1. Building a Business Case
International Association of Congress Centres
Liverpool
July 6th, 2010

2. What is a Business Case? States a problem Describes a solution
Estimates the cost to implement the solution
States the ROI that could be realized if the solution is implemented

3. Business Case Process Develop Assumptions 2 Scope of Info Predict
Simplify
Clarify
Calculate Financial
Impact 1 5 8
IRR
ROI
Determine Non-Financial Impacts
Determine Benefits
Desired Outcomes
Needs 3
Summarize Results 7
Define the Problem/Solution
Decision Matrix
Qualitative factors
Revenue
Cost savings from economies of scale
Sensitivity / Risk Analysis 6
Assumptions?
Structure?
Determine
Costs 4
Operating
Capital

4. Underlying Realities Convention centres don’t generate a direct ROI
Focus is on economic impact
The beneficiary often isn’t the funding source
Long-term (capital) $ vs. short-term (optg.) $
No time value of money
Your problem may not be “their” problem
Or as big a problem as their other problems
Or as pressing as their other problems

6. The Vancouver Timeline
VCEC Process
Competitive Process
B of T Task Force
PPP Process
Customer Focus Groups
Broader Business Community Engaged
Economic Impact #1
Economic Impact #2
Economic Impact #3
Business Case #1
Business Case #2
Business Case #3
Business Case #4
Business Case #5
Business Case #6
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Expansion Approved
Games Bid
Vancouver gets Games

7. What do we Know Picture of VCC
There you have the new building, with old building in background
Opened two years ago
Business cases are table stakes
Necessary to support but are not the trigger.
A number of things that really influence and dictate what you can do
LET ME TAKE THE REST OF MY TIME AND FOCUS ON HALF A DOZEN KEY PROCESS ITEMS

8. You Don’t Need Perfect Info
You do need:
Better information than anyone else
Basic event performance data:
Historical event performance
Turnaways (unavailability of size and dates)
Prospect/target list (not the telephone book!)
Basic financial performance data
Where are the opportunities: revenue and cost
Sometimes….the answer is NO!

9. Know Your Audience The Bureaucracy The Politicians
The Community at large
The Naysayers

10. Build Support Problem Solution Immediate Other areas Industry
The “Idea”
Immediate
Other areas
Bureaucracy
Industry
Business Community
Key Supporters
In Power
Opposition
All levels
Politicians
Influencers
Community at Large

11. What’s the ROI from a Library?
Not all public spending needs to generate ROI
Convention Centres need to demonstrate:
Catalytic impact (hotels, retail, support)
Networking and industry/academic exchange
Leading by example
Civic pride
“Cities were invented to facilitate the exchange of ideas, friendships, material goods and skills. How good a city is at facilitating exchange determines its health – economic, social, cultural and environmental. Public space forms a vital conduit…by providing platforms for everyday interaction and information flows – the basis and content for the life of cities.”

12. Timing is Everything Opportunities: Barriers
A competitor city is expanding
A land parcel is available (time limiting)
A grant program
A community leader ready to get involved
An election
Barriers
A competing “project”
Budget challenges

13. Public-Private Partnerships
A PPP can:
Raise limited capital (trade off revenue stream)
Encourage creativity (can also stifle)
Force trade offs (e.g., revenue, management)
Limit construction risk
Facilitate wider project support
A PPP cannot:
Easily adapt to revenue volatility
Make borrowing cheaper by the private sector
Make the project profitable
Make the project less complex (just the opposite)

14. A Picture’s Worth….

15. The Naysayers "A Lot of Hooey“ “Field of Schemes”
“Most of the feasibility studies are based on unrealistic assumptions and generate forecast numbers that are not likely to be realized.”
Dr. Heywood Sanders

16. Conclusions Core market and financial analysis is “table stakes”
Perfect information isn’t necessary
Know your audience
Build support gradually
Don’t forget the social/community benefits
PPPs can be useful in right circumstances
Timing is everything
Criticism is inevitable…stay focused on the solution

17. Q & A