Port business case cost $650k

| 29/11/2013

(CNS): Although government is looking to the private sector to finance the development of the cruise berthing facilities in George Town, the public purse has already forked out a considerable amount on this project even before the concrete starts to pour. According to the tender award letter which was released by the tourism ministry on request to CNS, government signed a $653,860 contract with PricewaterhouseCoppers to undertake the strategic business case as part of the process. This is in addition to the legal contract with Appleby, the cost of the Environmental Impact Assessment and on top of the money spent by the previous administration, including the payoff of more than $2.5 million to GLF Construction.

According to the letter, the local audit and consultancy firm was awarded the tender for the financial consultancy element of the project after it received the best value score of 95.2 points from the Central Tenders Committee after a competitive process. PwC then went on to produce the business case report and recommendations for how government should move forward to meet the policy objective of creating cruise berthing facilities in the capital.

The document released last month, which was accepted by Cabinet as making out a case for the project, recommended that government build two piers and the necessary terminals with no additional retail development. However, it also raises a number of real environmental risks and concerns that will fuel the Environmental Impact Assessment, which will also need to be paid for by government in the first instance before it gets anywhere near the point of putting together a request for proposals.

Government has set aside over $1m in this current budget to cover the administrative cost of finding a private sector partner to develop the piers, with the support and possible financial investment of some of the cruise lines.

Although the government has said it is committed to building the facilities, it is not clear yet whether the potential risk to Seven Mile Beach, which has already been identified, will be worth the end gain of larger ships calling on Grand Cayman. Tourism Minister Moses Kirkconnell has said that if the EIA demonstrated a real threat to Grand Cayman’s world famous beach, government would re-think the project.

See PwC award letter below.

Category: Crime

Comments (37)

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  1. Foreign Devil says:

    650 bites the dust.

  2. Anonymous says:

    If the cruise ship passengers were not so fat then the costs would be much lower since it would not be necessary to dig so deep a trench.  Can any MOU impose say a 225lb weight limit on passengers?  I appreciate this would be a big problem for Carnival cruises in Summer.

  3. Anonymous says:

    Which politician(s) profited?

  4. It's only money says:

    Do you think…I'm indecisive???

     

    Couldn't find their own asses in a hall full of mirrors why is it we elect (ie. hire) people to make decisions and they turn around and consult others….to make the decisions?  This adds tremendously to the cost of every government project. If you're not competent to make decisions…say so. And don't run for office.

    • Anonymous says:

      A part of good leadership is knowing your own limitations and knowing when to consult with others who are expert in the relevant field. It is exactly that mentality why we had a Minister of Finance who had no knowledge or understanding of public finance but believed he could rely on 'granny wits' instead and we see where that got us.  The trouble is when people are not competent to a particular decision and don't recognise that but plough on instead.

  5. Anny Omis says:

    Yes it is a big ole’ sum, but a huge part of that was Mac’s folly. We need a dock. Isn’t it better to do it right than to waste funds doing it foolishly, like Royal Watler or China Harbour? Have a little, tiny bit of faith. I might not always agree with the PPM, but at least they are honest, and trying to solve the problem.

    • And AnotherTing says:

      We are talking not goodness and who you know that befriend you only before and during election , and don't pay attention to you and your pot  barometer sense peeps and don't continue to be corns wobbled by words but by deeds that benefit all and not some. 

  6. Weapons Grade Bollocks says:

    Quite apart from the environmental aspects of this project, I am really concerned about the business case. We are so late out of the gate that the tide has already gone out on cruise tourism.

    The overall economic benefits of the cruise sector are limited in the grand scheme. So why does the taxpayer have to assume the risk, and the cost.

    Why don’t the wealthy merchants, who really stand to benefit the most, have to stump up?

  7. Anonymous says:

    What is the normal percentage for professional fees on a project of this size and scope? It's hard to say if this is high or low without that knowledge. 650,000/200,000,000 = 0.325 %. Too much? Perhaps the professionals can weigh in. C'mon Burns, you seem to know everything about everything. Why so quiet on this one?

  8. Anonymous says:

    Everywhere else in th region built retail into the port development.  This is clear evidence that it is necessary to business case.  Cayman is trying to avoid retail to pander to a few influential shopkeepers in George Town.  The greater good of protecting the nation's tourist economy is more important than a couple of stores.  The added costs of not including retail will make it less likely cruise ships will stop in Cayman.

    • Anonymous says:

      Best place to consult would be Freeport or Nassau Bahamas.

    • Anonymous says:

      No, you are missing the point that the nation will not benefit much if the cruise lines also have upland development. That is what Falmouth, Jamaica has discovered. We should try to learn from the mistakes of others, not repeat them based on the notion that they must have been necessary. Even the cruise lines are not saying it is impossible.

  9. Anonymous says:

    $ame $hit different goverment 

  10. Anonymous says:

    CNS please tell us the costs of the advice given my the other consulting firm I believe it was KPMG  to the UDP on the same project so that we are comparing apples to apples.

    why is it necessary to pay two sets of consultants to tell you things you already know? How does this project pay for itself or incentivize potential business partners like the cruise lines or dart without a upland component?  Or is protecting the family business more important than doing the right thing for the country? 

    Things that make you go ummmmmmmmm

  11. Tom S. says:

    Why! Why! Why!  Stop this nonsense!  

    Building a place for "Oasis"-size ships (2 of them) to dock, and another terminal for 2 smaller ships, will not help anything.

    What will be done is more destruction of the ocean.  

    In the Summer months, the ships will still go to Alaska, the Med, etc.  They will not stay.  In the Winter, you will only have a place for four (4) ships (what you've just built), and the other 2, 3, 4, 5, 6 ships. . . well, they will anchor or motor and 16,000-24,000 people a day will make Cayman more of a "livin' hell".  

    Cayman, why not go back to being unique.  Keep people covered up downtown (remember those days).  We now have 20+ jewelry stores – really!  They cruise ship people do not spend money here. . . . it has been said over, and over, and over.  Believe it!

    Drop the thoughts of a cruise ship terminal!  Move forward.

     

     

  12. Chris Johnson says:

    Thank you for making such a sensible comment. Too often previous Governments, in particularly the last one under bush, the Minister of Finance with no financial ability, have chosen to make business decisions without having a clue as to what they were doing. The turtle farm is a another classic blunder which has cost Cayman a huge amount of money. The conversion of the Tower Building into a religious icon is another. Hopefully the PPM will choose to make business decisions as they go forward, by employing experts. The next study needs be the runway extension and it’s viability.The Turks extended their runway to take the 777s but found the market from Europe did not fulfill expectations. The message I make is, please ask the experts for advice when you as Government do not have the internal resources to do the job. So far PPM, you are not doing a bad job.

    • Anonymous says:

      Do you mean ask real experts or just campaign supporters, conflicted family and friends?

      If the ppm have paid for yet another report on the GT dock and failed to use the one already prepared by KPMG it demonstrates they do not trust the competence of the civil servants to prepare a business case. Are they really any better than the previous government  when it comes to spending money wisely?

  13. Anonymous says:

    A project of this size will not cost 50k – 100,000k to produce the business case and EIA. . We have to cut government some slack. When private sector does a project of this magnitude they are under no obligation to divulge such costs and as a result we never know how much  these things really cost. Given the high risk stakes at hand (negative impact to SMB, etc) it does seem imperative that Govt pull out the stops to make sure that this project which WILL have some environmental impacts (common sense can tell us that) that these impacts are of such a nature that they can be reasonably mitigated and which do not exceed a specified threshold. 

    I attended the recent meeting on the outline plan for the EIA. One thing struck me was the fact that the lady from Mott and McDonald was very clear on several occasions to emphasize; we will do this work, we will not make recommendations on Go or No Go with this project, she added these are the  decisions which the Govt will make. Whilst this is the perfectly correct thing to say, my concern is around hearing clearly from the Minister what the threshold limit (s)  are. What would cause Govt  to pull back on this project. It's just the right thing for him to do to assure us that pull back they are fully prepared to do in the longer term interests of our island. 

    We should not get  so carried away that this becomes a Do project because of it being a big subject in the elections.  This port project like so many other areas of our development – Education- diversification of the economy – environmental legislation have been languishing for so long, some addressed with big hoopla but little foundation over the years.  We have simply run out of time; what we do now with this port project, or any of the other areas mentioned has to holistically and strategically be addressed, not simply as a response to a political promise but with a commitment to what is critical for longer term sustainability.

     

     

    • Anonymous says:

      I don't believe Moses has read beyond page 11 where it clearly discusses the removal of 626,000 cubic meters of national marine park and top snorkelling product by cutter suction dredging.  Apparently that is just fine with him and other conflicted backers!

  14. Anonymous says:

    I don't get it what was it they said that wasn't already known?

  15. Anonymous says:

    Is everyone really okay with grinding up 626,000 cubic meters of national marine park?  Are we that numb?

    • Anonymous says:

      All things being equal I would prefer not to but this country desperately needs a cruise port.

      Where ever we are going to put the cruise port will impact the environment.

      In the end I think the impact will be smaller using our natural harbour than any where else.

      Unless of course I am talking to someone who is wealthy enough not to worry about making money and getting food to eat.

      • Anonymous says:

        The business case is flawed.  Cost est is $200mln, best case net economic gain is $220mln over 20yrs.  The service cost, inflation, and lost opportunity cost and finance capacity quickly inverts the perceived $20mln net gain to a sizeable loss for Cayman, this doesn't even factor the irreversible ecological impact that is being proposed, or the repairs to pilings, roads, and other infrastructure risks after annual Nor'Westers.  

    • Anonymous says:

      The alternative to George Town is as you have so eloquently described as grinding up the marine national park/environment is to build the port in South Sound and grind up 20.0m cuyds or North Sound to grind up 50-60.0m cuyds of dredging so 0.25-0.63m cuyds in George Town is up to 40-120 less impact than other options/alternatives. Dredging in GT can be reduced substantially to minimize the impact back to 0.25m cuyds as estimated by previous proposals.

    • Anonymous says:

      Wow- with all these Chief Officers, Deputy Chief Officers, Chief Financial Officers, Consultants on hire, they couldn't have doen this case study within the government?

      If not, fire them and get staff who are actually effective within government!

    • And AnotherTing says:

      Yeah big money a spend, but, to whose benefit. destroy the ecological system, we can't bring in air arrivals to go to the beach;  we can't get no piers built and we spend 600 + thousand to tell them between the lines that it can't work and dem idjuts  still touting it? Woe betide. And another Ting.

    • And AnotherTing says:

      Great , can the public see the amounts of and who were the rest of bidders? Isn't it transparent to do so? And another Ting

    • Anonymous says:

      Considering who you keep choosing to lead you forward you are way passed being just numb!

      • Anonymous says:

        Yeah, we need Big Mac to be leading us. Everyone can see what a great leader he was!

  16. Anonymous says:

    I'm obviously in the wrong business….I can tell the goverment right now that the port will not work without 100,000+ sqft of retail….I will take $50,000 for that advice and they can put the other $600K towards needy folks. What a royal rip off!!!

    • Anonymous says:

      15;54

       

      I have to agree with you.

      It is only common sense. No one is coming in here and putting that kind of money down and dont have a way of getting it paid back.

      Those two piers are just the tool to get to  create the funds, the real money making machine are some upland business.

      Look at the four past developers who proposed the development of the port, they all had some sort of upland development.

      The hate for makeeva in this country, have blinded caymanians of the truth and reality. 

      The only way those piers will ever be built, will have to include some upland development. Even with the Bo Miller method of financing. Which is the best way to go.

      The EIA is a joke, it's a waste of money and to drag out the time for these projects.It has  never been used in this country except for a project the CUC wanted to carry out. No one can simulate nature.

      We just have to depend on engineering and design method . Caymanians want the luxury and money from the rich developers, but they do not want to sacrifice a leaf on a tree.

    • Anonymous says:

      100,000 sqft of retail in the hands of the usual so called "managers"… who prefer to go surfing in the morning rather than working… you know…

    • Peanuts says:

      total rubbish……….

  17. Anonymous says:

    Money well spent, in the right way, for a change..

  18. Anonymous says:



    A reasonable sum relative to the cost of the project, and more importantly relative to the cost of getting it wrong as evidenced by the 2.5 million wasted by the UDP. CNS, please note the 2.5 million is in no way related to the project costs XXXX

  19. Anonymous says:

    Close to 4 millions spent and they still don't know if they can build the pier. Youwould think they are planning a trip to space. Such a waste and show of inadequacy in government.

  20. Anonymous says:

    Over $650K sounds like a lot of money for a business case, but compared to what Boatswain Beach cost without a business case, it might be worth every penny spent.