2021-06-17 Ordinary Meeting Agenda

ORDINARY MEETING AGENDA                                                                  17 JUNE 2021


Finance
A.    Capital costs

There is $700,000, as per the table below, currently allocated evenly in the current 2020/21 and draft
2021/22 capital program to fund the Mobile Library replacement, which includes the new vehicle, the
library kiosks plus allowing for ancillary project costs and project contingency.

 Component                                          Budget
 Vehicle                                           $450,000
 Kiosks and Supporting Infrastructure              $155,000
 Project Management                                 $30,000
 Contingency                                        $65,000
 Total                                             $700,000

The tender submission identifies following costs for both vehicle options, and compares both options
to the vehicle budget.

 Vehicle ($ excl GST)                    Budget      Tendered Cost   Variance ($)   Variance (%)
 Diesel Option                                            $448,500       ($1,500)         -
                                        $450,000
 Electric Option                                          $599,300       149,300        33%

There is $150,800 difference between the two vehicle options, with the diesel option tendered at
$448,500 (in line with budget) and the electric option $599,300 ($149,300 or 33% above budget).

Final costs for the library kiosks are unable to be confirmed until the procurement process has been
completed however updated market research has indicated that, at this stage, these are still within
the budget estimates.

The diesel vehicle option should allow the total Mobile Library replacement project to be achieved
within the current $700,000 allocated budget. However the electric option will require up to an
additional $150,000 (pending kiosk outcomes and utilisation of contingency) currently not included
in Council’s draft budget and financial plan.

B.    Whole of life cost analysis

To facilitate a detailed financial evaluation of the tender options, a whole of life costing analysis has
been prepared. This approach collates all capital and operating costs of the two vehicle options over
a projected 8-year operating life to determine the overall least cost option to procure and operate.

Operating costs included in the assessment relate to vehicle operation and maintenance, and are
forecast based on levels of utilisation and established cost inputs from Council Fleet operations.
They include registration, insurance, maintenance, servicing, tyres, fuel or electricity, corporate
overheads, depreciation and ultimately trade-in at end of life. It excludes the operating cost of the
Mobile Library service itself, such as resources, staff and cleaning, as this is comparable for both
options and is not expected to change from existing service levels.

The table below summarises the net present value (NPV) of the 2 vehicle options. NPV is an
appropriate tool to compare total whole of life costs across the 8 year vehicle life to understand total
costs to ratepayers.

                                                    General Rate
 Option                       NPV
                                                     Equivalent
 Diesel Option                $(527,000)               1.1%
 Electric Option              $(620,000)                1.3%


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