Commercial broking is as much a business strategy as it is a skill set, writes Chris Thomas, executive commercial broker and equipment finance sales at NAB. Article originally published in Australian Broker on 14/11/23.
David Thornton, Chief Operating Officer at Somerset College, describes the factors they had to consider before committing to one of the most expensive capital works in their 33-year history.
Two basketball courts, grandstands for their swimming pool and a synthetic running track are among the capital works recently undertaken by Queensland’s Somerset College. Chief Operating Officer David Thornton describes the factors they had to consider before committing to one of the most expensive capital works in its 33-year history, how they funded the project and the insights gained from the process.
Somerset College, an independent school on Queensland’s Gold Coast, recently undertook one of the most expensive capital works in its 33-year history, creating an impressive new sports precinct that takes up a significant part of the campus. Building began in January 2015, with the project finalised by February of this year, on time and to budget.
David Thornton, Chief Operating Officer at Somerset, admits that the scope of the development was ambitious. It included two basketball courts with a fitness centre underneath, allied health and sports staff offices, a kinder gym, grandstands for their swimming pool, floodlighting, a new staircase and promenade. The pièce de resistance is the new 400-metre synthetic running track, built to international standards.
Choice of builders is always crucial, but in Somerset’s case, there was an additional challenge – as Thornton points out, there simply aren’t that many builders with experience building synthetic tracks to international standards. And it wasn’t only the skill of the builders that had to be considered, but also the nature of the contract they were able to commit to. In the end, the project managers and builders, who Somerset had worked with before, were able to sign a fixed contract, which helped to keep costs down.
Timing was another important consideration. They wanted to spend as little time as possible without access to sporting facilities, so the goal was to stage the building process to minimise disruption and to complete the project within a year.
Most significant, of course, was the issue of funding. Thornton points out that they were lucky with their timing – prevailing economic conditions were in their favour.
“We did go into it with a budget in mind, but the environment of low-interest rates and low building costs, which have since gone up, allowed us to be quite ambitious,” he says. “We went to tender through top-tier architects, and were able to find out that was both attractive – in terms of the design – and within our price range.”
With a design and a budget in mind, it was time to look at their funding options.
“What we found was that [financial] products had changed since the last project we’d undertaken – what was on offer was different and how banks were approaching schools was also different. The banks are so clued into schools these days,” says Thornton.
NAB was able to benchmark Somerset’s financials within the education sector. After analysis the College decided to commit to some aspects of the project that it might have initially considered to be ‘add-ons’. These included extra amenities, the painting of some original buildings so that the new development blended in better, and solar panels on the top of the new basketball building.
“It gave us a confidence boost,” he says. “It’s great to see how you’re doing from a bank’s perspective.”
Understanding that they could manage the financial commitment was important. As a school, there is an additional responsibility to parents and stakeholders. “It’s all very well for the banks to offer you millions of dollars, but you need to know that you can manage it,” says Thornton.
Somerset also gained valuable insights into their performance and policies from the data analysis and benchmarking process.
“NAB was very transparent about what they were looking at and how they were comparing us,” says Thornton. “We got some interesting insights … different schools have different policies [in particular around fees], so it gives us insight into other ways of managing things if we ever need to tweak what we’re doing.”
“At the end of the day, institutions like banks can offer us an extra depth of insight that a database like the Somerset Report [a budget and reporting tool for education] can’t give us, and that’s an incredibly valuable decision-making tool.”
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