LEASE CONCEPT PLAN
REPORT
CAPITAL ASSET REFERENCE GUIDE: TEMPLATE 4A
Ministry of Advanced Education
Version 1.2
March 31, 2014
TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................................................iii
1.0
PROJECT DESCRIPTION......................................................................................................................... 4
2.0
BACKGROUND INFORMATION ........................................................................................................... 5
3.0
STRATEGIC ALIGNMENT ........................................................................................................................ 6
4.0
PROGRAM DELIVERY OPTIONS ANALYSIS ......................................................................................... 7
5.0
CONCLUSIONS & RECOMMENDATIONS ......................................................................................... 18
6.0
IMPLEMENTATION STRATEGY ............................................................................................................. 19
OTHER RESOURCES FOR THE CONCEPT PLAN REPORT .............................................................................. 21
EXECUTIVE SUMMARY
Provide a summary for each section of the Lease Concept Plan Report
PROJECT DESCRIPTION
BACKGROUND INFORMATION
STRATEGIC ALIGNMENT
PROGRAM DELIVERY OPTIONS ANALYSIS
CONCLUSIONS & RECOMMENDATIONS
IMPLEMENTATION STRATEGY
Concept Plan Report | iii
1.0 PROJECT DESCRIPTION
1.1 Project Objectives


Identify and state the project objectives in the context of the strategic and
business drivers as stated in the Institutional Accountability Plan & Report. Drivers
can be related to demographics, program changes, technology, economic or
business changes, environmental, social changes, or legislation.
- For example, accommodate 25% of the forecast demand of trades and
technology workers in the region, in the next 5 years
- For example, the project will provide new access for a certain number of
FTEs annually
Objectives must be clear and measurable within a specified timeframe
1.2 Project Scope



Indicate the number of additional FTEs the project will accommodate
Articulate user needs based on student surveys, interviews, workshops, etc.
Translate the user needs into space requirements using the Ministry’s budget
model and space standards:
- Post-secondary Institutions Capital Budget Model
- BC College, University College, and Institute System Space Standards
Review
1.3 Project Outcomes


Describe the concrete results necessary to meet the project objectives
For example, new academic programs are required to meet forecast demand
for ## workers. As a result, an academic building of XX square meters must be
completed by YYYY
Note: Projects greater than $50M in initial capital costs must be evaluated by
Partnerships BC for public private partnership (P3) viability during the Concept Plan
Report activity. Institutions are instructed to coordinate with the Ministry for any services
provided by Partnerships BC. While it is not mandatory to use PBC’s services to plan,
deliver and oversee project delivery, they do offer those services. Please refer to
Section 13.0 Governance in the CARG and http://www.partnershipsbc.ca.
RESOURCES
 Institutional Accountability Plan & Report
 5 Year Capital Plan
 Utilization rate
 Ministry’s Space Standards
 Ministry’s Budget Model
Lease Concept Plan Report |Page 4 of 21
2.0 BACKGROUND INFORMATION
2.1 Current Situation


Describe the events leading up to the project described in Section 1.0 Project
Description
Describe the risks of maintaining the status quo
- For example, unable to meet regional demand for trades and technology
graduates
2.2 Demand



Identify the number of FTEs to be accommodated based on demand
Provide current labour market demand and forecast demand information
Analyze relevant reports, data, or trends using tables/figures relating to the
project, including those identified in the following:
- BCStats Population Projections (P.E.O.P.L.E.)
RESOURCES
 BCStats Population Projections (P.E.O.P.L.E.)
 Provincial data on labour trends
Lease Concept Plan Report |Page 5 of 21
3.0 STRATEGIC ALIGNMENT
3.1 Stakeholder Identification


List stakeholders (both internal and external) and provide a description of why
they are/should be invested in this opportunity
Include other ministries with similar goals and objectives
Stakeholder
Table 3-1. Stakeholder Identification
Internal/External
(I or E)
Role
The Ministry
Stakeholder #2
Stakeholder #3
Stakeholder #4
Stakeholder #5
Stakeholder #6
3.2 Stakeholder Alignment

Evaluate each stakeholder (e.g., business plan, etc.) to determine how the
opportunity supports their goals
Table 3-2. Stakeholder Alignment
The Ministry
Goal
How the Institution’s Opportunity
Supports the Stakeholder’s Goals
Impact
(High, Medium, Low)
1.
2.
3.
STAKEHOLDER #2
Goal
How the Institution’s Opportunity
Supports the Stakeholder’s Goals
Impact
(High, Medium, Low)
Goal
How the Institution’s Opportunity
Supports the Stakeholder’s Goals
(High, Medium, Low)
1.
2.
3.
STAKEHOLDER #3
Impact
1.
2.
3.
Lease Concept Plan Report |Page 6 of 21
4.0 PROGRAM DELIVERY OPTIONS ANALYSIS
The program delivery options analysis can be summarized in three steps, as follows:



Step 1– Identify All Options: List all options including status quo. These are
evaluated against mandatory criteria to determine which options are viable and
should undergo further analysis
Step 2 – Evaluate Viable Options: Options that meet mandatory criteria undergo
rigorous testing:
1. Options are compared using quantitative (cost/benefit) and qualitative
(advantages and disadvantages) analysis
2. For the lease option, ensure you provide current, reliable and
comparable market data for the type of land, building, and/or space in
that commercial market location
3. Identification of financing sources for each viable option, including
where applicable, Institution or landlord financing of TI’s
4. Risk assessment for each viable option
Step 3 – Summary of Options: The options analysis will result in the selection of
one option as “preferable”, for which an implementation strategy will be
developed
RESOURCES
 Ministry Business Plans
 Cross-ministry initiatives
Lease Concept Plan Report |Page 7 of 21
Table 4-1. Options Analysis Methodology
STEP 1
Identify All Options
Determine if any mandatory
criteria exist. If so, does the option
meet the mandatory criteria?
No
Option does not move
forward for further analysis
Yes
STEP 2
Evaluate Viable Options
Cost/Benefit
Analysis
STEP 3
Quantitative
Analysis
(Financial)
Preliminary
Financing
Preliminary Risk
Assessment
Qualitative
Analysis
(NonFinancial)
Summary of Options
Lease Concept Plan Report |Page 8 of 21
4.1 Step 1: Identify All Options

List all options (both capital and non-capital options), Include “do nothing” as an
option to identify the costs and disadvantages of maintaining status quo
Table 4-2. Identify all Options
OPTIONS
Option
Type of Project
Capital (include category of
project) or Non-Capital
Description
Status Quo
Option #1
Option #2
Option #3


Identify mandatory criteria that the options must meet. For example, mandatory
criteria may include:
- Infrastructure Improvements: FCI improvement and/or reduction of life
safety & occupational health risks
- Cost Effectiveness: Funding partnerships and/or cost benefits throughout
lifecycle
- Innovation: Demonstrates sustainable solutions and/or collaboration
- Strategic Alignment: Alignment with government priorities (e.g. Ministry
Service Plan) and Institutional priorities (e.g., mission statement, master
planning etc.)
- Quality Education: Improves student learning outcomes, and/or improve
access to learning and/or utilization rates
- Location of the facility
- Timing – when is the space or facility required
- Control – what degree of control does the institutions require over the
space or facility (this should be justifiable)
Options are evaluated against mandatory criteria to determine if any options
can be dismissed. For example:
- Strategic – the option does not conform to the Institution’s Campus Master
Plan, etc.
- Quality Education – the option does not accommodate the FTE forecast at
maximum utilization rates
Lease Concept Plan Report |Page 9 of 21
4.2 Step 2: Evaluate Viable Options

Options that meet mandatory criteria are evaluated through quantitative
(cost/benefit) analysis, qualitative (advantages/disadvantages) analysis,
financing, and preliminary risk assessment
4.2.1 Quantitative (Cost/Benefit) Analysis






1
A quantitative analysis provides a preliminary estimate of annual capital and
operating costs, including program/service delivery and facility lifecycle costs
Prepare a 20-year net present value cash flow analysis for the shortlisted viable
options. The term of the cash flow analysis should equal to one of the following:
- If asset is financed with debt – use the term for the debt/mortgage.
- If no debt financing required – use the expected life of the new asset.
Ensure that assumptions are adequately disclosed for revenue and cost
estimates
For the lease option, forecast lease rates for the entire 20 year period
Include schedules detailing the annual principal and interest payments to
accompany the cash flow forecast, as well as for total capital cost estimate
The cash flow analysis should reflect the total ‘incremental’1 costs and revenues
associated with each project option being evaluated, not the ‘full cost’
including existing programs and facilities. However, in cases where the new
project/program also results in additional costs or cost savings in existing facilities
or programs, these amounts are also to be included in the project incremental
cash flow
Incremental costs refer to the additional costs associated with the new program only. Costs for the
existing programs prior to the new development would not be included.
Lease Concept Plan Report |Page 10 of 21
Table 4-3. Summary Table of a Quantitative Cost/Benefit Analysis
OPERATING YEAR
CASH FLOW FORECAST – Viable Option 1
Inflow/(Outflow)
Operating Cash Flows
Incremental program revenues, by source
Incremental program costs, by source
Incremental facility operating costs, by source
Interest expense on new debt financings *
Total Operating Cash Flows
Investing (Capital) Cash Flows
Total capital cost including soft costs and
Amortized TI’s
Furniture, Fixtures and Equipment
1-time costs – moving, brokerage fees, etc
Annual capital renewal, by source
Total Investing Cash Flows
Year 1
201x
Year 2
201x
Year 3
201x
Years
4….19
$ xxx
$ (xxx)
$ (xxx)
$ (xxx)
$ xxx
$ xxx
$ (xxx)
$ (xxx)
$ (xxx)
$ xxx
$ xxx
$ (xxx)
$ (xxx)
$ (xxx)
$ xxx
$ (x,xxx)
-
-
$ (xxx)
$ (xxx)
$ (xxx)
$ (xxx)
$ (xxx)
$ (xxx)
……..
……..
$ (xxx)
$ (xxx)
$ x, xxx
$ xxx
$ xxx
$ (xxx)
$ xxx
$ xxx
$ xxx
$ (xxx)
$ xxx
$ xxx
$ xxx
$ (xxx)
$ xxx
……..
……..
……..
……..
$ xxx
$ xxx
$ (xxx)
$ xxx
$ xxx
$ xxx
$ xxx
……..
$ xxx
……..
……..
……..
……..
……..
Year 20
201x
$ xxx
$ (xxx)
$ (xxx)
$ (xxx)
$ xxx
-
-
Financing Cash Flows
New debt financing2
Internal financing
External financing
Annual debt repayments
Total Financing Cash Flows
Net Cash Inflow/(Outflow)
Net Present Value – 20 years at x %
2
$ xxx
Although debt financing may not be used for specific projects, there is still an opportunity cost of using
available cash flow for project funding.
Lease Concept Plan Report |Page 11 of 21
A supporting schedule detailing the annual principal and interest payments should
accompany the cash flow forecast. For example:
LONG TERM DEBT – Continuity Schedule
Long term debt, opening balance
DEBT TERM
Year 1
201x
Year 2
201x
Year 3
201x
Years
4 to 19
Year 20
201x
$ xx,xxx
$ xx,xxx
$ xx,xxx
……..
$ x,xxx
xxx
(xxx)
xxx
(xxx)
xxx
(xxx)
……..
……..
xx
(xxx)
$ xx,xxx
$ xx,xxx
$ xx,xxx
……..
$ -
Annual debt payment:
Interest expense
Principal repayment
Long term debt, closing balance *
* Closing balance = Opening balance less Principal Repayment
A supporting schedule detailing the total capital cost estimate should also be included.
For example:
CONSTRUCTION YEAR
CAPITAL COST ESTIMATE
Year 1
201x
Year 2
201x
Year 3
201x
TOTAL
Land:
Acquisition cost
Site preparation
Parking and improvements
Soft Costs for Above
Land Contingency
$ xx,xxx
x,xxx
-
$
x,xxx
xxx
$
xx,xxx
xx,xxx
x,xxx
xx,xxx
Total Land Costs
$ xxx,xxx
$ xxx,xxx
$ xxx,xxx
$ xxx,xxx
Hard costs (construction materials and labor)
Soft costs (design, engineering, PM/CM etc.)
Construction contingency
Total Building Costs
$ x,xxx,xxx
xxx,xxx
xx,xxx
$ x,xxx,xxx
$ x,xxx,xxx
xx,xxx
x,xxx
$ x,xxx,xxx
$ x,xxx,xxx
x,xxx
x,xxx
$ x,xxx,xxx
x,xxx,xxx
xx,xxx
xx,xxx
$ x,xxx,xxx
$ x,xxx
xx,xxx
-
$ xx,xxx
xxx,xxx
xx,xxx
xxx,xxx
$ xxx,xxx
$ xxx,xxx
$ xxx,xxx
$ xxx,xxx
Inflation during acquisition and
development period
$ xxx
$ x,xxx
$ xx,xxx
$ xx,xxx
Construction financing costs
$ xxx
$ x,xxx
$ xx,xxx
$ xx,xxx
$ x,xxx,xxx
$ x,xxx,xxx
$ x,xxx,xxx
$ x,xxx,xxx
Buildings:
Furniture, Fixtures & Equipment
Furniture
fixtures
Equipment
Soft Costs for Above
Contingency for FF&E
Total F,F&E
Sub-total
Total Capital Cost
Lease Concept Plan Report |Page 12 of 21
4.2.2 Qualitative Analysis


A qualitative analysis is required to evaluate the non-financial costs
(disadvantages) and benefits (advantages) of each viable option, including
physical, social, environmental, and risk considerations
Determine a list of qualitative criteria. Examples include:
- Operational – criteria related to expected facility or program operational
improvements, such as:
 ability to meet student needs and enrollment demand
 ability to attract new learners (e.g. First Nations, international
students)
 improved staff recruitment and retention
 integration of new and existing programs
 ability to implement new technologies and learning methodologies
 impact on other areas of the Institution such as parking, food
services, recreation, housing, student, and health services
 improved operations and maintenance facility costs, e.g., energy
efficiency, improved FCI
-
Physical – criteria related to increased or decreased facility functionality,
efficiency etc., such as:
 effectiveness of facilities for meeting existing and new program
needs
 integration with existing facilities
 improved access and mobility
 flexibility to adapt to changing demands in the future
-
Environmental – criteria related to the impact that the project and
subsequent operations is expected to have on the local environment,
such as:
 increase/decrease in noise levels
 Increase/decrease in local traffic levels
 Impact on GHG emissions, waste levels etc.
-
Strategic – criteria related to impact that the project and subsequent
operations is expected to have on key stakeholders, such as:
 government education and training goals
 response to industry requirements
 attracting research funding now or in future
 program or Institution prestige
 public/student perception of the program(s) and/or the Institution
 public and private sector perception of the Province/the Ministry
 perception of other provincial and national Institutions
Lease Concept Plan Report |Page 13 of 21

For each viable option, compile qualitative analysis findings in a summary table.
For example:
Viable Option 1: NAME
Summary of Qualitative Analysis
Advantages
Operational
Physical
Environmental
Strategic




Disadvantages




Viable Option 2: NAME
Summary of Qualitative Analysis
Advantages
Operational
Physical
Environmental
Strategic




Disadvantages




Lease Concept Plan Report |Page 14 of 21
4.2.3 Financing



For each viable option, identify intended sources of capital and operating
funding, including direct capital funding (e.g., provincial grants), federal grants,
own resources, debt financing, private financing, land lord and/or institute
financing of TI’s disposition of surplus property, etc.
Financing must include details of conditions, associated with external funding,
borrowing assumptions, and planned commercial revenues
For each source of capital financing, include a table showing the required
financing draws for each year of the project development, matching the
applicable categories in the cash flow forecast, as follows:
Table 4-4. Sources of Funding for Each Viable Option
Project Financing
Sources of Financing
Direct capital funding
 Source A
 Source B
New debt financing
 Source A
 Source B
Internal financing
 Source A
 Source B
External financing
 Source A
 Source B
Total Project Financing
Year
1
Year
2
Year
3
Total
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
$ xxx
Lease Concept Plan Report |Page 15 of 21
4.2.4 Risk Assessment
For each viable option, identify the risks using the Ministry risk register and
evaluate the risks in terms of probability, impact, risk owner, and mitigation
strategies
The Ministry risk register is in accordance with project management best
practices as described in the Ministry’s Risk Management Guide . Refer to the
Ministry’s Risk Register for further details and examples of risk identification and
evaluation
Note that risk response, risk monitoring & control, are completed during the
implementation phase of the proposed project



Table 4-5. Risk Register- Risk Identification & Evaluation (Inherent)
RISK IDENTIFICATION
RISK RESPONSE
(Inherent)
Risk Identification
Details
Risk Evaluation
(Inherent)
Risk Response
Details
Risk Monitor
& Control
Risk Ra nk ing
w ith Risk
Response
Im pa ct w ith Risk
Response
N otes on Risk
Response
(progress,
effectiveness,
other notes)
Proba bility w ith
Risk Response
Response
Percenta ge
Com plete
Due Da te of Risk
Response
Ex pected
Risk
Results of Risk
Response
Response
Response Cost
O w ner
O rga niza tion
Risk O w ner
Sta tus
Risk Ra nk ing
Risk Im pa ct
Consequence on
Project
Perform a nce
Risk Proba bility
Trigger / Root
Risk Event
Ca use
Risk Response
N otes
Life Cy cle
Risk ID
Risk Identifica tion
Risk Evaluation
(With Response)
RESOURCES
 Ministry’s Risk Management Guide
 Ministry’s Risk Register
Lease Concept Plan Report |Page 16 of 21
4.3 Step 3: Summary of Options


Typically, the preferred option is the lowest net cost option on a net present
value basis. However, other considerations including those identified in the
qualitative analysis, financing, and risk assessment may surface another viable
option with a higher net cost as the preferred option
Summarize the results from Sections 4.1-4.2, providing advantages,
disadvantages, and key findings to select a preferred option
Key Findings
Viable Option 1
Viable Option 2
Net Present Value
$
$
Qualitative Advantages


Qualitative Disadvantages


Financing


Risk Assessment


Lease Concept Plan Report |Page 17 of 21
5.0 CONCLUSIONS & RECOMMENDATIONS
5.1 Conclusions


List major conclusions based on Section 4.0
Identify the preferred option that has been selected
5.2 Recommendations


Recommends that the preferred option be approved by the Institution’s Board
Recommends that the Lease Concept Plan Report be approved by the Ministry
5.3 Next Steps
Following Ministry approval of the Lease Concept Plan Report, the next steps will
include:


The preparation of a formal Lease Request Submission for approval by the
Ministry of Advanced Education and Ministry of Finance.
Please refer to the Ministry website for the procedures outlined in the CARG,
Section 14, Acquisition and Disposition Of Property.
Lease Concept Plan Report |Page 18 of 21
6.0 IMPLEMENTATION STRATEGY

An implementation strategy is developed for the preferred option identified in
Section 5.0 Conclusions & Recommendations
6.1 Project Delivery Models




Provide a preliminary analysis of alternate project delivery models (e.g., designbid-build, design-build, construction management, etc.)
In the case of leasing, the only two delivery options for completing tenant
improvements are:
- Tenant Financing using the appropriate project delivery model for the
project
- Landlord Financing using the appropriate project delivery model for the
project
Summarize findings to arrive at a preferred project delivery model for
procurement purposes
Refer to the Project Delivery Option Analysis Tool (CARG Templates 13).
Table 6-1. Summary of Procurement Models
Project Delivery Models
Advantages
Disadvantages
Procurement Model 1
Procurement Model 2
Procurement Model 3
Lease Concept Plan Report |Page 19 of 21
6.2 Schedule

Create a Gantt chart that identifies the expected duration of each task in the
project, including the following:
- Institution prepares and submits a Lease Concept Plan Report
- Institution and Ministry reviews and approvals of Lease Concept Plan
Report
- Institution enters into lease negotiations
- Institution prepares and submits a Lease Submission package to the
Ministry of Advanced Education and Ministry of Finance for review and
approval
- A Ministerial decision is provided
- Design and construction of tenant improvements, etc.
- Commissioning
- Occupancy
6.3 Project Governance


The appropriate project governance structure is based on the complexity and
size of the project. Refer to Figure 6-1 for a project organizational structure.
The organization structure identifies relationships and communication lines
between project members, and is intended to:
- Encourage appropriate input from a wide range of sources
- Facilitate timely decisions
- Fulfill all Institutional and government requirements
- Ensure good business practice in accordance with government contract
guidelines and financial and signing authority controls
- Focus on making design and equipment decisions within the boundaries
of key project parameters such as budget, schedule and project scope
Figure 6-1. Example of an Organizational Structure for a Project
Institution
Stakeholders
Project Manager
Designers
Contractors
Supplier
Lease Concept Plan Report |Page 20 of 21
OTHER RESOURCES FOR THE CONCEPT LEASE PLAN
REPORT











Institutional Accountability Plan & Report
5 Year Capital Plan
Campus Master Plan
Utilization rate
Ministry’s Space Standards
Ministry’s Budget Model
BCStats Population Projections (P.E.O.P.L.E.)
Provincial data on labour trends
Ministry Business Plans
Cross-ministry initiatives
Ministry’s Risk Management Guide
Lease Concept Plan Report |Page 21 of 21