ADMINISTRATIVE REPORT

Date: June 6, 2002
Author/Local: E. Batty/7315

RTS No. 2648

CC File No. 5103

CS&B: June 13, 2002

TO:	Standing Committee on City Services and Budgets
FROM:	General Manager of Engineering Services
SUBJECT:	Development of a permanent Material Transfer Facility for excavated material at 900 E. Kent Avenue.

RECOMMENDATION

A. THAT Council approve the expenditure of $2,539,000 to purchase the land and construct a Material Transfer Facility for excavated material at 900 E. Kent Avenue; financing to be provided from the Capital Financing Fund on terms satisfactory to the Director of Finance, to be repaid from operating revenue of the Facility with no net increase to Operating or Capital Budgets.

B. THAT Council approve the creation of a permanent Systems Analyst 1A position and a permanent Weighmaster I position as staffing required for the operation of the Material Transfer Facility. Funding is to be provided from the operating revenue of the Facility with no net increase to Operating or Capital Budgets.

COUNCIL POLICY

On February 4, 1994, subject to Council discretion any recommendations for enhanced programs are to be accompanied by recommendations for matching cost savings or related revenue increases.

PURPOSE

The purpose of this report is to seek approval for the development of a permanent Material Transfer Facility for excavated material at 900 E. Kent Avenue. The report includes the review of a business case (see Appendix A) which supports the capital expenditure of $2,539,000 to acquire land and make capital improvements to create the permanent facility.
BACKGROUND

Engineering Services has for the past several years been reviewing its methods of handling excavated material from its many construction sites throughout Vancouver. Annually, Engineering Services hauls more than 380,000 tonnes of excavated material to the Vancouver Landfill in Delta and the Richmond Landfill. The majority of this material is not economical to reuse because of the high portion of fine silty material it contains. Reusing this material would require significant extra effort at the work site to avoid future settlement and pavement deterioration, and so it is hauled away and replaced with select material.

A review of how to best haul the material to the landfill sites compared the practice of hauling directly from the work sites to the landfill with the option of hauling to a transfer facility and from there to the landfill with larger vehicles.

The comparison of City and contracted forces hauling to the Vancouver Landfill from the 900 E. Kent Avenue transfer site in 1999 and 2000 demonstrated a cost advantage by using contracted forces. Based on these findings, a public tender was issued for a twelve-month contract. This tender was awarded by Council on May 18, 2001 and implemented in June 2001.

Since mid June 2001, the temporary facility has been efficiently handling the transfer of material and has allowed staff to complete a business case that affirms the establishment of a permanent transfer facility for excavated material, as laid out in this report.

DISCUSSION

The business case (see Appendix A) for the permanent transfer facility compares the trucking costs of the direct-haul method with the transfer facility option, including the costs of developing and operating the permanent transfer facility.

The temporary transfer facility at 900 E. Kent Avenue has been in operation since June 2001 and has provided practical information on the requirements and costs of a permanent facility. The benefit of the transfer facility occurs when site conditions, or the type of work undertaken at the construction site, require the use of single axle or tandem axle trucks. There is a benefit gained if these trucks transfer their material to trucks of larger capacity for the long haul to the landfill. The trial currently underway has shown that, of the total amount of excavated material hauled annually, approximately 250,000 tonnes are handled with the smaller vehicles. The material transfer facility obtains its revenue by charging an internal cost recovery fee to the business units dumping loads at the site. This fee covers the capital and operating cost of the facility, including the contract costs to haul the material to the landfill. There is also some revenue achieved from the recycling of approximately 40,000 tonnes of concrete and asphalt slab material which is used as road base material at the Vancouver Landfill.

The business case review reveals there is a net benefit of $195,000 from the use of a transfer facility compared to hauling directly to the landfill.

Capital Costs of the Permanent Facility

The cost to develop a permanent transfer facility for excavated material requires the acquisition of land and improvement to the existing temporary facility as follows:
· The current site area of 2.5 acres has been shown to be adequate. The property is presently owned by the Property Endowment Fund and the business case includes the purchase of the property with repayment over 20 years from revenues of the operation. The present temporary operation rents the land.
· The existing temporary facility requires improvements to the existing surface, which must be raised and hard surfaced to improve the collection of silt material. This material can then be processed in the existing silt containment facility at 900 E Kent Avenue.
· The existing weigh scale is not large enough to efficiently and accurately weigh all trucks, and a larger scale at an improved location is required.
· Improvements to the adjacent roadway and utility upgrading are also required.

Operating Costs of the Permanent Facility

The facility will have on going operating costs that must also be funded by revenues from the operation as follows:
· Two permanent staff positions are required; one to operate the weigh scale station and the other to provide the overall management of the facility.
· Maintenance and administration costs of the facility are included.
· The annual foregone property taxes are included in the operating cost.
· The hauling of material from the transfer facility is being provided through a twelve-month contract. Future contracts for the work will be made even more competitive from experience learned in the existing trial.

Excavated Material Supply

A material transfer facility must be assured of sufficient long term material supply to ensure the costs of its development are recovered. While the land costs are recovered over 20 years, the capital improvements for the material transfer facility are recovered over 10 years. It is anticipated that the projected annual rate of supply of rubble material will be sustained for that period. The larger capital reconstruction projects represent 76% of the rubble delivered to the site. These capital reconstruction projects are replacing aging infrastructure at a consistent annual rate as established in their currently proposed long range Capital Plans. Therefore, this supply should continue to be fairly consistent. Smaller capital work projects supply the remainder of the material by single axle trucks primarily delivering material from the installation of service connections to private properties. Although this area of supply does vary according to economic activity, it represents a smaller percentage of the total and would need to diminish significantly over a longperiod to be a concern. This is not expected to occur.

Business Case Conclusion

The above information was used in the business case to compare the two options for hauling excavated material. The result of this comparison, as outlined in the Executive Summary of the business case shown in Appendix A, is that the transfer facility operation would provide an annual saving of $195,000 on annual expenditures of approximately $2 million.

Additional Benefits of the Transfer Facility

Although the business case demonstrates the benefit of the transfer facility over direct hauling, there are other benefits which have not been quantified:
· The facility transfers the material to larger trucks for the long haul portion of the trip, resulting in fewer trucks on the road and reduced traffic congestion and pollution.
· The overall reduction in fuel consumption will result in greater savings if fuel prices increase.
· The transfer of the material allows greater potential for reusing and recycling.
· The location of the material transfer site adjacent to the existing aggregate handling facility allows easier integration of reclaimed material back into the supply stream.
· A transfer site facilitates the use of varying destinations for the material with the opportunity for reduced travel times.
· The use of a transfer facility keeps the construction site delivery trucks within the City where there are numerous routes available to avoid delays. The resulting consistency of travel times should improve efficiency of operations.
· A transfer facility allows for storage of material, which provides the flexibility for long-hauling to occur when the highways are less congested and risk of delays is reduced. This also should attract competitive bids as it allows the contractor to schedule these deliveries when its other trucking needs are low.
· The present recycling of slab material at the transfer facility provides a cost advantage over using private recycling sites. These private sites are presently close to Vancouver and their rates to drop off slab material are low. However, if in the future these sites are relocated farther from Vancouver, or if their dump charges increase, an additional benefit of the transfer facility at 900 E. Kent will be realized.

FINANCIAL IMPLICATIONS

The full cost of a Material Transfer Facility consists of its annual operating costs including the repayment of the capital expenditure.

The capital outlay costs required, as described on pages 4 and 5 of the business case, are for land acquisition and site improvements. The cost of the 2.5 acres of land at 900 E. Kent Avenue is$1,750,000. The cost of site improvements for the permanent facility is estimated to be $788,800. The total capital cost to establish the facility is $2,539,000. Proposed financing is to be provided from the Capital Financing Fund. At an interest rate of 6.0 % and an amortization period of twenty years, the annual payback amount for the land portion would amount to $152,600. At an interest rate of 6.0 % and an amortization period of ten years, the annual payback amount for the facilities portion would amount to $107,200.

The annual operating costs, as described on pages 5 and 6 of the business case, include all costs associated with full operation of the new facility. These include annual repayment charges for the capital cost of the facility plus the operating costs of plant and buildings, maintenance, administration, foregone property taxes and contracting of the out-haul service less the sale of crushed slab rubble to the Landfill. The total annual operating cost for the Material Transfer Facility would be $1,333,000.

These costs would be recovered from the revenue of the Material Transfer Facility. The revenue is obtained from internal, cost recovery fees charged for excavated material as it is weighed and dumped at the transfer site. The excavated material is from Sewer, Water and Streets Operations Branch projects. The majority of the projects involve capital funding for the construction or reconstruction of City infrastructure. In order to promote the reuse of excavated material, concrete and asphalt slabs, which are separated at the work site and delivered to the transfer site, are not charged the dumping fee. These slabs are crushed and sold at market rates to the Vancouver Landfill for roadway material. This recycled material currently represents 18% of the material handled at the site.

As noted above, revenue for the operation is obtained from the fees charged for the non-recycled material that goes through the Material Transfer Facility. The annual amount of this material is estimated to be 210,000 tonnes. The cost of hauling this material directly to landfills would be $2,206,000, whereas the cost to transfer this material using the Material Transfer Facility is $2,011,000, an annual saving of $195,000. This represents a saving of approximately nine percent.

This saving will primarily be realized on capital funded projects for which the hauling of excavated material represents 20 to 25 percent of the project cost. The overall savings on these capital projects would be approximately two percent.

The $195,000 savings is based on a comparison of direct hauling and establishing a permanent transfer facility. Given that current funding is based on the existing temporary facility, funding for a permanent facility would need to increase. The temporary facility is presently charging an internal, cost recovery fee of $6.01 per tonne. The proposed permanent transfer facility costs are slightly higher than the current temporary facility and would result in a cost recovery fee of $6.34 per tonne. This represents an annual cost increase of approximately $69,000 which primarily impacts capital budgets. This 5.5 percent increase is due to the required capital upgrading of the facility and the full cost of land acquisition as opposed to land rental. This increase is a necessary part of the permanent facility in order for it to be a full cost recovery operation. These costs will beabsorbed in both Operating and Capital Budgets.

Risks and Sensitivities

A sensitivity analysis for the Material Transfer Facility is included on page 12 of the business case. It considers several factors such as: a change in the total amount of material transferred, changes to the amount of material delivered by single and tandem axle trucks, and changes to travel time to the landfill. This analysis demonstrated that the total material supply would need to decrease by 30 per cent for the Facility to become less competitive than direct hauling. A review of the single and tandem-axle deliveries individually shows that with one delivery stream remaining constant the other could decrease as much as 40 percent without negating the benefit of the Transfer Facility.

The business case review concludes that the Material Transfer Facility will provide a $195,000 annual saving over direct hauling. The long term savings should continue to be realized subject to the sensitivities noted above. The significant cost component for both hauling options is the actual trucking costs themselves. The Transfer Facility uses less of this resource through the use of larger, more efficient vehicles. The cost of this significant component of both options will vary with changes in fuel costs. However, if fuel costs increase, the cost advantage of the Transfer Facility will improve. The business case reveals a sensitivity to the travel time to the landfill. Longer trip times benefit the Transfer Facility option, so if congestion on the highways increases in the future, the cost advantage of the Transfer Facility could again improve.

PERSONNEL IMPLICATIONS

A permanent Material Transfer Facility will require the creation of two new permanent positions. The permanent facility requires a Systems Analyst 1A position to supervise the operation, and to undertake research to ensure that the best value is achieved in the way excavated material is processed. A Weighmaster I position is required to operate the weigh scale, inspect the type of material coming in, direct where material is to be dumped, and provide administrative support of the facility supervisor, such as generating reports on material quantity and costs. The Systems Analyst 1A position is an exempt position and the Weighmaster I is a CUPE 15 position.

A copy of this report has been forwarded to CUPE 15 and CUPE 1004 for their review.

CONCLUSION

A business case has been completed which supports the permanent Material Transfer Facility, instead of direct hauling, as a more economic means of transporting much of the material excavated from the capital projects undertaken by Engineering Services. An annual saving of $195,000 is projected, which has the potential to improve as fuel costs and/or traffic congestion increase. There are additional unquantified benefits such as:
· reduced traffic congestion and pollution.

· greater potential for reusing and recycling material.
· greater potential for making use of a variety of destination sites for excavated material.
· improved work site efficiency with the variability of highway trucking travel times removed from the work site consideration.
Therefore we propose that the development of the Material Transfer Facility proceed at an estimated up-front capital cost of $2,539,000.

* * * * *

APPENDIX A

BUSINESS CASE

DEVELOPMENT OF A PERMANENT TRANSFER FACILITY
AT 900 E. KENT AVENUE
FOR HAULING AND RECYCLING EXCAVATED MATERIAL

E.C. BATTY P.Eng

ENGINEERING SERVICES

June 6, 2002

BUSINESS CASE FOR DEVELOPMENT OF A PERMANENT TRANSFER FACILITY AT 900 E. KENT AVENUE FOR HAULING AND RECYCLING EXCAVATED MATERIAL

Executive Summary

It is necessary for the City of Vancouver to haul excess excavated material from the work projects of Engineering Services to landfill sites. Two options are available for the transport of this material: direct hauling or hauling through a transfer site. The City of Vancouver has undertaken several trial projects using transfer sites since 1998. A temporary transfer facility has been operating at the Kent Avenue Works Yard at 900 E. Kent Avenue in Vancouver since June 2001. This temporary operation is now efficiently handling sufficient quantities of excavated material to confirm that it can be continued on a permanent basis. A permanent facility would require an investment of $2,539,000 in land purchase and facility upgrading. This report reviews the business case comparison of the two means of handling the excess excavated material. It is recommended that the City proceed with the development of a transfer facility for excavated material, with an expected annual saving of $195,000.

Introduction

Annually, Engineering Services excavates more than 380,000 tonnes of material from its many construction sites throughout Vancouver. These construction sites involve the Streets, Sewers and Waterworks Operating Branches. In the past this excess excavated material has been hauled to the Delta and Richmond landfills and recently trials have been put in place to determine if there is a business case for smaller single axle or tandem axle dump trucks to dump their material at a common transfer site in Vancouver and haul the material by larger vehicles to landfill disposal sites.

The excess excavated material delivered to the transfer site is composed of two basic types; both are referred to as rubble. The material excavated from sewer and waterworks trenches and street excavations is composed of granular to silty soil and is referred to here as earth rubble. It may contain some larger rocks and pavement pieces. The reconstruction of streets and sidewalks, along with the excavation of trenches through street pavements result in broken slabs of asphalt and concrete that are referred to as slab rubble. The earth rubble is used as fill material or cover material at landfill sites. The slab rubble is crushed and used as road base material at the Vancouver Landfill. The slab rubble must be kept separate at the excavation site to avoid the extra cost of separating material at the transfer site. Mixed loads must be treated as Earth Rubble.

Presently a temporary transfer operation for excavated material is in place at the Kent Avenue Works Yard. This operation has been in place since June of this year. This operation has provided the opportunity to confirm the land area required for the operation and the amount of material being processed. Sufficient time has now passed, to confirm that the operation is runningsmoothly and to compare costs to direct hauling of the material.

Material Supply

A material transfer facility must be assured of sufficient material supply to justify the cost of its development. The economy of the facility is also based on the transfer of material from trucks with smaller capacities to trucks with larger capacities to complete the longer portion of the delivery trip. In the case of the material transfer facility proposed for the Kent Yard, the smaller vehicles are tandem axle and single axle trucks that deliver excavated material to the site. The tandem trucks are primarily from main line sewer construction projects where the rate of excavation is high but maneuverability on the site generally limits truck size to tandem axle vehicles. The single axle trucks are used in smaller projects such as the installation of sewer or water connections to private properties, or smaller street reconstruction work. The excavated material is transferred from the transfer site with larger trucks such as tandem trucks with trailers.

As noted above, a transfer operation has been in operation since June. Appendix A provides a detailed breakdown of the more than 8,500 truck loads of excavated material supplied to the site from June to October. Table 1 below provides a summary of that information.

Although the material supply information was obtained from four months of summer and fall construction it is appropriate to project those quantities over a twelve-month period, even though some slow down might be expected during the winter months. The following reasons justify the straight-line extension.

· In the work carried out by the various Operations Branches involving excavation there is little reduction in work over the winter months except a brief reduction around Christmas or if a particularly harsh winter is encountered.
· The Sewers Operations Branch initiated several changes to sewer installation procedures during the four-month period and therefore its rate of construction and removal of excavated material is expected to increase over the balance of the year.
· Streets Operations is intending to direct more material through the Kent Yard facility after reviewing the costing comparison done during the summer and fall period.
· Waterworks would normally send material through the Kent Yard facility when it has projects nearby. This did not occur during the study period and therefore more material is expected over the year.

One exception to the above is the extension of the processing of crushed slab material. This must presently be limited to 40,000 tonnes of material per year due to the limits of new road construction at the Vancouver Landfill. Additional sources of demand will be sought out to make full use of this material.

Table 1: Material Delivered through Kent Yard Transfer Facility - June 18 to October 17

Branch	Four Month Total	Projected Annual Rubble Delivery	Percent of Total Delivered	Percent of Branch Delivery as Slab Rubble	Projected Annual Supply of Slab Rubble (Max. 40,000)	Projected Annual Supply of Earth Rubble
	tonnes	tonnes			tonnes	tonnes
Sewers	64,129	192,400	75.0%	2.8%	5,400	187,000
Streets	15,835	47,500	18.5%	82.1%	39,000	8,500
Waterworks	5,565	16,700	6.5%	11.6%	1,900	14,800
Total		256,600			40,000	210,300

The majority of the rubble material was delivered by tandem trucks (76%), and the remainder by single axle trucks.

The capital improvements in the amount of $788,800 (see Table 2, page 5), for the material transfer facility, will be paid out over 10 years. It is anticipated that the projected annual rate of supply of rubble material will be maintained for that period. The larger capital reconstruction projects deliver material by tandem trucks and this represents 76% of the rubble delivered to the site. These capital reconstruction projects are replacing aging infrastructure at a consistent annual rate as established in their Capital Plans. Therefore, this supply should continue to be fairly consistent. The remainder of the material is supplied by single axle trucks primarily delivering material from servicing projects to private properties. Although this area of supply does vary according to economic activity, it represents a smaller percentage of the total and would need to diminish significantly to be a concern. This is not expected to occur.

It may be possible to avoid disposing of some of the excavated material by reusing it at the excavation site as backfill material. However, only certain types of excavated material can be used as practical backfill material and therefore this reuse is not expected to reduce quantities significantly.

Material Destination

The destination of material will be the same for material using either the transfer site or direct transfer. It does not impact the present business case but it is worth discussing due to potential future impacts. The majority of material transferred through the Kent Yard since June is used at the Vancouver Landfill in Delta. The Vancouver Landfill requires soil and crushed concrete andasphalt for road construction on an ongoing basis. Soil is used for daily cover as well as for construction projects such as regrading the landfill surface and berming. Approximately half of the soil delivered to the Landfill is used for daily cover material and half is used for construction projects. The City expects that for the foreseeable future the Landfill will be able to take all of the soil generated through sewer, road and water construction activities for these purposes. The need for soil is contingent on future construction projects progressing as anticipated. If the material was not supplied through City projects, material from private sources would be required.

Although the current destination for material should continue for the foreseeable future, a transfer facility provides advantages if material destinations become more varied. The present transfer contract for material out of the Kent Yard delivers 17 percent of the earth rubble to sites other than the Vancouver Landfill at a reduced rate. A transfer site allows for the storage of material to allow delivery to alternate sites without any additional impact on the trucks delivering from work sites. If these trucks were delivering directly there would be additional administration and perhaps extra trucking costs associated with ensuring trucks had sites available and delivered to the correct locations.

Business Case Costs for a Material Transfer Facility

A transfer facility for excavated material requires a significant investment in land and facility development. The land purchased must accommodate sufficient storage space for earth rubble as it awaits transfer and also accommodate storage for slab rubble, room for crushing equipment as needed, and storage of the crushed product until it is delivered. A weigh scale station is required to accurately measure quantities of material. Staff is required to manage the facility. Also considered, are the actual costs of crushing and transferring the material from the site. The facility costs are broken up into capital costs, including the purchase of land and construction of facilities, and projected annual operating costs.

Capital Costs

The experience of the temporary transfer facility at the Kent Yard has demonstrated that 2.5 acres is an adequate site area. This amount of land is available for purchase at the 900 E. Kent Avenue site at a cost of $700,000 per acre. At an interest rate of 6.0% and an amortization period of 20 years, the capitalized value of the land would amount to $152,600. The existing temporary facility must be upgraded to improve the operating area surface and the control of silt runoff. This would require filling, regrading of the operating area and surfacing with asphalt. Drainage facilities are required to deliver the runoff to the Kent Yard silt containment facility. A consultant has confirmed that adequate capacity is available. Water service is required to serve the weigh scale building and assist dust control. A weigh scale and associated computerized quantity recording system is required to record the quantity of material arriving at and leaving the site.

With the addition of a contingency (15%), engineering, design and permit fees (15%) the total capitalized cost of all facilities is $107,200 based on an interest rate of 6.0% and an amortization period of 10 years. A ten-year amortization of the facilities will allow a review of the operation after ten years to confirm material supply and allow for site refurbishment which may be necessary at that time. Table 2 below details the capital costs of the Material Transfer Facility.

Table 2: Capital Costs of a Material Transfer Facility at 900 E. Kent Avenue

Land

Land cost (per acre)	$700,000
Transfer Operation Area (acres)	2.5
Total land cost	$1,750,000
Recovery term (years)	20
Land capital annuity @ 6.0%	$152,600

Facilities

Site improvements	$328,900
Offsite improvements at 900 E Kent	$80,000
Site utility servicing	$107,500
Weigh scale and recording system	$80,000
Contingency 15%	$89,500
Site Design and Approval Costs (15%)	$102,900
Total (including PST and GST)	$788,800
Recovery term (years)	10
Facilities capital annuity @ 6.0%	$107,200

Annual Operating Costs

The annual operating costs for the Material Transfer Facility are outlined in Table 3. They include the repayment of capital costs, staffing, maintenance of the operating area and the weigh station, administration, and foregone property taxes. The Operating costs associated with the transfer of material from the site and the cost recoveries involved are also shown.

Table 3 - Projected Annual Operating Costs

Capital annuities at 6.0% (Table 2)
Land	$152,600
Facility Construction	$107,200
Operating costs
Wages, salaries and benefits ( Table 4)	$114,200
Site maintenance	$50,000
Weigh Station operation	$17,100
Administrative expenses	$14,700
Foregone property taxes	$42,500
Cost of Slab Rubble crushing and transfer to Landfill	$300,400
Cost Recovery from sale of crushed Slab Rubble to Landfill at market rates (Table 5)	($386,800)
Cost of Earth Rubble transfer to Landfill sites	$921,100
Total Operation Cost	$1,333,000
Cost recovery from dumping fees at Transfer Facility	($1,333,000)

The staff requirements for the site are a Systems Analyst to manage the overall operation and a Weighmaster to operate the weigh station. The staffing wages and benefits are based on 2001 rates.

A Systems Analyst I position is required to not only manage the facility but to undertake research and recommend improvements to the manner in which material is processed. Although the business case justifies the transfer facility there is still additional opportunity to improve the way the excess excavated material generated by City forces is managed.

A Weighmaster I position is appropriate for the operation of the weigh station. In addition to operating the weigh scale this position will also be responsible for inspecting the type of material coming in, directing where material is to be dumped, and providing administrative support for the facility manager. This position would also prepare reports on material quantities and costs. The salary for this position includes additional compensation for working through breaks to ensure the scale remains operational through the day without delays to truck deliveries.

The 900 E. Kent site has sufficient staff to warrant having a First Aid Attendant II on site. The Weighmaster has been assigned this additional duty and is compensated accordingly.

Table 4: Labour Costs

Job Description	Class Title	Annual Cost with Fringe Benefits
Facility Supervisor	System Analyst I	$68,000
Weigh Station Operator and First Aid Attendant	Weighmaster I	$46,200
Total		$114,200

The excess excavated material handled at the Kent Yard Transfer Facility includes earth rubble which is transported to landfills as fill material or cover material, and slab rubble which is crushed and used for landfill roadways. The costs for the transfer of this material are shown in Table 5. The unit costs for the transfer of the material are based on 2001 contract bids to undertake the work. The rates used in the analysis take advantage of rates bid with the expectation of relaxed bonding requirements. It is anticipated that future contracts can take advantage of the lower bonding requirements, based on the experience of the present transfer operation. The rate to deliver earth rubble is a composite of the rate to deliver material to the Vancouver Landfill and other sites closer to the Kent Yard. The Vancouver Landfill purchases the recycled crushed slab rubble to use for road construction. The price charged is based on market rates.

Table 5: Costs and Recoveries for Earth and Slab Rubble

Description	Rate including net GST	Quantity from Table 1 (tonnes)	Total Cost
Earth Rubble delivered to Landfill and other sites	$4.38	210,300	$921,100
Slab Rubble crushed and delivered to Landfill	$7.51	40,000	$300,400
Cost recovery from sale of crushed material to Landfill	($9.67)	40,000	($386,800)

The operating costs for the site including the transfer of rubble material as shown in Table 3 are $1,333,000. These costs are recovered through charges to the Operations Branches dumpingrubble material at the site. The source separation of slab rubble at the job site which maximizes the amount of slab rubble recovered is encouraged by charging only a nominal fee for the dumping of these loads. The operating costs are therefore primarily recovered by a fee charged for the drop off of earth rubble at the material transfer site.

Table 6: Transfer Facility Dump Fees Required

Total annual cost of Operation	$1,333,000
Projected annual delivery of earth rubble (tonnes)	210,300
Dumping Fee required (per tonne)	$6.34

Foregone property taxes were estimated at $17,000 per acre based on a study by KPMG for a precast concrete facility which is also to be located at the Kent Yard site. The area for the material transfer operation is 2.5 acres and would cost the City an additional $42,500 per year.
With the addition of capital annuities calculated in the previous section of $152,600 for land and $107,200 for facilities, the total annual cost attributed to the Transfer Facility is $1,333,000. This cost is recovered through dump fees charged to Sewers, Waterworks and Streets Operating Branches that are the primary users of the Facility.

Comparison of Hauling Excavated Material Direct or through a Transfer Site

The comparison of direct hauling, and the use of a material transfer site, requires an assessment of the cost of hauling directly to the final destination, compared to the combined cost of operating a transfer site and getting the material to it. The delivery cost in both cases is related to the distance from the job site, the amount of material carried per load and the cost of the truck and driver. For the purpose of the comparison, most of the values are taken from typical Sewers Operations projects as they provide 75% of the transfer facility material.

The final destination site is the Vancouver Landfill in Delta. The typical job location is based on times logged from sewer main line construction projects this year. The projects are located north of 33^rd Avenue which is appropriate because the majority of the sewer main line reconstruction is to occur in this area over the next five years. Locations at 3^rd Avenue and Discovery Street on the west side of Vancouver and Nootka Street at Turner Street on the east were used.

The amount of material carried will vary with truck sizes, however for the purpose of this comparison, typical tandem axle and single axle trucks are used. A study carried out by the Sewers Operations Branch recorded average tandem truck loads over a three-week period to the Kent Yard transfer site and the Vancouver Landfill. The results were 12.1 tonnes per load to the Kent Yard and 11.13 tonnes to the Vancouver Landfill. The loads to the Landfill are typically lower due to lighter loading to ensure load shifts won't result in overloaded axles and fines athighway weigh scales. No special study was carried out for single axle trucks however, the average load arriving at the Kent Yard can be calculated from the four-month delivery study. This gives an average of 6 tonnes which will also be used as the average to the Landfill.

The hourly rate for the tandem truck and operator is based on the City hired rate including GST which is $54.08. The single axle charge based on City rates as none are hired is $46.22. Although some excavated material is hauled by larger vehicles such as tandems with trailers, this is not part of the comparison as we are only dealing with material that would normally be taken from the construction sites with the smaller vehicles.

Total Hauling Cost Using the Material Transfer Facility

The fee for handling material at the transfer station as shown in Table 6 is $6.34 per tonne. The average return time from the two work sites noted above to the Kent Yard was 60 minutes. However, recognizing that these sites are extreme west side and east side locations and more centrally located sites would be closer to the Kent Yard, an average time of 50 minutes is used.

The truck rates and average loads were noted above, and are shown in Table 7.

An additional factor which benefits the business case for a transfer site at the Kent Yard is that the Kent Yard is also the supply depot for mineral aggregate which is used as backfill material for excavations. Therefore, there is the opportunity for trucks dumping excavated material at the Kent Yard site, to load with aggregate as they return to the construction site. As they would have had to travel to the Kent Yard to pick up aggregate in any case, their delivery of rubble material is effectively free except for the extra time taken to unload it, which is estimated to be 15 minutes. Trucks are not always able to backhaul. As excavations are opened, excavated material is generated but it is too early for backfilling. As the work proceeds, more excavation occurs and then the previous area is available for backfilling and backhauling can occur. At the end of the job, excavation stops and only hauling of backfill material occurs. Longer projects which use the tandem trucks have longer portions of the work with the opportunity for backhauling. The percentage of backhauling by tandems is estimated to be 42%. This reduces the overall cost of hauling excavated material to the transfer site by 29%. The single axle trucks also have backhaul benefits however the projects are smaller and the opportunity is reduced. It is estimated that there is only a 30% opportunity for backhauling with a saving to the rubble hauling cost of 21%.

A summary of the information is provided in Table 7 below. It shows the cost per metric tonne for tandem and single trucks delivering excavated material to the Kent Yard. The cost component of the transfer facility is then added to provide the total cost per tonne for hauling material using the transfer facility.

Table 7: Hauling costs through Kent Yard Transfer Facility

Total Hauling Cost by Direct Hauling

The average return times logged for hauling directly to the Vancouver Landfill from a sewer work site at 9^th Avenue and Trimble Street was 105 minutes. Previously, the extreme east side and west side site return times were reduced by 10 minutes to give a typical site time to the Kent Yard. However, deliveries to landfill sites reach their minimum delivery times at Oak Street or Knight Street and not the centre of the City and therefore only a 5 minute reduction is applied. This gives a typical return trip time of 100 minutes for direct hauling.

The truck rates and average loads were noted above, and are shown in Table 8.

Back-hauling is not as efficient for direct hauling because the aggregate is not located at the dump site and therefore additional time is taken to get to the Kent Yard on the return trip, the extra time was logged for these pickups and was found to be approximately 60 minutes. The return time to pick up material from the Kent Yard is also 60 minutes, so there is no back-haul advantage with the direct haul scenario.

There is however, an additional contingency to be added to the direct haul cost because the longer trips make deliver times less reliable. In addition, this extra time commitment to deliveries reduces truck availability at the site for other material supply needs which results in alternate trucks being required. This is especially inefficient in the smaller jobs, where maintaining hauling destinations inside Vancouver results in the most efficient use of trucking resources for the various supply needs. The additional contingency for tandem trucks is estimated to be 10% and the contingency for single axle trucks is 20%.

The summary of the information provided above is shown in Table 8 below.

Table 8: Haul Costs for Direct Haul to Delta Landfill

The information developed for the hauling options allows for the comparison of their hauling rates. The rates of the two options can then be extended by the projected amounts of annual tandem truck hauling and single axle truck hauling to give the annual cost saving using the Material Transfer Facility. The annual amounts used are based on the amount of Earth Rubble to be transferred which represents 82% of the total amount processed. The slab rubble amounts are not included because that material would not be hauled directly to the Landfill. The cost comparison is shown in Table 9.

Table 9: Comparison of Direct hauling to Transfer Facility Hauling

Truck Type	Rate for Direct Hauling to Landfill (per tonne)	Rate for Hauling Through Transfer Facility (per tonne)	Rate Difference (per tonne)	Projected Quantity Transferred (Appendix A)	Annual Cost Saving Using Transfer Facility
Tandem Axle	$8.91	$8.97	($0.06)	159,200	($9,552)
Single Axle	$15.41	$11.41	$4.00	51,100	$204,400
Total					$194,848

The conclusion of the comparison is that there would be an annual saving of approximately $195,000 by using a Material Transfer Facility. The saving is generated primarily through single axle truck hauling. The cost saving for tandem axle hauling is slightly negative but by less than 1% of the total tandem axle trucking cost. This effectively puts tandem hauling at a break even point, at this point in time. The tandem hauling material must be included to get the economy of scale to make the expenditure on a permanent facility feasible. By establishing the Material Transfer Facility there are potential future benefits that could be realized as described in a following sections below.Sensitivity Analysis

The results of a sensitivity analysis for the business case is shown in Appendix B. It considers several factors such as;
· changes in the total amount of material transferred,
· changes to the amount of material delivered by either single axle or tandem trucks, and
· changes to the direct haul time to the landfill.

The analysis demonstrates that the total material supply would need to decrease by 30 per cent for the Facility to become less competitive than direct hauling. The single axle or tandem axle material delivery could decrease by more than 40 percent without negating the benefit of the Transfer Facility. Therefore significant reductions in material supply would be required to make the Transfer Facility uneconomic. The actual projection for the long term supply of excavated material is that it will remain relatively unchanged, as discussed in the earlier section on Material Supply.

The analysis indicated a greater sensitivity to the time to haul directly to the landfill. However longer trip times benefit the Transfer Facility option and as congestion on the highways is more likely to increase in the future, the Transfer Facility option could not be negatively affected.

The business case concludes that the Material Transfer Facility will provide a $195,000 annual saving over direct hauling. The long term savings should continue to be realized subject to the sensitivities noted above. Both hauling options have a significant component of their overall cost incurred from the actually trucking costs to haul material. The Transfer Facility uses less of this resource through the use of larger more efficient vehicles. The cost of this significant component of both options may vary over time especially with changes in fuel costs. However as fuel costs are more likely to increase, the present advantage of the Transfer Facility would, if anything, be improved. It is therefore expected that the current savings will be maintained with the potential for increased benefits if fuel prices and/or roadway congestion increases.

Other Benefits of a Material Transfer Facility

Although the business case presented, shows the benefit of the transfer facility over direct hauling there are other benefits which have not been quantified as follows:

· The facility transfers the material to larger trucks for the majority of the trip to the final destination. This more efficient means of transporting material results in fewer trucks on the road reducing traffic congestion and pollution.
· The overall reduction in fuel consumption will result in greater savings for single and tandem axle trucks as fuel prices increase.
· The management of the material as it flows through the transfer site allows greater potential for reuse and recycling.
· A transfer site easily accommodates the use of several destination sites for the material with the opportunity for reduced travel times.
· It is also felt that the short trips from the work site to the transfer site result in more efficient operation at the work site. The return trip times in the analysis do not include the time trucks wait at the job site. This wait time can add considerably to overall trucking costs. Direct hauling, ties the construction site operation to trucks which must follow limited highway routes where traffic tie ups can cause significant delays. The use of a transfer facility keeps the construction site delivery trucks within the City where there are numerous routes available to avoid delays. There is some truck contingency added to the direct hauling costs in the analysis however the improved construction site control with shorter trips and fewer trucks with the transfer facility may provide savings beyond that.
· A transfer site allows for deliveries from the site over the highway routes to occur when highways routes are less congested and risk of delays is reduced.
· Presently, private recycling sites for concrete and asphalt slab material are close to Vancouver and they offer reduced dumping fees similar to the temporary transfer facility at the Kent Yard. Therefore this is not a factor in the business case. However, if in the future these sites in close proximity are not available or if their dump charges increase, an additional benefit of a transfer facility at 900 E. Kent will be realized.

Summary

The business case demonstrates the advantage of handling excess excavated material through a Material Transfer Facility as compared to direct hauling. The saving to the City is estimated to be $195,000 per year. In addition there are benefits not quantified such as reduced air pollution and traffic congestion and the potential for recycling of excavated material. Finally it is felt that the overall efficiency of the construction work site is improved with fewer trucks working with more consistent delivery times.

This sensitivity analysis shows that the total amount of earth rubble processed can decrease by 30% before the Material Transfer Facility is less competitive than direct hauling.

This analysis shows that the tonnage of material hauled by single axle trucks which presents material from the smaller capital projects could decrease by over 40 % yet the Transfer Facility would still provide a cost savings over direct hauling.

This sensitivity analysis shows that the tonnage of material hauled by tandem trucks which presents material from the larger capital projects could also decrease by over 40 % yet the Transfer Facility would still provide a cost savings over direct hauling.

This sensitivity analysis shows that the cost benefit of the Material Transfer Facility is very sensitive to the time it takes to direct haul to the landfill. If the average time to haul to the landfill is reduced by over 8% the Transfer facility will show less immediate savings than direct hauling. However it is more likely that trip time to the land fill will increase as highways become more congested and therefore every 5 percent increase in trip times provides an approximately $110,000 savings using the Transfer Facility.

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