2016-02-02 P&O Committee - Item 7 - Attachment 1 - Waste Management PBA Draft Report

4.2         Overall Assessment of Business Models
The following tables provide an overall assessment of the alternative business models versus the base case (i.e. the FCP business model) using a
qualitative framework adapted from the Australian/New Zealand Standard for risk management (AS/NZS 31000:2009), with more detail on the
framework provided in Appendix B.

Table 4.1: Impact Assessment of FCP Business Model

Impact Area          Impact Criteria   Impact     Benefits / Cost Description                                                        Qualitative Assessment
                                       Type
                                                                                                                        Likelihood       Consequence          Impact
Business      Unit   Pricing           Benefits      The business must continue to apply full cost price-setting    n.a.               n.a.             Nil Benefit
Financial                                             practices and user pays principles in the pricing of goods
Position             NET COST (very                   and services to ensure ongoing financial sustainability.
                     low)              Costs         Some potential for political interference in price-setting     Very Low           Low              Very Low Cost
                                                      practices, although this also exists under the CBU model.
                     Non Commercial    Benefits      Non-commercial activities undertaken are still required to     n.a.               n.a.             Nil Benefit
                     Activities        Costs          be identified and funded via CSO payments funded by the        n.a.               n.a.             Nil Cost
                                                      general rate to the business, which should ensure
                     NIL IMPACT                       appropriate cost recovery for all activities undertaken,
                                                      enhanced transparency in service provision and the
                                                      removal of any potential hidden cross subsidies between
                                                      customer classes.
                     Administration    Benefits      Requires the ongoing use of a pricing model for the            n.a.               n.a.             Nil Benefit
                                       Costs          business, to ensure legislative requirements regarding full    Very High          Low              Medium Cost
                     NET COST                         cost recovery are met.
                     (medium)
                     Operational       Benefits      The identification of true direct and indirect operating and   Moderate           Low              Low Benefit
                     Efficiency                       capital costs incurred by the business may improve
                                                      decision making.
                     NET COST          Costs         There would be a reduced commercial focus for the              Moderate           Moderate         Medium Cost
                     (low)                            business, with reporting processes and performance
                                                      monitoring limited to minimum statutory requirements and
                                                      current Council reporting arrangements (which may
                                                      possibly reduce any incentive for the business to operate
                                                      efficiently and maximise profitability).
                     Business          Benefits      The business would continue to remain separated in             Very High          Very Low         Medium Benefit
                     Definition                       Council’s organisational structure under the Community
                                                      Services Department, with the Manager Waste and
                     NET BENEFIT                      Environmental Health continuing to oversee the day to day
                     (medium)                         operations of the business.
                                       Benefits      The identification of all costs associated with the business   Moderate           Low              Low Benefit

Waste Management Public Benefit Assessment                                                                                                                             Page 15