IS IT WORTH IT? 1

[mwitt]

The city I work for is comtenplating contracting with our local Sanitary District (sewage treatment)to allow them to provide billing services for the city sewer charges. It is estimated that the billing would cost the city $250,000per year with an initial startup cost(software) of $100,000. the District would like to trade 20 miles of thier non interceptor sewer in the city for this service. it is estimated the replacement cost would be $100/ foot( this sewer is not in very good shape now) for a cost of $10,560,000. it is also estimated that sewr replacement costs are rising faster than personnel costs. I used an interest rate of 4% for the billing costs and 8% for the sewer replacement costs. where do i take these calcs now, I don"t have any faith in my results.

 

[MiketheEngineer]

Take them to a bean counter.... They love this stuff!!

 

[RWF7437]

You can reduce all your cost data to some common basis; say Present Worth. Then they are directly comparable. Your old Econ textbook has the formulae you'll need.

good luck

 

[bimr]

One would think that you would want to make a favorable case for your client.

You should start off with a better estimate of the replacement cost. $100 per foot sounds to be on the low side if you consider the depth of the sewer and if the sewer is in the streets. Street repair and gravel backfill are expensive. You also need to estimate the life of the sewer.

You also have a procurement cost to be added to the $100/foot. The engineering design and constuction alone would add maybe 20% to the total.

Try to find a higher priced and quality estimate for sewer replacement. You also have to determine the typical installation cost of sewer that you are replacing.

$250,000 would buy 2,500 feet of replacement sewer per year at $100 per foot.

2,500/ (20 * 5280) === 2.3% of system replaced per year.

You also need to determine the annual maintenance cost of the 20 miles of sewers. Who is going to be responible for sewer maintenance?

It sounds like a bad deal for the City. I would look into this further and make sure all of your costs are correct.

 

[dicksewerrat]

If they did the billing for free and reduced your sewer rate by 10%, maybe it would be a wash. bnut tey are getting rid of a dog and charging you for the service. Not a good deal. Look at BIMR's comments. Who did the estimate of replacement cost? And when did they do it? 1965? 8 inch pipe 5 feet deep, in a corn field and the whole 20 milesat one time maybe.

Richard A. Cornelius, P.E.

http://WWW.amlinereast.com