Archived decisions

HAMPSHIRE COUNTY COUNCIL

1. Summary

1.1 This report details the long-term costs and other factors to be taken into

account before deciding whether to replace or refit the current Harbour Patrol catamarans, and makes a recommendation for a long-term policy.

1.2 In order to establish the relevant factors, an investigation was completed by the Harbour Master and Patrol Officers into the use of the present catamarans. The opinions of other members of the Harbour Authority staff were sought, along with advice from the County Treasurer and sources within the marine industry. The various types of patrol craft used in other similar harbours were also investigated and taken into consideration.

2. Recommendation:

That the River Hamble Harbour Management Committee advise the River Hamble Harbour Board to:

Adopt a policy of purchasing new boats approximately every twenty

years, with a mid-life refit, with the first refit taking place in 2009/10.

3. Introduction

3.1 The Harbour Authority currently owns two Cheetah catamaran patrol boats which were purchased in 1998 and 1999 at £29,000 per boat including adaptations to ensure that they were capable of carrying out their tasks safely and efficiently. The boats had a planned life of ten to twelve years from purchase date without a comprehensive refit. Without a refit, they have been valued at about £10,000 each on the second hand boat market at today's prices. During the boats' service to date a number of modifications to the hulls and superstructure have been added, the main purpose of which was to ensure that the boats were suitable to carry out the tasks required of them under the Port Marine Safety Code, in a safe manner.

3.2 Two distinct options have been identified and evaluated:

a. Sell the current boats and replace with new, on a ten-year cycle

b. Extend the life of the current boats for a further ten years by carrying out a thorough mid-life refit, and then continue with a twenty year cycle. with refits at the ten year point.

4. Comparison of Long Term Costs.

4.1 Cost of Replacement Boats

The table below shows the cost of two new 6.2 metre catamarans, together with the estimated cost of a mid-life refit after 10 years, benchmarked at today's prices. The quoted purchase price includes factory fitted items that are not standard to the basic vessel. The costs of engine replacement and engine maintenance are not included within these figures.

4.2 Residual values

Based on a recent valuation of the current boats, it is assumed that the residual value after ten years will be about 33% of the original capital cost, and that the residual value after 20 years (following a mid-life refit) will be in the range of 15-20% of the original capital cost.

4.3 Engine replacement and engine maintenance

The four 50 hp outboard engines that drive the two patrol boats are currently replaced annually under an agreement with Honda. An annual replacement programme was established six years ago and has found to be the most cost-effective means of reducing down time to almost nil and keeping the maintenance costs to a minimum. It is not proposed to make any changes to this arrangement, although it will be monitored regularly to ensure value for money.

4.4 Through-life costs

This long-term (30 year period) cost evaluation is based on a comparison of the net costs of the two options (replace the boats every 10 years, or replace every 20 years with a mid-life refit). Total costs, less residual values (benchmarked at today's prices) (in £000s) for the two options are shown in the tables below:

Option: Purchase new boats every ten years

Option: Purchase new boats every twenty years with mid-life refit

5. Conclusion

5.1 The total net cost, over a 30 year period, of purchasing two new build catamarans with recommended fittings and fixtures every ten years is in the region of £272,000. The net cost over the same period of refitting the two current catamarans, then replacing them every twenty years, is in the region of £184,000, showing a saving of almost £90,000. This does not reflect the cash flow benefits that would also arise from the purchase and refit option. It is therefore concluded that the option of buying new boats every 20 years and refitting them after 10 years is the most cost-effective way forward.

5.2 If the recommendation is accepted, it will be appropriate to review the

impact on the annual contribution to the Asset Replacement Reserve.

6. Impact Assessment

6.1 An Equalities Impact Assessment covering the Harbour Authority's

responsibilities under the Port Marine Safety Code has been conducted and the content of this report does not alter this assessment.