A. Cost Benefit Analysis of Water Meter Radio Needs I OW
CITY OF MEMORANDUM
CHANHASSEN TO: Mayor and City Council
7700 Market Boulevard
PO Box 147 FROM: Greg Sticha, Finance Director
Chanhassen, MN 55317
DATE: May 14, 2012 67 �,
Administration
Phone: 952.2271100 SUBJ: Cost Benefit Analysis of Water Meter Radio Needs
Fax: 952.2271110
BACKGROUND
Building Inspections
Phone: 952.2271180 At meetings in February & March, staff presented the need for replacing the radio
Fax: 952.2271190 devices on all water meters in the city. Attached is the staff report from the
Engineering March 26, 2012 work session that details the history and need for the radios.
Phone: 952.2271160 Below is the true estimated cost for each of the four options to replace the radios
Fax: 952.2271170 and the benefits (pros and cons) of each option.
Finance COST BENEFIT
Phone: 952.2271140
Fax: 952.2271110 There are two options for addressing our radio read needs for water utility billing.
Park & Recreation The first is to maintain the current system by replacing the batteries in the existing
Phone: 952.2271120 radios. The second is to move to a fixed based AMR (Automated Meter Reading)
Fax: 952.2271110 system. Within each option there are two different approaches to accomplishing
each; performing a majority of the work in -house or outsourcing the work to an
Recreation Center outside vendor.
2310 Coulter Boulevard
Phone: 952.2271400 In the information below, as well as on the PowerPoint that will be presented this
Fax: 952.2271404
evening, staff will break down the cost of each option and alternative; as well as
Planning & the benefits and negatives of the different approaches. For comparative purposes,
Natural Resources the total cost for the first three years will be included for each option. In addition,
Phone: 952.2271130 at the end of this document and the PowerPoint, staff will provide a comparison
Fax: 952.2271110 of total costs in future years and the estimated time it takes to spend equal
Public Works amounts on each option.
7901 Park Place
Phone: 952.2271300 Option 1, Alternative A:
Fax: 952.2271310 Maintain current system; replace batteries mostly with city staff
Estimated Cost after 3 years: $370,000
Senior Center
Phone: 952.2271125 This includes the cost of replacing failing radios, new batteries, software
Fax: 952.2271110 maintenance, staff time for installation and scheduling, a contingency for
Web Site overtime to schedule appointments, and a contingency for outsourcing a portion
www.ci.chanhassen.mn.us of battery replacement.
f \gregs \radio read replacement 2012\5 -14 -12 cost benefit discussion karen.docx
Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow
Mr. Todd Gerhardt
May 14, 2012
Page 2
Benefits:
1. Low cost alternative.
Negatives:
1. The task of cracking open the read case and re- wiring it with new batteries can be extremely
difficult.
2. Not certain how many years the new batteries will maintain the current system.
3. Final reads take 3 -4 days.
4. Re -reads (80- 100 /month) would still need to be done and could increase in future years.
5. No leak detection capabilities.
6. No meter tampering detection capabilities.
7. Final reads and re -reads are prone to human error.
8. If city staff replaces batteries, small maintenance duties such as sewer cleaning and hydrant
painting would need to be at least partially deferred.
Option 1, Alternative B
Maintain current system, replace batteries by outsourcing
Estimated cost after 3 years: $560,000
This includes the cost of replacing failing radios, new batteries, software maintenance, and the
cost to outsource the installation of the batteries.
Benefits:
1. Second lowest cost alternative.
2. Allows staff to complete minor maintenance and other duties (see #8 above).
Negatives:
1. The task of cracking open the read case and re- wiring with new batteries can be extremely
difficult.
2. Not certain how many years the new batteries will maintain the current system.
3. Final reads take 3 -4 days.
4. Re -reads (80 -100 /month) would still need to be done and could increase in future years.
5. No leak detection capabilities.
6. No meter tampering detection capabilities.
7. Final reads and re -reads are prone to human error.
Option 2, Alternative A
Move to Fixed Based AMR system, by doing majority of installations with city staff
Estimated cost after 3 years: $1 million
This includes the cost of new radios, technology infrastructure, software maintenance, staff time
for installation and scheduling, a contingency for overtime to schedule appointments, and a
contingency for outsourcing a portion of the radio replacements. In addition, cost savings
(reduction in total cost) were included for option 2 that accounts for staff time, fuel and vehicle
costs to continue mobile radio reads that would no longer be needed with the fixed base system.
Mr. Todd Gerhardt
May 14, 2012
Page 3
Benefits:
1. Entering the homes of our businesses and residents only one time in the next ten years versus
two times.
2. Staff time spent on re -reads will essentially be eliminated.
3. Final reads go from 3 -4 days to 10 -15 minutes.
4. Leak detection option available to customers.
5. Tamper detection available to city.
6. 20 year battery life.
7. Multiple customer service features available to residents.
8. An option to provide leak detection in city's water mains is available.
9. The possibility of human errors on final reads or re -reads would be eliminated.
10. The existing mobile reading device is no longer manufactured. If, in an extreme case, the
mobile reader is destroyed, it would be time consuming and costly to find or engineer a
replacement.
11. On -going staff time to do mobile reads is eliminated.
Negatives:
1. More expensive in years 1 -10 than maintaining the current system.
2. Requires some minor delay of maintenance and other utility functions to account for
installation of radios.
Option 2 Alternative B
Move to Fixed Based AMR system by outsourcing installations of new radios
Estimated cost after 3 years: $1.25 million
This includes the cost of new radios, the technology infrastructure, software maintenance, and
outsourcing all installations. In addition, cost savings (reduction in total cost) were included for
option 2 that accounts for staff time, fuel and vehicle costs to continue mobile radio reads that
would no longer be needed with the fixed base system.
Benefits:
1. Entering the homes of our businesses and residents only one time in the next ten years versus
two times.
2. Staff time spent on re -reads will essentially be eliminated.
3. Final reads go from 3 -4 days to 10 -15 minutes.
4. Leak detection is an option available to customers.
5. Tamper detection available to city.
6. 20 year battery life.
7. Multiple customer service features available to residents.
8. An option to provide leak detection in city's water mains is available.
9. The possibility of human errors on final reads or re -reads would be eliminated.
10. The existing mobile reading device is no longer manufactured. If, in an extreme case, the
mobile reader is destroyed, it would be time consuming and costly to find or engineer a
replacement.
11. On -going staff time to do mobile reads is eliminated.
12. Staff would not have to delay certain maintenance functions in order to perform installations.
f \gregs \radio read replacement 2012 \5 -14 -12 cost benefit discussion karen.docx
Mr. Todd Gerhardt
May 14, 2012
Page 4
Negatives:
1. Most expensive of all approaches in Years 1 -10
COST ANALYSIS FOR FUTURE YEARS
One of the attached spreadsheets indicates the total investment dollars required for each of the
four approaches at various times over the next 20 years. It is evident that the initial cost of
Option 2 (new system) is significantly more than Option 1 (maintain current). Under either
option, the city will have spent approximately the same amount for both systems in year 10 -13.
The exact date of the investment being equal depends largely on the battery life. It is estimated
that the majority of batteries will last ten years; however, it is possible that a significant number
of the batteries may average 6 -8 years.
WHAT ARE OTHER COMMUNITIES AND OTHER UTILITY OPERATORS IN
CHANHASSEN DOING?
Staff contacted Xcel Energy, MVEC and CenterPoint Energy and all have committed to some
form of fixed based AMR system. CenterPoint Energy has a combination of fixed base reads
and mobile reads and is in the process of migrating all mobile reads to fixed base reads. MVEC
just recently installed a fixed base system for all of their accounts. Xcel Energy has a fixed base
system in place for a majority of their accounts, with the exception of some of their larger users,
which are hand -read.
Staff sent out a survey to all communities in the state and did not receive responses from a
majority of the communities. In the PowerPoint there is a slide that includes all communities
that have either already gone to a fixed base system, just purchased a fixed base system, or are
migrating their current system and therefore have some fixed base and some mobile reads. The
second slide is a list of all communities that indicated they are planning to change to some form
of fixed base system within the next three years. Staff will review both lists with council at the
meeting on Monday night.
BY CONVERTING TO A FIXED BASE SYSTEM, WILL THE CITY EVER SAVE OR
BE ABLE TO DELAY THE HIRING OF A FTE POSITION IN THE UTILITY
DEPARTMENT?
Even by installing a fixed base system, the city will likely never save the equivalent of a 1.0 FTE
position. However, we would save significant dollars and hours of either a part-time utility
operator or overtime for a current FTE utility operator. The savings could amount to the
equivalent of a .5 FTE position within the next 10 -15 years, and more savings in future years if
the city stayed with the current mobile read system.
f \gregs \radio read replacement 2012 \5 -14 -12 cost benefit discussion karen.docx
Mr. Todd Gerhardt
May 14, 2012
Page 5
HOW WOULD IT BE PAID FOR AND WHAT WOULD BE THE IMPACT ON USER
RATES?
The current rate study has programmed water usage rate increases of 2% in 2013 and 3%
thereafter. Two of the 2012 projects that were included in last fall's rate study are anticipated to
come in under budget. CIP #W -032 is estimated to come in $45,000 under budget and
CIP #W -048 is estimated to come in $170,000 under budget. Staff will give more of a detailed
explanation of why they will be coming in under budget at the meeting on Monday.
Options Impacts on Rates*
Option1, Alternative A Little or no impact on rates
Maintain current system and staff replaces batteries
Option 1, Alternative B Possible .25% increase per year in years
Maintain current system and outside vendor replaces batteries 2014 -2017
Option 2, Alternative A or B Possible .5% increase per year for six to
New fixed base system (installed by current staff or outsourced) eight years beginning in 2014
* The future of the second water treatment plant has a very significant impact on the rates. Currently the
plant is scheduled for construction in the CIP for 2018. If the second water treatment plan is delayed until
sometime after 2020, there would be no need for a rate increase under Option 1, Alternative B. If either
alternative under Option 2 is chosen, the rate increases could be limited to three years rather than several.
RECOMMENDATION
Staff analyzed the costs and benefits of each option and believes the investment in a fixed based
radio read system will reap tangible and intangible benefits that exceed the additional investment
needed. Staff also believes that if the council chooses to maintain the current system that the
cost of replacing the batteries more than once would equal or exceed the cost of the fixed base
system. Therefore, if this option is chosen, staff recommends that batteries only be replaced one
time before moving to the new system. Additionally, if the purchase of the fixed base system is
delayed 8 -10 years, the city would be looking at two major capital investments around the same
time (second water treatment plant and fixed base system). This would drastically impact user
rates from that point into the future. By investing in the fixed base system now, the city will not
only realize the many benefits listed above, but only inconvenience our residents once instead of
twice.
ATTACHMENTS
1. Memo from March 26, 2012 meeting.
2. Cost breakdown spreadsheets
3. PowerPoint to be used during discussion
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Background
The need for replacing the radio devices on all water
meters in the city was discussed at previous work sessions.
The cost and benefit of all options for replacement will be
discussed tonight.
At the end of the discussion, staff will make a
recommendation and look for direction from cit y council
on how to proceed.
__-----
__ ,____--- —
Options
There are two options, with alternative approaches to
accomplishing each one.
Option 1 — Maintain Current System by replacing
batteries.
Option 2 — Purchase Fixed Base System or AMR
(Automated Meter Read) system.
Each option can be accomplished by completing
installation in -house or by outsourcing.
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Cost
Complete installation of either option can take 1 -3 years. For
comparative purposes, staff looked at the total cost of
installation of each option after three years.
Maintain Existing System
Option 1 A (Installation by city staff) : Estimated cost after 3
years - $370,000.
Option 1B (Installation by outside vendor): Estimated cost
after 3 years - $560,000.
New Fixed Base System
Option 2 (Installation with city staff): Estimated cost after
3 y ears - $1 million.
Option 2 (Installation with outside vendor): Estimated cost
after 3 years - $1.25 million.
_____ __________ _
__, __,____,________,
Cost — 20 Year Accumulative Cost Comparison
After "x" Years the City Will Have Invested
3 5 7 10 13 15 20
Option 1 Alt A $ 372,646 $ 391,235 $ 410,956 $ 442,812 $ 938,542 $ 985,870 $ 1,118,328
Option 1 Alt B $ 561,852 $ 580,441 $ 600,162 $ 632,018 $ 1,377,562 $ 1,425,824 $ 1,581,122
Option 2 Alt A $1,020,782 $1,002,147 $ 981,744 $ 947,891 $ 909,560 $ 881,136 $ 799,114
Option 2 Alt B $1,256,282 $1,237,647 $ 1,217,244 $1,183,391 $ 1,145,060 $ 1,116,636 $ 1,034,614
Benefits & Negatives — Option 1 Maintain Current System
(Staff Replaces Batteries)
Benefits
Low Cost Alternative (Short Term)
Negatives
Difficult to open radio cases and replace and rewire batteries
Not certain how many years the batteries will last
Final reads in current system take 3 -4 days
Re -Reads (80- 100 /month) would still need to be done and could increase in future years.
No leak detection capabilities
No meter tampering detection capabilities
Final reads and re -reads are prone to human error
Replacing batteries with city staff requires delaying minor maintenance tasks into future
years
g Y
Requires inconveniencing businesses and residents two times in the next ten years for
installation
■
Benefits & Negatives — Option 1 Maintain Current System
(Outsource Replacement of Batteries)
Benefits
Second Lowest Cost Alternative (Short Term)
• Would not require delay of minor maintenance tasks
Negatives
Difficult to open radio cases and replace and rewire batteries
Not certain how many years batteries will last
Final reads in current system takes 3 -4 days
Re -Reads (80 -100 /month) would still be required and could increase in future years
No leak detection capabilities
No meter tampering detection capabilities
Final reads and re -reads are prone to human error
Requires inconveniencing businesses and residents two times in the next ten years for
installation
Benefits & Negatives — Option 2 New Fixed Base System
(Staff Installs New Radios)
Benefits
• Utility staff time spent on re -reads eliminated
• Final reads take 10 minutes instead of 3 -4 days, and utility employee not requied to be dispatched
Leak detection option is available to residents
• Tamper detection option is available to city
• 20 year battery life
• Multiple customer service features available to residents
• Leak detection in city's water mains an option to city
• Errors from final reads and re -reads eliminated
• The existing mobile reading device is no longer manufactured. If, in an extreme case, the mobile
reader is destroyed, it would be time consuming and costly to find or engineer a replacement.
• On -going staff time to do monthly mobile reads eliminated
• Requires inconveniencing businesses and residents one time in next ten years for installation
instead of two times
Negatives
More expensive in years 1 thru 10 than maintaining current system
Replacing batteries with city staff would mean delaying minor maintenance tasks into future years
Benefits & Negatives — Option 2 New Fixed Base System
(Outside Vendor Installs New Radios)
Benefits
Utility staff time spent on re -reads eliminated
• Final reads take 10 minutes instead of 3 -4 days, and utility employee not required to be dispatched
• Leak detection option is available to residents
• Tamper detection option is available to city
• 20 year battery life
• Multiple customer service features available to residents
• Leak detection in city's water mains an option to city
• Errors from final reads and re -reads eliminated
• The existing mobile reading device is no longer manufactured. If, in an extreme case, the mobile
reader is destroyed, it would be time consuming and costly to find or engineer a replacement.
On -going staff time to do monthly mobile reads eliminated
Only need to inconvenience businesses and residents one time in next ten years for installation
Negatives
Most expensive of all approaches in years 1 thru 10
What are other Utility Providers in Chanhassen Doing?
Xcel Energy has a Fixed Base System in place.
MVEC has a Fixed Base System in place.
• CenterPoint Energy has a combination of a Fixed Base
System and Mobile Read System, but is transitioning the
remaining mobile read accounts to fixed base system
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-
What Are Other Cities Doing?
Staff conducted a survey of all Minnesota cities and asked if they already have
invested in a fixed base system or if they have plans to invest in a fixed base system.
The following indicated they either have already invested in a fixed base system, or
just recently entered into an agreement to invest in a fixed base system, or are
migrating their current system to a fixed base system.
Roseville, Brooklyn Center, Prior Lake, Arden Hills, Crystal, Golden Valley,
Little Falls, Luverne, Faribault, Lakeville, Maple Grove, and Blaine
The following indicated that within the next three years they plan to invest in a
fixed base system.
Fridley, Baxter, Chaska, Cottage Grove
1
Could a FTE Utility Operator position be deferred
if we move to a fixed base system?
By transitioning to a fixed base system, staff does not believe it will defer the
hiring of a 1.0 FTE Utility Operator. It is possible that between a .5 and .75
FTE equivalent utility operator could be available for other utility duties.
1
1
1
Impact on User Rates Under All Options
$215,000 in cost savings in 2012 projects
Impact of Option 1 (maintain current system) Alternative A
(city staff replaces batteries) — None
Impact of Option 1 (maintain current system) Alternative B
(outside vendor replaces batteries) — Potential for an
approximate .25% increase starting in 2014 for two to three
years.
Impact of Option 2 (new fixed base system) — Potential for
an approximate .5% increase starting in 2014 for six to eight
years depending on who installs new radios.
Largest factor influencing all rate increases is water treatment
plant scheduled for 2018. If second water treatment plant is
deferred past 2020, impact on user rates of Option 2 would
be significantly less (approximately .5% for just 2 -3 ears g Y . years).
R ecommendation
Staff recommends Option 2 (new fixed base system), either
installation method could be used.
Staff believes intangible benefits exceeds hard costs of new
system.
Staff priorities include: Inconveniencing residents as little as
possible, giving residents same customer service options that
other utility providers offer, and investing in infrastructure
that keeps costs down in the long term not just the short term.
If option 1 (maintain current system) is selected, staff
believes one replacement of the batteries at most makes
sense. Replacing the batteries of the current system more
than once becomes as costly as investing in a new system and
has limited to no benefits.
Cost benefit Analysis - Water Radio Replacements
Option 1- Alternative A (Replacement of Batteries with Staff)
Cost /Item 2012 2013 2014 2015 2016 2017 2018
Number of New Radios Installed (Replace 20yr radios installed in 2003 -2011)
Number of New Radios Installed (Failed radios needing new radios) 66 66 66 66 66 66 66
Subtotal New Radios Needed 66 66 66 66 66 66 66
Cost of new Raido's for old System $ 105.00 $ 108.15 $ 111.39 $ 114.74 $ 118.18 $ 121.72 $ 125.38
Total New Radio Installation Cost/Year $ 6,930 $ 7,138 $ 7,352 $ 7,573 $ 7,800 $ 8,034 $ 8,275
Number of Batteries Replaced /Year (with just battery) 1,800 2,900 1,900 - - -
Cost of Just Battery $ 20.91 $ 21.54 $ 22.18 $ 22.85 $ 23.53 $ 24.24 $ 24.97
Total battery Replacement only Cost Per Year $ 37,638 $ 62,458 $ 42,148 $ - $ - $ - $ -
Cost of Staff Regular Hours For Installation:
Public Works Secretary (Scheduling) $ 5,700 $ 9,200 $ 6,000
Utility Operators & Seasonal $ 11,400 $ 18,400 $ 12,000
Cost of Staff OT Hours For Installation & Regular Unattended Duties:
Utility Operators & Seasonal $ 9,200 $ 14,900 $ 9,700
Contingency for Outsource Portion of Replace $ 28,000 $ 52,000 $ 28,000
Annual Software Maint $ 1,450 $ 1,494 $ 1,538 $ 1,584 $ 1,632 $ 1,681 $ 1,731
Total Annual Cost $ 100,318 $ 165,590 $ 106,739 $ 9,157 $ 9,432 $ 9,715 $ 10,006
Assumptions:
- 3% increase in cost of goods /products per year
- 2% increase in staff wages per year
- 1% Failure rate where new radios are needed and cant just replace batteries
- 10 year life on replacing batteries
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
79 79 64 98 82 35 74 76
66 66 66 66 66 66 66 66 66 66 66 66 66
66 66 66 66 66 145 145 130 164 148 101 140 142
$ 129.14 $ 133.01 $ 137.00 $ 141.11 $ 145.34 $ 149.70 $ 154.20 $ 158.82 $ 163.59 $ 168.49 $ 173.55 $ 178.76 $ 184.12
$ 8,523 $ 8,779 $ 9,042 $ 9,313 $ 9,593 $ 21,707 $ 22,358 $ 20,647 $ 26,828 $ 24,937 $ 17,528 $ 25,026 $ 26,145
1,600 2,700 1,700
$ 25.72 $ 26.49 $ 27.28 $ 28.10 $ 28.94 $ 29.81 $ 30.71 $ 31.63 $ 32.58 $ 33.55 $ 34.56 $ 35.60 $ 36.67
$ - $ - $ - $ 44,962 $ 78,150 $ 50,682 $ - $ - $ - $ - $ - $ - $ -
$ 7,700 $ 12,400 $ 8,100
$ 15,300 $ 24,800 $ 16,200
$ 12,400 $ 20,000 $ 13,000
$ 37,700 $ 70,000 $ 37,700
$ 1,783 $ 1,837 $ 1,892 $ 1,949 $ 2,007 $ 2,067 $ 2,129 $ 2,193 $ 2,259 $ 2,327 $ 2,397 $ 2,469 $ 2,543
$ 10,306 $ 10,616 $ 10,934 $ 129,324 $ 216,950 $ 149,456 $ 24,488 $ 22,840 $ 29,087 $ 27,264 $ 19,925 $ 27,494 $ 28,687
Cost benefit Analysis - Water Radio Replacements
Option 1- Alternative B (Replacement of Batteries with Outside Firm)
Cost /Item 2012 2013 2014 2015 2016 2017 2018
Number of New Radios Installed (Replace 20yr radios installed in 2003 -2011)
Number of New Radios Installed (Failed radios needing new radios) 66 66 66 66 66 66 66
Subtotal New Radios Needed 66 66 66 66 66 66 66
Cost of new Raido's for old System $ 105.00 $ 108.15 $ 111.39 $ 114.74 $ 118.18 $ 121.72 $ 125.38
Total New Radio Installation Cost /Year $ 6,930 $ 7,138 $ 7,352 $ 7,573 $ 7,800 $ 8,034 $ 8,275
Number of Batteries Replaced /Year (with just battery) 3,500 3,100 - - -
Cost of Just Battery $ 20.91 $ 21.54
$ 22.18 $ 22.85 $ 23.53 $ 24.24 $ 24.97
Batteries Only $ 73,185 $ 66,766 $ - $ - $ - $ - $ -
Outsourcing Installation Costs $ 210,000 $ 186,000 $ -
Annual Software Maint $ 1,450 $ 1,494 $ 1,538 $ 1,584 $ 1,632 $ 1,681 $ 1,731
Total Annual Cost $ 291,565 $ 261,397 $ 8,890 $ 9,157 $ 9,432 $ 9,715 $ 10,006
Assumptions:
- 3% increase in cost of goods /products per year
- 1% Failure rate where new radios are needed and cant just replace batteries
- 10 year life on replacing batteries
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
79 79 64 98 82 35 74 76
66 66 66 66 66 66 66 66 66 66 66 66 66
66 66 66 66 66 145 145 130 164 148 101 140 142
$ 129.14 $ 133.01 $ 137.00 $ 141.11 $ 145.34 $ 149.70 $ 154.20 $ 158.82 $ 163.59 $ 168.49 $ 173.55 $ 178.76 $ 184.12
$ 8,523 $ 8,779 $ 9,042 $ 9,313 $ 9,593 $ 21,707 $ 22,358 $ 20,647 $ 26,828 $ 24,937 $ 17,528 $ 25,026 $ 26,145
3,500 3,100
$ 25.72 $ 26.49 $ 27.28 $ 28.10 $ 28.94 $ 29.81 $ 30.71 $ 31.63 $ 32.58 $ 33.55 $ 34.56 $ 35.60 $ 36.67
$ - $ - $ - $ 98,355 $ 89,727 $ - $ - $ - $ - $ - $ - $ - $ -
$ 283,500 $ 251,100
$ 1,783 $ 1,837 $ 1,892 $ 1,949 $ 2,007 $ 2,067 $ 2,129 $ 2,193 $ 2,259 $ 2,327 $ 2,397 $ 2,469 $ 2,543
$ 10,306 $ 10,616 $ 10,934 $ 393,117 $ 352,427 $ 23,775 $ 24,488 $ 22,840 $ 29,087 $ 27,264 $ 19,925 $ 27,494 $ 28,687
Cost benefit Analysis - Water Radio Replacements Fixed Base
Option 2 - Alternative A (Installation Of Fixed Base Radios With City Staff)
Cost /Item 2012 2013 2014 2015 2016 2017 2018
Number of Fixed Based Radios 2,000 3,500 2,200
Cost of Just Radio
Normal Radios @ $91 each $ 131,300 $ 328,100 $ 210,400
High Powered Radios @ $110 each $ 61,300
Infrastruce/Technology Hardware Costs $ 83,000
Cost of Staff Regular Hours For Installation:
Public Works Secretary (Scheduling) $ 5,700 $ 9,200 $ 6,000
Utility Operators & Seasonal $ 11,400
$ 18,400 $ 12,000
Cost of Staff OT Hours For Installation:
Utility Operators & Seasonal $ 9,200
$ 14,900 $ 9,700
Contingency for Outsource Portion of Replace $ 30,000 $ 60,000 $ 30,000
Annual Software Maint $ 2,000 $ 2,060 $ 2,122 $ 2,185 $ 2,251 $ 2,319 $ 2,388
Gross Annual Cost $ 333,900 $ 432,660 $ 270,222 $ 2,185 $ 2,251 $ 2,319 $ 2,388
COST SAVINGS ITEMS
Cost of Staff /Fuel (Meter Read & Finals) No Longer Needed
Utility Operator $ 3,300 $ 6,700 $ 6,834
$ 7,462 $ 7,611 $ 7,763
Additional Fuel $ 2,000 $ 4,000 $ 4,120 $ 4,656 $ 4,795 $ 4,939
Net Annual Cost $ 333,900 $ 427,360 $ 259,522 $ (8,769) $ (9,867) $ (10,088) $ (10,314)
Assumptions:
- 3% increase in cost of goods /products per year
- 2% increase in staff wages per year
- 250 hrs per year for utility operator to read meters and finals, increased by 10 hours every 5 years for new accounts and additional finals
- $4,000 per year in fuel and wear and tear on utility vehicle related to final reads, re -reads and regular reads, with 3% annual increases and 10% increase every 5 years for additional reads.
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
•
$ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 2,768 $ 2,852 $ 2,937 $ 3,025 $ 3,116 $ 3,209 $ 3,306 $ 3,405 $ 3,507
$ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 2,768 $ 2,852 $ 2,937 $ 3,025 $ 3,116 $ 3,209 $ 3,306 $ 3,405 $ 3,507
$ 7,919 $ 8,559 $ 8,730 $ 8,905 $ 9,083 $ 9,800 $ 9,996 $ 10,196 $ 10,400 $ 11,194 $ 11,418 $ 11,646 $ 11,879
$ 5,087 $ 5,240 $ 5,921 $ 6,099 $ 6,282 $ 6,470 $ 6,664 $ 7,531 $ 7,757 $ 7,989 $ 8,229 $ 8,476 $ 9,578
$ (10,546) $ (11,265) $ (12,042) $ (12,316) $ (12,596) $ (13,419) $ (13,723) $ (14,701) $ (15,040) $ (15,974) $ (16,341) $ (16,717) $ (17,950)
Cost benefit Analysis - Water Radio Replacements Fixed Base
Option 2 - Alternative B (Installation Of Fixed Base Radios Outsourcing)
Cost /Item 2012 2013 2014 2015 2016 2017 2018
Number of Fixed Based Radios 3,500 4,200
Cost of Just Radio
Normal Radios @ $91 each $ 267,800 $ 392,000
High Powered Radios @ $110 each $ 61,300
Infrastruce/Technology Hardware Costs $ 83,000
Outsource All Installations ($60 per installation) $ 210,000 $ 252,000
Annual Software Maint $ 2,060 2,122 $ 2122
$ 2,000 $ 2,185 $ 2,251 $ 2,319 $ 2,388
Gross Annual Cost $ 624,100 $ 646,060 $ 2,122 $ 2,185 $ 2,251 $ 2,319 $ 2,388
COST SAVINGS ITEMS
Cost of Staff /Fuel (Meter Read & Finals) No Longer Needed
Utility Operator $ 3,300 $ 6,700 $ 6,834 $ 7,462 $ 7,611 $ 7,763
Additional Fuel $ 2,000 $ 4,000 $ 4,120 $ 4,656 $ 4,795 $ 4,939
Net Annual Cost $ 624,100 $ 640,760 $ (8,578) $ (8,769) $ (9,867) $ (10,088) $ (10,314)
Assumptions:
- 3% increase in cost of goods /products per year
- 2% increase in staff wages per year
- 250 hrs per year for utility operator to read meters and finals, increased by 10 hours every 5 years for new accounts and additional finals
- $4,000 per year in fuel and wear and tear on utility vehicle related to final reads, re -reads and regular reads, with 3% annual increases and 10% increase every 5 years for additional reads.
- Majority of all new unit radios will be Normal radios not High Powered
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
$ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 2,768 $ 2,852 $ 2,937 $ 3,025 $ 3,116 $ 3,209 $ 3,306 $ 3,405 $ 3,507
$ 2,460 $ 2,534 $ 2,610 $ 2,688 $ 2,768 $ 2,852 $ 2,937 $ 3,025 $ 3,116 $ 3,209 $ 3,306 $ 3,405 $ 3,507
$ 7,919 $ 8,559 $ 8,730 $ 8,905 $ 9,083 $ 9,800 $ 9,996 $ 10,196 $ 10,400 $ 11,194 $ 11,418 $ 11,646 $ 11,879
$ 5,087 $ 5,240 $ 5,921 $ 6,099 $ 6,282 $ 6,470 $ 6,664 $ 7,531 $ 7,757 $ 7,989 $ 8,229 $ 8,476 $ 9,578
$ (10,546) $ (11,265) $ (12,042) $ (12,316) $ (12,596) $ (13,419) $ (13,723) $ (14,701) $ (15,040) $ (15,974) $ (16,341) $ (16,717) $ (17,950)
Accumulated Costs At Various Perods of Time
After X Years the City Will Have Invested
3 5 7 10 13 15 20
Option 1 Alt A $ 372,646 $ 391,235 $ 410,956 $ 442,812 $ 938,542 $ 985,870 $ 1,118,328
Option 1 Alt B $ 561,852 $ 580,441 $ 600,162 $ 632,018 $ 1,377,562 $ 1,425,824 $ 1,581,122
Option 2 Alt A $ 1,020,782 $ 1,002,147 $ 981,744 $ 947,891 $ 909,560 $ 881,136 $ 799,114
Option 2 Alt B $ 1,256,282 $ 1,237,647 $ 1,217,244 $ 1,183,391 $ 1,145,060 $ 1,116,636 $ 1,034,614
111 do
CITY OF MEMORANDUM
CHANHASSEN TO: Todd Gerhardt, City Manager
7700 Market Boulevard
PO Box 147 FROM: Paul Oehme, Director of Public Works /City Engineer 4.
Chanhassen, MN 55317
DATE: March 26, 2012
Administration
Phone: 952.2271100 SUBJ: Discuss Water Meter Radio Needs — PW02401
Fax: 952.227.1110
Building Inspections BACKGROUND
Phone: 952.2271180
Fax: 952.2211190 In 2001, the City installed radio devices on all the water meters to obtain the water usage
Engineering remotely without having to go on private property and read the meters. Previously, each
Phone: 952.2271160 meter had to be physically read which would take weeks to complete. Currently, all
Fax: 952.2271170 meters can be read by one Utility Department staff member in approximately 4 hours by
driving a vehicle throughout the city and collecting the usage data. This data is then
Finance downloaded to the Finance Department for billing. This system has served the city well;
Phone: 952.227.1140 however, the batteries for the radios have begun to fail. The batteries for the radios had a
Fax: 952.227.1110 life expectancy of 10 years. Staff has been looking into this situation for two years to
identify options to address the battery failures. Staff had originally included funding in
Park & Recreation the 2011 Water Operations budget to start replacing the radios last year as the batteries
Phone: 952.2271120 failed. Since replacement of equipment is more of a capital improvement project, these
Fax 9522271110 funds were shifted to the Capital Improvement Program in 2012 for one year until council
Recreation Center gives staff direction on what replacement option system is desired.
2310 Coulter Boulevard
Phone: 952.2271400 At the February 13, 2011 Council work session, staff presented three options to address
Fax: 952.2271404 the water meter radio failure problem were discussed.
Planning & 1. Replace only the battery of existing radios. This option is the cheapest; however,
Natural Resources
Phone: 952.2271130 the radio batteries can only be replaced with the same 10 -year life battery since
Fax: 952.227.1110 the housing of the radios will only fit the smaller 10 -year life battery. The older
generation radios are likely to use more power in the future as the system gets
Public Works older, which may decrease the life expectancy of the batteries even more. Also,
7901 Park Place staff would need to take apart the radio, cut out the old battery and splice in a new
Phone: 952.227.1300 battery. The spliced connections on these radios can be hard to make with fine
Fax: 952.2271310 gage wire in typically low light environments. Based on comments from other
communities that have attempted to replace batteries with similar systems as
Senior Center Chanhassen's, the batteries have a tendency to fail prior to the 10 -year life
Phone: 952.227.1125 expectancy battery.
Fax: 952.227.1110
Web Site 2. Replace the radios and batteries with the same manufacturer (Sensus Co.) system
www.ci.chanhassen.mn.us the City currently uses. This mobile (drive -by) meter reading option incorporates
the same radio frequency and software the City currently uses.
g:\eng \public\pw024o1 water meter radio replacement - 2012 \032612 bkgd ws water meter radios.doc
Chanhassen is a Community for Life - F8ding for Today and Planning for Tomorrow
Todd Gerhardt
Discuss Water Meter Radio Needs
March 26, 2012
Page 2
Staff has looked into possibly switching to another manufacturer's mobile radio system;
however, other systems are estimated to cost more. The system would still require the utility
operator to physically drive up and down a street to obtain the meter reads. It employs a one -way
radio system, meaning there is no modern functionality features common with modern systems.
Meter re -reads and final meter reads also require an employee to physically visit the outside of
the homes to obtain the readings, In the last quarter of 2011 alone there were 66 final reads that
required a physical proximity visit. This system has approximately a 20 -year life expectancy.
Staff time is estimated at 1/3 of a utility employee's annual hours to read the meters.
3. Upgrade the radio meter system with a fixed -based system. This more technologically current
system uses a 2 -way radio system. The system would require collectors and antennas to be
located on water towers and lift station antenna poles to collect the readings. Meter readings can
then be read at City Hall by the Finance Department, freeing up time and costs of a Utility
Department employee. Also this system has an increased customer service function, a customer
service software suite for instant re -reads and final reads. Billing questions can easily be
addressed in real time by this system providing greater and timelier customer service. Billing
would be much more streamlined and efficient for the Finance Department. This system has
approximately a 20+ -year life expectancy.
After reviewing the costs of the three options, the City Council directed staff to detail the time,
installation and cost involved for Options 1 and 3 for replacement for all batteries or radios in the
community not just for the radios batteries that are anticipated to fail in the next few years. Option 2 was
not thought to be the direction the City should take because it cost about the same as Option 3 and did
not provide greater customer service for the community.
DISCUSSION
Over the next few years, staff is estimating most of the radio batteries originally installed in 2011 will
fail. The City had 6,262 water accounts in 2001. Today there are 7,679 accounts. The options included
in the background include replacement of just the batteries or the meter radios with a fixed based system.
Two alternatives for each option for installation were identified. The alternatives include the cost of the
batteries or the fixed -based radios replacement and the installation cost estimates for each option. The
alternatives would complete the installation at different lengths of times and include outsourcing the
installation depending on staff time constraints. The alternative cost estimates also include City staff
overtime and inflation.
Alternative 1 would replace just the batteries for Option 1 or replace the radio with a fixed -based system
for Option 2 over a 3 -year period. These alternatives would set a defined completion date for the project.
Staff is anticipating that most of the project will be completed in -house if either of these alternatives is
selected; however a contingency for outsourcing some of the installations is included in the budget if
staff time becomes limited.
Alternative 2 would condense the project into a 9 -month period for both options. In order to accomplish
this, outsourcing the installation would be necessary. City staff could still be utilized for scheduling and
installations of a small portion of the project, but the majority of the project would need to be completed
by others. The cost identified for these alternatives assumes outsourcing 100% of the project.
Attachments
c: Kevin Crooks, Utility Superintendent
g: \eng \public \pw024o1 water meter radio replacement - 2012 \032612 bkg6ys water meter radios.doc
Option 1 - Water Meter Radio Battery Replacement Project with Installation Costs
Alternative 1 - Replace Radios Batteries in 3 years with City Staff
YEAR
2012 2013 2014 Total
Est.'ed Radio replacements per year 2,000 3,500 2,179 7,679
10 Year Battery $20.91 $41,820 $75,381 $48,338 $165,538
Staff O.T. afterhours replacements (Est. 35% of Installs) $10,200 $17,900 $11,200 $39,300
Budget Contingency for Outsourcing some Installations $30,000 $60,000 $30,000 $120,000
Yearly Total Project Est. $82,020 $153,281 $89,538 $324,838
Estimated Staff Time Assuming all done in -house 1,670 2,920 1,820 6,410
Estimated Staff Salary cost assuming all done in -house 19,000 33,300 20,700 73,000
Note:
1. It is estimated up to 3,500 radios could be replaced annually by staff with 2 staff dedicated to replacements
2. Will most likely need more then one person scheduling appoints for all years.
2. Recommend budgeting 5120,000 (2,000 radios replacements) for contractor assistance if staff time becomes limited.
3. Includes 3% annual inflation for Batteries
Alternative 2 - Replace Radio Batteries by Outsourcing Installations
YEAR
2012 2013 Total
Estimate Radio Replacements per Year 3,500 4,179 7,679
Cost Estimate
10 Year Battery $20.91 $73,185 590,004 $163,189
Outsourcing all Installations ($60 /install est.) $210,000 5250,740 $460,740
Yearly Total Project Est. 5283,185 $340,744 $623,929
City staff time savings by outsourcing project that could be $51,200 561,100 $112,300
dedicated to other tasks (6,400 hrs. /yr.)
Total Project estimate with staff time deduction $511,629
Note:
1. Includes 3% annual inflation for Batteries
68
Option 2 - Fixed Base Water Meter Radio Replacement Project with Estimated
Alternative 1 - Replace Radios in 3 years with City Staff
YEAR
2012 2013 2014 Total
Est.'ed Radio replacements per year 2,000 3,500 2,179 7,679
Radio Infrastructure and Software $83,000 $83,000
Normal Radios $91 $131,313 $328,055 5210,365 $669,733
Higher Power Radios $110 $61,270 $61,270
Radio Equipment Estimate $275,583 $328,055 $210,365 $814,003
Staff O.T. afterhours replacements (Est. 35 %of Installs) $10,200 $17,900 $11,200 $39,300
Budget Contingency for Outsourcing some Installations $30,000 $60,000 $30,000 $120,000
Yearly Total Project Est. $315,783 $405,955 $251,565 $973,303
Estimated Staff Time Assuming all done in -house 1,670 2,920 1,820 6,410
Estimated Staff Salary cost assuming all done in -house $19,000 $33,300 $20,700 $73,000
Note:
1. It is estimated up to 3,500 radios could be replaced annually by staff with 2 staff dedicated to replacements
2. Will most likely need more then one person scheduling appoints for all years.
2. Recommend budgeting $120,000 (2,000 radios replacements) for contractor assistance if staff time becomes limited.
3. Includes 3% annual inflation for Radios
Alternative 2 - Replace Radios by Outsourcing Installations
YEAR
2012 2013 Total
Estimate Radio Replacements per Year 3,500 4,179 7,679
Radio Infrastructure and Software $83,000 $83,000
Normal Radios $91 $267,813 $391,698 $659,511
Higher Power Radios $110 $61,270 $61,270
Radio Equipment Estimate $412,083 $391,698 $803,781
Outsourcing all Installations ($60 /install est.) $210,000 $250,740 $460,740
Yearly Total Project Est. $622,083 $642,438 $1,264,521
City staff time savings by outsourcing project that could be $51,200 $61,100 $112,300
dedicated to other tasks (6,400 hrs.)
Total Project estimate with staff time deduction $1,152,221
Note:
1. Includes 3% annual inflation for Radios
G: \ENG \PUBLIC \PW02401 Water Meter Radio Replacement - 2012 \radio replacement scUule.xlsx