Introduction There are three main sections in this assignment. In the first section, you are required to investigate the economic viability of a proposed wastewater treatment plant project in Cardiff. You are given the essential data to be able to carry out financial appraisal for the proposed investment. In the second section, you are required to develop a procurement strategy for the project. You are provided with some information on the proposed scheme in terms of the requirements and constraints to allow an appropriate procurement strategy to be developed. In the third section, you are required to recommend dispute resolution methods that are appropriate for this project.

Project background/context

Cardiff City Council, the project sponsor, undertook transportation studies to assess the current capacity issues related to the existing transport infrastructure. The studies found that most journeys in the city are made using private cars. The Transport Strategy for Cardiff, as expressed in the Welsh Governments National Transport Plan and the Local Transport Plans, aims to encourage more use of public transport. If this strategic goal to be achieved, significant improvements to public transport services are needed. Further, given that Cardiff is one of the fastest growing cities in the UK, the population of the city region is expected to double by 2055. This will impose severe strain and pressure on the current public transportation system.

An outline business case is currently under development to identify and investigate various options available to meet the business requirements. Several transportation solutions were examined in depth. The best way forward is to build an extensive tram network linking Cardiff and its wider city region. However, due to the large scale of investment required and to achieve operational efficiencies (based on the forecasted demand in the suburbs), a decision has been made to deliver the programme in three phases. The first phase of the Metrolink is planned to cover major urban areas where demand is expected to be high. The scope of this project is to provide on-street running of light rail/trams services through parts of Cardiff city centre and the Cardiff Bay area. The approximate length of the tramline to be built under this project is 10 miles, and it is estimated to cost 500 million (including an appropriate allowance for Optimism Bias as per the government guidelines).

The project is estimated to generate significant benefits to the city region. In addition to meeting the increasing demand for a reliable public transport system, this project is expected to reduce car journeys passing through the city centre and Cardiff Bay. As a result, it is expected to significantly reduce road congestion, travel delay, and reduce greenhouse gas emissions and the overall carbon footprint of the city. These project objectives contribute to the achievement of local, regional and national transport strategies aiming to create a cleaner, greener, and more prosperous city.

The estimated number of daily trips along the proposed route is 15,000 trips, and is projected to grow to 30,000 trips by the end of the systems design lifetime in 2055. The annual revenue forecasted based on an average ticket price/fare is 16 Million in the first year rising linearly/constantly to 50 Million in the last year of operation (including inflation). To account for the wider economic and social benefits (arising from increased employment, reduced travel time and delay etc.), include 10 Million a year in your calculations. The operations and maintenance cost are estimated to be 2 Million in 2025 3 increasing by 2% each year. An additional carriage will be added each 5 years with a total cost of 2.5 Million to meet the increasing passenger numbers while keeping the service reliability and frequency.

The Client/Project requirements

A planning permission has been granted. The client wants to have the tramline to be in operation in June 2025. The client has managed to secure funding for the project from different sources. The UK Governments Department for Transport, the Welsh Government, and Cardiff City Council have agreed to jointly fund the project. As the project is funded by the public purse, the project delivery method must provide value for money for the taxpayer.

The client is not willing to retain the project risks. In particular, the client is not keen to bear cost overrun, delays, quality/performance/operation, and design risks. The client organisation does not have internal resources to operate and maintain the tram service throughout its operational life, so these need to be contracted out.

The client has hired you as a project management consultant and wants your input into the business case currently under development. Based on the information given in this brief, and by drawing on evidence from relevant literature, you are required to produce a report that is comprised of the following sections:

1) Part A (~750 words) Carry out a financial appraisal and determine whether the project is worthwhile doing. In so doing, discuss the main financial appraisal techniques, and use two methods to evaluate the project.