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There was an interesting article published recently in the “Express & Echo” newspaper which discussed the costs (and expected revenues) associated with the refurbishment of a car park beside a new John Lewis store in Exeter city centre. The individual cost items for this project (or ‘job’) conveyed an intriguing mix – for instance, the cost of anti-slip surfaces, concrete repairs, pigeon fencing, new signage and disability access.

Total cost of the job was reported to be £927, 548 (£ = UKpounds), although this is around £27k higher than was announced by (Exeter) City Council when the car park was re-opened. There was seemingly some kind of ‘slippage’ in the budgets, maybe over-spending and/or maybe under-provision originally.

Justification for such expenditure of public funds is said to be more general increase in revenues to the city centre – can you think what sorts of incremental revenues might result? The price of parking was also more or less doubled, following refurbishment. For example, the charge for 1-hour of parking was raised from £0.90 to £1.80. Overall, annual revenues from parking fees was expected to increase by around £500k per annum; thus the project ‘pay back’ was expected in 2 years or so.

Angles that were (apparently) not considered in calculating the projected costs and revenues for this project included:

I.      How do the financial projections look if John Lewis had not opened a new store inExetercity?

II.      What is the likely impact if, with a new John Lewis store, no car park refurbishment is carried out?

Do you think the above questions are relevant to the project? Can you think of any other cost- or revenues-related aspects that ought to be considered?

Source: ‘How £930k was spent on John Lewis car park’, R. Birch, ‘This is Exeter’ website, 8/11/12