing to take more of their journeys by walking, cycling, motor cycle, using public transport and lift-sharing. Journeys for work are also included e.g., cycling to a meeting.

From left: Dr Eddie Roonie, Public Health Agency, Dr. Gary Benson, AECOM, Fiona Mooney, AECOM, Claire McLernon, Sustrans Northern Ireland.

AECOM expanded offices AECOM have continued to expand its operations in Ireland following the merger with URS. In Dublin the design disciplines moved offices to Adelphi Plaza in Dun Laoghaire, Co. Dublin. Our Galway office has also moved to larger offices at Galway Technology Park, Parkmore, Galway (see contact details for all offices in our centre pull-out).

A number of the AECOM Island of Ireland management team at a recent meeting in our Beechill offices, Belfast.

AECOM 39 AECOM Ireland Annual Review 2016

Oweninny Wind Farm, Bellacorrick, Co. Mayo. AECOM services: Landscape architecture, digital media.

Current projects include:

A24 Ballynahinch Bypass, Co. Down Curragh Racecourse Redevelopment, Co. Kildare A6 Randalstown to Castledawson, Northern Ireland DCU Block F Teaching Block Extension Athy Distributor Road, Co. Kildare Dropbox Offi ce, Dublin Baggot Street Offi ce Development, Dublin Dublin Airport Capacity Development Bon Secours Hospital North Block Extension, Cork Dublin Airport Terminal 1 Arrivals Upgrade Brown Thomas, Dublin & Cork Dublin City Council Ballymun Boilerhouse Repurpose Working, Dublin Capital Dock Mixed Use Development, Dublin Ebrington Development Framework, Castlebar Hospice, Mayo Derry-Londonderry Central Bank Headquarters, Dublin Endoscopy, Physical Medicine & Oncology Extension, Churchfi eld Housing Phase 1, Southill, Limerick Naas General Hospital, Co. Kildare Clancy Quay Residential Development, Dublin EY Offi ces, Dublin Coláiste Chiaráin, Limerick Failte Ireland Capital Development Programme Confi dential Data Centre, Dublin Foynes–Limerick improvement scheme, Limerick Connemara Visitors Centre, Galway Goodbody Offi ces, Galway Cork City North West Primary Care Centre Human Biology Building, NUI Galway, Galway Courts Bundle PPP, Ireland Grangegorman Development Agency New Primary Care Centre, Dublin

40 Hybrid Cardiac Cath Lab and New Orthopaedic Theatre, Royal College of Surgeons Ardilaun House Upgrade, Our Lady’s Children’s Hospital Crumlin, Dublin Dublin IT Tallaght Campus Development Sligo Hospital Surgical Block, Sligo JP Morgan Chase, IFSC, Dublin St. John’s Nursing Home, Dublin LinkedIn Headquarters, Dublin St. Patrick’s School, Shannon, Co. Clare LIT Campus Development, Limerick UCC Innovation Building, Cork Science & Innovation Park, Cork Mary Immaculate College Development, Limerick UCC Student Hub, UCC Campus, College Road, Cork National Centre for Hereditary Coagulation Disorders Outpatient Clinic (NCHCD), St. James Hospital, Dublin UCD Newman House, Dublin Omagh Integrated Primary School, Co. Tyrone UCD Student Accommodation, UCD, Dublin National Forensic Mental Health Services, University of Limerick Library Extension, Limerick Portrane, Co. Dublin University of Limerick Pool & Arena Extension, Limerick National Gallery of Ireland Extension & Upgrade, Dublin Woodvale and Shankill Housing Refurbishment, Belfast Palm Court Regeneration, Limerick University of Ulster Magee College Teaching Block, Residential Development, Bettystown, Co. Meath Derry-Londonderry Royal Belfast Hospital for Sick Children, Workday Offi ces, Dublin Royal Victoria Hospital, Belfast York Street interchange, Belfast About AECOM

AECOM is built to deliver a better world. We design, build, finance and operate infrastructure assets for governments, businesses and organizations in more than 150 countries. As a fully integrated firm, we connect knowledge and experience across our global network of experts to help clients solve their most complex challenges. From high- performance buildings and infrastructure, to resilient communities and environments, to stable and secure nations, our work is transformative, differentiated and vital. A Fortune 500 firm, AECOM companies have annual revenue of approximately US$18 billion. See how we deliver what others can only imagine at aecom.com and @AECOM.

See the AECOM Ireland profile fold-out in the centre of this document for full contact details of our management team and all our offices on the Island of Ireland.

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