Select Committee on Public Accounts Minutes of Evidence


APPENDIX 1—BUSINESS PLAN REVIEW MATRIX

OPERATING COSTS
CategoryPriority* DescriptionStatus Risk
Management—MCL1 Recruitment of key personnel at Millennium Central. Costs allocated and recruitment underway but as yet few posts filled. For example, production director still to be appointed, input of Marketing Director appears to be limited. Towers Perrin indicated there was no slack in the timetable in January, in May many issues have still not been progressed as there is no appointed leader for each area. This will increase the risk of deliverability.

Staff4Identify number and roles of specific staff. Zero-based staff budget has been developed for all areas excluding Drum-show. No provision for performers and events staff pre-opening, lump sum budget for 2000. Assessed risk by MCL in May business plan—12.5 per cent increase. With no product specification it is impossible to substantiate or challenge these projections. However budget includes a sum of up to 20 per cent to cover eventualities.
Operating Costs4Utilities, security, equipment hire and general running costs (including pre-opening). Ball park estimates as contents of Dome are yet to be specified. Assessed risk by MCL in May business plan—12.5 per cent increase. With no product specification it is impossible to substantiate or challenge these projections.

*  Anticipated status at this stage of the project
1  Activity should be complete by May 1997.
2  Action underway on the basis of detailed targets and plans.
3  Detailed strategy with linked action plans in place.
4  Issue to be addressed: outline budget and sensitivity in place.

SPONSORSHIP
CategoryPriority* DescriptionStatus Risk
In cash2Securing of £150 million commercial sponsorship. No contract signed with IMG, no evidence provided of any commercial offers though BA and BT have made some preliminary commitments. No substantiation of achievability of targets. Significant shortfall in sponsorship money. Also as there are no contracts there may be significant conditionality to the sponsorship money which may force further changes to the exhibition content.
In kind and secondary2 Securing of £45 million in kind and secondary sponsorship. No plans, no evaluation of impact on either revenues, capital costs or cash sponsorship. Significant shortfall in value of sponsorship. Conditionality to the in kind sponsorship may create compromise decisions.

*Anticipated status at this stage of the project
1  Activity should be complete by May 1997.
2  Action underway on the basis of detailed targets and plans.
3  Detailed strategy with linked action plans in place.
4  Issue to be addressed: outline budget and sensitivity in place.

SECONDARY SPENDING
CategoryPriority* DescriptionStatus Risk
Retail3Identify product mix, contracting strategy, outlet locations. Location defined—no logo and no details of contracting strategy or product mix supplied. If contractual relationship for retail is not well defined there is a risk that MCL will trade at a loss.
Catering3Identify product mix, contracting strategy, outlet locations. Location defined—clear strategy on use of brands and in-house operation. Assumption of break-even. If contractual relationship for catering is not well defined there is a risk that MCL will trade at a loss.

In order to achieve commission levels there may be an impact on capital spend to create shell business units, on sponsorship revenues and on the integrity of the Millennium brand in the dome.
Hospitality/Function4 Identify product mix, contracting strategy, outlet conditions Ballpark figure of £1 million contribution included in projections. Not significant.
Merchandising2Develop branded products. Both areas await determination of logo and image and the appointment of a Commercial Director. Failure to develop a strong enough brand image effecting retail sales.

*  Anticipated status at this stage of the project
1  Activity should be complete by May 1997.
2  Action underway on the basis of detailed targets and plans.
3  Detailed strategy with linked action plans in place.
4  Issue to be addressed: outline budget and sensitivity in place.



 
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