volume 1 - Halifax Regional Municipality
volume 1 - Halifax Regional Municipality
volume 1 - Halifax Regional Municipality
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<strong>Halifax</strong> Water Integrated Resource Plan<br />
Integrated Resource Plan Development and Evaluation<br />
by period. An individual financial model was prepared for each plan. The principal inputs<br />
to the financial models were:<br />
• Five-Year Capital Plan (Yrs. 2-5).<br />
• Extended capital program (Years 6 and beyond) refined through the IRP.<br />
• Asset renewal costs as per Five-Year Capital Plan (Yrs. 2-5) and IRP asset renewal<br />
modeling.<br />
• Additional asset renewal costs determined by asset renewal modeling due to capital<br />
additions during planning period.<br />
• RWWFP capital costs.<br />
• Capital programs/projects proposed through the IRP (e.g. enhanced overflow<br />
control).<br />
• Additional water and wastewater O&M costs associated with growth or systems<br />
upgrades.<br />
The key financial model assumptions were as follows:<br />
• A discount rate of 3% was applied to all capital expenditures and a discount rate of<br />
1% was applied for all additional O&M costs. The discount rates were calculated as<br />
the difference between the current municipal borrowing rate of 5% and an inflation<br />
rate of 2% for capital projects estimated from an analysis of ENRCC 29 index changes<br />
for municipal construction projects and 4% inflation rate for O&M. 30<br />
• As previously noted, only years 2-5 of the <strong>Halifax</strong> Water Five-Year Capital Plan were<br />
incorporated in the financial models. The initial year 2012-2013 was considered<br />
already in process and was not included. Year 1 of the IRP financial analysis is 2013-<br />
2014.<br />
• The expenditures associated with projects identified in the years beyond the Five-<br />
Year Capital Plan were distributed through the financial model through discussions<br />
with <strong>Halifax</strong> Water staff on priorities and programming.<br />
• All capital projects where variations were considered in timing were allocated to the<br />
single year indicated in the variation.<br />
• All capital expenditures developed during the IRP are stated as project costs and<br />
include a 1.6 multiplier to account for engineering, construction management,<br />
other incidental costs and a 25% estimating contingency. The details of the unit<br />
rates (e.g. cost per meter of pipe) and other aspects of the project costing<br />
29 Construction Cost Index History, Engineering News Record, July 2012<br />
30 Creating a Sustainable Solution for Pennsylvania, Governor’s Sustainable<br />
Infrastructure Task Force, November 2008<br />
Revision: 2012-10-29 Integrated Resource Plan 56<br />
October 31 2012 Page 89 of 272