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COWES FLOATING BRIDGE Revised Business Case (Final Revised Business Case)

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COWES FLOATING BRIDGE Revised Business Case (Final Revised Business Case) Isle of Wight Council 21/09/2018 COWES FLOATING BRIDGE Revised Business Case (Final Revised Business Case) ISLE OF WIGHT COUNCIL COWES FLOATING BRIDGE IDENTIFICATION TABLE Client/Project owner Isle of Wight Council Project Isle of Wight Council Study Cowes Floating Bridge Document Revised Business Case (final version) Date 21/09/2018 Floating Bridge Business Case Updated - Final Revised File name Version 1.docx Number of pages 107 APPROVAL Version Name Date Notes Wendy Perera, IWC Authors David Carter, SYSTRA First Revised Business Case – awaiting some 0q Checked by Jayne Tyler, IWC 10/09/2018 further technical work Sean Newton, Commercial before completion Approved by 10/09/2018 Manager, IWC Author David Carter, SYSTRA Intermediate Revised Business Case – with 0s Checked by Jayne Tyler, IWC 12/09/2018 core economic appraisal and selected Sean Newton, Commercial Approved by 12/09/2018 other updates Manager, IWC Author David Carter, SYSTRA Final Revised Business 1 Checked by Jayne Tyler, IWC 21/09/2018 Case Sean Newton, Commercial Approved by 21/09/2018 Manager, IWC TABLE OF CONTENTS 1. SUMMARY 5 1.1 INTRODUCTION 5 2. STRATEGIC CASE 8 2.1 INTRODUCTION 8 2.2 BUSINESS STRATEGY 8 2.3 PROBLEMS IDENTIFIED 10 2.4 WIDER IMPROVEMENT SCHEMES 13 2.5 IMPACT OF NOT CHANGING 14 2.6 SCHEME OBJECTIVES 14 2.7 CONSTRAINTS AND INTERDEPENDENCIES 15 2.8 SCHEME OPTION DEVELOPMENT 15 2.9 HOW THE SCHEME MEETS POLICY OBJECTIVES 23 2.10 EVIDENCE BASE 28 2.11 INTERNAL AND EXTERNAL DRIVERS 29 2.12 PROJECT SUMMARY AND COMMENTARY ON OPERATIONAL CHALLENGES 29 3. ECONOMIC CASE 32 3.1 INTRODUCTION 32 3.2 OPTIONS APPRAISED 32 3.3 FLOATING BRIDGE OPERATIONAL ISSUES 33 3.4 MODELLING AND APPRAISAL APPROACH 35 3.5 ECONOMIC IMPACTS 47 3.6 REGENERATION 52 3.7 EMPLOYMENT AND GVA IMPACTS 53 3.8 WIDER IMPACTS 54 3.9 ENVIRONMENTAL IMPACTS 54 3.10 SOCIAL AND DISTRIBUTIONAL IMPACTS 57 3.11 OVERALL VALUE FOR MONEY 62 4. FINANCIAL CASE 64 4.1 INTRODUCTION 64 4.2 BUDGETS/FUNDING COVER 66 4.3 ACCOUNTING IMPLICATIONS 67 4.4 STATE AID IMPLICATIONS 67 5. COMMERCIAL CASE 68 5.1 INTRODUCTION 68 5.2 SPECIFICATIONS 68 5.3 PROCUREMENT STRATEGY & PROCESSES 68 5.4 PAYMENT OPTIONS 72 5.5 PRICING FRAMEWORK AND CHARGING MECHANISMS 73 5.6 RISK ALLOCATION AND TRANSFER 73 5.7 CONTRACT LENGTH 73 5.8 HUMAN RESOURCE ISSUES 74 Isle of Wight Council Cowes Floating Bridge Revised Business Case (final version) 21/09/2018 Page 3/107 5.9 CONTRACT MANAGEMENT 74 5.10 STATE AID 74 5.11 LESSONS LEARNT 75 6. MANAGEMENT CASE 79 6.1 INTRODUCTION 79 6.2 EVIDENCE OF SIMILAR PROJECTS 79 6.3 INITIAL STAKEHOLDER ENGAGEMENT 79 6.4 PROCUREMENT, DESIGN AND BUILD GOVERNANCE 80 6.5 CONTRACT MANAGEMENT 82 6.6 COMMISSIONING TO OPERATIONS PHASE GOVERNANCE 83 6.7 RECOVERY PHASE 84 6.8 INTERNAL AUDIT REPORT, PRICEWATERHOUSECOOPERS, NOVEMBER 2017 89 6.9 COMMUNICATIONS AND STAKEHOLDER MANAGEMENT 92 6.10 RISK MANAGEMENT 92 6.11 MONITORING AND EVALUATION PROGRAMME 93 6.12 MONITORING AND EVALUATION DESIGN 95 6.13 ARRANGEMENTS FOR MAINTENANCE 96 6.14 ARRANGEMENTS FOR WARRANTY 96 7. OPERATIONAL UPDATE 97 7.1 INTRODUCTION 97 7.2 CURRENT PROGRAMME OF ACTIVITY 100 7.3 FLOATING BRIDGE 6 PATRONAGE AND RELIABILITY DATA 104 7.4 FUTURE IMPROVEMENTS 105 Appendix One: Floating Bridge User Group Terms of Reference Appendix Two: Cowes Floating Bridge Internal Audit Report, PriceWaterhouseCoopers, Nov 2017 Appendix Three: Floating Bridge 6 Project Recovery Risk Register Appendix Four: Economic Case Appraisal Tables Isle of Wight Council Cowes Floating Bridge Revised Business Case (final version) 21/09/2018 Page 4/107 1. SUMMARY 1.1 Introduction This business case has been prepared on behalf of the Isle of Wight Council (IWC or the Council) under the provision of DfT WebTAG guidance. The document provides an ex-ante appraisal submission following established business case processes, but as Floating Bridge 6 (FB6) is in operation, the appraisal is able to draw on a number of ex-post indicators, including delivery costs. The objectives of the Floating Bridge scheme are to: Provide direct pedestrian access between the two town centres of East Cowes and Cowes, to ensure their future vitality and competitiveness in a global tourism market. Allow for continued river access upstream for commercial and private vessels. Provide continuity of river crossings during the delivery period. Improve reliability in operation, which has become more critical since the reserve ferry was decommissioned in 1982. Minimise congestion on the local road network, particularly where this negatively impacts the economic potential of town centres. Ensure affordable fares for a population that experiences high levels of deprivation. Safeguard and enhance the value for money of the substantial delivery of the East Cowes Masterplan and subsequent planning permissions and developments Enhance environmental sustainability, through reduced vehicle use, operational energy requirements and carbon emissions. The Strategic Case demonstrates a close fit with the policy frameworks adopted by the Council and those of the Solent Local Enterprise Partnership (SLEP). A key objective of the 2011 Isle of Wight’s Local Transport Plan (called the Island Transport Plan) and its Core Strategy of 2012 is to reduce the need to travel, to improve accessibility across the Island and maintain functional transport links with the mainland. The Transport Infrastructure Task Force in their report of July 2017 recognised that Island gateways create valuable first impressions of the Island for visitors, and many of those attending the hearings expressed concern about the quality of the current gateways. In addition, they provide for the opportunity to improve connectivity and integrated transport options for those travelling both within and to/from the Island. This includes the transport links to and from the gateways of which the floating bridge is one element for the gateways of Cowes and East Cowes. Newport, which is the hub of the Islands road network, is identified in the Island Transport Plan as one of the Islands congestion hot spots; 80% of private car journeys entering Newport are single occupancy. Connectivity options between Newport and Cowes include the A3020, the main road corridor which carried 5.1m car movements in 2014 and a dedicated traffic free cycling and walking route, which Isle of Wight Council Cowes Floating Bridge Revised Business Case (final version) 21/09/2018 Page 5/107 hosts 110,000 cycle trips. Bus passenger journeys along the A3020 corridor are between 1m and 1.5m per year. The Council has secured grant funding of £9.6m to implement Newport junction improvements identified in the Island Plan Core Strategy. Work is ongoing to programme these works and complete the necessary assessment and design work with a view to delivery over the next four years with the first element of the scheme at St Mary’s roundabout programmed to begin in 2019/20. The replacement and modernisation of the earlier Floating Bridge 5 was seen as critical to the delivery of improved transport links and the policy framework of the Council. It is one of only two vehicle access/egress points for East Cowes that will come to the end of its economic life within the next two years. The rationale for the investment is to address market failures through addressing a recognised transport infrastructure deficit and thereby providing a platform of economic growth. The earlier business case for investment in Floating Bridge 6 led to a significant funding contribution from SLEP for the delivery of the new bridge. The challenging commissioning period and first year of operation for the Floating Bridge has been well documented and reported externally. However, driven in part by remedial works on the vessel and an increasing longevity of operations, reliability has improved significantly during 2018 to well over 90%, including extended operating hours from 0500 to 0030. Some residual issues remain with operations during low ebb times, but work is in hand to target further reliability improvements. This revised business case provides an assessment of the impacts of the early year and any possible on-going disruption to the case for investment. Ordinarily, an economic appraisal is undertaken before scheme implementation, but here the business case uses a hybrid approach based on the established ex-ante appraisal approaches, but taking on board some of the ex-post or out-turn elements to inform the appraisal. It is assumed that the appraisal pivots from a theoretical base of providing a passenger-only launch; this does not provide an appraisal of removing the new Floating Bridge and replacing it with a passenger-only launch, although the impacts of doing so can be inferred from the appraisal shown here. The economic case has assessed the scheme as offering a high level of value for money. The modelling shows a benefit cost ratio (BCR) of 5.40 for the full service specification for Floating Bridge 6 against the passenger-only launch. The financial case sets out the total costs of the project, plus the additional costs that have arisen since operating the new vessel. The commercial case sets out the Council’s approach to contracting and ensuring value for money for the scheme. The management case describes the overarching governance through a number of phases of the project. In addition, further information has been provided to set the context of the current operating position. Isle of Wight Council Cowes Floating Bridge Revised Business Case (final version) 21/09/2018 Page 6/107 This new section of the business case also includes information on the current improved service reliability and details of the further works commissioned to address the earlier operational challenges of Floating Bridge 6.
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