The effect of large port infrastructure on the development on the business and management structure of the port organisation Brendan Keating, CEO Paul O’Regan, Harbour Master/Operations Manager

CONTENT Port Company Outline Background to Project Key Drivers Future Port Funding Model Management structure; Before and After; Tier 1 Port – National Ports Policy Statement

ABOUT THE PORT OF CORK The key seaport on the South Coast of Ireland A Commercial Company (118 employees & 12 Sea Pilots), which is owned by the Irish State Caters seven shipping modes: Lo-Lo, Ro-Ro, Liquid bulk, Break bulk, Dry bulk, Offshore support and Cruise liners Annual traffic volumes of between 8 - 11 million tonnes: 11 million tonnes (2015) 205,829 TEU’s 58 cruise liners Turnover 2015 €29m Profit 2015 €5.2m Tier 1 Port – National Ports Policy Statement

TRADE TRAFFIC FIGURES 2006-2014 POCC August 2015 Ytd Total Trade Traffic 10% ahead of 2014 actual

PORT OF CORK FACILITIES CITY QUAYS TIVOLI DOCKS RINGASKIDDY COBH

CURRENT FACILITIES FUTURE OPERATIONAL CHALLENGES 17 May 2018 CURRENT FACILITIES FUTURE OPERATIONAL CHALLENGES The Port of Cork’s Strategic Development Plan review (2010) examined the future development of the cargo handling capacity. It concluded that in order to maintain competiveness, it is essential that the Port responds to future growth requirements and shipping trends Commercial ships are increasingly becoming larger The Port of Cork must relocate from the Upper Harbour (Tivoli Docks & City Quays) as the depth and width of the water channel, and landside capacity cannot deal with larger vessels Maritime logistics are trending towards port-centred logistics which requires a different nature of land banks adjacent to port facilities. It is not possible to redevelop the existing container facility (demand for back-up lands, distribution, etc.) Increasing container volumes means the Port is already reaching its capacity levels. [Document title]

A Long Road 10 year process – Common feature in Port Planning 2000 Strategic Development Plan approved 2005 Start preparations for planning process (EIS, Site Selection, Consultants) 2007 Initial Application for 800m Berthage & Container Terminal 750,000 TEU (€150m) 2008 Refusal by Planning Authorities (Road and Rail Links) – Company Costs €3m 2009 Peer Review process 2010 Revised Strategic Plan for Port Company 2012 Re-start preparations for planning process (EIS, Site Selection, Consultants) 2014 Application for 550m Berthage & 400,000 TEU terminal 2015 Application Approved 10 year process – Common feature in Port Planning A Long Road

IMPROVING PORT’S COMPETITIVE POSITION & OVERCOMING CONSTRAINTS The planning horizon seeks to put in place a long term framework in addition to addressing the short term infrastructural needs of the Port A strengthening of our competitive position by increasing infrastructure capacity is matched by strategies for transport connectivity, land use and ICT

FUTURE DEVELOPMENT - RINGASKIDDY Planning permission granted for re-development of existing port facilities at Ringaskiddy in May 2015

RINGASKIDDY PORT REDEVELOPMENT Project involves: €80 million investment Award main contract Q4 2016 Construction commencing late 2016 Operational by 2018

PORT ROAD ACCESS M28 Road Upgrade now included in Government’s Investment Plan and will meet Port’s requirements

LAND USE STRATEGY The Port is presently finalising a Land Use Strategy which will see the Company re-structure it’s property portfolio. This will Realise value from property in the Upper Harbour over-time to contribute to funding of infrastructure and operational requirements Ensure optimal use of Port of Cork lands so as to accommodate short, medium and long-term business needs Ensure sufficient land to facilitate port expansion and business requirements to 2040

FUNDING STRATEGY The financial crisis in Ireland saw a dramatic decline in the proportion of national output spent on infrastructure In the EU, the level of overall investment has dropped from 21.3% GDP in 2007 to 17% in 2013 Today there is a unique opportunity of securing cheap funding for long term proposals such as port infrastructure The challenge however, is to avoid building excess capacity and ensure that investments generate adequate returns A conventional publically owned port today most likely should seek to build the infrastructure and then enter into a concession arrangement over a period of 30 years or more for the operation The owners/shareholders of the Port of Cork are unwilling to invest in the development of the business and its asset base The Port of Cork has decided that if it is to have infrastructure with adequate capacity to drive business growth, it must make the investment itself

FUNDING STRATEGY (CONT’D) The Funding Strategy for delivering the Port of Cork infrastructure proposals is : Senior Debt: - European Investment Bank €30m - Commercial Bank €30m - Mezzanine Finance €10m - Company Cash €10m To reduce the level of debt before 2020, the Company will dispose of non-core assets such as: City Offices Complex Tivoli Port Industrial Estate

FUNDING STRATEGY (CONT’D) Consulting Teams EY MTBS (commercial planning) Philip Lee (Legal) Indecon (Economists) RPS (Civils) TBA (Terminals)

The Organisational Changes made to Plan and Deliver the Project The Port of Cork Company has restructured to effectively manage the additional work load on the planning and delivery of the major infrastructural project at Ringaskiddy The Organisational Changes made to Plan and Deliver the Project

The Organisational Changes made to Plan and Deliver the Project An Executive Project Steering Committee with responsibility for managing and co-ordinating activities and resources for the project has been established. A special Investment Sub-Committee of the Board has been established to oversee the work of the CEO and the Executive Team. The Organisational Changes made to Plan and Deliver the Project

The Organisational Changes made to Plan and Deliver the Project A member of specialist consultants have been engaged to cover issues such as: Planning & Design & Regulatory Consent Procurement Contract / Legal Finance & Banking The Organisational Changes made to Plan and Deliver the Project

Company Structure: pre-development Board of Directors Investment Committee CEO Commercial Manager Commercial / Marketing team Company Secetary Finance team / Administration Harbour Master / Operations Manager Port Operations Manager Engineering Services Engineering team

Company Structure: development Board of Directors CEO Commercial Manager Commercial / Marketing team Company Secetary Finance team / Administration Harbour Master / Operations Manager Port Operations Manager Engineering Services / Project Director Engineering team Project team Project Engineer Project Manager Project Co-Ordinator / Project Communications Safety & Quality Systems Manager Resident Engineer External Consultants Investment Committee Workforce grew by over 5% with dedicated project team

Project Working Structure (cont) 13 Work Streams each with nominated Co-ordinator – all reporting to Project Director Monthly progress reports for each Work Stream – chart progress against programme Monthly Work Stream Co-Ordinator meetings Monthly update to project risk register Monthly project Steering Group meeting Report to Board of Directors on project progress / issues / programme / funding each month

Key Issues / Pressure Points on Organisation Work Stream Co-Ordinator workloads V Day Jobs Day to Day Port Operations and Business Managing Port Operations interface with construction Community liaison and communication – buy-in and consistent messaging across the organisation Internal communication across company departments (engineering / operations / commercial / finance) Introduction of project specific systems (EDMS)

The Organisational Changes made to Plan and Deliver the Project A dedicated project of office has been established and resourced. Each Senior Manager has been assigned responsibility for the delivery of the nine work streams. Workloads increased in all sections, sometimes forcing reactive employment with the management structure The Organisational Changes made to Plan and Deliver the Project

Project Working Structure

A large scale project relative to Port size and structure has the potential to derail the Port if not run properly. The port needs this project to survive and grow The extent of engagements; public, customers, finance, legal, Statutory can be over whelming for a small management team Managing public perception is difficult but essential Consultants are a vital resource, however, you know your own Port best. Financing a large scale project can change the entire structure of the Port Company Plan and cost the necessary HRs with overall project costs The core port business must be supported throughout. Manage in-house Vs Contract Out? Conclusions Winner of World Cruise Awards for Best Port Welcome and Best Experience

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