The Royal Exhibition Building located within Carlton Gardens in Melbourne Australia is a gem in comparison to other famous exhibition pavilions in the world. This site is ideal for large public or trade exhibitions and prominent main events. Having been completed in 1880, this iconic building has seen better days.
A growing demand in new market areas and the subsequent advancement in technology has placed new demands on this facility. This has prompted the authorities in charge to come up with strategies aimed at upgrading the venue into an amiable facility worthy of a six star status.
The spot features first-class interior floor space of 12 000sq. m. over two levels, 7 000sq. m. of multipurpose outdoor grounds, exceptional public transport access and covertly secured parking lot (Cadamer 2008, pp.101). Scope of Feasibility Study for the Refurbishment of the Royal Exhibition Building Melbourne.
Introduction
The Commission for Sustainable Development in Australia has voted to commission a feasibility study to evaluate the technical and economic issues that would result from a refurbishment of the Royal building in the city of Melbourne. The intended refurbishment aims to upgrade this majestic venue to a level where it attains six star statuses.
The study will consider the most viable options that can be undertaken to ensure that this historic site maintains its grandeur and it is also able to sustainably compete at the world market. The study will be ultimately used to support the use of readily available resources and technologies for the improvement of one of the world’s heritage sites so as to tap in to emerging market trends and also in an attempt to maintain the cultural heritage synonymous with the site.
Its accessibility and connectivity to the rest of Melbourne’s financial, transportation and communication services will play a long way in ensuring this (David 2006 pp. 108). This project is being overseen by the Department of Cultural heritage, Commission of Sustainable development, National Geographic and Natural Resources (Australia) and the Department of Enterprise, Trade and Investment (Australia).
This project is funded under the Asian Pacific Economic Program for Asian Pacific countries in conjunction with the Australian ministry of cultural heritage. This Program aims to address the economic and social disadvantages which can result from the refurbishment of the Royal Exhibition building. Under this major Program, several Measures will be undertaken to improve the general ambiance of this historic site.
This is supposed to be accompanied by a tangible and sustainable upgrade in the transport, energy and communications infrastructure within the eligible area, in order to facilitate economic development and social co-operation that would match demands of the 21st century.
Objectives of Study
The object of this study is to evaluate the technical and economic issues that would arise in refurbishing the Royal Exhibition building in Melbourne such that it acquires a six star status. Bringing six stardom status to the Royal Exhibition Building is the core objective of this whole venture and this has to naturally fall under a careful sort out set of assumptions which will include the following.
Determine the feasibility of providing a venue worthy of a six star status which is able to avail the desired competitive advantages to be able to tap in the numerous economic advantages being presented by the 21st century (Ihde 2001). Identify the financial ramifications that might be associated with the said project.
Provide an estimate of the human capital requirements associated with the refurbishment of the Royal Exhibition Building in Melbourne. Define any relevant geographical and archaeological features that would be encountered within the envisaged refurbishment activity, Carry out a Preliminary Environmental Impact Assessment, Define the major components, potential locations and basic layouts for connecting all the present and potential stake holders.
Prepare a project budget to an accuracy of +/- 10%, Prepare a project schedule. In order for a project of such a magnitude to come into effect, several stakeholders have to put their act together. In this case the possible stakeholders are the Department of Cultural Heritage. This is mandated with the preservation and promotion of Australia’s cultural sites and since the Royal Exhibition Building lies in its domain then it is inevitable that they be a stake holder.
The Commission of Sustainable development has been mandated in coming up with possible ways of enhancing developments that are sustainable in both the short and long term economic future. The National Geographic and Natural resources Commission is a national body that ensures that all natural resources are harnessed and exploited accordingly.
Hence it would seem a very viable option for the refurbishment of the Royal Exhibition Building to enable it to reap full benefits of its economic potential. Development of Enterprise, Trade and Investment movement is movement that would want to promote the said refurbishment in view of a potential upsurge in trade and business ventures once the venue acquires six stardom statuses.
The Municipal Council of Melbourne, being a local government duly elected by the people, it would be an ideal opportunity for the council to invest and hence enable the electorate to benefit from the accrued revenues generating from the refurbished sites. UNESCO. Having endured 130 years since its construction, the Royal Exhibition building is rated highly by the United Nation’s body as an important heritage site and thus is likely to get an instant node as a site worthy of getting an upgrade so as to march up to the demands of 21 st century.
Refurbishments are bound to occur at some point in the lifespan of a building. A buildings’ construction and design should put into consideration how future refurbishments can be undertaken. It must have occurred to the original designers of the Royal Exhibition Building in Melbourne to put in place certain measures that would have ensured that this majestic structure would in future allow for some sustainable renovations to take place in view of not only prolonging its life but also to improve its aesthetic value so as to draw a larger clientele.
From a Similar point of view, the building’s original blue print could have revealed a deliberate attempt to accommodate renovations which would enable the building to get acceptable returns on investment if it was ever to be put up for sale. This feasibility study was prompted by the desire to achieve the following objectives; First there was the desire to extend the life of the iconic Royal Exhibition building in Melbourne so that future generations would be able to behold in real essence the grandeur and panache that was originally associated with the said building.
Then it was considered quite crucial that the building should uphold and retain its attractiveness to the already changing clientele. It is also of paramount importance that the building is able to measure up to the ever changing environmental demands i. e being compliant under the ‘green technology adage’ while at the same time retaining its attractiveness to clients.
The building is also expected to continue attracting greater rents and also present a considerable return on investments in case of a possible sale. The building is also through its refurbishments supposed to attract a six star recognition while at the same time achieving the much coveted competitive edge.
Any sustainable renovation has to face up to challenges posed by constraints presented by time limitation and the fact that refurbishments and reconstruction present extra expenses and an interruption to the businesses that operate from the particular venue (Ihde,2001 pp.111)). Due to the following reasons, the need to act swiftly and minimize expenses are the main challenges that formulators of renovation designs have to constantly deal with.
During renovation, huge amounts of waste is generated, thus it is very vital that a suitable approach for dealing with reclaimed materials, equipment and resources be put in place. It is also worthy to note that budget allocations could considerably reduce if effective processes of ensuring that proper waste management practices are put in place. This should also be accompanied by a proper utilization of reclaimed material Access to eco-friendly and reclaimable resources is linked to a structure’s blueprint.
There is a close link between the two since the necessity of materials at a construction blueprint stage basically influences when, and to what degree, a structure requires renovation or remodeling. Secondly, design influences ease of access to required material so much so that if it fails to identify appropriate ways of using eco-friendly/reusable resources, then it follows that unnecessary expenses will be incurred while at the same time having to deal with identifying practical ways of dealing with the waste material (Hillary 2005 pp 101).
Up to 97% of the construction work in Australia is carried out on already existing structures. Thus, building activities in the country have a great opportunity to embrace the concepts widely advocated the champions of a greener technology.
Market analysis
Australia is one of the fast developing countries in the world. The country has experienced several tremendous improvements over the last couple of years and this is not going to slow down. One of the areas noticeable is on tourism. Although tourism, one of the country’s key sectors, is having to endure an ever increasing competition from other Asian pacific countries, studies have indicated that a steady flow of tourists have continuously flocked Australia since the Sidney Olympics in 2002.
This coupled with the fact that Australia is experiencing growing demand in new market areas such as venture and intellectual tourism, eco-tourism and upscale hotels, offers an opportunity for the country to revitalize the full-grown tourism sector, in addition the amplification of eco-tourism across the country. Other positive examples are the presence of offshore education and information and communication technology (ICT) enabled practices seen as possible additional sectors of potential development, especially from English-speaking countries.
Foreign exchange earnings from both the agricultural and manufactured goods have immensely increased within the last 5 years, this has also seen an upward surge in developments in tourism, learning and monetary service providers. Over 4,200 firms in Australian are doing business directly with China, there has also been a tremendous increase of small and medium sized enterprises from Australia in china in the last two years.
Our resources companies has been joined by architectural, building, engineering, logistical, accountancy and legal firms are some of the companies from Australia that are now taking part in the Chinese market Export of manufactured goods to the least developed countries has increased from a partly 43% from the last ten year to an impressive 53% this current year.
UBS has pointed out to India, South Africa, Papua New Guinea, and the UAE as emerging future markets for Australia products. With upsurge of economic developments in most countries that traditionally had shared little or no economic ties with Australia, It has thus become increasingly necessary for Australia to review its trade relations with these countries in attempts to tap into the new but lucrative business opportunities presented.
In short, the emergence of these economic ventures is bound to present an ideal ground for the Royal exhibition building as a focal business/commercial center. 1st July 2004 marks the day when the Royal Exhibition Building and Carlton Gardens got duly recognition by UNESCO and were therefore subsequently placed on the World Heritage list. Hence, they became the first sites within Australia to achieve a listing in World Heritage.
Presently, the Royal Exhibition Building is a component site of Museum Victoria while the adjacent gardens fall under the jurisdiction of the City of Melbourne. With its fabulously lavish interior, all-embracing galleries and lofty arena, the Great Hall is second to none when it comes to hosting superb trade shows, fairs and artistic and public events. Hence with anticipated refurbishments, this majestic venue will not only attract high caliber clientele but will also enhance a long and an illustrious history as one of the world’s, cultural.business and heritage sites.
Technical Analysis
The Royal Exhibition is located in Carlton Gardens Melbourne Australia. It is made of brick and has been set on a bluestone base. It has long central naves and stunted transepts. For access, it has four triumphal entrance porticoes one on each side.
Refurbishment works of for this building are aimed at embracing a variety of green building aspects. It is aimed at achieving high levels of carbon neutrality and water balance. Innovative technologies such as lowering the use of energy and recycling of used water in the building for cleaning and watering the adjacent gardens are some of the technologies that will be used.
Figures in US $
Dynamo Company limited which has taken part in the construction of numerous mega structures in Australia will be providing the necessary machinery and equipment. They were considered since they have all that was needed in terms of machines and equipment. The centrality of the building makes it most ideal for access of building materials.
This is also enhanced by the availability of building material in Melbourne and good infrastructure which ensures smooth transportation.Above is an illustration of the time and amount of finances projected for complete renovation of the building. It has been decided to follow the following sequence so as to allow for continuation of business by half of the premises operating there even when renovation work is ongoing.
This is only a projection and it has also been taken into account that financial implications at completion of the project might exceed the projected figures due to factors such as price inflation. It might also take longer than two years to complete due to other unforeseen circumstances such as erratic weather conditions. Since the construction industry in Australia has grown considerably, there is abundant skilled labor to undertake the renovation.
The various cadres required to undertake a successful construction venture for instance, architects, designers, engineers, masons, laborers, machine operators etc are in constant supply. Most of the waste material from the renovation will be put into good use. Rabble and debris from the site will be used to lay the foundation of the adjacent park. Discarded steel will be smelted and recycled.
Statement of anticipated problems and risks
Refurbishment of the Royal exhibition building is bound to experience the following hiccups; inadequate funds. Though there are potential stakeholders who might be willing to fund this project, their budgetary allocations might not be enough to see the project to its conclusive stage. The project also faces the problem of having to experience lapses in the time frame within which it is supposed to have commenced and gained completion.
There is also the problem of price and market fluctuations in building materials which will mean that the original operating budgets cannot sustain the project to its conclusion. This project might also experience difficulties in having to deal with the numerous and stringent legal legislations required by the authorities. The emergence of other new and modern business venues might mean that this project is deemed vague and an attempt in futility. There can also emerge conflicting refurbishment designs (Seebhom, 2004).
Financial analysis
The proposed project is estimated to cost around one hundred and twenty ($120) US dollars. Twenty million is expected to cover the cost of labor while the rest is supposed to cover the cost of the building materials needed for the completion of the project. The vast amount of funds that this project is expected to require will call for several investors to chip in.
However, the Australian government should be expected to contribute a substantial amount through its various bodies namely; Commission for sustainable development, National Geographic and Natural Resources commission and the development of Enterprise, Trade and Investments Program. Other potential investors include UNESCO and the Municipal Council of Melbourne.
Having that the Royal Exhibition Building is a venerated business hub in Melbourne, several financial institutions might also consider it as good business and decide to finance the project anticipating improved returns once the project is complete. Currently the Royal Exhibition Building has a usual turnover of about twenty five million dollars per annum.
With improved facilities after the refurbishment, this revenue is expected to double. For all the investors to recoup their invested funds, it is estimated that it will take a minimum of five years for the hundred and twenty million dollars plus interest to be fully recovered by the investors. After that, the building is estimated to be accruing revenues of around forty million dollars per year.
Financial Cash Flow Statement: Renovation of the Royal Exhibition Building (figures in US$ )
EvaluationTo objectively and judiciously unearth the strengths and weaknesses of an existing business or projected endeavor, be able to identify the opportunities and threats involved, take stock of the available resources, coming up will ways of applying these resources to attain an anticipated amount of success is in most of the cases the reason why most feasibility studies are carried out. This has been the case with my case study.
However, sound capital budgeting techniques must be adhered to so as to determine beyond doubt that the project will be viable financially. This not only helps in making sound economic decisions but it also allows for the exploration of profitable investment opportunities. I will confine myself to mainly three techniques to measure the worth of this particular project against its expected return on investment.
Payback method
It represents the number of years required to recover the original cash outlay invested in a project. It is based on the principle that every capital expenditure pays itself back over a number of years. It attempts to measure the period of time it takes for the original cost of a project to be recovered from the additional earning of the project. The formula for calculating payback period is;
This shows a strong indication that the project is highly viable.
Though the above method is favored due to its, simplicity, liquidity, safety and reliability, it fails to capture the time value of money, disregards the productivity and cost of capital and doesn’t capture the entire lifespan of projects.
Net Present Value Method
The net present value is the difference between the present value of the future cash inflows after tax and the present value of cash out lay. It is expressed as follows;
Conclusion
This is also a good indication that the project is viable. Inasmuch as one would want look forward to formulating a foolproof feasibility study, it should be noted that there are some underlying factors that will inevitably influence the course of events and which can be hardly be anticipated neither accounted for. For example a schedule feasibility study may fail to account for delays emanating from maybe erratic climatic conditions or may be due to a sudden inflation in world markets (Thomas 2004, pp. 222).
List of References
Cadamer. H. 2008. Feasibility Study. California: University of California Press.
David A. 2006. Learn About Building Green and Sustainability. Warsaw: Trane Publishers.
Ihde, D.2001. Expanding With Sustainable Technology. Illinois: North West University Press.
Jean. 2001. Feasibility Study Simplified. New York: State University New Press. Hillary. B. 2005. Emerging Technologies and Practices. Chicago: Chicago University Press.
Ramburg, B. 2009. Boosting Efficiency energy with emerging Technologies. Chicago: Summer 2009 Hacket.
Seebhom. T. 2004. Feasibility methods & Methodology ISBNI-4020=2618-8(e-book)Dordrecht,Netherlands:KluwertPublishers.
Stephen, J. 2011. Building Community Using Social Technology. Maryland: United Press. Thiselton, D.2000. Sustainable energy. Michigan: Wm. B. Eerdmans Publishing Company.
Thomas, G. 2004. The Royal Exhibition Building. Melbourne: University of Melbourne Press.