Item 6 (a)

Glasgow and Clyde Valley City Deal 20th October 2015

Cabinet

Report by Director of Programme Management Office

Contact: Mandy MacDonald 0141 287 8503

Programme Management Office Evaluation

Inverclyde Council Strategic Business Cases

Purpose of Report:

Inverclyde Council, as a Member Authority, has submitted the following Strategic Business Cases for consideration by Glasgow and Clyde Valley City Deal Cabinet:-

Strategic Business Case – Inverkip Strategic Business Case – Ocean Terminal

Both Business Cases were considered by the Chief Executives’ Group on 7th October when it was agreed to submit them to Cabinet for approval.

Recommendations :

It is proposed that the Cabinet agrees

(1) to invite Inverclyde to proceed to develop the projects to the next stage of development through the preparation of Outline Business Cases, subject to them developing aspects of the Business Case to meet in full the business case criteria going forward;

(2) to note that Inverclyde Council will continue to take cognisance of the emerging outcomes of the SAF and the detail of the Programme Business Case; and

(3) to approve the funding required for each project as follows:-

(a) Inverkip - £260,000 for design fees; and

(b) Ocean Terminal - £800,000 for design fees.

1. Purpose :

1.1 Inverclyde, as a Member Authority, has submitted Strategic Business Cases for the following projects for consideration by Glasgow and Clyde Valley City Deal Cabinet:-

Strategic Business Case – Inverkip Strategic Business Case – Ocean Terminal.

These Business Cases were considered by the Chief Executives’ Group on 7th October 2015 when it was agreed that they should be submitted to Cabinet for approval

2. Background:

2.1 The Executive Summary for each project is attached as Appendices 1 and 2. These describe the strategic need for the projects, the options which have been considered to address the area’s development constraints and the outline of proposed solutions.

3 Programme Management Office Assessment

3.1 The projects have been reviewed against the business case criteria outlined within the Assurance Framework which aims to provide a level of technical checking, and to identify areas where further analysis or planning is required to develop the project to the next level of detail. These technical checks will be discussed with Inverclyde Council and will form the basis of development work going forward.

3.2 The Strategic Business Cases have also been assessed for “strategic fit” against the objectives of the City Deal. The projects are aligned with these objectives and the project outputs can be more fully defined at the Outline Business Case stage.

3.4 The Programme Business Case is in development in parallel with our appraisal of these projects. The outcomes of the SAF and Programme Business case process will further inform the development of these project business cases as they are developed to Outline Business Cases.

3.5 The SAF exercise is complete and the recommendations from this analysis will continue to be developed within the Programme Business Case.

3.6 Finance These Strategic Business Cases seek approval for monies to allow the projects to progress to the next stage of the business case process. The projects are seeking approval for City Deal funding of £260,000 to fund eligible expenditure for Inverkip and £800,000 for Ocean Terminal.

3.7 Legal The Member Authority should ensure close liaison and co-operation with the Legal and Procurement Support Group, and the Legal Sub Group in particular, to ensure that all outstanding legal issues are recognised and addressed appropriately at a Project and Programme level.

4 Recommendations

4.1 It is proposed that the Cabinet agrees

(1) to invite Inverclyde to proceed to develop the projects to the next stage of development through the preparation of Outline Business Cases, subject to them developing aspects of the Business Case to meet in full the business case criteria going forward;

(2) to note that Inverclyde Council will continue to take cognisance of the emerging outcomes of the SAF and the detail of the Programme Business Case; and

(3) to approve the funding required for each project as follows:-

(a) Inverkip - £260,000 for design fees; and

(b) Ocean Terminal - £800,000 for design fees.

APPENDIX 1

INVERCLYDE: Inverkip

1.0 Executive Summary Inverkip is an infrastructure and development project that addresses the restricted network and junction capacity on the A78 trunk road at four locations in and around Inverkip. It will release investment and secure the development of a Major Area of Change site identified within the Local Development Plan whilst also securing access and safety improvements benefiting the strategic network and transport and access at Wemyss Bay and Inverkip.

Development of the former Inverkip Power Station site is currently constrained by significant cost abnormalities that impact adversely on the viability of development. The site will not achieve planning consent unless, to the satisfaction of Transport Scotland, the existing A78 roads infrastructure at and specifically the four highlighted existing junctions and merge/diverge slip roads are improved.

The City Deal infrastructure project will act as a catalyst, through a developer agreement, for the current owner to remove the existing power station floor slab, make a feature of the existing Clyde jetty and build out the mixed use site over a fixed gestation period.

This strategic business case seeks approval to incur design fees of £260,000 which will be incurred on the current and next financial year.

1.1 Strategic need for the project Inverclyde Council and its economic development partners within the Single Operating Plan are focused on delivering investment and development in the area that addresses:  Economic disadvantage and inclusive growth within communities (National Regeneration Strategy 2011 / Inverclyde Single Operating Agreement 2014)  Sustainable Economic Investment with strong focus on SME’s (Inverclyde Economic Regeneration Strategy (2014-2017)  Regenerating Key Economic Sites and Communities (Inverclyde Economic Regeneration Strategy (2014-2017)

Inverkip is identified as a Major Area of Change (LDP). Inverclyde Council has been seeking to facilitate investment at Inverkip through active economic engagement and positive land-use planning. These include:  Mixed Use Development Zoning in the Local Plan 2006  Promotion of Major Area of Change in Local Development Plan 2014.  Supporting and facilitating a Development Masterplan for brownfield land  Developing clear partnership delivery arrangements with Riverside Inverclyde (Ri)

 Facilitating private/public sector dialogue on infrastructure and investment with: Transport Scotland / Major Landowners / Service and Utility Providers / Communities

The Inverclyde Economic Development and Regeneration Single Operating Plan (2014-2017) identifies the areas strategic challenges and opportunities with specific reference to:

Improving Economic Infrastructure (Section 3.5) focusing on:  Developing key sites within the A8 Corridor and associated with the Clyde waterfront  Increasing Inverclyde’s capacity to diversify the business base Regenerating Disadvantaged Areas (Section 3.6) focusing on:  An area based, partnership approach to regeneration Addressing Population Decline (section 3.7)  De-population is a major economic issue with a need to stabilise population

Inverclyde Council has secured, through positive engagement, a masterplan to promote a high quality mixed use development and secure positive investment in a major brownfield site capable of securing significant regeneration benefits.

1.2 Options shortlisted The options appraisal outlined below sets out a range of potential options which have been identified and considered in developing the preferred option based on a Detailed Transportation Assessment (Atkins) and discussions with Transport Scotland / Transportation Services within Inverclyde Council. Options include:

Do Nothing Retain existing arrangements with no further capacity or junction improvements and look to future Local Development Plan or alternative finance measures Transport Scotland / TIF / Infrastructure Fund to fund

Traffic Signalised Junction with Speed Controls Promote a new traffic Signalised Junction together with associated A78 Speed Controls and/or other speed reducing measures on the Trunk Road

New Roundabout Junction and Junction Improvement Preferred Option Promote a new roundabout Junction to Brueacre and Main Street with all associated traffic management measures together with pedestrian and cycle facilities to support enhancement for all transport modes and improve accessibility

Re-align A78 & Create new Roundabout Promote wider upgrading including dual entry roundabouts to secure additional long term capacity and access.

1.3 Proposed solution The preferred option allows for four improvements involving new Roundabout Junction and Junction Improvement that meet all stakeholder needs and are capable of securing DRMB design standards and meeting approval of Transport Scotland.

1.4 Forecast cost Inverkip will be implemented and delivered by Inverclyde Council in partnership with wider stakeholders under a standard NEC Contract suitable for transport infrastructure work contracts. Inverclyde Council has the in-house expertise to project manage transportation projects of this scale and complexity and will appoint, with partners, a Design Team through competitive tender. The broad breakdown of capital costs are as follows: Inverkip North £900,000 Brueacre Junction Northbound Slip £400,000 Brueacre Junction Southbound Slip £400,000 Brueacre Junction £800,000 Total Capital Cost £2,500,000 Optimise Bias / Contingency 11% £350,000 Fees & Consents £400,000 TOTAL £3,250,000

This strategic business case seeks approval to incur design fees of £260,000 which will be incurred in the current and next financial year.

1.5 Proposed team and project management arrangements Inverclyde Council and SPGL are developing the Governance Structure for Inverkip and anticipate this will take the form of a formal Development Agreement supported by appropriate project management and governance protocols to support an accountable and transparent process of formal partnership approvals, gateway and staged design approvals, project management milestone monitoring, consenting, stakeholder management and risk management, etc.

The Project Management Team will involve Corporate Services across all relevant Council Departments with a Client Board / Steering Group comprising representatives of Inverclyde Council, and SPGL.

The Design and Development Team for Inverkip has included specialist engineering, Cost, and technical support services involving:  Inverclyde Council Economic / Legal / Finance officers  SPGL Estates Development Team  Arch Henderson Marine Engineers  Turleys Planning & Masterplanning Services

 Atkins Engineering / Transport Planning / Cost consultancy

Inverclyde Council and Scottish Power Generation Limited will establish a Development Agreement to oversee the delivery of the project and establish the formal protocols for defined responsibilities and delegated authorities to each respective boards/committees of the parent bodies i.e. Environment and Regeneration Committee of Inverclyde Council and SPGL board. An agreement with Transport Scotland including endorsement of the proposals will be secured through Inverclyde Council.

The project will be procured in line with the Councils procurement policies. The Council will release funds to Scottish Power Generation Limited in arrears based on invoices at design stage and valuations during the construction phase, both monthly in arrears.

APPENDIX 2

INVERCLYDE : Ocean Terminal

1.0 Executive Summary This reports sets out the Strategic Business Case (SBC) for Ocean Terminal, Inverclyde and summarises concisely the current status of the project, the development of the project and decisions to date and sets out a project framework for going forward.

The report is set out to reflect the City Deal Guidance for Applicants and sets out in the varied sections, the business need; option appraisal, benefits, sustainability together with detail on delivery and governance. These issues will be further developed with City Deal PM Team in the Outline Business Case.

This strategic business case seeks approval to incur design fees of £800,000 which will be incurred on the current and next financial year.

1.1 Strategic Need for the Project Ocean Terminal is a partnership project between Inverclyde Council and Peel Ports - Clydeport to deliver a Cruise Liner Terminal at the port of Greenock. The development involves redevelopment of brownfield, underutilised quay assets to offer a dedicated cruise liner berth and associated terminal facilities supporting Scotland’s tourism sector.

Greenock’s cruise business in terms of passenger numbers has been growing steadily since 2007 rising by between 10 and 13% annually (GP Wild Cruise Study) and is now constrained by port capacity due to growth in container traffic. Peel Ports - Clydeport can no longer reserve quay capacity for cruise activity due to planned growth and increased container traffic and intervention is required to protect current cruise activity, respond to demand and provide for sustainable growth. The project will deliver tourism growth in a growing sector for Scotland; increase cruise tourism and visitor spend in the West of Scotland; increase local spend in an area of significant deprivation and support town centre regeneration in Greenock whilst facilitating the wider development of the port.

Investment in a new dedicated quay berth and landside facilities would support major growth in Cruise Liner activity and support national, regional and local policies to boost tourism numbers, spend and market penetration whilst supporting local regeneration.

1.2 Options Shortlisted Inverclyde Council and Riverside Inverclyde (Urban Regeneration Company) in collaboration with Scottish Enterprise identified economic opportunity to support regeneration and have worked with Peel Ports - Clydeport to initially explore options and develop a viable and deliverable proposal. Options reviewed include:

 Do Minimum Retain existing arrangements with no further capacity and seek to arrange as compatibly as possible the programming of vessels and cruise/freight activity;

 Extend Berth / Quay Facilities to West Promote an extension to the West of the Princess Quay extending as a finger pier or similar into the Clyde and used as a shared facility and/or dedicated facility for freight and cruise;

 Extend Berth / Quay Facilities to East Promote an extension to the East of the Princess Quay extending/enhancing the derelict Albert Quay and securing a new dedicated facility for cruise vessels;

 Comprehensive Port Re-structuring Radical re-structuring of the port for all activities including freight handling (container / bulk cargo / cruise / other) including securing new land, landside access and marine facilities.

1.3 Proposed Solution Extending Princess Quay to the east with a new 150metre dedicated Cruise Berth & Terminal represents the proposed solution. This will facilitate sustainable growth in cruise liner activity, develop the under-utilised brownfield asset of Albert Quay and create a new or refurbished dedicated cruise passenger terminal facility including coach and car parking supporting both transit and embarkation passengers. Ocean Terminal will be delivered to meet international standards for cruise facilities with quay embarkation/disembarkation; redeveloped cruise terminal and dedicated shore facilities all currently lacking in the West of Scotland.

1.4 Forecast Cost The cost plan requires a total investment of £14,136,918. The costs include for contingency allowances for marine engineering works of 10 %.

1.5 Contingency Plan The Ocean Terminal project is at an early stage of development that has included Outline Scheme Design by professionals with extensive experience in marine engineering /quay design at Greenock. A Risk Appraisal has been initiated for development in parallel with the development of the Outline Business Case and Detailed Design.

Engagement with key stakeholders including cruise liner operators has been progressed by Peel Ports - Clydeport and engagement with State Aid, consenting and regulatory bodies advanced. Due to State Aid restrictions Inverclyde Council will develop an appropriate joint venture with Peel/Peel Ports - Clydeport adopting the Market Economy Investor Principle to ensure public funds are contributed in a state aid compliant manner.

1.6 Proposed Team and Project Management Arrangements The Ocean Terminal Project will be delivered by Inverclyde Council and Peel Ports - Clydeport Group within in a Joint Venture arrangement to be developed and detailed in the Outline Business Case (OBC). The development agreement will ensure the project can take advantage of a mixture of publicly aided support operating within a Development Joint Venture (JV) between Inverclyde Council and Peel Ports - Clydeport that will allow participation under a Market Economy Investor Principle (MEIP) compliant with State Aid requirements and guidance.

The partnership and governance structure of the project will ensure the project has a strong, transparent governance structure with clear roles and accountability shaped around clear and evidenced skills and competencies. Lead Body: Inverclyde Council with Peel Ports - Clydeport operating within a JV and Riverside Inverclyde acting in a delivery agency capacity; Design Team: Selected by competitive tender / procurement; Contract Delivery: Peel Ports - Clydeport; Management of Facility: Peel Ports - Clydeport.

Summary: Does the Strategic Business case meet City Deal objectives Yes Are there clear SMART objectives Yes Option Appraisal clear & includes range of options Yes Proposed solution deliverable/buildable Yes Initial Risk Appraisal completed and risk identified Yes Full budget funding secured Yes Commercially viable/feasible Yes Costs and benefits quantified appropriate to SBC Yes