Golden Ears Bridge Reference Case Report
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Golden Ears Bridge Reference Case Report Golden Ears Bridge Reference Case Report NOTE: This Report must be read in conjunction with the Reference Case Supplementary Information as provided in the following section. Golden Ears Bridge Reference Case Report November 4, 2005 Golden Ears Bridge Reference Case Report 2005-11-04 TABLE OF CONTENTS EXECUTIVE SUMMARY................................................................................................................. 5 1. REPORT OBJECTIVES..................................................................................................... 6 A. Purpose of Reference Case Report...................................................................................... 6 B. Summary of Ensuing Sections ............................................................................................. 6 2. PROJECT OVERVIEW ...................................................................................................... 7 A. Project Description............................................................................................................... 7 B. Brief History of the Project to Date .................................................................................... 7 3. REFERENCE CASE DEVELOPMENT............................................................................ 10 A. Definition............................................................................................................................. 10 B. Framework.......................................................................................................................... 10 C. Valuation ............................................................................................................................. 11 D. Application - Value for Money .......................................................................................... 13 E. Limitations .......................................................................................................................... 14 F. Reference Case Development Team.................................................................................. 14 4. DELIVERY MODEL.......................................................................................................... 15 A. Scope of Project .................................................................................................................. 15 B. Number & Types of Contracts .......................................................................................... 17 C. Schedule............................................................................................................................... 18 D. Other Assumptions............................................................................................................. 21 5. REFERENCE CASE – CONSTRUCTION PERIOD COSTS........................................... 24 A. Construction Period Costs – TransLink Retained........................................................... 24 B. Construction Period Costs – Civil Works......................................................................... 24 C. Construction Period Costs – Tolling System.................................................................... 25 D. Cost Summary..................................................................................................................... 25 6. REFERENCE CASE – OPERATING PERIOD COSTS AND REVENUES..................... 27 2/60 Golden Ears Bridge Reference Case Report 2005-11-04 A. Operating Period Costs - TransLink Retained ................................................................ 27 B. Operating Period Costs – O&M Contractor and Rehabilitation Work ........................ 27 C. Operating Period Costs – Tolling System......................................................................... 28 D. Cost Summary..................................................................................................................... 29 E. Operating Period Revenues ............................................................................................... 29 7. PROJECT FINANCING.................................................................................................... 32 A. TransLink Capital Projects and Financing...................................................................... 32 B. Special Financial Considerations for GEB Reference Case............................................ 32 C. Reference Case Financing Plan ......................................................................................... 33 8. REFERENCE CASE RAW NPV (NON-RISK-ADJUSTED) ............................................ 36 9. RISK VALUATION ........................................................................................................... 38 A. Background......................................................................................................................... 38 B. Objectives ............................................................................................................................ 38 C. Risk Analysis Methodology................................................................................................ 38 D. Risk Identification .............................................................................................................. 39 E. Risk Quantification.............................................................................................................40 F. Risk Sensitivity.................................................................................................................... 45 10. RESULTS.........................................................................................................................46 11. ADJUSTMENTS TO THE REFERENCE CASE.............................................................. 48 3/60 Golden Ears Bridge Reference Case Report 2005-11-04 List of Appendices Appendix A The Public Sector Comparator, A Canadian Best Practices Guide (Section 3) Appendix B Description of Scope of Work, from Section 2.3 of Volume One, Main Document (source: current RFP documents) Appendix C Reference Case Delivery Model Comparison for Facility Construction Appendix D Basis of Estimate – Reference Case Total Contracts Appendix E Tolling Revenue and Tolling Infrastructure – DBFO and Reference Case Comparison Appendix F OMR Delivery Model Options Summary Table Appendix G Reference Case Project Schedule Appendix H Operations, Maintenance and Rehabilitation Costs Appendix I Traffic and Revenue Forecasts Appendix J GEB Reference Case Financing Plan Appendix K Summary Analysis of Project Risks, GEB Reference Case Appendix L Financial Model Output 4/60 Golden Ears Bridge Reference Case Report 2005-11-04 Executive Summary This report presents the compilation of data for and calculation of the Net Present Value of estimated Reference Case construction and operating period costs and revenues for the Golden Ears Bridge Project. It documents, in particular: • The compilation and calculation of the Raw NPV and the risk-adjusted NPV • The project’s material risks, both quantifiable and unquantifiable • The methodology for the quantification of project risks, and • The results of the financial analysis. The purpose of the Reference Case is to provide a benchmark against which TransLink can compare private sector proposals, and to assist in assessing whether project delivery by the private sector represents value-for-money. The Reference Case estimates the risk-adjusted, total cost if the project were to be financed, owned and implemented by TransLink. The costs reflect an efficient and most likely and achievable form and means of delivery by the public sector (TransLink) and a payment mechanism and risk allocation appropriately reflecting the Reference Case scenario. The following table shows the Raw NPV and the risk-adjusted NPV values expressed at the 50th, the 70th and the 90th Percentile confidence levels. Reference Case NPV [CAD$M] Raw 50th Percentile 70th Percentile 90th Percentile (Non Risk- Adjusted) $287 $197 $177 $143 5/60 Golden Ears Bridge Reference Case Report 2005-11-04 1. Report Objectives A. Purpose of Reference Case Report The purpose of the Reference Case is to provide a tool for determining whether the preferred design-build-finance-operate (DBFO) proposal represents value-for-money to TransLink and its stakeholders. The issue of value-for-money is to be considered in the context of the decision to either accept or reject the DBFO proposal. The information developed in the Reference Case will also be used in the conduct of due diligence on, and test for reasonableness of, the financial offers and financial models submitted by the Proponents. Specifically, this report sets out to: 1) Establish the nature of delivery of all components of the project, 2) Estimate the costs of delivering the project and its associated services, 3) Estimate the revenue forecast impacts resulting from the Reference Case, 4) Identify and quantify key risks, and show the expected risk allocation, and 5) Determine the Net Present Value of all project cash flows (including risks) over the 35 year project term, in order to accurately reflect the above in the event that the TransLink Board chooses to reject the DBFO procurement model and proceed with a more traditional capital project procurement model. B. Summary of Ensuing Sections This report presents the Reference Case and documents the approach and assumptions in nine subsequent sections: Section 2: Project Overview Section