COLLECTION: Cities Seek To Make Operations Cost Efficient

Jill Slovin

The quest for cost efficiency is leading municipalities to re-evaluate their operations.

"In the West Coast, the private sector is putting a lot more pressure on municipalities to privatize their collection," said Joseph Delaney, the Beverly Hills, Calif., solid waste superintendent.

The increasing number of municipalities turning to privatization, in addition to a tight economy, has sparked his city's re-evaluation process. Issues such as funding provide added pressure for Beverly Hills. Two years ago, funding for solid waste services switched from a general fund to an enterprise fund. Now, instead of being fully funded from a subsidy, the city charges residents on their utility bills. "This encourages us to become meaner and leaner in order to stay in business," said Delaney.

Beverly Hills has hired a consulting firm to evaluate city operations. It will consider the following:

* Current resources. It's important to maximize use of current resources. Beverly Hills, for example, examined the drivers and collectors productivity levels.

* Current disposal costs. Beverly Hills reduced hauling costs by switching to a nearby transfer station. Although the city pays more dollars per ton, Delaney said time saved offsets extra dollars spent.

* Larger costs such as collection equipment. To save on equipment costs, Delaney cut costs by following up on his warranty.

Contracting with a private company is one option for the city. A final report is expected in January.

Across the country, Wayman J. Pearson, the Charlotte, N.C., director of solid waste services, is also re-evaluating his operation. Automated collection is his most recent stride to update the city's operation.

Pearson said automated collection may not be the only change in store for Charlotte, a city that services 118,000 single households.

In September 1994, collection services for one-quarter of the city will be awarded to the most cost-efficient bidder - public or private.

Only a portion of the city is up for bid so Charlotte can test the competitive process, said Pearson. "It is time for the city to assess public vs. private," he said.

Charlotte has developed focus groups, made up of members from the different sanitation divisions, to evaluate the internal operations of the division.

To become cost effective all around, internal prices must be just as competitive, said David Cooke, Charlotte's director of business support services. The support systems he oversees - equipment maintenance for the city's roll-off fleet and computers, radios and routing systems - also were subject to bids. If Cooke, for example, found that a company such as Ford or Firestone could maintain the fleet cheaper, the city would opt for them. To date, the city is maintaining the fleet.

In July, the fully automated collection system will allow Charlotte to reduce its present two-person crew to one man. Also, a roll-off fleet will be implemented to contribute to the anticipated $41 million in savings. To cut costs further, the city is considering consolidating operations into the main facility and closing down the satellite facility.

Asheville, N.C., has recently completed a nine-month study evaluating costs vs. privatization.

The mountainous city of approximately 64,000 residents concluded that privatizing their operation would have cost the city an extra $150,000. James Ewing, director of public works, said that when the city compared monthly residential collection costs to the private sector's monthly rates, the extra collection services for bulky items and leaf collection made it difficult for private companies to top the city's rates.

In Asheville, these services receive special attention since residential refuse is viewed as only one item collected. State law bans yard waste and tires from landfills. Bulky items can be landfilled but, when calculating costs, the city took into consideration the space they fill on a truck, thus reducing the truck's load.

Ewing was not surprised with his findings. The city can operate cheaper because the collection routes are already established, city personnel are paid less than private personnel and the city does not operate for a profit, Ewing said.

Since the evaluation, Asheville will order four new vehicles with a low-entry cab which will reduce Ewing's manual crew from three people to two. A new leaf collection service, which will replace leaf vacuums, is estimated to save the city approximately $23,000. If the city achieves a 25 percent participation rate, the length of the season will be reduced.

When evaluating efficiency, Delaney notes certain standards for municipalities: salaries and benefits; equipment maintenance; being in the public eye; and little opportunity for economies of scale. Cities, for example, cannot solicit business outside city limits.

"Add planning into your efficiency calculation," said Delaney. "Think 10 years from now and how you will reach that goal. Also, use pilot programs."