Introduction There are three main sections in this assignment. In the first section, you are required to investigate the economic viability of a proposed wastewater treatment plant project in Cardiff. You are given the essential data to be able to carry out financial appraisal for the proposed investment. In the second section, you are required to develop a procurement strategy for the project. You are provided with some information on the proposed scheme in terms of the requirements and constraints to allow an appropriate procurement strategy to be developed. In the third section, you are required to recommend dispute resolution methods that are appropriate for this project. Project background/context Cardiff City population is rapidly growing due to several economic and social factors. As a result, there has been an increasing pressure on the city infrastructure including its wastewater treatment works. Welsh Water (the water and wastewater company for Wales) undertook a study to assess the current capacity issues related to the existing infrastructure. Currently, the existing wastewater treatment works have capacity concerns and most of them are coming to the end of their useful life. The capacity issues relate to the quality of the effluents, which sometimes do not meet the environmental requirements and standards; posing threats to the environment and wildlife. Further, excessive inflows at peak times means that there is occasional wastewater overflow into local rivers and streams. The discharge of untreated wastewater into watercourses has attracted media attention and angered the public. Thousands of citizens sent letters to their MPs expressing their anger and frustration. The Welsh Government/ Natural Resources Wales, who is responsible for monitoring levels of water quality, has warned Welsh Water that it will be fined for failure to meet relevant environmental targets set out in the relevant environmental legislation. For these reasons, and to meet the needs of the growing population (i.e. to treat additional flows), an intervention is urgently required to ensure that the population of Cardiff has access to an adequate level of facilities and services, and to protect the environment and public health. An outline business case and conceptual design have been prepared to identify various options available to meet the business/client requirements. The option to do rehabilitation and extension works to the existing wastewater treatment works has been ruled out because there is limited land in the vicinity that can be used to build additional treatment units. The recommended option requires delivery of a new wastewater treatment plant. The project will allow Welsh Water to avoid an annual 1.5 Million fine. The annual penalty payment is estimated based on current performance levels and it factors in increases in quantities of raw sewage discharge due to population growth. This project will also assist Welsh Water to improve its reputation and image and restore public confidence. The current population to be directly served from the project is estimated to be 100,000 capita at 2025, and is projected to grow to 150,000 capita in 2050, the end of its operational life. The estimated wastewater production is 150 litre per capita per day. In the first year of operation, Welsh Water charges its customers 1.3 /m3 of wastewater. It also charges 280 connection fees for each new property. These fees are projected to increase by 2% each year. In your calculation, assume 1,000 new properties are built in the catchment area of the plant each year. The operations and maintenance costs are estimated to be 1 Million in 2025 increasing by 3% each year. The estimated investment/capital cost (CAPEX) are 60 Million (including an appropriate allowance for Optimism Bias as per the government guidelines). The investment/capital cost (CAPEX) includes the cost of design, construction, and all works required to deliver the plant in an operating state. It does not include the cost of land because the site is made available by the Welsh Government and no cost will be paid for its acquisition. The Client/Project requirements A planning permission has been granted. This is an urgent project, and the client wants to have the facility in operation in 2025. The client has the funds made available, but achieving cost certainty is important before committing to the project. The client requires the contractor to assume the design risk, and to guarantee operational and performance requirements will be met in time. As the owner and operator of the plant, Welsh Water will operate the plant using its in-house resources throughout its operational life. The client has hired you as a project management consultant and wants your input into the business case currently under development. Based on the information given in this brief, and by drawing on evidence from relevant literature, you are required to produce a report that is comprised of the following sections: 1) Part A (~750 words) Carry out financial appraisal and determine whether the project is worthwhile doing. In so doing, discuss the main financial appraisal techniques, and use two methods to evaluate the project. Hint: if relevant, use the discount rate as recommended by the Green Book. 2) Part B (~2,000 words) Develop a procurement strategy for the project. It should explain and justify the procurement route/packaging strategy, supplier-buyer relationship, supplier selection method and criteria, reimbursement methods, standard forms to be used between the main parties (client and tier 1 suppliers). This section should include a supply chain diagram for this project. Include only two tiers of supply, and treat the client organisation as the focal organisation. This section should also clarify and defend the proposed risk allocation. 3) Part C (~750 words) Recommend and critically discuss dispute resolution methods that are appropriate to resolve any commercial disputes that may occur between the client and its suppliers. Report Structure The report should have the following sections: Title Page Executive summary (not included in the word count) Table of Contents (not included in word count) List of tables and figures (not included in word count) Introduction (~250 words) Main Body of Report o Part (A) Financial Appraisal (~750 words) o Part (B) Procurement Strategy (~2,000 words) o Part (C) Dispute resolution (~750 words) Conclusion (~250 words) Reference list (not included in word count) Appendix (not included in word count)