Investment Analysis Report
(for Space Projects)
<Project Name>
<Location (if applicable)>
<Client>
National Project Management System
Analysis Phase
Version: July 2, 2013
Prepared by:
Date:
Lease Number:
IAR Template for Space Based Projects
Table of Contents
Executive Summary ...........................................................................................................................................2
1.
Problem/Opportunity Definition ...............................................................................................................2
2.
Background ................................................................................................................................................3
2.1 Project History .........................................................................................................................................3
2.2 Building Condition....................................................................................................................................3
2.3 Tenant Considerations .............................................................................................................................3
2.4 Strategic Context .....................................................................................................................................4
2.5 Stakeholders ............................................................................................................................................4
3.
Project Scope ............................................................................................................................................5
4.
Identification & Analysis of Options ..........................................................................................................6
4.1 Options Considered .................................................................................................................................6
4.2 Non Feasible Options ...............................................................................................................................6
4.3 Feasible Options.......................................................................................................................................6
4.4 Financial Analysis .....................................................................................................................................6
4.5 Analysis of Non-Financial Factors ............................................................................................................7
4.6 Risk Assessment .......................................................................................................................................8
4.7 Conclusions ..............................................................................................................................................9
5.
Strategic Impact .........................................................................................................................................9
6.
Recommendation ................................................................................................................................... 10
7.
Approval Authority and Funding............................................................................................................. 10
8.
Implementation Plan .............................................................................................................................. 10
9.
Project Team & Signatures ..................................................................................................................... 11
10.
Appendices ......................................................................................................................................... 11
Appendix 1 – Financial Assumptions Summary Table .................................................................................... 12
1
IAR Template for Space Based Projects
This template serves as a helpful tool for preparing an IAR. It does not replace the “Guide for the Preparation of
Investment Analysis Reports”. The template has been approved by National Portfolio Management and the 2009
Guide is currently in the process of being updated.
Executive Summary
Maximum length of 2 pages
1.
Statement of the problem/opportunity
Problem/Opportunity definition
2.
Previous Approvals, decision or agreements (if applicable)
3.
Options analyzed
- Results of financial analysis
- Financial factors, include Table of PVCOA and risk-adjusted PVCOA (if applicable)
- Non-financial and risk factors for best value approach
4.
Estimated project cost
- Risk allocation
- HST/GST separate
- Type of approval
- Spending authorities (if applicable)
- Appropriate delegated authorities
- PCRA score
- LCA amount including fit-up costs, O&M, taxes (if applicable)
5.
Source of funding
6.
Client costs (if applicable)
7.
Special issues to Regional Investment Management Board/Real Property Investment Board (if applicable)
Risk management
Potential political consideration
Timing
Legal issues
Client issues
Department’s sustainable development targets
Heritage conservation
Public sensitivity
Recent or ongoing related projects
1. Problem/Opportunity Definition
1.
General Information
Client requirement
Occupancy Expiry Date
New Acquisition Date
Deadline to exercise lease option(s) (if applicable)
Location of space (address)
2.
Drivers
Program requirements
Current Accommodation not suitable (if applicable)
Possible opportunities
3.
Previous approvals, decisions or agreements:
2
IAR Template for Space Based Projects
-
4.
Real Property Investment Board (RPIB)
Regional Investment Management Board decision (RIMB)
Treasury Board approvals (TB)
Cabinet or Ministerial decision
Interdepartmental agreement
Special Involvement of other departments
Note: This section should not include any indication of the proposed solution. Its purpose is to concentrate
on what drives the project.
2. Background
2.1 Project History
1.
Description of tenants
Short description of the relevant history of the client occupancy at this location
Date when the client first occupied the space
2.
Compliance with NPMS
NPMS Checklist in the Appendix
2.2 Building Condition
1.
Brief description of building
Age, area , location, main characteristics, classification of the building, building owner
History of occupancy (When did the federal government begin leasing in this building? How was this
space acquired initially?)
Environmental performance assessment (BOMA BESt, LEED, etc)
2.
Overall condition
Building Performance Report (Building-related problems and impacts)
Recent renovations, refresh projects or tenant service projects, and fit-up condition
Accessibility Report (if not available; must have a confirmation from Property Management on
condition, and should include the estimated date that the report will be available)
Lease Condition Report (LCR) (if not available; must have a confirmation from Property Management
on condition, and should include the estimated date that the report will be available)
2.3 Tenant Considerations
1.
Description of tenants
Background information on tenants
Inventory of current occupancies for Client Department
Nature of program(s) that may be impacted by this requirement
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IAR Template for Space Based Projects
Inventory of current occupancies in the region1
Name or
address
Fontaine
Monclair
Saint-Joseph
Vincent Massey
Client
Occupancy
Start Date
Apr. 1, 2009
May 1, 2010
May 1, 2010
Aug. 1, 2011
Expiry Date
Lease Expiry
Date
Dec. 31, 2013
Mar. 31, 2013
Aug. 31, 2014
Mar. 31, 2016
Dec. 31, 2022
Apr. 30, 2020
Aug. 31, 2014
Jul. 31, 2036
Options
Left
1 X 5Y
Grand Total
Office
m2u
117.6
1,350.1
195.6
1,477.0
3,140.3
SPS
m2r
129.2
1,357.9
225.9
2,429.0
4,142.0
m2u
752.8
752.8
m2r
884.3
884.3
Total m2r
129.2
1,357.9
225.9
3,313.3
5,026.3
Current client(s) occupancies affected by this requirement
Note: for Special Purpose Space (SPS) and office, even if they are the same rate, they should always be shown
separately
Client
Lease No
OI
Funding
ABC
123456
4A0000
Non-reimbursing
123457
4A0001
Reimbursing
Type of
Space
Office
SPS
Office
Total for ABC
FTEs
m2u
m2r
Parking
Occupancy Expiry
62
1,000.0
500.0
750.0
2,250.0
1,125.6
562.8
844.2
2,532.6
2
May 31, 2015
3
5
May 31, 2015
46
108
2.
Impact of current problem/opportunity on tenants (if applicable)
Additional tenant costs
Disruption of Program
Required relocation
In-service date
3.
Client liaison activities (if applicable)
How client concerns are currently being dealt with
2.4 Strategic Context
1.
Describe how the problem/opportunity relates to current strategies and plans
National Investment Strategy (NIS)
Regional Investment Strategy
Community Based Investment Strategy (CBIS)
Portfolio Strategy
Strategic Action Plan
Lease Action Plan
Client Strategy (Explain the client’s long-term and short-term accommodation strategy)
Government of Canada WP2.0 fit-up standards
2.
Meet with Portfolio Management, Owner Investor Analyst, Asset Manager and any other relevant
stakeholders, to ensure that all necessary background information is included; any additional directives
from upper management, priorities, budget cuts, strategic and operating review, etc.
2.5 Stakeholders
1
1.
List all the relevant stakeholders who have an involvement in the problem/opportunity
2.
Briefly describe their stake
This information is from the OI List. If relevant (i.e. consolidation), information should be provided
4
IAR Template for Space Based Projects
3. Project Scope 2
1.
Requirements
Space required : number of FTEs to accommodate, m2 of Special Purpose Space (SPS), m2 of storage
(warehouse, training rooms, etc,)
Type of space (identify if any non-compliant space or SPS was approved by PWGSC)
Swing Space (if applicable)
Geographical boundaries including justification of boundaries chosen
1. North : _________
2. South : _________
3. West: _________
4. East : _________
- Identify the City and Province. Identify unique program and/or operational requirements that may
further restrict the geographic boundaries as per the Geographic Boundaries Procedure.
Date by which space is required
Length of term as required by client
2.
PWGSC Space Allocation Limits (see table below)
Number of FTEs
Space entitlement (m2u/ m2r) as per Space Allocation Limits (WP2.0)
Ratio m2u/FTE (current vs. WP2.0)
Determine if space is quasi-judicial; if yes, WP2.0 entitlement is different
If client is above m2u/FTE target, justification is required
Requirements for compliance to WP2.0 fit-up standards and exemptions (non-compliant space)
Space Allocation Standards based on project requirement
Client
Type of Space
FTEs
X
Office – General Administration
Y
Z
Office – Public Contact
Office – Quasi-Judicial
Total Usable Area Required
183 Office
5 SPS
0
0
188
Space
Allocation
Limits
(m2u)
2,429.12
Requested
Space (m2u)
Variance
(+/-)
Utilization rate
(m2u /FTE)
2,430
0
12.92
0
0
2,429.12
0
0
2,430
0
0
n/a
n/a
12.92
Office Space Calculator
3.
Operational parking requirements (as per custodial parking policy)
4.
Special considerations (if applicable)
Specific location within a building (ground floor, retail space etc.)
Specific type of location
Security requirements (highly sensitive)
Heritage building
5.
Client demand forecast (if applicable)
Factors influencing future demand
Likelihood of factors
2
If a Client Accommodation Requirement Questionnaire (CARQ) and/or a Tenant Requirement Package (TRP) were filled-out, include them in the
appendices.
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IAR Template for Space Based Projects
-
Impact on client requirements
Future changes in funding levels
6.
Occupancy commitments (client commitment vs. lease term)
7.
Impact on space envelope and source of client funding (ECF or Non-Reimbursing)
4. Identification & Analysis of Options
The information in the following section should only summarize the key findings of the Feasibility Report and should
be updated, if applicable. If the project qualifies for NPMS Lite (where a Feasibility Report is not required), all
Feasibility Report information should be incorporated into this section.
4.1 Options Considered
-
Identify and describe all reasonable options for satisfying the project requirements
4.2 Non Feasible Options
-
Clearly explain why the eliminated options are not considered for further analysis
4.3 Feasible Options
-
Clearly explain why the retained options are being considered for further analysis
4.4 Financial Analysis
1.
Availability of accommodation space
Government inventory
Local real estate market description (quarterly reports)
2.
Real Estate Market Analysis
Market information
Market Survey Report (MSR) (include source of reports and effective dates)
Market Analysis Report (MAR) (include source of reports and effective dates)
Market Analysis Report; reference XXXXXX
(date)
Gross Effective Rental Range ($/m2r)
$XXX - $XXX
Estimated Base Year Taxes and Operating Costs
Net Effective Rental Range
Storage Space (Gross)
Parking (per stall per month, including taxes)
$XXX
$XXX - $XXX
$XXX - $XXX
$XXX - $XXX
-
Classifications of comparable buildings surveyed (class A, B, or C)
Vacancy rates
Results of recent Generic Request for Information (GRFI) and Request for Information (RFI) that may
apply to this project to confirm the supply
Conclusion reached based on the analysis of demand and supply related to this project:
Most probable availability of suitable space (description of the supply; class of building; anticipated
rental rates used)
3. Financial Assumptions
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IAR Template for Space Based Projects
*Financial Assumptions must either be fully developed under each option wherever relevant or an individual
section must be created before the Financial Analysis section. This information could also be put in an
appendix.
-
Key input assumptions common to all options
Detailed description specific to each option (in-service date, swing space, m2 for each option,
description of delivery, LEED requirement, …)
Additional notes where applicable
Summary table for each option and source (refer to Appendix 1)
** REFIT calculations and detailed table of assumptions are always required.
4.
Financial Analysis
Full costs to the federal government for each option (PWGSC and client)
All relevant costs (ensure valid assumptions and input values are realistic and supported by an
explanation or a source)
Results of financial analysis in table showing PVCOA for each option
Options
Option 1: …..
Option 2: ….
PVCOA
$ XXXX
$ XXXX
Rank
2
1
RA-PVCOA
$XXXX
$XXXX
Rank
1
2
-
Risk-based investment analysis (for projects with LPA > $30M only)

Risk-neutral PVCOA and risk-adjusted PVCOA for each option in table form
 Explain the results
 Note: if a risk factor is quantified in the RA-PVCOA, do not include it in the Risk Assessment
(Section 4.6) as it would then be double-counted
-
Conclusion
Which is the most financially viable option?
Do variations to key assumption make a difference (sensitivity analysis)?
What conclusions can be reached?
4.5 Analysis of Non-Financial Factors
1.
Advantage and Disadvantage Table (example)
Option
Option #1
Renewal
In-Situ
Option #2
Lease
Tender Call
2.




Advantages
Benefit from client investments and
current infrastructure
No disruption to the tenants
program delivery and services to
Canadians
Open transparent and competitive
process
Space alignment with OAF





Disadvantages
Non-competitive process
Risk of not finding suitable
alternative space
Limited internal resources
Disruption to client
New fit-up required, longer project
delivery timeline
Include all relevant non-financial factors for each option. Some examples that can be used are the
following:
Project requirement satisfaction
Client requirements satisfaction
Strategic context
Impact on diversity or balance of the inventory
Timing requirements respected
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IAR Template for Space Based Projects
3.
Support goals and objectives of PWGSC Sustainable Development Strategy
Suitability of accommodation
Flexibility
Ease of implementation
Disruptions to tenants
Strategic compatibility
Good Neighbour Policy
Environmental factors
Federal presence
Accessibility
For projects that require National approval, also use an “Evaluation Matrix for Qualitative Analysis”
Each factor should be explained
Non-Financial
Factor
Weight
Factor 1
Factor 2
Factor 3
Factor 4
Factor 5
Total Score
30
25
20
15
10
100
Option 1
Option 2
Option 3
Score
Score
Score
30
22
17
15
8
92
27
25
10
5
6
73
30
25
16
12
6
89
Note: not applicable if there is only one feasible option.
4. Description of results of analysis and conclusion reached for each factor (must justify ratings)
4.6 Risk Assessment
1.
Evaluation of relative level of risk for each option (Evaluation Matrix for Risks)
Risk Factors
Client requirements not being met
Changing client requirements
Timing delays
Cost increase
Negotiation risk
Market conditions
Funding
Lack of human resources
TOTAL SCORE
Option 1
I
Score
M
4
L
1
H
3
H
3
L
1
L
1
M
4
L
1
18
L
M
L
L
L
L
L
M
L
L
Option 2
I
Score
L
Option 3
I
Score
Note 1: Table not applicable if there is only one feasible option.
Note 2: For projects going to National, a 5x5 matrix (Very High-High-Moderate-Low-Very Low) is necessary.
Impact
(I)
Legend:
High (H)
3
3
6
9
Moderate (M)
2
2
4
6
Low (L)
1
1
2
3
1
2
3
Low
(L)
Moderate
(M)
High
(H)
Likelihood (L)
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IAR Template for Space Based Projects
2.
Example of risk factors relevant to each option
Risk that the project may not fully rectify an identified problem
Risk of user needs not being met
Risk of changing requirements
Risk of not meeting timing requirements
Risk of cost overruns
Risk of future performance being impaired
Risk of environmental degradation
3.
Explanation of the evaluation matrix per risk:
Description of results
4.
Conclusion of risk assessment :
Which option carries lowest level of risk? How does each option rank in terms of risk?
Do any of the options carry an unacceptable high level of risk?
Briefly summarize key findings from the evaluation matrix
4.7 Conclusions
Combination of results of all analysis (determine which option provides the overall best value to the
federal government)
Considering results, what conclusions can be reached?
State why preferred option is better than the other options available
Convey through the conclusion that the recommended option represents “best value” to the Crown,
particularly when it may not be the “least cost” option
Convey the risks of not proceeding with the recommended option to further articulate the need to
implement the recommended option
-
5. Strategic Impact
1. Identify strategic value of proceeding with the project
2. Demonstrate project is carried out in a manner consistent with departmental policies and strategies.
3. Use checklist of strategic and policy compliance table below. Apply it specifically to each individual project:
Policy/Strategy
Compliance
Yes
No
Justification
(always required)
Workplace 2.0 Fit-up Standards
Sustainable Development Strategy
Good Neighbour Policy
Community-Based Investment Strategy
Strategic Action Plan
Regional Portfolio Strategy
Client Strategy
4. In Case of DIRECT NEGOTIATION for lease, identify whether or not the project meets with the ‘Six Principles
of Direct Negotiation Lease Renewal’.
-
If not, identify why not and include a mitigation strategy if renewal fails
In the Appendix, attach a detailed list of the Six Principles
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IAR Template for Space Based Projects
6. Recommendation
Maximum length of 2 paragraphs
1.
Clear and detailed statement of the proposal being recommended for approval.
Project definition
Cost (HST, Class of estimate, LCA, Risk allowance)
Timing
Usable and rentable square meters (m2u, m2r)
2.
Client costs (if applicable)
- Related to above standard fit-up (included in LPA) and how they will be reimbursed
- Furniture, Fixture & Equipment (FF&E)
3.
Comments on urgency of project
4.
Client agreement with proposed approach (statement)
5.
Issues to be brought to the attention of RPIB or RIMB (decision makers)
7. Approval Authority and Funding
1.
PCRA Score
Date included on IIP list
2.
Identify Delegated Approval Authority (DG, ADM, Deputy Minister, TB)
3.
Source of funding (confirmation from CFO for client costs)
4.
Projection of cash flows (in a table)
5.
For projects that require National approval, detail cash flow table should be provided:
2012/2013
2013/2014
Project Cost
$ XXXXX
$ XXXXX
Risk allowance $ XXXXX
$ XXXXX
Sub-Total
Escalation
GST/HST
$
XXX
$
XXX
Total
$ XXXXX
$ XXXXX
See detailed cost breakdown in Appendix
2014/2015
$ XXXXX
$ XXXXX
2015/2016
$ XXXXX
$ XXXXX
Total
$ XXXXX
$ XXXXX
$
XXX
$ XXXXX
$
XXX
$ XXXXX
$
XXX
$ XXXXX
8. Implementation Plan
1.
Include project schedule
Key milestones for project
Anticipated completion date
Occupancy date
Detailed project schedule attached in appendix
2.
Risk Management Plan (attach as appendix)
Identify key risks including summary of risk mitigation measures only for the recommended option
3.
Include what type of lease will be used (if applicable – mainly for large projects)
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IAR Template for Space Based Projects
9. Project Team & Signatures
Position (examples)
Project Director
Senior Project Leader
CASA/ Accommodation Manager
Senior Project Manager
Project Manager
Prof. and Tech. Resources
Senior Financial Advisor
Property Manager
Other (specify)
Action
Organization
Date
Name
Signature
Prepared by
Project Leader
Reviewed by
Recommended by
10.Appendices
Content varies depending on situation:
1. Financial Assumptions Summary Table
2. Detailed cost estimates for the proposed project
3. Space Calculation (summary page)
4. NPMS Feasibility Report (if separate document)
5. NPMS Compliance Checklist
6. Risk Management Plan
7. Summaries of building condition and building performance (LCR), if extensive
8. Project Implementation schedule
9. Communication Strategy
10. PCRA Summary Sheet
11. Six Principles of Direct Negotiation for Lease Renewal (if applicable)
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IAR Template for Space Based Projects
Appendix 1 – Financial Assumptions Summary Table
Financial Assumptions Applicable to all Options
Financial
Item
Source
Assumption
Escalator (%) – Rent
%
Finance’s month/year publication
Escalator (%) – O&M
%
Finance’s month/year publication
Escalator (%) – Taxes
%
Finance’s month/year publication
Escalator (%) – Land
%
Finance’s month/year publication
Escalator (%) – Service Fees
%
Finance’s month/year publication
Escalator (%) – Construction & Systems
%
Finance’s month/year publication
Option 1:
Item
Financial
Assumption
Option 2:
Financial
Assumption
Source
Source
General Financial Assumptions
Office space
m2u / m2r
m2u / m2r
SPS space
m2u / m2r
m2u / m2r
Storage space
m2u / m2r
m2u / m2r
Parking stalls
# of stalls
# of stalls
Fit-up/Refresh
$/m2u
Moving and signage
$/m2u
Consultant
Disbursements
Contingency
Project Leadership fees
Project Management
fees
Based on PWGSC’s
FYXX/XX Fit-up standards
Best practice
$/m2u
$/m2u
Based on PWGSC’s
FYXX/XX Fit-up standards
Best practice
% of fit-up
Best practice
% of fit-up
Best practice
% of fit-up
% of fit-up,
moving and
signage,
consultant and
disbursements
% of fit-up
Best practice
Best practice
Best practice
% of fit-up
% of fit-up,
moving and
signage,
consultant and
disbursements
% of fit-up
% of fit-up
Best practice
% of fit-up
Best practice
Best practice
Best practice
Best practice
LPA (2001L)
Gross Rent Office &
SPS space
$/m2r
n/a
n/a
Gross Rent Storage
$/m2r
n/a
n/a
O&M
$/m2r
n/a
n/a
Taxes
$/m2r
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Parking rate
Investment horizon
(Term)
Discount Rate
$/stall/year
# years
%
Client requirement, Owner
Investor, Leasing
Finance’s month/year
publication
12
IAR Template for Space Based Projects
Option 1:
Item
Financial
Assumption
Option 2:
Source
Financial
Assumption
Source
REFIT
Net Rent Office & SPS
space
$/m2r
$/m2r
Net Rent Storage
$/m2r
$/m2r
O&M
$/m2r
$/m2r
Taxes
$/m2r
$/m2r
$/stall/year
$/stall/year
Parking rate
Investment Horizon
Discount Rate
Refresh
Client Costs
# years
%
Owner Investor, Leasing
Finance’s month/year
publication
$/m2u or % of
fit-up
Best practice
$/FTE or $/m2u
Best practice
# years
%
$/m2u or % of
fit-up
$/FTEs or
$/m2u
13
Owner Investor, Leasing
Finance’s month/year
publication
Best practice
Best practice