Synergies was engaged by Building Queensland to conduct a peer review of a demand assessment and economic analysis for input into a Detailed Business Case to support infrastructure development at the Port of Cairns. A strong Business Case was crucial in securing government approval and funding that has resulted in the Port of Cairns now being better equipped to accommodate and welcome the anticipated relaunch of cruising
Cairns Shipping Development Project (CSDP) was completed in 2020. It involves the upgrade of the Trinity Inlet within the Port of Cairns to allow cruise ships up to 300 metres long to berth at the Cairns Cruise Liner Terminal. In February 2020, the first Vista Class cruise ship successfully entered the harbour as the largest cruise ship to have ever arrived at the port.
Prior to the project development, due to limitations on the size of vessels that could enter the Port of Cairns, larger vessels were required to dock off Yorkey’s Knob, with passengers shuttled onto shore before being transported to Cairns. The poor passenger experience presented a problem in terms of the potential for the Port to realise the potential demand for Cairns as a cruise ship destination.
A business case was prepared by the Queensland Government as part of assessing whether or not the upgrade should occur.
Synergies was engaged by Building Queensland to peer review the demand assessment and economic analysis for the Detailed Business Case for the project.
We reviewed the methodology that had been developed by the economic advisor to conduct both the demand assessment and economic analysis and the application of the methodology. This included conducting a detailed review of the economic modelling.
The peer review identified several issues with the demand assessment and economic analysis of the project. Most importantly, we identified a need to revisit the base case to ensure that the demand projections upon which the economic benefits were estimated represent the incremental increase in economic activity attributable to the project.
Other issues identified in the review included the growth rates assumed in terms of cruise ship calls at Cairns under both the base case and reference project scenarios; the vessel mix assumptions applied in estimating demand under the base case; the characterisation and appropriateness of the scenarios modelled in terms of the future increase in cruise shipping calls at the Port of Cairns as a result of the CSDP; and the need to include terminal values in the quantification of economic benefits.
Various recommendations were also made to improve the robustness of the documentation of the demand and economic modelling.
Our review assisted in the development of a robust business case, whereby the project was ultimately approved and granted funding.