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BEXLEY SWIMMING AND LEISURE CENTRE FEASIBILITY REPORT FOR ROCKDALE CITY COUNCIL
COPYRIGHT TOMPKINSMDA ARCHITECTS 28 NOVEMBER 2011
RECREATION PLANNING REPORT prepared by Recreation Planning Associates, October 2011
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Rockdale City Council
Bexley Pool
Redevelopment Feasibility Study – STAGE 2 REPORT
Draft
November 2011 Recreation Planning Associates
Bexley Pool Redevelopment Feasibility Study – Stage 2
Recreation Planning Associates
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TABLE OF CONTENTS
EXECUTIVE SUMMARY 4
CHAPTER ONE: INTRODUCTION 11 1.1 PURPOSE OF STUDY 11 1.2 EXISTING SERVICE LEVELS 11 1.3 COMMUNITY NEEDS 11 1.4 DEVELOPMENT RATIONALE AND CONCEPT 12 1.5 PRELIMINARY BUSINESS CASE 13
CHAPTER TWO: THE PROJECT PROPOSAL 14 2.1 THE PROPOSED CONCEPT 14 2.2 PROJECT ALTERNATIVES 14 2.3 CONSISTENCY WITH COMMUNITY STRATEGIC PLAN 14
CHAPTER THREE: CRITICAL SUCCESS FACTORS 16
CHAPTER FOUR: BUSINESS OBJECTIVES 17 4.1 MISSION AND GOALS 17 4.2 SERVICE OBJECTIVES 17 4.3 SERVICE PRINCIPLES/PHILOSOPHY 18
CHAPTER FIVE: BUSINESS STRUCTURE 20 5.1 BUSINESS STRUCTURE OPTIONS 20 5.2 CHOOSING A STRUCTURE 20 5.3 PROPOSED BUSINESS STRUCTURE & MANAGEMENT MODEL 22
CHAPTER SIX: STAFFING/PERSONNEL 24 6.1 KEY MANAGEMENT RESPONSIBILITIES 24 6.2 CENTRE MANAGER 25 6.3 STAFFING PLAN/STRUCTURE 25
CHAPTER SEVEN: PROGRAMS & SERVICES 27 7.1 PROGRAMS AND SERVICES 27 7.2 OPENING HOURS 28 7.3 CHILD CARE 28 7.4 ENTRY AND PROGRAM FEES 28
CHAPTER EIGHT: CENTRE MARKETING 30 8.1 MARKET POSITIONING 30 8.2 MARKETING STRATEGY 30 8.3 INCLUSIVE PROGRAMING 31 8.4 CUSTOMER SERVICE 32
CHAPTER NINE: RISK & ASSET MANAGEMENT 33 9.1 OPERATIONAL PROCEDURES 33 9.2 ASSET MAINTENANCE 33
CHAPTER TEN: PERFORMANCE MEASUREMENT 34 10.1 MONITORING PERFORMANCE 34 10.2 EXTERNAL BENCHMARKING 34
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CHAPTER ELEVEN: FINANCIAL FORECASTS 35 11.1 OPERATIONAL COST AND REVENUE PROJECTIONS 35
CHAPTER TWELVE: MARKET APPRAISAL 39 12.1 APPRAISAL METHOD 39 12.2 BENEFITS 39 12.3 COSTS 41 12.4 CONCLUSIONS 45
ATTACHMENT A: BUSINESS PLAN ASSUMTIONS 46
ATTACHMENT B: BUSINESS PLAN PRO FORMA 52
ATTACHMENT C: BUSINESS PLAN FORECASTS IN DETAIL 57
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EXECUTIVE SUMMARY
Background
In late 2008, Council resolved to investigate options for upgrading the Bexley
Pool to a facility of ‗national standing‘. To assist it in this process, Council
established a Pool Reference Group (comprising representatives of Rockdale
Swim Club, public schools and high schools, a community representative, the
Pool Operator and Council staff) to review the options.
Options were developed by the Reference Group and Council commissioned a
study to test the feasibility of the options. That study was completed in late 2010.
Since then Council has continued to investigate options - including via
discussions with a range of facility management organisations – and at its
meeting of 6 July 2011, adopted the following concept:
Refurbished/rebuilt outdoor 50m pool
Indoor 25m x 8 lane indoor pool
Program 20 x 12m x 5 lane pool
Leisure pool of 165 m2 (with built in spa)
700m2 multi-space gym (with weights/cardio space and group
fitness/functions) of
Multi-purpose space for child-minding/birthday parties (100 m2)
Kiosk (50m2)
Amenities and support facilities (change, toilets, storage, first aid, wet
lounge etc)
Study Purpose
The purpose of this study is to assess the feasibility of the concept in accordance
with the assessment requirements established in the NSW Government‘s Capital
Expenditure Guidelines.
Capital Expenditure Guidelines
The NSW Government has prepared guidelines for the assessment of council
proposals to buy, construct, renovate or acquire assets1. As stated in the
document, the aim of the guidelines is ―to ensure that a council‘s evaluation of the
proposed capital expenditure is consistent and rigorous, the merits of projects
can be compared and resource allocation can be made on an informed basis.
1 NSW Department of Premier and Cabinet, Division of Local Government, December 2010, Capital Expenditure
Guidelines
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Consistent with the Guidelines, the study has:
Reconfirmed the initial business case developed in the Stage 1 Study,
Identified the community needs for the proposed facility,
Confirmed the project‘s consistency with Council‘s Community
Strategic Plan, and
Identified critical success factors for the project
The critical success factors are detailed at length in this report and include the
following key elements of successful aquatic/leisure centre management:
Clear statement of business and service objectives
A management structure consistent with achievement of the objectives
Appropriately skilled management and operational staff with the ability
to grow and adapt services as expectations and needs change
Program offerings relevant to community needs and aspirations and
the effective scheduling and marketing of those programs
Asset and risk management systems and processes, and
Performance measurement and monitoring processes
Business Operational Forecasts
Based on the adopted concept and the outline Business Plan, income and
expenditure estimates for the proposed upgraded facility - over the first three-
year period of operation – have been prepared.
The performance parameters for the estimates were derived from the current use
of facilities, the current and projected demographics of the catchment (in
particular, size, projected growth and distribution), the CERM PI Project national
benchmarks, program and service needs identified through previous
consultations and detailed discussions with the contract managers of other,
similar facilities within the sub-region.
In accordance with risk management principles, sensitivity (ie 'what if') analyses
including base case, worst-case and best case scenarios – have been
undertaken.
The key findings are as follows.
Baseline Scenario
The projected revenue and expenditure for the ‗baseline‘ scenario for the first
three years of operation is as follows:
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Proposed Concept – ‘Baseline' Forecasts
Year 1 Year 2 Year 3
INCOME 3,987,505 4,186,880 4,396,224
EXPENDITURE 3,994,590 4,138,395 4,287,377
NET RESULT -7,085 48,485 108,847
With the baseline scenario, it is anticipated that the proposal will require an
operational subsidy of around $7,000 in year one, and will produce an operational
surplus of around $109,000 by year 3. It should stabilise there with further
improvements in line with the forecast increase in the catchment population size.
Best Case Scenario
The projected revenue and expenditure for the ‗best case‘ scenario for the first
three years of operation is as follows:
Proposed Concept – ‘Best Case' Forecasts
Year 1 Year 2 Year 3
TOTAL INCOME 4,386,256 4,605,568 4,835,847
TOTAL EXPENDITURE 4,243,429 4,396,193 4,554,456
NET RESULT 142,826 209,376 281,391
With the ‗best case‘ scenario, it is anticipated that the proposal will generate an
operational surplus of around $143,000 in year one improving to a surplus of
around $281,000 by year 3 (which is a 106% recovery rate which compares with
the most successful centres in Australia),.
Low Case Scenario
The projected revenue and expenditure for the ‗low case‘ scenario for the first
three years of operation is as follows:
Proposed Concept – ‘Low Case' Forecasts
Year 1 Year 2 Year 3
TOTAL INCOME 3,588,755 3,768,192 3,956,602
TOTAL EXPENDITURE 3,773,291 3,909,129 4,049,858
NET RESULT -184,536 -140,937 -93,256
With the ‗low case‘ scenario, it is anticipated that the proposal will require an
operational subsidy of around $185,000 in year one, reducing to around $93,000
by year 3. It should stabilise there but improve gradually in line with the forecast
population growth.
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Market Appraisal
The Capital Expenditure Guidelines require a market appraisal – comprising
either a cost/benefit analysis (where major benefits can be quantified) or a cost-
effectiveness analysis (where outputs can not be readily measured in monetary
terms).
As the forecast benefits for the current proposal are largely non-quantifiable, a
cost-effectiveness appraisal has been undertaken.
Social benefits
The proposed centre will generate substantial community and personal benefits –
including more diverse recreation opportunities, enhanced access and equity,
improved health, improved water safety, social connectedness and positive
economic impacts – as summarised below:
Increased Recreation Participation
Provision of year-round facilities and programs (e.g. leisure pool,
leisure centre-based health club, warm water therapy, spa) not
currently available in the City
Provision of opportunity for residents whose needs are not met by the
existing facility – including warm water facilities for a rapidly ageing
population
Access and equity
Provision of year-round aquatic facilities already enjoyed by most of the
other LGA‘s in the region
Health, Active Lifestyles
The upgraded centre – in providing greatly enhanced opportunities for
exercise and enjoyable physical activity – will play an important role in
combating significant current health problems (including the ‗obesity
epidemic‘ and chidhood diabetes).
In this way, the centre will contribute significantly to community–based
health promotion - thereby enhancing the vitality and productivity of
Rockdale‘s population and reducing potential costs associated with
primary and acute care in the public health care system
Water Safety
The upgraded facility will provide specially designated (leisure water)
areas for children and this, together with appropriate supervision by
qualified lifeguards, will enhance water awareness and confidence.
Water safety is a particular issue in communities, such as Rockdale
City, with high CALD populations2. Accordingly, any improvements in
water safety education in Rockdale City will reap greater than average
benefits in terms of potential lives saved.
Social Capital
The proposed facility - through providing a high quality place to
exercise, relax, unwind, meet and socialize - will generate social
cohesion and community-building opportunities
Economic Development
The upgraded facility will generate jobs – both short term in the
construction phase and on-going for the expanded operations
It will likely increase the value of adjacent private properties which
benefits not just the owners, but also the community because the
added value is capitalized in land values for the purpose of rating
2 Australian Water Safety Council, 2008, Australian Water Safety Strategy 2008 – 2011 - Reducing drowning
deaths by 50% by 2020
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Economic Impact Costs
The proposed facility is likely to attract visits away from existing facilities
(commercial pools and fitness centres). This will result in a possible loss of
income for owners of these existing facilities , which could lead to their closure
and associated impacts on current users of those facilities who may not wish or
be able to switch to the upgraded Bexley facility.
These impacts however are difficult to assess and quantify. It is likely however
that any closures of wet or dry centres in the LGA or surrounding areas will be
offset by the spaces provided in the upgraded Bexley facility.
As well, such closures will generate a net community benefit where the shut-
down facilities are replaced by a facility which better meets consumer needs.
Nevertheless the potential costs or dis-benefits that may be experienced by some
small businesses is a legitimate issue for Council to consider – particularly with
respect to competitive neutrality requirements.
Annual Service (Life Cycle) Costs
While the proposed facility is forecast (on base and best case scenarios, as
identified in Chapter Eleven) to generate an operational surplus, it will require an
operational subsidy once full life cycle costing is taken into account.
Life cycle costs include the operational costs and revenues (as identified in
Chapter Eleven) as well as all asset renewal and asset depreciation costs.
The Annual Service Cost (ASC) is a method for identifying full life cycle costs and
expressing them as an average annual cost. The ASC for the proposed upgraded
Bexley facility – for the base, best and low cases - is detailed below:
Item Capital cost ($)
Annual Service cost ($)
Base case Best case Low case
Funding source
Asset renewal 5,000,000
S94 13,200,000
Restricted reserves 763,000
Asset sales 4,687,000
Grants 3,000,000
Budget Impact: cash
Net operational result -108,847 -281,391 93,256
Asset renewal 266,400 266,400 266,400
Net cash flow impact 157,553 -14,991 359,656
Budget Impact: non cash
Depreciation 533,000 533,000 533,000
TOTAL 26,650,000 690,553 518,009 892,656
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The forecast ASC ranges from a low of $518,000, for the best case scenario, to a
potential high of $890,000, for the low case scenario. For the base-case scenario,
the forecast cost is $690,000 per annum.
The Annual Service Costs – for the existing Bexley Pool and the three proposed
pool scenarios - represent the annual Community Service Obligation (CSO)
values for the respective facilities and scenarios.
Based on these CSO‘s, the varying cost-effectiveness outcomes for the different
scenarios –– in terms of CSO‘s per visit and proportion of costs paid by Council -
are as follows:
Indicator Existing Pool Proposed Upgrade
Base case Best case Low case
Annual Service Cost $470,000 $690,000 $518,000 $893,000
No. of annual visits 130,000 541,000 590,000 489,000
CSO per visit $3.62 $1.28 $0.88 $1.83
Average fees paid by visitors (including secondary spend)
$5.00 $8.12 $8.20 $8.10
Total cost per visit $8.62 $9.40 $9.08 $9.93
Proportion of costs paid by users
58% 86% 90% 82%
Proportion of costs paid by Council
42% 14% 10% 18%
The CSO‘s per visit range from $0.88 for the proposed pool, best case scenario,
to $3.62 for the existing pool.
The comparative contributions of Council and users to total pool costs, at both
the existing and proposed centres, are also illustrated in the table. At the existing
Bexley Pool, Council pays around 42% of total costs per visit (in the form of
operational subsidies). For the proposed pool (base case), this is forecast to drop
by around $2.30 to 14% per visit.
The NPV under the base case scenario for the proposed upgraded centre, at an
internal rate of return of 5.00% is a negative $14.05 million which is a proxy
measure of the full life cycle CSO value of the project.
Conclusions
The social benefits of the proposed upgrading to the Rockdale community are
substantial. They include greater diversity of opportunities, increased participation
in aquatic and fitness recreation, improved health and wellbeing, enhanced
access and equity, improved water safety through more people learning to swim,
more opportunities for family outings and positive economic impacts.
While these benefits are substantial, many are difficult or impossible to quantify in
dollar terms. However, just the community health benefits have the potential to
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offset up to half of those costs (in the form of reduced demand for health and
medical services).3 The other benefits, generated via millions of visits over the life
of the facility, are likely to offset the other costs many times over.
3 That is, if the upgraded centre is successful in encouraging 5-10% of the population to achieve the
Commonwealth Government recommended weekly physical activity levels
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CHAPTER ONE: INTRODUCTION
1 . 1 P U R P O S E O F S T U D Y
The purpose of this study is to assess the feasibility of the concept for the Bexley
Pool Redevelopment adopted by Rockdale City Council at its meeting of 6 July
2011. The study is to comply with the assessment requirements established in
the NSW Government‘s Capital Expenditure Guidelines4
1 . 2 E X I S T I N G S E R V I C E L E V E L S
Rockdale City Council currently delivers aquatic recreation services to its 99,000
population through its Bexley outdoor swimming centre (comprising a 50 metre
lap pool, a teaching pool and a wading pool).
The centre is an important venue for school activities – including annual swim
carnivals, intensive learn-to-swim, lifesaving and weekly sports programs. This
use accounts for around 30% of the 130,000 annual visits to Bexley Pool.
Other key programs include children‘s learn-to-swim (LTS) and squad training.
There are currently no adult programs (LTS, squad or aquarobics) at the Pool.
Lap swimming (for fitness) and family visits (for cooling off) in the warmer months
appear to be the other main uses of the Pool.
Usage is below average on a national benchmark basis. Thus, based on the
national facility use benchmarks produced by the Centre for Environmental and
Recreation Management (CERM) at the University of South Australia, average
participation within the catchment would generate around 170,000 visits to the
Pool – around 30% more than the 131,000 visits actually achieved in 2008/2009.
1 . 3 C O M M U N I T Y N E E D S
In late 2008, Council resolved to investigate options for upgrading the Bexley
Pool to a facility of ‗national standing‘. To assist it in this process, Council
established a Pool Reference Group (comprising representatives of Rockdale
Swim Club, public schools and high schools, a community representative, the
Pool Operator and Council staff) to review the options.
In early 2010, Tompkins MDA were commissioned to review the options
developed by the Reference Group and other appropriate concepts.
4 NSW Division of Local Government, Department of Premier and Cabinet, December 2010, Capital Expenditure
Guidelines
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The review, completed in September 2010, concluded that there was a
demonstrated demand and need for year-round indoor aquatic facilities in the
City based on:
Specific aquatic, leisure and fitness participation needs identified in the
course of this study, combined with the lack of indoor year-round water
space in the City,
The poor physical condition and limited capacity of the existing facility,
The demonstrated need for year-round facilities for schools, swim
clubs, fitness swimmers and other sports people,
The demonstrated need for ‗leisure‘ water for the City‘s large and
growing population,
The demonstrated need for year-round warm water for the City‘s
growing aged population,
The need for diverse physical activity opportunities to build a more
active and healthier population,
The capacity of the Bexley Pool site to accommodate the additional
required facilities, and
The need to provide a ‗package‘ of facilities which best meets Council‘s
long term operational and financial viability objectives for the Pool.
The strength of the need was confirmed in the consultations undertaken for this
study, the relatively long travel distances to existing facilities in neighbouring local
government areas (for many but not all of the City‘s residents) and the full
capacity use of the existing pool at peak times.
Additionally, according to planning benchmarks, the catchment population
(growing towards 100,000 people) is sufficient to financially support a modest-
scale indoor heated pool and associated facilities.
The need is also confirmed by the use of similar facilities (Annette Kellerman Aquatic Centre, Hurstville Leisure Centre) in surrounding council areas. The high use of these facilities confirmed substantial ‗pent-up‘ demand in the community before they were established.
1 . 4 D E V E L O P M E N T R A T I O N A L E A N D C O N C E P T
Based on the identified needs, the following development rationale was
proposed:
The upgraded Bexley Pool will play a central role in meeting a wide diversity of
leisure, sport, fitness, health and social needs throughout Rockdale City.
In doing so, the Pool will seek to meet a range of needs which are not adequately
provided for in the City. These needs include year-round fitness, school and club
swimming, leisure swimming and warm water therapy.
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Based on this development rationale, Council‘s consultants recommended the
following facility mix:
Refurbished/rebuilt outdoor 50m pool
25m x 6 lane indoor heated pool
Combined indoor teaching/program/therapy/leisure pool with water
play features, beach entry etc (minimum 350m2)
New sauna/spa (associated with indoor pool)
Multi-space gym (i.e. with weights/cardio space and group
fitness/functions space – minimum total 600m2) and subject to
compliance with Council‘s competition policy
Multi-purpose space for child-minding/birthday parties (120m2)
Café/dry lounge
Amenities and support facilities (change, toilets, storage, first aid, wet
lounge etc)
The preliminary cost estimate for the proposal was $19.34 million.
1 . 5 P R E L I M I N A R Y B U S I N E S S C A S E
The preliminary business case for the proposed facility was completed in
conjunction with the first stage of the feasibility study5.
The bottom line was positive – with the base case forecasts anticipating visits of
around 450,000 and an operational subsidy of around $250,000 in year one
(reducing to $160,000 deficit in Year 2 and around $60,000 by year 3).
The forecast first year operating result entailed a subsidy of around 55c per
centre visit (compared to the current $1.25 per visit) with a forecast reduction to
13c/visit by the third year of operation.
5 The business case was based on a concept that was only slightly different from the one now proposed.
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CHAPTER TWO: THE PROJECT PROPOSAL
2 . 1 T H E P R O P O S E D C O N C E P T
Council has discussed the Consultant‘s inititial concept (as detailed in the
previous chapter) with several aquatic facility contract management groups
(including the YMCA, Bluefit and Belgravia Leisure) and resolved to develop the
following, slightly modified, facility mix:
Refurbished/rebuilt outdoor 50m pool
Indoor 25m x 8 lane indoor pool
Program 20 x 12m x 5 lane pool
Leisure pool of 165 m2 (with built in spa)
700m2 multi-space gym (with weights/cardio space and group
fitness/functions) of
Multi-purpose space for child-minding/birthday parties (100 m2)
Kiosk (50m2)
Amenities and support facilities (change, toilets, storage, first aid, wet
lounge etc)
This report presents the feasibility report for this modified proposal.
2 . 2 P R O J E C T A L T E R N A T I V E S
Council has considered several concept options for the redevelopment of the
Bexley Pool over the past three years – including the consequences of not
proceeding with the project. It has aso addressed a range of service delivery
options (including direct and outsourced management).
Project options have been developed in conjunction with a community-based
Reference Group and experienced aquatic industry consultants. The options have
been scrutinised by and discussed in detail with three independent leisure industry
contract management companies. These companies have, collectively, made
several significant suggestions based on their extensive hands-on experience in
aquatic centre management.
There has also been considerable consultation with the community - including with
schools, swimming clubs and wellness providers – and with surrounding councils
with experience in indoor aquatic centre management.
The proposed concept is the outcome of all these inputs over a three-year period.
2 . 3 C O N S I S T E N C Y W I T H C O M M U N I T Y S T R A T E G I C P L A N
The proposed concept is fully consistent with the Council‘s long term visions and
desired outcomes – as documented in its Community Strategic Plan 2010-19, as
summarised in Table 1.
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Table 1: Consistency with Council’s Corporate Objectives
Desired Outcome Strategy Consistency of Proposal
A community that has an
enjoyable, active, healthy and
safe environment for all ages and
abilities (1.2)
Ensure the development of
planned services and
programs to progressively
improve the social, health and
education indicators of the
City‘s people.
Enhanced opportunities for adopting active, healthy lifestyles
Ensure equitable access to
Council services and facilities
to support a better quality of
life for the community
Diverse programming, disability access and subsidised fee structures will ensure access and equity
Rockdale is a place with a range
of entertainment events and a
built environment that contributes
to community well being (1.5)
Ensure appropriate provision,
access, use and management
of all open space and
recreation facilities
The provisiion of year-round aquatic facilities will add to the apropriate ‗range‘ of recreation activity opportunities in Rockdale
The provision of parks, reserves
and recreation areas which reflect
the qualities of the City‘s natural
environment and provide
enhanced biodiversity (2.5)
Ensure that Council‘s open
space and recreational areas
meets existing and future
community needs.
Provisiion of year-round aquatic facilities will meet existing demonstrated needs and also cater to the future growth in population
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CHAPTER THREE: CRITICAL SUCCESS FACTORS
This project will be successful because there is a demonstrated strong need and
demand for the services it will provide. Additionally, the project will attend to the
following key elements of successful aquatic/leisure centre management:
Clear statement of business and service objectives
A management structure consistent with achievement of the objectives
Appropriately skilled management and operational staff with the ability
to grow and adapt services as expectations and needs change
Program offerings relevant to community needs and aspirations and
the effective scheduling and marketing of those programs
Asset and risk management systems and processes, and
Performance measurement and monitoring processes
Council‘s approach to addressing these key elements of the project is identified in
the following sections.
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CHAPTER FOUR: BUSINESS OBJECTIVES
4 . 1 M I S S I O N A N D G O A L S
The mission of the proposed Bexley Aquatic Leisure Centre will pursue and
accord with the overall vision and objectives of Rockdale City Council.
That is, the Centre will be developed and managed consisten with Council‘s
overall vision of providing ―quality local government services that protect our
environment, are respectful to our community‘s needs and are delivered in a
financially, socially and environmentally responsible way‖.
4 . 2 S E R V I C E O B J E C T I V E S
The specific goals and objectives for the centre flow from Council‘s overall
mission and goals. They cover all aspects of the proposed centre‘s roles and
functions and, where possible, are measurable.
Proposed model objectives - which can be refined and added to following full
commitment to the project and finalisation of business planning - are detailed in
Table 2
Table 2: Model Centre Management Objectives
BROAD OBJECTIVE SPECIFIC OBJECTIVES
Purpose To provide year-round aquatic leisure facilities and
programs consistent with the community‘s curent and
forecast needs and preferences
Positive image/ identity To establish and maintain a good public image for the
proposed centre
Sound governance To manage the centre as efficiently and effectively as
possible
Financial sustainability To operate within pre-determined operating budgets
and to maximize operating income.
To commit to an annual facility, plant and equipment
maintenance spend
Needs Based Programming To provide a balanced and broad-based program of
opportunities that meet the leisure and sporting needs
of the whole community
To contribute to the health, fitness and general well-
being of the community
To build partnerships with other community providers to
facilitate a greater range of services.
To provide events that deliver social connectivity
inclusive to all community users.
Effective Marketing To promote the centre to its maximum potential within
the budget available
To maximise use of the facility to its fullest potential
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BROAD OBJECTIVE SPECIFIC OBJECTIVES
Access and Equity To provide access to programs and services for the
total community regardless of age, gender, cultural
background, level of income or disability
Sound people management To ensure that staff are adequately informed, motivated
and trained to meet the requirements of the centre and
able to fulfil the duties expected of them
Effective asset management To provide and maintain a safe, accessible, well
presented, clean and hygienic building, plant and
equipment.
To commit to the maintenance of the building, plant
and equipment.
To develop and implement environmentally sustainable
energy and water consumption practices and
technologies
4 . 3 S E R V I C E P R I N C I P L E S / P H I L O S O P H Y
The proposed operating principles complement the mission and objectives. They
provide the service philosophy and values behind management action –
particularly in regard to duties and obligations to the centre owner (ie Council) and
the centre users.
Proposed model operating principles - which can be refined and added to following
full commitment to the project and finalisation of business planning - are listed in
Table 3.
Table 3: Model Centre Operating Principles
Principle Service Philosophy/Approach
Governance
Engagement with Council
Management will consult with relevant council officers - to ensure that the centre's programs are responsive to community needs and complementary to other council programs and services in the centre
Engagement with customers
Management will develop ongoing customer and community consultation processes - to ensure that programs remain responsive to customer and community need and keep up with leisure and recreation trends
Economic sustainability Outsourcing
Centre management will directly operate the majority of programs and services except where improved economies can be realised via outsourcing (e.g. catering/merchandising)
Cost recovery
The proposed facility‘s cost recovery and pricing philosophy will be based on the identification of personal and community benefits and will be fair, equitable, affordable and transparent
Environmental sustainability Climate change
The facility will be designed and managed to incorporate best practice energy and water saving technologies and be fully consistent with Council‘s climate change adaptation strategy
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Principle Service Philosophy/Approach
Social capital Inclusiveness
The programs and spaces will reflect and respond to the needs of all age groups and those with special needs (parents with children, older people, people with disabilities, CALD).
The integration of people with physical and intellectual disabilities will be a priority for all program areas. Where integration is not possible, programs that cater for people with physical and intellectual disabilities will be introduced.
Welcoming and friendly
The centre staff will be well trained in customer service and will proactively seek to meet visitor expectations
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CHAPTER FIVE: BUSINESS STRUCTURE
5 . 1 B U S I N E S S S T R U C T U R E O P T I O N S
The appropriate business or management structure for the proposed facility is
one that assures that it is managed effectively, efficiently and sustainably - in
accordance with industry standards and best practice guidelines – and one that
also optimises use and user satisfaction, while requiring minimum subsidisation.
To ensure these outcomes, Council will seek to retain direct overall control of the
proposed facility either through in-house direct management or through an
outsourcing model where it retains responsibility for major strategic elements
(such as program fees, cyclical building and plant maintenance and capital
improvements).
5 . 2 C H O O S I N G A S T R U C T U R E
There is no clear consensus on the best management model for indoor aquatic
and recreation centres. Final decisions will, to a large extent, be dictated by the
community service values of Councillors and senior Council officers and by
financial constraints.
On the one hand, there is the view that adequately resourced and appropriately
structured business units within government can do at least as good a job as
outsiders without relinquishing day to day control. Such units are able to retain
control over programming and marketing (and market responsiveness) without
having to forecast needs and write them into management agreements.
On the other hand, there is the view that private sector agencies can maximise
efficiencies and customer service through better management skills, greater
responsiveness to the needs of users, more innovative management approaches,
and the ability to adopt more flexible labour market arrangements.
The relative advantages and disadvantages of the two key models (direct council
management and contract management by a specialist venue management
company or organisation) are detailed summarised below.
Direct Council Management
The main advantage of the direct management model is that, with full day-to-day
control of operations, management flexibility and the capability to respond more
immediately to Council objectives and policy changes are optimised
On the other hand, performance can be hampered by local government
regulations and practices and inappropriate financial, staffing and reporting
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systems. Council managed facilities can also be susceptible to the influence of
dominant user groups and local political pressures.
Contract Management
Over the past 15 years an increasing number of Councils have contracted the
management of aquatic and leisure services to commercial management
organisations (such as LeisureCo, Belgravia Leisure and Bluefit) and non-profit
organisations (such as the YMCA and PCYC)6.
These organisations have introduced a more business-oriented ‗approach – with
a stronger focus on visitor numbers, service delivery, cost efficiency and financial
outcomes (rather than the traditional focus on inputs and budget line items).
The key advantage that management organisations have over individual lessees
is their ability to draw on substantial corporate back-up resources and experience
(developed through the management of multiple centres across the country).
Contract managers also have the advantage of being able to avoid various
encumbrances and constraints inherent in both the Local Government Act (1993)
and the Local Government (State) Award 7.
They can determine and implement decisions on fees and charges, employment
of staff, centre programs and other important matters in a more immediate, more
streamlined way than a Council can.
The strong business focus of contractors does not necessarily guarantee better
overall outcomes for the community – in terms of enhanced diversity of
opportunity, social sustainability (improved personal and community health and
well-being), economic sustainability (job-creation initiatives) or the
implementation of ESD principles.
In fact, some independent management groups have been found to 'skimp' on
building maintenance and cleanliness, OH&S issues, adequate staffing levels
and skills, programming for less viable market segments, and on the quality of
support services (e.g. cafe food types, re-enrolment skill assessments, life
guarding).
6 This change in approach was largely driven by the emergence of compulsory competitive tendering,
local government downsizing and economic rationalism during the 1990s.
7 However, the latter advantage is declining, and will continue to do so as the Award
becomes more flexible.
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Additionally, some management groups have failed in recent years and gone into
administration and closure. This has been substantially disruptive for the Councils
and pool users affected by these failures.
In the face of these issues, some Councils are returning to in-house management
models.
5 . 3 P R O P O S E D B U S I N E S S S T R U C T U R E & M A N A G E M E N T M O D E L
The business structure will be designed to deliver a diverse and community-
responsive mix of services that ensure optimum access and equity for all residents
and maximum benefits to the community (in social, economic and environmental
terms).
Specifically, the structure will have the ability to:
• Provide programs and services that meet the needs of all members of the
community
• Promote high levels of use and high levels of user satisfaction
• Be flexible, pro-active and responsive in the provision of programs and
services so as to meet changing needs
• Establish and implement high quality asset maintenance and management
processes
• Devise programs which optimise family time together and social capital
building
• Minimise operational costs and to cover operational and day-to-day
maintenance and potentially longer term capital replacement costs
(consistent with promoting the above-mentioned 'social outcomes'), and
• Secure community acceptance of the proposed manager/management team
The key requirement is a market-oriented, responsive and efficient management
regime, which retains a high ability to meet access and equity and community
service obligations.
This requires a high degree of Council management involvement and 'control' –
at policy, strategic and operational levels.
Accordingly, the business structure will likely be one of the following options:
Direct Council management options:
Management and operation by Council employees
Management by a Council committee (Local Government Act) with
Council employees
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Management by Council or a Council committee (Local Government
Act) with operational management contracted to a specialist venue
management company or organisation agency
Indirect (arms length) Council management options:
Management by an incorporated association (comprising Council, user
groups and community representatives)
Management by a company limited by guarantee (comprising Council,
user group and community representatives)
Management by an incorporated association or a company limited by
guarantee with operational management contracted to a specialist
venue management company or organisation agency
If a direct Council management option is chosen, steps will be taken to ensure
that operations are not hampered by 'inappropriate' financial, staffing and
reporting mechanisms and that program planning is not influenced by dominant
user groups and/or local political pressures.
Similarly, if an indirect option is chosen, processes will be adoted to ensure that
sufficient control (over policy, strategy and operations) is retained via facility
management and business plans, contract specifications and/or sufficient
representation on the management board.
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CHAPTER SIX: STAFFING/PERSONNEL
6 . 1 K E Y M A N A G E M E N T R E S P O N S I B I L I T I E S
The key staffing functions at the proposed Centre will include overall
management, financial management, administration, reception, program delivery,
marketing, asset management and maintenance, cleaning, child care, catering,
safety/risk management and customer service – as summarised in Table 4.
Table 4: Key Staff Functions
Staff Function Requirements
Overall centre management
Implementing Council‘s operational and performance objectives under an agreed set of service standards
Developing and monitoring facility management and operational plans
Overseeing staff recruitment and training
Overall responsibility for centre operations
Customer service Reception, program registration, membership sales, selling merchandise, telephone reception, distribution of promotional material
Program delivery & marketing
Organising and scheduling aquatic and group fitness programs, personal training, child minding, lane hire and special events
Coordinating event planning and liaising with promoters in respect of commercial activities including carnivals, special events and larger community events
Liaising with patrons, user groups, swimming clubs, schools and other groups to co-ordinate regular bookings
Implementing marketing strategies to maximise facility visits, memberships and other revenues
Market research to identify market opportunities, target markets, new programs and services, opening hours, pricing policies
Catering Organising and co-ordinating catering, merchandising and equipment hire operations
Asset management Asset management processes including asset inventories, maintenance schedules, energy consumption, risk management, and quality assurance systems
Assisting with the preparation, revision and implementation of the facility‘s Strategic Asset Maintenance Plan
Safety/risk management Preparing and implementing the centre Risk Management Plan
Ensuring appropriate risk management training
Financial Management Budgeting and financial projections
Bookkeeping, payroll, tax
Financial reporting
Performance monitoring & evaluation
Identify functions to be measured (visits x number x type; revenues; customer satisfaction)
Manage performance indicators (e.g. benchmarking by Centre for Environmental and Recreation Management)
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6 . 2 C E N T R E M A N A G E R
It is critical that the people selected to manage the facility – whether employees,
lessees or contractors – have adequate training and experience and appropriate
attitudes and approaches.
The venue manager would need a higher level mix of management and
marketing skills, combined with the professional knowledge of aquatic, sport,
leisure and recreation services, and a capacity to understand and influence the
development of the Region‟s future „Health, Lifestyle and Sport‟ based policies
and procedures. A business and market oriented approach to the management
and operation of the aquatic centre is essential for this option if usage and
viability are to be maximised by seeking commercial outcomes and events. A
strong emphasis on customer service should drive recruitment because
contemporary venues are designed and operated as high profile facilities for
residents, tourists and community organisations.
Again, irrespective of which management option is chosen, a facility manager
who possesses the above attributes should be appointed at least six months prior
to the centre opening. The manager will be responsible, in this period, for:
centre fit-out and establishment
preparation of annual budget
preparation of a business plan to include a program and marketing
plan
recruitment and selection of key staff
public relations and community consultation on project development,
and
preparation of the facility management plan.
6 . 3 S T A F F I N G P L A N / S T R U C T U R E
A contemporary leisure venue with swimming pools, fitness/wellness facilities,
merchandising and creche and operating 12 months of the year will require a
combination of casual, permanent part time, full time and contracted staff.
An indicative staff complement could include:
Centre Manager
Aquatics Co-ordinator
Health Club Co-ordinator
Membership Consultants
Duty Officers
Administration Co-ordinator
Receptionists
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Cafe/kiosk Manager and casual staff
Health Club program staff;
Head Swimming Coach
Assistant coaches / swimming instructors
Lifeguards
Creche Co-ordinator and casual staff
Cleaners and Maintenance staff
The hours of operation will vary from centre to centre but a facility with indoor
fitness and program pools, health and fitness centres, cafe with significant food
and beverage service can be open to the public for 15+ hours a day or around
100 hours per week.
Assuming a minimum core staff of around four at any one time (duty manager,
health and fitness instructor, centre receptionist, lifeguard) this can equate to
more than 10 effective full time (EFT) staff per week plus program staff (learn to
swim, group fitness and school programs) and multiple lifeguards/recepotionists
during busy peak use periods.
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CHAPTER SEVEN: PROGRAMS & SERVICES
7 . 1 P R O G R A M S A N D S E R V I C E S
Council will confirm the activities and programs to be provided in the upgraded
centre – in conjunction with development of the centre Business Plan - once full
commitment to the upgrading is finalised.
Programming will reflect demonstrated community needs and demands as well
as best practice programming in existing successful centres with similar similar
populations to that in Rockdale City.
Accordingly, core programs are likely to include health club memberships, learn
to swim program, squads, school programs, casual lap swimming, leisure
swimming, spa, personal training, birthday parties and cafe/merchandise.
The programs8 itemised in Table 5 are indicative of the types and range of
programs that could be developed at the upgraded Bexley facility:
Table 5: Possible programs and services at the upgraded centre
Program Details
Health and Fitness Club
Cardiovascular and resistance weights
machines used as part of a fitness
program (provided by a qualified Gym
Instructor or Personal Trainer)
Group Fitness Classes - General Pump, Pilates, Cardio Box, Zumba, X-
circuit,Yoga, Boot Camp, Aero Combat etc
Group Fitness Classes - Targeted Living Longer Living Stronger
Pregnancy Be Active
Sports Teams Boot Camps
Kids Get Active
Tai Chi
Gentle Exercise for seniors
Swimming programs Learn to Swim
Swim Squad
Aqua Play Group (babies and toddlers)
Aqua Aerobics
Junior Lifeguard
Birthday Parties
Schools Programs
School Swim and Survive
School ‗Activate‘ Program
Junior Fun Days
School Carnivals
School Holiday Madness
8 Program provided by Belgravia Leisure at Melton Waves Leisure Centre and documented in Melton Waves
Leisure Centre Service Delivery Plan 2010-11
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Program Details
Water Education Outreach
Joint Programs (with other community
providers – schools, universities, State Health
Department, Council departments etc)
Osteocise (osteoporosis program)
Your Choice (teenagers obesity)
Men on the Move (strength program for Men‘s
Shed members)
Biomechanics Studies (for high school phys ed
students)
7 . 2 O P E N I N G H O U R S
Specific operating hours will be confirmed in conjunction with the Business Plan
for the upgraded facility but, based on typical operating hours for aquatic leisure
centres, are likely to be similar to the following:
Monday- Friday 6 am to 9 pm Saturday 8 am to 6 pm Sunday 8 am to 6 pm Public Holidays 8 am to 6 pm Closed Christmas Day and Good Friday
Some components of the centre – such as the Health Club - may be open for
shorter hours, depending upon the amount and spread of demand.
7 . 3 C H I L D C A R E
Child care is typically a loss leader for aquatic leisure centres. However, it is
proposed for the upgraded centre due to its importance for access and equity
reasons. It is noted also that losses can be minimised by offering the service
during peak use times only.
7 . 4 E N T R Y A N D P R O G R A M F E E S
Entry, program and membership fees provide the main revenue sources for
aquatic leisure centres. Some income is also generated from secondary spending
(cafe and merchandise) and sometimes from donations and small program
grants.
The fees are normally established through reference to the ‗going rate‘ – or the
fees being charged at other comparative facilities within the region or other areas.
There is good sense in this because it minimises the possibility of unfair
competition between public aquatic leisure centres within reasonable travel
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distance of each other. It also helps to ensure that prices reflect the cost of
providing the service, in keeping with the principles of competitive neutrality.
It is also proposed, in conjuction with the Business Plan, to develop a Pricing and
Cost Recovery Policy – to identify the appropriateness of different levels of
recovery (e.g. higher levels for non residents, lower levels for people with
particular hardships etc).
The business case analysis documented in Chapter 10 of this report uses an
entry and program fee schedule that is both current and typical for the type of
centre being proposed for Bexley.
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CHAPTER EIGHT: CENTRE MARKETING
8 . 1 M A R K E T P O S I T I O N I N G
The Stage 1 feasibility study concluded that the Bexley Pool (in its current and
proposed form) has an ‗effective‘ catchment population of 96,000, taking into
consideration the estimated competition from surrounding pools.
It was emphasised, also, that in the early life of the project (i.e. in the five years to
2016), the population was forecast to grow by at least 10,000 people – taking the
effective catchment population to around 110,000.
The Stage 1 study also concluded that many aquatic/fitness facilities in the
surrounding sub-region were not seen to be competitive threats to the proposed
Bexley facility because they were either too distant (Fanny Durack Pool and
Canterbury Aquatic Centre) or too limited in their program offerings (Roselands
Aquatic Centre, Col Jones Swim Fitness and Carss Park Pool).9
However, some facilities in the region (such as the Hurstville Aquatic Centre,
Sans Souci Leisure Centre and the Annette Kellerman Leisure Centre) were seen
to have a competitive advantage over the Bexley pool (in its current form) due to
their wider range of leisure offerings and particularly when the weather is poor.
With the new facility, it is proposed to optimise its competitive position – to ensure
its success – through not only providing the facilities that are needed, but also
through a range of strategies (including strategic marketing, inclusive
programming, and excellent customer service) intended to capture the majority of
the 110,000-strong potential market.
8 . 2 M A R K E T I N G S T R A T E G Y
The Business Plan for the proposed upgraded facility will include a marketing
strategy to optimise centre visits. It will address the potential barriers to
participation (cost, ease of access, information and unwelcoming atmosphere). It
will seek to remove or minimise these barriers by:
Preparing and implementing an annual marketing strategy (covering all
potential target markets x marketing activity type x each month of the
year)
Ensuring entry and program fee affordability
Providing ‗come and try‘ introductory programs
9 Exceptions to this would include club swimmers ‗following‘ a particular coach (based at one
of the other centres) or where a family (or individuals) visit the centre in conjunction with a
shopping or business trip (or some other purpose)
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Providing an easy to follow and inspiring on-line portal
Working with other organisations to mutually promote services and
programs
Developing information flyers in multilingual languages and distributing
widely
Promoting the upgraded Centre via Council and relevant community-
based publications
Developing and implementing a member retention program
(comprising welcome and ‗we miss you‘ letters, birthday cards and
motivational health tips)
Providing programs and services of relevance to all population groups
(as summarised in Section 8.3)
Providing excellent customer service (as detailed in Section 8.4) .
8 . 3 I N C L U S I V E P R O G R A M I N G
The upgraded facility will contribute to Council‘s social sustainability and social
capital goals by providing services not just to mainstream markets, but also to
population groups with particular needs – as summarised in Table 6.
Table 6: Inclusive Programming Objectives
Target population Programming
Older Adults
Healthy ageing programs
Distribution of health information for older
people
Disability Services
Staff training on disability awareness and
specific training on the use of equipment
used by patrons with special needs.
Develop new programs or improve existing
programs swimming lessons to cater to the
needs of people with disabilities
CALD populations
Develop new programs or improve existing
programs to cater to the needs of people
who are culturally and linguistically diverse:
Implement systems for the identification of
CALD visitors that may require additional
assistance from life guards and duty
managers to ensure they can swim and are
actively supervising their children.
Develop staff awareness on service
delivery and provide specialist instructors
and/or interpreters for programmes that are
being offered to the CALD community.
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Target population Programming
Young People
Provide recreation opportunities for young
people (e.g Junior Lifeguard Program, Teen
Gym, Kids Get Active)
Build partnership programs with other
community providers.
Continue to provide free water safety
education seminars at local play groups,
kinders and schools. 20 site visits were
made in the past 18 months
All
Organisation of special events to build
social connectivity (e.g. fun runs, free
after-noon teas for older adults, annual
free Open Day and annual Health and
Wellness Expo
8 . 4 C U S T O M E R S E R V I C E
Excellent customer service will be a key component of the upgraded Centre‘s
marketing strategy.
Visitor expectations will be met (and exceeded) by staff who pay detailed
attention to visitor needs, get to know visitor‘s names, offer unprompted
assistance and generally create a responsive, welcoming environment.
Supportive customer service systems will include:
Customer service training programs (with modules geared to assisting
the delivery of superior customer service, understanding visitor needs,
visitor satisfaction etc)
Customer feedback forms (and rapid management response to all
submitted feedback)
Annual centre exit surveys
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CHAPTER NINE: RISK & ASSET MANAGEMENT
9 . 1 O P E R A T I O N A L P R O C E D U R E S
In conjunction with the Business Plan preparation for the upgraded centre,
Council will develop quality and risk management procedures policies and
manuals – including at least the following:
Occupational Health and Safety Policy
Public Health and Safety Plan
Emergency procedures
Administration Procedures
Child Care Procedures
Merchandise Procedures
Operations Procedures
The procedures will help to ensure that the following (and other) critical asset
management issues are attended to in a timely and comprehensive manner:
Monitoring of environmental conditions: water quality, heating and
ventilation, lighting levels
Compliance with public health and safety regulations
Continuity of insurance currency
Maintenance of an incident log and a complaints register
External risk auditing
Maintenance of an asset register
Maintenance of the Centre is in a clean, safe and hygienic condition
Keeping the Centre secure at all times outside of opening hours
Undertaking major building and plant maintenance and servicing
functions
9 . 2 A S S E T M A I N T E N A N C E
Major scheduled maintenance will be required to minimise the life cycle cost of
the upgraded centre.
To ensure optimal customer service, it will be necessary to schedule the
maintenance at times with the lowest impact on facility use (with consideration to
the season and numbers of users). Where closure is necessary, only
components of the facility should be closed (if possible) to minimise impacts on
visits and programs.
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CHAPTER TEN: PERFORMANCE MEASUREMENT
1 0 . 1 M O N I T O R I N G P E R F O R M A N C E
A performance monitoring and evaluation process will be established in
conjunction with preparation of the centre Business Plan.
Detailed monitoring is a core requirement for securing optimal operational and
financial performance and will likely include the following components:
The establishment of quantifiable performance measures and
indicators (e.g. on visits x adult/child, programs used, capacity space
utilisation, peak and non-peak variations in use, membership retention
rates, place of residence of visitors, gender/age of visitors etc)
The deployment of centre management hardware and software that
facilitates the accurate and economic capture of visitor statistics
Staff performance evaluations
Benchmarking against the performance of other similar facilities
Visitor surveys (e.g. on where visitors obtain information about the
centre, satisfaction levels, unmet needs, program ideas)
Visitor feedback forms or cards (for complaints and/or program ideas)
1 0 . 2 E X T E R N A L B E N C H M A R K I N G
External benchmarking entails the study of other providers‘ (including
competitors‘) services and programs in order to identify opportunities to improve
performance.
In Australia, the Centre for Tourism and Leisure Centre Management co-
ordinates a national benchmarking project (the CERM PI Project) which provides
an excellent vehicle for the administrative benchmarking of aquatic and indoor
sports facilities.
The CERM project currently benchmarks more than 150 facilities across Australia
and tailors the analysis for specific types of facility (including ‗indoor wet and dry
centres with outdoor pools‘ such as that proposed for Bexley). The project
provides two key indicators (‗expense recovery‘ and ‗visits per year‘) and 24 other
indicators (covering services, marketing, organisation, facilities and finance).
Council proposes to subscribe to the CERM PI Project, once the proposed
upgrading is completed, to facilitate effective external benchmarking.
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CHAPTER ELEVEN: FINANCIAL FORECASTS
1 1 . 1 O P E R A T I O N A L C O S T A N D R E V E N U E P R O J E C T I O N S
Income and expenditure estimates for the proposed upgraded facility - over the
first three-year period of operation – have been prepared. These include both
‗direct‘ and ‗indirect‘ costs as required by the Capital Expenditure Guidelines but
do not include asset renewal/whole of life costs (which are covered in the full
market appraisal in chapter twelve)
The performance parameters for the estimates have been derived from the
current use of facilities, the current and projected demographics of the catchment
(in particular, size, projected growth and distribution), the CERM PI Project
national benchmarks, program and service needs identified through previous
consultations and detailed discussions with the contract managers of other,
similar facilities within the sub-region.
In accordance with risk management principles, we have also undertaken
sensitivity (ie 'what if') analyses through the application of a range of alternate
cost, fees and participation values and other measures. These include base case
worst-case and best case scenarios.
The detailed analysis is at Attachments A and B. The key findings are
summarised below.
Baseline Scenario
Table 7 summarises the projected revenue and expenditure for the ‗baseline‘
scenario for the first three years of operation.
Table 7 – Proposed Concept – ‘Baseline' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,584,000 1,663,200 1,746,360
Aquatics General entry 540,275 567,289 595,653
LTS 1,088,350 1,142,768 1,199,906
Squad 89,000 93,450 98,123
Casual Aqua 14,400 15,120 15,876
Schools 238,000 249,900 262,395
41,000 43,050 45,203
Total aquatics 2,011,025 2,111,576 2,217,155
Other
Casual Health/Fitness 60,480 63,504 66,679
School holiday programs 21,000 22,050 23,153
Ancillary income 311,000 326,550 342,878
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Year 1 Year 2 Year 3
TOTAL INCOME 3,987,505 4,186,880 4,396,224
EXPENDITURE Staff/salaries 2,753,990 2,853,134 2,955,846
Administration/office expenses 200,000 207,200 214,659
Trading (cost of sales) 180,600 187,102 193,837
Facilities 650,000 673,400 697,642
Programs 210,000 217,560 225,392
TOTAL EXPENDITURE 3,994,590 4,138,395 4,287,377
NET RESULT -7,085 48,485 108,847
With the baseline scenario, it is anticipated that the proposal will require an
operational subsidy of around $7,000 in year one, and will produce an operational
surplus of around $109,000 by year 3. It should stabilise there with further
improvements in line with the forecast increase in the catchment population size.
The forecast first year operating result (not including depreciation) entails a
subsidy of around 0.2c per centre visit (compared to the pre-YMCA subsidy of
$1.25 per visit). This is forecast to become a 23c/visit surplus by the third year of
operation.
Best Case Scenario
Table 8 summarises the projected revenue and expenditure for the ‗best case‘
scenario for the first three years of operation.
Table 8 – Proposed Concept – ‘Best Case' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,742,400 1,829,520 1,920,996
Aquatics
General admissions 594,303 624,018 655,219
LTS 1,197,185 1,257,044 1,319,896
Squad 97,900 102,795 107,935
Casual Aqua 15,840 16,632 17,464
Schools 261,800 274,890 288,635
45,100 47,355 49,723
Total aquatics 2,212,128 2,322,734 2,438,871
Other
Casual Health/Fitness 66,528 69,854 73,347
School holiday programs 23,100 24,255 25,468
Ancillary income 342,100 359,205 377,165
TOTAL INCOME 4,386,256 4,605,568 4,835,847
EXPENDITURE Staff/salaries 2,946,769 3,052,853 3,162,756
Administration/office expenses 204,000 211,344 218,952
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Year 1 Year 2 Year 3
Trading (cost of sales) 198,660 205,812 213,221
Facilities 663,000 686,868 711,595
Programs 231,000 239,316 247,931
TOTAL EXPENDITURE 4,243,429 4,396,193 4,554,456
NET RESULT 142,826 209,376 281,391
With the ‗best case‘ scenario, it is anticipated that the proposal will generate an
operational surplus of around $143,000 in year one improving to a surplus of
around $281,000 by year 3 (which is a 106% recovery rate which compares with
the most successful centres in Australia),.
The forecast first year operating result (not including depreciation) entails a
surplus of around 30c per centre visit – and this is forecast to increase to 59c/visit
by year 3.
Low Case Scenario
Table 9 summarises the projected revenue and expenditure for the ‗low case‘
scenario for the first three years of operation.
Table 9 – Proposed Concept – ‘Low Case' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,425,600 1,496,880 1,571,724
Aquatics
General admissions 486,248 510,560 536,088
LTS 979,515 1,028,491 1,079,915
Squad 80,100 84,105 88,310
Casual Aqua 12,960 13,608 14,288
Schools 214,200 224,910 236,156
36,900 38,745 40,682
Total aquatics 1,809,923 1,900,419 1,995,440
Other
Casual Health/Fitness 54,432 57,154 60,011
School holiday programs 18,900 19,845 20,837
Ancillary income 279,900 293,895 308,590
TOTAL INCOME 3,588,755 3,768,192 3,956,602
EXPENDITURE Staff/salaries 2,588,751 2,681,946 2,778,496
Administration/office expenses 196,000 203,056 210,366
Trading (cost of sales) 162,540 168,391 174,454
Facilities 637,000 659,932 683,690
Programs 189,000 195,804 202,853
TOTAL EXPENDITURE 3,773,291 3,909,129 4,049,858
NET RESULT -184,536 -140,937 -93,256
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With the ‗low case‘ scenario, it is anticipated that the proposal will require an
operational subsidy of around $184,000 in year one, reducing to around $93,000
by year 3. It should stabilise there but improve gradually in line with the forecast
population growth.
The forecast first year operating result (not including depreciation) entails a
subsidy of around 39c per centre visit (which is still a significant per capita
improvement on the current operation).
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CHAPTER TWELVE: MARKET APPRAISAL
1 2 . 1 A P P R A I S A L M E T H O D
The Stage 1 feasibility study identified substantial demand and needs for
upgraded swimming and wellness facilities at the Bexley Pool site.
Meeting these needs and demands will generate substantial community and
personal benefits – including more diverse recreation opportunities, improved
health, enhanced access and equity, improved water safety, social
connectedness and positive economic impacts (construction and on-going
operational jobs).
As real as all these benefits are, most cannot be accurately quantified in dollar
terms. Therefore, for this project, a cost-effectiveness appraisal is more
appropriate than a cost-benefit appraisal10.
1 2 . 2 B E N E F I T S
Increased Recreation Participation
The upgraded centre will boost recreation participation by providing a year-round
facility and a range of programs (e.g. leisure pool, leisure centre-based health
club, warm water therapy, spa) not currently available in Rockdale City.
The new and extended facilities are likely to encourage many existing users to
participate more regularly as well as tapping into new demand from residents
whose needs are not met by the existing facility.
With its warm water facilities, the upgraded centre will also play a leading role in
meeting the future recreation demands of a rapidly ageing population.
Access and equity
The upgraded facility will improve regional equity by providing similar access to
year-round aquatic facilities already enjoyed by most of the other LGA‘s in the
region.
This is particularly significant given Rockdale City‘s lower than average personal
and household incomes, and the associated greater expense and difficulties for
many residents in accessing aquatic centres in other parts of Sydney.
10
―Cost-effectiveness analysis relaxes the requirement of cost-benefit analysis that benefits, as well as costs, be specified as far as possible in money terms. The method can be useful where it is easier to identify benefits than to value them. It is not surprising therefore to find that cost-effectiveness analysis is used widely in health, safety and education fields where there are difficulties in expressing in money terms the benefits of output values such as reduced mortality, reduced morbidity and educational quality‖. Commonwealth Government, January 2006, Handbook of Cost Benefit Analysis, page 108
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Health, Active Lifestyles.
Over the past 10-15 years, there has been strong growth in the active
lifestyle/wellness industry, prompted by concerns about the poor health outcomes
of modern lifestyles (including inadequate exercise). The Commonwealth
Government‘s Active Australia and Healthy Communities Initiatives and the NSW
Government‘s support of the Premier‘s Council for Active Living have supported
this growth.
The upgraded centre – in providing greatly enhanced opportunities for exercise
and enjoyable physical activity – will play an important role in combating
significant current health problems (including the ‗obesity epidemic‘ and chidhood
diabetes).
In this way, the centre will contribute significantly to community–based health
promotion - thereby enhancing the vitality and productivity of Rockdale‘s
population and reducing potential costs associated with primary and acute care in
the public health care system.
In fact, if the upgraded centre was to encourage just ten percent of Rockdale
City‘s adult (+15 years) population to increase their physical activity to
recommended levels11 — a high but not unreasonable target given the
substantial and broad community use of such facilities — the net economic
benefits would be substantial and amount to around $1.2 million per annum (or
$16 per capita of the City‘s adult population)12.
Water Safety
While ‗learn to swim‘ programs are currently available in Rockdale City (at the
existing Bexley Pool and at private facilities) any increased usage of aquatic
facilities generated by the upgraded centre would generate water safety benefits.
The upgraded facility will, in fact, provide specially designated (leisure water)
areas for children and this, together with appropriate supervision by qualified
lifeguards, will enhance water awareness and confidence.
Water safety is a particular issue in communities, such as Rockdale City, with
high CALD populations13. Accordingly, any improvements in water safety
education in Rockdale City will reap greater than average benefits in terms of
potential lives saved.
11
The Commonwealth Government recommended level of physical activity is 3 sessions of at least 20 minutes vigorous exercise or 5 sessions of at least 30 minutes moderate exercise per week 12
Comprising $460,000 in reduced health sector costs, $340,000 in home-based production savings, $380,000 in leisure-based production savings and $58,000 in improved workforce productivity. Cadilhac et al. The economic benefits of reducing physical inactivity: an Australian example, International Journal of Behavioral Nutrition and Physical Activity 2011, 8:99 13
Australian Water Safety Council, 2008, Australian Water Safety Strategy 2008 – 2011 - Reducing drowning
deaths by 50% by 2020
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Given the existing learn to swim and other educational programs available in the
sub-region (at private pools and in public pools in surrounding LGA‘s), it is difficult
to estimate how many additional people will learn to swim as a result of the
Bexley Pool upgrading. However, based on travel times to other facilities, it is
likely to be significant.
Social Capital
The proposed facility - through providing a high quality place to exercise, relax,
unwind, meet and socialize - will generate social cohesion and community-
building opportunities.
Many studies have documented the actual and potential roles that participation in
sport and recreational activities can have in improving social cohesion,
community integration, bonding, cooperation and community identity and pride14.
While these benefits definitely exist, it is difficult to quantify them in any
measurable terms.
Economic Development
The upgraded facility will generate economic benefits for Rockdale City in the
following ways:
It will generate jobs – both short term in the construction phase and on-
going for the expanded operations
It will likely increase the value of adjacent private properties which
benefits not just the owners, but also the community because the
added value is capitalized in land values for the purpose of rating
It may contribute to attracting residents and businesses (for whom
such facilities are significant attributes) to Rockdale City, thereby
boosting the tax base and local economy
1 2 . 3 C O S T S
There are two categories of economic cost – one comprising the negative
economic impacts on existing service providers that the upgraded pool will
compete with and, the other, the ‗annual service cost‘ or the subsidy required to
meet the full life cycle costs of the upgraded facility.
Economic Impact Costs
Based on the Stage 1 feasibility study consultations and benchmarking, it is clear
that the proposed facility will generate significant new demand. But it is also likely
14
For example, Kim M. Atherley, Department of Sport and Recreation, WA, 2006, Sport and Community Cohesion in the 21st Century: Understanding linkages between sport, social capital and the community
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to attract visits away from existing facilities (commercial pools and fitness
centres).
The major dis-benefit is a possible loss of income for owners of these existing
facilities , which could lead to their closure and associated impacts on current
users of those facilities who may not wish or be able to switch to the upgraded
Bexley facility.
These impacts however are difficult to assess and quantify. It is likely however
that any closures of wet or dry centres in the LGA or surrounding areas will be
offset by the spaces provided in the upgraded Bexley facility.
As well, such closures will generate a net community benefit where the shut-
down facilities are replaced by a facility which better meets consumer needs.
Nevertheless the potential costs or dis-benefits that may be experienced by some
small businesses is a legitimate issue for Council to consider.
The main implication is full and proper adherence to, and consistency with, the
principles of competitive neutrality and the requirements of the Trade Practices
Act and other policies and regulations of relevance to market competition.
In particular, Council will need to adopt transparent business planning and
costing and pricing processes so that it is seen to be 'competing' fairly with
private providers. This will require at least the following:
compliance with the Trade Practices Act
clear definition of business activities
appropriate costing
identification and application of pricing principles
implementation of complaints mechanism
appropriate auditing and management reporting
Annual Service (Life Cycle) Costs
While the proposed facility is forecast (on base and best case scenarios, as
identified in Chapter Eleven) to generate an operational surplus, it will require an
operational subsidy once full life cycle costing is taken into account15.
Life cycle costs include the operational costs and revenues (as identified in
Chapter Eleven) as well as all asset renewal and asset depreciation costs.
15
This accords with CERM‘s PI Project benchmarking which demonstrates that, on average, indoor leisure centres with aquatic facilities only just cover their operating costs. That is, they rarely make a significant contribution to the capital costs of constructing centres
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The Annual Service Cost is a method for identifying full life cycle costs and
expressing them as an average annual cost.16
The Annual Service Cost for the proposed upgraded Bexley facility – for the
base, best and low cases - is detailed in Table 7.
The redevelopment cost estimate is $26.65m. This comprises an asset renewal
component ($5m for replacing the 50m outdoor pool, with seating and shading
and a pro-rata contibution to the new amenities/change facilities) and an asset
upgrade/expansion component ($21.65m for the indoor facility and new car park).
The net operational result is the forecast performance for year three and reflects
full ramping up of operations (following strong marketing and building of the
membership base and swim school over the first two years of operation).
The asset renewal provisions are based on the industry benchmark of around 1%
of capital costs annually over the life of the project and assuming the use of high
quality construction materials and methods (to maximise the economically useful
life of all centre components)17.
Table 7: Annual Service Cost for upgraded Bexley Pool
Item Capital cost ($)
Annual Service cost ($) Notes
Base case Best case Low case
Funding source
Asset renewal 5,000,000
S94 13,200,000
Restricted reserves 763,000
Asset sales 4,687,000
Grants 3,000,000
Budget Impact: cash
Net operational result -108,847 -281,391 93,256
Asset renewal 266,400 266,400 266,400
Loan interest N/A N/A N/A No loan element
Demolition N/A N/A N/A
Renewal more likely than demolition
Net cash flow impact 157,553 -14,991 359,656
Budget Impact: non cash
Depreciation18
533,000 533,000 533,000
TOTAL 26,650,000 690,553 518,009 892,656
16
Local Government Victoria, Aug 2006, Local Government Asset Investment Guidelines 17
This amounts to $13.32m over the assumed 50 year life of the project. Actual provisions would be around $60,000 pa for the first 7 years and $300,000 pa thereafter – or an average of $266,400 per annum 18
Depreciation is a non-cash expense that reflects the decrease in value of the asset as a result of wear and tear and age. Based on average pool performance, an economically useful life of around 50 years is assumed. That is, it is assumed that the proposed pool will have an approximate 50 year life and at the end of that period it will have limited value and will have to be demolished. Based on the straight-line depreciation method, the cost is $533,000 per year for the proposed project. This is the amount by which the community‘s pool investment is consumed (and devalues by) each year
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As illustrated in Table 7, the forecast Annual Service Cost ranges from a low of
$518,000, for the best case scenario, to a potential high of $890,000, for the low
case scenario. For the base-case scenario, the forecast cost is $690,000 per
annum.
The Annual Service Costs – for the existing Bexley Pool and the three proposed
pool scenarios - represent the annual community service obligation (CSO) values
for the respective facilities and scenarios.
Based on these CSO‘s, the varying cost-effectiveness outcomes for the different
scenarios –– in terms of CSO‘s per visit and proportion of costs paid by Council -
are summarised in Table 8.
The CSO‘s per visit range from $0.90 for the proposed pool, best case scenario,
to $3.60 for the existing pool.
Table 8 also illustrates the comparative contributions of Council and users to total
pool costs, at both the existing and proposed centres. For example, at the
existing Bexley Pool, Council pays around 42% of total costs per visit (in the form
of operational subsidies). For the proposed pool (base case), this is forecast to
drop by around $2.30 per visit to only 14%.
Table 8: Cost-Effectiveness comparison – existing and proposed upgraded pools
Indicator Existing Pool Proposed Upgrade
Base case Best case Low case
Annual Service Cost 19
$470,000 $690,000 $518,000 $893,000
No. of annual visits 130,000 541,000 590,000 489,000
CSO per visit $3.62 $1.28 $0.88 $1.83
Average fees paid by visitors (including secondary spend)
$5.00 $8.12 $8.20 $8.10
Total cost per visit $8.62 $9.40 $9.08 $9.93
Proportion of costs paid by users
58% 86% 90% 82%
Proportion of costs paid by Council
42% 14% 10% 18%
The Annual Service Costs can be aggregated over the forecast life of the facility
and discounted to net present value (NPV).
The NPV under the base case scenario for the proposed upgraded centre, at an
internal rate of return of 5.00% and an inflation rate of 3% (based on Council
forecast return on investment and inflation rates as detailed in its Long Term
Financial Plan) is a negative $14.05 million which is a proxy measure of the full
life cycle community service obligation value of the project.
19
The figures for the proposed upgrade are as described in Table 7. For the existing pool, the Annual Service Cost comprises $233,000 annual operational subsidy, $160,000 depreciation (2% of $8m fair value) and $80,000 asset renewal allowance (1% of $8m fair value)
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1 2 . 4 C O N C L U S I O N S
The overall cost-effectiveness of the project entails a comparison of the life cycle
CSO value ($14.05 million) with the social and community benefits (quantifiable
and non-quantifiable) of the project.
The social benefits of the proposed upgrading to the Rockdale community are
substantial. As detailed in Section 12.2, they include greater diversity of
opportunities, increased participation in aquatic and fitness recreation, improved
health and wellbeing, enhanced access and equity, improved water safety
through more people learning to swim, more opportunities for family outings and
positive economic impacts.
While these benefits are substantial, many are difficult or impossible to quantify in
dollar terms. However, just the community health benefits have the potential to
offset up to half of those costs (in the form of reduced demand for health and
medical services).20 The other benefits, generated via millions of visits over the
life of the facility, are likely to offset the other costs many times over.
20
That is, if the upgraded centre is successful in encouraging 5-10% of the population to achieve the Commonwealth Government recommended weekly physical activity levels
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ATTACHMENT A: BUSINESS PLAN ASSUMTIONS
INTRODUCTION
A model business plan – with management and other assumptions built into it –
has been developed and is outlined below.
The business plan includes operational revenue and expenditure forecasts for
the concept adopted by Council at its meeting of 6 July 2011.
The forecasts are estimates, based on the experience of similar centres around
Australia21, discussions with three venue management organisations22, best
available knowledge of Rockdale City‘s pool markets, assumptions that the
markets will behave ‗typically‘ and a series of operational assumptions (on
staffing, user fees, opening times etc).
In the event that the markets do not behave ‗typically‘ and/or where, following
centre commissioning, the actual operational practices deviate from the assumed
ones, the realised results may be higher or lower than those forecast.
Expenditure forecasts are reasonably straightforward and can be made with a
reasonable degree of confidence.
There are, however, inherent difficulties in preparing revenue projections – due to
the diverse and somewhat unpredictable nature of the markets for heated indoor
pools and leisure centres and the presence of factors in the market that cannot
be controlled (such as the provision and marketing of other heated pools and
indoor recreation space in the region by other agencies).
Despite the difficulties, demand and revenue forecasts have been made and are
detailed in the following sections.
REVENUE FORECAST ASSUMPTIONS
Visitor numbers – and revenues - will be influenced by many variables (most
importantly by the proposed facility‘s quality of management and staffing, ease of
access, availability of convenient parking, marketing and customer service
initiatives) and by the breadth and strength of competition.
The key revenue assumptions are as follows:
21
As researched and documented since 1991 in Adelaide University‘s Centre for Environmental and Recreation Management (CERM) annual surveys of leisure and aquatic centre operations and performance 22
YMCA (6 June 2011); Bluefit Leisure (29 June 2011); Belgravia Leisure (4 July 2011)
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Centre management
It is assumed that management will aim to achieve an annual profit or break even
position while providing a wide range of aquatic, fitness and recreational
opportunities for residents of the City and surrounding areas.
The Council and centre management must ensure that the new centre has a
strong focus on:
Providing programs relevant to demonstrated community needs
Customer service
Continually improving the quality of programming
Continually improving the range of programming
Revenue generation
Professional marketing
Staff training and development
Best practice risk management approach
Ongoing market research, and
Benchmarking to assess performance and success against similar
services.
Marketing Assumptions
The main focus of centre management will be to identify, understand and meet
the needs of residents and attract sufficient visitation levels to deliver value for
money, quality programs and an accessible and affordable service.
The core markets for the proposed centre will be:
Recreation and leisure: providing an attractive and welcoming environment
for social interaction and relaxation,
Sport: providing a venue for club and school based competitive swimming
(and other aquatic sport) carnivals and competitions
Education: including learn to swim, water safety, swimming competency
training and certificates, life saving, coaching courses,
Fitness: provision of programs and activities to improve fitness levels of
participants, and
Health: provision of rehabilitation programs and opportunities for people
requiring the benefits of water therapy and movement. This includes people
of all ages with arthritis, asthma, injuries or any other disability that may be
improved by exercise in a warm water environment.
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The success of each ‗market‘ will be dependant on offering appropriate and
innovative programs, the pricing structure, marketing and promotion strategies,
and, most importantly, the skills and attitudes of staff.
Entry Fees
The proposed fees are based on the current ‗market rates‘ for indoor aquatic and
leisure centres in the region (Annette Kellerman Aquatic Centre and the Hurstville
Leisure Centre).
Opening Hours
The forecasts are based on typical operating hours for indoor aquatic/leisure
centres (of 95 to 100 hours per week – or around 6.00am-9.00pm week days and
7.00am-6.00pm weekends).
Visitation levels
One of the Centre for Environmental and Recreation Management‘s (CERM) key
indicators - catchment multiple - provides a basis for predicting the use of new
centres.
‘Catchment multiple’ is a measure of ‗the number of visits a year divided by the
estimated population size within 5 kilometres of the centre‘.
The CERM research has demonstrated that ‗outdoor wet centres‘ (such as
Council‘s existing pool) and ‗indoor wet/dry centres with outdoor pools‘ (such as
the proposed facility) have average catchment multiples of 1.723 and 5.2,
respectively.
CERM‘s average ‗catchment multiple‘ for ‗indoor wet/dry centres with outdoor
pools‘ suggests that the upgraded facility can generate around 500,000 or more
visits per annum (catchment population of 96,000 x 5.2) if it performed at the
average level.
However, another CERM indicator, visits per metre2 of building/water space,
suggests that 500,000 visits per annum may be difficult to achieve.
23 Bexley Pool‘s existing catchment multiple of 1.4 is less than national average utilisation
(of 1.7) for this type of pool – probably reflecting the availability of several alternative
facilities in the sub-region and perhaps the ‗hidden away‘ location of the pool (as discussed
in Section 4.2, above).
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The ‗visits per metre2’ indicator suggests a more modest result – with the
proposed concept generating around 370,000 visits (5,100 m2 x 72 visits per m2),
if they perform at the average level.24
It is probable, however that the proposed facility will attract visits well above the
average ‗visits per metre2’ for ‗indoor wet/dry centres with outdoor pools‘. This is
because of the well-above-average catchment population for the Bexley facility –
nearly 90,000 compared with the average of 60,000 in the CERM study. It is
reasonable to assume, on this basis, that visits per metre2’ could be in the range
of 25-50% higher than average.
Additionally, the levels of use of similar facilities in the sub-region (such as
Hurstville Leisure Centre and the new Annette Kellerman Aquatic Centre) are
well-above the national average visitation levels, so it is reasonable to assume
that this will be the case for the proposed Bexley facility (so long as it is marketed
effectively).
Based on the average national performance of the type of facility proposed for
Bexley (as documented in the CERM benchmarks) and the experience of other
centres in the sub-region, it is concluded that the reasonable baseline visitation
forecasts for the proposed facility is 520,000.
Sensitivity Analysis
The estimated visitation levels of 520,000 represents the ‗baseline‘ scenario for
the purposes of the business plan analysis.
However, due to the inherent uncertainties in forecasting visits to new aquatic
and leisure centres, we have also identified ‗best case‘ and ‗low case‘ scenarios
in terms of projected visitor levels.
Best Case
It may be possible for the proposed centre to perform at above-average levels in
its first year of operation.
It will have an excellent range of fitness, program and leisure facilities (with more
leisure water and a larger gym/wellness space than the Annette Kellerman
Centre) and it will have the attraction of ‗newness‘ compared to other competing
facilities in the region (such as Roselands Aquatic Centre and Hurstville Leisure
Centre).
24 The average visits per m
2 multiple for ‗indoor wet/dry centres with outdoor pools‘ is 72 but
is higher (in the high 70‘s) for facilities around 5,000m2 or more.
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It is noted that many well designed and managed indoor aquatic centres perform
well above the average levels. The Great Lakes Leisure Centre25, for example,
has a catchment population of 19,200 and generated 205,000 visits in 2004-05 –
a catchment multiple of nearly 11.
For climatic and competing pool reasons, the proposed Bexley Pool is very
unlikely to emulate the Great Lakes results. However the proposed pool could
attract visits at above-average levels but this would require excellent
management and a vigorous and very successful marketing campaign.
The assumed visit levels for the best case scenario are 10% higher than the
baseline forecasts – or around 570,000 visits.
Low Case
The proposed centre may, conversely, attract lower than average visits. There
could be several reasons for this – including a failure to attract visitors who
currently use other facilities (indoor and outdoor pools and/or gyms in the City or
surrounding LGA‘s) and the failure of marketing to offset the relatively poor
‗visibility‘ of the pool site.
The assumed catchment multiple for the low case scenario is 10% lower than
the baseline forecasts – 470,000 visits.
Catchment Population Growth
In the life of the project, the catchment population is expected to increase
significantly (to 113,800 by 2036 – an increase of 17,500 or 18% from 2006)26.
This should underpin a steady and substantial increase in annual visitations over
the life of the facility.
More than half of the forecast growth – 10,000 persons or 1% per annum - is expected to occur in the 10 years between 2006-2016.
EXPENDITURE FORECAST ASSUMPTIONS
The expenditure forecasts are based on recent budgets for similar centres (as
documented in the CERM benchmarks), discussions with the operators of the
Hurstville and Annette Kellerman Centres, typical staffing and facility
management policies and relevant assumptions (on opening hours etc).
25
The Centre comprises a 25m x 8 lane pool, a leisure/program pool, gym and indoor sports courts 26
NSW Department of Planning, New South Wales Statistical Local Area Population Projections 2006– 2036, April 2010 Release
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Forecast staffing levels are in accordance with current approaches, industry best
practice and public safety guidelines (Department of Local Government Water
Safety Practice Note 15 and Fitness Australia Code of Practice).
Staff wage and salary on-costs have been calculated in accordance with current
market rates and typical Council‘s on-cost practices.
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ATTACHMENT B: BUSINESS PLAN PRO FORMA
FORECAST SENARIOS
The operating forecasts have been prepared according to the three visitation
scenarios – ‗baseline‘, ‗best‘ and ‗low‘. They are based on the assumptions
detailed above and the market segment breakdowns summarised in Table 1.
Table 1 – Forecast market segments x size
Market segment Forecast Visits
(%)
Adult general entry 14
Child general entry 8
Learn to Swim 16
Schools 9
Squad 3
Casual wellness/fitness 1
Centre membership 49
Total 100
The market segment break down is based on typical user patterns at the type of
facility proposed for Bexley (with particular consideration given to current visitor
patterns at the Annette Kellerman and Hurstville Centres).
The assumed adult-child 60:40 distribution of visitation is a little different from the
65:35 currently being experienced at the Annette Kellerman Centre but is based
on the larger proposed (child-attractive) leisure pool at Bexley.
The forecasts comprise the operating projections for the facility once fully
commissioned. No allowance has been made for:
capital costs (with these to be covered by government grants,
community funds and/or Council funds),
post-construction budget for any anomalies which may occur, and
facility pre-commissioning expenses.
Forecasts have been provided for the first three years of operation. The year 2
and 3 forecasts assume a continuation of current CPI movements of (around
3.5% per annum), expenditure increases in line with CPI movements and
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revenue improvements resulting from a combination of CPI based fee increases
and modest (2% per annum) business growth27.
Achieving the projected outcomes – particularly for the ‗best‘ and ‗baseline‘ case
scenarios - will require skilled management, including:
effective marketing and provision of programs to meet the needs of the
whole community,
promotion of access for all,
attracting some of the fitness market from the large number of private
fitness centres in the sub-region,
attracting some of the wellness and aquatic markets from the existing
centres in surrounding LGA‘s,
appropriately balanced pricing policies (which tap the commercial
potential of the proposed venue whilst also recognising its role in
meeting a wide range of social capital and community development
objectives), and
high quality programs and facilities at a competitive price.
All operating costs, other than asset renewal and asset depreciation costs
have been included in the estimates.
OPERATIONAL FORECASTS
The detailed financial calculations for the proposed concept are included at
Attachment C and summarised below. All operating costs (including allowances
for asset depreciation) have been included in the estimates.
The market segment breakdowns for this option are summarised in Table 2.
Table 2 – Proposed Concept – Forecast market segments x visits per annum
Market segment Forecast
Visits
(%)
Baseline
Scenario
(No.)
Best case
Scenario
(No.)
Low case
Scenario
(No.)
Adult general entry 14 72,800 79,800 65,800
Child general entry 8 41,600 45,600 37,600
Learn to Swim 16 83,200 91,200 75,200
Schools 9 46,800 51,300 42,300
Squad 3 15,600 17,100 14,100
Casual
fitness/wellness 1 5,200 5,700 4,700
Centre
memberships 49 254,800 279,300 230,300
Total 520,000 570,000 470,000
27
With a forecast population growth in the area of around 1% per annum for the next 5 or so years, this should be not difficult to achieve
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Baseline Scenario
Table 3 summarises the projected revenue and expenditure for the ‗baseline‘
scenario for the first three years of operation.
Table 3 – Proposed Concept – ‘Baseline' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,584,000 1,663,200 1,746,360
Aquatics General entry 540,275 567,289 595,653
LTS 1,088,350 1,142,768 1,199,906
Squad 89,000 93,450 98,123
Casual Aqua 14,400 15,120 15,876
Schools 238,000 249,900 262,395
41,000 43,050 45,203
Total aquatics 2,011,025 2,111,576 2,217,155
Other
Casual Health/Fitness 60,480 63,504 66,679
School holiday programs 21,000 22,050 23,153
Ancillary income 311,000 326,550 342,878
TOTAL INCOME 3,987,505 4,186,880 4,396,224
EXPENDITURE Staff/salaries 2,753,990 2,853,134 2,955,846
Administration/office expenses 200,000 207,200 214,659
Trading (cost of sales) 180,600 187,102 193,837
Facilities 650,000 673,400 697,642
Programs 210,000 217,560 225,392
TOTAL EXPENDITURE 3,994,590 4,138,395 4,287,377
NET RESULT -7,085 48,485 108,847
With the baseline scenario, it is anticipated that the proposal will require an
operational subsidy of around $7,000 in year one, and will produce an operational
surplus of around $109,000 by year 3. It should stabilise there with further
improvements in line with the forecast increase in the catchment population size.
The forecast first year operating result (not including depreciation) entails a
subsidy of around 0.2c per centre visit (compared to the pre-YMCA subsidy of
$1.25 per visit). This is forecast to become a 23c/visit surplus by the third year of
operation.
Best Case Scenario
Table 4 summarises the projected revenue and expenditure for the ‗best case‘
scenario for the first three years of operation.
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Table 4 – Proposed Concept – ‘Best Case' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,742,400 1,829,520 1,920,996
Aquatics
General admissions 594,303 624,018 655,219
LTS 1,197,185 1,257,044 1,319,896
Squad 97,900 102,795 107,935
Casual Aqua 15,840 16,632 17,464
Schools 261,800 274,890 288,635
45,100 47,355 49,723
Total aquatics 2,212,128 2,322,734 2,438,871
Other
Casual Health/Fitness 66,528 69,854 73,347
School holiday programs 23,100 24,255 25,468
Ancillary income 342,100 359,205 377,165
TOTAL INCOME 4,386,256 4,605,568 4,835,847
EXPENDITURE Staff/salaries 2,946,769 3,052,853 3,162,756
Administration/office expenses 204,000 211,344 218,952
Trading (cost of sales) 198,660 205,812 213,221
Facilities 663,000 686,868 711,595
Programs 231,000 239,316 247,931
TOTAL EXPENDITURE 4,243,429 4,396,193 4,554,456
NET RESULT 142,826 209,376 281,391
With the ‗best case‘ scenario, it is anticipated that the proposal will generate an
operational surplus of around $143,000 in year one improving to a surplus of
around $281,000 by year 3 (which is a 106% recovery rate which compares with
the most successful centres in Australia),.
The forecast first year operating result (not including depreciation) entails a
surplus of around 30c per centre visit – and this is forecast to increase to 59c/visit
by year 3.
Low Case Scenario
Table 5 summarises the projected revenue and expenditure for the ‗low case‘
scenario for the first three years of operation.
Table 5 – Proposed Concept – ‘Low Case' Forecasts
Year 1 Year 2 Year 3
INCOME Memberships 1,425,600 1,496,880 1,571,724
Aquatics
General admissions 486,248 510,560 536,088
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Year 1 Year 2 Year 3
LTS 979,515 1,028,491 1,079,915
Squad 80,100 84,105 88,310
Casual Aqua 12,960 13,608 14,288
Schools 214,200 224,910 236,156
36,900 38,745 40,682
Total aquatics 1,809,923 1,900,419 1,995,440
Other
Casual Health/Fitness 54,432 57,154 60,011
School holiday programs 18,900 19,845 20,837
Ancillary income 279,900 293,895 308,590
TOTAL INCOME 3,588,755 3,768,192 3,956,602
EXPENDITURE Staff/salaries 2,588,751 2,681,946 2,778,496
Administration/office expenses 196,000 203,056 210,366
Trading (cost of sales) 162,540 168,391 174,454
Facilities 637,000 659,932 683,690
Programs 189,000 195,804 202,853
TOTAL EXPENDITURE 3,773,291 3,909,129 4,049,858
NET RESULT -184,536 -140,937 -93,256
With the ‗low case‘ scenario, it is anticipated that the proposal will require an
operational subsidy of around $184,000 in year one, reducing to around $93,000
by year 3. It should stabilise there but improve gradually in line with the forecast
population growth.
The forecast first year operating result (not including depreciation) entails a
subsidy of around 39c per centre visit (which is still a significant per capita
improvement on the current operation).
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ATTACHMENT C: BUSINESS PLAN FORECASTS IN DETAIL
INCOME AND EXPENDITURE ASSUMPTIONS & ANALYSIS
Revenue Forecast
Facility componen
ts Program
Classes
/week
No. weeks
No. per clas
s Unit
sales Fee
Average
discount
Achieved rate Income Assumptions
CENTRE (GYM and/or POOLS)
700m2 gym
Memberships 1,584,000 Average 2,200 members month x net yield $60
School holiday programs 600 40.00 35.00 21,000
40 days x 15 children per day x $40
Sub-Total 1,605,000
GYMNASIUM
700m2 gym
Casual gym 2,600 18.00 20% 14.40 38,000
Average 50 casuals per week
Casual aerobics/pump /circuit/ Pilates/pump etc 1,600 18.00 20% 14.40 23,000
Average 30 casuals per week
Sub-Total 61,000
AQUATICS
50m outdoor pool 25m x 8 lane indoor pool Leisure Pool 20 X 15m program pool Spa
General admissions
Adults 61,000 6.50 15% 5.53 337,025 53% of estimated 115,000 admissions in year one
Children 42,000 4.50 15% 3.83 160,650 37% of estimated 115,000 admissions in year one
Pensioners 8,000 4.50 15% 3.83 30,600 7% of estimated 115,000 admissions in year one
Spectator 4,000 3.00 3.00 12,000 3% of estimated 115,000 admissions in year one
Learn to Swim
School terms
Tiny tots 50 40 4 8,000 14.00 7% 13 104,000 Average fee with 5% discount based on reduced fees for 2nd and 3rd child in family)
Pre-school 50 40 4 8,000 14.00 7% 13 104,000
School aged 308 40 5 61,600 14.00 7% 13 800,800
School holidays 13
Pre-school 15 10 4 600 14.00 7% 13 7,800
School aged 95 10 5 4,750 14.00 7% 13 61,750
Private LTS 500 20.00 20 10,000
Squad
Squad program (sharks to seniors) 89,000
Average 125 squad members month x net yield $65month x 11 months
Aqua-fitness
Casual Aquarobics 1,000 18.00 20% 14.40 14,400
Includes gentle, moderate aquafit and rehabilitation classes
School programs
Carnivals 28,000 4.00 112,000 School & Zone
Intensive LTS (10 days) 14,000 7.00 7.00 98,000
8 schools/term x 3 terms x average 60 students x 10 visits x $70/student
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Facility componen
ts Program
Classes
/week
No. weeks
No. per clas
s Unit
sales Fee
Average
discount
Achieved rate Income Assumptions
School sport 5,000 5.50 5.50 28,000
Average 8 schools x 3 terms x 8 weeks x average 30 students x $5.50/student
Other
Sauna/spa 10,000 3 3 30,000 15% of adult aquatic entries ($5 exclusive of entry fee)
Lane hire 125 15 15 2,000 3 hours/week x average $15/hour
Birthday parties 600 15 15 9,000 60 parties x 10 children x $15 child
Total Aquatic 2,011,025
ANCILLARY FACILITIES Trading Income
Café 170,000 Average $0.60 per visit secondary spend
Merchandising 120,000
Telephone/lockers 1,000
Total trading income 291,000
Creche 20,000
21 children day x 5 days x 48 weeks x average $4
TOTAL INCOME
3,987,505 $7.90 per visit based on 520,000 visits
Expenditure Analysis
Expenditure Item $ Assumptions
Management/Staffing
Permanent F/T 718,740 Detailed in staff schedule (below)
Casuals 1,284,000 Detailed in staff schedule (below)
Program Instructors 651,250 Training and uniforms
Management Fee/Contract administration 100,000
2,753,990
Administration
Office expenses 100,000 Telephone, post, printing, stationery, office equipment, corporate costs, training
Advertising/promotion 100,000
200,000
Trading
Café and merchandise COS 180,000
Telephone/locker COS 600
180,600
Facilities
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Energy 260,000 Electricity and gas
Chemicals 30,000
Water rates 40,000
Repairs, maintenance, cleaning 230,000
Buildings insurance 40,000
Security 20,000
Minor equipment 30,000
650,000
Programs
Cardio fitness equipment – lease 160,000
Program materials/equipment 45,000
Maintenance - equipment 5,000
210,000
Total 3,994,590
Staff Schedule
Staff Position EFT Salary Hrs/week Hr/rate Weeks/ annum Expend ($)
Permanent staff
Centre Manager 1 85,000 85,000
Aquatic Co-ordinator 1 60,000 60,000
Health Club Co-ordinator 1 55,000 55,000
Head Coach/ Aquatic Education 1 50,000 50,000
Customer Service (Memberships) 2 55,000 110,000
LTS Co-ordinator 1 45,000 45,000
Cafe Supervisor 1 42,000 42,000
Duty Managers 2 42,000 84,000
Staff on-costs (42%)28
187,740
Total F/T Staff 718,740
Casual staff
Reception/Café attendants 280 22 52 320,320
Lifeguards (Year round) 300 22 52 343,200
Lifeguards (summer season) 200 22 26 114,400
Gym supervision 140 26 52 189,280
Creche assistants 50 24 50 60,000
Casual staff on-costs (25%)29
256,800
28
Permanent employees – typical allowance for on-costs and administration/payroll levies 29
Casual employees – typical allowance for on-costs and administration/payroll levies
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Staff Position EFT Salary Hrs/week Hr/rate Weeks/ annum Expend ($)
Total Casual Staff 1,284,000
Program Staff
Term Learn to swim 250 30 40 300,000
Holiday Learn to swim 80 30 10 24,000
Squad 25 30 50 37,500
Aqua/Aerobics/Group Fitness 58 55 50 159,500
Casual staff on-costs (25%) 130,250
Total program staff 651,250
Total 2,653,990