Business Case Regarding the Proposal of Affordable Housing in Port Hedland - Research Paper Example

? Critical analysis of a project business case Contents Contents Introduction 3 Background 3 The Analysis 4 Summary 8 Conclusion 9 References 10 Appendices 12 Introduction A business case is used to represent the information related to a proposed project plan to study the feasibility and viability of the project. The business case is presented to the stakeholders so that they can refer to the report while making their decisions regarding sponsoring the project. The business case is aimed at identifying the scopes of a business opportunity and work towards the plan of utilizing the opportunity to improve the business perspectives of the company and achieve certain benefits from the viable project plan. A business case is used to present the strategies and evaluate the alternatives associated with the project plan. To critically analyze the business case regarding the proposal of Affordable Housing for Essential Workers in Port Hedland town in Western Australia, the business case can be looked into with an aim of reflecting on the goals and objectives of the business case as proposed, the valid opportunities and scopes that the case effectively addresses, evaluate the costs and benefits as proposed in the business case and identify the various economic, legal and non- economic benefits as well as the strategies and risks involved in the business case report. Also the business case should be analyzed critically to understand the level of alignment that it has with the vision and objectives of the organization undertaking the project. The rationale for developing the business plan and the risk factors and benefits of implementing the alternatives should also be critically evaluated. Background Port Hedland is located in Western Australia on the coastal region of Pilbara region. Due to the presence of a natural harbour, the area has developed as a service centre hub for many industries like gold mining and pearling. In 1960, large iron ore deposits were discovered in Pilbara which drove major changes in the townscape with developments in the construction of railway lines, harbours, accommodation and other facilities for the increase number of mining workers and their families moving into the town. Since then, Port Hedland saw major investments towards resource projects which established Port Hedland as a prominent administration and service hub. In the current scenario, Port Hedland has a huge service population constituting of more than 20,000 full time workers and around 3000 hour based workers. This is referred to in Appendix 1. The accommodation of the rapidly expanding work population has become a major challenge for the town (Government of Western Australia, 2012). The Western Australian Government has become much focused towards improving the living standards and qualities in port Hedland and turning the city into a modern and diverse city with several facilities, infrastructure and services being provided for the population in Port Hedland. The Analysis The greatest challenges for the government of Port Hedland are to develop sufficient infrastructure, land and housing to match the accelerated and unpredictable growth in the population and service workers number (Australian Bureau of Statistics, 2008). The business plan for Affordable Housing for Essential Workers in Port Hedland town can be analyzed to be in alignment with the current developments in the town area. The region is experiencing huge demand from the resource boom and has to particularly focus on the land and infrastructure projects to match up with the current and the future growth trends in the town. There are extensive plans made for Port Hedland city growth plan to offset the complex development, infrastructure and planning constraints. The business case under study is streamlined with the requirement of more developed infrastructure, housing facilities and other amenities to make the economy more diversified. The economic outlook in the town of Port Hedland looks perfect for new business investments particularly in the housing sector. The economic landscape for Port Hedland is strong due to the town being the coastal gateway for the richest iron ore deposits in the world. The demand for steel is high and continuous from all the major countries of the world and thus, this factor encourages enormous investments in the town for infrastructure and mining industries. Port Hedland acts as major transport hub as well as an established service centre for raw materials and services required for construction, accommodation services and major operations in resource projects. The accommodation of the increasing population and the number of workers in the town is driving the need for more investments towards housing projects of different budgets. The demand for the development of land and infrastructure in the town is also boosting the number of proposed business plans for the town (Department of Regional Development and Lands, 2010, p.2). The business case suggests that there is a lack of accommodation facilities in the town which is a major constraint for the future development of the port as a service centre. The necessity of housing projects in the city are identified correctly as the non-availability of accommodation for the workers would result in a fall in the performance and growth of the service industry in the town. This is not at all acceptable for Port Hedland as the population and the economy of the town is highly dependent on the service industry. Since attracting new workers and retaining the existing workers within the town is critical for the survival of the service industry in the town, Port Hedland would give maximum priority to provide incentives and benefits to the workers like housing facilities and other social amenities in the coming few years. This means that the objective of the business plan is in keeping with the current economic opportunities prevailing in Port Hedland. As identified in the business plan, the improvement in the housing facilities would also bring in more opportunities for investments into the town. The town of Port Hedland has an immediate need for a diverse pattern of housing system in the town. The housing system should also include affordable accommodation facilities for the service level workers. This is in regards to supporting the tourism, hospitality, retail and general service industry in the town of Port Hedland. The business plan as prepared by the Pilbara Regional Council has identified this particular demand of the Port Herald Town and prepared the plan to incorporate different levels of accommodation capacities to cater to the need of the different levels in the community. The case has mentioned the different residential services like Transitional housing for providing boarding style housing for the students, service professional housing for the service professional excepting the mining industry people, essential worker housing aimed at the low income worker group and the lifestyle housing for the care of aged and disabled people. The policies and strategic framework of the business plan is essentially designed keeping in mind the economic and industrial growth of Port Hedland in the future as an established service centre and exporting harbour. The business case presents an impressive array of objectives to gain interest from the shareholders to invest in the project. The capacity building in the town is aimed to normalize the existing community in Port Hedland by providing housing facilities to all the levels of the population, service the disabled and aged people, support and encourage the small and medium enterprises and the entrepreneurship levels in the town (Government of Western Australia, 2010). The business case also mentions the benefits of the project to the regional community in Port Hedland. The Pilbara region is a major contributor in the Australian economy and as an established exporter it enjoys enormous Royalties for the regions based on the economic improvements in the area (McKenzie, Phillips, Rowley, Brereton and Birdsall- Jones, C. 2009, p.54). The business case lists the huge potential for getting more Regional royalties for the Port Hedland town. The business plan also considers the local benefits from the construction, facilities management and repair and maintenance of the housings which include the creation of more employment opportunities and capital developments in the town as given in Appendix 2. The business case further mentions the various opportunities and scope of the plan to attain sustainability and grow the business opportunities in the region. The prosperity growth factors are explicitly mentioned in the business plan making it an attractive plan for investment for the shareholders (Taylor and Brinckerhoff, 2004, p.71) The business plan has identified the major stakeholders as the Pilbara Regional Council, National Australia Bank, an Australian advisory company named Blue Zoo, the social service providers, individual communities in the region and the town of Port Hedland itself. The investment opportunities have been effectively identified and the private-public partnership investments involving the National Australia Bank and other institutional investors are considered as the main mode of investment in the business case. This combination of both public and private investments would increase the scope of the plan and gain more interest from the shareholders as a secure plan. The private-public partnership model is likely to infuse more assurance for the shareholders who would assume this as a stable investment plan with major part of the risk lying with the consortium responsible for the construction and maintenance of the housings. Risk analysis is impressively done in the business case making it less risky than the other similar projects in terms of management quality, loss of income from rents, property refurbishment etc. The business case has made a critical assumption of sufficient land availability in the town for housing projects. The town of Port Hedland is estimated to experience a need of more than 3600 housing facilities in the next five years (Western Australia Government, 2011, p.6). In concern to this rising need, The Pilbara Towns Housing Study has proposed that the median sales of land in Pilbara region has increased by more than five times from the year 1994 to 2009 as represented in Appendix 3. But the business case does not take into consideration the volatility of the demand for land sales in the area which majorly varies with the fluctuating economic cycles existing in the mining industry (Commonwealth of Australia, 2009). This is a pitfall in the business case as the availability of land is of critical importance in a housing project plan. Though the business case has listed certain parcels of land to be availed for the construction and development of the accommodation facilities, it has not taken into account the challenges of continuously shifting demand levels and the need for adapting to these changes in the mining industry dependent region of Pilbara. Another major drawback in the business plan is that the investors would be provided with the option to move out of the scheme, sell the property or remove the tenants. This will ensure investment attractiveness for the shareholders when they study the business case but this system would weaken the possibility of low rent systems being stabilized in the town of Port Hedland. Summary The critical analysis of the business case for the proposal of Affordable Housing for Essential Workers in Port Hedland town is effectively designed in alignment with the current and future economic perspectives of Port Hedland and the Pilbara region as a whole. The business case shows minimum risk as compared to the alternative business plans presented for the housing projects in Port Hedland. Also, the business case can be evaluated as having sufficient government backup as it is prepared and presented by the Pilbara regional Council and proposes a significant partnership with the National Australia Bank. Conclusion The business case has been effectively documented with the key features of the case developed on the basis of business orientation, transparency, accountability, measurability, consistency and adaptability factors. The deliverables and benefits are measurable and the role of the stakeholders, communities and the town of Port Hedland is clearly specified. Therefore, to conclude the project business case is comprehensively defined with some necessary minor assumptions in the planning process and the case is equipped to get suitable interest from the shareholders as well as the people in Port Hedland. References Australian Bureau of Statistics. 2008. Australian Social Trends, Article: Towns of the mineral boom. [Online]. Available at http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/4102.02008?OpenDocument. [Accessed on 21 December 2013]. Commonwealth of Australia. 2009. Special purpose hostel for Pilbara’s Indigenous community. [Online]. Available at www.jennymacklin.fahcsia.gov.au/internet/jennymacklin.nsf/content/pilbara hostel 15june2009.htm. [Accessed on 21 December 2013]. Department of Regional Development and Lands. 2010. Country Local Government Fund Allocations 2010-11 - Regional Groups of Local Government. [Pdf]. Available at http://www.drd.wa.gov.au/publications/Documents/R4R_Progress_Report_2012_13.pdf. [Accessed on 21 December 2013]. Government of Western Australia. 2010. 200th house completed under Royalties for Regions scheme, media release. [Online]. Available at http://www.mediastatements.wa.gov.au/Pages/default.%20aspx?ItemId=134210&page=3. [Accessed on 21 December 2013]. Government of Western Australia. 2010. Wide release of light industrial lots in the Pilbara, media release. [Online]. Available at http://www.mediastatements.wa.gov.au/Pages/default.aspx?ItemId=133995&page=6. [Accessed on 21 December 2013]. Government of Western Australia. 2011. Regional Hotspots Land Supply Update. [Pdf]. Available at http://www.planning.wa.gov.au/dop_pub_pdf/port_hedland_combined_report.pdf. [Accessed on 21 December 2013]. Government of Western Australia. 2012. Hedland 125 Service Workers Accommodation. [Online]. Available at http://www.housing.wa.gov.au/investorsandpartners/swa/hedland/Pages/default.aspx. [Accessed on 21 December 2013]. McKenzie, H. F., Phillips, R., Rowley, S., Brereton & Birdsall- Jones, C. 2009. Housing market dynamics in resource boom towns. Perth: Australian Housing and Urban Research Institute. Taylor, B. B. & Brinckerhoff, P. 2004. Port Hedland Industrial Land Strategy. Perth: Australian Housing and Urban Research Institute. Appendices Appendix 1: Census 2006 working patterns by industry - Town of Port Hedland and Western Australia. (Source: Government of Western Australia, 2011, p.15) Appendix 2: Construction employment projections (2008 to 2020) - Pilbara region. (Source: Government of Western Australia, 2011, p.29) Appendix 3: Land sales 1994 to 2009 - Port Hedland. (Source: Government of Western Australia, 2011, p.32) Read More