Post by Low Light Mike on Sept 30, 2014 14:19:58 GMT -8
I decided to put this into its own thread, to make it easier to find. Vessel replacement is a frequent topic of Q&A & discussion on our forum.
Also, there is so much specific-vessel inter-connectedness to these issues, that it would be impossible to contain our discussion with specific vessel threads.
This just-released capital plan document is the most recent vessel plan that we're able to see.
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Link is here, to the long document: HERE
- the good stuff starts on page 22 of the document.
===============
Consider this long quote to be the preamble:
So this means that this document shows their intended plan as of now. BUT as each replacement date approaches, they will go through that detailed process of deciding on like-for-like replacement or not, or major upgrade, etc.
Also, there is so much specific-vessel inter-connectedness to these issues, that it would be impossible to contain our discussion with specific vessel threads.
This just-released capital plan document is the most recent vessel plan that we're able to see.
=====================
Link is here, to the long document: HERE
- the good stuff starts on page 22 of the document.
===============
Consider this long quote to be the preamble:
Planned Major Capital Expenditures
Over the next 12 years, BC Ferries is planning to replace 18 vessels which are expected to reach the end of their lives, and to carry out a number of major upgrades of existing vessels at planned intervals over their remaining lives. As well, the Company will need to invest in its terminals and berths, and upgrade its information technology systems. These investments are required in order to ensure the Company can continue to provide safe, reliable and efficient service that meets the needs of its customers and complies with the current Coastal Ferry Services Contract.
As previously described, the Company has in place a rigorous capital planning process. Before reaching a decision on the nature of a specific major capital expenditure, BC Ferries will consider a range of alternatives and options to ensure the most optimal investment for ongoing effective and efficient service. These will include, as appropriate to the type of investment:
.retirement of the asset without replacement;
• life extension or upgrade of the asset;
• replacement with a new or used asset of different size or type;
• replacement with a new or used asset of similar size and type;
• adoption of new technologies or innovations; and
• alternative service delivery or other commercial arrangements.
When considering a major capital expenditure, BC Ferries first assesses the condition and suitability of the current asset to determine its viability for life extension or upgrade in terms of value and length of time. This is then compared to the cost and benefits of replacing the asset, allowing for any alternative size or type of asset which may be better matched to meet service demand in terms of effectiveness and efficiency. In the case of vessels, this includes consideration of both new and used alternatives.
New technologies and innovative solutions are explored, as are, where appropriate, alternative service delivery or other commercial arrangements through which capital investments may be avoided or financed in a different way.
The analysis of the options is done on a total cost of ownership (or life cycle) basis. It follows that, for these analyses to be conducted effectively, they cannot be done too far in advance of the notional retirement date of the assets as key determinants, such as the condition of the asset, costs to replace, upgrade or life-extend, technological solutions, identification of alternative service providers or other commercial arrangements, and service level requirements, will not be known with precision until closer to the notional retirement date. Hence, the capital expenditure ultimately required for each asset may differ from that included in the Capital Plan. However, the Company believes that this approach to the Capital Plan, which assumes a one for one replacement of the existing asset (within the Company’s strategy of standardization), is appropriate as it reflects the conservative forecast of required capital expenditures.
Applications to the Commissioner for approval under section 55 of the Act for each of the planned major capital expenditures have or will be made. In all cases, these applications will address the specific guidelines established by the Commissioner for such applications, and will include details in regard to the amount, proposed timing, type of expenditure, options considered and the rationale for the proposed capital expenditures.
Vessel Replacements
For vessel replacements, the Capital Plan reflects the assumption that replacement will be on a one for one basis, within the Company’s standardization strategy, such that vessels of similar size, amenities and service capabilities will be acquired. This reflects the assumption described previously that service requirements will continue to be those set out in the current Coastal Ferry Services Contract.
The Company makes these assumptions as they are the most conservative. Closer to the notional replacement date for these vessels, additional analysis on the alternatives and options, as generally described above, will be considered and reported to the Commissioner as part of the Company’s application for approval of the planned major capital expenditures. The additional analysis may include an alternative approach to service delivery and/or alternative service schedule. These options are addressed more fully in the Company’s submission to the Commissioner pursuant to section 40(1.1)(a) of the Act, dated September 30, 2014, entitled Strategies for Enhanced Efficiency in Performance Term Four and Beyond (the “Efficiency Plan for PT4”).
Over the next 12 years, BC Ferries is planning to replace 18 vessels which are expected to reach the end of their lives, and to carry out a number of major upgrades of existing vessels at planned intervals over their remaining lives. As well, the Company will need to invest in its terminals and berths, and upgrade its information technology systems. These investments are required in order to ensure the Company can continue to provide safe, reliable and efficient service that meets the needs of its customers and complies with the current Coastal Ferry Services Contract.
As previously described, the Company has in place a rigorous capital planning process. Before reaching a decision on the nature of a specific major capital expenditure, BC Ferries will consider a range of alternatives and options to ensure the most optimal investment for ongoing effective and efficient service. These will include, as appropriate to the type of investment:
.retirement of the asset without replacement;
• life extension or upgrade of the asset;
• replacement with a new or used asset of different size or type;
• replacement with a new or used asset of similar size and type;
• adoption of new technologies or innovations; and
• alternative service delivery or other commercial arrangements.
When considering a major capital expenditure, BC Ferries first assesses the condition and suitability of the current asset to determine its viability for life extension or upgrade in terms of value and length of time. This is then compared to the cost and benefits of replacing the asset, allowing for any alternative size or type of asset which may be better matched to meet service demand in terms of effectiveness and efficiency. In the case of vessels, this includes consideration of both new and used alternatives.
New technologies and innovative solutions are explored, as are, where appropriate, alternative service delivery or other commercial arrangements through which capital investments may be avoided or financed in a different way.
The analysis of the options is done on a total cost of ownership (or life cycle) basis. It follows that, for these analyses to be conducted effectively, they cannot be done too far in advance of the notional retirement date of the assets as key determinants, such as the condition of the asset, costs to replace, upgrade or life-extend, technological solutions, identification of alternative service providers or other commercial arrangements, and service level requirements, will not be known with precision until closer to the notional retirement date. Hence, the capital expenditure ultimately required for each asset may differ from that included in the Capital Plan. However, the Company believes that this approach to the Capital Plan, which assumes a one for one replacement of the existing asset (within the Company’s strategy of standardization), is appropriate as it reflects the conservative forecast of required capital expenditures.
Applications to the Commissioner for approval under section 55 of the Act for each of the planned major capital expenditures have or will be made. In all cases, these applications will address the specific guidelines established by the Commissioner for such applications, and will include details in regard to the amount, proposed timing, type of expenditure, options considered and the rationale for the proposed capital expenditures.
Vessel Replacements
For vessel replacements, the Capital Plan reflects the assumption that replacement will be on a one for one basis, within the Company’s standardization strategy, such that vessels of similar size, amenities and service capabilities will be acquired. This reflects the assumption described previously that service requirements will continue to be those set out in the current Coastal Ferry Services Contract.
The Company makes these assumptions as they are the most conservative. Closer to the notional replacement date for these vessels, additional analysis on the alternatives and options, as generally described above, will be considered and reported to the Commissioner as part of the Company’s application for approval of the planned major capital expenditures. The additional analysis may include an alternative approach to service delivery and/or alternative service schedule. These options are addressed more fully in the Company’s submission to the Commissioner pursuant to section 40(1.1)(a) of the Act, dated September 30, 2014, entitled Strategies for Enhanced Efficiency in Performance Term Four and Beyond (the “Efficiency Plan for PT4”).
So this means that this document shows their intended plan as of now. BUT as each replacement date approaches, they will go through that detailed process of deciding on like-for-like replacement or not, or major upgrade, etc.