19. DirApp - AGD BC - Flexible Space i3 - FINAL - 18-05-26
North Ayrshire Council · 2 June 2026
Back to Cabinet — 2 June 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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NORTH AYRSHIRE COUNCIL 2 June 2026 Cabinet Title: Flexible Advanced Manufacturing Space, i3 Irvine: Phase 2, Full Business Case Purpose: To seek endorsement of the Full Business Case for Phase 2 of the Flexible Advanced Manufacturing Space Project at i3, Irvine. Recommendation: That Cabinet agrees to: (a) Endorse the Full Business Case for Phase 2 of the Flexible Advanced Manufacturing Space project at i3, subject to feedback from Scottish and UK Governments and the successful outcome of the tender process; (b) Delegate authority to the Executive Director (Place) to update the Full Business Case to reflect the feedback and outcome of the tender process; and (c) Approve the submission of the Full Business Case to the Ayrshire Economic Joint Committee. 1. Executive Summary 1.1 The i3 Flexible Advanced Manufacturing Space (flexible space) project is one of two projects located at i3 Riverside Business Park in Irvine that is benefitting from an overall investment of over £22M through the Ayrshire Growth Deal. i3 is one of North Ayrshire’s key strategic sites, designated as an Enterprise Area in 2012 to attract life science companies. 1.2 The project is part of a wider programme of new employment space across Ayrshire funded by £69.5M from the AGD, supporting economic infrastructure and engineering and manufacturing sectors and through the Local Regeneration Fund that is delivering additional floorspace in Irvine at Annickbank Innovation Campus on the edge of i3, and at Kyle Road. The overall aim is to meet an identified demand for modern business space where there has been a longstanding issue of market failure, to help grow local businesses and to attract inward investment. Additional funding has also been secured via the £17.4M award for the Levelling Up for Ayrshire: Commercial and Low Carbon Infrastructure project from the Local Regeneration Fund, formerly the Levelling Up Fund. 1.3 Cabinet previously agreed to support the delivery of Phase One, with the approval of the Full Business Case on 29 November 2022 and approval of the related lease on 2
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December 2025. The location of AGD flexible space investment is now focussed entirely on a cluster entirely at Riverside Way informed by increased construction costs, market demand and the successful marketing of the Strategic Investment Campus site for inward investment. 1.4 The draft Full Business Case provided at Appendix One is under review by the Scottish and UK Governments. The tender for the design and build contract works has been published, with receipt of tenders expected in July 2026. Subject to the selection of a preferred bidder within the available budget, it is intended that the contract will be awarded following feedback from Governments and any required adjustments, final endorsement by Cabinet and the approval of the FBC by the Ayrshire Economic Joint Committee (AEJC). 2. Background 2.1 The Ayrshire Growth Deal (AGD) investment in the flexible space project comprises of £11M from Scottish Government and £4M from North Ayrshire Council, plus additional funds leveraged from the Local Regeneration Fund (LRF), formerly Levelling Up Fund (LUF) of £4.706M, and the Vacant and Derelict Land Fund (VDLF) of £0.967M, to help create commercial space in a variety of formats and over a series of phases. 2.2 The i3 Flexible Space project is focussed on investing in new business space in a variety of formats, including large units capable of sub-division and small terraced units for business start-ups or research and development. The project will help address the following issues: • High local demand for industrial space. • Low vacancy rates for industrial space of less than 1% for Irvine, 2.4% for North Ayrshire and 4.4% for West of Scotland (amongst the lowest in the UK). • Insufficient rental values to support financially viable new-build speculative development. • Very limited funding sources available for the public sector to intervene. • Constraints on indigenous companies seeking to grow and expand within North Ayrshire. • Constraints on attracting inward investment through lack of modern premises. • The need to grow the local economy through adapting to modern industrial processes linked to Life Science, Advanced Manufacturing and other sectors. • Ageing stock of existing industrial premises that is facing obsolescence. • Constraints due to companies being less accessible to disabled or mobility impaired job seekers / trainees. • Growing pressure through changes in legislation and customer demand, to create better configured, more energy efficient building stock and eliminate hazardous building materials. 2.3 Phase One of the project involved the construction of an 18,180 square foot (1,690 m2) light industrial unit on a 2.7 acres site with an adjoining yard and parking spaces. The unit, which is capable of subdivision or extension, benefits from dedicated parking including EV charging infrastructure, low energy LED lighting, roof mounted photovoltaic panels and full fibre connectivity. A topping out event was held on 17 February 2026 to celebrate the completion of the project. The property has been leased through a successful marketing campaign with the tenant, Barony Universal, now in occupation.
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2.4 Phase Two will establish an additional unit of similar scale on a site approximately 4.59 acres in size and with a level of fit-out and also includes some development of the wider site to accommodate a Sustainable Urban Drainage System (SUDS) and road infrastructure. 2.5 This Full Business Case (FBC) focusses on Phase Two of the project which requires an overall estimated capital funding of £6.775M comprised of £4.706M from the LRF and £2.069M from the Ayrshire Growth Deal. The funding supports the design and build contract, consultancy costs, fees and staff costs for the development and delivery of the project. The LRF contribution is assisting to address the increase in construction costs over the time period of the AGD. 2.6 The project and wider programme have revenue implications which are set out in Section 4.1. In summary, there will be revenue costs incurred until the unit is occupied and in relation to ongoing wider site maintenance. These costs will be met from existing resources in the short term and recovered through additional rental income, received once the unit and further developments are occupied. The marketing of the unit will commence following the award of contract. 2.7 The key risks related to the project are detailed within the FBC. These include tenders received being above the available budget, potential delays to the expected timeline for the approval of the FBC and award of tender, or unforeseen project complexities that require additional funding. Mitigations include the delivery of Phase One in close proximity to the Phase Two site and the availability of wider site information and the approval of Phase One FBC. 2.8 The draft FBC has been provided at Appendix One for Cabinet’s consideration, whilst initial feedback from both Governments is awaited and the tender process for the design and build contract is underway. The FBC will be updated informed by the feedback and outcome of the tender process for submission to the Ayrshire Economic Joint Committee (AEJC) for approval. Following the award of the contract, the contractor will finalise the design, apply for building warrant and commence the contract works. 2.9 Progress of Phase Two represents continued positive investment in the i3 area and the development of an innovation cluster complemented by wider investment in the Digital Process Manufacturing Centre which adjoins the Phase One and Phase Two flexible space sites, investment in active travel routes into i3 and the expected major investment in AI and data centre development at the Strategic Investment Campus site. 3. Proposals 3.1 It is proposed that Cabinet agrees to: a) Endorse the Full Business Case for Phase 2 of the Flexible Advanced Manufacturing Space project at i3, subject to feedback from Scottish and UK Governments and the successful outcome of the current tender process;
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b) Delegate authority to the Executive Director (Place) to update the Full Business Case to reflect the feedback and outcome of the tender process; and c) Approve the submission of the Full Business Case to the Ayrshire Economic Joint Committee (AEJC). 4. Implications/Socio-economic Duty Financial 4.1 The main financial implications of the project are: i) Capital – An estimated capital investment of £6.775M is required for Phase 2 towards a design and build contract and related costs including staff costs and fees. This is comprised of £2,068,741 from the AGD and £4,706,259 from LRF. These budgets are included in the NAC capital programme. The project’s capital costs will be confirmed in an updated report to Cabinet, following the current tender process and will be subject to the selection of a preferred contractor within the available budget. Feedback from Governments will provide confirmation that Phase Two can proceed and enable the draw down of the Scottish Government AGD grant as part of the project budget. The LRF monies are being prioritised to ensure full expenditure within the fund’s timescales. ii) Revenue – Similar to Phase One, it is anticipated that there will be revenue costs incurred by the Council until the Phase Two unit is occupied, such as building and grounds maintenance, security, rates and utility bills, building insurance, statutory compliance certificates, EPC costs, legal fees and marketing and promotion. In addition, there will also be costs related to wider site maintenance for this Phase and future developments at i3. Revenue costs will be met from existing resources in the short term and will be reimbursed once a tenant is in place and rental income starts to be received. Human Resources 4.2 None. The project is being managed by the Council’s Property Management and Investment (PMI) Team with input from the Growth and Investment Project Lead. Legal 4.3 All Statutory consents have been secured with the exclusion of the Building Warrant which will be secured by the successful contractor. The award of the tender is required within the 150-day period. Furthermore, the Council will require to ensure compliance with the conditions set out within the Local Growth Fund award. Equality/Socio-economic 4.4 The project seeks to tackle market failure through the provision of much needed new, modern and more energy efficient business space to help local businesses grow and expand and to attract inward investment to an area of above average unemployment and low business investment. It will build on recent investment in Phase One of the project which is now under tenancy, and complement the Digital Process Manufacturing Centre (DPMC) pilot project at the adjoining site which is operated by the National Manufacturing Institute Scotland (NMIS).
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Climate Change and Carbon 4.5 An assessment of carbon impact has been undertaken for the project and is included within the business case. The unit will offer modern sustainable design features including sustainable urban drainage, solar panels and electric vehicle charging. In addition, the selected contractor will be required to ensure that the building design will facilitate the ability to achieve recognised standards for CO2 emissions. Key Priorities 4.6 The project will contribute to a range of Council Plan outcomes including the key activities to develop infrastructure to support business growth and support local businesses and economic opportunities. Community Wealth Building 4.7 The project will contribute to Community Wealth Building and will have a significant positive impact on Council’s ambitions under the Land and Assets pillar. In relation to: • Procurement: Local procurement and supply chain opportunities will be created through the project. • Fair Employment: The project will create employment opportunities particularly within the construction sector and wider opportunities when the commercial space is occupied by a tenant. • Land and Assets: The project will regenerate a site which is long term vacant and derelict land and identified as priorities for investment. This will bring underutilised land into positive use to support local social, economic and environmental wellbeing. • Financial Power: The project will invest in localities and leverage external national investment into North Ayrshire. • Plural Ownership: The project will create commercial space to support local businesses to stay and grow in North Ayrshire. Islands Communities Impact Assessment (ICIA) 4.8 None. United Nations Rights of the Child (UNCRC) 4.9 None. Consumer Duty 4.10 None.
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5. Consultation 5.1 The Council’s PMI, Finance, Legal, Business Support and Development and Estates Teams have been involved in the development of the project. An updated report for the Irvine area by property agents has confirmed ongoing demand for the business space alongside ongoing engagement with local businesses by the Business Support and Development team. RUSSELL McCUTCHEON Executive Director (Place) For further information please contact Bruce McClure, Senior Manager, Growth and Investment, on 01294 324176. Background Papers Cabinet Report, 29 November 2022, Flexible Advanced Manufacturing Space, i3 Irvine: Phase 1, Full Business Case Cabinet Report, 21 March 2021, i3 Advanced Manufacturing Space Project, Irvine
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NAC Growth and Investment AGD Business Case 1 i3, ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2 Version No.2 Issue Date: 01 May 2026
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NAC Growth and Investment AGD Business Case 2 VERSION HISTORY Version Date Issued Brief Summary of Version / Change Owner’s Name 1 10 April 2026 First draft version – issued to PMO Marnie Ritchie 2 01 May 2026 Second version addressing initial PMO feedback M Ritchie, L Jamieson, K MacDonald
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NAC Growth and Investment AGD Business Case 3 Table of Contents Part A Project Description Part B The Five Cases 1. EXECUTIVE SUMMARY .............................................................................................. 11 1.1 Introduction .............................................................................................. 11 1.1.1 Project aims & objectives ...................................................................... 12 1.1.2 Project scope ........................................................................................ 12 1.1.3 Project phases ...................................................................................... 14 1.1.4 Structure and content ........................................................................... 18 1.2 Strategic case .......................................................................................... 18 1.2.1 The strategic context ............................................................................ 18 1.2.2 The case for change ............................................................................. 20 1.3 Economic case ........................................................................................ 21 1.3.1 OBC long list and short list ................................................................... 21 1.3.2 The procurement .................................................................................. 23 1.3.3 Key findings and the preferred option ................................................... 23 1.4 Commercial case ..................................................................................... 24 1.4.1 Agreed products and services .............................................................. 24 1.4.2 Agreed risk allocation and charging mechanism .................................. 24 1.4.3 Key contractual arrangements .............................................................. 24 1.4.4 Agreed implementation timescales ....................................................... 24 1.4.5 Accountancy treatment ......................................................................... 25 1.5 Financial case .......................................................................................... 25 1.5.1 Financial expenditure ........................................................................... 26 1.5.2 Overall affordability and balance sheet treatment ................................. 26 1.6 Management case ................................................................................... 27 1.6.1 Project management arrangements ..................................................... 27 1.6.2 Benefits Realisation and Risk Management ......................................... 27 1.6.3 Post project evaluation arrangements .................................................. 27 1.7 Recommendation ..................................................................................... 27 2. THE STRATEGIC CASE ................................................................................................ 29 2.0 Introduction .............................................................................................. 29 2.1 Organisational overview ........................................................................... 30 2.2 Business strategies .................................................................................. 30 2.3.2 Regional Policy Context ........................................................................ 34
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NAC Growth and Investment AGD Business Case 4 2.4 Investment objectives .............................................................................. 36 2.4.1 Strategic need ...................................................................................... 37 2.5 Existing arrangements ............................................................................. 38 2.6 Business needs ....................................................................................... 38 2.6.1 Property market assessment ................................................................ 39 2.7 Potential business scope and key service requirements .......................... 39 2.8 Main benefits criteria ................................................................................ 40 2.9 Main risks ................................................................................................. 41 2.10 Constraints .............................................................................................. 46 2.11 Dependencies .......................................................................................... 46 3. THE ECONOMIC CASE ............................................................................................... 47 3.1 Introduction .............................................................................................. 47 3.2 Critical success factors ............................................................................ 47 3.3 The long-listed options, Flexible Space Programme ................................ 48 3.4 Short-listed options, Flexible Space Programme ..................................... 50 3.5 The procurement process ........................................................................ 56 3.5.1 The Long List Criteria ........................................................................... 56 3.5.2 Long list ................................................................................................ 56 3.5.3 Short list criteria .................................................................................... 57 3.5.4 Short list ................................................................................................ 57 3.6 Economic appraisal .................................................................................. 57 3.6.1 Introduction ........................................................................................... 57 3.6.2 Estimating benefits ............................................................................... 57 3.6.3 Estimating costs ................................................................................... 59 3.6.4 Cost appraisal conclusions ................................................................... 59 3.7 Qualitative benefits appraisal ................................................................... 59 3.7.1 Methodology ......................................................................................... 59 3.7.2 Qualitative benefits criteria ................................................................... 60 3.7.3 Qualitative benefits scoring ................................................................... 61 3.7.4 Analysis of key results .......................................................................... 61 3.8 Risk appraisal – unquantifiables .............................................................. 61 3.9 The preferred option – selected supplier .................................................. 61 3.10 Sensitivity analysis ................................................................................... 62 3.11 The preferred option ................................................................................ 62 3.12 Sustainability and carbon ......................................................................... 62
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NAC Growth and Investment AGD Business Case 5 3.13 Economic / Financial ................................................................................ 62 3.13.1 Embodied Carbon ................................................................................. 62 3.13.2 Operational Carbon .............................................................................. 63 4. THE COMMERCIAL CASE ........................................................................................... 64 4.1 Introduction .............................................................................................. 64 4.2 Required services .................................................................................... 65 4.3 Potential for risk transfer .......................................................................... 67 4.4 Agreed charging mechanism ................................................................... 67 4.5 Agreed contract length ............................................................................. 68 4.6 Key contractual clauses ........................................................................... 68 4.7 Personnel implications (including TUPE) ................................................. 68 4.8 Procurement route and implementation timescales ................................. 68 4.9 FRS 5 accountancy treatment ................................................................. 69 5.0 THE FINANCIAL CASE ................................................................................................ 70 5.1 Introduction .............................................................................................. 70 5.2 Impact on the organisation’s income and expenditure account ............... 71 5.3 Local Regeneration Fund (formerly Levelling Up Fund, 3) ....................... 71 5.4 Impact on the balance sheet .................................................................... 71 5.5 Overall affordability .................................................................................. 72 6.0 THE MANAGEMENT CASE ......................................................................................... 73 6.1 Introduction .............................................................................................. 73 6.2 Programme management arrangements ................................................. 73 6.3 Project management arrangements ......................................................... 74 6.3.1 Project reporting structure .................................................................... 74 6.3.2 Project Roles and Responsibilities ....................................................... 75 6.3.3 Project Plan .......................................................................................... 75 6.4 Use of Special Advisers ........................................................................... 76 6.5 Arrangements for change management ................................................... 77 6.6 Arrangements for benefits realisation ...................................................... 77 6.7 Carbon management ............................................................................... 78 6.8 Arrangements for risk management ......................................................... 78 6.9 Arrangements for contract management .................................................. 79 6.10 Arrangements for post project evaluation ................................................ 79 6.11 OCG Gateway review arrangements ....................................................... 79 6.12 Contingency plans ................................................................................... 80
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NAC Growth and Investment AGD Business Case 6 Appendices 81 APPENDIX A: INCLUSIVE GROWTH HEAT MAP ............................................................................... 82 APPENDIX B: AGD PROJECT LINKS .................................................................................................. 83 APPENDIX C: BENEFITS REALISATION LOGIC CHAIN ...................................................................... 85 APPENDIX D: ECONOMIC MODELLING, i3 FLEXIBLE SPACE PHASE 2 ............................................. 86 APPENDIX E: RISK REGISTER ......................................................................................................... 104 APPENDIX F: INCLUSIVE GROWTH & COMMUNITY WEALTH BUILDING ..................................... 110 APPENDIX G: COMMUNITY BENEFIT STATEMENT ........................................................................ 111 APPENDIX H: EQUALITY IMPACT ASSESSMENT ............................................................................ 113 APPENDIX I: CARBON ANALYSIS ................................................................................................. 121 APPENDIX J: AYRSHIRE GROWTH DEAL CHANGE MANAGEMENT PROCESS ............................... 122 LIST of FIGURES 1: Flexible Space, Phase 1, (4A Riverside Way, now complete and let) 2: Project location showing area of focus of AGD Investment 3: Location of Flex Space Phase 1 & DPMC Pilot (within Booth Welsh), on Riverside Way, i3 4: excerpt from i3 draft masterplan, 2021 5: Image of proposal at OBC / Phase 1 FBC Stage 6: Updated - Proposed Phases of Flexible Space Programme 7: Updated Flexible Space Masterplan 8: Active travel path connections to Riverside Way i3, delivered 2021/22 9: Current active travel route improvements in proximity to Ph 1 Flex Space i3 (shown green) 10: Recent Active Travel Improvements on Long Drive 11: Phase 1, Flex Space (4A Riverside Way), front & rear elevations 12: RIBA 2030 Climate Change Target Metrics 13: Phase 2 Unit drawings 14: Standard AGD Governance approach 15: Organisational chart, showing governance of the project LIST of TABLES 1: Flex Space Phase 2 Unit Specification 2: Flexible Advanced Manufacturing Space estimated floorspace profile at OBC stage 3: Flexible Advanced Manufacturing Space profile – reduced and at FBC Ph 1 stage. 4: Flexible Advanced Manufacturing Space profile – at Phase 2 FBC stage. 5: Strategic Drivers for Investment in Advanced Manufacturing Space at i3 6: Assessment of Options at i3 – Long List at OBC Stage 7: Assessment of Options for i3 - Short List OBC Stage 8: Phase 2 and Phase 1 Options considered 9: Flexible Space Phase 2, Project Milestones (working version) 10: Flexible Advanced Manufacturing Space, Phase 2 - Source of Capital Funds 11: Flexible Space Financial Profile – Capital – updated 12: National Policy and Strategies
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NAC Growth and Investment AGD Business Case 7 13: Project’s Relationship to UK’s Modern Industrial Strategy 14: Project’s Relationship to Scotland’s National Strategy for Economic Transformation 15: Regional & Local Policy & Strategies 16: Flexible Space Investment Objectives 17: Investment Objectives and Stakeholder Benefits 18: Flexible Advanced Manufacturing Space – Project Risks, Updated 19: Critical Success Factors 20: Preferred Way Forward, Flexible Space Programme – OBC Stage 21: Review of Critical Success Factors for Shortlisted Options for Overall Flexible Space Programme at OBC Stage 22: High-level Economic Outcomes at OBC Stage 23: OBC Investment Appraisal Ranking 24: Flexible Space, Phase 1 - Options 25: Flexible Space Phase 2 Options 26: Benefits-Cost Ratio Timeframe - 25 Year Appraisal 27: Benefits-Cost Ratio Timeframe - 25 Year Appraisal (Construction Impacts Removed) 28: Main Benefits 29: i3 Flexible Advanced Manufacturing Space - Outputs, Outcomes and Impacts, Benefits Realisation Plan 30: Qualitative Benefits Criteria 31: Estimated Embodied Carbon, Flexible Space Phase 2 32: Estimated Operational Carbon, Flexible Space Phase 2 33: Estimated Whole Life Carbon, Flexible Space Phase 2 34: FBC Flex Space Phase 2, Risk Transfer Analysis 35: Key timescales for progress of Phase 2 Unit 36: Flexible Space Phase 2, Project Spend Profile 37: Roles & Responsibilities 38: Special Advisers 39: Benefits-Cost Ratio Timeframe - 25 Year Appraisal – Sensitivity Testing of Single Unit 40: Benefits-Cost Ratio Timeframe - 25 Year Appraisal (Construction Impacts Removed) - Sensitivity Testing of Single Unit 41: Economic Outputs – Overall value for money assessment 42: Profile of Benefits Accrued – 5 Year Periods 43: Green House Gas Accounting
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NAC Growth and Investment AGD Business Case 8 PART A: Project Description What is the project about? This project is the second phase of the i3 flexible advanced manufacturing space project at i3 Business Park in Irvine, which is a strategic site for North Ayrshire Council and was designated as a Life Science Enterprise Area in 2012. Phase 1 delivered an advanced industrial unit of 18,180 ft2 (1,690 m2) GIFA to a shell specification suitable for Classes 4, 5 and 6, capable of subdivision to a maximum of 4 self-contained units with a rear service yard and parking spaces, on a total site area of 10,972 m2 or 2.7 acres and at a total cost of £5.147M, which included £0.967M of VDLF funds. The unit is now being leased to Barony Universal Products Ltd who have recently submitted a planning application for an extension to accommodate a new production line and related plant. The budget for Phase 2 is £6,775,000. It should be noted that Phase 2 is mostly being funded by £4,706,259 of the Local Regeneration Fund (formerly the Levelling Up 3 funds) from UK Government, with the remaining funds of £2,068,741 covered by the Ayrshire Growth Deal, comprising £355,650 from North Ayrshire Council and £1,713,091 from Scottish Government. This will deliver a unit of similar size c1,690m2 on a site approximately 4.59 acres in size but also includes some development of the wider site to accommodate suds and roads infrastructure. The project is being delivered in a number of phases. A third phase of the FBC will be submitted in 2027 to cover the final phase of the project. This Full Business Case (FBC) for Phase 2, follows on from an Outline Business Case (OBC) for the overall project which was approved in June 2021 and a Full Business Case for Phase 1 which was approved in December 2022. NAC is seeking the timely endorsement of the FBC for Phase 2 by the Scottish Government and its subsequent approval by the Ayrshire Economic Joint Committee (AEJC) to enable the construction works contract to be awarded by September 2026 and the works to be completed by September 2027. The tender is currently being prepared for publication. Timelines are critical to ensure that the tender award takes place before the 150-day period expires for tenderers holding their costs. The funds sourced from the Local Regeneration Fund require to be spent by 31 March 2028. Tenders will be received for the Phase 2 contract works and the details will be contained within the Commercial Case in Section 4 in an updated version of the FBC. It should be noted that these details will be limited following advice from the Council’s Corporate Procurement Unit, who advised that the sharing of commercial information should be limited prior to the award of the tender. The project will complement Phase 1 of the programme and also the Digital Process Manufacturing Centre (DPMC) facility which is being supported by the Ayrshire Growth Deal (AGD) and has been delivered in partnership with NMIS (National Manufacturing Institute Scotland), University of Strathclyde and CPI (Centre for Process Innovation). The DPMC is currently operating as a pilot in close proximity to the location of the Phase 1 Flex Space unit and the Phase 2 Flex Space site. Why is it being undertaken? Phase 2 of the project will contribute towards meeting current demand for new industrial space within North Ayrshire and Ayrshire, where there is a longstanding issue of market failure that discourages the private sector from building new space. It will help grow local businesses and attract inward investment to an area of above average unemployment and low business investment. It will also help to address an ongoing issue of ageing, obsolete industrial space.
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NAC Growth and Investment AGD Business Case 9 The new space also provides the opportunity for interest from businesses linked to the DPMC project to take up space, helping create a cluster of industry and innovation at i3. How does it fit within the wider Deal? This project contributes to the wider AGD Economic Infrastructure Programme, addressing economic underperformance by helping position Ayrshire as the go-to region for smart manufacturing and digital skills and by improving access to employment opportunities. It complements the Ayrshire Innovation Park development at Kilmarnock and commercial space proposals at Prestwick and provides opportunities for investment linked to the DPMC and Building Digital Capital AGD projects. What is being proposed? The original approved OBC estimated that the project would involve the phased delivery of approximately 9,000 m2 (97,000 sq ft) of floorspace in a variety of building types to suit varying needs, ranging from larger 20,000 sq ft to 40,000 sq ft units capable of subdivision, to small, terraced business incubation units and class 4 offices. A draft masterplan was developed in 2020/21 to show the potential location and scale of development across i3. The majority of the buildings were proposed to be located within a central area of i3, creating a cluster area with the proposed DPMC. A small number of units were also proposed at the large Strategic Investment Campus site at i3, to stimulate interest in this area. A review of costs at Phase 1 FBC stage identified that the costs of delivering each phase was likely to be higher than the estimates contained in the OBC, due to the further development of the project following OBC stage which provided a more accurate assessment of costs but also due to cost inflation. It was then highlighted that the level of floorspace that could be delivered for the available budget would be lower than that approved in the OBC at 9,000 sq m. Projections at Phase 1 FBC stage estimated that the amount of floorspace that could be delivered could within the available budget could be 6,000 sq m and this was accounted for in the economic modelling. In order to offset these increased costs, allocations from the Vacant and Derelict Land Fund have supported the development and delivery of Phase 1 and the Local Regeneration Fund (formerly LUF3) is supporting Phase 2. How will it be delivered? The overall project is being delivered in phases, allowing for a review of the market at key stages. Each phase will be designed by a professionally qualified team, led by architects and tendered in packages over a number of phases through either a traditional procurement route or a design and build route. Phase 2 is the subject of this FBC and has been developed with support from North Ayrshire Council’s architects and quantity surveyors and is being tendered as a design and build contract. What outcomes will it deliver and by when? The outcomes anticipated include the delivery of much needed modern business space, new jobs and construction jobs, support to SMEs, additional GVA, access to related employability and skills programmes for local people including those from disadvantaged or protected characteristic groups and removal of sites from the vacant and derelict land register. A Benefits Realisation Plan has been prepared for the overall project in conjunction with the Ayrshire Growth Deal PMO and Phase 2 will contribute to these outcomes. Who will use it and why? The project will be marketed widely to local companies, including SME’s looking to grow and expand and to inward investment companies from Ayrshire, Scotland, the UK and beyond. A marketing campaign will be prepared for Phase 2. At closing date for marketing, Phase 1 received four bids to lease the premises, providing evidence of demand for Phase 2.
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NAC Growth and Investment AGD Business Case 10 What are the headline figures around what is being proposed? An allocation of £15M from the Ayrshire Growth Deal was agreed for the i3 Flexible Space project, comprised of £11M from Scottish Government and £4M from North Ayrshire Council. Overall, £22.225M is being invested at i3 by the Ayrshire Growth Deal, including an allocation of £7.225M contributing to the DPMC project. This has been added to by £4.706M from the Local Regeneration Fund from UK Government for Phase 2 of the project, providing an overall investment of £26.931M. Phase 2 is the beneficiary of funding from the Local Regeneration Fund as part of an overall £17.5M allocation to North Ayrshire, aiming to address market failure through the delivery of new energy efficient commercial property alongside the provision of low carbon infrastructure at key employment sites including i3. Phase 1 has invested a total of £5.147M, comprising £4.180M of AGD committed capital funding towards the first unit, supported by £0.967M of Vacant and Derelict Land Funds. Figure 1: Flexible Space, Phase 1, (4A Riverside Way, now complete and let)
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NAC Growth and Investment AGD Business Case 11 PART B: The Five Cases 1. EXECUTIVE SUMMARY 1.1 Introduction This Full Business Case (FBC) seeks approval for investment in Phase 2 of the i3 Flexible Advanced Manufacturing Space project of up to a maximum of £2.069M of capital, including a contract with a supplier, to undertake the construction of an 18,191 sq ft (1,690 sq m) industrial unit as a second phase of the project. The remainder of the required funds of £4.706M are being covered by the Local Regeneration Fund (formerly LUF3). The delivery of further phases of the project will be set out in subsequent updates to the FBC. This FBC for Phase 2, follows on from the approval of the first FBC for Phase 1 in December 2022, and the project’s original Outline Business Case (OBC) approved in June 2021 for the investment of £15M in the delivery of approximately 97,000 sq ft (approx. 9,000 sq m) of flexible advanced manufacturing space at i3. The Phase 1 FBC and related change request of April 2022 gained approval for a reduction in the anticipated level of floorspace that would be delivered by the AGD, from 9,000 square metres to 6,000 square metres. Additional funds secured from the Local Regeneration Fund (formerly LUF3) have sought to offset this risk to project outcomes. The overall project includes the delivery of business space in various configurations, aiming to meet demand in a series of phases, responding to market requirements and with a focus on high value sectors. This includes chemical and life science manufacturing, more general local demand and opportunities for space emerging from the development of the Digital Process Manufacturing Centre (DPMC) at i3 by NMIS, CPI and NAC. The DPMC is being delivered as part of the same AGD Economic Infrastructure Programme and is now operational and engaging with business and industry as an NMIS specialist centre at Riverside Way in i3. Figure 2: Project location showing area of focus of AGD Investment
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NAC Growth and Investment AGD Business Case 12 1.1.1 Project aims & objectives The main investment objectives of the overall project are: • To create flexible business space capable of meeting manufacturing requirements for chemical and life sciences, but also for a wide range of other high value sectors; • To create a centre of digital innovation which offers digital tools, support and innovation scaled to a national market supporting a restructure of the regional economy to deliver advanced manufacturing; • To create serviced industrial land and capable of immediate development; • To create opportunities for employment and inclusive growth with particular emphasis on making connections to local communities, schools and colleges in preparation for employment, particularly in areas of deprivation and targeting people drawn from disadvantaged or Protected Characteristic groups including women and young people; • To attract mobile and private sector investment both from abroad and from indigenous companies; and • To create a sustainable, high quality business location and R&D cluster, capable of meeting and keeping pace with the changing demands of high value manufacturing sectors and complementing national initiatives including NMIS The project is now beginning to deliver on these objectives with the completion of the first phase of business space and the operation of the DPMC pilot, which is adjacent to flex space, combining to help enable a small innovation cluster. The project also aligns with Inclusive Growth & Community Wealth Building objectives (see Appendix F). 1.1.2 Project scope The scope of the overall project is to contribute to the AGD’s Economic Infrastructure Programme using £15M of AGD investment, additional leverage of £4.706M from the UK Government’s Local Regeneration Fund (formerly LUF 3) and early support funding of £0.967M from the Scottish Government’s Vacant and Derelict Land Fund (VDLF), to create modern flexible advanced manufacturing space that addresses the current issues businesses and inward investors are facing, with lack of modern business space provision in Ayrshire, impacting on business growth and expansion. The project is focused on delivering this space at i3, east of Irvine town centre. The area was developed as part of Irvine New Town from the early 1970s. Given that the town was originally planned with a much higher population than realised, and due to differing industrial structures at the time, the i3 area is of significant scale and covers around 132 ha. Parts of i3 remain undeveloped and/or are in private ownerships and the flexible space development will help to address this by focusing AGD development within a central area around Riverside Way. The inclusion of flexible space and DPMC within this area helps to provide a sense of consolidation, focus and longer term, presents the opportunity to provide services and networking opportunities for businesses (see Figure 3). The large SIC site owned by NAC (see Figure 2) was recently marketed for sale in 2025 and is now in the process of being sold, subject to suspensive conditions. It has also been put forward for AI Growth Zone status, which is currently being considered.
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NAC Growth and Investment AGD Business Case 13 Figure 3: Location of Flex Space Phase 1 and DPMC Pilot (within Booth Welsh), on Riverside Way, i3 The advanced manufacturing space proposed will complement the DPMC project and provide modern space in a number of phases. Now operational as a pilot, the DPMC is raising the profile of i3 and encouraging business investment and growth with a focus on Industry 4.0. The proposed investments are part of a strategy for i3 that allows the central Riverside Way area to be developed as a core commercial space and potential service area for i3, that includes flexible space and the DPMC facility, with the large Strategic Investment Campus targeted for major inward investment linked to potential datacentre and AI development through the sale of the site. The proposed Phase 2 unit includes the following specifications: Table 1: Flex Space Phase 2 Unit Specification ITEM PROVISION GENERAL • Unit specification suitable for immediate occupation • GIFA 18,191 ft2 (1690m2) • Site Area 74,023ft2 (6877m2) • Steel portal frame • Profiled and microrib cladding panels to Building Standards Class 1 Storage/Factory Use • Cat A office fit out • Fully serviced with water and electricity (metered) • BT Openreach FTTP fibre connection • Storage areas for waste collection and provision of infrastructure to facilitate future installation of sprinkler system tank provided
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NAC Growth and Investment AGD Business Case 14 ITEM PROVISION POWER • 100kVA 3-phase supply to each unit • additional ducts to each sub-divided unit will be installed to allow future Tenants to apply for individual LV connections based upon their anticipated design load requirements. • all apparatus and wiring connected to the low voltage systems shall be suitable for use with a 3 Phase, 4 Wire, 400 Volt or 230 Volt, Single Phase, 50 Hertz earthed neutral system. WAREHOUSE/ FACTORY • 8m haunch height (9.28m to ridge) • Concrete floors with 50kN/m2 floor loading • 10% roof lights • Powered 4.4m (H) x 4.76m (W) level loading doors • High bay LED lighting (330 lux) OFFICE & CONVENIENCE • Suspended ceilings with recessed LED lighting • Kitchen • Unisex and accessible WCs EXTERNAL • Secure 31.5m deep concrete service yard with gates will be formed to the rear of the property accessed from a road constructed to adoptable standards and suitable for RCC (Roads Construction Consent) • Dedicated car parking to NRDG Standards • Covered Bicycle storage to NRDG Standards SUSTAINABILITY • EPC rating "B" • EV charging points • Water saving sanitaryware • Low energy PIR controlled LED lighting • Air source heat pump for office heating and cooling • Roof mounted solar PV installed with scope to increase this as required. SECURITY • gated access, • intruder alarm • internal & external security lighting • 2.4m high open mesh steel panel Security Fencing to the boundary VEHICLE PARKING • 35 spaces for General Industrial (Class 5) use in accordance with minimum NRDG Standards DISABLED PARKING • 4 spaces EV PARKING • 4 active spaces / 8 passive spaces CYCLE PARKING • 12 spaces or 6 cycle stands The unit will be constructed north-west of and immediately adjacent to the Phase 1 unit and in close proximity to the DPMC Phase 1 pilot facility. Phase 1 and 2 of the flex space project and the DPMC pilot will begin to create the cluster of activity at i3. 1.1.3 Project phases Estimated Floorspace at Outline Business Case Stage The original OBC anticipated that the following range of units in Table 2 would be delivered in a number of phases through the £15M investment. This was informed through market assessment and includes the Phase 1 unit highlighted in red, which is now complete.
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NAC Growth and Investment AGD Business Case 15 Table 2: Flexible Advanced Manufacturing Space estimated floorspace profile at OBC stage Description Size - sq m Size – sq ft Flexible Space Estimated Floorspace at OBC Stage Terraced units, capable of subdivision 232 2,500 Terraced units, capable of subdivision 465 5,000 Modular building (capable of subdivision and or expansion) 1,858 20,000 Serviced plot tbc tbc Two office pavilions (2 x 425 sq.m.) 850 9,150 Modular building (capable of subdivision and or expansion) 3,716 40,000 Modular building (capable of subdivision and or expansion) 1,858 20,000 Total estimated floorspace 8,979 96,650 These configurations are shown in the i3 draft Masterplan from 2021. Please see the excerpts below. Figure 4 shows the proposed buildings in blue as part of the i3 AGD investment and the potential development in other areas of i3 in red, should funding become available. Figure 5 shows an image of the proposals at that stage. Figure 4: excerpt from i3 draft masterplan, 2021 Figure 5: Image of proposal at OBC / Phase 1 FBC Stage Proposed Flex Space Phase 1 Booth Welsh & DPMC Ph 1 Proposed terraced units Proposed DPMC Phase 2
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NAC Growth and Investment AGD Business Case 16 Estimated Floorspace at Phase 1, Full Business Case Stage The Phase 1 FBC advised that due to cost increases, the scale of floorspace to be delivered was likely to be reduced and it was assumed that the estimated floorspace that could be delivered would be in the region of 6,000 m2 for which the profile was shown in the table below with Phase 1 highlighted again. Table 3: Flexible Advanced Manufacturing Space profile – reduced and at FBC Phase 1 stage. Description Size - sq m Size – sq ft Flexible Space Estimated Floorspace at Phase 1 FBC Stage Terraced units, capable of subdivision 232 2,500 Terraced units, capable of subdivision 465 5,000 Modular building (capable of subdivision and or expansion) 1,690 18,180 Modular building (capable of subdivision and or expansion) 1,858 20,000 Modular building (capable of subdivision and or expansion) 1,858 20,000 Total estimated floorspace 6,103 65,680 Estimated Floorspace at Phase 2, Full Business Case Stage For the purpose of Phase 2, the scale of floorspace to be delivered has been reviewed again and the approach to how the AGD investment would be developed has also been reviewed as part of wider considerations of the land available. The amended plans below show the development of industrial units off Riverside Way, including the location of the Phase 1 and Phase 2 units and a proposed Phase 3 which is terraced units and potential future development plots or a further unit, subject to future funding (Figure 6). A cost plan for Phase 3 is awaited, to establish if additional floorspace can be delivered beyond the terraced units, to ensure that the floorspace can be achieved that was estimated at Phase 1. Whilst the Programme has benefited from Local Regeneration Funds, Phase 2 requires to deliver significant infrastructure for the wider site, as a result of planning requirements. The focus of development has been intensified around DPMC Phase 1 (Figure 7), with the large SIC site indicated on the original masterplan now in the process of being sold for redevelopment. Figure 7 also shows a potential site option for DPMC Phase 2 as part of the cluster. Further investment is also anticipated as the new tenant of Phase 1 has submitted a planning application for an extension of approximately 1,200m2.
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NAC Growth and Investment AGD Business Case 17 Figure 6: Updated - Proposed Phases of Flexible Space Programme Figure 7: Updated Flexible Space Masterplan
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NAC Growth and Investment AGD Business Case 18 Table 4: Flexible Advanced Manufacturing Space profile – at Phase 2 FBC stage. Description Status Square metres Square feet Flexible Space Estimated Floorspace at Phase 2 FBC Stage Modular building (capable of subdivision & expansion), Phase 1 Complete 1,690 18,180 Modular building (capable of subdivision & expansion), Phase 2 FBC 1,690 18,180 Terraced units (3A), capable of subdivision, proposed Phase 3 Design 642 6,910 Terraced units (3B), capable of subdivision, proposed Phase 3 Design 426 4,585 Remaining floorspace to be achieved to meet current floorspace target, by serviced plots or additional unit Design 1,655 17,825 Total estimated floorspace 6,103 65,680 1.1.4 Structure and content This Full Business Case (FBC) sets out details related to Phase 2 of the project. The format used is the Five Case Model and follows the AGD Project Management Office (PMO) template. Subsequent updates to this FBC will be submitted for future phases of the project. 1.2 Strategic case 1.2.1 The strategic context The following table summarises the strategic drivers for this investment with the associated national, regional and local strategy, plan or policy listed below: Table 5: Strategic Drivers for Investment in Advanced Manufacturing Space at i3 UK Policy Agenda Scottish Government Policy Ayrshire Regional Policy The UK’s Modern Industrial Strategy 2025 Scotland’s National Strategy for Economic Transformation, 2022-2032 Ayrshire Regional Economic Strategy 2023- 2033 UK Life Sciences Sector Plan 2025 A Manufacturing Future for Scotland, 2016 North Ayrshire Council, Council Plan 2023-2028 Levelling Up the UK: Executive Summary Making Scotland’s Future: a recovery plan for manufacturing & subsequent programme Sustainable North Ayrshire Strategy 2024-2027 Scotland’s 2018 – 2032 Climate Change Plan, Updated 2020 North Ayrshire Council Community Wealth Building Strategy 2024-2027 Life and Chemical Sciences Manufacturing Strategy for Scotland Skills and Investment Plan for Scotland’s Life and Chemical Sciences LOIP – Irvine Locality Action Plan 2023/24 Life Sciences Strategy for Scotland 2025 Vision Ayrshire Growth Deal Agreement Chemical Sciences Scotland Strategic Plan 2025 North Ayrshire Council Local Development Plan 2 and emerging LDP3 Green Data Centres and Digital Connectivity Vision and Action Plan, 2021 Shortlist for Data Centre Site Selection in Scotland 2021 A changing nation: how Scotland will thrive in a digital world Shaping Scotland’s Economy: Inward Investment Plan 2020 Programme for Government, 2024 to 2025 Serving Scotland National Planning Framework 4, 2023
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NAC Growth and Investment AGD Business Case 19 National Innovation Strategy, 2023-33 This £15M project is part of an overall investment of £22.225M that is being sought for i3 through the Ayrshire Growth Deal, with committed funding secured from UK Government (£6.225M), Scottish Government (£11M) and North Ayrshire Council (£5M). £7.225M is focussed on investment in the Digital Process Manufacturing Centre (DPMC) which is now operational as a pilot with partners and is assisting in driving demand for space at i3 and raising the profile of i3. It provides a unique facility and hub for businesses within process manufacturing sectors (including Pharmaceutical Products, Oil & Gas, Chemicals and Chemical Products, Agrichemicals (under life sciences), Food & Drink, Fast moving consumer goods (FMCG) and Water (collection, treatment, supply) that are seeking to improve their productivity and modernise their processes through digital automation. If the pilot is successful, Phase 2 will be progressed which can expand on opportunities to provide events and meeting space, R&D space, bio-manufacturing facilities and sector support. The UK Government’s £6.225M contribution and a £1M contribution from North Ayrshire Council are supporting the DPMC project. Previously a separate AGD Digital Programme Business Case led by South Ayrshire Council, had included investment towards a subsea fibre optic cable and associated infrastructure that may have had opportunities for Irvine as a potential landing point and investment linked to data centres. However, a commercial case could not be advanced for the project and the funds for the project have since been reallocated toward the Building Digital Capital Programme across the three Ayrshire authorities, with North Ayrshire receiving c £4.631M which could bring further investment to the i3 area. This would complement investment being made by UK Government as part of the 5G Innovation Regions in partnership with NMIS at i3, to provide a private 5G network with investment of £0.7M and the ambitions for AI campus status focussed on the large Strategic Investment Campus. The Heat Map at Appendix A illustrates the strengths of relationships between the AGD projects and the i3 project. The AGD Project Links Table at Appendix B, provides further detail on particular AGD projects where there are strong links. I3 is also the focus of a number of improvements related to active travel to improve connections to and from i3. Overall, the capital investment spent or planned at i3 through UK & Scottish Government funds, amounts to approximately £33.5M. Figure 8: active travel path connections to Riverside Way i3, delivered 2021/22 Figure 9: current active travel improvements in proximity to Phase 1 Flex Space (shown in green) Figure 10: Recent Active Travel Improvements on Long Drive
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NAC Growth and Investment AGD Business Case 20 1.2.2 The case for change AGD funding is required in order to meet demand for modern industrial accommodation in the face of acute market failure. This is preventing private sector investment in speculative industrial development across Ayrshire and most non-prime locations in Scotland. Recent research commissioned by NAC has identified the following issues that demonstrate the requirement for investment: • High demand for industrial space; • Low vacancy rates for industrial space of less than 1% for Irvine, 2.4% for North Ayrshire and 4.4% for West Central Scotland (among the lowest in the UK); (These figures were previously 4.5% for Irvine, 4.5% for North Ayrshire and 3.4% for West of Scotland at Phase 1 FBC stage and 4%, 6% and 4% respectively at OBC stage) • Insufficient rental values to support financially viable, new-build speculative development; • Very limited funding sources available for the public sector to intervene; • Constraints on indigenous companies seeking to grow and expand within North Ayrshire; • Constraints on attracting inward investment through lack of modern premises; • Ageing building stock of existing industrial premises that is facing obsolescence; • Constraints due to companies being less accessible to disabled or mobility impaired job seekers / trainees; and • Growing pressure through changes in legislation and customer demand, to create better configured, more energy efficient building stock and eliminate hazardous building materials. The overall i3 proposal has included engagement with the following partners and local stakeholders through discussions and through commissioned research. • AGD PMO Team • Key Advisors (Scottish Enterprise) • Local businesses • Irvine Locality Planning Partnership • Local industry leaders • Academia – NMIS, University of Strathclyde, CPI and Ayrshire College • Other Council teams
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NAC Growth and Investment AGD Business Case 21 1.3 Economic case 1.3.1 OBC long list and short list In terms of the best option for delivery of the overall programme for this project to meet demand, a wide range of potential options were considered at OBC stage, in terms of location, interventions and scale of interventions, funding sources and timescales, shown in the table below. A preferred option was identified for each category and three options were then considered in greater detail within the Economic Case: • Do Nothing – the Counterfactual Option; • The Preferred Option: Flexible Space, Phased; and • The Ambitious Option: Flexible Space, Accelerated. The Critical Success Factors used when evaluating the long list of options below included: • How does the option satisfy the AGD Vision & key themes? • How does the option provide a holistic fit and synergy with other national, regional and local strategies? • How does the option optimise value for money? • Is the option viable and can it be delivered? • Will the option meet an identified market demand, remove a constraint and how will it affect existing supply? • Can the option be funded by both the up-front capital and future revenue? The long list for the original OBC stage and the overall programme, is shown in the table below: Table 6: Assessment of Options at i3 – Long List at OBC Stage OPTIONS 1. LOCATION 1.1 i3 Enterprise Area (EA) 1.2 Other North Ayrshire Site 1.3 Other Ayrshire Sites i3 is one of two locations in Scotland marketed by SDI for manufacturing linked to life sciences & related sectors. It has key locational benefits for investors, with existing established businesses. Preferred Option A limited number of other North Ayrshire sites have capacity to accommodate new development but are unable to offer the locational advantages of i3, installed infrastructure capacity and existing business base. Discounted Option Irvine has key sector and cluster strengths in life sciences, and is therefore an attractive proposition for investors in comparison to other Ayrshire sites. Discounted Option 2.1 Site Preparation Only 2.2 Flexible Space on all Sites 2.3 Flexible Space 1. INTERVENTION Create prepared site platforms at i3, ready for immediate development. This would offer a low-cost option but would fail to meet the needs of life sciences and related manu-facturing businesses for premises. Discounted Option Flexible space across the whole i3 area, including the large Strategic Investment Campus could mean the space would be too dispersed, reducing its impact and chance to create a central cluster of activity. Potential Future Option Delivering flexible space on a phased basis linked to the DPMC proposal, and that addresses market need for business space with the opportunity to review the specification after Phase 1. Preferred Option 3. SCALE 3.1 Small-Scale / Cautious 3.2 Mid-Scale Market Ready 3.3 Large-Scale / Ambitious Developing 1 or 2 shell buildings to test market Similar to Option 2.3, a market-ready proposition that Similar to Option 2.2, cost savings could be made if
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NAC Growth and Investment AGD Business Case 22 interest but discounted due to value for money factors i.e. there is clear demand for the units proposed but developing in smaller phases will ultimately increase costs. Discounted Option balances forecast demand, level of risk, cost efficiencies and future flexibility. Preferred Option large-scale flexible space was delivered. This could significantly increase costs and risks, overstep the known level of demand and is likely to be in advance of need. Discounted Option 4. FUNDING SOURCES 4.1 Seek AGD Funding 4.2 Seek Other Public Funds 4.3 Seek Private Partner AGD funding through the public sector allows business space to be provided in the face of market failure as development is not viable for the private sector. Consider- ation to be given to a rolling development programme utilising development income. Preferred Option There are no alternative public sector funding sources identified to deliver this scale of intervention. We will continue to scan the market to identify other funding sources and respond accordingly. Potential Future Option Attracting private investment to develop new business space was considered but has been discounted due to its lack of viability in Ayrshire. This option will be reviewed as a future option. Discounted Option 5. TIMESCALES 5.1 Immediate 5.2 Phased Approach 5.3 Postpone Similar to 2.2 and 3.3, there is potential to develop the whole of the i3 site immediately. This would deliver cost savings to the public sector but would also increase risk and remove the option to adapt the size/ layout of proposed space on demand. Discounted Option Delivering the AGD investment through a phased approach minimises risk – this creates flexible manufacturing space, alongside the DPMC project, to meet immediate demand and allows further phases of flexible space, based on take-up of Phase 1. Preferred Option The project could be planned, designed, costed, approved and all relevant permissions secured but construction postponed til occupier interest is secured. This option fails to meet the current market need for good quality business units that are ready for occupation Discounted Option The short-list for the OBC stage is shown in the table below: Table 7: Assessment of Options for i3 - Short List OBC Stage Option 1 Do Nothing Option 2 (Preferred) Flexible Space, Phased Option 3 (Ambitious) Flexible Space, Accelerated Delivers no additional floorspace Attracts 0 occupiers Delivers 0 gross jobs Delivers 8,830 sqm floorspace (NIA) Attracts 8 to 16 occupiers Delivers 162 net jobs Delivers 8,830 sqm floorspace (NIA) Attracts 8 to 16 occupiers Delivers 162 net jobs Investment Level AGD NAC & SG £0 Other Funding £0 Investment Level AGD NAC £4M AGD SG £11M Investment Level AGD NAC £4M AGD SG £11M Delivery Timescale N/A Delivery Timescale (21/22) to (27/28) Delivery Timescale (21/22) to (24/25) The conclusion of the Economic Appraisal for the OBC was that a phased delivery of the floorspace was the preferred approach. Phase 1 was progressed as a first unit to accelerate the programme as much as possible and was developed during the challenges of COVID. Whilst Option 2 - Phased Delivery was the preferred option for the OBC, Section 3 provides an analysis of options specifically for delivering Phase 2, which is the subject of this FBC and Appendix D provides detail on the economic modelling. The table below provides a summary of the options considered for Phase 2 and a comparison of the options previously considered for Phase 1.
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NAC Growth and Investment AGD Business Case 23 Table 8: Phase 2 and Phase 1 Options considered Options Comparison across phases Options for Phase 1 Options for Phase 2 Option 1 Do nothing Option 1 Do Nothing Option 2: Preferred Option Preferred Option, Deliver 18,180 sq ft Phase 1 unit with occupancy achieved half-way through 24/25 Option 2 Preferred Option Deliver 18,180 sq ft Phase 2 unit by June 2027, with occupancy achieved by April 2028. Preferred Option Sensitivity Check – Negative Impact – assumes unit subdivided into 4 with 100% occupancy achieved in 2027/28 Preferred Option Sensitivity Check – Negative Impact – assumes unit subdivided into 4 with 100% occupancy achieved by March 2029. Preferred Option Sensitivity Check – Positive Impact – assumes unit fully occupied at the start of 24/25 Preferred Option Sensitivity Check – Positive Impact – assumes unit fully occupied by June 2027. Option 3 Deliver Phase 2 instead – comprised of two sets of terraced units and one modular unit Option 3 Subdivided Unit Deliver 17,544 sq ft unit subdivided into 4 lettable units by 30 June 2027 with 100% occupancy by April 2029. Option 4 Terraced Units Deliver two sets of terraced units totaling 11,495 sq ft with 100% occupancy by April 2029 Option 5 Smaller Unit, Local Regen Fund only Deliver smaller single unit within Local Regeneration Fund cost envelope (c13,788 sq ft) by April 2027 with occupancy by Jan 2028. 1.3.2 The procurement The procurement for the Phase 2 of the project involves North Ayrshire Council procuring a contract for the build of the industrial unit and surrounding grounds. The Council is seeking tenders through the Public Contracts Scotland (PCS) Portal for contractors to undertake the works Riverside Way, i3 in Irvine. The Council has an available budget of £6.775M for the project. The following paragraph will be updated following the tender process: A total of xx suppliers submitted tenders and were assessed at the pre-qualification stage by the NAC’s Corporate Procurement Team, in terms of initial pass / fail criteria and by the service team, following which the xx suppliers proceeded to the quality evaluation stage. At the evaluation stage the assessment was made based on 80% cost and 20% quality. Suppliers were assessed against a number of criterion for quality. The xx suppliers then proceeded to the commercial envelope stage where they were scored overall and a competent bid was identified from the highest scoring contractor. 1.3.3 Key findings and the preferred option The findings from the procurement for Phase 2 of the project will relate to the quality and cost assessment of bids related to capital expenditure. The quality and commercial assessments will identify a preferred bidder for the works and in accordance with the tender process this supplier should be the preferred bidder based on their combined scores.
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NAC Growth and Investment AGD Business Case 24 1.4 Commercial case 1.4.1 Agreed products and services Goods and services are being sought as part of one fixed price contract for Phase 2 of the Advanced Manufacturing Space project. This relates to the construction of an industrial unit, its associated grounds and suds and roads infrastructure for the wider site. Tenderers will be invited to submit tenders on a fixed price basis and will then be evaluated by North Ayrshire Council. It should be noted that the tender remains open for a period of 150 days from the tender return date (xx xxxxx 2026). The tender will expire on xx xxxx 2026. For the overall project commissioned services are likely to include the following: • Quantity surveying • Architecture • Geotechnical • Cost consultants • M&E • Site investigation work • Land based engineering works • Industrial building construction company 1.4.2 Agreed risk allocation and charging mechanism Risks that could affect the successful implementation of the project have been identified and are set out in detail in the risk register attached as Appendix E. This includes details of risk owners, risk evaluation and mitigation measures. A key risk at the moment is the uncertain length of time to endorse and approve the FBC prior to the award of the contract within the required timescale. The payment mechanism agreed with the service provider with respect to the planned construction works will involve submission of invoices by the contractor at agreed stages of the works, which will be certified for payment by NAC. 1.4.3 Key contractual arrangements The Form of Contract for the project is the SBCC Design and Build Contract for use in Scotland (DB/Scot), 2016 edition incorporating Amendment 1 February 2018. The key contractual clauses are as follows: • Clause 4.18.1 Retention Percentage – 3% • Clause 6.4.1 Contractors Insurance – injury to persons or property - £10,000,000 • Clause 6.5.1 Insurance – Liability of Employer - £10,000,000 • Clause 6.7 Insurance of the works – Option A applies (By Contractor) • Clause 6.15 Contractors Designed Portion Professional Indemnity Insurance - £10M There are no personnel implications and TUPE does not apply. It would be inappropriate to incorporate contract clauses for occupiers of the completed units. However, there is an opportunity to work with tenants to maximise impacts and benefits for local people and local businesses through supply chains and local procurement mechanisms. 1.4.4 Agreed implementation timescales The key milestones and delivery dates for the overall Phase 2 project are shown in detail in the table below. A Delivery Assurance Implementation Plan (DAIP) was produced by the AGD PMO in early 2026. The milestones vary slightly from the detail in the DAIP that has been shared with Governments, following the finalisation of the tender and FBC and this is illustrated below the first table.
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NAC Growth and Investment AGD Business Case 25 Table 9: Flexible Space Phase 2, Project Milestones (working version) and comparisons to DAIP FLEXIBLE SPACE, PHASE 2: Key Milestones Estimated date Quarter (financial year) Status Flexible Space Outline Business Case Approved Phase 1, Full Business Case granted Approved Planning approval granted for Phase 2 Complete NAC Gate 3, Project Board, Investment Decision to tender 23 Jan 26 Q4, 25/26 Complete NAC publish Invitation to Tender (ITT) (estimate) 06 May 26 Q1, 26/27 Not started NAC receive tenders (estimate) 01 Jul 26 Q2, 26/27 Not started NAC tender evaluation period ends 14 Aug 26 Q2, 26/27 Not started Government endorse Phase 2 FBC 21 Aug 26 Q2, 26/27 Not started NAC report FBC to Cabinet 01 Sept 26 Q2, 26/27 Not started AEPB & AEJC approve Phase 2 FBC 11 Sept 26 Q2, 26/27 Not started NAC award Phase 2 contract, D&B contract commences 16 Sept 26 Q2, 26/27 Not started NAC commences marketing of the building Sept 26 Q2, 26/27 Not started Contractor completes construction works 22 Sept 27 Q2, 27/28 Not started Contractor handover to NAC 22 Oct 27 Q3, 27/28 Not started NAC sets closing date for interest and selection of tenant tbc tbc Not started Current deadline for claiming all Local Regeneration Fund 31 Mar 28 Q4, 27/28 In progress NAC reports Outputs/Outcomes/CWB tbc tbc Not started NAC delivers subsequent Phases and related FBCs. tbc tbc Not started FLEXIBLE SPACE PHASE 2, ESTIMATED TIMELINES Y7 (2026/27) Y8 (2027/28) Y9 (2028/29) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Current Delivery Assurance Imp Plan dates FBC FBC approval by June 26, Q1 Contract award/delivery phase from Jul 26, Q2, to contract completion in Jul 27, Q2. Updated FBC milestone dates FBC FBC approval during Sept 26 in Q2 Contract award/delivery phase from Sept 26, Q2, to contract completion in Sept 27, Q2. 1.4.5 Accountancy treatment It is envisaged that the assets underpinning the delivery of the service will be on the balance sheet of the organisation should the development remain in the ownership of NAC. 1.5 Financial case The financial implication of this procurement is a commitment by North Ayrshire Council, to a contract with a maximum value within the budget available for the delivery of the Phase 2 over the course of 2026, into 2027. The capital funds comprise of the following, within the table below including the Local Regeneration Fund (formerly Levelling Up Funding (LUF) 3). Table 10: Flexible Advanced Manufacturing Space, Phase 2 - Source of Capital Funds Source Amount North Ayrshire Council AGD contribution £355,650 Scottish Government AGD contribution £1,713,091 Local Regeneration Fund (Levelling Up Funding (LUF) 3) £4,706,259 Total £6,775,000
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NAC Growth and Investment AGD Business Case 26 1.5.1 Financial expenditure The majority of the financial expenditure for this procurement will take place across financial year 2026/27 (excluding retention) and the contract is expected to be complete by mid to late 2027. 1.5.2 Overall affordability and balance sheet treatment The proposed works have been the subject of a best value procurement exercise. The award of the tender will require to be signed off by the Ayrshire Economic Joint Committee, following endorsement from NAC’s own Cabinet. The Council has ensured there are sufficient funds in place to cover the project and will confirm following the process if the tender cost is below the budget available. The table below is a current summary of the project’s financial appraisal. Proposed investment is in phases. NAC will be responsible for ongoing maintenance and management of the buildings through an appointed agent, until let. Anticipated rental income for Phase 2 is £127,400 per annum. The project budget includes for clawback costs from Scottish Enterprise, related to the original sale of land and change in delineation of the defined developable area, following the decision to focus all AGD investment at Riverside Way. Table 11a: Flexible Space Financial Profile – Capital Expenditure £'000 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 Phase 1 5,147 34 140 217 403 2,912 1,387 53 0 0 0 0 Phase 2 6,775 0 0 0 0 51 305 132 2,068 4,220 0 0 Phase 3 8,751 0 0 0 0 0 0 0 230 3,655 4,866 0 Total 20,673 34 140 217 403 2,963 1,692 185 2,298 7,875 4,866 0 Table 11b: Flexible Space Financial Profile – Capital Funding £’000 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 Scottish Government 11,000 307 2,195 1,383 0 0 2,372 2,372 2,372 NAC 4,000 34 83 122 0 51 308 53 230 2,996 2,494 (2,372) AGD Total 15,000 34 83 122 307 2,246 1,692 53 230 5,368 4,866 0 VDLF 967 56 95 97 718 LRF (Prev LUF3) 4,706 132 2,068 2,507 Project Total 20,673 34 140 217 403 2,963 1,692 185 2,298 7,875 4,866 0 It is anticipated that the completed project will generate income from the following: • Ongoing rental income through the lease of completed units; and • Longer term, One-off capital receipts from the sale of buildings and/or development plots. A draft Risk Register is included at Appendix E. The main financial risks are expected to be: • Design and technical studies result in additional costs beyond the contingencies and optimism bias allowed for; • Slippage / delay in the programme that incurs additional costs; • Unforeseen project complexities that require additional funding; • Insufficient availability of non-financial resources for the delivery of the project; • Risks that the key milestones are not achieved; and • Risk that the project does not proceed as an AGD project.
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NAC Growth and Investment AGD Business Case 27 1.6 Management case 1.6.1 Project management arrangements Phase 2 of the Flex Space Programme, which is the subject of this FBC, will be managed by the Council’s PMI (Property Management and Investment) team and will follow the PRINCE2 methodology as much as possible. This was the approach taken for Phase 1. Project Management responsibilities sit with PMI who have led on the development of the design on behalf of the Growth and Investment Team who have acted as client. PMI will continue this role as part of the delivery stage and will report to the Council’s internal Project Board for the contract. Overall responsibility will rest with Executive Director, Place, reporting to the Chief Executive. All personnel will be experienced and professionally qualified in their respective roles. NAC has established internal governance arrangements for the management of its AGD project(s) organised through a Project Board, which comprises of officers from Growth and Investment, PMI, Legal and Finance. The NAC Project Board has overall authority and responsibility for Project Delivery including the Business Case, prior to submission to the NAC Executive Leadership Group for approval and prior to submission to the AGD Programme Management Office (PMO). The Board has a Project Management responsibility but no decision-making powers. The Project Board provides a mechanism for accountable project management delivered by regular progress reporting and updates and coordination of any aspects of the project associated with infrastructure, employability, business and innovation strands. 1.6.2 Benefits Realisation and Risk Management The AGD PMO has produced a Benefits Realisation Plan for the AGD projects. The purpose of the Plan is to demonstrate, to local, regional and national stakeholders, how the AGD will capture the outputs, outcomes, impacts and community benefits resulting from Deal investments including the Flexible Advanced Manufacturing Floorspace project at i3. It sets out approaches to project monitoring and reporting, including definitions guidance and deal programme and project evaluation. The NAC Project Board will be responsible for managing the risks and benefits realisation for Phase 2 of the project and the remainder of the Flex Space Programme, through reporting to the PMO and Government. Day to day management will be the responsibility of the Project Lead and the Council’s PMI Team as Project Manager. 1.6.3 Post project evaluation arrangements Project monitoring and evaluation will be managed through AGD governance arrangements to monitor the projects outputs and outcomes. The project will be subject to regular review meetings to discuss progress, programme, financial and technical matters. 1.7 Recommendation It is recommended that the Full Business Case for Phase 2 of the Flexible Advanced Manufacturing Space project at i3 in Irvine is approved. As the project includes Local Regeneration Funding (formerly Levelling Up Fund Three), the Council intends to invest its remaining AGD project funds in the third and final phase of the project programme that will be subject to the submission of an updated version of the Full Business Case.
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NAC Growth and Investment AGD Business Case 28 I hereby recommend the approval of the scheme as set out in this Full Business Case to proceed to the delivery of the scheme. Signed: XX Date: Date / May / 2026 Senior Responsible Owner Louise Kirk, Head of Economic Development, Growth & Regeneration, NAC
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NAC Growth and Investment AGD Business Case 29 2. THE STRATEGIC CASE 2.0 Introduction This Full Business Case is for the approval of investment in Phase 2 of the Advanced Manufacturing Flexible Space project at i3 in Irvine. It is focussed on appointing a contractor to construct an 18,191ft2 (1,690m2) GIFA industrial unit with yard space and supporting infrastructure for the wider site. Structure and content of the document This FBC has been prepared using the agreed standards and formats for business cases. The approved format is the Five Case Model, which comprises the following key components: • strategic case section. This sets out the case for change, together with the supporting investment objectives for the project. • economic case section. This demonstrates that the organisation has selected the most economically advantageous offer which best meets the existing and future needs of the service and is likely to optimise value for money (VFM) • commercial case section. This sets out the content of the proposed deal • financial case section which confirms funding arrangements, affordability and the effect on the balance sheet of the organisation • management case section which details the plans for the successful delivery of the scheme to cost, time and quality. The purpose of the strategic case is to explain and revisit how the scope of the proposed project or scheme fits within the existing business strategies of the organisation and provides a compelling case for change, in terms of existing and future operational needs. In this respect, there is a growing case for the project to provide new energy efficient industrial building stock in North Ayrshire to support the local Ayrshire economy. In addition, the project has the potential to support the i3 DPMC Phase 2 project with complementary, supporting advanced manufacturing space within the DPMC facility. The project at i3 is part of a wider strategy to modernise the Council’s commercial estate, which has also benefited from Local Regeneration Funds from UK Government. To note, the Strategic Case remains the same, as set out previously within the approved Outline Business Case of June 2021 and Full Business Case for Phase 1 of December 2022. Key scope changes were made in relation to the scale of floorspace estimated to be delivered. At SOC and included in the Heads of Terms, this was estimated as 150,000 square feet, at OBC stage 97,000 square feet (approx. 9,000 square metres) was estimated and at Phase 1 FBC stage, 65,000 square feet (approx. 6,000 square metres). As part of the development of the Phase 1 scheme, a draft masterplan was prepared, showing where the overall programme of space could be located at i3 and a Benefits Realisation Plan was also prepared. Since then, the masterplan has been updated to focus flexible space investment within a central area or cluster and around the DPMC project, as it was felt that the original masterplan may not be achieved and the development would be fragmented with less impact. A draft Strategic Framework was prepared to support this work. Ayrshire Growth Deal The Ayrshire Growth Deal Agreement (November 2020) commits the Scottish Government and UK Government to work collaboratively with the Ayrshire Councils and regional partners to deliver the Ayrshire Growth Deal that will help transform the Ayrshire economy. The AGD
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NAC Growth and Investment AGD Business Case 30 Agreement advises the following regarding i3 projects including the Flexible Space programme: Both Governments and North Ayrshire Council, will support new developments at the i3 Irvine Enterprise Area Advanced Manufacturing Space in Irvine, which will create a National Digital Processing Industry Hub and advanced manufacturing flexible space. This will serve digital processing industries, building on current Life Science Clustering at the site, and facilitate R&D activity, start up, spin out, and growth of Life Science businesses and other advanced manufacturing opportunities. This will see investment of up to £11 million from the Scottish Government, £6.225 million from the UK Government, and £5 million from North Ayrshire Council. The National Digital Processing Industry Hub will be developed at i3 with links to the National Manufacturing Institute Scotland in partnership with Strathclyde University and industry. The project also includes construction of flexible business space capable of meeting the requirements of Chemical and Life Sciences manufacturing, Digital Automation and other advanced manufacturing opportunities. The combined offer at i3, centred round the National Digital Processing Industry Hub, will attract a range of supply chain and digital technology SMEs and start-ups and offer strategic capacity to secure major digital process sector investment at i3. Part A: the strategic context 2.1 Organisational overview North Ayrshire Council is delivering Phase 2 of the project and a final third phase and is seeking other funding support to help deliver as much advanced manufacturing floorspace as possible, including the Local Regeneration Fund (formerly LUF3). The Council has led on the following areas of work to progress the project: • Masterplanning for i3, including planning, masterplanning and conceptual development of future i3 flexible space and DPMC; • Targeting Vacant and Derelict Land funding allocations to help support the project; • Funding bids to improve the Council’s commercial space for businesses e.g. Local Regeneration Fund (formerly LUF3); • Land assembly in conjunction with Scottish Enterprise to create a cluster of development within a central area of i3; • Project management of the design and development of Phase 1 and Phase 2 of the project and an updated masterplan for the site, by NAC’s architects and surveyors; • Active travel proposals to improve connections between i3 and Irvine; • Securing community benefits outcomes from the Growth Deal projects, aligning with the Council’s Community Wealth Building Strategy; and • Working with East and South Ayrshire teams to develop a collaborative approach to regional working in Ayrshire in relation to commercial space. This will work will complement the DPMC i3 project which is in partnership with University of Strathclyde, NMIS and CPI. NAC is acting as an enabler and facilitator for the project, using the Ayrshire Growth Deal investment as a catalyst. 2.2 Business strategies The purpose of the project aligns across a breadth of local, regional, national and UK policies. Summaries of relevant plans, policies and strategies have been outlined in the tables below.
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NAC Growth and Investment AGD Business Case 31 2.2.1 Strategic policy context The broad policy framework is summarised with additional supporting information on specific policies. The following table provides an overview of relevant policies and strategies. Table 12: National Policy and Strategies National Policy and Strategies Policy Objectives Relevance for i3 Project The UK’s Modern Industrial Strategy 2025 • Position the UK as a leading destination for investment and innovation • Increase business investment and provide stability for long-term investment decisions • Focus on eight High-Growth Sectors including Advanced Manufacturing, Digital & Technologies and Life Sciences with individual sector plans. • Using innovation to drive productivity and high-quality employment • A focus on supporting sectors with high-growth potential, with Advanced Manufacturing identified as a key sector. UK Life Sciences Sector Plan 2025 • To support world-class research and development, attract investment, grow advanced manufacturing, and accelerate health innovation • To position the UK as the leading life sciences economy in Europe by 2030 • Creation of Life Sciences Innovative Manufacturing Fund (LSIMF) to bring globally mobile manufacturing investments to the UK • A commitment to partnering with industry to drive growth and innovation. • The project supports the Life Sciences Sector Plan by providing flexible business space capable of meeting manufacturing requirements for chemical and life sciences Levelling Up the UK: Executive Summary • Providing a catalyst for delivering a long-term programme of change to unlock the potential of people and places in every part of the UK - creating jobs, driving productivity, improving people’s quality of life and helping restore pride in places. • i3 benefiting from £4.706M towards commercial space and funding towards low carbon infrastructure through the Local Regeneration Fund (formerly LUF3). Scotland’s National Strategy for Economic Transformation, 2022 to 2032 • Identifies five programmes to drive improvements in Scotland’s economy over the next 10 years – stimulating entrepreneurship, opening new markets, increasing productivity, developing skills required for the next decade and ensuring fairer and more equal economic opportunities • The project will support improvements in the local economy by providing modern business space to attract inward investment and help local companies grow and expand. Programme for Government, 2024 to 2025 Serving Scotland • 4 Key Priorities including Growing the Economy • The Flexible Space Programme will provide a source of employment to communities. National Planning Framework 4, 2023 • Supporting business and industrial development whilst safeguarding and enhancing the natural and built environment. • The project supports the creation of high quality, modern, energy efficient, well-designed business space as part of a new industrial cluster. National Innovation Strategy, 2023-33 • Sets out a vision and road map to transform Scotland’s economy over the next decade by placing innovation at the heart of economic growth, societal prosperity and wellbeing with four key priorities including growing the economy. • The project will seek to supported economic growth by providing modern space for businesses to expand and grow. Shaping Scotland’s Economy: Inward Investment Plan 2020 • The Plan focuses efforts on nine areas of opportunity where Scotland has global strengths. • The Plan acknowledges that the Covid-19 crisis has placed digital at the forefront of the response and subsequent recovery steps across the private, public and third sectors • Key role to grow Scotland’s manufacturing sector, strengthen supply chain linkages and increase productivity using advanced manufacturing • Giving priority to investors who can build local supply chains, provide new skills and invest in research. • Nine priorities and three themes underpin Inward Investment. 3 themes all applicable to i3 are: Digital / High Value Manufacturing / Net Zero.
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NAC Growth and Investment AGD Business Case 32 National Policy and Strategies Policy Objectives Relevance for i3 Project technologies such as automation, AI and digital manufacturing techniques A Manufacturing Future for Scotland, 2016 • Innovative manufacturing and utilisation of leading edge technologies, driving competitive advantage • Co-ordinating national innovation resources and assets to be appropriate for manufacturing base • Creating an environment where businesses of all sizes, in all manufacturing sectors can innovate and adopt new novel technologies • Linking up with NMIS and other centres of excellence • Enabling collaboration between businesses, RTOs & academia by providing a focal point and promoting an open innovation ethos Making Scotland's Future – A Recovery Plan for Manufacturing & related Programme, 21 • Co-ordinating national innovation resources and assets to be appropriate for the manufacturing base • Creating an environment where businesses of all sizes and in all manufacturing sectors can innovate and adopt new novel technologies • Encouraging and supporting our manufacturing businesses to put investment in the best available technologies at the core of their business going forward. • Work with Innovate UK to align interventions and promote opportunities around digital for manufacturing, driving manufacturing readiness and stimulating innovation to uncover new sources of revenue from manufacturing. • Linking up with NMIS and other centres of excellence • Enabling collaboration between businesses, RTOs and academia by providing a focal point and promoting an open innovation ethos • Co-ordinating national innovation resources and assets to be appropriate for the manufacturing base. In particular, interaction with both new and existing centres of excellence will provide an environment where innovation and demonstration opportunities can be developed. Scotland’s 2018 to 2032 Climate Change Plan, Updated 2020 • Sets out Scotland’s Ambitions to reduce carbon emissions and achieve net zero emissions by 2045, set by the Climate Change Act 2019 • The project will contribute through the provision of modern and energy efficient commercial space built on vacant and derelict land at i3. Life and Chemical Sciences Manufacturing Strategy for Scotland • Establishing a strong platform for manufacturing growth through strong communication between the Life and Chemical Sciences sectors • Improving the translation of research into application • Strengthening UK’s case (including supply chains) for manufacturing businesses • Enabling commercialisation of research by providing a focal point between academia and industry • Building up service offering at i3 to attract businesses Skills & Investment Plan for Scotland’s Life and Chemical Sciences • Four priority areas: addressing specific skill shortages, ensuring national coverage of skills and training provision, increasing exposure to, and understanding of, industry, enhancing practical experience • Developing Scotland’s life and chemical sciences capability • Encouraging engagement between HE/FE and industry Life Sciences Strategy for Scotland 2025, Vision • Making Scotland the location of choice for Life Sciences businesses, researchers, healthcare professionals and investors while increasing Life Sciences contribution to Scotland’s economic growth • Four key priority areas: business environment, innovation & commercialisation, internationalisation, and sustainable production • Developing Scotland’s life sciences capability • Linking with the Life Sciences Innovation Centres. Chemical Sciences Scotland Strategic Plan 2025 • Establishing Scotland as a world class centre of high value manufacturing as well as delivering a skill investment plan to provide easy access to training and education to support the growth of the chemical sciences sector • The project will provide opportunities for the sector to locate to i3, in close proximity to the DPMC project. A changing nation: how Scotland will thrive in a digital world • To create a strong digital economy for Scotland which supports businesses to adapt and be successful • Create conditions for technology businesses to grow, thrive, create jobs and attract investment • Support for focus on digital automation at i3 as part of wider AGD project
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NAC Growth and Investment AGD Business Case 33 National Policy and Strategies Policy Objectives Relevance for i3 Project Green Data Centres and Digital Connectivity Vision and Action Plan, 2021 • attract new investors that require high-speed data transit to locate in Scotland and take advantage of enhanced terrestrial and international fibre connectivity • build on its capacity to generate energy from renewable sources • ensure that the full economic and social potential of technologies, such as 5G, Internet of Things (IoT) and Artificial Intelligence (AI), are realised across all parts of Scotland • improve Scottish competitiveness and internet resilience providing direct links to other countries and markets • Potential for i3 to accommodate such development and build on opportunities arising from the subsea cable AGD project Shortlist for Data Centre Site Selection in Scotland, 2021 • Joint study by Scottish Futures Trust/Host in Scotland, Crown Estate Scotland and Scottish Enterprise, emerging from Green Data Centres and Digital Connectivity Vision and Action Plan. Providing an overview of potential data centre locations in Scotland. • Identifies i3, Irvine as one of 10 sites in Scotland where such development could be accommodated Of specific relevance is the overall project’s relationship to the UK Industrial Strategy 2025 and Scotland’s National Strategy for Economic Transformation, which are mapped out below. Table 13: Project’s Relationship to UK’s Modern Industrial Strategy The UK’s MODERN INDUSTRIAL STRATEGY 2025 Relationship to i3 Advanced Manufacturing Space Project Key Related Objectives Prioritise Business Investment Focus on High-Growth Sectors Infrastructure and Energy Skills and Talent Innovation and R&D Net zero Transition Regional Economic Growth Providing certainty and stability for long-term decisions. Sectors include Advance Manufacturing, Digital & Technologies and Life Sciences Reduce energy costs and grid connection times Reform skills & employment support system and increase technology training for engineering, digital and defence Targeted investment into R&D, leveraging private investment Support decarbonisation and a transition to net zero Increased support for regional innovation and creation of high quality employment Table 14: Project’s Relationship to Scotland’s National Strategy for Economic Transformation SCOTLAND’S NATIONAL STRATEGY FOR ECONOMIC TRANSFORMATION 2022-2032 Relationship to i3 Advanced Manufacturing Space Project Key Related Objectives Entrepreneurial People and Culture New Market Opportunities Productive Businesses and Regions Skilled Workforce A Fairer and More Equal Society Supporting business start-ups and building a culture of innovation Attract inward investment, generating good quality jobs from a just transition to net zero Improving business efficiency and productivity and supporting digital innovation Upskill the workforce to meet emerging economic needs Promoting fair work and increasing employment and wage growth to reduce poverty and improve outcomes for disadvantaged people and places
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NAC Growth and Investment AGD Business Case 34 2.3 Other organisational strategies 2.3.1 AGD Programme The AGD programme links to Governments’ objectives of increased growth and prosperity. Post the development of NAC’s Strategic Outline Case, NAC has been working closely with the other Ayrshire Councils regarding the complementarity of projects and has coordinated activity though the Ayrshire Growth Deal Leadership Group and Project Management Office (PMO). Appendix F provides an initial analysis of inclusive growth objectives for the project. The key themes identified as being critical to economic recovery and renewal are: Advanced Manufacturing Aerospace/space Clean Growth Community Wealth Building Food & Drink Life Sciences Visitor Economy Business Connectivity Digital Innovation Skills The development of detailed actions and subsequent delivery of themes is framed through a Community Wealth Building approach that seeks to harness assets, resources, community strength and relationships within Ayrshire to deliver improved outcomes for our communities. 2.3.2 Regional Policy Context The Flexible Space Advanced Manufacturing project has the potential to support two of North Ayrshire’s economic development objectives: creating employment opportunities and positioning the area as a leading location for business within the Glasgow city region. The project has the potential to deliver against the policy objectives of key strategies set out at both the Scottish and regional levels. The Ayrshire Regional Economic Strategy was developed in 2023 and outlines a ten-year economic vision for Ayrshire, providing regional context for this project. The proposition is also in line with the Scottish Government’s inclusive growth agenda, targeting regional imbalances in economic activity. The key messages from these strategies are outlined below. Most recently North and East Ayrshire Councils have taken the decision to progress with the development of a shared Economic Development Service commencing during 2026/27 which will include the Ayrshire Growth Deal delivery teams from both Councils. The overall aim is to deliver greatly enhanced outcomes through: enhanced strategic leadership, shared resources, enhanced collaborative arrangements, economies of scale, greater access to specialist skills and expertise, enhanced capacity, and strengthened service resilience, together with simplification, standardisation, upskilling and best practice sharing. Table 15: Regional & Local Policy & Strategies Regional and Local Policy and Strategies Policy Objectives Relevance for i3 Project Ayrshire Growth Deal Heads of Terms and Agreement • Focus on aerospace, space and life sciences, as well as building on Ayrshire’s existing strengths in food and drink, tourism, manufacturing and engineering • Driving inclusive economic growth through creation of new high-quality jobs and opportunities • Building Digital Capital – replacing the Digital Infrastructure and Subsea Cable projects to provide modern digital infrastructure across Ayrshire, including over £4M for North Ayrshire. • Linking in with the digital infrastructure agenda • Possible links with the sustainability agenda • In partnership with Strathclyde University and industry, a Digital Hub facility will be developed at i3 to incorporate relevant testing/ R&D equipment and specialist staff
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NAC Growth and Investment AGD Business Case 35 Regional and Local Policy and Strategies Policy Objectives Relevance for i3 Project NAC Local Development Plan 2 and emerging LDP3 • Safeguards key business & industrial sites • Identifies ways to support areas for specific new residential development to cross fund new or improved employment space • i3 is identified as a strategic business location, including opportunities for a large single user or major multiple investments, as well as a high amenity business park NAC Council Plan –2023-2028 • A key priority of the Council Plan is a transition to a wellbeing economy which delivers inclusive economic opportunities, prosperity and enhanced wellbeing for North Ayrshire. This includes developing infrastructure to support business growth. • The i3 project would strongly support these priority outcomes. Sustainable North Ayrshire Strategy 2024-2027 • Setting out targets and priorities to achieve net zero carbon emissions, halt biodiversity loss and be Nature Positive by 2030 • i3 has the potential to support the strategy by ensuring this project seeks to provide developments that generate minimum carbon. North Ayrshire Community Wealth Building Strategy 2024- 2027 • To create an inclusive and wellbeing economy for North Ayrshire that delivers social, economic and environmental justice for all • Working in partnership with communities and businesses, the economic levers of Anchor Institutions are used to support and improve the local economy and create more benefits for the area. • Working within localities to facilitate place-based Community Wealth Building activities on procurement, employment, assets and ownership. • Promote Fair Work practices and position Ayrshire as a Fair Work region. LOIP – Irvine Locality Action Plan 2023/24 The Irvine Locality Partnership has identified their key priorities as: • Supporting Skills and Work Opportunities • Enhancing our Mental Health and Wellbeing • Alleviating Poverty • Championing Green Health and the Natural Environment • The i3 project will support the Partnerships priority of Supporting Skills and Work Opportunities Ayrshire Regional Economic Strategy 2023-2033 The Regional Economic Strategy for Ayrshire outlines a ten- year economic vision for Ayrshire, identifying six priority themes: • Support for enterprise • Fair work • Innovation • Good health and wellbeing • Stronger places and communities • Enhancing natural capital • i3 is identified within the strategy as a site with significant growth opportunity The i3 Advanced Manufacturing Space project fits with these strategies through: • supporting the growth of key sectors to build competitive advantage & economic contribution; • enabling sector growth by addressing a critical market failure in the provision of high quality modern business sites and premises to attract and retain business activity; • creating quality jobs and economic value (GVA), and supporting Community Wealth Building by filtering through the rest of the economy via sector supply-chain activity; • enhancing Scotland’s reputation as a key location for life sciences, and attracting manufacturing activity based on embedded skills and expertise of Ayrshire’s workforce; • making best use of existing embedded infrastructure assets and investments at i3; • positioning i3 as a key strategic location within the Glasgow City Region, providing opportunities for major investment; • providing high quality development space and opportunities, set within a highly competitive infrastructure and quality environment; • supporting the two overarching goals for economic development in North Ayrshire – becoming a leading location for doing business – and creating quality, inclusive
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NAC Growth and Investment AGD Business Case 36 employment opportunities (and multiplier benefits) that will help to reduce worklessness and inequality; • delivering economic impacts and outcomes spread across Ayrshire (and beyond) and contributing to business and job growth targets, through direct and indirect/induced supply chain linkages; and • delivering a completed development that meets the LDP site designation for business and industrial use. In summary, as demonstrated, there is a good strategic rationale for the i3 project. It contributes to the aims, objectives and aspirations of the AGD, and of key Government strategies linked to industry and achieving a low carbon, inclusive economy. The successful marketing and letting of Phase 1 of the project (4A Riverside Way), has demonstrated demand for the project. Part B: the case for change 2.4 Investment objectives Investment objectives for the i3 Flexible Advanced Manufacturing Space project were set out within the OBC and Phase 1 FBC as follows: Table 16: Flexible Space Investment Objectives Investment Objective 1 To create flexible business space capable of meeting manufacturing requirements for chemical and life sciences, but also for a wide range of other high value sectors. AGD investment will overcome market failure barriers and deliver 65,000 square feet of high-quality business by 2030. Investment Objective 2 To complement planned AGD investment in a Digital Hub and related services at i3 and the proposed new National Manufacturing Institute Scotland (NMIS) development. AGD investment will provide a new focus for modern industry at i3 and for Ayrshire. In particular, the proposed Digital Hub has the potential to operate as a satellite of NMIS, focussing on specialised sectors. Investment Objective 3 To create serviced industrial land capable of immediate development. AGD investment will make best value use of a key asset by enabling prime industrial land to be developed by 2030. Investment Objective 4 To attract mobile investment both from abroad and from indigenous companies. AGD investment will meet identified market opportunities for mobile investment and could accommodate between 8 to 16 companies at i3 by 2030. Investment Objective 5 To create opportunities for employment and inclusive growth with particular emphasis on making connections to local communities, schools and colleges in preparation for employment. AGD investment will create floorspace that will accommodate 162 net jobs by 2031. Through the wider AGD project activity, businesses will be engaged in activities that seek to
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NAC Growth and Investment AGD Business Case 37 maximise opportunities for local people and local people will be engaged to ensure they have the skills, qualifications and aspirations to take advantage of these opportunities. Investment Objective 5 To create a sustainable, high quality business location capable of meeting and keeping pace with the changing demands of high value manufacturing sectors. AGD Investment will remove a market constraint and create modern and flexible business accommodation that will be attractive to occupiers long into the future. Since the approval of the OBC it has been identified that the project will now deliver approximately 65,000 square feet of business space and the pilot of the Digital Process Manufacturing Centre (DPMC) referred to in Objective 2, is now delivered and operated by National Manufacturing Institute Scotland (NMIS), at i3, hosted by engineering company Booth Welsh. 2.4.1 Strategic need A number of studies were commissioned to inform the development of the i3 AGD projects. These studies highlighted the key strengths of the local economy in terms of manufacturing activity (particularly around life sciences and engineering), industrial heritage, the role of international businesses, key infrastructure assets and proximity to Glasgow. However, it is well recognised that the area is underperforming economically and has some serious challenges around depopulation, productivity, economic growth rates, skills levels and lack of fit for purpose modern business space. The priority for the i3 project is to build on the area’s key strengths and help to address these longer-term challenges. Through the Growth Deal, partners are looking to support ‘transformational’ and ‘catalytic’ projects that can change perceptions and turn around the long-term economic performance of the area. The advanced manufacturing space proposed will complement the DPMC and provide modern space in a number of phases. While separate business cases, the two are linked, as the DPMC project is helping to raise the profile of i3 and to encourage business investment and growth, with a focus on Industry 4.0. The proposed investments are part of a strategy for i3 that allows: • The central Riverside Way area to be developed as a central area for i3, including the proposed flexible space and DPMC pilot, with the potential for a second, permanent DPMC Phase 2, enable through the AGD and subject to Full Business Case development and approval; • The large Strategic Investment Campus (SIC) which was marketed for major inward investment as a separate development and is currently in the process of being sold. The previously referred to Digital Outline Business Case which considered investment towards a subsea fibre optic cable and associated infrastructure, with opportunities for Irvine as a potential landing point, could not progress as the commercial case was not viable. A new programme and related business case – Building Digital Capital, is now being taken forward with workstreams across the three Ayrshire authorities. North Ayrshire holds a budget of £4.631M with initial focus on progressing the delivery of infrastructure, adoption, skills and intelligence. This will include consideration of digital infrastructure that can support development at i3. The project is currently in development. This would build on the separately funded UK Government 5G Innovation Regions investment. Whilst it had been anticipated that the proposed subsea fibre optic cable would help attract
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NAC Growth and Investment AGD Business Case 38 global businesses and enable the potential creation of a datacentre cluster of national significance there has been significant interest in data centre development at i3 in relation to the large Strategic Investment Campus. The Heat Map at Appendix A illustrates the strengths of relationships between the AGD projects and the i3 project. 2.5 Existing arrangements Presently there are no existing arrangements in place to support the supply of new industrial property in North Ayrshire and Ayrshire, in order to meet the demand from local companies and potential inward investment companies. This is due to prolonged market failure within the area making it unviable for the private sector to deliver such development. Our strategic objective is to create jobs and bring economic activity to Ayrshire. In order to do this, we need to improve the offer that we can make to investors by providing well-serviced development sites and business space that is ready for occupation. 2.6 Business needs AGD funding is required in order to meet demand for modern industrial accommodation in the face of acute market failure. This is preventing private sector investment in speculative industrial development across Ayrshire and most non-prime locations in Scotland. Studies commissioned by NAC have identified the following issues that demonstrate the requirement for investment and the creation of new modern business space as a priority for the Council. This was set out within the project’s Outline Business Case and Phase 1 Full Business Case and has been reaffirmed by more recent reviews by property consultant Ryden. • High demand for industrial space; • Low vacancy rates for industrial space of less than 1% for Irvine, 2.4% for North Ayrshire and 4.4% for West Central Scotland (among the lowest in the UK); (These figures were previously 4.5% for Irvine, 4.5% for North Ayrshire and 3.4% for West of Scotland at Phase 1 FBC stage and 4%, 6% and 4% respectively at OBC stage) • Insufficient rental values to support financially viable, new-build speculative development; • Very limited funding sources available for the public sector to intervene; • Constraints on indigenous companies seeking to grow and expand within North Ayrshire; • Constraints on attracting inward investment through lack of modern premises; • Ageing building stock of existing industrial premises that is facing obsolescence; • Constraints due to companies being less accessible to disabled or mobility impaired job seekers / trainees; and • Growing pressure through changes in legislation and customer demand, to create better configured, more energy efficient building stock and eliminate hazardous building materials. A more recent update by Ryden in February 2026 has confirmed this as an ongoing issue for the area.
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NAC Growth and Investment AGD Business Case 39 Figure 11: Phase 1, Flex Space (4A Riverside Way, front & rear elevations 2.6.1 Property market assessment Property market consultants assessed and reviewed the potential to invest in new industrial and office property at i3 through the AGD funds for the OBC and FBC. This included assessment of supply and demand in North Ayrshire. An updated survey was done in February 2026 which re-confirmed this as an ongoing significant issue for the local industrial property market with vacancy levels being even lower for Irvine and North Ayrshire, with a slight 1% increase for West Central Scotland. However, whilst there is significant demand, the report highlights that rental values are insufficient to support financially viable, new build speculative industrial and office development. 2.7 Potential business scope and key service requirements The project will seek to address the business needs set out in section 2.6 by providing a range of types of industrial space across the Flexible Space Programme. The proposed units will be as flexible as possible in their design. Phase 1 was designed with the potential to be subdivided to a maximum of four units, to easily accommodate a rear extension and the installation of a mezzanine level. The new tenant has recently taken occupation and has submitted a planning application for an extension and plans to instal a mezzanine level, taking full advantage of the flexible features of the building and its plot. It has already been highlighted at Phase 1 FBC stage, that the project scope has been impacted upon by increased costs, affecting the amount of floorspace that can be delivered, reducing from 9,000 square metres to around 6,000 square metres. Additional funds secured from the Local Regeneration Fund (formerly LUF 3) will help maintain this revised cost in the face of further cost increases. The project is seeking to attract a wide variety of occupiers, including local SMEs and inward investors including opportunities through the location of the Digital Processing Manufacturing Centre (DPMC) in close proximity at i3. Phase 1 has enabled the adjoining business Barony, to extend their production line and create approximately 50 new jobs as a result of them securing the lease for the building. A refreshed masterplan has been developed to show the proposed location and scale of development within a central area of i3 with Riverside Way to the south, Long Drive to the east, A71 to the north and industrial premises to the west. This will create a cluster area with the proposed DPMC. Previously, it was anticipated that a small number of units could also be
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NAC Growth and Investment AGD Business Case 40 located at the large Strategic Investment Campus (major inward investment site), however given the increase in construction costs and reduction in floorspace that could be achieved, it was decided that the focus of investment should be within a central area. Figure 6: Proposed Phases of Flexible Space Programme 2.8 Main benefits criteria This section describes the main outcomes and benefits associated with the implementation of the potential scope in relation to business needs. These are set out in the table below. In addition, a Benefits Realisation Plan was prepared for the project, and a Benefits Realisation Logic Chain is included in Appendix C. Table 17: Investment Objectives and Stakeholder Benefits Objectives Benefits for Stakeholder Groups 1. To create flexible business space capable of meeting manufacturing requirements for chemical and life sciences, but also for a wide range of other high value sectors. • New business units will be occupied by Ayrshire/ Scottish/ UK/ overseas businesses • Created/safeguarded jobs will generate economic value – jobs, GVA, turnover for Ayrshire and Scotland • Supply chain outcomes will be created for other Ayrshire and Scottish businesses • Design and construction contracts will generate turnover for Ayrshire and Scottish contractors • Construction jobs and training outcomes will be created ,primarily for Ayrshire people and particularly drawn from disadvantaged or Protected Characteristic groups. 2. Create a centre of digital innovation which offers digital tools, support and innovation scaled to a national market • University and College presence at i3 offering training and business development opportunities. • Cluster of R&D and spin off opportunities • Providing employment, skills development, community wealth building
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NAC Growth and Investment AGD Business Case 41 Objectives Benefits for Stakeholder Groups supporting a restructure of the regional economy to deliver advanced manufacturing. and supply chain growth opportunities • Providing the private sector with opportunities for upskilling, business transformation and increased productivity 3. To create serviced industrial land and capable of immediate development. • Development plot will be available for indigenous Ayrshire/ Scottish, UK- owned and foreign investors • Design and construction contracts will generate turnover and jobs for Ayrshire and Scotland 4. To create opportunities for employment and inclusive growth with particular emphasis on making connections to local communities, schools and colleges in preparation for employment, particularly in areas of deprivation. • New employment outcomes – direct and indirect through supply chains • Work experience and training places for school and college students • Job market entrants and low skilled workers increasing soft and basic skills through provision of local jobs. • Residents of deprived areas gaining access to opportunities • University presence enabling additional educational and training opportunities • Delivery of enhanced public transport connection that opens up employment opportunities 5. To attract mobile and private sector investment both from abroad and from indigenous companies. • New employment and training outcomes • Demonstrate attractiveness of Scotland as excellent location for life sciences manufacturing • Increased investment confidence 6. To create a sustainable, high quality business location and R&D cluster, capable of meeting and keeping pace with the changing demands of high value manufacturing sectors and complementing national initiatives including NMIS. • Enhancement and maintenance of attractiveness of Ayrshire as a location, meeting modern business needs and promoting Industry 4.0 services. • Large, visible and modern development that clearly shows Ayrshire is Open for Business • Recognised as part of a national strategy for improving digital technology 2.9 Main risks The main business and service risks associated with the potential scope for this project are shown in the table below together with their counter measures. A number of these risks are included as main risks in the most recent Ayrshire Growth Deal Implementation Plan, and these have been highlighted in the Risk Ref column as (IP). The risk register is included in Appendix E and listed in Table 18 below. The likely increase in costs from the indicative costs included in the approved OBC were reported to the PMO and Scottish Government at Phase 1 FBC stage, on the basis that that project was unlikely to deliver the amount of business space set out in the OBC. It was agreed that Phase 1 of the project should progress to tender stage to test the construction market, with the outcome that Phase 1 could proceed. In addition, the Council sought Levelling Up Funding to help mitigate this issue for Phase 2. The tender opportunity for Phase 2 will be published in May and an updated version of the FBC will report whether the tenders have come in within the budget available which will enable Phase 2 to progress. The risks are based on the following assessment / scores: Green 0 - 3 Amber / Green 4 - 9 Amber / Red 10 - 14 Red 15 - 25
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NAC Growth and Investment AGD Business Case 42 Table 18: Flexible Advanced Manufacturing Space – Project Risks, Updated Ref Category Risk Description Impact Likeli- hood RAG Mitigating Actions I3FL-R01 (IP) SCOPE Outputs & Outcomes Anticipated outputs and outcomes are not delivered. 3 3 9 Ensure BC addresses sensitivity of outcomes Clear Evaluation & Monitoring Framework Maximise outcomes through project suppliers. I3FL-R02 QUALITY Outputs & Outcomes The project fails to achieve more inclusive growth and/or reduce poverty by increasing the income of people in deprived areas or protected characteristic groups 3 5 15 Benefits Realisation Plan prepared to identify targets. I3FL-R03 SCHEDULE Timescales / Programme Delays to overall project programme and key milestones 3 3 9 Prepare a detailed project programme with considered time allowances and review regularly. I3FL-R04 (IP) SCHEDULE Timescales / Procurement Delays to the submission or approval of business cases or the progress of tender procurement, causes delays to the award of contracts for flex space and the progress or claiming AGD spend or the Local Regeneration Fund. 4 3 12 Seek early agreement on appropriate procurement routes Include anticipated tender packages within the Council’s Procurement Wave Plan Spend aligned against related funding source deadlines Ensure sufficient timeline allocated to evaluation tender Ensure response, evaluation and governance process programme to enable swift progress to award I3FL-R05 Timescales / Environment Delays caused by environmental considerations 3 5 15 Protected Species/Habitat risk has been assessed at an early stage. Review of site studies required at key stages. Ensure seasonal work/study requirements are accounted for in programme. I3FL-R06 Timescales / Environment Delays caused by site investigation work and findings 3 5 15 Instruct SI work at early stage of project I3FL-R07 Timescales / Regulatory Delays caused by objections 2 4 8 Advance programme of local & stakeholder engagement. I3FL-R08 (IP) SCHEDULE Timescales / Regulatory Delays caused by statutory consent processes 3 2 6 Zoned & allocated site
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NAC Growth and Investment AGD Business Case 43 Ref Category Risk Description Impact Likeli- hood RAG Mitigating Actions Pre-App discussion with NAC Planning Assess protected species/habitat risk at early stage Review planning challenge/appeals Agree programme for consents Advance programme of local stakeholder engagement I3FL-R09 (IP) SCHEDULE Timescales / Regulatory Delays caused by land assembly / lease agreement processes. 2 2 4 Early engagement with owners. Ensure programme allows for third party approvals. Phase 3 layout has been developed to reduce requirement for private land. I3FL-R10 (IP) SCHEDULE Timescale / Contractor Delays during project construction phases. 3 3 9 Regular monitoring through site meetings and reports Ensure emphasis through programme analysis and approach included in tender documentation and evaluation. I3FL-R11 (IP) INTERNAL RESOURCES Timescale / Business / Professional Staff resources not sufficient to manage projects as they develop. 3 2 6 Risk has reduced as vacant post has been filled, although impact has been significant on pushing out delivery timelines for projects. I3FL-R12 Regulatory Planning/building warrants are not granted. 2 5 10 LDP supports development of site for this use. Ensure local members briefed/updated on project. Hold pre-app discussion with NAC Planning Assess Protected Species/Habitat risk Formally agree programme for consents Advance programme of stakeholder engagement I3FL-R13 (IP) EXTERNAL Regulatory Compliance with Subsidy regulations. 1 2 3 Regular monitoring and if required, contact with Subsidy Unit to ensure no specific risks arising related to subsidy, due to nature of the project. I3FL-R14 Financial Design and technical studies result in additional costs beyond the contingencies and optimism bias allowed for. 3 4 12 Develop and validate project briefs and specifications for each phase Benchmark costs. Ensure early infrastructure cost tested and informed by SI work. Provide Optimism Bias allowances compliant with Green Book Provide for contingency & inflation. I3FL-R15 Financial Slippage / delay in the programme incurs additional costs. 3 5 15 Instruct appointed project team to address this within Risk Register. Selected procurement route will seek to ensure contract type has less risk for client.
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NAC Growth and Investment AGD Business Case 44 Ref Category Risk Description Impact Likeli- hood RAG Mitigating Actions I3FL-R16 Financial There are unforeseen project complexities that require additional funding. 2 4 8 Provide for contingency Provide Green Book compliant Optimism Bias allowances. Similar project has been delivered previously. I3FL-R17 Financial Rental income lower than forecast 2 3 6 Market review and comparator analysis to identify appropriate rent but ultimately down to actual market demand on completion I3FL-R18 Financial Lack of budget to support interested tenants to fit out shell of building 4 3 12 Identify at an early stage and with Business Growth Team, how this can be supported. I3FL-R19 Financial Lack of budget to support maintenance of buildings until tenants take occupancy, if buildings are classified and non - operational. 2 2 4 Identify at an early stage with Finance and Estates, how this can be supported. I3FL-R20 Professional Lack of project management experience. 2 3 6 Ensure experience project management team, both in-house and any external support. Budget allows for appointment of required expertise. I3FL-R21 Professional Poor change management procedures. 3 3 6 Clear and agreed procedures set in place for internal change management and for external processes with design team and contractor. I3FL-R22 Professional Specification – design issues on- site 2 4 8 Adopt best practice design and ensure flexibility for subsequent division/ alteration of premises. I3FL-R23 Contractual / Political Failure to deliver community benefits – training, employment 3 4 12 Incorporate appropriate community benefits into contract terms and resource appropriately I3FL-R24 Contractual Issues with co- ordination on-site - contracts, visitors 2 4 8 Ensure main contractor has appropriate procedures for site management I3FL-R25 (IP) QUALITY Reputational / Political The Flexible Space Programme’s Full Business Cases fail. 3 2 6 Development of OBC/FBC in accordance with Green Book Flex Space OBC approved June 21 Flex Space Ph1 FBC approved Dec 22 Review capex and opex costs Partner/stakeholder risk assessment Early market input / partner & commercial input Review governance arrangements.
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NAC Growth and Investment AGD Business Case 45 Ref Category Risk Description Impact Likeli- hood RAG Mitigating Actions I3FL-R26 (IP) QUALITY Reputational Demand for the Flex Space Programme diminishes and there is no interest from occupiers. 3 2 6 Flexible design to maximise potential interest from occupiers. Marketing and promotion of floorspace Continue to establish relationships with national sectors (incl NMIS) Interest in Phase 1 has confirmed market interest and reduced risk Review of Ph2&3 prepared by property agents. I3FL-R27 Reputational Market expectations are not met. 2 5 10 Scale/ quality/ design based on identified market needs Recent research has established demand. Continue to review demand and business needs with Partners including SE and SDI. Involve relevant business engagement partners. I3FL-R28 Reputational Businesses interested in units decide not to progress 3 5 15 Ensure ongoing engagement with businesses to prepare suitable Heads of Terms. I3FL-R29 (IP) EXTERNAL Project delays due to external economic impacts such as COVID-19 and recovery. 4 2 8 Early analysis has identified that the need for this project is unlikely to be diminished and in fact may be even greater. Analysis of external factors will be monitored that area likely to impact on the project. I3FL -R30 (IP) SPEND Proposals become unaffordable and there are cost overruns. 4 3 12 Regular review of design vs budget, value engineering and impact of market conditions on costs Benchmark costs Ensure early infrastructure cost tested /informed SI Provide for contingency and Green Book compliant optimism bias allowances Ensure project approval processes are in place to control budget compliance Pursue additional funding sources. I3FL-R33 (IP) SCHEDULE Timescales / Financial Existing and proposed utilities cause issues or delays e.g. surface water drainage connections, sub- station requirements. 3 3 9 Ensure exact locations of existing infrastructure identified Early engagement with SPEN, Scottish Water, BT etc. Testing to be carried out and capacity to be confirmed for water supply
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NAC Growth and Investment AGD Business Case 46 2.10 Constraints There are no significant internal constraints to the delivery of the project. North Ayrshire Council will bring together an experienced delivery team supported by internal or external design, project management and contract skills as required. The completed units will be owned and managed by NAC in line with existing estates management and will be marketed via a number of appropriate sources. 2.11 Dependencies Phase 2 of the project is subject to the following dependencies that will be carefully monitored and managed throughout this phase of the project: • A successful tender process that produces a valid tender outcome within the project’s cost envelope. • FBC endorsement by Government • FBC Approval by Ayrshire Economic Joint Committee • Award of contract by NAC following Joint Committee approval • Demand from businesses for the space and commitment to a lease • Input from local schools and colleges for work placements and training outcomes • Availability of skilled workforce to take up job opportunities In addition, the success of the main project is dependent on a number of factors including: • Input from local schools and college (s) for work placements and training outcomes; and • Longer term - seeking the support from a public transport provider for a new bus route to ensure the location and the job opportunities can be accessible to and affordable for local people, including people with disabilities.
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NAC Growth and Investment AGD Business Case 47 3. THE ECONOMIC CASE 3.1 Introduction In accordance with the Capital Investment Manual and requirements of HM Treasury’s Green Book (A Guide to Investment Appraisal in the Public Sector), this section of the FBC documents the procurement process and provides evidence to show that we have selected the most economically advantageous offer, which best meets our service needs and optimises value for money. It should be noted that this process relates specifically to Phase 2 of the Programme, which is for one 18,191ft2 (1,690m2) GIFA industrial unit. The level of information provided regarding the procurement process has been informed by discussions with NAC’s Corporate Procurement Unit and is in accordance with the Council’s Standing Order. The Council’s Corporate Procurement Unit has advised that once the tender process is complete, details of the bidders, their final costs and the evaluation scores, must be kept confidential prior to the award of the tender, as this would be a breach of the Council’s Standing Orders. Details of the contract award will be published on Public Contracts Scotland and North Ayrshire Council’s contract register when the successful bidder is awarded. 3.2 Critical success factors The AGD has a regional economic vision for Ayrshire that focuses on unlocking local potential for the wider benefit of the Scottish and UK economies. The AGD programme links to Governments’ objectives for increased growth and prosperity. The programme is based on the achievement of inclusive economic growth with a clear focus on addressing the issues of relatively poor levels of innovation and productivity, and inequality across the regional economy. Under the Regional Vision, assessed projects are grouped together into five programmes which have been developed from the Prospectuses ‘Framework for Growth’ and ‘Connecting Communities to Growth’ with the infrastructure proposals developed from ‘Connections for Growth’ prospectus. These programmes focus on high growth, high value sectors that Ayrshire has real opportunities in and are linked to Ayrshire’s general manufacturing strength, distinctive coastal opportunities and to its communities. The AGD aim is to marry business growth opportunities to employment progression, to developing the future workforce and to community development whereby all communities benefit from economic growth. The AGD programmes reflect the strengths and opportunities of the Ayrshire economy. The critical success factors (CSFs) shown within the OBC for the Flexible Space Programme were as follows in the table below:
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NAC Growth and Investment AGD Business Case 48 Table 19: Critical Success Factors Critical Success Factors Measures to Address Critical Success Factors BUSINESS NEEDS: How does the option satisfy the AGD Vision & key themes? • Supporting economic growth for Ayrshire and Scotland by attracting next generation manufacturing businesses. STRATEGIC FIT: How does the option provide a holistic fit and synergy with other national, regional and local strategies? • Supporting growth of the life sciences sector • Delivering net additional economic outcomes BENEFITS OPTIMISATION: How does the option optimise value for money? • Cost per job for public sector POTENTIAL ACHIEVABILITY: Is the option viable and can it be delivered? • Site capacity to accommodate floorspace MARKET CAPACITY: Will the option meet an identified market demand, remove a constraint and how will it affect existing supply? • Level of market demand to take the completed units / development plots POTENTIAL AFFORDABILITY: Can the option be funded both the up-front capital and future revenue? • Availability of AGD or other public / private funding 3.3 The long-listed options, Flexible Space Programme The longlisted, shortlisted, and preferred options set out in the OBC remain valid, and their original rankings are unchanged. Since completion of the OBC, no material changes have arisen that would affect the options appraisal process, the value-for-money assessment of shortlisted options, or the selection of the preferred option. For clarity, the appraisal work documented within the OBC has been re-stated in this FBC, while updated economic modelling has been undertaken to assess the delivery models required to progress Phase Two. The information presented on procurement reflects advice received from North Ayrshire Council’s Procurement team and is fully aligned with Council policy. In line with Standing Orders, details relating to bidders, final costs, and evaluation scores must remain confidential until the tender award is confirmed. Following award, details of the successful contractor will be published on Public Contracts Scotland and the North Ayrshire Council contract register.
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NAC Growth and Investment AGD Business Case 49 Table 6: Assessment of Options for i3 Flexible Space Programme at OBC Stage – Long List OPTIONS 1. LOCATION 1.1 i3 Enterprise Area (EA) 1.2 Other North Ayrshire Site 1.3 Other Ayrshire Sites i3 is one of two locations in Scotland marketed by SDI for manufacturing linked to life sciences & related sectors. It has key locational benefits for investors, with existing established businesses. Preferred Option A limited number of other North Ayrshire sites have capacity to accommodate new development but are unable to offer the locational advantages of i3, installed infrastructure capacity and existing business base. Discounted Option Irvine has key sector and cluster strengths in life sciences and is therefore an attractive proposition for investors in comparison to other Ayrshire sites. Discounted Option 2.1 Site Preparation Only 2.2 Flexible Space on all Sites 2.3 Flexible Space 3 INTERVENTION Create prepared site platforms at i3, ready for immediate development. This would offer a low-cost option but would fail to meet the needs of life sciences and related manu-facturing businesses for premises. Discounted Option Flexible space across the whole i3 area, including the large Strategic Investment Campus could mean the space would be too dispersed, reducing its impact and chance to create a central cluster of activity. Potential Future Option Delivering flexible space on a phased basis linked to the DOMC proposal, and that addresses market need for business space with the opportunity to review the specification after Phase 1. Preferred Option 3. SCALE 3.1 Small-Scale / Cautious 3.2 Mid-Scale Market Ready 3.3 Large-Scale / Ambitious Developing 1 or 2 shell buildings to test market interest but discounted due to value for money factors i.e. there is clear demand for the units proposed but developing in smaller phases will ultimately increase costs. Discounted Option Similar to Option 2.3, a market-ready proposition that balances forecast demand, level of risk, cost efficiencies and future flexibility. Preferred Option Similar to Option 2.2, cost savings could be made if large-scale flexible space was delivered. This could significantly increase costs and risks, overstep the known level of demand and is likely to be in advance of need. Discounted Option 4. FUNDING SOURCES 4.1 Seek AGD Funding 4.2 Seek Other Public Funds 4.3 Seek Private Partner AGD funding through the public sector allows business space to be provided in the face of market failure as development is not viable for the private sector. Consider- ation to be given to a rolling development programme utilising development income. Preferred Option There are no alternative public sector funding sources identified to deliver this scale of intervention. We will continue to scan the market to identify other funding sources and respond accordingly. Potential Future Option Attracting private investment to develop new business space was considered but has been discounted due to its lack of viability in Ayrshire. This option will be reviewed as a future option. Discounted Option 5. TIMESCALES 5.1 Immediate 5.2 Phased Approach 5.3 Postpone Similar to 2.2 and 3.3, there is potential to develop the whole of the i3 site immediately. This would deliver cost savings to the public sector but would also increase risk and remove the option to adapt the size/ layout of proposed space on demand. Discounted Option Delivering the AGD investment through a phased approach minimises risk – this creates flexible manufacturing space, alongside the DPMC project, to meet immediate demand and allows further phases of flexible space, based on take-up of Phase 1. Preferred Option The project could be planned, designed, costed, approved and all relevant permissions secured but construction postponed til occupier interest is secured. This option fails to meet the current market need for good quality business units that are ready for occupation Discounted Option
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NAC Growth and Investment AGD Business Case 50 Preferred way forward – Flexible Space Programme at OBC The preferred way forward at SOC and OBC stages was AGD funding (4.1) to deliver flexible space (2.3) at i3 Enterprise Area (1.1) through a mid-scale intervention (3.2) within a phased timescale (5.2), as follows: Table 20: Preferred Way Forward, Flexible Space Programme – OBC Stage 4.1 Seek AGD Funding 2.3 Flexible Space 1.1 i3 Enterprise Area 3.2 Mid-Scale Market Ready 5.2 Phased Approach AGD funding through the public sector allows business premises to be provided in the face of market failure as development is not viable for the private sector. Consideration will be given to a rolling development programme utilising development income. Delivering flexible space on a phased basis that complements the DPMC proposal, and that addresses market need for business space with the opportunity to review the specification after Phase 1. i3 is one of two locations in Scotland marketed by SDI for manufacturing linked to life sciences & related sectors. It has key locational benefits for investors, with existing established businesses. Similar to Option 2.3, a market-ready proposition that balances forecast demand, level of risk, cost efficiencies and future flexibility. Delivering the AGD investment through a phased approach minimises risk – this creates flexible manufacturing space and the Digital Hub to meet immediate demand and allows further phases of flexible space, based on take-up of Phase 1. 3.4 Short-listed options, Flexible Space Programme The short-listed options shown within the OBC were as follows and are summarised in the tables below for the overall i3 Flexible Space Programme. • Option 1 – do nothing • Option 2 – the preferred option – flexible space, phased • Option 3 – ambitious option – flexible space, accelerated Table 7: Assessment of Options for i3 Flexible Space Programme at OBC Stage - Short List Option 1 Do Nothing Option 2 (Preferred) Flexible Space, Phased Option 3 (Ambitious) Flexible Space, Accelerated Delivers no additional floorspace Attracts 0 occupiers Delivers 0 gross jobs Delivers 8,830 sqm floorspace (NIA) Attracts 8 to 16 occupiers Delivers 162 net jobs Delivers 8,830 sqm floorspace (NIA) Attracts 8 to 16 occupiers Delivers 162 net jobs Investment Level AGD NAC & SG £0 Other Funding £0 Investment Level AGD NAC £4M AGD SG £11M Investment Level AGD NAC £4M AGD SG £11M Delivery Timescale N/A Delivery Timescale (21/22) to (27/28) Delivery Timescale (21/22) to (24/25) In addition, the following table provided a review of each of the short-listed options, considering how each performed against the Critical Success Factors for the i3 project.
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NAC Growth and Investment AGD Business Case 51 Table 21: Review of Critical Success Factors for Shortlisted Options for Overall Flexible Space Programme at OBC Stage 1. Do Nothing 2. Preferred 3. Accelerated BUSINESS NEEDS: How does the option satisfy the AGD Vision & key themes? • Delivers no additional floorspace • Delivers 8,830 sq metres (NIA) of advanced manufacturing floorspace that will support economic growth • Delivers 8,830 sq metres of advanced manufacturing floorspace in one phase. STRATEGIC FIT: How does the option provide a holistic fit and synergy with other national, regional and local strategies? • Attracts no business occupiers • Delivers no jobs • Attracts approx. 8 to 16 occupiers • Delivers 162 net jobs (Direct & Indirect) • Strong synergy with national Advanced Manufacturing and Chemical and Life Science Strategies. • Attracts 8 to 16 occupiers • Delivers 162 net jobs (Direct & Indirect) • Strong synergy with national Advanced Manufacturing and Chemical and Life Science Strategies. BENEFITS OPTIMISATION: How does the option optimise value for money? • There is no value for money as the project is not delivered. • The option delivers floorspace on a phased basis allowing time for review and ensuring the accommodation meets market requirements. • The option delivers all floorspace within one phase but at risk and with possible financial liabilities. POTENTIAL ACHIEVABILITY: Is the option viable and can it be delivered? • N/A • This development option can be accommodated at i3. • This development option can be accommodated at i3. MARKET CAPACITY: Will the option meet an identified market demand, remove a constraint and how will it affect existing supply? • Market demand not met. • This development option has been profiled against detailed market knowledge. • This development option is likely to be in advance of market need. POTENTIAL AFFORDABILITY: Can the option be funded both the up-front capital and future revenue? • N/A • £15m AGD funding is required. Future revenue costs will be met from revenue returns (rent and plot sales). • £15m AGD funding is required. Future revenue costs will be met from revenue returns (rent and plot sales). It should be noted that the total floorspace stated at OBC was updated at the Phase 1 FBC, with assumptions that due to cost increases the scale of floorspace was now likely to be reduced and that the estimated floorspace may be in the region of 6,000m2. (para 1.1.3, Phase 1 FBC). Key Findings from OBC Analysis The table below shows the estimated high level economic outcomes at OBC stage.
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NAC Growth and Investment AGD Business Case 52 Table 22: High-level Economic Outcomes at OBC Stage STAGE 1 - Scotland Impacts - Standard Analysis as calculated before (traditional) Outcome Short Listed Options Option 1 Do nothing Option 2 Preferred Preferred (sensitivity check - negative impact) Preferred (sensitivity check - positive impact) Option 3 (accelerated) Business space created (NIA) 0 8672 sq m 8672 sq m 8672 sq m 8672 sq m Capital Expenditure n/a £15,000,000 £15,000,000 £14,000,000 £15,000,000 Net Present Cost £12,764,649 £12,764,649 £11,978,658 £13,545,157 Optimism bias 5% 5% 5% 5% Direct Jobs 0 111 100 111 111 Indirect Jobs 0 51 26 51 51 Total Jobs 0 162 126 162 162 Construction jobs 0 150 150 140 150 Construction GVA £000 £0 £5,008,507 £5,008,507 £4,700,105 £5,314,757 Direct GVA (Present Value of Benefits) 25 year NPV £0 £54,552,693 £50,233,326 £55,882,327 £56,223,953 Indirect GVA 25 year NPV £0 £25,428,207 £13,338,450 £26,045,489 £26,184,461 Total GVA 25 year NPV £0 £79,980,900 £63,571,776 £81,927,816 £82,408,414 Present Value of Costs to Government n/a £12,764,649 £12,764,649 £11,978,658 £13,545,157 NPV £41,788,044 £37,468,676 £43,903,669 £42,678,796 BCR 4.27 3.94 4.67 4.15 Rank based on BCR 1 n/a n/a 2 STAGE 2- Scotland Impacts - Spatially Adjusted Analysis to align 'traditional' results with Inclusive Growth approach within Scottish Government's Economic Strategy Spatial Adjustment factor n/a 1.11 1.11 1.11 1.11 NPV £60,376,266 £55,595,800 £61,847,840 £62,225,935 BCR 4.73 4.36 5.16 4.59 STAGE 3- UK Impacts - calculate extent of UK level impacts by taking Scotland level impacts and calculating proportion of them which remain after applying UKG guidance Spatial Adjustment factor (d) n/a 1.22 1.22 1.22 1.22 STAGE 4- UK Impacts - A high employment area can be thought of as drawing labour from UK whereas low employment area will draw from the local area Steady State Direct Employment - Jobs 0 111 100 111 111 Steady State GVA £0 £9,377,900 £8,440,110 £9,377,900 £9,377,900 GVA per head for project £0 £84,486 £84,401 £84,486 £84,486 Productivity Adjustment factor (r) n/a 2.03 2.03 2.03 2.03 Overall UKG Adjustment Factor (UKAF) (g) 2.48 2.48 2.48 2.48 Scottish BCR Factor (b) 1.23 1.25 1.21 1.24 Rank based on Overall UKG Adjustment Factor 1 n/a n/a 2 The key appraisal assumptions made in the OBC Economic Analysis were as follows: • Appraisal period – 25 years • Discount rate – 3.5% • Spatially adjusted analysis, using Green Book techniques, to account for the local income distribution, compared with the country as a whole • Employment multipliers – taken from the Scottish Government’s Supply, Use and Input -Output Tables: 1998-2021
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NAC Growth and Investment AGD Business Case 53 The original short list options appraisal from the OBC resulted in the following overall findings with the preferred option as flexible space, delivered on a phased basis. Table 23: OBC Investment Appraisal Ranking Evaluation Results Option 1 Do Nothing Option 2 Preferred (Phased) Option 3 Ambitious (Accelerated) Economic Appraisal 3 1 2 Benefits Appraisal 3 1 2 Risk Appraisal 3 1 2 Overall Ranking 3 1 2 Preferred Option – Phase 1 The preferred and agreed option at OBC stage was a phased approach to flexible space as shown in the table above. In considering moving forward to deliver the first phase, it was agreed that the Council would progress an initial unit at i3 that was originally part of the first Phase, with assistance from internal resources and making use of the Council’s AGD £4M allocation if required. In scoping out options for delivery of Phase 1, the following options were considered in the table below with the preferred option in bold. Table 24: Flexible Space, Phase 1 - Options Flexible Space, Phase 1 – Options Business as usual Do Nothing (Counterfactual) Preferred Option Deliver 18,180 sq ft (1,690 m2) unit with occupancy achieved half-way through 24/25 Deliver Phase 2 instead Deliver two sets of terraced units and one modular unit (2,504 sq m) Preferred Option Sensitivity Check – Negative Impact Unit subdivided into 4 with 100% occupancy achieved in 2027/28 Sensitivity Check – Positive Impact Assumes unit fully occupied at the start of 24/25 Flexible Space Phase 2 Options Appraisal Following approval from the UK and Scottish Governments of the Outline Business Case (OBC), approved in June 2021, the i3 Flexible Space Programme is being delivered in three phases, The first phase Full Business Case (FBC) was approved in November 2022 and constructed in 2025-26. This Phase 2 FBC seeks approval for an estimated investment of £6.775M in a single 18,191 sq ft (1,690 sq m) industrial unit with related yard space and parking, and wider suds and roads infrastructure, funded by the Local Regeneration Fund (formerly Levelling Up Fund 3) (£4.7M) and Ayrshire Growth Deal (£2.075M). To assess the economic impact of this phase, updated modelling has been undertaken to compare the delivery of this phase against a ‘do nothing’ baseline scenario. The Glasgow City Region (GCR) Intelligence Hub’s Business Case Economic Model (BCEM) has been utilised to assess the value for money of the Flex Space Phase 2 project. BCEM follows the methodology outlined within the GCR’s Programme Management Toolkit – quantifying Benefit-Cost Ratios (BCRs) using a HM Treasury Green Book approved methodology. The modelling has assessed five options and these are shown in the table below.
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NAC Growth and Investment AGD Business Case 54 Table 25: Flexible Space Phase 2 Options Option Title Description 1 Do Nothing. 2 Single Unit Deliver one 1,690 sqm (18,191 sqft) GIFA unit by 30 June 2027, with occupancy starting 01 April 2028. – total value £7.65M 3 Subdivided Unit Deliver 1,630 sqm (17,544 sq ft) GIFA of space subdivided into 4 lettable units by 30 June 2027 with 100% occupancy by 01 April 2029.projects as funded by external match-funding – total value £7.67M 4 Terraced Units Deliver Flex Space Phase 3 earlier by 31 March 2028, which includes two sets of terraced units totalling 1,068 sqm (11,496 sq ft) with 100% occupancy by 1 April 2029. – total value £7.02M 5 Smaller unit, LUF 3 Deliver a smaller single unit within the LUF 3 budget cost envelope (estimated at 1,281 m2) by 30 April 2027 with full occupancy by 01 January 2028. Total value £5.38M Table 26 and Table 27 below show the impacts of each option, Table 27 with the construction impacts removed. Note cost figures inputted into the model are expressed as Present Value terms, where a 3.5% discount Rate is used as set by the Green Book. Table 26: Benefits-Cost Ratio Timeframe - 25 Year Appraisal Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit Sub divided Unit Terraced Unit Small Unit + LUF PV of Capital Costs All Geographies £0 £6,806,267 £6,817,997 £6,204,841 £4,754,090 PV of Revenue Costs All Geographies £0 £847,851 £859,795 £823,880 £632,261 PV of Total Costs All Geographies £0 £7,654,118 £7,677,791 £7,028,721 £5,386,350 Local Authority £0 39 41 39 28 Ayrshire Growth Deal £0 49 53 49 36 Scotland £0 79 84 79 58 Local Authority - £2,102,108 £2,250,353 £2,064,459 £1,561,971 Ayrshire Growth Deal - £2,669,343 £2,857,591 £2,621,535 £1,983,455 Scotland - £4,279,291 £4,581,076 £4,202,648 £3,179,726 Local Authority £0 19 19 12 15 Ayrshire Growth Deal £0 26 25 16 20 Scotland £0 34 33 22 26 Local Authority - £50,628,932 £48,878,624 £29,253,376 £40,832,926 Ayrshire Growth Deal - £67,318,248 £64,990,968 £38,896,456 £54,293,087 Scotland - £88,822,688 £85,751,972 £51,321,713 £71,636,712 Actual 0 £39,735 £38,001 £8,963 £30,329 Net Impact - £39,735 £38,001 £8,963 £30,329 Local Authority - £6.91 £6.69 £4.49 £7.90 Ayrshire Growth Deal - £9.18 £8.88 £5.96 £10.49 Scotland - £12.22 £11.84 £7.97 £13.96 Person Years of Construction Employment Present Value of Net Additional Construction GVA Benefit Cost Ratio Full-time Equivalent Jobs Present Value of Net Additional Operational GVA PV of GHG Carbon Accounting
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NAC Growth and Investment AGD Business Case 55 Table 27: Benefits-Cost Ratio Timeframe - 25 Year Appraisal (Construction Impacts Removed) Key Findings The key findings for the options that have been modelled for Phase 2 are as follows: Option 1: Do nothing/minimum status quo Do Nothing Option 2: Single Unit: • Creates 49 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 79 person years of employment in the Construction sector (Scotland) • Supports 26 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £67.318m in net additional GVA over 25 years, £2.669m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a of £9.18:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Option 3: Sub Divided Unit: • Creates 53 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 84 person years of employment in the Construction sector (Scotland) • Supports 25 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £64.990m in net additional GVA over 25 years, £2.857m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a of £8.88:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Option 4: Terraced Unit: • Creates 39 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 49 person years of employment in the Construction sector (Scotland) • Supports 16 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £38.896m in net additional GVA over 25 years, £2.621m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a positive rate of return through a £5.96:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit Sub divided Unit Terraced Unit Small Unit + LUF PV of Total Costs All Geographies £0 £7,654,118 £7,677,791 £7,028,721 £5,386,350 Local Authority £0 £52,889,911 £51,374,336 £31,575,564 £42,551,916 Ayrshire Growth Deal £0 £70,246,516 £68,211,833 £41,856,541 £56,515,423 Scotland £0 £93,547,670 £90,916,429 £56,013,778 £75,208,127 Local Authority - £50,787,804 £49,123,984 £29,511,105 £40,989,946 Ayrshire Growth Deal - £67,577,173 £65,354,242 £39,235,006 £54,531,968 Scotland - £89,268,380 £86,335,353 £51,811,130 £72,028,400 Actual 0 £39,735 £38,001 £8,963 £30,329 Net Impact - £39,735 £38,001 £8,963 £30,329 Local Authority - £6.64 £6.40 £4.20 £7.61 Ayrshire Growth Deal - £8.83 £8.51 £5.58 £10.12 Scotland - £11.66 £11.24 £7.37 £13.37 Present Value of Net Direct GVA Present Value of Net Additional GVA PV of GHG Carbon Accounting Benefit Cost Ratio
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NAC Growth and Investment AGD Business Case 56 Option 5: Small Unit funded by Local Regeneration Fund (formerly LUF3) • Creates 36 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 58 person years of employment in the Construction sector (Scotland) • Supports 20 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £54.293m in net additional GVA over 25 years, £1.983m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a positive rate of return through a £10.49: £1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Economic Modelling Conclusion In conclusion, Option 2, the delivery of a Single Unit approach provides overall the greatest economic benefits. Benefit Cost Ratio Analysis North Ayrshire Council acknowledges that the Benefit Cost Ratio (BCR) for Option 5 the delivery of a small unit with Local Regeneration Funds provides the best return at £10.49:£1 invested. This reflects the combination of funding e.g. AGD and Local Regeneration Funds, and the reduced footprint generated e.g. 1,281m2 at a reduced budget of £5.38M. However, considering the broader gains Option 2 provides a good financial investment return for the AGD, which includes the creation of a larger footprint of 1,690m2. In response, the sensitivity of this preferred option was tested to establish if additional benefits could be generated when amending variables in the delivery and operation of the project. Through negative adaptations (e.g. full occupation delayed until 01 October 2028) the BCR for the Single Unit dropped marginally to £9.25:£1. However, when positive changes are made (e.g. full occupation brought forward to 01 October 2027) the BCR increased to £9.92:£1, thus generating an uplift to £71.627m in net additional GVA over 25 years. A projected increase of £4.309m compared to the unadjusted projection for a Single Unit. 3.5 The procurement process 3.5.1 The Long List Criteria The Phase 2 Flex Space project is being procured through the Public Contracts Scotland portal as an open tender for a one-off contract to construct an advanced factory unit within a total project budget value of £6.775M (including fees, construction cost estimate and other costs). The tender is expected to be published in May 2026 with returns expected in early July 2026. The bids will be assessed on pass / fail question, following which bids will be progressed to the quality assessment stage and then to the commercial stage. As mentioned in paragraph 3.1, the Council’s Corporate Procurement Unit has advised that details of the bidders, their final costs and the evaluation scores, must be kept confidential prior to the award of the tender, as this would be a breach of the Council’s Standing Orders. Details of the contract award will be published on Public Contracts Scotland and North Ayrshire Council’s contract register when the tender is awarded to the successful bidder. 3.5.2 Long list The number of bids received will be assessed on their response to pass/fail questions and as a result of this assessment, bids will then be assessed in terms of the quality evaluation.
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NAC Growth and Investment AGD Business Case 57 3.5.3 Short list criteria The quality evaluation stage will account for 20% of the score. Following the completion of the quality evaluation, bidders will proceed to the commercial evaluation stage which accounts for 80% of the score. The commercial evaluation involves a review of the bids, including an arithmetic check, rate analysis and a review of tender qualifications, with any clarifications sought from bidders where necessary. 3.5.4 Short list Following the commercial evaluation bidders will be assessed and scored and ranked according to the quality and cost assessments. A preferred bidder will be selected that is within the available budget. 3.6 Economic appraisal 3.6.1 Introduction This section provides an overview of the costs and benefits associated with the main Advanced Manufacturing Flexible Space project generally, including the focus of this Phase 2 FBC, the delivery of construction contract for an advanced factory unit of 18,191 sq ft (1690 sq m) and on a total site of 4.59 acres. 3.6.2 Estimating benefits Methodology The Outline Business Case (OBC) set out the benefits associated with each option for the main Flexible Space project and the AGD PMO undertook economic modelling for the overall project. The key findings from this analysis were presented in the OBC. As part of this Full Business Case, economic modelling has been undertaken for Phase 2 only, the outcome of which is contained in Appendix D. In addition, a Benefits Realisation Plan has been developed to add to this work, which is detailed in the paragraphs below. Description, sources and assumptions The benefits identified fell into the following main categories. In each case, the sources and assumptions underlying their use is explained. • Quantitative – cash releasing benefits: financial benefits that the project will help generate. These include direct benefits such as rental income and indirect benefits - such as business rate receipts; • Quantitative – non-cash releasing benefits: societal benefits which can be monetised and expressed in Gross Value Added (GVA) terms. • Qualitative – non-cash releasing benefits: these are assessed separately in paragraph 3.7.2 Table 28: Main Benefits Type Direct to Organisation(s) Indirect to Organisation(s) To society Quantitative (or quantifiable) • Rental income • Business rates receipts • Provision of additional new space for businesses • Reduction in area of vacant and derelict land Cash releasing • Reduction in grounds maintenance costs once tenant moves in • Accelerated/enabled construction activity • Carbon efficiency savings for tenant. Non-cash releasing • Productivity gains to existing businesses Qualitative (or non-quantifiable) • Improvement in appearance of part of business park.
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NAC Growth and Investment AGD Business Case 58 The estimated benefits arising from Phase 2 of the project, in relation to this procurement exercise, relate mostly to the potential for benefits through rental income, the provision of new space for businesses, the appointment of contractors and enabled construction activity with the potential to support training places, maintain jobs and support SMEs through the contract. The economic modelling for Phase 2 in Appendix D for the Preferred Option, would in summary deliver the following: • Creates 49 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 79 person years of employment in the Construction sector (Scotland) • Supports 26 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £67.318m in net additional GVA over 25 years, £2.669m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a of £9.18:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) A Benefits Realisation Plan has been developed for the Ayrshire Growth Deal projects and has identified the outcomes, outputs and impacts that could be measured for the overall Flexible Space project. These are listed below, and it’s anticipated that Phase 2, similar to Phase1, will provide those benefits at a smaller scale. Table 29: i3 Flexible Advanced Manufacturing Space - Outputs, Outcomes and Impacts, Benefits Realisation Plan Ref Indicator Outputs AGD/O/1 Direct/Indirect jobs AGD/O/2 Construction jobs AGD/O/3 Safeguarded jobs AGD/O/4 Community Benefits AGD/O/5 Jobs retained AGD/O/6 Jobs secured AGD/O/7 New or upgraded roads/junctions/cycle pathways AGD/O/8 Journey time savings/modal shifts AGD/O/9 Development space unlocked AGD/O/10 Reduced vacant & derelict land AGD/O/11 Digital Infrastructure AGD/O/12 New Residential Energy Supply AGD/O/13 Visitors AGD/O/14 Start-Ups AGD/O/15 Private sector investment AGD/O/16 Leverage: (including LA, HE/FE, Private Sector and any other leverage AGD/O/17 Income Levels AGD/CB/O/1 Training places / Weeks AGD/CB/O/2 Training places / accredited qualification main-contractor AGD/CB/O/3 Training places / accredited qualification sub-contractor AGD/CB/O/4 Schools Outreach AGD/CB/O/5 CWB Support Places AGD/CB/O/6 Fair Work Accreditation AGD/CB/O/7 SME’s supported AGD/CB/O/8 Regional Supplier Spend AGD/CB/O/9 Work Experience AGD/CB/O/10 Total jobs created by NSAfC projects (Apprentices)
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NAC Growth and Investment AGD Business Case 59 AGD/CB/O/11 Total jobs created by NSAfC projects (Graduates) AGD/CB/O/12 Total jobs created by NSAfC projects (New Entrants) AGD/CB/O/13 Construction Careers Information, Advice & Guidance (CCIAG) Events AGD/CB/O/14 Number of learners receiving an Industry certification – main contractor AGD/CB/O/15 Number of learners receiving an Industry certification – sub-contractor AGD/CB/O/16 Number of Training Plans for sub-contractors AGD/CB/O/17 Site visits by Colleges AGD/CB/O/18 Supply Chain Briefings to sub-contractors AGD/CB/O/19 Business Skills Supports for sub-contractors AGD/CB/O/20 Support for the Third Sector AGD/CB/O/21 Softer community benefits delivered to Ayrshire as part of the project Outcomes AGD/OT/1 Job Levels (new and maintained) AGD/OT/2 Development Space uptake AGD/OT/3 Digital usage patterns AGD/OT/4 Reduced (net) Fuel Poverty AGD/OT/5 Increase in visitor spend AGD/OT/6 Start-up performance/survival AGD/OT/7 Additional investment (including FDI) AGD/OT/8 Improved business productivity AGD/CB/OT/1 CWB participant well-being uplifts AGD/CB/OT/2 Fair Work implementation Impacts AGD/I/1 Net additional jobs created/ maintained AGD/I/2 Net additional returns on investment AGD/I/3 Net changes in Fuel Poverty AGD/I/4 Net additional user productivity AGD/I/5 Follow on investment AGD/I/6 Reduced levels of deprivation within the region AGD/I/7 Increased income levels AGD/CB/I/1 Wider uptake of Well Being/Fair work AGD/CB/I/2 Net uplifts in regional supplier spend AGD/CB/1/3 Case Studies – qualitative community impacts In addition, the selected preferred bidder will be asked to commit to a number of Community Benefits. 3.6.3 Estimating costs In terms of Phase 2 of the Flexible Space Programme, a pre-tender estimate was undertaken by the project that was within the available budget of for the delivery of Phase 2. 3.6.4 Cost appraisal conclusions For the project to proceed, the supplier selected as a result of the cost assessment of the bidders, will require to have a tender value which is below the overall budget for the contract tender which is within the overall project budget of £6.775M (excluding consultancy and other fees). 3.7 Qualitative benefits appraisal The qualitative benefits associated with the Flexible Space Programme generally, were set out within the Outline Business Case. 3.7.1 Methodology The appraisal of the qualitative benefits was undertaken via the following process for the OBC: • Identifying the benefits criteria relating to each of the investment objectives
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NAC Growth and Investment AGD Business Case 60 • Weighting the relative importance (in percentage terms) of each benefit criterion in relation to each investment objective • Scoring each of the short-listed options against the benefit criteria on a scale of 0-9 • Deriving a weighted benefit score for each option 3.7.2 Qualitative benefits criteria The benefits criteria were weighted as follows for each investment objective, as part of the OBC. Specific qualitative benefits were added for Phase 1 of the Flexible Space but maintaining the original percentages and the same has been done for Phase 2 which will also contribute to achieving these benefits. Table 30: Qualitative Benefits Criteria Objectives Qualitative Benefits, Flex Space Programme Flex Space Weight 1 2 % 1. To create flexible business space capable of meeting manufacturing requirements for chemical and life sciences, but also for a wide range of other high value sectors. • New business units will be occupied by Ayrshire/ Scottish/ UK/ overseas businesses 20 • Created/safeguarded jobs will generate economic value – jobs, GVA, turnover for Ayrshire and Scotland • Supply chain outcomes will be created for other Ayrshire and Scottish businesses • Design and construction contracts will generate turnover for Ayrshire and Scottish contractors • Construction jobs and training outcomes will be created, primarily for Ayrshire people and particularly drawn from disadvantaged or Protected Characteristic groups. 2. Create a centre of digital innovation which offers digital tools, support and innovation scaled to a national market supporting a restructure of the regional economy to deliver advanced manufacturing. • University and College presence at i3 offering training and business development opportunities. 20 • Cluster of R&D and spin off opportunities • Providing employment, skills development, community wealth building and supply chain growth opportunities • Providing the private sector with opportunities for upskilling, business transformation and increased productivity 3. To create serviced industrial land and capable of immediate development. • Development plot will be available for indigenous Ayrshire/ Scottish, UK-owned and foreign investors 10 • Design and construction contracts will generate turnover and jobs for Ayrshire and Scotland 4. To create opportunities for employment and inclusive growth with particular emphasis on making connections to local communities, schools and colleges in preparation for employment, particularly in areas of deprivation. • New employment outcomes – direct and indirect through supply chains 20 • Work experience and training places for school and college student. • Job market entrants and low skilled workers increasing soft and basic skills through provision of local jobs. • Residents of deprived areas gaining access to opportunities • University presence enabling additional educational and training opportunities • Delivery of enhanced public transport connection that opens up employment opportunities 5. To attract mobile and private sector investment both from abroad and from indigenous companies. • New employment and training outcomes 15 • Demonstrate attractiveness of Scotland as excellent location for life sciences manufacturing • Increased investment confidence
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NAC Growth and Investment AGD Business Case 61 6. To create a sustainable, high quality business location and R&D cluster, capable of meeting and keeping pace with the changing demands of high value manufacturing sectors and complementing national initiatives including NMIS • Enhancement and maintenance of attractiveness of Ayrshire as a location, meeting modern business needs and promoting Industry 4.0 services. 15 • Large, visible and modern development that clearly shows Ayrshire is Open for Business • Recognised as part of a national strategy for improving digital technology 3.7.3 Qualitative benefits scoring The tender assessment for the refurbishment contract will include a quality assessment of the bids based on a 20% quality / 80% cost ratio. NAC is anticipating receiving competent submissions in relation to this aspect and to be able to score bidders against a set of agreed criterion. 3.7.4 Analysis of key results NAC’s Corporate Procurement Unit will provide a completed tender score sheet for the bidders, providing scores related to the quality and cost aspects, identifying a preferred bidder. 3.7.5 Carbon Emissions Impact Cost Initial carbon analysis has been done for the overall project and is shown in Appendix I. The project has been categorised as Control (3, then zero) and Influence (B). Further information is contained in section 3.12 and 3.13. 3.8 Risk appraisal – unquantifiables The tender for Phase 2 poses a number of risks which are contained in the main risk register for the project. In summary, the main risks related to this project are considered to be: • Failure to obtain approval for the project’s Full Business Case. • All sources of capital and revenue funding for the project are insufficient to deliver and operate the project. • Delays to the project timescales caused by issues such as protected species, statutory consents, procurement or construction. • Delays to the tender award period due to the requirement for various FBC approvals which takes the timescale beyond the acceptance period, after which the preferred supplier may increase their costs • The project fails to attract enough of its target audience to generate sufficient income. Key project mitigations included the progress of Phase 1 of the project which is now completed and has a tenant, therefore confirming demand for new space. For Phase 2, the market has been tested at tender stage and additional sources of funding (Local Regeneration Fund) have been sought to address the increases in costs since the estimates were prepared for the OBC. Any additional risks will be highlighted following the tender process, regarding the selection of a preferred bidder. 3.9 The preferred option – selected supplier The procurement process to select a supplier to undertake the construction of a second industrial unit, surrounding yard and infrastructure for the wider site at Riverside Way in i3, Irvine, will commence in April 2026. It is hoped that a preferred supplier will be selected to be
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NAC Growth and Investment AGD Business Case 62 appointed, who will have submitted a competent bid and will be appointed following the FBC approval process. 3.10 Sensitivity analysis General Sensitivity analysis has been undertaken as part of the economic modelling for Phase 2 and is set out in Appendix D. This included the full occupation delayed or brought forward. However generally, the Preferred Option for Phase 2 provided a positive result. 3.11 The preferred option The preferred option for the overall Flexible Space Programme was to deliver the project on a phased basis. For this FBC, the preferred option is to select a recommended supplier in accordance with the future tender assessment for the construction of a second industrial unit at i3. It is anticipated that this option will offer value for money and will be within the available budget for the project. 3.12 Sustainability and carbon Like the Phase 1 unit, Phase 2 has been designed to be a robust and sustainable building that is capable of being easily adapted if required, through for example the creation of a platform to facilitate space for expansion, the ability to subdivide the building into a maximum of four units or to install a mezzanine level. This approach seeks to reduce potential additional whole life carbon emissions that could be created through any future adaptations required to the building. The new occupier of Phase 1 is already proposing to construct an extension and install a mezzanine level. 3.13 Economic / Financial The Whole Life Carbon Emissions impact associated with the project, including embodied carbon from construction, has been estimated in tonnes CO2e over the economic appraisal period of 25 years. This is shown in the tables below in terms of embodied carbon and operational carbon. 3.13.1 Embodied Carbon No embodied carbon targets were set for the building at the design stage and therefore, the measurement of embodied carbon has been estimated based on a similar calculation to the units being constructed at AEP and within the AEP approved OBC of <970kgCO2/m2 referenced from the RIBA 2030 Climate Challenge target. Prior to the construction stage the contractor will require to investigate and make allowances for the usage of recycled materials where possible. Table 31: Estimated Embodied Carbon, Flexible Space Phase 2 Embodied Carbon Unit Area Embodied Carbon Target kgCO2/m2 Estimated Embodied Energy (whole Life) Embodied Energy per year (/60) *** Phase 2 Flex Space 1,690 m2 969.0 1,638,579 27,310
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NAC Growth and Investment AGD Business Case 63 Figure 12: RIBA 2030 Climate Change Target Metrics 3.13.2 Operational Carbon Operational energy use is not currently known, given the speculative nature of the development. In this respect, energy demand has been estimated. Table 32: Estimated Operational Carbon, Flexible Space Phase 2 Operational Carbon No. Building Use Calculated Annual Demand (kWh) Area (m2) Demand / m2 Phase 2, Flexible Space Light Industrial 204,842* 1,690 m2 121.0 *Sourced from modelling input spreadsheet for preferred option Table 33: Estimated Whole Life Carbon, Flexible Space Phase 2 Whole Life Carbon Building Area Estimated Energy Use / m2 (based on mean precedented use) Estimated Annual Energy Use UK Grid Carbon Factor from Carbon Trust ‘Conversion Factors’ 2023 Update kgCO2e / year Whole Life (60 years)* Phase 2, Flexible Space 1,690 121 204,490 0.20707* 42,344 2,540,640 *Sourced from AEP table
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NAC Growth and Investment AGD Business Case 64 4. THE COMMERCIAL CASE 4.1 Introduction The overall Advanced Manufacturing Flexible Space Programme is seeking delivery of floorspace and related works, over a series of phases. This was identified as the preferred option in the approved Outline Business Case. This FBC is for the second phase of the programme which is for one 18,191 sqft (1,690m2) GIFA industrial unit. This section of the FBC sets out the negotiated arrangements for the provision of an industrial unit and related yard space and infrastructure, under a contract with the selected bidder. The drawings below show the proposed layout and elevations of the unit which have received planning permission (25/0299/PP). Figure13: Phase2 Unit drawings
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NAC Growth and Investment AGD Business Case 65 4.2 Required services The products and services under contract are as follows: • the design and construction of a new 18,191 ft2 (1,690m2) industrial unit suitable for class 4,5 & 6 outlined within, The Town and Country Planning (Use Classes) (Scotland) Order 1997, to be presented to the market with core fitted out to a Category A level. The remaining space will be subject to subsequent fit out by future tenants. The proposed Flex Space Phase 2 unit includes the following specifications and will be situated immediately adjacent to the recently completed Flex Space Phase1 unit and the established Digital Process Manufacturing Centre (DPMC) which has been operational since February 2025. The unit will incorporate sustainable and low carbon components and offers an impressive specification including secure yardage; dedicated parking including EV charging; Low energy LED lighting; office heating via air source heat pump; roof mounted PV panels and FTTP fibre connection. Modifications or complete bespoke solutions have been considered for the unit, to be easily subdivided into a maximum of 4 no. separately lettable units and expansion of the unit is possible by a minimum of 50% to the north of the industrial unit. The quantity of office and ancillary accommodation will generally be around 10% of the total floor area. Further details are set out within the table below: Table 1: Phase 2 Flex Space Specification ITEM PROVISION GENERAL • Unit specification suitable for immediate occupation • GIFA 18,191 ft2 (1690m2) • Site Area 74,023ft2 (6877m2) • Steel portal frame • Profiled and microrib cladding panels to Building Standards Class 1 Storage/Factory Use • Cat A office fit out • Fully serviced with water and electricity (metered) • BT Openreach FTTP fibre connection
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NAC Growth and Investment AGD Business Case 66 • Storage areas for waste collection and provision of infrastructure to facilitate future installation of sprinkler system tank provided POWER • 100kVA 3-phase supply to each unit • additional ducts to each sub-divided unit will be installed to allow future Tenants to apply for individual LV connections based upon their anticipated design load requirements. • all apparatus and wiring connected to the low voltage systems shall be suitable for use with a 3 Phase, 4 Wire, 400 Volt or 230 Volt, Single Phase, 50 Hertz earthed neutral system. WAREHOUSE/ FACTORY • 8m haunch height (9.28m to ridge) • Concrete floors with 50kN/m2 floor loading • 10% roof lights • Powered 4.4m (H) x 4.76m (W) level loading doors • High bay LED lighting (330 lux) OFFICE & CONVENIENCE • Suspended ceilings with recessed LED lighting • Kitchen • Unisex and accessible WCs EXTERNAL • Secure 31.5m deep concrete service yard with gates will be formed to the rear of the property accessed from a road constructed to adoptable standards and suitable for RCC (Roads Construction Consent) • Dedicated car parking to NRDG Standards • Covered Bicycle storage to NRDG Standards SUSTAINABILITY • EPC rating "B" • EV charging points • Water saving sanitaryware • Low energy PIR controlled LED lighting • Air source heat pump for office heating and cooling • Roof mounted solar PV installed with scope to increase this as required. SECURITY • gated access, • intruder alarm • internal & external security lighting • 2.4m high open mesh steel panel Security Fencing to the boundary VEHICLE PARKING • 35 spaces for General Industrial (Class 5) use in accordance with minimum NRDG Standards DISABLED PARKING • 4 spaces EV PARKING PROVISION • 4 active spaces / 8 passive spaces CYCLE PARKING PROVISION • 12 spaces or 6 cycle stands The Council’s Property Management and Investment (PMI) Team have led on developing the design of the unit. This has involved mainly architecture and quantity surveying services and they also procured the following external services: • Geotechnical • Cost consultants • M&E • Site investigation work • Land based engineering works • Ecologists • Transport specialists
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NAC Growth and Investment AGD Business Case 67 4.3 Potential for risk transfer Risks that could affect the successful implementation of the project have been identified and are set out in detail in the Risk Register attached as Appendix E. This includes details of risk owners, risk evaluation and mitigation measures. In terms of this FBC, the general principle of ‘risk passed to the party best able to manage them’ subject to value for money, has been applied. For this project it is anticipated that the associated risks may be apportioned between the Council, design team, contractor and occupier. This is shown in the table below, where we have agreed that we will apportion service risks in the design build and operational phases as follows: Table 34: FBC Flex Space Phase 2, Risk Transfer Analysis Risk Category Potential Allocation Comments Public Private Shared 1. Design Risk Depends on contract type and conditions. 2. Construction & Development Risk Depends on contract type and conditions. 3. Transition & Implementation Risk Both parties will establish and agree change management procedures if not dictated by contract type. 4. Availability & Performance Risk Performance of design team and contractor will be monitored by NAC. 5. Operating Risk NAC will manage the completed units. 6. Variability of Revenue Risks Rental income profiled at market rate but NAC will retain risk of variance. 7. Termination Risks NAC will hold risk if contractor or tenant terminates their agreements. 8. Technology & Obsolescence Risks NAC and occupier carry risks relating to obsolescence of property and equipment. 9. Control Risks NAC holds overall control for the delivery and ongoing management of the project. 10. Residual Value Risks The completed floorspace will hold a residual value for which NAC is responsible for maintaining the value. 11. Financing Risks Limited – major costs relate to up-front capital construction and potentially empty rates obligation. Tenants will be responsible for property maintenance. Issues related to Local Regeneration Fund (LUF3) grant criteria. 12. Legislative Risks N/A. Likely only to apply to initial planning and building warrant – risks will be off-set by securing permissions in advance of construction. 13. Other Project Risks Cost inflation. Supply of materials. 4.4 Agreed charging mechanism The payment mechanism agreed with the service provider with respect to the construction of the industrial unit will involve submission of invoices by the contractor at agreed stages of the works, which will be certified by the consultant’s team to NAC for payment. In addition, this
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NAC Growth and Investment AGD Business Case 68 phase will generate ongoing rental income from the lease of the completed unit with rent charged at appropriate rates in line with market conditions. A valuation prepared in December 2024 for the project suggested a market rent of £7.00 per sq ft. Based on a total development Gross Internal Area (GIA) of 18,200 sq ft, this would be a total rent of £127,400 per annum. The valuation is based on the unit, extending to a total of 18,191 sq ft (1,690 sq m) consisting of an industrial processing packaging/ laboratory/ warehouse area of approximately 16,361 sq ft (1,520 sq m) and provision for office, reception and meeting areas of approximately 1,830 sq ft (170 sq m), suitable for Class 4, 5 & 6 uses is to be situated on 16,355 sq m of vacant land. It's anticipated that NAC will not consider selling buildings initially, to ensure NAC benefits from income generated. NAC will also be responsible for any Non-Domestic Rates charges accruing against any vacant units following handover from the contractor. For the Local Regeneration Fund (Levelling Up 3 funding) its anticipated that the Council would pay the invoices and claim the funds from the UK Government. 4.5 Agreed contract length Building contracts are envisaged to endure for a period of construction only. Occupier contracts are envisaged to be leases to occupiers on terms that are appropriate to secure the investment i.e. at the maximum term that the occupier will accept. This is expected to enhance financial and economic returns to the public sector and provide a return on capital investment. 4.6 Key contractual clauses The Form of Contract for the project is the SBCC Design and Build Contract for use in Scotland (DB/Scot), 2016 edition incorporating Amendment 1 February 2018. The key contractual clauses are as follows: • Clause 4.18.1 Retention Percentage – 3% • Clause 6.4.1 Contractors Insurance – injury to persons or property - £10,000,000 • Clause 6.5.1 Insurance – Liability of Employer - £10,000,000 • Clause 6.7 Insurance of the works – Option A applies (By Contractor) • Clause 6.15 Contractors Designed Portion Professional Indemnity Insurance - £10M In addition, the preferred supplier has stated that they will deliver a number of community benefits. It would be inappropriate to incorporate contract clauses for occupiers of the completed units. However, there is an opportunity to work with tenants to maximise impacts and benefits for local people and local businesses through supply chains and local procurement mechanisms. 4.7 Personnel implications (including TUPE) It is anticipated that the TUPE – Transfer of Undertakings (Protection of Employment) Regulations 1981, will not apply to any aspect of this project. 4.8 Procurement route and implementation timescales The procurement of this Phase was through a tender advertised on Public Contracts Scotland. The implementation milestones for the scheme are to be discussed with the selected service provider. The dates shown below are critical in terms of how quickly the FBC can be endorsed and approved, in order to award the contract before the tender acceptance period expires, to
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NAC Growth and Investment AGD Business Case 69 enable the works to commence. Indicative Project Milestones are shown at 6.3.3, including information regarding Levelling Up Fund 3 (LUF2) which is partly funding this project. Table 35: Key timescales for progress of Phase 2 Unit Stage Estimated Date Full Business Case submitted to AGD PMO 10 April 2026 Tender published 06 May 2026 Tender returns 01 July 2026 Tender evaluation ends 31 July 2026 Final feedback / endorsement from Govt on FBC 21 Aug 2026 Cabinet endorse FBC 01 Sept 2026 AEPB & AEJC approval (special meeting to be set) 11 Sept 2026 Contract award 16 Sept 2026 Contract completion 22 Sept 2027 Deadline for drawing down Local Regeneration Funds 31 March 2028 4.9 FRS 5 accountancy treatment It is envisaged that the assets underpinning the delivery of the service will be on the balance sheet of the organisation should the development remain in the ownership of NAC.
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NAC Growth and Investment AGD Business Case 70 5.0 THE FINANCIAL CASE 5.1 Introduction The purpose of this section is to set out firm financial implications of this contracted solution. At FBC stage for Phase 1, it was noted that there had been changes to the financial implications, following on from the approval of the Outline Business Case in June 2021. Adjustments were made to the estimated overall level of floorspace that the Programme was anticipated to achieve, from 9,000 square metres (97,000 sq ft) to just over 6,000 square metres (65,000 sq ft). The difference in floorspace estimated was due to a combination of the OBC costs being early indicative estimates, prepared prior to the development of QS cost reports for the project, and significant construction cost increases. The overall cost of Phase 1, now delivered, is £5.147M, which delivered 1,690m2 of flexible floorspace. This included support of £0.967M from the Scottish Government’s Vacant and Derelict Land Fund for the Phase 1 plot and early development work for the overall Flexible Space Programme. The unit is now let (from mid-March 2026) and will begin to generate rental income for the Council from June 2026. The estimated cost of Phase 2 is £6.775M, including consultants fees, construction estimate and other costs. This includes not only a unit of a similar size to Phase 1 and related yard space but also a level of fit out to enable tenants to occupy the unit immediately and suds and roads infrastructure for Phase 2 and the wider site, to enable future phases. The overall area for the Phase 2 unit and yard space is 7,322m2. The wider area of the site included in Phase 2 is 18,568m2 (4.59 acres) which is 39% of the area of the Phase 2 site. The projected spend profile for Phase 2 is shown below, including estimated revenue costs for the Council, prior to the unit being occupied. It’s anticipated that revenue costs will include the following costs listed below until the unit is occupied. However, these costs will eventually be offset by the additional rental income to the Council. • Maintenance, repair and management • Rates & utility bills • Marketing and promotion • Legal fees • Building insurance • Statutory compliance certificates and any associated works • EPC costs Table 36: Flexible Space Phase 2, Project Spend Profile Construction Spend Total Spend Year 4 Year 5 24/25 Year 6 25/26 Year 7 26/27 Year 8 27/28 Capital spend £6.775M £0.051m £0.305M £0.132M £2.068M £4.220M Revenue spend £0.0675M £0 £0 £0 £0.0675M Total £6.8425M £0.051M £0.305M £0.132M £2.068M £4.2875M To mitigate the risk of increased costs and the volatility of the construction market, Phase 2 is being supported with £4.706M of funding leveraged from the Local Regeneration Fund (see 5.3 below).
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NAC Growth and Investment AGD Business Case 71 5.2 Impact on the organisation’s income and expenditure account The anticipated payment stream for the project over its intended life span is set out in the following table which shows the overall Flexible Space Programme. The payment stream in relation to Phase 2 is also shown in the Table below. It is anticipated that the tender for the works will come back within the budget available, enabling the works to progress. It should be noted that increased project costs have been mitigated for Phase 2 through the UK Government’s Local Regeneration Fund, to support this particular phase. Table 11a: Flexible Space Financial Profile – Capital Expenditure £'000 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 Phase 1 5,147 34 140 217 403 2,912 1,387 53 0 0 0 0 Phase 2 6,775 0 0 0 0 51 305 132 2,068 4,220 0 0 Phase 3 8,751 0 0 0 0 0 0 0 230 3,655 4,866 0 Total 20,673 34 140 217 403 2,963 1,692 185 2,298 7,875 4,866 0 Table 11b: Flexible Space Financial Profile – Capital Funding £’000 Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 19/20 20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 Scottish Government 11,000 307 2,195 1,38 0 0 2,372 2,372 2,372 NAC 4,000 34 83 122 0 51 308 53 230 2,996 2,494 (2,372) AGD Total 15,000 34 83 122 307 2,246 1,692 53 230 5,368 4,866 0 VDLF 967 56 95 97 718 LRF (Prev LUF3) 4,706 132 2,068 2,507 Project Total 20,673 34 140 217 403 2,963 1,692 185 2,298 7,875 4,866 0 5.3 Local Regeneration Fund (formerly Levelling Up Fund, 3) Phase 2 of the project benefits from an award of £4.706M as part of the UK Government’s Local Regeneration Fund (formerly LUF 3). The approved Phase 1 FBC had advised of an application for Levelling Up Funding being considered by the UK Government which, if successful, could have contributed to Phase 1, however this fund was postponed. As a result, Phase 2 is now benefitting from the fund, providing crucial leverage for the flexible space programme, helping to address budget challenges and replacing the majority (69%) of the AGD funding for Phase 2. This is part of an overall £17.5M allocation to North Ayrshire, aiming to address market failure, through the delivery of new energy efficient commercial property alongside the provision of low carbon infrastructure at key employment sites including i3. 5.4 Impact on the balance sheet An updated version of this FBC will advise on the outcome of the tender process and whether the tender costs of the preferred bidder are affordable to deliver Phase 2 and are within the capital expenditure available within the budget.
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NAC Growth and Investment AGD Business Case 72 5.5 Overall affordability The capital cost of the overall project is £15M from the AGD. Early spend has been supported by the Vacant and Derelict Land Fund, prior to any draw down of AGD spend. It should be noted that the capital costs for Phase 2 have not factored in any additional cost for private sector tenants to fit out a completed unit for their specific purposes but a level of fit out is being provided to enable immediate occupancy. It is anticipated that a tender can be received for Phase 2 which is competent, affordable and within the available budget. NAC will be responsible for ongoing maintenance, marketing and management of the buildings and any surrounding curtilage, until they are let, and will cover any related costs. This will be offset by income generated from the completed project from the following: • Ongoing rental income through the lease of completed units; and • One-off capital receipts from the sale of buildings and/or development plots. The approved OBC had estimated overall rental income for the Programme to be in the region of £400,000 by 2032. However, this is figure is likely to be significantly higher, based on the known rental income due to be received for the Phase 1 unit from June 2026 onwards, which will be higher than the rental valuation provided by Colliers of £127,500. In addition, a valuation for the Phase 2 unit by Ryden in December 2024 estimates rental income of £127,400 per annum for Phase 2. ASSURANCE STATEMENT This is to confirm that the financial profile for the project outlined in Section 5.2 above reflects the position of North Ayrshire Council as at the date stated below. Name of Council’s S95 Officer in block capitals: MARK BOYD Signed: Date: xx May 2026
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NAC Growth and Investment AGD Business Case 73 6.0 THE MANAGEMENT CASE 6.1 Introduction This section of the FBC addresses how the scheme will be delivered successfully. 6.2 Programme management arrangements The three Ayrshire Councils (East, North and South) have agreed to implement a new governance structure to oversee the delivery of the Ayrshire Growth Deal and to promote the main drivers for the Regional Economic Partnership, namely: • to promote and deliver regional economic and inclusive growth on an Ayrshire-wide basis, in line with the Scottish Government’s aim of having a Regional Economic Partnership for every region of Scotland; • to provide the robust shared governance which will enable the Scottish and UK Governments and other funding sources to dispense monies on an Ayrshire basis; • To encourage the meaningful involvement of private sector partners as well as the public sector; • The structure should be as simple as possible, but be capable of adaptation as required; and • To recognise that the funding element is being delivered through Councils, and consequently democratic accountability will be required for key investment decision. The governance for the AGD programme includes the following: • The Ayrshire Economic Joint Committee (AEJC) – comprising Elected Members, representatives from Scottish Enterprise, Skills Development Scotland, business and education. • The Ayrshire Regional Economic Partnership Board (AEPB) – comprising Elected Members, representatives from public sector partners including SE, SDS, HIE, VisitScotland, HE, FE, the third sector and the business community. These committees have oversight of the AGD both at a programme level and in terms of approval of detailed business cases for individual projects, as well as continued monitoring and evaluation of the AGD programme post Deal document sign off. Please see Figure 14 below, showing the standard AGD Governance approach. The projects also have internal Gateway Review Boards to monitor and review progress and reach agreement on key aspects of the project. It is anticipated that over time the 3 Councils will develop more regional responses to the needs of our businesses and communities to complement the AGD investment. This is currently being developed through an agreed proposal between NAC and EAC for an Economic Development service that includes AGD delivery teams from both Councils. The i3 Flexible Space programme including Phase 2, is an integral part of the Ayrshire Growth Deal Programme of Economic Infrastructure. The Programme will be managed by North Ayrshire Council in conjunction with the AGD PMO and related Governance structure.
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NAC Growth and Investment AGD Business Case 74 Figure 14: Standard AGD Governance approach 6.3 Project management arrangements Phase 2 of the Flex Space Programme, which is the subject of this FBC, will be managed by the Council’s PMI team and will follow the PRINCE2 methodology as much as possible. 6.3.1 Project reporting structure NAC has established internal governance arrangements for the management of its AGD project(s) organised through a Project Board. The NAC Project Board has overall authority and responsibility for project delivery including the Business Case, prior to submission to the NAC Executive Leadership Group for approval and prior to submission to the Programme Management Office (PMO). The Board has a project management responsibility but no decision-making powers. The Project Board provides a mechanism for accountable project management delivered by regular progress reporting and updates and coordination of all design teams and initiatives associated with infrastructure, employability, business and innovation strands. The Project Board will co-ordinate the overall delivery of the Phase 2 Flexible Space project. Project Management responsibilities for Phase 2 sit with the Council’s Property Management and Investment (PMI) Team who have led on the development of the design on behalf of the Growth and Investment Team who have acted as client. PMI will continue this role as part of the delivery stage. Overall responsibility will rest with Director of Growth and Investment reporting to the Chief Executive. All personnel will be experienced and professionally qualified in their respective roles. The project will be managed in accordance with NAC project management procedures. The Senior Responsible Officer for the project in NAC is the Senior Manager, Growth and Investment, with support from a Growth and Investment Manager as project lead. A full multi-disciplinary team will advance the project to completion. Regular monthly updates will also be provided to the PMO and to Governments in accordance with the required reporting for all Ayrshire Growth Deal projects as defined by the AGD Governance document.
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NAC Growth and Investment AGD Business Case 75 As a large percentage of the project is funded by the Local Regeneration Fund, the project is also subject to providing quarterly progress and programme updates to Government through an online portal reporting system. Figure 15: Organisational chart, showing governance of the project 6.3.2 Project Roles and Responsibilities Phase 2 of the Flex Space Programme is being managed by the Council’s PMI team. For the purposes of the Ayrshire Growth Deal processes, the SRO is Louise Kirk, Head of Service, Economic Development, Growth and Regeneration, North Ayrshire Council and Project Lead is Marnie Ritchie, Regeneration Manager, North Ayrshire Council. The overall Project Team includes the Council’s Growth and Investment, PMI and Finance teams. The appointed contractor’s role will be for the completion of the design and build of the Phase 2 unit. The table below sets out roles and responsibilities for Phase 2 of the project which is the focus of this FBC: Table 37: Roles & Responsibilities Senior Responsible Officer Louise Kirk, Head of Service, Economic Development, Growth and Regeneration, NAC Chief Financial Officer Mark Boyd, Head of Finance, NAC Project Manager Alan Martin, Team Leader, PMI, NAC Senior Manager Bruce McClure, Snr Manager, Growth & Investment, NAC Project Lead (client) Marnie Ritchie, Manager, Growth & Investment Specialist advisors See para 6.4 Project Contractor Preferred supplier 6.3.3 Project Plan The Project Plan is set out in the table below with a status update for each milestone. Additional milestones have been added for Phase 2, in particular to reflect the current approval processes for the FBC and Gateway milestones. A project plan will also be required from bidders for the construction tender to demonstrate how they can meet the required timelines. A Delivery Assurance Implementation Plan (DAIP) was produced by the AGD PMO in early 2026. The milestones vary slightly from the detail in the DAIP that has been shared with Governments, following the finalisation of the tender and FBC and this is illustrated below the first table.
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NAC Growth and Investment AGD Business Case 76 Table 9: Flexible Space Phase 2, Project Milestones (working version) and comparisons to DAIP FLEXIBLE SPACE, PHASE 2: Key Milestones Estimated date Quarter (financial year) Status Flexible Space Outline Business Case Approved Phase 1, Full Business Case granted Approved Planning approval granted for Phase 2 Complete NAC Gate 3, Project Board, Investment Decision to tender 23 Jan 26 Q4, 25/26 Complete NAC publish Invitation to Tender (ITT) (estimate) 06 May 26 Q1, 26/27 Not started NAC receive tenders (estimate) 01 Jul 26 Q2, 26/27 Not started NAC tender evaluation period ends 14 Aug 26 Q2, 26/27 Not started Government endorse Phase 2 FBC 21 Aug 26 Q2, 26/27 Not started NAC report FBC to Cabinet 01 Sept 26 Q2, 26/27 Not started AEPB & AEJC approve Phase 2 FBC 11 Sept 26 Q2, 26/27 Not started NAC award Phase 2 contract, D&B contract commences 16 Sept 26 Q2, 26/27 Not started NAC commences marketing of the building Sept 26 Q2, 26/27 Not started Contractor completes construction works 22 Sept 27 Q2, 27/28 Not started Contractor handover to NAC 22 Oct 27 Q3, 27/28 Not started NAC sets closing date for interest and selection of tenant tbc tbc Not started Current deadline for claiming all Local Regeneration Fund 31 Mar 28 Q4, 27/28 In progress NAC reports Outputs/Outcomes/CWB tbc tbc Not started NAC delivers subsequent Phases and related FBCs. tbc tbc Not started FLEXIBLE SPACE PHASE 2, ESTIMATED TIMELINES Y7 (2026/27) Y8 (2027/28) Y9 (2028/29) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Current Delivery Assurance Imp Plan dates FBC FBC approval by June 26, Q1 Contract award/delivery phase from Jul 26, Q2, to contract completion in Jul 27, Q2. Updated FBC milestone dates FBC FBC approval during Sept 26 in Q2 Contract award/delivery phase from Sept 26, Q2, to contract completion in Sept 27, Q2. 6.4 Use of Special Advisers Special advisers are being used for Phase 2 of the project as follows: Table 38: Special Advisers Specialist Area Adviser Detail Financial N/A Technical Clancy Structural Engineers & Civils consultants Hulley & Kirkwood Mechanical & Electrical Engineering Consultants NAC Property Management & Investment (PMI) Team Architect, Quantity Surveyor, Project Management Services Applied Ecology Ecologists, ongoing input Colliers Land & proposed building valuation Stantec Local Transport Strategy Procurement & Legal N/A Business Assurance Ryden Property consultants Other N/A
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NAC Growth and Investment AGD Business Case 77 6.5 Arrangements for change management The change control process will be managed by NAC. Arrangements for change management are set out within the Ayrshire Growth Deal Governance Document (v16) and are summarised in the flow chart in Appendix J. 6.6 Arrangements for benefits realisation A Benefits Realisation Logic Chain is shown in Appendix C. In addition, a Benefits Realisation Plan for the Ayrshire Growth has been prepared and has identified the outcomes, outputs and impacts that could be measured for this project as set out below. This will also ensure alignment of information across the AGD documentation of the Implementation Plan and Benefits Realisation Plan. Table: i3 Flexible Advanced Manufacturing Space - Outputs, Outcomes and Impacts, Benefits Realisation Plan Ref Indicator Outputs AGD/O/1 Direct/Indirect jobs AGD/O/2 Construction jobs AGD/O/3 Safeguarded jobs AGD/O/4 Community Benefits AGD/O/5 Jobs retained AGD/O/6 Jobs secured AGD/O/7 New or upgraded roads/junctions/cycle pathways AGD/O/8 Journey time savings/modal shifts AGD/O/9 Development space unlocked AGD/O/10 Reduced vacant & derelict land AGD/O/11 Digital Infrastructure AGD/O/12 New Residential Energy Supply AGD/O/13 Visitors AGD/O/14 Start-Ups AGD/O/15 Private sector investment AGD/O/16 Leverage: (including LA, HE/FE, Private Sector and any other leverage AGD/O/17 Income Levels AGD/CB/O/1 Training places / Weeks AGD/CB/O/2 Training places / accredited qualification main-contractor AGD/CB/O/3 Training places / accredited qualification sub-contractor AGD/CB/O/4 Schools Outreach AGD/CB/O/5 CWB Support Places AGD/CB/O/6 Fair Work Accreditation AGD/CB/O/7 SME’s supported AGD/CB/O/8 Regional Supplier Spend AGD/CB/O/9 Work Experience AGD/CB/O/10 Total jobs created by NSAfC projects (Apprentices) AGD/CB/O/11 Total jobs created by NSAfC projects (Graduates) AGD/CB/O/12 Total jobs created by NSAfC projects (New Entrants) AGD/CB/O/13 Construction Careers Information, Advice & Guidance (CCIAG) Events AGD/CB/O/14 Number of learners receiving an Industry certification – main contractor AGD/CB/O/15 Number of learners receiving an Industry certification – sub-contractor AGD/CB/O/16 Number of Training Plans for sub-contractors AGD/CB/O/17 Site visits by Colleges AGD/CB/O/18 Supply Chain Briefings to sub-contractors
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NAC Growth and Investment AGD Business Case 78 AGD/CB/O/19 Business Skills Supports for sub-contractors AGD/CB/O/20 Support for the Third Sector AGD/CB/O/21 Softer community benefits delivered to Ayrshire as part of the project Outcomes AGD/OT/1 Job Levels (new and maintained) AGD/OT/2 Development Space uptake AGD/OT/3 Digital usage patterns AGD/OT/4 Reduced (net) Fuel Poverty AGD/OT/5 Increase in visitor spend AGD/OT/6 Start-up performance/survival AGD/OT/7 Additional investment (including FDI) AGD/OT/8 Improved business productivity AGD/CB/OT/1 CWB participant well-being uplifts AGD/CB/OT/2 Fair Work implementation Impacts AGD/I/1 Net additional jobs created/ maintained AGD/I/2 Net additional returns on investment AGD/I/3 Net changes in Fuel Poverty AGD/I/4 Net additional user productivity AGD/I/5 Follow on investment AGD/I/6 Reduced levels of deprivation within the region AGD/I/7 Increased income levels AGD/CB/I/1 Wider uptake of Well Being/Fair work AGD/CB/I/2 Net uplifts in regional supplier spend AGD/CB/1/3 Case Studies – qualitative community impacts 6.7 Carbon management For all AGD projects, procedures will be developed across that apply best practice carbon management techniques, notably PAS 2080: Carbon Management in Infrastructure, to ensure that potential carbon emissions resulting from the project will be minimised from the outset. For planned buildings, the RICS Whole Life Carbon Assessment for the Built Environment approach will also be applied. These compatible approaches represent the highest standard in whole life buildings and infrastructure carbon management and will ensure that the potential carbon emissions impact of the project is demonstrably minimised. Embodied carbon (i.e., carbon particularly associated with construction materials and processes) will be minimised utilising the above carbon management approaches, including the use of innovative materials, construction techniques and supply chain procurement mechanisms to reduce carbon emissions, minimise waste and contribute towards a circular economy, Design and construction of the project will target net zero operational emissions, including no use of fossil fuels, at lease in accordance with the Scottish Government’s climate change plan. Initial carbon analysis has been done for the overall project and is shown in Appendix I. The project has been categorised as Control (3, then zero) and Influence (B). 6.8 Arrangements for risk management The strategy, framework and plan for dealing with the management of risk will be through the contract with monitoring by the Project Manager within the Council’s PMI Team.
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NAC Growth and Investment AGD Business Case 79 A copy of the project Risk Register is attached at Appendix E. This sets out who is responsible for the management of risks and the required counter measures. 6.9 Arrangements for contract management The Phase 2 Flex Space project will be managed by the Council’s PMI team and construction phase will be delivered by the preferred bidder. Management will include regular progress meetings and reports by the contractor. The Council’s PMI team will project manage and oversee the works on behalf of North Ayrshire Council and will be responsible for resolving any issues that arise with the contractor. 6.10 Arrangements for post project evaluation Project monitoring and evaluation will be managed through AGD governance arrangements, as established and through the reporting requirements related to the Local Regeneration Fund. The project will be subject to regular review meetings to discuss progress, programme, financial and technical matters. It will be necessary to monitor the impact of the AGD, including at individual project level. The flexible space project will be monitored through the various Green Book Business Case Stages by North Ayrshire Council’s Growth and Investment Team. The Project Lead will report progress at key stages through a series of Gateway Boards and bi-monthly updates to the Council’s Executive Leadership Team. Project spend will be monitored on a monthly basis with the Council’s Finance Team. A monitoring and evaluation framework will be developed to monitor the project’s outputs and outcomes and ensure that those are included, where possible, within the procurement process. 6.11 OCG Gateway review arrangements The Office of Government Commerce (OGC) Gateway Process is designed to provide independent guidance to Senior Responsible Owners (SROs), programme and project teams and to the departments who commission their work, on how best to ensure that their programmes and projects are successful. This process examines programmes and projects at key decision points in their lifecycle. It looks ahead to provide assurance that they can progress successfully to the next stage. These key stages or ‘Gates’ are: • Gate 0 – Strategic Assessment • Gate 1 – Business Justification • Gate 2 – Delivery Strategy • Gate 3 – Investment decision • Gate 4 – Ready for Service • Gate 5 – Benefits Realisation and Operational Review In terms of Phase 2 and this specific FBC, the internal project board will discuss the aspects of the outcome of the tender process at a meeting in due course, and will require to be satisfied with the outcome of the process outlined to them at the meeting in order for the proposed contract award to progress through the next governance stages.
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NAC Growth and Investment AGD Business Case 80 6.12 Contingency plans In the event that this project fails, governance arrangements are in place to allow the Council to agree an appropriate way forward with the PMO and Governments to ensure that there is limited impact on the Ayrshire Growth Deal and the main funder for the Phase which is UK Government, through the Local Regeneration Fund (formerly LUF3 fund). Signed: XX Date: Date / April / 2026 Senior Responsible Owner Louise Kirk, Head of Economic Development, Growth & Regeneration, NAC
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NAC Growth and Investment AGD Business Case 81 PART C: APPENDICES Appendices Table 1: List of appendices Ref. Appendices Referenced A Heat Map and Inclusive Growth Drivers 1.2.1, 2.4.1 B Flexible Space Links to AGD Projects 1.2.1 C Benefits Realisation Logic Chain 2.8, 6.6 D Economic Modelling & Technical Detail 1.3.1, 3.6.2, 3.10 E Risk Register 1.4.2, 1.5.2, 2.9, 4.3, 6.8 F Inclusive Growth & Community Wealth Building 1.1.1, 2.3.1 G Community Benefit Statement For information H Equality Impact Assessment For information I Carbon Management 3.7.5, 6.7 J Ayrshire Growth Deal Change Management Process 6.5
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NAC Growth and Investment AGD Business Case 82 APPENDIX A: INCLUSIVE GROWTH HEAT MAP
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NAC Growth and Investment AGD Business Case 83 APPENDIX B: AGD PROJECT LINKS Project Link What is the Link? Key Actions to Maximise Link Expected benefits of the link Digital Process Manufacturing Centre (DPMC), i3 The DPMC pilot at i3 is operational and provides a unique facility for processing manufacturing sector companies to improve their productivity and modernise their processes through digital automation. This is linked to the i3 Flexible space to create a cluster and accommodate business opportunities arising from the DPMC project eg business incubation units. • Dialogue required across AGD projects to established differentiation between projects, complementarity opportunities and wider understanding of partner roles in each project (eg NMIS, University of Strathclyde, CPI, Ayrshire College) • Creation of cluster area at i3 with DPMC and business space that complements each other and accommodates spin off opportunities from the DPMC facility being located at Irvine. • Opportunities for referral from DPMC to more specialised F&D facility at AMIC Project Link What is the Link? Key Actions to Maximise Link Expected benefits of the link Building Digital Capital (BDC) This project replaces the Digital Infrastructure (£3M) and Subsea Cable (£11M) projects supporting digital infrastructure across Ayrshire with an allocation of £4.6M for North Ayrshire to support digital infrastructure, critical to the region’s future growth. This will still seek to improve connectivity for local businesses including fibre, mobile, 5G and smart poles infrastructure, building on the recent benefits of the 5GIR private network pilot delivered at DPMC. • Develop specific digital infrastructure improvement proposals for i3 with BDC project lead, Flex Space design team and NMIS. • Information sharing and opportunities for joint working. • Ensuring i3 connectivity requirements, including that of DPMC partner NMIS, have high visibility as part of the Digital Infrastructure project. Project Link What is the Link? Key Actions to Maximise Link Expected benefits of the link Ayrshire Engineering Park (AEP) With potential links to NMIS (National Manufacturing Institute Scotland) which are still being explored, the Engineering Park will provide businesses the opportunity to explore how to improve process and improve engineering/manufacturing excellence to be the best in their field. i3 will provide a unique facility and hub for businesses seeking to improve their productivity and modernise their processes through digital automation for the chemical and Life Sciences sectors which is very much aligned • Set up referral routes from the project • Working group oversees both projects and responsible for integration. • Sharing of information and joint discussions with NMIS to ensure a collaborative approach and avoid duplication. • Sharing of learnings and studies which would benefit or transfer across sub sectors to benefit the wider manufacturing sector in Ayrshire. • Sharing of information and resource. • Collaboration on projects which can be developed with mass benefit to the wider manufacturing sector in Ayrshire. • Provision of flexible space in both North and East Ayrshire which will drive inward investment to the area providing greater choice to investors and collaborative working across the councils.
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NAC Growth and Investment AGD Business Case 84 with the Engineering Park vision. I3 and the Engineering Park will complement the manufacturing industry in general across Ayrshire and the south-west of Scotland while focusing on different areas of industry. The development of advanced manufacturing space in both North and East Ayrshire will attract inward investment to the Ayrshire Region. Project Link What is the Link? Key Actions to Maximise the Link Expected Benefits of the Link Ayrshire Skills Investment Fund Ayrshire Skills Investment Fund has established a responsive skills fund to drive Inclusive Growth. The fund can help support people on the programme to develop skills. The Ayrshire Skills Investment Fund will add flexibility and responsiveness to the skills system to address related i3/DPMC industry needs. It can also ensure that disadvantaged sectors of the community have access to career opportunities through the i3/DPMC AGD projects • Ensure attendance of Officer representing Flex Space/DPMC at relevant working group meetings • Set up referral routes from project. • Joint discussions with local Colleges to ensure a collaborative approach • Sharing of information regarding skills gaps identified through business engagement • Direct link to skills training • Support to prepare those out of labour market to new jobs • Achievement of key outcome to raise skills levels within the local area Project Link What is the Link? Key Actions to Maximise the Link Expected Benefits of the Link AMIC (Ayrshire Manufacturing Investment Corridor) With links to NMIS the AMIC centre will provide pilot plant facilities to allow F&D manufactures to test and development new production and manufacturing practices. While the DPMC at i3 provides a unique facility for process manufacturing sector companies to improve their productivity and modernise their processes through digital automation. AMIC and DPMC will complement the manufacturing industry in general across Ayrshire and the south-west of Scotland while focusing on different areas of industry. The development of advanced manufacturing space as part of AMIC, will attract inward investment to the Ayrshire Region. • Set up referral routes from the project • Working group oversees both projects and responsible for integration. • Sharing of information and joint discussions with NMIS to ensure a collaborative approach and avoid duplication. • Sharing of learnings and studies which would benefit or transfer across sub sectors to benefit the wider manufacturing sector in Ayrshire. • Sharing of information and resource. • Collaboration on projects which can be developed with mass benefit to the wider manufacturing sector in Ayrshire. • Provision of flexible space in both North and East Ayrshire which will drive inward investment to the area providing greater choice to investors and collaborative working across the councils.
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NAC Growth and Investment AGD Business Case 85 APPENDIX C: BENEFITS REALISATION LOGIC CHAIN Project Inputs (resources) Project Activities (what you do) Project Outputs (what is produced) Project Outcomes (change expected as result of outputs/activities) Programme Objective AGD £15million Scot Govt £11M NAC £4M Local Regeneration Fund (formerly LUF3) £4.706M Vacant & Derelict Land Fund (VDLF) £0.967M • Planning applications submitted • Site remediation work • New link/access roads developed • Construction of SUDS/sewerage systems • Improved junctions to enhance access to sites • New junctions to open up access to sites • Construction of flexible business space in phases. • Total Area reclaimed, (re)developed or assembled (20 Ha) as a result of the project • Total Area of Opportunity Sites (20 Ha) • New Industrial & Business Space (6,000sq m) • Individuals supported into work • Private businesses supported • Jobs safeguarded • Wide range of employment opportunities • Improved pedestrian linkages • Vacant and Derelict Land brought back into use/removed from SVDL Register (20 ha) • Flexible business space for start-up or needs • Well-connected flexible business space within close proximity to central belt region supply chains and workforce • Altered perception and market sentiment in regard to Ayrshire’s advance manufacturing and digital offer • Improved market sentiment • 20 Ha land unlocked for development • Increased levels of investment, including FDI • Uplift in commercial rental/sales values (£) • Increased supply of commercial space • Strengthening key business clusters • Increased employment and development of skills in local workforce • Increased GVA • Reduced levels of deprivation in local areas • Enhanced accessibility - employment/ business locations • Widening of labour market • Improved business productivity • Strengthening key business clusters • Businesses attracted to the locality and increase in inward investment • Reduction in level of vacant and derelict land • 18-35 People from Employability & Skills Programme Accessing Jobs • Sustainable work location with services and amenities to support employees (e.g. child care/creche facility/café/retail) • Increase employment opportunities • Increase in GVA across region • Lever in private sector investment • Spread the benefits of economic growth across region, ensuring deprived areas benefit from this growth. • Job market entrants and low skilled workers increasing soft and basic skills through provision of local jobs • Attract skilled workers to the region and support local people entering skilled employment opportunities
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NAC Growth and Investment AGD Business Case 86 APPENDIX D: ECONOMIC MODELLING, i3 FLEXIBLE SPACE PHASE 2 The following tables and information set out the approach to and findings of economic modelling for the Flexible Space Phase 2 project. Flexible Space, Phase 2 – Options Summary Option Description Narrative Option 1 Business as usual Do Nothing (Counterfactual) DISCOUNTED It is estimated that the percentage of economic activity generated within the project area without any investment i.e. Deadweight, would be 0%. Option 2: Single Unit Deliver one 1,690 sqm (18,191 sqft) GIFA unit by 30 June 2027, with occupancy starting 01 April 2028. PREFERRED OPTION. Delivers additional space with a realistic timeline for occupation. In addition, Options for positive and negative sensitivity are provided. Option 2a: Single Unit Preferred Option Positive Sensitivity DISCOUNTED • Fully occupied earlier – 01 October 2027 • Increased rateable rate from £75 per sqm to £85 per sqm • Decrease Leakage and Displacement additionality operational factors. Leakage Current Leakage Decrease Displace- ment Current Displace- ment Decrease LA 40% 30% 5% 0% GCR 20% 15% 10% 5% Scotland 0% 0% 0% 0% Option 2b: Single Unit Preferred Option Negative Sensitivity DISCOUNTED • Fully occupied later – 01 October 2028 • Decreased rateable rate from £75 per sqm to £65 per sqm • Increased Leakage and Displacement additionality operational factors Leakage Current Leakage Increase Displace- ment Current Displace- ment Increase LA 40% 45% 5% 10% GCR 20% 30% 10% 15% Scotland 0% 5% 0% 5% Option 3: Subdivided Unit Deliver 1,630 sqm (17,544 sq ft) GIFA of space subdivided into 4 lettable units by 30 June 2027 with 100% occupancy by 01 April 2029. DISCOUNTED OPTION. Delivers one unit subdivided into smaller units, some of which may be filled quicker but not necessarily all of them, meaning that 100% occupancy is likely to be achieved later. This option may take slightly longer to deliver due to the difference in format. There is more need for larger units and the main cost of the development is being funded through LUF 3, for which the business case and format of the unit has already been agreed and aligns with the Preferred Option. Option 4: Terraced Units Deliver Flex Space Phase 3 earlier by 31 March 2028, which DISCOUNTED OPTION. Delivers Phase 3 Flex Space earlier which are two sets of smaller terraced incubation units. This option is
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NAC Growth and Investment AGD Business Case 87 includes two sets of terraced units totaling 1,068 sqm (11,496 sq ft) with 100% occupancy by 1 April 2029. discounted as it would take longer to deliver as it has not yet reached the end of RIBA Stage 4, like Option 2, could take longer to achieve 100% occupation and the majority of the development is supported by LUF 3 which requires the business case and format of the unit to align with the Preferred Option. Option 5: Smaller unit, LUF 3 Deliver a smaller single unit within the LUF 3 budget cost envelope (estimated at 1,281 m2) by 30 April 2027 with full occupancy by 01 January 2028. DISCOUNTED OPTION. Delivers a smaller unit only funded by LUF3 funds, that could be delivered earlier ie 30 April and enables additional AGD funds to be reallocated from Phase 2 to Phase 3. This development could be delivered slightly earlier but would not meet the agreed floorspace level approved by LUF 3. In addition, the project is already advanced based on the preferred option and is at tender stage. Additionality Approach 2.0 Introduction This note has been prepared to explain the approach to considering additionality for the purposes of economic modelling for Phase 2 of the Ayrshire Growth Deal Flexible Advanced Manufacturing Space project at i3 Business Park in Irvine. The project proposes an estimated investment of £6.775M in a single 18,191 sq ft (1,690 sq m) industrial unit with related yard space and parking, funded by Levelling Up Fund 3 (£4.7M) and Ayrshire Growth Deal (£2.069M). In this respect, benefits are estimated in relation to construction, operational, land value uplift and carbon accounting. 2.1 Counterfactual Assessment and Deadweight It’s unlikely that any or very limited outputs/outcomes would be secured without the intervention of the project’s investment through the public sector, as there is market failure within the area. This means that there is no incentive for the market to deliver modern industrial units. New, similar developments taking place within the locality have been supported by the public sector with little or no historical development / investment from the private sector in this type of project. The significant gap between the construction costs and asset value is demonstrated in a valuation undertaken for the project by Ryden in December 2024. The valuation estimated the market value of £1,304,000 for the unit, in comparison to the estimated construction costs, which at the time were estimated to be £6,156,300. In this respect, it is estimated that the percentage of economic activity that would have been generated within the project area without any investment i.e. the Deadweight, would be 5% for North Ayrshire, Ayrshire and Scotland, given the challenges that the private sector face in delivering commercial floorspace. 2.2 Construction Benefits The project is estimated to generate nearly £6M in construction related benefits through the creation of an industrial unit and related land remediation, following investment in Phase 1. The main investment activity takes place during years 2026/27 and 2027/28, after which some revenue costs are anticipated until the unit is let. It is assumed these revenue costs will be in the region of £67,500. In this respect the project investment profile is as follows: Construction Spend Total Spend Year 4 Year 5 24/25 Year 6 25/26 Year 7 26/27 Year 8 27/28 Capital spend £6.775M £0.051m £0.305M £0.132M £2.068M £4.220M Revenue spend £0.0675M £0 £0 £0 £0.0675M Total £6.8425M £0.051M £0.305M £0.132M £2.068M £4.2875M
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NAC Growth and Investment AGD Business Case 88 Follow on investment from the tenant is anticipated in terms of fit out costs which are assumed at £500,000 as a rough estimate. There may also be the potential for the tenant to extend the building as the format allows for this, although this is assumed to be unlikely for the moment due to the high cost of construction. 2.2.1 Construction Leakage The works involve the construction of an industrial unit for which there are probably only a few companies based locally (i.e. within Ayrshire) that could tender for this work, as it is considered to be quite specialised. If the appointed contractor for the works is not based locally, it is assumed that a very small percentage of construction activity will be delivered by local businesses that employ local labour. This was the scenario for Phase 1 Flex Space, as the contractor was based in Fife and so there were limited job opportunities for local people with the main contractor but more opportunities related to sub-contracts locally. However, if the company awarded the tender is locally based, this could make a significant difference to the level of construction activity employing local labour. 2.2.2 Construction Displacement It is assumed that there will be lower levels of displacement due to lower competition within the Ayrshire area, as there are not many local contractors within North Ayrshire and the wider Ayrshire area that specialise in constructing industrial units. 2.2.3 Construction - Economic Multipliers It is considered that local business within North Ayrshire will act as a supply chain for the construction of the industrial unit. For example, within the following trades of groundworks, fencing, plumbing & heating, joinery, roofing. In addition, community benefits will be included within the contract to encourage the successful contractor to take on for example local apprentices. 2.2.4 Construction Benefits – Additionality Factors To summarise, for the project and the preferred option, the additionality factors are set out in the table below. In addition, the same percentages have been applied to the other options. Please see overall table in Appendix 1 and comparison to AEP OBC Additionality Factor percentages in Appendix 2. Construction Benefits Additionality Factors: Leakage (%) Displacement (%) Multipliers Deadweight (%) North Ayrshire 30% 10% 1.2 5% Ayrshire 20% 20% 1.5 5% Scotland 5% 10% 1.8 5% • Leakage - the extent to which the construction benefits of the project will leak out of the target area into other areas are estimated to be 30% for North Ayrshire, 20% for Ayrshire and 5% for Scotland. • Displacement - the extent to which an increase in the intended construction benefits is offset by reductions in economic activity elsewhere in the economy is estimated to be low and 10% for North Ayrshire and Scotland and 20% for Ayrshire. • Economic Multipliers – the wider economic benefits generated through the project into the economy are likely to be 1.2, 1.5 and 1.8 respectively. • Deadweight is estimated to be 5% across North Ayrshire, Ayrshire and Scotland because a very small number, if any, of the economic construction benefits of the project would've happened without this intervention.
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NAC Growth and Investment AGD Business Case 89 2.3 Operational Benefits The project will create commercial floorspace which has planning permission for use classes 4, 5 and 6. The unit is speculative, so at this time it is not known what business will occupy the building and what the operational benefits could be in terms of how many people will be employed and what GVA it will generate. • Leakage - a comparison has been made with the percentages for the AEP OBC which were 40% for East Ayrshire, 15% for Ayrshire and 0% for Scotland for all options that included commercial floorspace. For this project its considered that the figures could be 40% for North Ayrshire, 20% for Ayrshire and 0% for Scotland for all options. • Displacement - the extent to which an increase in the intended operational benefits is offset by reductions in economic activity elsewhere in the economy is estimated to be low and 5% for North Ayrshire, 10% for Ayrshire and 0% for Scotland – taking a similar approach to those percentages applied to the AEP OBC. • Economic Multipliers –Reflecting other similar projects in the Ayrshire region and as a conservative estimate a multiplier of 1.1 have been applied which is the same as the AEP OBC. • Deadweight is estimated to be 5% across North Ayrshire, Ayrshire and Scotland because a very small number, if any, of the operational benefits of the project would've happened without this intervention. Operational Benefits Additionality Factors: Leakage (%) Displacement (%) Multipliers Deadweight (%) North Ayrshire 40% 5% 1.0 5% Ayrshire 20% 10% 1.0 5% Scotland 0% 0% 1.0 5% Options Narrative for Modelling Option 2: Single Unit, Preferred Option, plus Options 2a & 2b (Sensitivity) Description Narrative Deliver one 1,690 sqm (18,191 sq ft) unit by 30 June 2027, with occupancy starting 01 April 2028. PREFERRED OPTION. Delivers additional space with a realistic timeline for occupation. In addition, Options for positive and negative sensitivity are also provided below comprising of: Option 1a (positive) – fully occupied by 1 October 2027 (positive) Rateable rate at £85 per sqm Leakage and Displacement Additionality Operational factors decreased to the following: Leakage Decrease Displacement Decrease LA 30% 0% GCR 15% 5% Scotland 0% 0% Option 1b (negative) – fully occupied by 1 October 2028 (negative) Rateable rate at £65 per sqm Leakage and Displacement Additionality Operational factors decreased to the following: Leakage Increase Displacement Increase LA 45% 10% GCR 30% 15% Scotland 5% 5%
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NAC Growth and Investment AGD Business Case 90 • Assumes single unit, not subdivided. • Design and build contract awarded June 2026. • Unit completed by 30 June 2027. • Fully occupied starting 01 April 2028. This time period allows for approximately 9 months (July 27 to March 28 inclusive) for conclusion of marketing period, Cabinet agreement to lease disposal and subsequent conclusion of the lease agreement. • Assumes operational year of unit would start in financial year 28/29 ie April 2028 MODELLING SPREADSHEETS INFORMATION / ASSUMPTIONS Costs Capital cost estimates for design, consultancy and contract costs are grouped together. Assumes private sector fit out costs of £500,000. Revenue costs assume costs incurred by NAC from handover from contractor to occupancy by lessee, ie, costs from July 2027 to March 28 (9 months). This would comprise of the following costs per annum based on previous estimates for the project: Electricity and standing charges £60,000 Maintenance £10,000 Landscaping £10,000 Insurance £5,000 Water £5,000 Total annual charges £90,000 This equates to £7,500 per month and £67,500 for 9 months. Construction Benefits Assumes design development takes place 24/25, 25/26 and construction takes place 26/27 and part of 27/28. Assumes private sector fit out costs of £500,000. Operational Benefits Assumed light industrial, with full occupancy by April 2028. NDR Based on Ryden rental valuation from Dec 2024 of £127,400. Assumes 100% rates relief in first year of occupancy from April 2028 til March 2029. Works out at a rateable value of £75 per square metre. Additionality Factors percentages are assumed to reflect the Operational Benefits. Housing Benefits N/A Council Tax N/A Energy Consumption Assumes energy consumption of 200,000 kwh (or when building operational, based on estimates for Phase 1. Assumes energy consumption of 538 kwh per month (6,456 kwh per annum) when building unoccupied, based on average taken from invoices for Phase 1 when unoccupied. Assumes lower energy consumption between July 2027 and March 2050 which is 4,842 kwh (ie 538 kwh per month for 9 months). Assumes energy consumption 200,000 kwh per annum (or 16,667 kwh per month) from April 2028 onwards. Proposed solar PV panels will help off-set emissions. Option 2: Sensitivity Testing – Occupation – Positive & Negative Scenarios Additional modelling sheets have been provided that have considered the following variations on Option 1 related to when the unit is fully occupied.
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NAC Growth and Investment AGD Business Case 91 Option 2a – fully occupied by October 2027 (positive) This Positive Sensitivity Option assumes that the unit will be occupied earlier by October 2027 rather than by April 2028. This means there will be less revenue costs for the Council between the handover and letting period i.e. three months of revenue costs at an estimated £22,500. In addition, the unit will be operational within an earlier financial year 27/28, with the Council receiving rental income at an earlier stage. The rateable value of the Unit once occupied is assumed to increase to £85 per sqm, an increase of £10 per sqm when compared to the preferred option of £75 per sqm. Leakage and Displacement Additionally factors related to the operation of the Unit are adjusted downwards, with the percentage rate across all three geographical spatial defined areas when compared to the preferred option. Assumes lower energy consumption between July 2027 and Sept 2027 which is 1,614 kwh (ie 538 kwh per month for 3 months) and from Oct 27 til March 28, 100,002 kwh based on 6 months operational, providing a total of 101,616 kwh consumption for 2027/28. Option 2b – fully occupied by October 2028 (negative) This Negative Sensitivity Option assumes that the unit will be occupied later by October 2028 rather than by April 2028. This means there will be more revenue costs for the Council between the handover and letting period i.e. 15 months of revenue costs at a total of £112,500 (£67,500 in 27/28 and £45,000 in 28/29). In addition, as the unit will be operational later, the Council will begin to receive rental income at a later date. The rateable value of the Unit once occupied is assumed to decrease to £65 per sqm, a decrease of £10 per sqm when compared to the preferred option of £75 per sqm. Leakage and Displacement Additionally factors related to the operation of the Unit are adjusted upwards, with the percentage rate across all three geographical spatial defined areas when compared to the preferred option. Assumes lower energy consumption between July 2027 and Sept 2028 which is 8,070 kwh (ie 538 kwh per month for 15 months) and from Oct 28 til March 2029, 108,172 kwh based on 6 months operational, providing a total of 101,616 kwh consumption. This works out: energy consumption of 9 months during 2027/28 (Jul 27 to Mar 28) of 4,842 kwh and energy consumption during 2028/29 of 6 months of low energy consumption of 3,3228 kwh (Apr 28 to Sept 28) and 6 months of high energy consumption once the unit is occupied from October 2028 (100,002 kwh) giving a total of 103,230 kwh. Leakage Current Leakage Decrease Displacement Current Displacement Decrease Multipliers Deadweight LA 40% 30% 5% 0% 1.0 5% GCR 20% 15% 10% 5% 1.0 5% Scotland 0% 0% 0% 0% 1.0 5% Leakage Current Leakage Increase Displacement Current Displacement Increase Multipliers Deadweight LA 40% 45% 5% 10% 1.0 5% GCR 20% 30% 10% 15% 1.0 5% Scotland 0% 5% 0% 5% 1.0 5%
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NAC Growth and Investment AGD Business Case 92 Table 39: Benefits-Cost Ratio Timeframe - 25 Year Appraisal – Sensitivity Testing of Single Unit Table 40: Benefits-Cost Ratio Timeframe - 25 Year Appraisal (Construction Impacts Removed) - Sensitivity Testing of Single Unit The sensitivity testing of the preferred option to assess its robustness has demonstrated that through amendments of the occupation of the built unit, ratebale rates and Additionality factors during operation will change significantly the Ayrshire BCR of the proposal. An accumulation of the Negative alterations reduces the BCR to £8.62:£1, whilst accelerating occupation, increasing rateable rates and softening of Additional factors heightens the BCR to £11.02:£1. In the meantime, the number of construction and occupational jobs generated changes principally in response to the positive alterations with an uplift in Ayrshire jobs to 29. Elsewhere significant change is translated to expected operational GVA generated with a positive action uplifting the GVA potential to £80.332m when compared against benchmark preferred option of £67.318 (at an AGD level). Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit-Pref Option Pref Option Sensitive +A Pref Option Sensitive -B PV of Capital Costs All Geographies £0 £6,806,267 £6,806,267 £6,806,267 PV of Revenue Costs All Geographies £0 £847,851 £735,412 £815,476 PV of Total Costs All Geographies £0 £7,654,118 £7,541,679 £7,621,744 Local Authority £0 41 41 41 Ayrshire Growth Deal £0 53 53 53 Scotland £0 84 84 84 Local Authority - £2,247,803 £2,247,803 £2,247,803 Ayrshire Growth Deal - £2,854,353 £2,854,353 £2,854,353 Scotland - £4,575,885 £4,575,885 £4,575,885 Local Authority £0 19 24 19 Ayrshire Growth Deal £0 26 29 26 Scotland £0 34 34 34 Local Authority - £50,628,932 £66,156,308 £47,497,335 Ayrshire Growth Deal - £67,318,248 £80,332,659 £63,154,351 Scotland - £88,822,688 £94,509,011 £83,328,657 Actual 0 £491,064 £491,064 £491,064 Net Impact - £491,064 £491,064 £491,064 Local Authority - £6.90 £9.04 £6.48 Ayrshire Growth Deal - £9.16 £11.02 £8.62 Scotland - £12.19 £13.16 £11.52 Person Years of Construction Employment Present Value of Net Additional Construction GVA Benefit Cost Ratio Full-time Equivalent Jobs Present Value of Net Additional Operational GVA PV of GHG Carbon Accounting Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit-Pref OptionPref Option Sensitive +APref Option Sensitive -B PV of Total Costs All Geographies £0 £7,654,118 £7,541,679 £7,621,744 Local Authority £0 £52,810,691 £68,190,851 £49,375,641 Ayrshire Growth Deal £0 £70,106,557 £83,096,150 £65,701,606 Scotland £0 £93,332,529 £99,222,509 £87,789,321 Local Authority - £50,562,888 £65,943,047 £47,127,837 Ayrshire Growth Deal - £67,252,204 £80,241,797 £62,847,252 Scotland - £88,756,644 £94,646,624 £83,213,435 Actual 0 £491,064 £491,064 £491,064 Net Impact - £491,064 £491,064 £491,064 Local Authority - £6.61 £8.74 £6.18 Ayrshire Growth Deal - £8.79 £10.64 £8.25 Scotland - £11.60 £12.55 £10.92 Present Value of Net Direct GVA Present Value of Net Additional GVA PV of GHG Carbon Accounting Benefit Cost Ratio
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NAC Growth and Investment AGD Business Case 93 Option 3: Subdivided Unit Description Narrative Deliver 1,630 sqm (17,544 sq ft) of space subdivided into 4 lettable units by 30 June 2027 with 100% occupancy by 01 April 2029. DISCOUNTED OPTION. Delivers smaller units within the same timescale, some of which may be filled quicker but not necessarily all of them, meaning that 100% occupancy is likely to be achieved later. There is evidence of more need for larger units and the main cost of the development is being funded through LUF 3, for which the business case and format of the unit has already been agreed and aligns with the Preferred Option. • Assumes four units with a rateable value of £8.50 per sq ft based on previous Colliers valuation. • Estimated revenue costs based on benchmark from Annickbank proposals (3 units at 500m2, total estimated annual revenue costs whilst vacant are £45,000) works out four units just over 400m2 each with overall annual revenue vacancy costs of £48,000 (£12k per unit per annum) Unit Size sq ft (GIA) Size sq m Rental Value Occupancy Date Revenue Costs period Est Rev costs 1 4,445 413 £37,782.50 01 Oct 27 3 months £3,000 2 4,445 413 £37,782.50 01 Apr 28 9 months £9,000 3 4,327 402 £36,779.50 01 Oct 28 15 months £15,000 4 4,327 402 £36,779.50 01 Apr 29 21 months £21,000 Electricity Consumption assumptions Unit Size sq ft (G Size sq m Occupancy Date Vacant kwh 27/28 Occupied kwh 27/28 Vacant kwh 28/29 Occupied kwh 28/29 1 4,445 413 01 Oct 27 501 kwh 25,002 N/A 50,000 2 4,445 413 01 Apr 28 1,503 kwh N/A N/A 50,000 3 4,327 402 01 Oct 28 1,503 kwh N/A 1,002 25,002 4 4,327 402 01 Apr 29 1,503 kwh N/A 2,004 N/A MODELLING SPREADSHEETS INFORMATION / ASSUMPTIONS Costs Capital cost estimates for design, consultancy and contract costs are grouped together. Assumes construction costs include a level of fit out works. Private sector costs of £500,000 assumed for fit out. Revenue costs assume costs incurred by NAC from handover from contractor to occupancy by lessee, ie, costs from July 2027. Estimated revenue costs based on benchmark from Annickbank proposals (3 units at 500m2, total estimated annual revenue costs whilst vacant are £45,000). Constructions Benefits Construction costs and programme – are the same as the preferred option - design and build contract awarded June 2026 and units completed by 30 June 2027. Assumes construction costs also include a level of fit out works. Assumes private sector fit out costs of £500,000. Fully occupied, starting from 01 April 2029. This extended time period allows for a longer timescale to market all four units and for the subsequent conclusion of the lease agreements. It’s
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NAC Growth and Investment AGD Business Case 94 assumed that the individual rental values would below the threshold for seeking Cabinet approval as part of this process. Assumes design development takes place 24/25, 25/26 and construction takes place 26/27 and part of 27/28. Operational Benefits Assumed light industrial, with full occupancy by 01 April 2029. NDR Colliers valuation of Phase 1 from June 2022 provided a scenario for sub- division into 4 units at a total of 17,544 sq ft or 1,630 m2, with a completed development value of £2,095,000, assuming an overall market annual rent of £149,200 per annum at £8.50 per sq ft or £91.50 per sq m. Assumes value of each unit would sit below the 100k value at £37k to £38k. Additionality Factors percentages are assumed the same as for the Operational Benefits spreadsheet. Housing Benefits N/A Council Tax N/A Energy Consumption Assumes energy consumption for a light industrial unit of c410m2 would be approximately 50,000 kwh per year or 4,167 kwh per month when operational. Assumes when non-operational/vacant, the consumption would be 2,000 kwh per annum or 167 kwh per month. Please see assumptions table above. Option 4: Terraced Units Description Narrative Deliver Flex Space Phase 3 which includes two sets of terraced units totaling 1,068 sqm (11,496 sq ft) delivered by 31 March 2028 and with full occupancy by 01 April 2030. DISCOUNTED OPTION. Delivers Phase 3 Flex Space earlier which includes two sets of smaller terraced incubation units. This option is discounted as it would take longer to deliver as it has not yet reached the end of RIBA Stage 4 (like Option 2), it could take longer to achieve 100% occupation and the majority of the development is supported by LUF 3 which requires the business case and format of the unit to align with the Preferred Option and the certainty of LUF3 funds being spent within a required timeline. Assumes the following: Terrace* Size sq ft (GIA) Size sq m Rental Value Occupancy Date Revenue Costs period Est Rev costs 3A 6,907.26 641.7 £58,711.71 01 Apr 2029 12 months £12,000 3B 4,588.70 426.3 £39,003.95 01 Apr 2030 24 months £24,000 • terrace 3A – capable of subdivision into 6 units with a combined floorspace of 641.7m2 (6,907.26 sq ft) fully occupied by 01 April 2029. • terrace 3B – capable of subdivision into 4 units with a combined floorspace of 426.3m2 (4,588.70 sq ft) fully occupied by 01 April 2030. • Rateable value of £8.50 per sq ft based on previous Colliers valuation. • Estimated revenue costs based on benchmark from Annickbank proposals (3 units at 500m2, total estimated annual revenue costs whilst vacant are £45,000) works out four units just over 400m2 each with overall annual revenue vacancy costs of £48,000 (£12k per unit per annum)
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NAC Growth and Investment AGD Business Case 95 MODELLING SPREADSHEETS INFORMATION / ASSUMPTIONS Costs Capital cost estimates for design, consultancy and contract costs are grouped together. Revenue costs assume costs incurred by NAC from handover from contractor in March 2028 to occupancy by businesses, i.e. revenue costs as follows: Unit 3A – revenue costs from 01 Apr 2028 to March 2029 (12 months) when fully occupied Unit 3B – revenue costs from 01 Apr 2028 to March 2030 (24 months) when fully occupied Constructions Benefits Whilst overall floorspace is smaller, this option assumes construction costs are the same, as two individual terraces are being created. Assumes contract works commence later than July 2026 and starts Jan 2027, as design has not reached RIBA Stage 4, statutory consents required and tender pack not prepared. Estimate completion by 31 March 2028, full occupation of terrace 3A by 01 April 2029 and full occupation of terrace 3B by 01 April 2030. Operational Benefits Assumes: • terrace 3A –capable of subdivision into 6 units with a combined floorspace of 641.7m2 (6,907.26 sq ft) fully occupied by 01 April 2029 • terrace 3B – capable of subdivision into 4 units with a combined floorspace of 426.3m2 (4,588.70 sq ft) fully occupied by 01 April 2030. NDR Assumes 100% rates relief in year 1 Additionality Factors percentages are assumed the same as for the Operational Benefits spreadsheet. Housing Benefits N/A Council Tax N/A Energy Consumption Assumes energy consumption for unit 3A is low kwh estimate for 2028/29 (3,006 kwh per annum) when unit vacant and being marketed, with full energy consumption starting in 2029/30 (75,000 kwh per annum) when unit becomes occupied. Assumes energy consumption for unit 3B 426.3m2 is low kwh estimate for 2028/29 (2,004 kwh per annum) and 2029/30 (2,004 kwh per annum) when unit vacant and being marketed with full energy consumption starting 2030/31 (50,000 kwh per annum) when unit becomes occupied. Option 5: LUF 3 Cost Envelope Description Narrative Deliver a single unit within the LUF 3 budget cost envelope by 30 April 2027 with full occupancy achieved by 01 January 2028. DISCOUNTED OPTION. Delivers a smaller unit only funded by LUF3 levered funds, which could be delivered earlier and enables additional AGD funds to be reallocated from Phase 2 to Phase 3. This development could be delivered earlier but would not meet the agreed floorspace level approved by LUF 3. This scenario would be based on the following assumptions: • Project overall construction spend would require to be within the LUF3 funding cost envelope which is £4,706,259 rather than the preferred option which is £6,775,000. • Cost estimate:
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NAC Growth and Investment AGD Business Case 96 Design, PM & consultants fees £394,259 Main contractors £4,100,000 Site investigation £21,000 Utilities £125,000 Planning and Building warrant fees £20,000 Other contractors (tree clearance) £30,000 Other capital expenditure £15,000 Total £4,705,259 • Floorspace estimate of 1,281m2 (13,788 sq ft) could be achieved based on £4,100,000 available main contractors budget divided by estimate cost of £3,200 per square metre. Similar to floorspace scale being created at Kyle Road (1,200m2 based on £4.56K budget). MODELLING SPREADSHEETS INFORMATION / ASSUMPTIONS Costs Sheet Capital cost estimates for design, consultancy and contract costs are grouped together. Assumes same spend for preferred option 24/25, 25/26 with majority of spend during 26/27 and smaller allocation in 27/28 to cover retention and other potential costs. Assumes private sector costs of £300,000 for fit out. Revenue costs assume costs incurred by NAC from handover from contractor to occupancy by lessee, ie, costs from May 2027 to January 2028 (8 months). This would comprise of the following costs per annum based on preferred option estimates with some adjustments as the unit is smaller: Electricity and standing charges £50,000 (assume pay almost the same) Maintenance £7,000 Landscaping £7,000 Insurance £4,000 Water £4,000 Total annual charges £72,000 This equates to £6,000 per month and £48,000 for 8 months. Constructions Benefits Assumes design development takes place 24/25, 25/26 and construction takes place 26/27. Assumes private sector costs of £300,000 for fit out. Operational Benefits Assumed light industrial with full occupancy by January 2028. NDR Based on Ryden valuation from Dec 2024 works out at a rateable value of £75 per square metre. Assumes 100% rates relief in first year of occupancy from January 2028 til December 2028. Additionality Factors percentages are assumed the same as for the Operational Benefits spreadsheet. Housing Benefits N/A Council Tax N/A Energy Consumption Assumes energy consumption for the unit is low kwh estimate from completion date of 30 April 2027 to occupancy by 01 January 2028 ie 8 months and 3 months at full consumption from January to March 2028. Consumption estimates are based on 75% of preferred option low estimates 538 kwh per month and high estimates 16,667 kwh per month (ie 404 kwh and 12,005 kwh) 8 months at low is 3,232 kwh and 3 months at high is 36,015 kwh Total is 39,247 kwh for 2027/28 Total for 2028/29 is 144,060 kwh
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NAC Growth and Investment AGD Business Case 97 Background to Economic Modelling The economic modelling for the Phase 2 Flexible Space options has been quantified using the Glasgow City Region Intelligence Hub’s Business Case Economic Model (BCEM). BCEM was developed following the methodology outlined within the GCR’s Programme Management Toolkit. This approach quantifies Benefit-Cost Ratios (BCRs) using a HM Treasury Green Book approved methodology and has been used for successful Glasgow City Region City Deal business cases and Levelling Up Fund applications. The benefits that are quantified within BCEM can fall under the broad headings of Construction, Operational, Housing, and Greenhouse Gas Emissions. Each monetary benefit is then subject to HM Treasury’s preferred discount rate of 3.5%, moving to 3% after a 30-year appraisal period, to obtain Present Values (PV). As per HM Treasury Green Book compliance, a Counterfactual, otherwise known as a “do nothing”, scenario is initially established before identifying the costs and benefits of any subsequent appraised intervention. The PV of an intervention’s cumulative benefits are then re-calculated as Net Additional benefits by subtracting any economic benefits generated in the Counterfactual scenario. A Benefit-Cost Ratio is then established by dividing the PV of Net Additional Benefits by the PV of Total Costs. For the purposes of modelling for this Ayrshire Growth Deal investment, spatial adjustment analyses have not been quantified. Spatial adjustment analysis can be used to quantify the disproportionate impacts that an investment can have on communities with non-typical levels of productivity or earnings potential. Such disproportionate impacts are not anticipated to occur from this investment. Estimated Benefits and Costs METHODOLOGY This cost benefit analysis has employed appraisal techniques that are consistent with those outlined in HM Treasury Green Book (HM Treasury, 2022). It considers the range of socio- economic impacts that the project is forecast to generate at the Local Authority, Growth Deal Area, and Scotland Geographic levels within the 25-year project appraisal period. This timeframe aligns with the economic appraisal undertaken at OBC stage and ensures consistency with the approach adopted by the Glasgow Intelligence Hub for economic analysis across Ayrshire Growth Deal projects. The timeframe is consistent with estimated asset lifespans and servicing and maintenance plans. Whilst the modelling has stated a 25 year lifespan, the lifetime of the unit is expected to be longer, due to the quality of the design and construction including sustainable features. The economic outputs for each option displayed within Table 41 below are as of March 2026. As the project develops, these outputs will be updated to take account of current evidence, changes to the project scope and the associated financial case. Costs were estimated based on benchmarking with other Local Authorities and organisations, feasibility studies and high-level costings from contractor’s and consultants and evidence of past work examples. Figures have been adjusted for BCIS all in TPI (Tender Price Index). Consideration is also being given to the cost impact of the buildings meeting the Scottish Government Net Zero Buildings Standard.
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NAC Growth and Investment AGD Business Case 98 OPTIMISM BIAS The project budget has a significant level of contingency and continues to be given consideration. Consideration was also given to previous North Ayrshire Council Phase 1 project, now completed spring 2026. BCR CALCULATION EXPLANATION BCRs have been calculated by dividing the PV Net Additional GVA for each option (minus the PV Carbon Accounting) by the PV Total Cost. • The Single Unit at Local Authority Geography: • Net Additional GVA: £2.102m (Construction) + £50.628m (Operational) - £0.039m (Carbon) = £52.691m • Divided by the PV Total Cost of £7.654m • Equals a BCR of £6.91 over a 25-year appraisal period at the local authority level. BCR Analysis: The analysis illustrates the robustness of the project and its projected ability to generate significant economic growth at a local and regional level. This includes not only demonstrating VfM from the public sector investment but also enable the delivery of both 39 construction and 19 operational jobs. 25-Year Appraisal Table 41: Economic Outputs – Overall value for money assessment The analysis above identifies the overall value for money assessment benefits that could be achieved through investment in Flexi Space Phase 2 in and around the Ayrshire area. Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit Sub divided Unit Terraced Unit Small Unit + LUF PV of Capital Costs All Geographies £0 £6,806,267 £6,817,997 £6,204,841 £4,754,090 PV of Revenue Costs All Geographies £0 £847,851 £859,795 £823,880 £632,261 PV of Total Costs All Geographies £0 £7,654,118 £7,677,791 £7,028,721 £5,386,350 Local Authority £0 39 41 39 28 Ayrshire Growth Deal £0 49 53 49 36 Scotland £0 79 84 79 58 Local Authority - £2,102,108 £2,250,353 £2,064,459 £1,561,971 Ayrshire Growth Deal - £2,669,343 £2,857,591 £2,621,535 £1,983,455 Scotland - £4,279,291 £4,581,076 £4,202,648 £3,179,726 Local Authority £0 19 19 12 15 Ayrshire Growth Deal £0 26 25 16 20 Scotland £0 34 33 22 26 Local Authority - £50,628,932 £48,878,624 £29,253,376 £40,832,926 Ayrshire Growth Deal - £67,318,248 £64,990,968 £38,896,456 £54,293,087 Scotland - £88,822,688 £85,751,972 £51,321,713 £71,636,712 Actual 0 £39,735 £38,001 £8,963 £30,329 Net Impact - £39,735 £38,001 £8,963 £30,329 Local Authority - £6.91 £6.69 £4.49 £7.90 Ayrshire Growth Deal - £9.18 £8.88 £5.96 £10.49 Scotland - £12.22 £11.84 £7.97 £13.96 Person Years of Construction Employment Present Value of Net Additional Construction GVA Benefit Cost Ratio Full-time Equivalent Jobs Present Value of Net Additional Operational GVA PV of GHG Carbon Accounting
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NAC Growth and Investment AGD Business Case 99 Table 27: BCRs with Construction Impacts Removed Construction Benefits: • Construction-related benefits are temporary as they only occur during the construction period of a project. This results in person years of employment (PYE) being created for construction jobs, rather than full-time equivalent (FTE) jobs. Outputs are based solely on construction-related expenditure. • Local authority-level socioeconomic data on turnover per employee and productivity per employee (measured as gross value added per employee) are used to calculate the PYE the construction-related expenditure creates and the output (GVA) that each worker produces. • Additionality assumptions including leakage, displacement, deadweight, and type ii economic multipliers are then applied to estimate the net direct benefits of construction-related activity at three geographic levels: local authority, growth deal area, and national level. Details of these are already provided. Operational Benefits: • Operational benefits are realised through the creation of commercial floorspace and the utilisation of that floorspace in line with recently completed Phase 1 of Flexi Space. • The creation of commercial floorspace generates FTEs dependent on the final use of the floorspace. Floorspace density coefficients recommended by the Homes & Communities Agency are used to derive the number of FTEs per metre-squared (m2) of floorspace created. These vary depending on the type of floorspace created – with higher density classifications, like call centres, generating more FTEs than lower density classifications, such as warehouses. For this Phase of Flexi Space the focus is upon the creation of light industrial space. • The latest local socioeconomic data on employee productivity are then applied to the FTEs created to calculate the economic benefit of the floorspace occupied. These benefits are assumed to continue throughout the appraisal period selected and are subject to the additionality assumptions aforementioned in the construction benefits section. Present value of monetised benefits and carbon accounting across 5-year periods to watch the 25-year appraisal time period. Project Start Date: Benefit-Cost Ratio Timeframe: 2025 25 Years 2050 Option 1 Single Unit Sub divided Unit Terraced Unit Small Unit + LUF PV of Total Costs All Geographies £0 £7,654,118 £7,677,791 £7,028,721 £5,386,350 Local Authority £0 £52,889,911 £51,374,336 £31,575,564 £42,551,916 Ayrshire Growth Deal £0 £70,246,516 £68,211,833 £41,856,541 £56,515,423 Scotland £0 £93,547,670 £90,916,429 £56,013,778 £75,208,127 Local Authority - £50,787,804 £49,123,984 £29,511,105 £40,989,946 Ayrshire Growth Deal - £67,577,173 £65,354,242 £39,235,006 £54,531,968 Scotland - £89,268,380 £86,335,353 £51,811,130 £72,028,400 Actual 0 £39,735 £38,001 £8,963 £30,329 Net Impact - £39,735 £38,001 £8,963 £30,329 Local Authority - £6.64 £6.40 £4.20 £7.61 Ayrshire Growth Deal - £8.83 £8.51 £5.58 £10.12 Scotland - £11.66 £11.24 £7.37 £13.37 Present Value of Net Direct GVA Present Value of Net Additional GVA PV of GHG Carbon Accounting Benefit Cost Ratio
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NAC Growth and Investment AGD Business Case 100 Table 42: Profile of Benefits Accrued – 5 Year Periods Green House Gas Accounting: The table below outlines how monetised carbon savings will accumulate and increase across five-year periods following pathfinder projects delivery. This analysis reflects the decarbonisation potential of the interventions and long-term value of avoided emissions. This will provide a clear framework for tracking progress against climate targets and support evaluation of scalability of pathfinder models. Table 43: Green House Gas Accounting Inflation Level • All monetary values are expressed as a constant price i.e. expressed as “real price”. The Office of National Statistics (ONS) publishes time series data for a series of price indices, and we apply the Gross Domestic Product (GDP) deflator to present all figures in constant prices. Note that this treatment of financial values differs from the Financial Case. The financial case presents “nominal prices” with a 2% inflationary rate applied. • The Social Time Preference Rate (STPR) has been applied at 3.5% to discount monetary values. This rate decreases to 3% after 30 years as per HM Treasury guidance. • Confirmation that BCEM utilises the latest estimates of CPI and GDP deflators sourced from the ONS and Office for Budget Responsibility. At the time of the modelling exercise the latest sources for each were: GDP deflators at market prices, and money GDP September 2024 (Quarterly National Accounts) – GOV.UK Consumer price inflation, UK – Office for National Statistics Distributional Analysis • A quantitative distributional analysis (i.e. employing welfare weighting – relative value of jobs/income based on their geographic distribution) has not been carried out, though distributional impacts have been considered. This project by nature has not been designed to have specific distributional impacts on any demographic. Additionality • Additionality assumptions including Leakage, Displacement, Deadweight, and Type II Economic multipliers are applied to estimate the Net Direct benefits of each shortlisted option. Additionality assumptions have been disaggregated between both the Construction and Operational activity taking place within the project area – providing a greater assessment of the net additionality of the project than applying a blanket set of assumptions across each project element. 2030 2035 2040 2045 2050 Single Unit £2,102,108 £2,102,108 £2,102,108 £2,102,108 £2,102,108 Sub divided Unit £2,250,353 £2,250,353 £2,250,353 £2,250,353 £2,250,353 Terraced Unit £2,064,459 £2,064,459 £2,064,459 £2,064,459 £2,064,459 Small Unit + LUF £1,561,971 £1,561,971 £1,561,971 £1,561,971 £1,561,971 Present Value of Construction-related Benefits - Local Authority 2030 2035 2040 2045 2050 Single Unit £20,789 £34,261 £37,837 £39,097 £39,735 Sub divided Unit £19,055 £32,528 £36,104 £37,364 £38,001 Terraced Unit £4,227 £7,595 £8,489 £8,804 £8,963 Small Unit + LUF £16,682 £26,386 £28,962 £29,870 £30,329 Present Value of GHG Accounting - Local Authority
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NAC Growth and Investment AGD Business Case 101 • Leakage, Displacement, Deadweight, and Type II Economic multipliers have been informed through discussion with the project team who hold local knowledge and similar development across Scotland. List of additionality assumptions have been used which incorporates displacement, leakage, economic multipliers and deadweight at each geographic level for relevant appraisal criteria. Details of the assumptions made are included within this Appendix. Conclusion and Quantitative Benefits The key findings are as follows: Option 1: Do nothing/minimum status quo Do Nothing Option 2: Single Unit: • Creates 49 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 79 person years of employment in the Construction sector (Scotland) • Supports 26 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £67.318m in net additional GVA over 25 years, £2.669m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a of £9.18:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Option 3: Sub Divided Unit: • Creates 53 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 84 person years of employment in the Construction sector (Scotland) • Supports 25 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £64.990m in net additional GVA over 25 years, £2.857m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a of £8.88:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) Option 4: Terraced Unit: • Creates 39 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 49 person years of employment in the Construction sector (Scotland) • Supports 16 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £38.896m in net additional GVA over 25 years, £2.621m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a positive rate of return through a £5.96:£1 Benefit-Cost Ratio (Ayrshire Growth Deal Region)
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NAC Growth and Investment AGD Business Case 102 Option 5: Small Unit within LUF3 Cost Envelope • Creates 36 person years of employment in the Construction sector. (Ayrshire Growth Deal Region) • Creates 58 person years of employment in the Construction sector (Scotland) • Supports 20 full-time equivalent jobs through commercial development. (Ayrshire Growth Deal Region) • Generates £54.293m in net additional GVA over 25 years, £1.983m when construction impacts removed. (Ayrshire Growth Deal Region) • Demonstrates a positive rate of return through a £10.49: £1 Benefit-Cost Ratio (Ayrshire Growth Deal Region) The BCR figures used for comparison purposes of the options are those excluding construction impacts, as set out in Table 27. This approach ensures consistency with appraisal guidance and allows for a like-for-like comparison across options. In addition to the quantitative benefits noted above, the following qualitative benefits will be achieved through investment in Phase 2: Qualitative Benefits Appraisal The qualitative benefits were considered by the project team to evaluate the benefits. Delivery of the Phase 2, will deliver the following: Table 30: Qualitative Benefits Criteria Objectives Qualitative Benefits, Flex Space Programme Flex Space Phase Weight 1 2 % 7. To create flexible business space capable of meeting manufacturing requirements for chemical and life sciences, but also for a wide range of other high value sectors. • New business units will be occupied by Ayrshire/ Scottish/ UK/ overseas businesses 20 • Created/safeguarded jobs will generate economic value – jobs, GVA, turnover for Ayrshire and Scotland • Supply chain outcomes will be created for other Ayrshire and Scottish businesses • Design and construction contracts will generate turnover for Ayrshire and Scottish contractors • Construction jobs and training outcomes will be created, primarily for Ayrshire people and particularly drawn from disadvantaged or Protected Characteristic groups. 8. Create a centre of digital innovation which offers digital tools, support and innovation scaled to a national market supporting a restructure of the regional economy to deliver advanced manufacturing. • University and College presence at i3 offering training and business development opportunities. 20 • Cluster of R&D and spin off opportunities • Providing employment, skills development, community wealth building and supply chain growth opportunities • Providing the private sector with opportunities for upskilling, business transformation and increased productivity 9. To create serviced industrial land and capable of immediate development. • Development plot will be available for indigenous Ayrshire/ Scottish, UK-owned and foreign investors ü ü 10 • Design and construction contracts will generate turnover and jobs for Ayrshire and Scotland ü ü
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NAC Growth and Investment AGD Business Case 103 Objectives Qualitative Benefits, Flex Space Programme Flex Space Phase Weight 1 2 % 10. To create opportunities for employment and inclusive growth with particular emphasis on making connections to local communities, schools and colleges in preparation for employment, particularly in areas of deprivation. • New employment outcomes – direct and indirect through supply chains 20 • Work experience and training places for school and college student. ü ü • Job market entrants and low skilled workers increasing soft and basic skills through provision of local jobs. ü ü • Residents of deprived areas gaining access to opportunities • University presence enabling additional educational and training opportunities ü ü • Delivery of enhanced public transport connection that opens up employment opportunities 11. To attract mobile and private sector investment both from abroad and from indigenous companies. • New employment and training outcomes 15 • Demonstrate attractiveness of Scotland as excellent location for life sciences manufacturing • Increased investment confidence 12. To create a sustainable, high quality business location and R&D cluster, capable of meeting and keeping pace with the changing demands of high value manufacturing sectors and complementing national initiatives including NMIS • Enhancement and maintenance of attractiveness of Ayrshire as a location, meeting modern business needs and promoting Industry 4.0 services. ü ü 15 • Large, visible and modern development that clearly shows Ayrshire is Open for Business ü • Recognised as part of a national strategy for improving digital technology Economic Modelling Conclusion – Delivery of Phase 2 In conclusion, Option 2, the delivery of a Single Unit provides the greatest economic benefits. Beyond the economic metrics, this approach delivers transformative benefits such as the wider infrastructure provided for the site, the opportunity for training placements and engagement with local schools e.g. through the STEM curriculum and towards the completion of a cluster of modern industrial space within a central are of i3.
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NAC Growth and Investment AGD Business Case 104 APPENDIX E: RISK REGISTER AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status I3FL-R01 (IP) SCOPE Outputs & Outcomes Anticipated outputs and outcomes are not delivered. 3 3 9 Ensure BC addresses sensitivity of outcomes Clear Evaluation & Monitoring Framework Maximise outcomes through project suppliers NAC / Contractor Amber I3FL-R02 QUALITY Outputs & Outcomes The project fails to achieve more inclusive growth and/or reduce poverty by increasing the income of people in deprived areas or protected characteristic groups 3 5 15 Benefits Realisation Plan prepared to identify targets. NAC Red I3FL-R03 SCHEDULE Timescales / Programme Delays to overall project programme and key milestones 3 3 9 Prepare a detailed project programme with considered time allowances and review regularly. Delivery Team Amber I3FL-R04 (IP) SCHEDULE Timescales / Procure- ment Delays to the submission or approval of business cases or the progress of tender procurement, causes delays to the award of contracts for flex space and the progress or claiming AGD spend or the Local Regeneration Fund. 4 3 12 Seek early agreement on appropriate procurement routes Include anticipated tender packages within the Council’s Procurement Wave Plan Spend aligned against related funding source deadlines Ensure sufficient timeline allocated to evaluation tender Ensure response, evaluation and governance process programme to enable swift progress to award NAC Amber I3FL-R05 Timescales / Environmen t Delays caused by environmental considerations 3 5 15 Protected Species/Habitat risk has been assessed at an early stage. Review of site studies required at key stages. NAC Red
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NAC Growth and Investment AGD Business Case 105 AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status Ensure seasonal work/study requirements are accounted for in programme. I3FL-R06 Timescales / Environ- ment Delays caused by site investigation work and findings 3 5 15 Instruct SI work at early stage of project NAC Red I3FL-R07 Timescales / Regulatory Delays caused by objections 2 4 8 Advance programme of local & stakeholder engagement. NAC Amber I3FL-R08 (IP) SCHEDULE Timescales / Regulatory Delays caused by statutory consent processes 3 2 6 Zoned & allocated site Pre-App discussion with NAC Planning Assess protected species/habitat risk at early stage Review planning challenge/appeals Agree programme for consents Advance programme of local stakeholder engagement NAC Amber I3FL-R9 (IP) SCHEDULE Timescales / Regulatory Delays caused by land assembly / lease agreement processes. 2 2 4 Early engagement with owners. Ensure programme allows for third party approvals. Phase 3 layout has been developed to reduce requirement for private land. NAC / SE Amber I3FL-R10 (IP) SCHEDULE Timescale / Contractor Delays during project construction phases. 3 3 9 Regular monitoring through site meetings and reports Ensure emphasis through programme analysis and approach included in tender documentation and evaluation. Contractor Amber I3FL-R11 (IP) INTERNAL RESOURCES Timescale / Staff resources not sufficient to manage projects as they develop. 3 2 6 Risk has reduced as vacant post has been filled, although impact has been significant on pushing out delivery timelines for projects. NAC / Consultant s / Contractor Amber
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NAC Growth and Investment AGD Business Case 106 AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status Business / Professional I3FL-R12 Regulatory Planning/building warrants are not granted. 2 5 10 LDP supports development of site for this use. Ensure local members briefed/updated on project. Hold pre-app discussion with NAC Planning Assess Protected Species/Habitat risk Formally agree programme for consents Advance programme of stakeholder engagement NAC Amber I3FL-R13 (IP) Regulatory Compliance Subsidy regulations. 1 2 3 Regular monitoring and if required, contact with Subsidy Unit to ensure no specific risks arising related to subsidy, due to nature of the project. NAC Green I3FL-R14 Financial Design and technical studies result in additional costs beyond the contingencies and optimism bias allowed for. 3 4 12 Develop and validate project briefs and specifications for each phase Benchmark costs. Ensure early infrastructure cost tested and informed by SI work. Provide Optimism Bias allowances compliant with Green Book Provide for contingency & inflation. NAC / Design Team Amber I3FL-R15 Financial Slippage / delay in the programme incurs additional costs. 3 5 15 Instruct appointed project team to address this within Risk Register. Selected procurement route will seek to ensure contract type has less risk for client. NAC / Contractor Red
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NAC Growth and Investment AGD Business Case 107 AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status I3FL-R16 Financial There are unforeseen project complexities that require additional funding. 2 4 8 Provide for contingency Provide Green Book compliant Optimism Bias allowances. Similar project has been delivered previously. NAC Amber I3FL-R17 Financial Rental income lower than forecast 2 3 6 Market review and comparator analysis to identify appropriate rent but ultimately down to actual market demand on completion. NAC Amber I3FL-R18 Financial Lack of budget to support interested tenants to fit out shell of building 4 3 12 Identify at an early stage and with Business Growth Team, how this can be supported. NAC Amber I3FL-R19 Financial Lack of budget to support maintenance of buildings until tenants take occupancy, if buildings are classified and non -operational. 2 2 4 Identify at an early stage with Finance and Estates, how this can be supported. NAC Amber I3FL-R20 Professional Lack of project management experience. 2 3 6 Ensure experience project management team, both in-house and any external support. Budget allows for appointment of required expertise. NAC Amber I3FL-R21 Professional Poor change management procedures. 2 3 6 Clear and agreed procedures set in place for internal change management and for external processes with design team and contractor. NAC / Contractor Amber I3FL-R22 Professional Specification – design issues on-site 2 4 8 Adopt best practice design and ensure flexibility for subsequent division/ alteration of premises. NAC / Consult- ants / Contractor Amber
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NAC Growth and Investment AGD Business Case 108 AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status I3FL-R23 Contractual / Political Failure to deliver community benefits – training, employment 3 4 12 Incorporate appropriate community benefits into contract terms and resource appropriately NAC / Contractor Amber I3FL-R24 Contractual Issues with co-ordination on-site - contracts, visitors 2 4 8 Ensure main contractor has appropriate procedures for site management Contractor Amber I3FL-R25 (IP) QUALITY Reputat- ional / Political The Flexible Space Programme’s Full Business Cases fail. 3 2 6 Development of OBC/FBC in accordance with Green Book Flex Space OBC approved June 21 Flex Space Ph1 FBC approved Dec 22 Review capex and opex costs Partner/stakeholder risk assessment Early market input / partner & commercial input Review governance arrangements. NAC Amber I3FL-R26 (IP) QUALITY Reputat- ional Demand for the Flex Space Programme diminishes and there is no interest from occupiers. 3 2 6 Flexible design to maximise potential interest from occupiers. Marketing and promotion of floorspace Continue to establish relationships with national sectors (incl NMIS) Interest in Phase 1 has confirmed market interest and reduced risk Review of Ph2&3 prepared by property agents. NAC Amber I3FL-R27 Reputat- ional Market expectations are not met. 2 5 10 Scale/ quality/ design based on identified market needs Recent research has established demand. Continue to review demand and business needs with Partners including SE and SDI. NAC Amber
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NAC Growth and Investment AGD Business Case 109 AYRSHIRE GROWTH DEAL RISK REGISTER: i3 ADVANCED MANUFACTURING SPACE Full Business Case, Phase 2, 08 April 2026 (IP) denotes risks within Implementation Plan Risk Code Risk Type Risk Description Likeli- hood Impact Risk Score Internal Controls / Counter Measure Owner Status Involve relevant business engagement partners. I3FL-R28 Reputat ional Businesses interested in units decide not to progress 3 5 15 Ensure ongoing engagement with businesses to prepare suitable Heads of Terms. NAC Red I3FL-R29 (IP) EXTERNAL Project delays due to external economic impacts such as COVID-19 and recovery. 4 2 8 Early analysis has identified that the need for this project is unlikely to be diminished and in fact may be even greater. Analysis of external factors will be monitored that area likely to impact on the project. NAC Amber I3FL-R30 (IP) EXTERNAL Proposals become unaffordable and there are cost overruns. 4 3 12 Regular review of design vs budget, value engineering and impact of market conditions on costs Benchmark costs Ensure early infrastructure cost tested /informed SI Provide for contingency and Green Book compliant optimism bias allowances Ensure project approval processes are in place to control budget compliance Pursue additional funding sources. NAC Amber I3FL – R31 (IP) Timescales / Financial Existing and proposed utilities cause issues or delays e.g. surface water drainage connections, sub-station requirements. 3 3 9 Ensure exact locations of existing infrastructure identified Early engagement with SPEN, Scottish Water, BT etc. Testing to be carried out and capacity to be confirmed for water supply Amber
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NAC Growth and Investment AGD Business Case 110 APPENDIX F: INCLUSIVE GROWTH & COMMUNITY WEALTH BUILDING I3 Flexible Advanced Manufacturing Space: Inclusive Growth and Community Wealth Building Inclusive Growth Ambition/Objective How? IG Barrier IG Action Plan CWB pillar CWB theme Equalities/ Excluded Group Increase in GVA across region Deliver modern, flexible business space to provide space to market (65,000 sq ft) Intermediate & Advanced Skills, Structure of economy, Advanced digital skills, Business premises Inward investment Maximising benefits for Ayrshire’s business base. Maximising benefits for people – Fair Work. Maximising benefits for places/communities. Fair employment Land and assets Promote our investment opportunities to regional and national institutions to gain investment in our communities Expenditure in R&D per head Deliver modern business space which attracts investment from firms spending in R&D Structure of economy Advanced digital skills Business premises Maximising benefits for Ayrshire’s business base. Maximising benefits for people – Fair Work. Maximising benefits for places/communities. Fair employment Land and assets Promote our investment opportunities to regional and national institutions to gain investment in our communities Employment Opportunities Create employment opportunities for groups that most need them eg disadvantaged groups and protected characteristic groups including women and young people. Detail requirements through Community Benefits in procurement packages. Work with partner organisations to facilitate recruitment of excluded groups. Intermediate & Advanced Skills, Structure of economy, Maximising benefits for people – Fair Work. Maximising benefits for places/communities. Fair employment Procurement Promote our investment opportunities to regional and national institutions to gain investment in our communities Improving skills Creating pre-employment learning pathways for identified priority groups eg females, living in Ayrshire. Support skills needs of businesses taking space within i3. Intermediate & Advanced Skills, Structure of economy, Advanced digital skills, Maximising benefits for people – Fair Work. Maximising benefits for places/communities. Fair employment supporting in work progression, and training and skills pipeline
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NAC Growth and Investment AGD Business Case 111 APPENDIX G: COMMUNITY BENEFIT STATEMENT AGD Business Cases – Regional Community Benefits Statement Community Benefits Community Benefits have been a key component of public procurement policy and practice in Scotland for more than ten years. To embed best practice and drive public bodies to consider Community Benefits clauses in procurement, The Procurement Reform (Scotland) Act 2014 established a national legislative framework for sustainable public procurement that supports Scotland’s economic growth through improved procurement practice. The Reform Act requires public bodies, including Ayrshire Growth Deal (AGD) Partners, to consider how their procurement activity can improve the economic, social and environmental wellbeing of their communities. Community Benefits are one of a range of social and environmental requirements that can be included in public contracts, contributing to national outcomes on sustainability including, but not limited to, employment, learning, skills, supply chain development and community engagement. Contractors, suppliers and Service Providers appointed through AGD projects must demonstrate their organisations’ commitment to providing Community Benefits within Ayrshire, over and above their obligations to deliver on the core purpose of a contract. In accordance with guidance of the Reform Act and always in a relevant and proportionate manner, applicable appointments, through AGD projects, which require procurement activity, will be subject to Community Benefits requirements. Community Benefits Themes Through their separate procurement activities and where possible, AGD Partners are committed to assisting both young and unemployed people by encouraging access to quality sustainable employment and providing skills and training opportunities. Organisations appointed to AGD projects must therefore be able to demonstrate their commitment to integrate trainees and long-term unemployed persons into the labour market, without distinction to sex, marital status, race, ethnic origin or political or religious beliefs. AGD projects will also bring together an extensive range of experienced Professionals who, with minimal sacrifice of time, could provide useful learning and knowledge exchange opportunities for various groups of people in our Ayrshire communities and over a wide range of subject areas and
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NAC Growth and Investment AGD Business Case 112 expertise. Organisations appointed to AGD projects must therefore be able to demonstrate their commitment in providing learning opportunities across the wider Ayrshire community. Community Benefits pledges from AGD projects should also have a focus on supporting and developing Ayrshire’s existing business base and building on this with the aim of increasing the number of new business start-ups and growing sustainable businesses. The long-term sustainable development of Ayrshire’s SME business base is vital and AGD Partners recognise the need to support the development of the SME sector through the use of a procurement approach which maximises SME exposure to procurement opportunities. As such and through the procurement phases of any AGD project, contracting organisations will be asked to consider the following objectives when committing to the delivery of Community Benefits: • Improving Education and Skills. For example, creation of apprenticeships or delivering knowledge exchange and presentations in schools or community groups. • Improving Local Employability. For example, creation of new jobs, recruitment of the long- term unemployed, disadvantaged or young people. • Work Experience Placements/Programmes. For example, providing work experience placements to those in education. • Delivering Training and Development in the Community. For example, mentoring - private sector suppliers can offer support, normally as part of their CSR activity, where they can offer training and guidance to local organisations and individuals. • Community Consultation - giving the local community an opportunity to express an opinion and possibly influence the design and delivery of a project or service in an area. • Enhancing & Improving Local Community and Environmental Projects. For example, providing volunteers or donations to local initiatives. • Sponsorship and Charity Work • Supply Chain, Supported Business, Third Sector and Voluntary Initiatives. For example, offering Small and Medium Enterprises and Voluntary Sector organisations opportunities to provide goods, works and/or services as part of a contract. Tracking & Reporting Community Benefits Organisations who are successful in being awarded a contract through an AGD project will have their Community Benefits pledges evaluated on an ongoing basis, throughout the duration of their contract and through each of the AGD Partners’ contract management procedures, using a shared Community Benefits tracking system. Along with providing an excellent, flexible and accessible record of business information for those organisations appointed to Growth Deal projects, the AGD Partners’ shared, online Community Benefits Tracker will ensure a consistent approach is applied to the monitoring of Community Benefits pledged through AGD procurement.
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NAC Growth and Investment AGD Business Case 113 APPENDIX H: EQUALITY IMPACT ASSESSMENT Ayrshire Growth Deal Equality Impact Assessment including Fairer Scotland Duty Equality Impact Assessment is a legal requirement under the Public Sector Duty to promote equality of the Equality Act 2010. Separate guidance has been developed on the Equality Impact Assessment’s which will guide you through the process and is available to view here: https://www.equalityhumanrights.com/en/publication-download/assessing-impact-and-public-sector-equality-duty-guide-public-authorities/ The Fairer Scotland Duty (‘the Duty’), Part 1 of the Equality Act 2010, came into force in Scotland from 1 April 2018. It places a legal responsibility on Councils to actively consider (‘pay due regard to’) how we can reduce inequalities of outcome caused by socio-economic disadvantage, when making strategic decisions. Interim Guidance for Public Bodies in respect of the Duty was published by the Scottish Government in March 2018. Please note that the term ‘project’ is used throughout and applies to policies, strategies, provisions, criteria, functions, practices, budget savings and activities, including the delivery of services. If you require assistance please contact: North Ayrshire Council Andrew Hale andrewhale@north-ayrshire.gov.uk Section One: Project Details* Name of Project I3 Flexible Advanced Manufacturing Space Lead Officer (Name/Position) Marnie Ritchie, Manager, Growth and Investment Support Team (Names/Positions) including Critical Friend Growth and Investment Team, North Ayrshire Council What are the main aims of the project? To deliver approximately 6,000m2 of advanced manufacturing space at i3 over a number of phases, to meet market demand in an area of market failure and to complement AGD investment in the Digital Process Manufacturing Centre (DPMC) at i3, in partnership with NMIS and CPI - creating an overall cluster of research, innovation, accommodation and services for industry and business. What are the intended outcomes of the project The intended outcomes of the project are the delivery of much needed modern business space, new jobs and construction jobs, supported SMEs, additional GVA, access to related employability and skills programmes for local people and removal of sites from the vacant and derelict land register.
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NAC Growth and Investment AGD Business Case 114 Section Two: What are the Likely Impacts of the Project? Will the project impact upon all three Ayrshire Council areas or a specific council area and/or particular groups within the population (please specify the equality groups) The project has the potential to impact on all three Ayrshire Council areas but mostly North Ayrshire. It has the potential to positively impact on particular groups in terms of opportunities for employment and training for disadvantaged people or people within Protected Characteristic groups. Consider the ‘Three Key Needs’ of the Equality Duty Which aspects of the project eliminate unlawful discrimination, harassment and victimisation? Which aspects of the project advance equality of opportunity between people who share a relevant protected characteristic and those who do not? The project is about creating new business space, therefore due to the nature of the project, it is not considered that this key need is relevant to the project. However, the modern design of the buildings and the site will take account of people that have disabilities in a way that existing ageing business space may not. • The design of the project space will be modern and fully accessible, complying with EA 2010 standards and enabling potential employees or trainees that are mobility impaired or disabled to access the buildings and the surrounding space. • The procurement process for the buildings will require construction companies to provide opportunities for trainees and job seekers from disadvantaged or Protected Characteristic groups. For Phase 1 of the project, contractor Muir Group worked with CEIS Ayrshire to support a young person from the local area who had been unemployed for approximately 6 months, moving from a work experience placement to a full-time site labourer for the duration of the contract. • Businesses that occupy the space will be encouraged by the Council and its partners to create employment/skills development/ learning opportunities for people in disadvantaged or Protected Characteristic groups. Phase 1 has only recently been let so and update can be provided in due course. • It is intended that the project will seek to improve active travel links to the site, to make the location more accessible to people without access to a car and who may be reliant on affordable and accessible public transport services. Active travel route improvements have recently been made in close proximity to the i3 AGD investment site along Long Drive, linking to Riverside Way, providing wider shared surface footways and crossing points towards key public transport routes.
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NAC Growth and Investment AGD Business Case 115 Which aspect of the project foster good relations between people who share a protected characteristic and those who do not? (Does it tackle prejudice and promote a better understanding of equality issues?) Have any cross-cutting impacts been identified from other Council Services or Partner Agencies? (Multiple discrimination or accumulated effects of multiple proposals on a protected characteristic group) Island Proofing Island Proofing is about considering the particular needs and circumstances of island communities when public sector organisations exercise their functions and make decisions. This process includes a range of issues such as access to services, digital connectivity, employment and access to education; transport and access to goods and services. The project is focussed on a specific location at i3 Business Park in Irvine. It is not considered that the particular needs and circumstances of island communities would be detrimentally affected by this particular project. Considering the following Protected Characteristics and themes, what likely impacts or issues does the project have for the group or community? Please outline evidence in relation to impacts identified. List any likely positive and/or negative impacts. If negative impacts are identified, can these be mitigated or lessened? If you require further information in relation to evidence, the Equality Evidence Finder brings together the latest statistics and research for Scotland across different themes for age, disability, ethnicity, gender, religion, sexual orientation, socio-economic status and transgender status. The Equality Evidence Finder is updated monthly with a summary of the key official statistics, social research and National Performance Framework equality analysis. Links to further datasets, statistics and research are provided to help find the full range of available equality evidence for Scotland. The design of the buildings and job/skills/training opportunities for protected characteristic groups will help tackle prejudice and promote a better understanding of equality issues, through the integration of these requirements as standard practice. No cross-cutting impacts have been identified at this stage.
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NAC Growth and Investment AGD Business Case 116 Protected Characteristics Evidence Positive/Negative Impacts Mitigating Factors Age: Issues relating to different age groups eg older people or children and young people Young people are particularly excluded from manufacturing growth areas. Opportunities through NAC’s Employability team to sign post people seeking employment to contract opportunities. Disability: Issues relating to disabled people Limited access to employment opportunities due to limited scope to work in ageing industrial buildings and limited access to transport to i3. Modern design standards will ensure this is no longer an issue. Gender Reassignment – Trans/Transgender: Issues relating to people who have proposed, started or completed a process to change his or her sex No issues identified. Marriage and Civil Partnership: Issues relating to people who are married or are in a civil partnership No issues identified. Pregnancy and Maternity: Issues relating to woman who are pregnant and/or on maternity leave No issues identified. Race: Issues relating to people from different racial groups,(BME) ethnic minorities, including Gypsy/Travellers No issues identified. Religion or Belief: Issues relating to a person’s religion or belief (including non- belief) No issues identified. Sex: Gender identity: Issues specific to women and men/or girls and boys Women are particularly excluded from manufacturing growth areas. Opportunities through STEM Engagement with local schools to encourage more girls to consider certain careers. Sexual Orientation: Issues relating to a person’s sexual orientation i.e. LGBT+, lesbian, gay, bi-sexual, heterosexual/straight No issues identified. Children’s Rights Issues and impacts affecting children’s rights* No issues identified.
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NAC Growth and Investment AGD Business Case 117 Protected Characteristics Evidence Positive/Negative Impacts Mitigating Factors *for more information please email – andrewhale@north-ayrshire.gov.uk Health Issues and impacts affecting people’s health No issues identified. Wider improvements to active travel infrastructure enabling people to walk/cycle/wheel to i3. Human Rights: Issues and impacts affecting people’s human rights such as being treated with dignity and respect, the right to education, the right to respect for private and family life, and the right to free elections. No issues identified. Fairer Scotland Duty – Socio Economic Disadvantage Evidence Positive/Negative Impacts Mitigating Factors Low Income/Income Poverty: Issues: cannot afford to maintain regular payments such as bills, food and clothing. No relevant issues identified. Low and/or no wealth: Issues: enough money to meet basic living costs and pay bills but have no savings to deal with any unexpected spends and no provision for the future No relevant issues identified. Material Deprivation: Issues: being unable to access basic goods and services i.e. financial No relevant issues identified.
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NAC Growth and Investment AGD Business Case 118 Section Three: Evidence Used in Developing the Project Involvement and Consultation In assessing the impact(s) set out above what evidence has been collected from involvement, engagement or consultation? Who did you involve, when and how? Data and Research In assessing the impact set out above what evidence has been collected from research or other data. Please specify what research was carried out or data collected, when and how this was done. Research by Ryden property consultants on demand for commercial space across Ayrshire and within North Ayrshire. Advice from Graham and Sibbald property agents. Inward investment inquiries related to available industrial / commercial space or land to build space, including referrals from Scottish Enterprise. Inquiries from local companies seeking to move in order to expand their business premises. Partners data and research Please see above products like life insurance, repair/replace broken electrical goods, warm home, leisure/hobbies Area Deprivation: Issues: where you live (rural areas), where you work (accessibility of transport) Accessibility and affordability of transport to i3. Access to I3 Enterprise Area is currently limited by public transport. Active travel improvements (walking/cycling/wheeling) made from i3 AGD investment site to public transport routes. Action to progress discussions with public transport provider to consider improved services. Outcome of discussions with public transport provider required that improved public transport to i3 would require subsidy until there was a level of demand for the service. This will be reviewed once the i3 Flexible Space buildings are occupied.
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NAC Growth and Investment AGD Business Case 119 In assessing the impact(s) set out in Section 2 what evidence has been provided by partners? Please specify partners Gaps and Uncertainties Have you identified any gaps or uncertainties in your understanding of the issues or impacts that need to be explored further? No Section Four: Detailed Action Plan to address identified gaps in: a) evidence and b) to mitigate negative impacts Note: Please add more rows as required. Section Five - Performance monitoring and reporting Considering the project as a whole, including its equality and diversity implications: No. Action Responsible Officer(s) Timescale 1 Ensure the proposed build space and general project location is fully accessible and where appropriate, compliant with EA2010. Project Designers Over the course of the various phases of the project. 2 Progress discussions with public transport provider Discussions have taken place which require that there must be sufficient demand for an improved bus service, otherwise the route will require to be subsidised. It is too early in the project for there to be further demand as the Phase 1 building is not yet occupied. AGD Project Lead December 2022 Review position by December 2026 3 Develop initiatives with colleagues and other Council teams to ensure young people and women will benefit from the project. For Phase 1, Muir Group employed a young unemployed person and made links with Auchenharvie Academy for STEM engagement activities. AGD Project Lead Over the course of the various phases of the project. When is the project intended to come into effect? The project has started and will be delivered in a series of phases. When will the project be reviewed? At various Gateway Stages and at each Phase. Which Panel will have oversight of the project? The Project Board and particular Gateway Review meetings. NAC’s Executive Leadership Team.
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NAC Growth and Investment AGD Business Case 120 Section 6 Ayrshire Growth Deal Summary Equality Impact Assessment Implications & Mitigating Actions Name of Project: i3 Flexible Advanced Manufacturing Space project Name of Project Lead: Marnie Ritchie Email of Project Lead: marnieritchie@north-ayrshire.gov.uk Date of Assessment: original assessment for OBC in Feb 2021, reviewed 07 April 2026 This project will assist or inhibit the Council’s ability to eliminate discrimination; advance equality of opportunity; and foster good relations as follows: Please see information contained above. 1. Summary of project aims 2. Summary of how the project will eliminate discrimination 3. Summary of how the project will advance equality of opportunity 4. Summary of how the project will foster good relations 5. Summary of how the project considers Socio-Economic Disadvantage (Fairer Scotland Duty) 6. Summary of how the project considers the needs of island communities 7. Summary of Key Action to Mitigate Negative Impacts a. Actions and Timescales Project Lead: Marnie Ritchie, Manager, Growth and Investment Signed: 07 April 2026
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NAC Growth and Investment AGD Business Case 121 APPENDIX I: CARBON ANALYSIS Item Project Owner Response 1. Project Name i3 Flexible Advanced Manufacturing Space 2. Deal Region Ayrshire 3. Brief Description of Project The provision of flexible advanced manufacturing space to support business growth and inward investment. 4. Expected Carbon Emissions Impact CONTROL Category (1-5) 3 – Cap + then Zero 5. Expected Carbon Emissions Impact INFLUENCE Category (A-C) B (i.e. will have a negligible effect on wider carbon emissions) 6. Justification of Expected Carbon Emissions Impact Category e.g. a short narrative outlining the key carbon emission sources and their relationship to capital and operational net zero following the Deals Carbon Emissions Impact Categorisation Process. Carbon emissions through the construction process to create new industrial buildings and related access roads, parking, yard space and sustainable urban drainage areas. The first phase and phase two have considered measures at the operational stage to reduce carbon through the installation of solar roof panels, EV charging points and suds ponds. 7. Could the Carbon Emissions Impact Category be improved? e.g. from Category 4B to Category 3A It is expected that 3B will be the highest achievable rating for the project. 8. Could the carbon performance of the project be improved? e.g. reducing emissions further, achieving net zero faster. Yes. The project is being delivered in phases and its anticipated that further knowledge will be gained as the project develops, to inform adjustments or improvements to the design. 9. How will carbon be managed? e.g. through PAS 2080: Carbon Management in Infrastructure for infrastructure projects or the RICS Whole Life-Cycle Carbon Professional Statement for buildings projects PAS 2080 – check 10. What other carbon savings are expected to result from the project? e.g. wider carbon savings across the economy resulting from project output The new industrial space created through the project will provide businesses with the opportunity to benefit from solar panels and electric charging for vehicles on each site. The wider site will have a network of suds ponds and links into a separately funded active travel network of improvements which provides more sustainable transport options for travelling to and from the project site. There is also the possibility that future tenants could be involved in activities that contribute to achieving net zero.
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NAC Growth and Investment AGD Business Case 122 APPENDIX J: AYRSHIRE GROWTH DEAL CHANGE MANAGEMENT PROCESS