Expenditure. Vehicles. Call centre cost. Marketing. Cost of reuse. Disposal

Transcription

1 Costs Introduction The cost of running a bulky waste collection service is the difference between income and expenditure. However, any set-up and up-front costs, prior to starting the service will also have to be covered. The principle budget headings include: Income Expenditure Collection charge to customers Recycling or reuse credits or disposal savings Net recycling income - Vehicles Staff Call centre cost Marketing Cost of reuse = Cost of service Sales Disposal The table below provides a summary of the costs involved. The headings used are designed as a guide only and will vary according to the service and service provider. Table 1 Cost summary for bulky waste collection service, as part of a reuse and recycling operation Heading 1 Collection Charges Allocation basis Direct actual Number A Income Number of collections B Rate per collection Total A x B 2 Recycling/ reuse credits or disposal savings Direct actual based on additional tonnages Additional tonnes diverted Rate per tonne 3 Net recycling income Direct actual based on additional material Additional tonnes recycled Net rate per tonne (some materials may incur a gate fee) 1

2 4 Sales 5 Total Income (I) 6 Vehicles and equipment required for service 7 Collection staff required for service Direct actual based on additional items Additional items reused Expenditure Direct actual Number of vehicles, numbers of equipment by type Direct actual Number of collection staff Sales income Fixed and variable vehicle costs (capital or lease, standing costs, fuel and maintenance) plus all costs of equipment Annual wages plus on-costs, including absence cover Sum 1 to 4 Income (I) 8 Management/ Supervision 9 Call centre staffing and resources (if running call centre function) 10 Marketing and comms consider up front and ongoing 11 Cost of reuse: includes proportion of premises, overheads, support staff, other costs 13 Disposal Contribution, based on additional work % of total Direct actual Number of additional call centre staff and resources required Direct actual All marketing costs for new service Contribution, based on additional work % of total Direct actual Tonnes disposed of Annual wages plus annual on-costs, including absence cover Rate per tonne 2

3 15 Total expenditure (E) 16 Cost of service Sum 6 to 14 Expenditure (E) I E = Direct Cost The overall cost of the service will depend on: the scale, i.e. number of collections made and tonnage diverted; the methodology e.g. collections that maximise reuse (such as where items are collected from within the property) take longer and therefore the number of collections per day are less than bulky waste service for disposal; and whether the call centre function is included or not. The chosen method will determine the reuse and recycling performance of the service, thus affecting the income from sales and disposal savings. It will also have an impact on expenditure, reflected in the resources needed as different methods require different resource profiles. Basis for costs This section develops the indicative costs for a number of different scenarios, depicted in Section 4, and illustrates the difference in cost for each of the systems. The same scenario is used throughout using a local authority with: 61,000 households; urban/rural mix; 375 tonnes of bulky waste collected annually; an average total weight of 70kg per collection; and 5,335 collections per year or an average of 107 per week, based on 50 working weeks. The numbers of vehicles and collection staff needed to meet the workload depends on what outcomes will be delivered and which collection method is selected. If items are collected for reuse from within premises, handled carefully and loaded and unloaded separately on tail-lift vehicles, then fewer collections can be achieved per crew per day than if collected from outside premises and loaded onto an open-backed cage or a refuse collection vehicle (RCV). The following values are based on research with operators and assume driver plus one, with the exception of the RCV where driver plus two is assumed, so as to optimise the capital investment in the vehicle. The box vehicles are assumed to be 3.5 tonne GVW, the caged flat bed vehicles 7.5 tonnes GVW, and the RCV 18 tonnes GVW. 3

4 Table 2 Average number of collections per day for a rural/urban area Service Vehicle Number of collections made per day Reuse Box vehicle 1 12 Reuse/recycle Box vehicle 2 14 Recycle Caged 1 25 Recycle/ dispose Caged 2 30 Dispose RCV 45 Note: the number of collection possible per day will be lower for more rural areas, and may be higher for more urban areas, traffic permitting. The difference in the number of collections made per day reflects the complexity of the collection, carriage and handling of items for different end destinations reuse, recycling or disposal. In order to compare different systems, it is important to apply similar assumptions for each scenario. The following table provides the key cost assumptions to be applied over a range of different collection systems. These costs will vary locally and are provided as a guide only. Table 3 Key cost assumptions Vehicle Capital Capital costs at 6% interest over 5 yrs Annual costs Fixed costs (tax, insurance) Variable costs: (fuel, MOT, maintenance) 3.5t Box vehicle 27,000 7,020 1,500 5, t Caged flat bed 35,000 9,100 3,006 6,269 RCV 120,000 31,200 4,915 11,871 Item Rate Driver Collection crew Management and supervision Disposal costs (landfill tax and gate fee) Cost of reuse (proportional share of sorting, repair and refurbishment, and cost of sales operations to process additional materials) Recycling income Reuse sales 25,000 p.a. including on costs (N.I., pension, absence cover) 20,000 p.a. including on costs 15% of total staff costs 85 per tonne disposed of 950 per tonne reused Based on 200 per tonne for WEEE/metal recycling offset by 40 per tonne wood recycling (and a 80% WEEE; 20% wood split on the tonnage recycled) = 168/tonne Based on additional sales generated from this stream at an average of 700 per tonne. 4

5 The following example is based on a 62% diversion rate; this includes a 40% reuse rate (achieved by high performing schemes currently) and 22% recycling. To achieve this rate the service would need to be reuse/recycling focused, and therefore would need to operate with box vans which ensure that the items are kept dry and in good condition. To manage the number of pick-ups at a rate of 14 per day, based on the assumptions in Table 2, it would require 2 vehicles/crews to undertake the service on a 4 day a week basis (14 pick-ups/day x 2 vehicles x 4 days per week x 50 weeks per year = scope for up to 5,600 total collections). In this case the resource requirement does not fit exactly with full time crews and vehicles. This would result in one day with two unallocated crews and vehicles per week, so thought would need to be given to how best to deploy resources. One option would be to allocating the vehicles and crew to another job on the 5th day, such as bin deliveries, another would be to employ these staff on a 4 day a week basis. If this is not possible, the full costs of the third vehicle will need to be covered within the bulky waste collection service budget. Using the same set of assumptions, and applying them across the range of different service scenarios in the section on Collection Options (accessed through the main Bulky Waste Guidance page), it is possible to see how savings are made through reuse and recycling. However, expenditure increases with the additional resources needed to achieve that diversion. In these scenarios, a direct charge to the customer has been applied at an average of 25 per collection, and an assumption of an average rate of 2 items per collection, leads to a collection weight of 70kg. As the tonnage is relatively low and the source of the materials unpredictable, there are unlikely to be any savings achieved in the residual waste service collection costs. Table 4 Comparing different scenarios 375 tonnes collected p.a. 5,335 collections p.a. Scenario 1 All bulky waste Scenario 2 Reuse only Scenario 3 One or more streams Scenario 4 Set aside for reuse Scenario 5 Referrals Diversion rate 65% 40% 25% 35% 30% Reuse % 40% 20% 10% 15% 10% Recycling % 25% 20% 15% 20% 20% Disposal % 35% 60% 75% 65% 70% Income/savings Charges per pick-up , , , , ,375 Disposal savings 85 20,719 12,750 7,969 11,156 9,563 Sales (Recycling) 168 per tonne net 15,750 12,600 9,450 12,600 12,600 Sales (Reuse) 700 per tonne 105,000 52,500 26,250 39,375 26,250 Total Income 274, , , , ,788 5

6 Resources Vehicles Box van Cage RCV 0.50 Crew Expenditure Vehicles costs 25,236 20,308 27,318 19,437 26,797 Collection staff costs 81,000 54,000 76,500 54,000 41,500 Management/supervision 12,150 8,100 11,475 8,100 6,225 Call centre total 20,006 20,006 20,006 20,006 20,006 Marketing 2,000 2,000 2,000 2,000 2,000 Cost of reuse 142,500 71,250 35,625 53,438 35,625 Disposal 11,156 35,730 23,906 20,719 22,313 Total expenditure 294, , , , ,466 Cost/value of service -19, ,787 18,807 27,322 Cost/collection Cost /Hh Cost/tonne Net cost/collection Net cost/hh Net cost/tonne Note: Percentage figures have been rounded. There are additional benefits that could be factored if financial data is available. They include: carbon savings; reduced external environmental impacts to landfill; value of goods provided to families on low incomes; benefits to individuals employed, volunteering or receiving training; and potential improvement to public realm/ street scene through reduced fly-tipping. London Reuse business plan suggests, as a rough indication, the benefits accrued per 100 tonnes reused to be: 2.7 FTE jobs created 19 volunteer places 14 training and back-to-work placements 1,336 households helped 6

7 We can compare the impact achieved by transposing the above outcomes to the following scenarios, based on 375 tonnes gross weight collected and various degrees of reuse activity. Table 5 depicts the key outcomes achieved within the different collection scenarios. Table 5 Outcomes A B C D E All bulky waste Reuse only One or more streams Set aside for reuse Referrals Tonnes collected Tonnes reused Tonnes recycled Total diversion Disposal saving 20,719 12,750 7,969 11,156 9,563 Cost/collection Cost /Hh Cost/tonne Jobs created Volunteering opportunities Training and back-towork placements Households helped 2,003 1, Costs of providing bulky waste service at HWRCs The direct cost of providing bulky waste reuse at HWRCs is the difference between income and expenditure. The principal budget headings would include: Income Recycling or reuse credits (disposal savings) Net recycling income Sales Expenditure Capital costs (premises, equipment) - = Direct Revenue (staff and running costs) Alterations to site Marketing/Comms Cost of reuse (if off site sales) Cost 7

8 The table below provides a breakdown and what should be included. Table 6 Cost summary for bulky waste service at HWRCs Number A B Total A x B Income 1 Disposal savings Tonnes diverted Rate 2 Sales (Recycling) Sales (Reuse) 3 Total Income (I) Sum 1 and 2 Income (I) Expenditure 4 Capital costs Premises, equipment (tills, racking, tools) 5 Revenue costs Shop and workshop staff, management and volunteer costs, and running costs Annual wage bill and volunteer expenses plus on costs, including absence cover 6 Staff costs Number of staff Annual wages plus employment costs plus cover 7 Alterations to site Electricity to reuse facility, re-direction of traffic flow etc. 9 Marketing/Comms Signage on site, leaflets, articles in local press 10 Cost of reuse Cost of collections and off-site processing and sales 11 Total expenditure Sum 5 to 10 Expenditure (E) (E) 12 Cost of service I E = Direct Cost The overall cost of providing reuse at HWRCs will be determined by the: resources applied i.e. facilities provided and additional staff deployed; tonnes diverted as a result of reuse; and income from sales from on site shop. 8

9 The amount of material diverted to reuse will depend on the throughput of suitable items and the facility to manage them. Facilities may range from a set-aside area allocated to appointed reuse groups to select useful items for sale off site, right up to shops and workshops on site. The selected method of managing the reusable bulky waste on site will influence the diversion rates and hence the disposal savings and sales value. Basis for costs This section develops different scenarios based on a site with: a total throughput of 9,000 tonnes; and 4% of the throughput being bulky household item (not including large WEEE), equivalent to 360 tonnes. (Bulky items including WEEE can make up between 10-20% throughput) This scenario resembles an average sized UK HWRC. Recycling has been estimated at 20% of the household items stream, however as recycling is potentially taking place anyway, and the addition of a reuse facility will not necessarily increase the amount recycled, then this has been excluded for the purposes of the worked examples. Large WEEE equates to around 2-3% of the total site throughput, however this has not been included in the scenarios below because: large WEEE for reuse should be taken off site and full-function tested (not just PAT tested, for example running a washing machine wash cycle) and is likely to be sold off site. This stream will incur costs similar to a reuse facility in the collections scenarios; all large WEEE is already presumed to be recycled, therefore any items reused instead, do not make a difference to tonnages diverted; and WEEE presented at Designated Collection Facilities (all HWRCs are registered at DCFs) is under the control of Producer Compliance Schemes and therefore any agreements and costs of reuse are incurred by these operators. Each of the different scenarios requires different facilities and numbers of staff. As any facility needs to be open when the site is open this will require 7 day a week working. Staff will generally be on 5 day a week contracts but with varying days off to cover the facility all the time. Staff salaries have been based therefore on this basis. Table 7 Key cost assumptions Facilities Shop and workshop (3,500 sq ft) wood workshop and basic PAT testing only Shop (2,000 sq ft) includes fitting out Capital 70,000 50,000 Annual costs Capital costs at 6% interest over 10yrs 9,600 6,400 9

10 40ft shipping container for 3,500 storage 560 Alterations to site 20,000 3,200 Item Rate Shop / workshop manager 25,000 p.a. including on costs (N.I., pension, absence cover) 7 days a week equivalent Shop and workshop staff 20,000 p.a. including on costs 7 days a week equivalent Volunteers 5 per day each, average of 2 days per week each Marketing / Communications Signage on site and leaflets 3,000 Disposal costs Reuse sales Cost of reuse (collection costs and off site sales) 80 per tonne 1,500 per tonne 1,050 per tonne As the assumptions are put together and the costs applied, an indicative cost can be calculated for introducing different level of diversion and methods of implementing reuse at an HWRC. The following example is based on providing an on-site wood workshop and shop, preparing and selling on items delivered to the HWRC. Table 11 below presents a number of scenarios where at a maximum 35% of the bulky waste stream is separated for reuse, an additional 20% recycled, and the rest is sent for disposal. Using this set of assumptions and applying them it is possible to compare the cost of each scenario against its relevant expenditure. Table 11: Comparison of options Total HWRC tonnage 9,000 p.a. Total Bulky Household (excl. WEEE) 4% of total Shop and workshop Shop Storage onsite - off site sales Tonnes Tonnes Tonnes 1,400 1,400 1,400 Target Target Reuse Recycle 126 (35%) 126 (25%) 50 (14%) 72 (20%) 72 (20%) 72 (20%) Remainder Staff requirements Dispose 162 (45%) 162 (55%) 238 (66%) Manager FTE Operatives FTE 2 2 (included in cost of sales) Workshop FTE

11 Volunteers/trainees FTE 10 5 (included in cost of sales) Income 1. Disposal savings (from reuse) At 85/te 10,710 7,650 4, Sales At 1,500/te 189, ,000 75, Total income Expenditure 199, ,650 79, Capital costs 3,500 sq ft shop and workshop 9, ,000 sq ft shop - 6, ft container Revenue Staffing 140,400 85,200 10,208 Running costs 10,000 8, Alterations to site 3,200 3, Marketing / communications 3,000 3,000 3, Cost of reuse (collections and - - off site sales) 9. Total expenditure 167,800 99,400 66, Net Revenue or (Net Cost) of service 31,910 43,250 13,196 11

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