3 Business Case Wairere House Exit Project Redacted.pdf

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INFORMATION
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Out of scope
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3. What is the problem to solve or opportunity to maximise?
It is the Department’s obligation under the Public Records Act 2005 and section 11(2A) of the
National Library of New Zealand Act 2003 to ensure that our documentary heritage is protected and
preserved over time, that the risk of loss or damage is reduced, and that it is made accessible to New
Zealanders now and in the future.
Wairere House is not in a fit state to protect this documentary heritage. A number of leaks through
multiple floors over the last few years have damaged collections1.
Out of scope
INFORMATION
The shelving systems used at Wairere House are not compliant with European Standard EN 16893,
resulting in a Health and Safety risk.
OFFICIAL
Loss of any of the collections at Wairere House would cause considerable loss of confidence in the
ability of the NZ Government to safeguard New Zealand’s documentary heritage.
3.1.  Benefits
THE
The benefits gained from fixing these problems include:
•  Improve protection of heritage collections;
o  Increase proportion of building and storage systems that meet archival standards
o  Improve safety of the environment for our people.
•  Optimise value for money
UNDER
•  Reduce risk of loss of trust in government.


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1 Agenda Item 5. Wairere House Property Report.doc 13 September 2017
2 The seismic rating is 56% of the new building standard (NBS) and 40% of importance level (IL) 3 standards. This is
considered below the acceptable level of seismic reliance for contents of high value
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4. What are the options?

4.1.  Location
A wide variety of location options for holding the re-housed col ections were considered, including
alternative:
ACT
•
regional centres
•
cities (e.g. Christchurch).
However, the significant additional cost and risk of transporting col ections removed Christchurch and
other South Island locations from consideration.
The remaining North Island regions suffer from the same issue as Whanganui;  that there are no
suitable National Library staff available to curate or access the collections when needed. The only staff
available are based in Wellington; but Wellington is not suitable as a location for the Wairere House
2°C collections since they are the master copies of the ones available for access in Wellington. For
disaster protection, master copies should be held in a different location.
The only other viable location is Auckland, providing that Auckland Archives staff are cross-trained to
support the unique nature of the material.
INFORMATION
Wellington was considered an acceptable medium-term location for the newspaper col ection items,
with Rugby House able to create capacity by removing items from the Overseas Published Collections
(OPC) which no longer meet the National Library col ection requirements.
4.2.  Scope
The  rest of the options considered  were scope  related. As Table  1  shows, the shortlisted options
differed primarily by quantity of collections removed from Wairere House.
4.3.  The options
OFFICIAL
Option 1. Do Nothing. This was the “do nothing” option of leaving the collections in Wairere House.
Option 2. Complete Exit. The complete removal of all items from Wairere House, which would be
returned to LINZ for disposal. Out of scope

THE

This option assumes that the majority of the OPC col ection wil  be disposed of once selected
items that meet the current col ections policy are identified for retention.
Option 3. Do Minimum. This option only removed the ground floor items from Wairere House. Out of sco
UNDER

Option 4. Relocate ATL Collections, Retain OPC Collection. This option was added because of the cost
of sorting and disposing of the OPC collection. It removes all Alexander Turnbull collections, but allows
for the continued storage of the OPC collection on the second floor of Wairere House, and the storage
in boxes of the OPC col ection items removed from Rugby House in Wel ington. This option assumes
that Wairere House could stil  be disposed of as a Government Asset, but that the second floor could
be leased back.
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Option 2 (Complete Exit) is the best value for money of al  the exit options reviewed. Although Option
1 (do nothing) looks like a better value for money option, it carries a significant risk that building repairs
and maintenance would exceed current estimates over the next ten years, and if it was assessed over
a longer term than 10 years, it would quickly become the higher cost option due to ongoing costs.
If the sensitivity of the cost-benefit analysis is reviewed, it can be seen that a 10% variation in costs
would eliminate any significant difference in whole of life costs between options 1, 2 and 4.
ACT
Table 3. Sensitivity of Financial Analysis
Sensitivity
Option 1
Option 2
Option 3
Option 4
Whole of Life Cost
  3,
  939,489     4,
  121,006     5,
  316,037     4,
  298,039
Low range @ 10%
  3,
  545,540     3,
  708,905     4,
  784,433     3,
  868,235
High Range @ 10%
  4,
  333,438     4,
  533,107     5,
  847,641     4,
  727,843
Options were also assessed against the investment objectives of: improve protection of collections,
reduce risk of loss of trust in government, and optimise value for money. Critical Success Factors were
considered, including whether an option was in line with The Departments and Government Strategy,
Value for Money, Level of Risk, Capability to Deliver, Affordability and Achievability. The assessments
made by members of the Wairere House Col ections Steering Committee are shown in Table 4 below.
INFORMATION
Table 4. Options Assessment
Scope (What)
Option 1
Option 2
Option 3
Option 4
Do nothing - leave all
Complete Exit. Remove  Minimum scope. Remove  Remove al  ATL
collections in Wairere
all collections from
only ATL collections held  collections from Wairere
House
Wairere House. Relocate  in Control ed Atmosphere House. Retain NL OPC
ATL col ections, dispose  2  C Room on Ground
Collection on 2nd floor
of majority of OPC
Floor to Ak Archives new
CA room
Wairere House Floors Vacated
Investment Objectives
OFFICIAL
Improve protection of heritage col ections
no
yes
partial
yes
Reduced risk of loss of trust in government
no
yes
partial
yes
THE
Optimise value for money
no
yes
no
yes
Critical Success Factors (Must Meet)
Strategic Fit and business need
no
yes
yes
no
Value for Money
no
yes
no
yes
UNDER
Acceptable Risk
no
yes
no
yes
Capability and capacity to deliver
yes
yes
yes
yes
Affordable
no
yes
no
yes
Achievable
yes
yes
yes
partial
Whole of Life Cost (10 year)
$3.9 M
$4.1 M
$5.3 M
$4.3 M
Capital Cost
$3.9 M
$1.4 M
$4.4 M
$1.4 M
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preferred

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Option 2 Complete Exit from Wairere House is the Preferred Option. It delivers the best protection for
the heritage col ections and trust in government, as well as being the lowest risk option since the new
storage environments meet workplace safety standards. It is the best value for money option that
meets organisation requirements and supports property group strategy.
ACT
6. Procurement and commercial arrangements
The arrangements detailed below relate to the preferred Option 2 Complete Exit.
6.1.  Required outcomes
The sourcing strategy for the Architect, Contract Project Manager and Change Manager was
approved by the PtNM Board, and appointments have either been made or are about to be made.
The Col ections Relocation Manager will be appointed internally.
The remaining sourcing to be approved includes:
1.  Main Contractor – this organisation will build the new insulated room within Auckland
Archives, including the air conditioning and cooling components and oversee the contractors
providing other components (shelving, electrical, flooring etc). INFORMATION
2.  Furniture supplier – to provide and instal  shelving as per the requirements.
3.  Training and Change Deliverables - to develop and deliver training and communications
deliverables as outlined in the change plan.
4.  Relocation Services – to assist with the physical move to new premises.
5.  Disposal Services – for secure disposal.
Each of these requires a different sourcing strategy. These wil  be documented in the procurement
OFFICIAL
plan produced by the Contract Project Manager, and will be signed off by the PtNM board. The key
Contract Project Manager responsibilities are detailed in Appendix E.
7. Deliverables (preferred op
THE tion)
The project will deliver the following:
Out of scope
UNDER
•  New shelving designed to efficiently and safely house collections. Services to install the new
shelving.4
•  Services to dismantle or move old shelving.
•  Packaging boxes. Some temporary until the packed items are unpacked, and some
permanent storage boxes that wil  be used to move and then store col ection items.

3 For detailed specifications, refer to the enhanced requirements documented by Stephenson and Turner: Outline
specifications
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•  Services to pack and move collection items out of Wairere House and to move collections
around within Rugby House to accommodate the items coming from Wairere House.
•  Services to catalogue or withdraw collection items.
•  Services to securely dispose of collection items.
•  Change Management, Communications and training collateral and services.
ACT
Out of scope
•  Floor filling and alignment to ensure shelving tracks can be installed.
Business Requirements for the collections and their final locations are shown in Appendix B.
8. What is the total cost?

8.1.  Key financial assumptions
•  Life Time of Shelving is 15 years
•  Life Time of Buildings and rooms is 30 years
INFORMATION
•  Analysis Period for Cost Benefit is 10 years
•  The book value of the Overseas Published Col ection (OPC) is nil
•  All options assume an off-set of ongoing costs from rental received from the lease of the top
floor to 9(2)(g)(ii)
There is a risk that the tenant will move
out before DIA has disposed of the building, but this risk exists independently from this project
and its options.
8.2.  Project budget
OFFICIAL
This Project requires a total investment of $3.684m for the recommended option, funded from PtNM
Budget 2019 bid:
THE
•  $1.410m capital expenditure (including $0.235m contingency, being 20% of the capital
investment)
•  $2.274m operating expenditure.

Table 5. Project Costs
Project Budget requirements for preferred Option 2
UNDER
2019/2020 2020/2021
$000
Year 0
Year 1
Total
Capital expenditure
1,410.3
-
1,410.3
Operating expenditure
1,134.5
1,139.4
2,273.9
Total Project Budget
2,544.7
1,139.4
3,684.1

Detailed project costs are shown in Appendix F.

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9. Ongoing costs and benefits:
Ongoing costs of $2.501m over ten years, made up of other operating ($0.588m), depreciation
ACT
($1.224m) and capital charge ($0.689m). Other operating costs (maintenance and utility bills) for the
preferred option over a 10 year period is $0.711m less than the “do nothing” option baseline costs of
$1.299m and represents the benefit of exiting the building. The ongoing costs wil  continue to be
funded from the Property Group baseline.
It is noted that as PtNM (excluding AIMS) only received 2-year funding in Budget 2019, ongoing
funding for depreciation and capital charge will be sought as part of the proposed PtNM Budget 2020
submission.
Table 6. Ongoing Operating Expenditure
Total Project and Ongoing Costs for preferred Option 2-Complete Exit and Dispose of Majority of OPC Col ection
2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 2026/2027 2027/2028 2028/2029 2029/2030
$000
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Total
Capital expenditure
1,410.3
-
-
-
-
-
-
-
-
-
-
1,410.3
Operating expenditure
1,347.0
1,386.3
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
4,774.7
Project operating expenditure
1,134.5
1,139.4
-
-
-
-
-
-
-
-
-
2,273.9
On-going operating expenditure
212.6
246.9
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
2,500.8
Total expenditure
2,757.3
1,386.3
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
6,184.9
INFORMATION
-
Revenue
-
-
-
-
-
-
-
-
-
-
-
-
Capital funding required
1,410.3
-
-
-
-
-
-
-
-
-
-
1,410.3
Operating funding required
1,347.0
1,386.3
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
4,774.7
Realisable cash benefits
-
-
-
-
-
-
-
-
-
-
-
-
10. Whole of life costs:
Whole of Life Costs for the preferred option are $4.121m.
Economic case - Potential value for money
OFFICIAL
Option 1
Option 2
Option 3
Option 4
Move 2° CAR to
Auckland and ATL
Collection to Rugby
House, Move OPC
Move 2° Control ed  Col ection out of
THE
Complete Exit and  Atmosphere Room to  Rugby House back
Dispose of Majority
Auckland Archives  to rented floor at
Do nothing
of OPC Collection
Building
Wairere House
(Preferred)
Key Outputs
Unit
Analysis period
years
10
10
10
10
Capital cost
$
3,
  860,000     1,
  410,259
4,
    370,259
1,
   410,259
Whole of life costs
$
3,
  939,489     4,
  121,006
5,
    316,037
4,
   298,039
Cost-Benefit Analysis of monetary costs and benefits at the Public Sector Discount Rate of 6%
Present value of rental received
$
  -
-

  -
-
Present value of total costs
$
(3,939,489)
(4,121,006)
(5,316,037)
(4,298,039)
UNDER
Benefit Cost Ratio
x : 1
0x : 1
0x : 1
0x : 1
0x : 1
Net present value (NPV)
$
(3,939,489)
(4,121,006)
(5,316,037)
(4,298,039)
NPV rank
Out of 4
1
2
4
3
Payback period
years
No payback
No payback
No payback
No payback
Payback period rank
Out of 4
4
4
4
4
The detailed financials can be accessed here.
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11.3.
Impact analysis
An impact analysis has been completed with members of the Steering Committee5. The impact analysis
focussed on people, processes, systems and tools, organisational model, management and policy.
There are no major systems or process impacts. People impacts are relatively minor, with one part-time fixed-
ACT
term employee affected. There are two other employees who currently use Wairere House as an office
location, but their jobs are not at risk from the exit of the building. It is assumed it will take up to three years
to dispose of the building, so this gives some time for these staff and their managers to come up with
alternative remote work place arrangements.
9(2)(f)(iv)

Also, many National Library staff will be significantly involved in the
project itself, with a large volume of inventory and catalogue work required as part of the change.
11.4.
Key risks and issues
Risks and issues wil  be documented using the Project Management methodology, and any risks that
change status wil  be reported to the relevant governance group.
Risks
INFORMATION
The primary risks6 that result from the project and their mitigations are:
•  Negative response by the public to the disposal of the OPC collection. This wil  be mitigated by the
process of offering the collection to libraries first, and clear communications about the nature of
the items marked for disposal).
•  Negative public and political reaction to divestment from the Whanganui region. This will be
mitigated by communication with political bodies with an interest in regional economic, stressing
that labour impact is virtually nil, and pointing out that a prime waterfront site will become
available to develop with more economically active tenants.
OFFICIAL
•  Inaccurate estimates of packaging and removal costs for any taonga not yet identified within the
collections, and potential damage to government relationships if not handled appropriately. This
will be mitigated during the inventory assessment, when items of likely significance to local iwi are
identified, the relevant iwi wil  be brought in to consult on movement of the item.
THE
Issues
The key issue (and constraint) is the amount of internal staff time available to deliver the collection
inventory, packing and cataloguing work. If sufficient staff time is not available, then it is likely that the
dates for relocation will slip. This slippage is unlikely to affect Whole of Life Costs because it is assumed that
the current costs for Wairere House will continue for three years beyond the date of removal.
11.5.
Dis-benefits
UNDER
The project will reduce the overall storage available to the National Library and could impact on the
National Library’s ability to collect future heritage items. To offset this, annual savings from the property
disposal could be used to contribute to future storage options.



5 Impact Analysis, Stakeholder Engagement Analysis and Plan
6 See Appendix D for details.
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Appendix B: Business requirements
A summary of key business requirements for each of the collections is as follows;
Out of scope
ACT
INFORMATION
OFFICIAL
National Library Overseas Published Col ections (OPC)
THE
Divestment of the items in the OPC stored in Wairere House and Rugby House that do not fit with the
current collecting plan will create enough space to store 5-10 years of expected OPC growth Out of scope

Environmental conditions required for storage are Standard “2” - a dry environment, free from leaks with
air filtering, preferably dark.
UNDER

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8 None of the Wairere House shelving meets this standard currently, with significant gaps in Health and Safety
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Out of scope
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Appendix F: Detailed financials – note from
Heather – only anything relating to OPC in
these tables is in scope
ACT
Project Costs
Budget Year
19-20
20-21
Project Costs
Capex
Out of scope
Fit Out Rugby House and room B21C (Shelving)
   500,

000
contingency @20%
   235,

043
Project Capex Total
1,
  410,259      -
Opex
External Services/Products
Moving Company
   -
   300,

000
Out of scope
Property PM 25% 6 months = 225 hr @ $170/hour
   38,
  250
INFORMATION
Rugby House OPC Disposal
   365,

000
Wairere House OPC Disposal
   115,

000
Legal and Misc consultant fees
   50,
  000
Internal Staff Time
Out of scope
Business PM 12 months @ 75% @100,000pa *30% burden      97,
  500
Staff Set up /label/move Shelving in Rugby House
   30,
  000
Retrieving OPC collection items that will stay
   158,

000
Moving col ections around and out of Rugby House,
corporate library out of WH
   50,
  000OFFICIAL
Project Opex Total
1,
  134,450   1,
  139,400

Total Project and Ongoing Costs for preferred Option 2-Complete Exit and Dispose of Majority of OPC Col ection
2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 2025/2026 2026/2027 2027/2028 2028/2029 2029/2030
$000
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Total
THE
Capital expenditure
DIA project cost
-
-
-
-
-
-
-
-
-
-
-
-
External vendor costs
1,410.3
-
-
-
-
-
-
-
-
-
-
1,410.3
Purchase of tangible assets
-
-
-
-
-
-
-
-
-
-
-
-
Software
-
-
-
-
-
-
-
-
-
-
-
-
Others
-
-
-
-
-
-
-
-
-
-
-
-
1,410.3
-
-
-
-
-
-
-
-
-
-
1,410.3
Operating expenditure
-
Project operating expenditure
-
Personnel
-
-
-
-
-
-
-
-
-
-
-
-
Software maintenance
-
-
-
-
-
-
-
-
-
-
-
-
Internal Staff Time
591.5
513.0
-
-
-
-
-
-
-
-
-
1,104.5
UNDER
Others
543.0
626.4
-
-
-
-
-
-
-
-
-
1,169.4
Total project operating expenditure
1,134.5
1,139.4
-
-
-
-
-
-
-
-
-
2,273.9
On-going operating expenditure
-
Personnel
-
-
-
-
-
-
-
-
-
-
-
-
Other operating expenditures
127.9
93.4
93.4
93.4
30.0
30.0
30.0
30.0
30.0
30.0
-
588.1
Depreciation & amortisation
-
73.3
73.3
73.3
73.3
73.3
73.3
73.3
73.3
73.3
73.3
1,223.9
Capital charge
84.6
80.2
75.8
71.4
67.0
62.6
58.2
53.8
49.4
45.0
40.6
688.8
Total on-going operating expenditure
212.6
246.9
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
2,500.8
Total expenditure
2,757.3
1,386.3
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
6,184.9-
Revenue
-
Revenue Crown
-
-
-
-
-
-
-
-
-
-
-
-
Third party revenue
-
-
-
-
-
-
-
-
-
-
-
-
Total revenue
-
-
-
-
-
-
-
-
-
-
-
-
-
Capital funding required
1,410.3
-
-
-
-
-
-
-
-
-
-
1,410.3
Operating funding required
1,347.0
1,386.3
242.5
238.1
170.3
165.9
161.5
157.1
152.7
148.3
113.9
4,774.7
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Realisable cash benefits
-
-
-
-
-
-
-
-
-
-
-
-
-
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