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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

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