5.4. ERMUSR 10-12-2010 - Laserfiche WebLink

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Elk River - MunicipalUtilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING Phone: 763.44 L2020 Fax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. -Director of Operations John Dietz, Chair 'i Jerry Gumphrey, Vice Chair Dar 1 Thom son, Trustee MEETING DATE: AGENDA ITEM NUMBER: October 12, 2010 5.4 SUBJECT: Bore Ri Analysis BACKGROUND: At the October Utilities Commission the purchase of a Bore Rig was discussed as a way to bring work in-house and save money. The Commission directed staff to perform a cost analysis of the purchase of a bore rig. DISCUSSION: Over the years, the placement of electric distribution cable for ERMU has been performed by contractors as well as ERMU staff. Contractors were often used when the project work load was more that what ERMU staff could complete in a required deadline. Using contractors was an effective way to mitigate the volatility in work load volume which is often related to the economy. Also, many contractors have and are proficient at using bore rigs. This piece of equipment allows for placement of cable in developed and landscaped areas with minimal need for restoration as well as placement of cables under roads. [n our current economy it makes sense [o analyze whether or not purchasing a bore rig and brining some of that type of work in house is viable. Some of the work that would typically be performed by a contractor with a bore rig, like placement of large cable for feeders or major road/railroad crossing, would require a larger bore rig. Most of this work, like placement of secondary services and primary taps servicing developments, require only a smaller bore rig. The most logical scenario for bringing this type of work in-house would be to analyze the bulk of this type of work associated with the smaller sized bore rigs. Over the last 3 years, the average cost for contracted cable placement that could be performed in- house using one of these smaller bore rigs was approximately $100,000. The cost for this equipment is approximately $200,000 with a 5 year life. The payback for purchasing one of these smaller sized bore rigs would be just over 2 years with a positive net present value. Refer to the attached analysis for further detail. ACTION REQUESTED: Staff recommends authorizing the purchase of a bore rig with the 2011 Budget.