APPENDIX A
PLMC
Peter Linsell Management Consultants
Peter Linsell
Managing Director
Peter Linsell Management
Consultants
4 Howard Way
Meltham
Holmfirth
West Yorkshire
HD9 4NW
E: [email protected]
T: 01484 950783
M:07882 334 05
www.twitter.com/@PeterPlmc
North Herts District Council
New Crematorium Business Case
Prepared by Peter Linsell
(Managing Director)
February 2014
O&S (18.03.14)
 Page 2
APPENDIX A
July 14, 2017
Contents
Page 3
The Consultant: Peter Linsell – Managing Director
About PLMC
Terms of Reference
Page 4
Scope
Page 5
Identify realistic targets for turn over, including profit
margins and running costs for an average 12 month
period
Page 13
Provide a detailed break down of each area requiring
capital investment
Page 16
Identify the options for procurement that would be
available to North Herts District Council with the pro’s
and cons of each so as to enable further consideration
of each option as appropriate.
Page 18
Progress any identified issues highlighted within the
feasibility study to provide clear priced solutions to
each item
Page 20
Design of the proposed facility including proposals for
car parking
Page 22
Conclusions and Recommendations
Appendix 1
Quantity Surveyors Cost Estimates for Option 1 and 2
Appendix 2
Site design drawings and images of recent new build crematoria
Appendix 3
Wilbury Hill Crematorium Concept Drawing
O&S (18.03.14)
 Page 3
APPENDIX A
July 14, 2017
The Consultant: Peter Linsell – Managing Director
Peter has been lead consultant on a number of key projects for burial and
cremation authorities in the UK.
With 25 years local government experience at Kirklees Council and nearly
four years as consultant and trainer with the ICCM, Peter has vast
experience of working with architects, engineers, planners, heritage, legal
and financial specialists on a number of site development projects for
burial and cremation authorities.
He was Bereavement Services Manager at Kirklees Council from 1994 and
during that time he project managed the installation of three new
cremators at one crematorium, the Best Value Review of the Service in
2001 and their organisational review completed in 2004.
Peter has an inclusive approach to project management and is always
intent on seeing a project through to the end.
About PLMC
Peter Linsell Management Consultants (“PLMC”) was formed in April 2008
and has developed a substantial client base and a strong reputation for
delivering complex consultancy projects across a wide spectrum of
activities.
Terms of Reference
Prepare a business case for a new crematorium at Wilbury Hills Cemetery
as per the attached “Feasibility Business Case Study with Fees”
document.
O&S (18.03.14)
 Page 4
APPENDIX A
July 14, 2017
Scope
The business case addresses the following issues–
Identify realistic targets for turn over, including profit margins and
running costs for an average 12 month period
Provide a detailed break down of each area requiring capital investment
Identify the options for procurement that would be available to North
Herts District Council with the pros and cons of each so as to enable
further consideration of each option as appropriate.
Progress any identified issues high lighted within the feasibility study to
provide clear priced solutions to each item
Provide a detailed design of the proposed facility including proposals for
car parking.
Present this business case to Senior Managers and Councillors of North
Herts District Council which could entail an evening meeting.
O&S (18.03.14)
 Page 5
APPENDIX A
July 14, 2017
Identify realistic targets for turn over, including profit margins
and running costs for an average 12 month period
Turnover
The catchment population for the proposed site at Wilbury Hill,
Letchworth is estimated at 176,648 in 2014.1
Catchment by area of residence
120,000
110,574
100,000
North Hertfordshire
80,000
Central Bedfordshire UA
60,000
57,599
East Hertfordshire
40,000
South Cambridgeshire
20,000
5,810
2,665
0
This will present an estimated 1,727 deaths.
1
Based on 30 minute travelling time by car. See North Herts catchment local authorities.
O&S (18.03.14)
 Page 6
APPENDIX A
July 14, 2017
2014 catchment deaths
1,200
1,117
1,000
North Hertfordshire
800
Central Bedfordshire UA
600
536
East Hertfordshire
400
South Cambridgeshire
200
54
21
0
Nationally 70% of deaths result in cremation, so when established we
would expect 1209 cremations at a new North Herts crematorium.
Deaths 2014 Cremations
Burials 30%
70%
1727
1209
518
With a 20-year projected population increase of 22.21% in the catchment
area, we could eventually see 1448 cremations at North Herts
crematorium.
Catchment population 2014-2034
250,000
200,000
150,000
100,000
50,000
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
0
O&S (18.03.14)
 Page 7
APPENDIX A
July 14, 2017
Catchment cremations 2014-2034
1500
1450
1400
1350
1300
1250
1200
1150
1100
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
1050
Benchmarking neighbouring regional fees the fee proposed for Wilbury
Hills is £640 per adult cremation.2
Adult cremation fees at neighbouring crematoria
900
770
800
665
700
642
638
613
600
500
£
500
400
300
200
100
2
fie
ld
En
df
o
rd
ts
tH
er
Be
am
C
W
es
br
id
ge
ag
en
St
ev
Lu
to
n
e
0
Median value of Luton, Stevenage, Cambridge, West Herts, Bedford & Enfield. Average is £638.
O&S (18.03.14)
 Page 8
APPENDIX A
July 14, 2017
In the chart below it can be seen that the increase in volumes in the first
full year of opening is significant. First full year income is on average 71%
of the number disposed of in year 10.
First 10 Years Cremation Numbers
1400
BANBURY, Oxfordshire
1200
HOWE BRIDGE, Greater
Manchester
Cremations
1000
MORAY, Scotland
800
TELFORD, Shropshire
600
COLESHILL, West Midlands
400
LLANELLI, Wales
200
SITTINGBOURNE, Kent
0
1
2
3
4
5
6
7
8
9
10
Year
Using these facts as a base and translating this into income estimates, a
modest 50% take-up of the new facility in the first full year of operation
(605 cremations) is assumed realising a gross income of £386,913.3 In
year two we would expect over 900 cremations bringing in over
£580,000.
Going forward, by year 10 we can expect income from cremations only to
exceed £849,000 and reach over £915,000 ten years after that.
The following chart shows the projected adult cremation to year 21 of
operation.
3
A study of new crematoria opened in the UK since 1999 reveals a 75% median
O&S (18.03.14)
 Page 9
APPENDIX A
July 14, 2017
Cremation projections year 1-21
1600
1400
Cremations
1200
1000
800
600
400
200
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
Year
This then translates into adult cremation income projections for the same
period.
Adult cremation income year 1-21
£1,000,000
£900,000
£800,000
£700,000
£600,000
£500,000
£400,000
£300,000
£200,000
£100,000
£0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20 21
Year
O&S (18.03.14)
 Page 10
APPENDIX A
July 14, 2017
The above income figures exclude any memorial sales and other income
streams.
Memorial sales income projections year 1-21
£100,000
£90,000
£80,000
£70,000
£60,000
£50,000
£40,000
£30,000
£20,000
£10,000
£0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
Year
Realistically this could add a minimum of 10 % to gross income after 10
years, ultimately pushing income over the £1m a year mark at current
fee levels.
Total income including memorial sales year 1-21
£1,200,000
£1,000,000
£800,000
£600,000
£400,000
£200,000
£0
1
O&S (18.03.14)
2
3
4
5
6
7
8
9
10
11 12 13 14 15 16 17
18 19 20
21
 Page 11
APPENDIX A
July 14, 2017
Running costs
Median expenditure - crematoria 1000-1500 cremations per year
(14 sites)
160
146
136
140
120
£000
100
80
56
60
40
31
20
0
Emps
Premises
Supp & servs
Suppt servs
Using data from other sites with cremation figures ranging from 10001500 a year, we have calculated that the expected full year revenue
expenditure would be £369,000 with an income of £761,000 (net
£352,000).
Applied to the proposed set-up at North Herts crematorium, adjusting for
one rather than two cremators and an assumed staffing of 5 employees
the projection would be as shown in the next chart.
O&S (18.03.14)
 Page 12
APPENDIX A
July 14, 2017
Cremation income v expenditure year 1-21
1000
900
800
700
£000
600
500
400
300
200
100
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
Year
Revenue expenditure
Cremation income
Please note the above figures exclude capital costs and memorial sales.
Key points:

Marginal 16% surplus in year 1 (circa £50K)

69% surplus year 2

Over 100% surplus in year 5
O&S (18.03.14)
 Page 13
APPENDIX A
July 14, 2017
Provide a detailed break down of each area requiring capital
investment
There are two options to consider regarding where the new crematorium
is situated.
Option 1: Extension to existing building
Extend the cemetery chapel building complex to include a crematory
with abatement plant. This would allow the existing chapel to be used
for burial and cremation services.
To achieve this consideration would need to be given to:
1. Managing the building, car parking, human traffic and bookings
to ensure continuity and service to more funerals than at
present.
2. Designing the extension to match existing materials and
structure.
3. Providing enough space for a potential second cremator to future
proof against growing demand. The probable footprint could be
a limiting factor.
Option 2: Stand alone Facility
Building a completely separate building in another area of the site
possibly but not necessarily matching the design of the existing
cemetery chapel complex (less costly materials).
Issues:
1. More expensive option
2. Reduces pressure on chapel use compared to option 1 (chapel
would only be used for cremation services). Separate identity
may avoid accusations from funeral directors and families of a
compromise to cut costs.
3. Opportunity to provide more office space and waiting room
facilities than in Option 1.
4. Avoids any issue regarding the 200 yard rule which prevents a
crematorium from being built too close to residential buildings.
5. Larger chapel than Option 1.
O&S (18.03.14)
 Page 14
APPENDIX A
July 14, 2017
QS Approximate Estimate
The figures below are from a report provided by Press and Starkey
quantity surveyors (attached at Appendix 1).
External works
Buildings
Crematory
Sub total
Prelims 13%
Overheads
&
profit 5%
Contingencies
5%
Design fees 10%
Total
Option 1 £
76,000
548,000
Option 2 £
661,000
1,531,000
Variance £
585,000
983,000
681,000
792,000
111,000
1,305,000
169,700
73,800
2,984,000
388,000
168,600
1,679,000
218,300
94,800
77,500
177,100
99,600
162,600
1,788,600
371,800
4,089,500
209,200
2,300,900
Depending on the final design capital costs could be considerably lower
but the QS report is based on a professional assessment using
contemporary data.
Option 2, though more expensive, is the most viable and sustainable
option. The added practical value, customer benefits and extended
service offer would outweigh the immediate capital outlay in the
medium to long-term.
O&S (18.03.14)
 Page 15
APPENDIX A
July 14, 2017
Payback Calculations
The following figures exclude any prudential borrowing costs or
expenditure on additional professional fees over and above those already
identified in the QS report. The chart demonstrates that break-even
would be achieved on year 11. Note that the income figures used is for
cremations only and excludes memorial income.
Capital cost debt recovery year 1-21
6,000
4,000
£000
2,000
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
-2,000
-4,000
-6,000
-8,000
Year
O&S (18.03.14)
 Page 16
APPENDIX A
July 14, 2017
Identify the options for procurement that would be available to
North Herts District Council with the pro’s and cons of each so as
to enable further consideration of each option as appropriate.
Propose NHDC first option for design and build by specialist crematorium
developers and operated in-house. This brings expertise and modern
thinking into the process to future proof the facility at economic levels.
By year 11 income could achieve break even. See chart in section above.
Alternative to outsource design, build and operation to specialist provider.
This would mean that all capital and revenue costs are carried by third
party whilst providing state-of-the-art crematorium to local people.
Depending on terms, NHDC could receive 20% of turnover. The
cumulative income projections are shown below.
Outsourced: 20% of income paid to NHDC
2500
2000
£000
1500
1000
500
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20
Year
O&S (18.03.14)
 Page 17
APPENDIX A
July 14, 2017
The option chosen could be determined by comparing the net return over
time of each as follows.
NHDC operated v outsourced net revenues year 1-21
8000
6000
£000
4000
2000
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21
-2000
-4000
-6000
Year
Option 1 - NHDC operated
Option 2 - Outsourced 20% return
Key points:



Outsourcing attracts a positive net revenue position from Year 1
NHDC operated crematorium net revenue outstrips outsourcing
option from Year 13 onwards. Actual annual surplus would be
£525,000 as opposed to £105,000 in Year 13
At 21 years NHDC run facility would realise £3.6m more income to
the council than outsourcing. Actual annual surplus would be
£579,000 as opposed to £116,000 in Year 21.
There is an argument for developing an outsourced facility providing a
suitable arrangement can be negotiated that meets the objectives of the
Council and the operator. The key benefit is that revenues are achieved
fro Year 1 with limited, if any, project costs.
If NHDC opted for operating the crematorium themselves, capital funding
would be required and the payback period would be around 11 years.
Key benefit: Net annual income returns from Year 11 onwards should
exceed £500,000.
O&S (18.03.14)
 Page 18
APPENDIX A
July 14, 2017
Progress any identified issues highlighted within the feasibility
study to provide clear priced solutions to each item
Planning requirements impact on costs
This is especially relevant should extending the current cemetery building
be the preferred option. A separate building as per Option 2 would
negate this effect on costs.
Materials required to match existing
As above, Option 2 (separate building) should reduce the need for this.
Internal staffing will require training and guidance depending on
appointments made
The private sector pride themselves on the standard and depth of training
afforded employees at their new facilities. The need for commercial
know-how combined with high quality operational and technical expertise
comes at a price but needs to be available if the level of returns described
is to be achieved.
Competition will influence demand and pricing
This is usually the case with any venture of this kind. Nevertheless,
anecdotal comments from funeral directors and other customers suggests
that a new local facility would be welcomed, especially given that it would
be built on an existing cemetery site.
Detailed research of ward population data and calculated death rates from
the Office for National Statistics (ONS), using the standard 30 minute
travelling time benchmark, shows that there is a big enough customer
base to make demand levels sustainable.
Pricing, although often politically sensitive, can be set at levels similar to
those of neighbouring providers. The cremation fees and other payments
to the operator are only a fraction of the overall charge made by funeral
directors in normal circumstances. Often funeral directors baulk at
cremation fees increases because of the effect they have on their own
profit margins.
Memorial options to be maximised while maintaining soft marketing
position
One advantage the private operator has over a Council-run facility is how
memorial sales are perceived. While private crematoria invest time and
money on their dedicated sales operation, aimed at maximising add-on
income, a municipal operation is not expected to take such a commercial
stance on memorial sales.
O&S (18.03.14)
 Page 19
APPENDIX A
July 14, 2017
This can limit the Council’s capacity to raise income and needs careful
consideration. Looking around at what other Council’s allow and promote
in their crematoria is a worthwhile pursuit as the offers a wide and varied.
For the purpose of this report, income returns from memorial sales have
been excluded from the income projections when comparing options.
O&S (18.03.14)
 Page 20
APPENDIX A
July 14, 2017
Design of the proposed facility including proposals for car parking
Using information from recent new-build crematoria the following
elements are typically included:
Landscaping

Tree planting

Facility screened from highway and residential properties by
hedgerows and boundary planting

Tranquil setting

Attractive formal gardens of remembrance

Water features

Low maintenance informal areas towards site boundaries

Reflection areas with seating and memorial features

Car parking for up to 100 cars (say 35 tarmac spaces close to
crematorium building and 65 reinforced grass as overflow)

Memorial gardens and features
Building

Covered main entrance to chapel (porte cochere)

Waiting room

Vestry/officiants changing room

Music room

Toilets for public

Chapel

Crematory containing cremator and mercury abatement plant

Coffin storage area

Cremated remains storage

Workshop/storage

Staff rest area and toilets

Reception office

Private meeting room

Book of remembrance room

Floral tribute area
Some examples of site design drawings and images are attached at
Appendix 2.
At Wilbury Hill the site has ample room to accommodate all of the above
and complement the existing cemetery provision.
Ideally detailed design drawings would be prepared showing the exact
location and layout of the crematorium facility. This, however, is very
O&S (18.03.14)
 Page 21
APPENDIX A
July 14, 2017
costly, subject to planning approval and would be the next stage should
the business case for a new crematorium be approved.
The drawings and images at Appendix 2 give a flavour of the type of
facility that might result from this project. Using this, some concept
sketches have been produced showing how the new crematorium might
look. These are included in Appendix 3.
O&S (18.03.14)
 Page 22
APPENDIX A
July 14, 2017
Conclusions and Recommendations
This study concludes that there is a need for a crematorium in North
Hertfordshire and that the site at Wilbury Hill is an ideal location.
There is a decision to be made about whether NHDC should find the
capital and revenue to design, build and operate the crematorium
themselves or whether to bring in an experienced private sector
developer to provide it.
A payback period whereby break-even will not be achieved until Year 11
may affect this decision, as will the attendant risks and unknowns
associated with a long-term investment of this kind. However, the
revenues that can be expected post break-even are attractive, realising in
excess of £500K per annum.
On the other hand, the lower risk option of entering into a contract with a
private sector developer and provider over perhaps a 30 year period is
itself attractive. There would be no capital outlay, the financial and
operational risks would be carried by the operator and NHDC would be
looking to receive annual income in excess of £75k from year 5 rising to
£100K by year 10 and steadily growing from there on.
In terms of timescale, NHDC should anticipate a minimum of 2 years from
formal approval to site opening for business, depending on consultation,
planning and contractual process times.
Recommendation
NHDC approve the business case to develop a crematorium at Wilbury
Hills
O&S (18.03.14)
 Page 23
APPENDIX A
July 14, 2017
Appendix 1
Quantity Surveyors Cost Estimates for Option 1 and 2
O&S (18.03.14)
 Page 24
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 25
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 26
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 27
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 28
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 29
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 30
APPENDIX A
July 14, 2017
Appendix 2
Site design drawings and images of recent new build crematoria
O&S (18.03.14)
 Page 31
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 32
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 33
O&S (18.03.14)
APPENDIX A
July 14, 2017
 Page 34
APPENDIX A
July 14, 2017
Appendix 3
Wilbury Hill Crematorium Concept Drawing
O&S (18.03.14)