Cairns Gallery Precinct Detailed Business Case

Client: Cairns Regional Council

State: QLD

AEC was commissioned by AECOM to provide the technical economic and financial analysis for the Cairns Regional Gallery Precinct Business Case. The project included: • Completion of 10-Year cash-flow forecasts for each option using capital and operational cost inputs, funding assumptions and any revenue generating benefits. • Peer review of the preliminary financial sensitivity analysis at confidence level P-50 and further develop the sensitivity for each option to confidence level P-90. • Calculation of Net Present Value (NPV). • Identification of the timing, mechanisms and sources for cash flows and consequent impacts on Council’s financial position. • An assessment of the economic benefits and costs delivered by each option using standard cost benefit analysis (CBA) techniques, meeting PAF guidelines. This involved: Developing a summary description of the Project case as well as what would be expected to occur without the Project (the base case). o Identification, quantification and valuation of the relevant annual costs and benefits of each option, compared to what would otherwise be expected to occur in the base case. This included consideration of project impacts and benefits. o A discounted cash flow analysis of the stream of annualised benefits and costs, to assess the net present value (NPV), net present value per unit of capital of investment (NPVI), benefit cost ratio (BCR) and internal rate of return (IRR) for the Project. Discounting was undertaken using standard discount rates for CBA (4%, 7% and 10%). o Sensitivity analysis of key assumptions and variables used in the CBA, using Monte Carlo analysis. Sensitivity analysis was conducted for key assumptions/ variables in isolation, as well as different combinations.