Report No. SR02-03-02
Estimating the Cost of l/M
Programs
prepared for:
U.S. Environmental Protection Agency
March 20, 2002
prepared by:
Sierra Research, Inc.
1801 J Street
Sacramento, California 95814
(916) 444-6666
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Estimating the Cost of I/M Programs
prepared for:
U.S. Environmental Protection Agency
Contract No. 68-C7-0051
Work Assignment 2-04
March 20, 2002
prepared by:
Thomas C. Austin
Richard W. Joy
Sierra Research, Inc.
1801 J Street
Sacramento, CA 95814
(916) 444-6666
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Although the information described in this report has been funded wholly or in part by the
United States Environmental Protection Agency under Contract No. 68-C7-0051, it has not
been subjected to the Agency's peer and administrative review and is being released for
information purposes only. It therefore may not necessarily reflect the views of the Agency
and no official endorsement should be inferred.
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Estimating the Cost of I/M Programs
Table of Contents
Section page
1. Introduction 1
Scope of Work 1
Organization of the Report 4
2. Centralized Program Model 5
Program Parameters and Default Values 15
Initial Costs to Program Operator 25
Recurring Costs to Program Operator 25
Annualized Costs to Program Operator 25
Program Costs to State 25
3. Decentralized Program Model 27
4. Example Calculations 39
List of Tables
Table page
1. Primary User Input Values for Centralized I/M Cost Model 16
2. Secondary User Input Values for Centralized I/M Cost Model 22
3. Embedded Default Values for Centralized I/M Cost Model 24
4. Summary of Inspection Cost/Test for Hypothetical Programs 39
5. Cost Per Test vs. Vehicle Population 40
6. Cost Per Test vs. Program Length 40
List of Figures
Figure page
1. Centralized Cost Model 6
2. Decentralized Cost Model 28
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1. INTRODUCTION
During 1992, Sierra Research developed two I/M Cost Estimation spreadsheet models to
estimate the cost of a variety of I/M program alternatives that were of interest to the
California Air Resources Board (CARB) and the California I/M Review Committee. The
models account for individual I/M program cost elements (e.g., direct labor, land,
buildings, equipment, overhead, etc.) using a methodology that was patterned after
manual I/M cost worksheets developed by EPA in the late 1970s. Since the
development of the 1992 version of the models, they have been updated and modified to
support work that Sierra has performed for a variety of clients. The models have also
been validated against the actual costs of several different I/M program designs and
successfully predicted the significant cost increase that was associated with recent
changes to the California I/M program (called "Smog Check") involving a conversion to
loaded mode testing. Prior to the work described herein, the spreadsheet models were
undocumented and no users manual was available.
Assistance in the area of I/M program cost estimation is one of the services that EPA
provides to local, state, and international governments considering implementation of, or
significant modifications to, I/M programs. Because Sierra's models appeared to be
useful tools for estimating the costs of various I/M program designs, EPA issued, during
1999, Work Assignment 1-11 (under Contract No. 68-C7-0051) directing Sierra to
prepare and deliver documented versions of the models for use by EPA and other
interested parties. In 2000, EPA issued Work Assignment 2-04, directing Sierra to make
certain revisions to the models to make them more flexible.
Scope of Work
The scope of work followed by Sierra under Work Assignment 1-11 consisted of five tasks:
1. Work Plan Preparation and Review of Existing Default Values;
2. Preparation of Narrative Description of Model Structure, Input Variables, and
Default Values;
3. Internal Documentation and Code Review;
4. Preparation of Example Calculations; and
5. Reporting.
*
"Centralized I/M Program Cost Calculation Worksheet," U.S. Environmental Protection Agency, August
1979; and "Decentralized Private Garage I/M Program Cost Calculation Worksheet," U.S. Environmental
Protection Agency, August 1979.
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Task 1. Work Plan Preparation and Review of Existine Default Values - In addition to the
preparation of the work plan, Task 1 involved a review of the many default values
contained in the models. These include such values as the cost of bare land for inspection
facilities, the cost of test equipment, salaries for various personnel categories, etc.
Although all of these values can be modified by the user, the default values provide good
starting points when the models are applied to urban areas in the U.S. As noted below,
the documentation highlights those default values that are most likely to be affected by
local conditions.
Task 2. Preparation of Narrative Description of Model Structure. Input Variables, and
Default Values - Under this task, the structure of the models was summarized and the
basic steps in the calculation process were explained in more detail. Work under this task
also included developing warnings to the user about changing certain input variables or
default values beyond certain limits. (The need for some of those warnings was
subsequently eliminated under revisions made during the completion of Work
Assignment 2-04.)
Task 3. Internal Documentation and Code Review - Internal documentation of the
models primarily consisted of showing the basic formulas used at key locations in the
spreadsheets. Headings embedded in the spreadsheets also explain the purpose of various
sections of the model. The internal documentation will be useful to users who have
already reviewed the separate documentation. During the performance of this task, the
code was also reviewed and minor programming errors were corrected.
Task 4. Preparation of Example Calculations - To help users understand the operation of
the models and the sensitivity of the output to key input variables and default values,
several example calculations were described in detail. Two examples provide a
comparison of a decentralized loaded mode program to a centralized program using the
same test procedure. Other examples cover the effect of changes in the vehicle
population and the length of the program.
Task 5. Reporting - This task covered the preparation of a draft final report. Sierra also
submitted electronic versions of the documentation and spreadsheets on diskette. The
report itself was in WordPerfect 8.0 format and the spreadsheets were in Lotus 123
format.
Under follow-on Work Assignment 2-04, there was a similar reporting task. All other
work was covered under a task entitled "Model and Documentation Revisions." The
revisions to the models and associated documentation made under that task were as
follows:
1. Summary of Inspection Fees: There were two blocks of results contained in the
version of the spreadsheet models prepared under Work Assignment 1-11. The first
block showed the test fees associated with a program that requires motorists to pay for
each test at the time it is performed. The second block showed the test fees associated
with a program that requires motorists to pay only one fee that covers both the initial
test and any retests that are subsequently required. Under Work Assignment 2-04, the
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difference between these fee summaries were clarified in both the internal
documentation and the written description of the model contained in this report.
2. Currency Adjustment: Sierra modified the models so that users can specify currency
different from U.S. dollars. This was accomplished by adding a variable for the
exchange rate from the local currency to U.S. Dollars and converting appropriate
spreadsheet cells based on the specified conversion rate.
3. Labor Rate Multiplier: In order to adjust labor rates for various labor categories to
local labor rates, the initial versions of the models require the user to make many
changes in various protected cells in the spreadsheet. While a labor rate multiplier
allowed the user to adjust, in effect, the overall or average rate, it did not allow for a
change in the relationship between, for example, the program administrator and a test
technician. To provide greater flexibility, two different labor rate multipliers were
incorporated—one for the employees working in inspection facilities, and the other
for administrative personnel.
4. Inflation Adjustment: Sierra added a factor to adjust all of the non-labor cost
assumptions in the models (e.g., construction, equipment, etc.) for either inflation or
local factors.
5. Comments: Sierra modified the descriptions of program operation contained in this
report and the internal documentation within the spreadsheet models to provide more
detailed information on the following inputs:
a. Percent of Vehicles Exempt: The standard exemption rates are based on the typical
U.S. fleet. Given the international application of this model, a more general
explanation, using a U.S. example, was incorporated.
b. Annual Interest Rate: Sierra clarified the statement "Use Prime Rate" to indicate
that it is the expected cost of financing loans during the program period, with the
U.S. Prime Rate being a recommended value for U.S. programs.
c. Lane Loading Percentage: Sierra further defined this term and provided
additional guidance regarding how to estimate this value.
d. Hourly Lane Throughput (Max.): To address ambiguities regarding the definition
of this term, Sierra added a whole new section to the centralized program
spreadsheet to internally calculate this value from program characteristics (e.g.,
test type, number of lane positions, etc.).
e. Property Tax Rate per Full Value (Contractor program)-. Sierra revised this
description to clarify that it is the property tax rate based on the market value of
land and facilities rather than a rate that applies to some arbitrarily discounted
value (as is used in some jurisdictions).
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f. Average Number of Inspectors per Lane: Based on information obtained from
centralized I/M program operators, the average number of inspectors per lane is
one less than the number of lane positions. This results from the partial staffing
that is common during the slack periods associated with a lane loading percentage
of 50%. The accuracy of this estimate was confirmed based on additional
consultation with program operators and the spreadsheet was modified to
eliminate the need for the user to enter this value.
g. Lane Equipment: Sierra reviewed the lane equipment cost estimates and adjusted
them as required. Sierra also expanded the documentation to clarify precisely
what equipment is included in the cost estimate. Sierra also added an estimate for
VMAS flow measurement equipment to the transient loaded testing alternative.
h. Site Preparation Costs: Sierra provided a clearer explanation of specific items
included in this input and specifically addressed whether utility connections are
included.
i. Lane Efficiency Factor: Sierra provided more explanation of this term, which
accounts for the net effect of equipment failures and test aborts, and clarified that
it is not related to Land Loading Percentage.
j. Initial/Recurring Program Design and Engineering Cost: Sierra revised the
documentation to clarify that the program design and engineering cost is a
percentage of the total investment in land, buildings, and equipment.
k. Excel Versions : Sierra prepared Microsoft Excel versions of both spreadsheets to
be provided along with the Lotus 123 versions.
Organization of the Report
Following this introductory section, Section 2 of the report describes the basic structure,
input variables, and default values for the centralized program version of the model.
Section 3 describes the differences between the structure, input variables, and default
values for the decentralized (private garage) program version of the model. Section 4
presents the results of example calculations.
II II II
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2. CENTRALIZED PROGRAM MODEL
The basic method used in the computer spreadsheet for centralized (high-volume, test-
only) I/M program cost estimation accounts for all costs "from the ground up." Capital
costs (e.g., equipment purchases) are amortized and converted to annual costs after
accounting for the money needed to make the capital investments. Annualized capital
costs are added to recurring costs (e.g., wages) to determine the total annual cost. After
accounting for an assumed profit margin, the annual cost is divided by the average annual
number of I/M tests projected for the contract period to produce a cost-per-test estimate.
Figure 1 shows what the spreadsheet looks like on-screen with user inputs for a
hypothetical program involving an automobile population of 2 million, exemptions for
vehicles up to five years of age, and biennial testing. The spreadsheet contains a
"Summary of Inspection Fees & Facilities" and five other sections. The first page of
Figure 1 contains the fee summary, the number of inspection stations and lanes required,
and the section of the spreadsheet listing various program parameters, many of which
(e.g., automobile population) are unique to a particular program area. In addition to the
parameters that are unique to a particular program area, there are a number of other
parameters listed in Section I that the user has the option of modifying to reflect area-
specific information (e.g., construction costs). Although it is possible for the user to edit
the default values contained in other sections, the default values are considered
representative and should be modified only when locally available data are clearly more
accurate. To minimize the risk of inappropriate changes in default values, the only
"unprotected" cells in the spreadsheets are those where program-specific changes are
expected (e.g., vehicle population, program length, etc.). However, changes to the
assumptions built into the spreadsheets can be made by unchecking the "Lock contents of
protected cells" box on the "Sheet Properties" window.
The second page of Figure 1 shows the calculations made to determine the number of
inspection lanes required for the specified vehicle population and test procedure. At the
top of this page is the section used to calculate the maximum lane throughput associated
with the selected combination of test procedures and the number of lane positions. The
maximum throughput value is then used to calculate the number of inspection lanes
required in conjunction with the values for average annual vehicle population (AAP), the
percent of initial tests conducted at centralized facilities (1NIT), the projected failure rate
or "stringency" (STR), the estimated number of extra (out-of-cycle or voluntary) tests
(XTR), and the percent of retests conducted at centralized facilities (RTST).
Beginning on the third page of Figure 1, Section II of the spreadsheet addresses the start-
up or "initial" costs to a program operator associated with land acquisition, facility
construction, hiring, and training. Beginning on the fifth page of Figure 1, Section HI
covers recurring program operator costs, such as employee wages and benefits.
Beginning on page six of figure 1, Section IV of the spreadsheet contains the
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Figure 1
Centralized _IM_EPA. 123
Prepared by Sierra Research, Inc., November 2000
Centralized l/M Cost Model
0. SUMMARY OF INSPECTION FEES & FACILITIES
Motorists pay for each test,
whether initial or re-test.
Motorists pay only for initial test.
No charge for retests.
Fees Shown In US Dollars
With CVS Cell
No CVS Cell
Contractor
Fee/Test
14.02
14.02
[With CVS Cell
No CVS Cell
State
CVS Cost/Test
Total
State Costs/Test
Fee/lnit Tesl
"17.11
17.11
0.55
Total/Test
0.45 1.52
n.a. 1.07
CVS Cost/lnit State Costs/lnit
15.54
15.09
Totat/jnitial Test
1.85
1.40
18.96
18.51
Facilities
Number of Lanes
37
Number of Stations
10
I. PROGRAM PARAMETERS
1.
Local Currency/US Dollar
LC/USD =
1
Enter amount of local currency equivalent to one US dollar.
2.
Present Auto Population
POP =
2,000,000
3.
Annual Auto Population Growth Rate (%)
GRT =
2.0%
4.
Percent of Vehicles Exempt
EXEMPT =
44%
For '81 and later US fleet, use 20% for current yr + 2; 36% for current + 3; 44% for current +4
5.
Inspection Frequency (Annual - 1, Biennial = 2)
FREQ =
2
Average years between inspections for non-exempt vehicles
6.
Annual Inflation Rate (%)
INF =
1.5%
Use annual change in Consumer Price Index
7.
Annual Interest Rate (%)
INT =
7.5%
Cost of financing loans; Use current prime rate for US programs.
8.
Program Length (years)
PRL =
7
5-7 years minimum needed for cost/effective amortization
9.
Annual Operating Hours
HRS =
2,340
Exceeding 2400 may not be cost/effective
10.
Lane Loading Percentage (100% = all lanes always busy)
LLP 55
50%
50% typical; long lines expected above 66%.
11.
Lane Efficiency Factor
EFF =
85%
85% max for experienced contractors
12.
Stringency Factor (%)
STR =
20.0%
New programs may require start-up standards to avoid excessive failure rates initially
13.
Property Tax Rate per Full Value (contractor program)
PRT =
2.00%
Area specific, 2% typical In US
14.
Number of Lane Positions
#POS =
3.0
1, 2, or 3; 1 position lanes inefficient except for simplest tests
15.
Exhaust Test Type
ExTest =
asm1
IDLE, TSI, ASM1, ASM2, IM240, IM147, BAR31, NONE
16.
Loaded Preconditioning?
Precond =
no
¦Yes- or "No"
17.
Fast Pass Algorithm?
Fast Pass =
yes
"Yes" or "No"
18.
Dyno Type
Dyno =
ss
Steady-State (SS), Transient (TRANS), NONE
19.
Exhaust Test Equipment
ExMeas =
ndir
CVS, VMAS, NDIR, CUSTOM, NONE
20.
Evaporative Test Type
Evap =
cap
NONE, CAP, PRES. FULL
21.
Time for Other Visual/Functional Checks
Func =
0
Enter Time in Seconds, Use 40 seconds for OBDII check
22.
Maximum Lanes per Facility =
MaxLanes =
4
Default = 4 to minimize driving distance without major cost impact
23.
Minimum Number of Test Facilities «
MlnStations =
1
Default = ifor minimum cost per test
24.
Minimum Number of Total Lanes =
MlnLanes =
1
Default = 1 for minimum cost
B. Optional User Inputs
25.
Steady State Loaded Mode Equipment Cost
$SSLoaded =
97,000
Default=US$ 97,000.00
26.
Transient CVS Equipment Cost
$CVS =
145,000
Defauit=US$ 145,000.00
27.
Transient VMAS Equipment Cost
$VMAS =
105,000
Default=US$ 105,000.00
28.
idle Equipment Cost
$ldle =
57,000
Default=US$ 57,000.00
29.
Custom, User-Specified Equipment Cost
SCUSTOM =
100,000
Defaull=US$ 100,000.00
30.
Equipment cost per lane -
$/LANE =
97,000
31.
Land Acquisition Cost per square foot
$LAND/ft2 =
10.00
Typical = US$ 10.00 Metropolitan area costs range from US$7-15 in industrial areas
32.
Construction Costs per square foot
$CONS/ft2 =
80.00
Default=US$ 80.00 US$80 Typical barring extraordinary costs
33.
Site Preparation Costs
$SITE =
100.000
Typical = US$ 100,000.00 US$50,000 - US$200,000, depends on local utility hookup costs
34.
Paving Costs per square foot
$PAVG/ft2 =
2.00
Typical = US$ 2.00 US$2.00 Typical
35.
Monthly Office Space Rental Cost per square foot
$RENT/ft2 =
1.20
Typical = US$ 1.20 US$1.20 Typical
36.
Training Cost per mechanic
$MCH =
50.00
Typical = US$ 50.00 Cost covers dissemination of program information and perhaps <
37.
Mechanics Required per 1,000 autos
Mech/1,000 =
1
1.0 typical
36.
Initial Public Information Costs
$IPI =
0.50
Oefault/veh = US$ 0.50 US$0.50 Typical
39.
Recurring Public Information Costs
$RPI =
0.10
Default/veh = US$0.10 US$0.10 Typical
40.
Annual Percent Additional Tests (%)
XTR =
2.0%
2% is reasonable minimum
41.
Percent of Initial Tests at Centralized Facility (%)
INIT =
100.0%
100% for pure centralized program
42.
Percent of Retests at Centralized Facility (%)
RTST =
100.0%
100% for pure centralized program
43.
Initial Program Design and Engineering Cost
IDE =
10.0%
Default = 10% of land, building, and equipment costs
44.
Recurring Program Design and Engineering Cost
RDE =
0.2%
Default = 0.2% of land, building, and equipment costs
45.
Computer Processing Cost per test
$CPT =
0.05
Default = US$ 0.05
46.
CVS Test Cell Annual Capacity =
CVSCAP=
1,600
Default = 1600 for hot start 1M240S
47.
Labor Rate Multiplier for Administration/Management (Since 1/1/99)
1
Default« 1.0
48.
Labor Rate Multiplier for Test Facility Staff (Since 1/1/99)
1
Default a 1.0
49.
Capital, Land, Construction, Training Cost Multiplier (Since 1/199)
1
Default a 1.0
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Figure 1
C. Facility Requirement Calculations
1. Throughput Calculations
Number of Lane Positions
Lane Activities:
One
Two
Three
No Exhaust Test
0
0
0
Idle/precond
0
0
0
Idle
0
0
0
TSI. precond
0
0
0
TSt
0
0
0
ASM1, fast pass
80
80
80
ASM1
0
0
0
ASM2, fast pass
0
0
0
ASM2
0
0
0
IM240
0
0
0
IM240, fast pass
0
0
0
Transient, fast pass/precond
0
0
0
Other Transient w/o precond
0
O
0
Position Change
0
10
10
Off/On Dyno
90
90
90
Evap Testing
20
20
20
Other Functional Testing
0
0
0
Oata Entry Position
105
0
0
Test Results
50
50
50
Peak Tests/Hour
10.43
15.65
20.00
Degree of Difficulty
1.3
1.3
1.3
2. Average Annual Population
i = PRL-1
AAP = POP(VEXEMPT) x (SUM (1+GRT)«i ] I (PRl x FREQ 594,743
i=0
3. Average Annual Tests Performed
TST = AAP x [INIT + (STR + XTR) x RTST] = 725,586
4. Maximum Test Rate
(From table above) Cars/hr = 20.00
5. Annual Lane Capacity
CAP = HRS x Cars/hr CAP = 46,800
6. Total Test Lanes Required
LAN = TST / (CAP x LLP x EFF) LAN = 37 Larger of LAN or MinLanes =37
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Figure 1
INITIAL COSTS TO PROGRAM OPERATOR
A. Estimates of Facility Requirements
1. Inspection Facility Square Footage Requirements (enter data in sq ft)
LAND
|
LANES
OFFICE
ETC.
PAVING
Basic per
Additional |
per
Basic per
Additional
Basic per
Additional
Facility
per Lane >
Lane
Facility
per Lane
Facility
per Lane
20,000
10,890]
1,000
1,000
0
5,000
3,200
Allocation of Lanes and Square Footage Requirements
LANE ALLOCATION
LAND
BUILDING
•
Lanes per
# Facilities
Total
Each
LANES
OFFICE, ETC.
PAVING
Facility
This Size
Lanes
Facility
Total
Each Facility
Total
Each Facility
Total
Each Facility
Total
1
0
0
1,000
0
TOTAL
10
37
LND =
602.930
LNS =
37,000
OFC =
10,000
PVG =
168,400
(FAC)
(LAN)
Inspection Facility Personnel Hiring and Training Requirements
Annual Salary
Overhead
Duration of
Direct Costs
Total Training
Hiring
Total Training
Facility Staffing Requirements
per employee
& Fringe
Instruction per
of Instruction
Cost per
Cost per
& Hiring Cost
Position
A of Positions
Pers-Yrs
@ 2340 hrs/yr
@ 40 hrs/week
30%
Trainee (hrs)
per Trainee
Employee
Employee
per Employee
Station Manager
1
1.13
per facility
27,750
8,325
640
400
11,500
200
11,700
Asst. Station Manager
1
1.13
per facility
19,990
. 5,997
160
400
2,399
100
2,499
Inspection Technicians
2.50
2.81
per test lane
18,928
5,678
160
200
2,093
50
2,143
Customer Service Rep
0
0.00
per facility
23,200
6,960
60
200
1,360
50
1,410
B. Calculation of Facility Investment Costs
1. Construction and Land Acquisition Costs
a. Land Acquisition = LND x $LAND/ft2 =
b. Paving
SLANDAQ =
$PAVING
= PVG x $PAVG/ft2 =
c. Construction = (OFC + LNS) x $CONS/ft2 = $CONSTR =
d. TOTAL Building = JPAVING + JCONSTR = {BUILDING =
3. Facility Preparation and Equipment Costs
6.029.300
336,800
3,760,000
4.096.800
2. Inspection Facility Personnel Hiring and Training Costs
a. Station Managers:
11700 x 1.13/ facil x FAC
b. Assistant Station Managers:
2499 x 1.13 / facil X FAC
c. Inspection Technicians:
2143 x 2.81/lane x LAN
d. Customer Service Representatives:
x /facil x FAC
e. TOTAL Inspection Facility Personnel
Hiring & Training
= FIELDPERS =
(5PREP)
131.625
28.114
222,985 (staffed lanes)
382,724
Per
Site Preparation
Test Equipment
Office & Other Equipmt.
Data Proc. Equipmt.
(Category)
Number
Each
Total
Each Total
Each
Total
Each
Total
TOTAL
Facility
10
100,000
1,000,000
20,000
200,000
0
1,200,000
Test Lane
37
97,000 3,589,000
0
3,589,000
Satellite Offices
1
N/A
20,000
20,000
0
20,000
Central Office
1
N/A
40,000
40,000
100,000
100,000
140,000
TOTAL
1,000,000
3,589,000
260,000
100,000
SEQUIP = 4,949,000
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Figure 1
C. Start-Up Administrative Costs
1. Start-Up Personnel Costs
Position Area
Program Administrator
Area Administrators
Technical Officers
Data Analysis/Statistical Staff
Clerical and Secretarial Staff
TOTAL
Number
Average No. of
Annual Salary Overhead
per Central Number per Total Number Startup Hours Total Person @ 40 hrs/week & Fringe
Office Satellite Office
of Employees
1
1
4
2
5
13
per Employee
3,120
2,080
1,040
693
693
Years
1.5
1.0
2.0
0.7
1.7
per Employee
67,500
62,500
52,500
37,500
22,500
50%
33,750
31,250
26,250
18,750
11,250
Total Salary
and Benefits
151,875
93,750
157,500
37,482
56,223
496,830
($CSBP)
2. Start-Up Training and Hiring Costs
Position Area
Program Administrator
Area Administrators
Technical Officers
Data Analysis/Statistical Staff
Clerical and Secretarial Staff
TOTAL
Total
Number of
Employees
1
1
4
2
5
13
Annual Salary
and Benefits
per Employee
101,250
93,750
78,750
56,250
33,750
Duration of
Instruction (hrs)
(Per Employee)
40
40
80
40
40
Direct Cost of
Instruction
(Per Employee)
2.000
2,000
3,000
2,000
400
Total
Training Costs
(All Employees)
3,947
3,803
24,115
6,163
5,245
43,274
Hiring
Costs
(Per Employee)
10,000
5,000
1,000
500
400
Total Training
Plus Hiring
(All Employees)
13,947
8,803
28,115
7,163
7,245
65,274
(JCHIRE)
3. Calculation of Start-Up Administrative Costs
a. Start-Up Personnel
b. Initial Public Information
= $CSBP
$IPI or $IPI/vehicle x POP
c. Initial Program Design, Eng. & Eval.
%IDE x (JLANDAQ + JBUILDING + $EQUIP)
or $IDE/veh. x POP
d. Administrative Personnel Hiring and Training
e. TOTAL Start-Up Administrative Costs
JCHIRE =
496,830
1,000,000
1,507,510
65,274
3,069,614
D. Total Initial Costs to Program Operator
1. Land Acquisition = $LANDAQ = 6,029,300.00
2. Total Building = {BUILDING = 4,096,800.00
3. Field Personnel Training & Hiring = SFIELDPERS = 382,723.88
4. Facility Preparation & Equipment = SEQUIP = 4,949,000.00
5. Land Purchase & Re-Sale Fee = 6.0%
x JLANDAQ = $LNDFEE = 723,516.00
6. TOTAL Start-Up Administrative Costs = SADMIN = 3,069,613.97
7. SUBTOTAL = SFIELDPERS + JEQUIP + $ADMIN = SSTARTUP = 9,124,853.84
8. TOTAL Initial Costs = SLANDAQ + SBUILDING + JSTARTUP = 19,250,953.84
-------
Figure 1
III. RECURRING COSTS TO PROGRAM OPERATOR
A. Personnel Costs
Central Office Operating Staff
Annual Salary
2. Each Satellite Offices Operating Staff
Position Area
Number
@ 40 hrs/week
Number
Annual Salary
Program Administrator
1
67.500
Position Area
Per Office
@ 40 hrs/week
Technical Officers
3
52,500
Area Administrator
1
62.500
Data Analysis/Statistical Staff
2
37.500
Technical Officers
1
52,500
Clerical and Secretarial Staff
4
22.500
Data Analysis/Statistical Staff
0
37,500
SUBTOTAL (salary x person years)
390,000
Clerical and Secretarial Staff
1
22,500
Overhead & Fringe
50.0%
195,000
SUBTOTAL (salary x person years)
137,500
TOTAL
SCSTAFF =
585,000
Overhead & Fringe
Total per Satellite Office
TOTAL
50.0%
SSSTAFF «
68,750
206,250
206,250
3. Inspection Facility Operating Staff
a.
Station Managers:
S salary
X
#/facil x
FAC
b.
Assistant Station Managers:
S salary
X
0/facil x
FAC
c.
Inspection Technicians:
S salary
X
Mane x
LAN
d.
Customer Service Reps:
% salary
X
Ullacil x
FAC
312,187.50
224,667.50
1,969,695.00 (staffed lanes only)
e. SUBTOTAL
2,506,770.00
f. Overhead and Fringe Benefits
g. TOTAL Inspection Facility
Operating Staff
= SFSTAFF
B. Miscellaneous Total Recurring Costs
1. Office Rental
tfCSTAFF x SRENT/ft2 x 12 = 26,600
SSSTAFF x SRENT/ft2 x 12 = 6.460
TOTAL RENTAL COSTS = 35,260
2. Support Services to Facilities
Basic per facility = 12,000
Additional per lane »
TOTAL SUPPORT SERVICES 120,000
3. Operating Supplies
N2 Gas = USS30/2S0 Tests = 67,070
Cal. Gases = USS240/2 mo /lane = 53,260
Misc. Supplies = US$250/lane = 9,250
SSUPP = 149,600
4. Travel 4.000 /facil x FAt 40,000
5. Public Information = SRPI or $RPI/veh. x AAP = 59,474
6. Equipment Maintenance
10% x ({EQUIP • SPREP) 394,900
7. Annual Program Design. Eng. & Eval.
%RDE x (SLANDAQ + $8U1L0ING * (EQUIP) =
Computer Processing of Tests = $CPT x TST
Insurance Costs (where applicable) •
"Buildings' rate
"Office Contents" rate
Liability Insurance =
Test/Data Proc. Equip." rate
Rate as %
Capital Cost
0.3%
4.5%
0.4%
TOTAL INSURANCE COSTS
Insurance
Cost
10.743
11,700
65.303 US$0.09 per tested vehicle
14,222
101,967
10. Personnel Costs
SCSTAFF ~ SSSTAFF ~ SFSTAFF = 4.050.051
11. Property Taxes (contractor program only)
PRT x (SBU1LD1NG ~ SLANDAQ ~ $EOUIP) = 301,502
12. Hiring and Training Costs Oue to Employee Turnover
20% x ($FlELOPERS ~ SCHIRE) = 89,600
13. TOTAL Recurring Costs = SRECUR = 5.510,771
-------
Figure 1
IV. ANNUALIZED COSTS TO PROGRAM OPERATOR
A. Average Recurring Costs ($RECURi) Accounting for Inflation
i = PRL-1
$RECUR x [ SUM (1 + INF)"i ) / PRL = 5,765,050
i=0
8. Amortization of Initial Costs
General Formulas
1. Value of Item Remaining VAE = $ITEM x (OEPR - PRL) / DEPR (where DEPR is
at End of Program depreciation period)
2. Present Discounted Value (PDV) of Item
Remaining at End of Program (VAE) PDV = VAE/(1 + INT)APRL
3. Value of Principle to be Paid PRIN = $ITEM - PDV
Off over Length of Program
4. Annual Payment for Initial
Loan for Item Plus Interest $PMT = PRIN x INT (1 + INT)APRL / (1 + INT)"PRL -1
(Note: Interest Rate Already Accounts for Inflation)
Calculation for Initial Specific Cost Elements
1. Land Acquisition:
Buy/Sell Discount Rate = 10.0% $PMT-Land = 520,811
(Relative VAE = (1 - Disc Rate) x JLANDAQ)
2. Building:
Depreciation period lyre) = 20 $PMT-Bldg = 470,436
3. Other Start-Up:
Depreciation period (yrs) = 7 $PMT-Start = 1,722,775
(VAE = 0; PRIN = $STARTUP)
4. TOTAL Annual Payment Plus Interest For Initial Costs = JPAYMENT = 2,714,022
C. Total Annualized Costs to Program Operator
JRECURI + JPAYMENT = $ ANNUAL = 8,479,071.91
Contractor's Net Return 20.0% 1,695,814.38
TOTAL Annualized Contractor Program Costs =$CONTR= 10,174,886.30
Annualized Contractor Cost per Vehicle = $CONTR/TST= 14.02
VAE
$5,426,370
$2,662,920
$0
PDV
3,270,771
1,605,088
0
PRIN
2,758,529
2,491,712
9,124,854
-------
V. PROGRAM COSTS TO STATE
A. Mass Emissions Testing Costs
1. Initial Test Cell Personnel
Position Area
Supervisor
Specialist 3
Specialist 2
Specialist 1
SUBTOTAL
Overhead & Fringe
TOTAL
Person Yean
0.3
0.1
0
0.1
95.0%
$MTSTIN=
Cosl/PY
37,500
35,000
32,000
27,500
17,500
16,625
34,125
NJ
3. Test Cell Start-Up Costs
a. Required Annual Mass Emission Tests
8MTSTS = Number of tests for statistically significant sample •
b. Required Number of Test Cells
SCELLS = MTSTS / CVSCAP
c. Facility Upgrades (dyno install, power, HVAC, etc.)
Single Test Cell Cost - SMBLDG =
SMBLDGS = $MBLDG x #CELLS
d. Cost of Test Cell Equipment
Single Test Cell Cost = JMEQUIP
SMEQUIPS = JMEQUIP x #CELLS
e. Total Capital Cost
$MCAP = SMBLDGS + JMEQUIPS
f. Initial Test Cell Personnel Cost = JMTSTIN =
g. Hiring and Training Cost for Test Cell Personnel
SMPERS x $2,000 /Employee
h. TOTAL Start-Up Test Cell Costs (SCELLIN) =
1,200
200,000
200,000
200,000
200,000
400,000
34,125
6,000
440,125
5. Amortization of Initial Test Cell Costs to State
PRL PRL
SCELLIN x INT (1 + INT) / (1 + INT) -1 = $CLPT =
Recurring Test Cell Costs to State Accounting for Inflation
I
PRL-1
SCELLAN x ( SUM (1 + INF) ] / PRL
i=0
TOTAL Annualized Test Cell Costs to State
JSTPT + JSANN
SCLANN
= SSTATE
Figure 1
Recurring Test Cell Personnel
Position Area
Person Years
Cost/PY
Supervisor
1
37,500
Specialist 3
1
35,000
Specialist 2
0
32,000
Specialist 1
1
27,500
SUBTOTAL (#MPERS =)
3
100,000
Overhead & Fringe
95%
95,000
TOTAL
$MTSTAN =
195,000
4. Test Cell Recurring Costs
a. Recurring Test Cell Pers. Cost = $MTSTAN = 195,000.00
b. Recurring Vehicle Recruitment Costs
Recruitment Cost/Vehicle = JRCTMT = 0.00
c. Recurring Maintenance Costs
% of Initial Test Cell Cost = %MMAINT = 10%
Annual Cost = $MMAINT x $MCAP = 40,000.00
d. TOTAL Recurring Test Cell Costs . = 235,000.00
83,096
245,843
328,939
6. Test Cell Portion Of Annual Fee to Motorists
a. Test Cell-Inspection Fee" = STOTL/TST = $0.45
-------
. Initial Oversight Costs
1. Central Administrative Personnel
Annual Salary
Position Area
Person Year:
@ 40 hrs/week
Program Administrator
1.0
67,500
Deputy Administrator
62.500
Auto Emissions Control Engineer
52,500
Emissions Testing Technician
27,500
Data Processing Specialist
1
52,500
Automotive Mechanic
35,000
Vehicle Inspection Specialist
2
42,000
Mechanic Certification Officer
1
37,500
Mechanic Certification Clerk
0
22,500
Secretary
0
25,000
Clerk/Typist
1
20,000
TOTAL
6.0
261,500
(SCAPIN)
2. Total Initial Costs to State
a. Central Administrative Personnel = SCAPIN + $BENIN =
b. Administrative Personnel Training & Hiring = $FTRN =
c. Initial Private Mechanic Training
Mech/1,000 x POP/(FREQ x 1.000) x $MCH
d. Data Processing Equipment
SDEQUIP = 2.000 x ((STAFF =
e. Initial Test Cell Costs = SCELLIN
(. TOTAL Initial Costs lo State = SSTIN =
Figure 1
95%
Overhead
Duration of
Direct Cost of
Total
Hiring
Total Training
& Fringe
Instruction (hrs)
Instruction
Training Costs
Costs
Plus Hiring
64,125
40
600
3,131
10,000
13.131
40
600
0
5,000
0
60
400
0
3,000
0
80
400
0
200
0
49,875
40
200
2,169
200
2.369
80
400
0
200
0
79,800
80
400
7,100
200
7.500
35,625
80
400
3,213
200
3.413
40
100
0
200
0
40
50
0
200
0
19,000
40
50
600
200
1.000
248,425
16,413
19,600
27,413
(SBENIN) ($FTRN)
509.925.00
27,412.50
50.000.00
12,000.00
440,125.00
1,039,462.50
-------
Figure 1
. Recurring Costs
1. Central Administrative Personnel
Position Area
Program Administrator
Deputy Administrator
Auto Emissions Control Engineer
Emissions Testing Technician
Data Processing Specialist
Automotive Mechanic
Vehicle Inspection Specialist
Mechanic Certification Officer
Mechanic Certification Clerk
Secretary
Clerk/Typist
SUBTOTAL
Overhead & Fringe
TOTAL
(SSTAFF) =
Person Year:
1.0
2
1
0
0
1
6
95.0%
SCAPAN =
Annual Salary
@ 40 hrs/week
67,500 1 person year, regardless of program size
62,500
52,500
27,500
52,500 1 person year, regardless of program size
35,000
42,000 1 + 1 per million tests
37,500 1 + 0.2 per million tests
22,500 0.2 per million tests
25,000 0.2 per million tests
20,000 1 + 0.05 per million tests
261,500
248,425
509.925
2. Total Recurring Costs to State
a. Central Administrative Personnel
b. Annual Additional Mechanic Training
20% of Initial Mechanic Training Cost
c. Recurring Test Cell Costs
e. Travel 5000 +
g. Equip. Maintenance
h. Contractual Services
i. Recurring Hiring and Training Costs
j. TOTAL Recurring Costs to State
. Annualized Costs to State
1. Amortization of Initial Costs to State
PRL
$STIN x INT (1 + INT) / (1 + INT) -1 = $STPT =
2. Recurring Costs to State Accounting for Inflation
= SCAPAN =
SCELLAN =
300 x #STAFF =
10% x $DEQUIP =
= $STRC =
PRL
509,925
10,000
235,000
6,800
1,200
100,000
2,741
865,666
PRL-1
$STRC x [ SUM (1 + INF) ] / PRL
i=0
= SSANN =
196,251
905,610
3. TOTAL Annualized Program Costs to State
SSTPT + SSANN
= SSTATE =
1,101,861
$1.52 State Cost/test
-------
calculations that convert the initial and recurring costs to an annualized basis. Beginning
on page seven of Figure 1, Section V of the spreadsheet contains calculations addressing
costs to the government agency overseeing the program. The calculations contained in
this section are based on the assumption that the agency operates a CVS test facility for
doing routine program evaluation testing; however, calculations are done with and
without CVS testing cost included. The values calculated in Sections IV and V feed into
the cost summary table at the top of the spreadsheet.
Key formulas used throughout the spreadsheet are documented on the spreadsheet in text
form. More detail on each section of spreadsheet is presented below.
Program Parameters and Default Values
Following the "Summary of Inspection Fees," the first section of the spreadsheet contains
a listing of certain program parameters. The primary program-specific parameters
affecting the cost per test are listed in Table 1. These are the most important "user
inputs" required for a model run. They include the automobile population, the portion of
that population that is exempt, the inspection frequency (e.g., annual or biennial), the
period over which capital investments will be amortized (program length), the type of
testing to be performed, and other relevant parameters.
Although all of the parameters listed in Table 1 can be modified to be program specific,
default values are suggested in several areas. There are two reasons for the default
values. In some cases a default value is used because program-specific data are not
expected to have a significant impact on the ultimate cost per test. In other cases, a
default value is used to provide some guidance. This is the case with respect to vehicle
exemptions, inspection frequency, program length, annual operating hours, lane loading
percentage, lanes per facility, minimum number of facilities, and stringency factor. The
default values used in these areas are what are considered reasonable to achieve a good
cost-effectiveness ratio and public acceptance. Significant deviations from the default
values can create problems such as much higher costs per test or long waiting lines.
Additional comments regarding each of the 24 Primary User Inputs are set forth below.
1. Local Currencv/US Dollar - This entry is the number of foreign currency units equal to
one US dollar. For US programs, the value of this parameter is set at 1.0.
2. Present Auto Population - This entry is the population of vehicles in the I/M program
area that are the type of vehicles (e.g., passenger cars, light-duty trucks) to be tested in the
program, including those vehicles exempted because they are relatively new. This
number excludes vehicles that are exempted because they are too old.
3. Annual Auto Pop. Growth Rate - Just as it sounds, this entry is the best local estimate
of the growth rate of the type of vehicles subject to the program.
-15-
-------
Table 1
Primary User Input Values for Centralized I/M Cost Model
Assumption
Default Value
Comments
Local Currency/US Dollar
1.0
Amount of Local Currency Equal
to One US Dollar
Present Auto Population
None
Use Local Data
Annual Auto Pop. Growth Rate
None
Use Local Data
Percent New Vehicles Exempt
44%
Represents Current + 4 Model
Years for 1981+ US Fleet
Inspection Frequency
2 (Biennial)
Most Cost-Effective
Annual Inflation Rate
None
Use Current CPI
Annual Interest Rate
None
Use Current Prime Rate
Program Length
7 years
Shorter Increases Cost/Test
Annual Operating Hours
2,340
(45 hr/week)
More Hrs/Wk May Increase
Cost/Test
Lane Loading Percentage
50%
Higher = Longer Lines
Lane Efficiency Factor
85%
Maximum for Experienced
Contractors
Stringency Factor (Failure Rate)
20%
Typical for Moderately Stringent
Standards
Property Tax Rate
None
Use Local Rate
Number of Lane Positions
None
1, 2, or 3 (Optimum number
depends on complexity of test)
Exhaust Test Type
None
Idle, TSI, ASM1, ASM2, IM240,
IM147, BAR31, or None
Loaded Preconditioning?
None
Yes or No, Yes Recommended to
Avoid False Failures
Fast Pass Algorithm?
None
Yes or No, Yes Recommended for
Minimum Test Time
Dyno Type
None
Steady-State (SS), Transient
(Trans), or None
Exhaust Test Equipment
None
CVS, VMAS, NDIR, CUSTOM,
or NONE
Evaporative Test Type
None
None, Gas Cap Only ("Cap"), Cap
and Pressure Test ("Press"), or
"Full" (Purge and Pressure)
Time for Other Visual/Functional Checks
None
Use 40 Seconds for OBD Check
Maximum Lanes Per Facility
4
4-6 Lane Facilities are More Cost-
Effective Than Smaller Facilities
Minimum Number of Test Facilities
1
Minimum of 1 Ensures Minimum
Cost
Minimum Number of Lanes
1
Minimum of 1 Ensures Minimum
Cost
-16-
-------
4. Percent New Vehicles Exempt - This entry is the fraction of the vehicles otherwise
subject to the program that are exempt because they are relatively new. Since there is
relatively little benefit from inspecting new vehicles until they are more than five years
old, programs will be more cost-effective if they exempt the current model year and four
additional model years. For the 1981 and newer fleet of passenger cars and light trucks in
the US, the current model year plus four additional model years is approximately 44% of
the fleet. For the current plus three additional model years, the percentage drops to 36%.
For the current plus two additional model years, the percentage drops to 20%.
5. Inspection Frequency - This entry is for the number of years between inspections: 1 for
annual programs and 2 for biennial programs. Because properly performed I/M repairs
last for more than one year and because of the relatively slow rate at which new defects
occur in customer service, biennial programs are more cost-effective than programs with
annual inspection frequency.
6. Annual Inflation Rate - The annual inflation rate, which in the US can be approximated
by the annual change in the Consumer Price Index, is used in several calculations and
needs to be adjusted to reflect current, local conditions.
7. Annual Interest Rate - This entry is for the cost of financing loans assumed to be used
to raise the capital necessary to purchase land, construct facilities, and purchase test
equipment. For US programs, the prime rate provides a reasonable estimate when more
specific information is not available.
8. Program Length - This entry is the period of time over which start-up expenses and
equipment costs can be amortized. The longer the period of time, the lower the cost per test.
9. Annual Operating Hours - In conjunction with other parameters, the annual operating
hours for the test facilities affect the cost per test. Maximum convenience for the
motorist is provided by relatively long operating hours; however, there must be a balance
between the number of inspection lanes and the hours of operation to achieve a cost-
effective program. Forty-five (45) hours per week has proven adequate in some
programs; other programs successfully use over 50 hours per week.
10. Lane Loading Percentage - This entry is the annual average throughput for each lane
as a percentage of the maximum theoretical throughput as adjusted by the "lane efficiency
factor" (see below). This is the primary factor that must be balanced with the annual
hours of operation. A lane loading percentage of 100% means there is always at least one
vehicle in line, waiting to be tested. This results in the minimum program cost; however,
unless motorist arrival times are uniformly distributed, a high lane loading percentage
results in long lines. Experience in the US indicates that, to avoid long lines, the lane
loading percentage should be no more than about 50%.
11. Lane Efficiency Factor - The lane efficiency factor is the average throughput that can
be achieved in a test lane when there is a queue of vehicles waiting to be tested. The
difference between the average throughput and the maximum theoretical throughput
results from aborted tests due to vehicle or equipment failures and occasional difficulties
-17-
-------
getting motorists to quickly respond to instructions. Experienced contractors can
generally achieve an efficiency factor of about 85%.
12. Stringency Factor ("Failure Rate') - This parameter is important because it affects the
retest volume. Higher stringency factors generally increase program benefits by
identifying more emissions-related defects. Excessively high stringency factors can cause
"false failures," however, especially when vehicles are inadequately preconditioned. It
also should be noted that the same emissions standards will cause a higher failure rate
during the initial inspection cycle than in subsequent cycles. If less stringent "start up"
standards are used during the initial inspection cycle, the failure rate during subsequent
cycles will likely be about 20% using the most stringent standards that enable the false
failure rate to be kept under 2%.
13. Property Tax Rate - The local property tax rate should determine this entry. If
necessary, the local rate should be adjusted to reflect the annual tax as a percentage of the
actual cost of the land, buildings, and equipment (as opposed to some discounted value).
14. Number of Lane Positions - Any I/M test can be conducted in a single position lane;
however, land, buildings, and equipment may be more efficiently utilized if the required
activities can be divided among two or three people working in two or three different
positions in the lane. More vehicles can be tested per hour if, for example, data entry is
performed in one position, the actual emissions test is performed in another position, and
the test results are presented to the motorist in a third position. Whether multiple lane
positions make sense depends on the complexity of the test. The more complex the test,
the more lane positions needed to minimize the cost per test.
The "Throughput Calculations" section of the spreadsheet determines the number of
vehicles per hour that can be tested as a function of the number of lane positions and the
type of test. The time required for each element of each type of test used in this portion
of the spreadsheet was obtained from experienced I/M contractors.
The table is structured to reduce the complexity of formulas that would otherwise be
needed to calculate the throughput based on the combination of program parameters
entered at the top of the spreadsheet. (The formula required to compute throughput in one
cell is too long for spreadsheet use.)
Each of the three columns of the table is for the number of "positions" in each lane. Each
row of the table represents a potential type of in-lane operation. The first 13 rows cover
the various types of exhaust emission test procedures. Within each of these rows, the
entry is zero unless that particular type of test is specified in the Primary User Inputs
portion of the spreadsheet. For the type of test that is specified, the entry in each column
of the row is the number of seconds required to perform the test. In the case of idle
and/or 2500 rpm tests, the entry in the row includes emissions measurement time plus the
time required to open the vehicle hood and attach the RPM hookup, insert the exhaust
sample probe, detach the RPM hookup, and close the hood. In the case of loaded mode
tests, the entry in the row is only for the number of seconds during which emissions are
measured. Other required activities are covered later in the table in the row labeled
"On/Off Dyno."
-18-
-------
The fourteenth row of the table lists the estimated time required to change from one lane
position to another.
The fifteenth row of the table is for the time required for the dynamometer test, excluding
the emissions test itself. This includes opening the vehicle hood, moving a cooling fan
into place, installing an exhaust collection device, getting the motorist out of the vehicle,
entering the vehicle, exiting the vehicle, returning the motorist to the vehicle, moving the
fan, closing the hood, and removing the exhaust collection device.
The next four rows of the table are for the time required for evaporative testing, other
functional testing, data entry, and presentation of test results to the motorist. The formula
embedded in the cells for the evaporative testing row calculates a time for the test as a
function of the type of test selected in the program parameters portion of the spreadsheet
(e.g., gas cap test only vs. gas cap plus pressure test). The time for other functional tests
depends on what has been entered in the program parameters section. The time for data
entry depends on whether a dynamometer is used for the exhaust emissions test or
whether emissions are measured only under idle and/or 2500 rpm conditions. More time
is associated with dynamometer testing because of the need to enter additional
information regarding the type of vehicle being tested. Likewise, the amount of time
required to report the results to the motorist depends on the complexity of the test.
The calculation of maximum throughput at the bottom of each row involves a relatively
simple allocation of individual time entries among the available positions. For one-
position lanes, the throughput calculation is based on a summation of all entries. For
two-position lanes, the data entry is assumed to occur in position one, and the emissions
testing and results reporting is assumed to occur in position two. The location of the evap
and functional testing depends on which location results in the minimum time in the lane.
For the three position case, the results reporting is assumed to occur in the final position,
and the evaporative and functional testing is placed in position two or position three,
depending on which position minimizes the time in the lane. The throughput calculation
results are shown in the next-to-last row.
The final row of the table contains the estimated "degree of difficulty" associated with the
selected test procedure. For loaded mode testing, the degree of difficulty is set at 1.3.
For idle or two-speed idle tests, the degree of difficulty is set at 1.0. This value is
subsequently used to adjust the labor rate for the inspectors working in the lane.
15. Exhaust Test Type - This entry is used to indicate the type of exhaust emissions test to
be used. The options are for idle and two-speed idle (TSI) testing, single mode
Acceleration Simulation Mode testing (ASM1), dual mode ASM testing (ASM2), IM240
testing, IM147 testing, the very short BAR31 transient test, and "None". The entry made
here affects the test time and equipment cost calculations made later in the spreadsheet.
16. Loaded Preconditioning? - A yes or no entry for loaded preconditioning affects the
test time for certain test procedures. Although it increases the test time, preconditioning
is recommended to avoid false failures.
-19-
-------
17. Fast Pass Algorithm? - A yes or no entry for the use of a fast pass algorithm also
affects the test time. With a fast pass algorithm, test time can be shortened with no
significant loss in program benefits.
18. Dvno Type - This entry is subsequently used to determine the equipment cost
associated with the program. Logic incorporated in the spreadsheet produces error
messages if the type of dyno selected is inconsistent with the type of exhaust emissions
test selected, e.g., transient dynos must be specified for transient tests like the IM240.
19. Exhaust Test Equipment - As with the dyno type entry, this entry affects the
equipment costs and is checked for consistency with the type of test selected. Transient
tests require either constant volume sampling (CVS) equipment or the less expensive
"VMAS" equipment that uses NDIR analyzers to measure pollutants in the raw exhaust
stream while using dual oxygen sensors and flow meters to determine exhaust volume.
20. Evaporative Test Type - This entry specifies what type of test, if any, of the
evaporative emissions control system is to be performed. The options range from a
simple pressure test of the gas cap, to a pressure test of the cap and the rest of the system,
to a full purge and pressure test.
21. Time for Other Visual/Functional Checks - This entry is to cover the time (in
seconds) required for any additional inspection procedures besides the exhaust test and
the evaporative system check. It is recommended that a value of 40 seconds be entered
for OBD system checks, which includes the time needed to connect/disconnect the OBD
connector and download the data from the vehicle.
22. Maximum Lanes Per Facility - This entry is used to specify the maximum number of
test lanes at each test facility. In conjunction with the minimum number of test facilities
and the minimum number of total lanes, this parameter can affect the overall cost per test.
Multi-lane facilities are more cost-effective than single-lane facilities; however, multi-
lane facilities increase the spacing between facilities, thereby increasing the time required
for motorists to drive to the nearest facility. For large urban areas, 4-6 lanes per facility is
usually a good compromise.
23. Minimum Number of Test Facilities - As noted above, this parameter involves a
tradeoff between facility spacing and cost per test. Specifying a minimum of one facility
ensures the minimum program cost per test. A value of one will allow the number of
facilities to be based on the specified maximum number of lanes per facility and the total
projected test volume (or the specified minimum number of lanes).
24. Minimum Number of Lanes - This is another parameter that involves a tradeoff
between motorist convenience and program cost. For minimum cost, the minimum
number of lanes should be set at one. A value of one will allow the number of lanes to be
based on the specified minimum number of facilities and the total projected test volume.
In addition to the parameters listed in Table 1, there are several other parameters
contained in the first section of the spreadsheet ("Optional User Inputs") that are not
-20-
-------
intended to be routinely modified by program users. These parameters are listed in
Table 2. They include equipment cost estimates, construction costs, public information
costs, and program design and engineering costs. At the bottom of this list are three
adjustment factors to account for program-specific differences in labor rates and other
costs.
Equipment Costs - The first several entries under the "Optional User Inputs" portion of
the spreadsheet cover Steady-State Equipment Cost, Transient CVS Equipment Cost,
Transient VMAS Equipment Cost, Idle Equipment Cost, and "Custom" Equipment Cost.
The "Custom" cost category is intended to deal with unique situations without requiring
the user to modify a default value for one of the standard equipment configurations.
Based on the type of test selected under the "Primary User Inputs," one of the cost
estimates is transferred to the entry labeled "Equipment Cost Per Lane." (This is a
protected cell not intended to ever be overwritten.)
Basic Facility Costs - The next four lines of the Optional User Inputs cover Land
Acquisition Cost Per Square Foot, Construction Costs Per Square Foot, Site Preparation
Costs, and Paving Costs Per Square Foot. The default values are typical of US urban
areas; however, regional differences can be substantial for land costs. In addition, site
preparation costs can be highly variable. They are often affected by whether public
roadway improvements are required. The default value of US$100,000 per site assumes
no extraordinary costs, such as public roadway improvements. It also assumes electric
power and sewer hookups are available without extraordinary expenses. However, the
cost of bringing power, water, and sewer to the site from adjacent streets and properties is
included.
The entry for "Monthly Office Space Rental Cost Per Square Foot" covers the cost of
facilities for administrative personnel.
Training Cost Per Mechanic - This entry covers the cost of educating mechanics about the
requirements of the program. The $50 default value is only sufficient to cover the cost of
preparing and mailing informational materials and conducting seminars prior to program
startup for interested mechanics. If the program is to cover the costs of a more
meaningful training program, the cost for this item can increase substantially.
Mechanics Per 1.000 Autos - In conjunction with the above item, the number of
mechanics per 1,000 vehicles subject to the program determines the total mechanic
training cost.
Public Information Costs - Initial and recurring public information costs are intended to
covered by this entry. Initial public information costs are significant because public
confusion about program requirements is a common problem that threatens the viability
ofl/M programs.
-21-
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Table 2
Secondary User Input Values for Centralized I/M Cost Model
Assumption
Default Value
Comments
Steady-State Equipment Cost
US$97,000
Vendor Cost Estimate
Transient CVS Equipment Cost
US$145,000
Vendor Cost Estimate
Transient VMAS Equipment Cost
US$105,000
Vendor Cost Estimate
Idle Equipment Cost
US$57,000
Vendor Cost Estimate
Custom Equipment Cost
None
User Specified
Equipment Cost Per Lane
None
Calculated Value
Land Acquisition Cost Per Square
Foot
US$10
Typical US costs range from $7-
15/sq.ft.
Construction Costs/Square Foot
$80/^
Local Rates May Vary
Site Preparation Costs
$100,000
Local Costs Vary
Paving Costs/Square Foot
$2.00/^
Local Rates May Vary
Office Space Rental/Square Foot
$1.20/mo./ft2
Local Rates May Vary
Training Cost Per Mechanic
$50
Covers Information Mailing
Plus One Seminar
Mechanics Per 1,000 Autos
1.0
Typical
Initial Public Information Costs
$0.50/veh 1st yr
Recommendation Based on
Historical Experience
Recurring Public Information Costs
$0.10/veh/yr
Recommendation Based on
Historical Experience
Annual % Additional Tests
2.0%
Out-of-Cycle/ Voluntary/
Multiple Retests/ Unnecessary
Test Estimate
Percent of Initial Tests at
Centralized Facility
100%
100% for Pure Centralized
Program
Percent of Retests at Centralized
Facility
100%
100% for Pure Centralized
Program
Initial Program Design &
Engineering Costs
10%
10% of Land & Equipment
Costs
Recurring Program Design &
Engineering Costs
0.2%
0.2% of Land & Equipment
Costs
Computer Processing Costs/Test
US$0.05
CVS Test Cell Annual Capacity
1,600
Hot Start IM240 Tests
Labor Rate Multiplier for
Admin/Management
1.0
Baseline is 1/1/99
Labor Rate Multiplier for Test
Facility Staff
1.0
Baseline is 1/1/99
Capital, Land, Construction,
Training Cost Multiplier
1.0
Baseline is 1/1/99
-22-
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Volume of Tests at Centralized Facilities - "Annual % Additional Tests" is an entry
intended to cover out-of-cycle tests (e.g., due to a change of ownership inspection
requirement), voluntary tests, multiple retests (for vehicles that fail their initial retests), or
otherwise unnecessary tests that might be conducted at centralized facilities. Although
the suggested default value of 2% is relatively small, ignoring this factor can result in an
undersized network. The entries for "Percent of Initial Tests at Centralized Facility" and
"Percent of Retests at Centralized Facility" will be 100% unless the centralized testing
network is part of a "hybrid" program design under which some testing is conducted at
private garages.
Program Design & Engineering Costs - Initial and recurring program design and
engineering costs are expressed as a percentage of land, facilities, and equipment costs.
Although some economies of scale would be anticipated, empirical data indicate that
design and engineering costs are proportional to the total capital investment.
Computer Processing Costs/Test - This relatively small item is broken out because
program-specific computer processing costs can be significantly larger depending on
whether repair data are collected and used to identify underperforming facilities.
CVS Test Cell Annual Capacity - When a CVS test facility is used for routine program
evaluation, the cost per test depends on whether the testing involves quick, simple hot
start tests, like the 1M240, or more time-consuming cold start tests using the full Federal
Test Procedure. The default estimate for annual test cell capacity assumes IM240 testing.
Labor and Capital Cost Adjustments - Three different adjustment factors can be entered
to account for local conditions and/or inflation: "Labor Rate Multiplier for
Administration/Management," "Labor Rate Multiplier for Test Facility Staff," and
"Capital, Land, Construction, Training Cost Multiplier." To account for inflation only,
the same value would be entered for each factor. As indicated in the parenthetical
comments on the spreadsheet, the baseline from which the adjustments should be made is
January 1999, which is the date applicable to the default values in the spreadsheet.
Sections II-V of the spreadsheet involve calculations that utilize these additional
parameter values in addition to the "User Input" parameter values entered by the user in
Section I of the spreadsheet. However, there are many default values throughout Sections
II-V that can be altered by users of the program in cases where a more detailed analysis is
being conducted. Table 3 provides a fairly comprehensive listing of the type of
information contained in Sections II-V that can be modified, if necessary.
Salary rates used in Sections II-V are one area where program-specific values might be
substituted for the default values used in the spreadsheet. However, to simplify salary
adjustments, the last rows in the "Optional User Inputs" section of the spreadsheet
provide labor cost multipliers that adjust all labor rates in the remainder of the
spreadsheet.
-23-
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Table 3
Embedded Default Values for Centralized I/M Cost Model
Assumption Default Value Source
Facility Square Footage
Requirements
(see spreadsheet)
I/M Contractors
Test Facility Staffing Requirements
(see spreadsheet)
I/M Contractors
Contractor Personnel Salaries
$7-9/hr inspectors to
$13/hr station mgr
I/M Contractors
Contractor Hiring and Training
Costs
(see spreadsheet)
I/M Contractors
Office Equipment Costs
(see spreadsheet)
Sierra
Data Processing Equipment Costs
(see spreadsheet)
I/M Contractors,
Sierra
Start-Up Administrative
Personnel Requirements
for Contractor
(see spreadsheet)
I/M Contractors
Satellite Office Requirements
(see spreadsheet)
I/M Contractors
On-going Administrative
Personnel Requirements
for Contractor
(see spreadsheet)
I/M Contractors
Personnel Overhead Rates
(see spreadsheet)
I/M Contractors, Sierra
Support Services Costs/Facility
(Utilities, Janitorial, Etc.)
(see spreadsheet)
Sierra
Travel Costs/Facility
(see spreadsheet)
I/M Contractors
Equipment Maintenance Costs
10% of original cost
of purchase
I/M Contractors
Insurance Costs
(see spreadsheet)
Insurance Broker
Contractor's Net Return
20%
I/M Contractors
State-Operated Mass Emissions Test
Cell Throughput and Cost
(see spreadsheet)
Sierra
State Administrative Personnel
Requirements and Costs
(see spreadsheet)
Sierra Recommendation
State Hiring and Training Costs
(see spreadsheet)
Sierra
State Data Processing
Equipment Costs
(see spreadsheet)
Sierra
State Travel Costs
(see spreadsheet)
Sierra
State Contractual Services Costs
(see spreadsheet)
Sierra
State Personnel Salaries
(see spreadsheet)
Based on California
Wage Rates
'Information provided by the I/M contractors was reviewed for reasonableness and used to adjust cost
model inputs developed by Siena in previous studies.
-24-
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Initial Costs to Program Operator
Section II of the spreadsheet contains the calculations of start-up costs for the program
operator. This area of the spreadsheet contains estimates of the land area required for
inspection facilities, the square footage of buildings and paving, personnel hiring and
training, and the costs for public information and mechanic education. Details are
provided on the third and fourth pages of Figure 1.
Recurring Costs to Program Operator
Section III of the spreadsheet contains the calculations for recurring costs to the program
operator. These costs are dominated by personnel costs. Equipment maintenance,
supplies (e.g., span gases), insurance, and property taxes are also a significant factor.
Details of the assumptions and calculation procedures are shown on the fifth page of
Figure 1.
Annualized Costs to Program Operator
Section IV of the spreadsheet is shown on the sixth page of Figure 1. It covers the
annualized cost to the program operator. The calculations in this section include the
amortization of the start-up costs from Section II. The residual value of land and
buildings at the end of the program is specifically accounted for. When combined with
the annual recurring costs from Section HI, the total annual cost is determined. Cost per
test is then calculated following the application of an assumed profit of 20%.
Although users can modify this profit assumption, history indicates that I/M program
operation has a relatively high risk factor and lower profit assumptions are difficult to
justify. The 20% default value is considered to reflect a reasonable rate of return for a
program that does not involve excessive risk to the contractor. I/M contractors contacted
during the preparation of this report, however, emphasized that they considered a rate of
return of 30% or even higher reasonable for programs involving high risk. This would
include new programs with significant uncertainty in projected revenues (e.g., due to non-
guaranteed test volumes), penalty clauses that are likely to be invoked, and other contract
provisions that I/M contractors would consider risky.
Program Costs to State
Beginning on page seven of Figure 1, the first subsection of "Program Costs to State"
addresses mass emissions testing costs. The capital investment and operating costs for
running a test cell equipped with IM240 capability are covered. Land acquisition cost for
the test facility is not included, as it is assumed that CVS testing capability is added to
one of the I/M testing facilities. However, $200,000 is allocated to facility upgrades,
which could include additional floor space under the roof, a dynamometer pit, additional
electrical power, compressed air, heating and air conditioning for climate control, etc.
-25-
-------
Another $200,000 is allocated to purchase of the IM240 system itself, including an
electric dynamometer. The way this section of the spreadsheet is configured, an annual
mass emissions test volume of 1,200 is hard-coded (although easily modified by the user).
At this annual testing volume, only one test cell is required, regardless of program size.
A total of three employees are estimated to be necessary to operate the cell and recruit
vehicles from the I/M lanes.
Additional state costs covered in this section are primarily related to the operation of a
Program Administration Office. Regardless of program size, each Program
Administration Office is assumed to have a Program Administrator, a Data Processing
Specialist, and at least one Vehicle Inspection Specialist, one Mechanic Certification
Officer, and one Clerk/Typist. Additional staffing is added in proportion to program size.
Office space and equipment for the Program Administration Office is covered by a 95%
rate for overhead and fringe. Start-up costs include expenses for recruiting and training
Program Administration Office staff. Recurring costs include a modest travel budget and
some contractor support services.
if if ii
-26-
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3. DECENTRALIZED PROGRAM MODEL
The structure of the decentralized program spreadsheet is similar to that used for the
centralized program spreadsheet. Figure 2 shows what the spreadsheet looks like on-
screen with user inputs for a hypothetical program that is similar to the program
assumptions reflected in the centralized program described in the previous section (e.g.,
an automobile population of two million, exemptions for vehicles up to five years of age,
and biennial testing).
The main difference between this and the centralized program spreadsheet is that a new
section (Section II) is added addressing "Cost to Private Garages." In this section, there is
no consideration of capital costs for buildings and land. This reflects the fact that
decentralized programs generally involve utilization of existing facilities. In addition,
this section of the spreadsheet uses the average hourly "shop rate" rather than actual
employee salaries. This rate incorporates a charge to recover rents or capital invested in
land and buildings. However, the shop rate is not assumed to cover the cost of emission
analyzers and other equipment specifically required for the I/M program, nor the cost of
mechanics training required for program participation. These program-specific capital
costs are computed using the same type of methodology used in the centralized program
spreadsheet, i.e., amortized over the inspection volume, hi addition, recurring costs are
added for an extended warranty on the emissions testing equipment and miscellaneous
supplies (span gases, analyzer maintenance, etc.).
Six additional program parameters are required for the decentralized spreadsheet:
1. Inspection bays per 1,000 autos;
2. Garage costs per hour;
3. Minutes per inspection;
4. Number of mechanics/inspectors per bay;
5. Equipment costs per inspection bay; and
6. Referee test volume as a percent of initial tests.
In addition, several of the parameters contained in the centralized program spreadsheet
are renamed and have different values for the decentralized program spreadsheet. In all
cases, these changes reflect the fact that the "centralized" style test facilities are now
referee facilities. To see the specific changes, the program parameters listed on the first
page of Figure 2 can be compared to the parameters listed on the first page of Figure 1.
-27-
-------
Figure 2
Decentralized_IM_EPA.l 23
Prepared by Sierra Research. Inc.. November 2000
0. SUMMARY OF INSPECTION FEES
With CVS Cell
No CVS Cell
Wilh CVS Cell
No CVS Cell
Decentralized l/M Cost Model
Note: Fees Shown in US Dollars
Garage
Fee/Test
39.59
39.59
Fee/lnil Test
48.30
48.30
Stale
CVS Cosl/Test
0.63
n.a.
CVS Cosl/lnlt
0.63
n.a.
Total
Slate Costs/Test
4.66
4.03
Stale Costs/lnil
5.68
5.05
Total/Test
44.25
43.62
Total/lnit
53.98
53.36
I. PROGRAM PARAMETERS
A. Primary User Inputs
1.
Local Currency/US Dollar
LC/USD =
1
Enter amount of local currency equivalent to one US dollar.
1.
Present Auto Population
POP =
2,000.000
2.
Annual Auto Population Growth Rate (%)
GRT =
2.0%
3.
Percent of Vehicles Exempt
EXEMPT =
44%
For '81 and later US fleet, use 20% for current yr + 2; 36% for current + 3; 44% for current +4
4.
Inspection Frequency (Annual = 1, Biennial = 2)
FREQ =
2
Average years between inspections for non-exempl vehicles
5.
Annual Inflation Rate (%)
INF =
1.5%
Use annual change in Consumer Price Index
6.
Annual Interest Rate {%)
INT =
7.5%
Cost of financing loans; Use current prime rate for US programs.
7.
Program Length (years)
PRL =
7
5-7 years minimum needed for cosl/effeclive amortization
8.
Inspection Bays per 1,000 Autos
BAYH000 =
0.70
More bays increase cost per test
9.
Garage Costs Per Hour ("Shop Rate")
$MPH =
60.00
Defauil=US$ 60
10.
Minutes Per Inspection
GTI =
30
Use 30 minutes for loaded mode test or TSI test with extensive visual/functional inspections
11.
Referee Test Volume as % of Initial Tests
PCHT =
1%
Default = 1%
12.
Annual Operating Hours for Referee Lane
HRS =
2,340
Exceeding 2400 may not be cost/effective
13.
Lane Loading Percentage at Referee
LLP =
75%
75% OK for Referee lanes
14.
Hourly Lane Throughput (Max.) at Referee
Cars/hr =
6
Referee = 6
15.
Stringency Factor (%)
STR =
20.0%
New programs may require start-up standards to avoid excessive failure rates initially
16.
Training Cost per mechanic
$MCH =
400.00
Minimum US$ 400
17.
Number of Mechanics/Inspectors Per Bay
MCH =
1.50
Number of mechanics to be trained per bay. usually only 1-2
18.
Property Tax Rate per Full Value (contractor program)
PRT =
2.00%
Area specific
19.
Average Number of Inspectors per Referee Lane =
1.00
1.0 for Referee; 1.5 for simple 2 position lane; 2.5 for 3 position lane
20.
Equipment Costs Per Inspection Bay =
$/BAY =
45,000.00
US$ 45000 US$45,000 for SS loaded; $20,000 for idle
21.
Equipment Cost Per Referee Lane =
$(LANE =
80,000.00
US$ 80000 US$80,000 for SS loaded; $40,000 for idle
22.
Maximum Lanes per Referee Facility =
1
Default = 2 to limit driving distance without major cosl impact
23.
Minimum Number of Test Facilities =
1
Default = 1 for minimum cost per test
3. Optional User Inputs
24.
Land Acquisition Cost per square fool
$LAND/ft2 =
10.00
Typical = US$ 10
25.
Construction Costs per square loot
$CONS/ft2 =
80.00
Default = US$ 80
26.
Site Preparation Costs
$SITE =
100,000.00
Typical = US$ 100000
27.
Monthly Office Space Rental Cost per square foot
$RENT/ft2 =
1.20
T ypical = US$ 1.2
28.
Paving Costs per square fool
$PAVG/ft2 =
2.00
Typical = US$ 2
29.
Initial Public Information Costs
$IPI =
0.50 Default/veh = US$ 0.5
30.
Recurring Public Information Cosls
$RPI =
0.10 Defaull/veh = US$0.1
31.
Referee Lane Efficiency Faclor
EFF =
85%
85% max for experienced contractors
32.
Annual Percent Additional Tests (%)
XTR =
2.0%
2% is reasonable minimum
33.
Percent of Initial Tests at Centralized Facility (%)
INIT =
1.0%
From referee test volume above
34.
Percent of Retests at Centralized Facility (%)
RTST =
0.0%
0% for decentralized program
35.
Mechanics Required per 1.000 aulos
Mech/1.000 =
i
1.0 typical
36.
Initial Program Design and Engineering Cost
IDE =
10.0%
Default = 10%
37.
Recurring Program Design and Engineering Cost
RDE =
0.2%
Default = 0.2%
38.
Computer Processing Cost per lest
$CPT =
0.05
Default = US$ 0.05
39.
CVS Test Cell Annual Capacity =
1,600
Default = 1600 for hot slarl IM240s
40.
Capital. Land. Construction, Training Cosl Multiplier (Since 1/199)
1
Default = 1.0
41.
Labor Rale Multiplier for Administration/Management (Since 1/1/99)
1
Defaull = 1.0
42.
Labor Rale Multiplier for Private Garages Since 1/1/99
1
Defaull = 1.0
-------
Figure 2
C. Parameter Calculations
1. Average Annual Population
i = PRL-1
AAP = POP(1-EXEMPT) x (SUM (1+GRT)»i | / (PRL x FREQ) 594,743
i=0
to
VO
I
2. Average Annual Tests Performed
Decentralized Tests = AAP x (1 + STR +¦ XTR) =
Referee Tests = AAP x |INIT + (STR + XTR) x RTST|
3. Total Inspection Bays Required
AAP/1000 x BAY/1000 = BYRQ =
4. Annual Referee Lane Capacity
CAP = HRS x Cars/hr CAP =
5. Total Referee Lanes Required
LAN = TST / (CAP x LLP x EFF) LAN =
II. COSTS TO PRIVATE GARAGES
A. Initial Investment Costs
1. Per Inspection Bay
Analyzer and Equipment
Mechanic Training (SMIT)
Mechanics/Bay (MCH)
Total per Bay = $PGI =
2. Program Wide
$PGI x BYRQ = $PWI =
725,586
5,947
416
14,040
45,000
5,000
1.50
52,500
21,640,000
C. Annualized Total Costs to Private Garages
1. Amortization of Initial Costs
PRL PRL
$PWI x INT (1 ~ INT) / (1 + INT) -1
2. Annual Costs with Inflation
PRL-1 i
$PWA x [ SUM (1 ~ INF) ] / PRL
i=0
3. Total Annualized Program
Cost to Private Garages
= $TPPG =
Cost per test =
Cost/Initial Test =
4,123,399
24,604,721
28,728,120
39.59
48.30
B. Annually Recurring Costs
1. Per Inspection Bay
Extended Warranty
Calibration Gases/Supplies
Total per Bay = $PGA =
2. Per Test
Inspector's Time & Overhead
GTI x $MPN = $PIA =
N2 Gas = $30/250 Tests =
Total per Test = $PTA = 30.12
3. Program Wide
($PGA x BYRQ) +
(SPTAxTST) = $PWA = 23,519,484
2,502 5.56%of$/BAY
1,500
4,002
30.00
0.12
-------
Figure 2
III. INITIAL COSTS TO REFEREE PROGRAM OPERATOR
A. Estimates of Facility Requirements
1. Inspection Facility Square Footage Requirements (enter data in sq ft)
LAND
U>
O
Basic per
Facility
j LANES
Additional ! per
per Lane j Lane
io.89oj .1.000
: 20.000
2. Allocation of Lanes and Square Footage Requirements
OFFICE. ETC.
Basic per Additional
Facility per Lane
1,000
PAVING j
Basic per Additional •
Facility per Lane
5.000 3.2001
LANE ALLOCATION
LAND"
.
BUILDING
; Lanes per
# Facilities
Total
Each
LANES
OFFICE, ETC.
PAVING
Facility
This Size
Lanes
Facility
Total
Each Facility
Total
Each Facility
Total
Each Facility
Total
1
Q
1
n
1
30,890
30,890
1,000
1,000
1,000
1.000
8,200
8,200
1
U
0
1.000
0
TOTAL
1 ...
1
LND = _
30,890
INS =
1.000
OFC = _
1.000
PVG
8,200
(FAC) '
(LAN) "
3.
Inspection Facility Personnel Hiring and Training Requirements
|
Annual Salary
"
Overhead
Duration of
Direct Costs
Total Training
Hiring
Total Training
Facility Staffing Requirements
per employee
& Fringe
Instruction per
of Instruction
Cost per
Cost per
& Hiring Cost
Position
j # of Positions
Pers-Yrs
@ 2340 hrs/yr
@ 40 hrs/week
30%
Trainee (hrs)
per Trainee
Employee
Employee
per Employee
Station Manager
|
1
1.13
per facility
27,750
8,325
640
400
11,500
200
11,700
Asst. Station Manager
1
1.13
per facility
19.990
5,997
160
400
2,399
100
2,499
Inspection Technicians
i
1
1.13
per test lane
14,560
4,368
160
200
1,656
50
1,706
j Customer Service Rep
. . i
0
0.00
per facility
23,200
6,960
80
200
1,360
50
1,410
B. Calculation of Facility Investment Costs
1. Construction and Land Acquisition Costs
a. Land Acquisition = LND x $LAND/ft2 =
b. Paving = PVG x $PAVG/ft2 =
Inspection Facility Personnel Hiring and Training Costs
SLANDAQ =
SPAVING =
Construction = (OFC + LNS) x $CONS/tt2 = SCONSTR
d. TOTAL Building = $PAVING + SCONSTR :
SBUILDING =
308,900
16,400
160,000
176,400
a. Station Managers:
$11700
x 1.13/ facil x FAC
b. Assistant Station Managers:
$2499 x 1.13 /facil x FAC
c. Inspection Technicians:
$1706 x 1.13 / lane x LAN
d. Customer Service Representatives:
$ x / facil x FAC
e. TOTAL Inspection Facility Personnel
Hiring & Training
13,163
2.011
= FIELDPERS =
1,919 (staffed lanes)
17,893
3. Facility Preparation and Equipment Costs
Per
(Category)
Facility
Test Lane
Satellite Offices
Central Office
TOTAL
Number
Site Preparation
Each
1 100,000
1
0 N/A
1 N/A
Total
100.000'
100.000
(SPREP)
Test Equipment
Each Total
Office & Other Equipmt.
Each Total
20.000 20.000:
80.000
80.000;
20.000
40.000
40.000
60.000
Data Proc. Equipmt.
Each Total
0
0
0
100.000 100.000
100.000
TOTAL
$EQUIP
120.000
80.000
140,000
340.000
-------
Figure 2
C. Sian-Up Administrative Costs
1. Start-Up Personnel Costs
Position Area
Program Administrator
Area Administrators
Technical Officers
Data Analysis/Statistical Staff
Clerical and Secretarial Staff
TOTAL
per Central
Office
1
0
1
1
2
Number per
Satellite Office
0
1
1
0
1
Total Number
of Employees
1
0
1
1
2
5
Average No. of
Startup Hours
per Employee
3,120
2.080
1.040
693
693
Total Person
Years
1.5
0.0
0.5
0.3
0.7
Annual Salary Overhead
@ 40 hrs/week
per Employee
67,500
62,500
52,500
37,500
22,500
& Fringe
50%
33.750
31.250
26.250.
18.750
11.250
Total Salary
and Benefits
151.875
39.375
18,741
22.489
232.480
($CSBP)
2. Start-Up Training and Hiring Costs
Position Area
Program Administrator
Area Administrators
Technical Officers
Data Analysis/Statistical Staff
Clerical and Secretarial Staff
TOTAL
Total
Number of
Employees
1
0
1
1
2
5
Annual Salary
and Benefits
per Employee
101,250
93,750
78,750
56,250
33,750
Duration of
Instruction (hrs)
(Per Employee)
40
40
80
40
40
Direct Cost of
Instruction
(Per Employee)
2.000
2,000
3.000
2.000
400
Total
Training Costs
Hiring
Costs
(All Employees) (Per Employee)
3,947
0
6.029
3.082
2,098
15,156
10.000
5,000
1.000
500
400
Total Training
Plus Hiring
(All Employees)
13.947
0
7.029
3.582
2.898
27,456
($CHIRE)
3. Calculation of Starl-Up Administrative Costs
a. Start-Up Personnel
b. Initial Public Information
= SCSBP
$IPI or $IPI/vehicle x POP =
Initial Program Design, Eng. & Eval.
%IDE x (SLANDAQ + $BUILDING + $EQUIP)
or $tDE/veh. x POP =
Administrative Personnel Hiring and Training
TOTAL Start-Up Administrative Costs
SCHIRE =
232,480.17
1,000,000.00
82,530.00
27,455.77
1,342.465.94
D. Total Initial Costs to Program Operator
1. Land Acquisition = $LANDAQ = 308.900.00
2. Total Building = SBUILDING = 176.400.00
3. Field Personnel Training & Hiring = SFIELDPERS = 17.893.13
4. Facility Preparation & Equipment = SEQUIP = 340.000.00
5. Land Purchase & Re-Sale Fee = 6.0%
x SLANDAQ = SLNDFEE = 37.068.00
6. TOTAL Start-Up Administrative Costs = SADMIN = 1.342,465.94
7. SUBTOTAL = SFIELDPERS ~ SEQUIP + SADMIN = SSTARTUP = 1.737.427.06
8. TOTAL Initial Costs = SLANDAQ ~ SBUILDING + SSTARTUP
2.222.727.06
-------
IV. RECURRING COSTS TO REFEREE PROGRAM OPERATOR
A. Personnel Costs
1. Central Office Operating Staff
Annual Salary
Position Area Number @ 40 hrs/week
Program Administralor 1 67,500
Technical Officers 1 52,500
Data Analysis/Statistical Staff 1 37,500
Clerical and Secretarial Slaff 2 22,500
SUBTOTAL (salary * person years) 202,500
Overhead & Fringe 50.0% 101,250
TOTAL SCSTAFF = 303,750
3. Inspection Facility Operating Staff
a. Station Managers:
b. Assistant Station Managers:
c. Inspection Technicians:
d. Customer Service Reps:
$ salary
$ salary
$ salary
$ salary
x #/facil x
x Macil x
x #/lane x
x #/facil x
FAC
FAC
LAN
FAC
SUBTOTAL
f. Overhead and Fringe Benefits
30.0%
g. TOTAL Inspection Facility
Operating Staff
JFSTAFF
O.)
jvj B. Miscellaneous Total Recurring Costs
i
1. Office Rental
f/CSTAFF x $RENT/ft2 x 12 = 14,400
ffSSTAFF x $RENT/fl2 x 12 =
TOTAL RENTAL COSTS = 14,400
2. Support Services to Facilities
Basic per facility = 12,000
Additional per lane =
TOTAL SUPPORT SERVICES 12,000
3. Operating Supplies
N2 Gas = $30/250 Tests = 714
Cat. Gases = $240/2 mo./lane = 1,440
Misc. Supplies = $250/lane = 250
SSUPP = 2,404
4. Travel 4.000 /facil x FA' 4.000
5. Public Information = $RPI or $RPI/veh. x AAP = 59,474
6. Equipment Maintenance
10% x ($EQUIP ¦ $PREP) 24.000
7. Annual Program Design, Eng. 8 Eval.
%RDE x (SLANDAQ + SDUILOING « $EQUIP)
or $RDE/veh. x AAP = 1,651
8. Computer Processing of Tests = $CPT x TST = 36,279
Figure 2
2. Each Satellite Offices Operating Staff
Annual Salary
@ 40 hrs/week
62,500
52,500
37,500
22,500
137,500
68,750
206,250
31,218.75
22,488.75
16,380.00 (staffed lanes only)
70,087.50
21,026.25
Number
Position Area Per Office
Area Administrator 1
Technical Officers 1
Data Analysis/Statistical Staff 0
Clerical and Secrelarial Staff 1
SUBTOTAL (salary x person years)
Overhead & Fringe 50.0%
Total per Satellite Office
TOTAL SSSTAFF =
91,113.75
-------
Figure 2
9 Insurance Costs (where applicable)
"Buildings" rate
"Office Contents" rale
Liability Insurance =
"Test/Data Proc. Equip." rale
Rate as %
Capital Cost
0.3%
4.5%
0.4%
TOTAL INSURANCE COSTS
10. Personnel Cosls
SCSTAFF + 5SSTAFF ~ SFSTAFF =
12. Properly Taxes (contractor program only)
PRT x (SBUILDING ~ SLANDAG + SEQUIPJ =
13. Hiring and Training Cosls Due to Employee Turnover
20% x ($FIELDPERS + SCHIRE)
14. TOTAL Recurring Costs = $RECUR =
ANNUALIZED COSTS TO REFEREE PROGRAM OPERATOR
A. Average Recurring Costs ($RECURi) Accounting for Inflation
i = PRL-1
$RECUR x ( SUM (1 + INF)N ] / PRL =
i=0
Insurance
Cost
457
2.700
535 US$0.09 per tested vehicle
694
4.366
394,864
16.506
9.070
583.420
610,340
B. Amortization of Initial Cosls
1. Value of Item Remaining
at end of Program
2. Present Discounted Value of Item
Remaining at end of Program
3. Value of Principle to be Paid
Off over Length of Program
4. Annual Payment - of Initial
Loan
- Plus Interest
General Formulas
VAE = $ITEM x (DEPR - PRL) / DEPR (where DEPR is
depreciation period)
PDV = VAE/(1 ~ INT)APRL
PRIN = SITEM - PDV
$PMT = PRIN x INT (1 + INT)APRL / (1 + INT)*PRL -1
(Note: Interest Rate Already Accounts for Inflation)
Calculation for Initial Specific Cost Elements
1 Land Acquisition:
Buy/Sell Discount Rate -
(Relative VAE = (1 - Disc Rate) x SLANDAG)
2. Building:
Depreciation period (yrs) =
3 Other Start-Up:
Depreciation period (yrs) =
(VAE = 0; PRIN = SSTARTUP)
10.0%
20
$PMT«Land =
$PMT-Bldg =
$PMT-Start =
26.683
20.256
4 TOTAL Annual Payment Plus Interest For Initial Costs =
SPAYMENT
374.966
Total Annualized Costs to Program Operator
SRECUR i + SPAYMENT = $ANNUAL = 985.305.86
Contractor's Net Return 15.0% 147.795 88
TOTAL Annualized Contractor Program Costs = SCONTR = 1.133.101.74
Annualized Contractor Cost per Vehicle = SCONTR / TST = 190.52
VAE
$278,010
$114,660
$0
PDV
$167,572
$69,112
$0
PRIN
$141,328
$107,288
$1,737,427
-------
VI. PROGRAM COSTS TO STATE
A. Mass Emissions Testing Costs
1. Initial Test Cell Personnel
Position Area
Supervisor
Specialist 3
Specialist 2
Specialist 1
SUBTOTAL
Overhead & Fringe
TOTAL
rson Years
0.3
0.1
0
0.1
95.0%
5MTSTIN =
Cost/PY
37,500
35,000
32,000
27,500
17,500
16,625
34,125
U>
3. Test Cell Start-Up Costs
a. Required Annual Mass Emission Tests
#MTSTS = Number of tests for statistically significant sample
b. Required Number of Test Cells
0CELLS = MTSTS / CVSCAP
c. Facility Upgrades (dyno install, power, HVAC, etc.)
Single Test Cell Cost = SMBLOG =
SMBLDGS = SMBLDG x #CELLS
d. Coit of Test Cell Equipment
Single Test Cell Cost = SMEQUIP =
SMEQUIPS = SMEQUIP x #CELLS
e. Total Capital Cost
$MCAP = SMBLDGS + SMEQUIPS
f. Initial Test Cell Personnel Cost = SMTSTIN =
g. Hiring and Training Cost for Test Cell Personnel
0MPERS x $2,000 /Employee
h. TOTAL Starl-Up Test Cell Costs (SCELLIN) =
1,200
200,000.00
200,000.00
200.000.00
200,000.00
400.000.00
34,125.00
6,000.00
440,125.00
5. Amortization of Initial Test Cell Costs to State
PRL PRL
SCELLIN x INT (1 + INT) / (1 + INT) - 1 = SCLPT =
Recurring Test Cell Costs to Slate Accounting for Inflation
PRL-l i
SCELLAN x | SUM (1 + INF) ] / PRL = SCLANN =
i=0
TOTAL Annualized Test Cell Costs to State
SSTPT ~ SSANN
= SSTATE =
Figure 2
Recurring Test Cell Personnel
Posilion Area
Person Years
Cost
Supervisor
1
37,500
Specialist 3
1
35,000
Specialist 2
0
32,000
Specialist 1
1
27.500
SUBTOTAL (#MPERS =]
I 3
100.000
Overhead & Fringe
95%
95.000
TOTAL
$MTSTAN =
195,000
Test Cell Recurring Costs
a. Recurring Test Cell Pers. Cost = SMTSTAN = 195,000.00
b. Recurring Vehicle Recruitment Costs
Recruitment CostA/ehicle = SRCTMT = 100.00
Annual Cost = SRCTMT X 8MTSTS = 120,000.00
c. Recurring Maintenance Costs
% of Initial Test Cell Cost = %MMAINT = 0.10
Annual Cost = SMMAINT x SMCAP = 40,000.00
d. TOTAL Recurring Test Cell Costs = 355,000.00
B3.095.74
371,380.42
454,476.16
6. Test Cell Portion Of Annual Fee to Motorists
a. Test Ceirinspection Fee" = $TOTL/TST .= 0.63
-------
Figure 2
B. Initial Oversight Costs
1. Central Administrative Personnel
95%
Annual Salary
Overhead
Duration of
Direct Cost of
Total
Hiring
Position Area
rson Years
@ 40 hrs/week
& Fringe
Instruction (hrs)
Instruction
Training Costs
Costs
Program Administrator
(see below for
1.0
75.000
71,250
40
600
"3,413
10,000
Deputy Administrator
person-year
0
62,500
40
600
0
5,000
Auto Emissions Control Engineer
formulas)
52,500
80
400
0
3,000
Emissions Testing Technician
27,500
80
400
0
200
Data Processing Specialist
1
52,500
49,875
40
200
2,169
200
Automotive Mechanic
2
35.000
66,500
80
400
9,075
200
Vehicle Inspection Specialist
3
42,000
119,700
80
400
17,750
200
Mechanic Certification Officer
1
37,500
35,625
80
400
3,213
200
Mechanic Certification Clerk
1
22,500
21,375
40
100
944
200
Secretary .
0
25,000
40
50
0
200
Clerk/Typist
1
20,000
19,000
40
50
600
200
TOTAL
10.0
403,500
383,325
37.363
19.600
(SCAPIN) ($BENIN)
U>
2. Tolal Initial Costs to State
a. Central Administrative Personnel = SCAPIN ~ SBENIN -
b. Administrative Personnel Training & Hiring = $FTRN ^
c. Initial Private Mechanic Training
Mech/1,000 x POP/(FREQ x 1.000) x $MCH
d. Data Processing Equipment
e. Initial Test Cell Costs
f. Program Design Cost (contract)
g. Initial Undercover Vehicle Fleet
h. TOTAL Initial Costs to State
SDEQUIP = $2,000 x#STAFF =
= SCELLIN
$10,000 x 10/1000 bays =
= $STIN =
766,625.00
49,762.50
400,000.00
26,000.00
440,125.00
500,000.00
41,600.00
2,244.312.50
C. Recurring Costs
1. Central Administrative Personnel
Position Area
Program Administrator
Deputy Administrator
Auto Emissions Control Engineer
Emissions Testing Technician
Data Processing Specialist
Automotive Mechanic
Vehicle Inspection Specialist
Mechanic Certification Officer
Mechanic Certification Clerk
Secretary
Clerk/Typist
SUBTOTAL
Overhead & Fringe
TOTAL
(#STAFF) =
rson Years
1.0
1
3
5
1
1
0
1
13
95.0%
$CAPAN =
Annual Salary
@ 40 hrs/week
75.000
62,500
52.500
27.500
52.500
35,000
42.000
37.500
22.500
25.000
20.000
522.500
196.375
1,018.875
1 regardless of program size
0.5/1 million tests
1 «¦ 1/2 million tests
1 * 5/1,000 Bays
1 + 10/1,000 Bays
1 + 1/1,000 Bays
1 + 1/1,000 Bays
0.2/1 million tests
1 + 0.25/1 million tests
Tolal Training
Plus Hiring
13,413
0
0
0
2,369
9,675
18,750
3,413
1,144
0
1,000
49,763
($FTRN)
-------
Toial Recurring Costs to State
a. Central Administrative Personnel = SCAPAN
b. Annual Additional Mechanic Training
20% of Initial Mechanic Training Cost =
c. Recurring Test Cell (posts = SCELLAN =
e. Travel = $5,000 + $300 x#STAFF
g. D.P. Equip. Maintenance = 10% k $DEQUIP
h. Contract Services
i. Recurring Hiring and Training Costs
j. Recurring Undercover Car Costs = $5000 x 10/1000 bays =
k. TOTAL Recurring Costs to State = $STRC
Annualized Costs to State
Amortization of Initial Costs to State
PRL PRL
$STIN x INT (1 + INT) I (1+INT) :1 = $STPT =
Recurring Costs to State Accounting for Inflation
PRL-1 i
$STRC x [ SUM (1 + INF) ] / PRL = $SANN =
i=0
TOTAL Annualized Program Costs to State
$STPT + SSANN = $STATE
Figure 2
1.018.875
80.000.00
355,000.00
8,900.00
2,600.00
250,000.00
4,976.25
20,800.00
1,741,151.25
423.727
1.821.491
2,245,218
3.09 Slate Cosl/Tesl for Program Eval and Enforcement
1.56 Costs/Test (or Referee Contract
4.66 Total Costs/Test Referee + Other State Costs
-------
The costs associated with referee testing capability are addressed using a calculation
methodology very similar to that used for centralized test facility operating costs in the
centralized program spreadsheet. CVS testing costs are also calculated in a very similar
manner; however, vehicle recruitment costs have to be added because of the lack of
centralized lanes from which randomly selected vehicles can be easily recruited for
testing. Other program costs to the state are also handled in a manner similar to that
contained in the centralized program spreadsheet; however, significantly greater staffing
is assumed to deal with the greater enforcement needs of decentralized programs. The
main increase in staffing is associated with the resources necessary to average two
inspections per licensed garage each year. One or both of these inspections could involve
undercover car runs. Details of the staffing formulas are shown on the eighth page of
Figure 2. The basic assumption behind the formula for "Vehicle Inspection Specialists"
is that two-person teams will be able to do two undercover runs per day. One mechanic is
assumed to be required to support each 2-person team in the field.
Another element of costs contained in the decentralized spreadsheet involves a fleet of
undercover vehicles. Initial costs are based on purchasing two $10,000 vehicles per team
of field personnel. Recurring costs for the operation, maintenance, and annual
replacement of the vehicles with comparable models are estimated at $5,000 per vehicle.
No separate costs are assigned to a facility at which the undercover vehicles will be
housed and maintained. The overhead charge for the personnel associated with these
vehicles is considered sufficient to cover the cost of the necessary garage space.
###
-37-
-------
4. EXAMPLE CALCULATIONS
In Figures 1 and 2, costs were presented for a centralized program and a decentralized
program for a hypothetical area with a vehicle population of 2 million, a 2.0% annual
vehicle population growth rate, exemptions for 44% of the vehicles, biennial ASM testing
frequency, a 1.5% inflation rate, a 7.5% interest rate, and a 7-year program length. The
results are summarized below in Table 4.
Table 4
Summary of Inspection Cost/Test for Hypothetical Programs
Inspection Fee
CVS Testing
Oversight and
Enforcement
Total Cost
Decentralized
$39.59
$0.63
$4.03
$44.25
Centralized
$14.02
$0.45
$1.07
$15.54
As shown in Table 4, the total cost per test for the decentralized program was almost
three times higher than the centralized program. The most significant factor was the
higher inspection fee needed to cover the fundamentally less efficient inspection process
done in a private garage as opposed to a highly automated, drive-through inspection lane.
Also contributing to the cost increase for decentralized testing is the higher oversight and
enforcement cost associated with so many more locations where inspections are being
performed and the fact that the inspections in private garages are more easily falsified
(necessitating greater enforcement resources).
As shown in Table 5, the spreadsheet models indicate that the economy of scale is a
significant factor for both centralized and decentralized I/M programs. This is because
there is a minimum number of people needed to design and manage both the public and
private sector activities. However, centralized programs are projected to have
significantly lower costs per test, regardless of the vehicle population. With a relatively
small program (e.g., 250,000 vehicle population) decentralized testing is twice as
expensive. With relatively large programs (e.g., z.2 million), decentralized testing is
about three times more expensive.
-38-
-------
Table 5
Cost Per Test vs. Vehicle Population
(44% Exempt, Biennial ASM Testing, 7 Year Program Length)
Vehicle Population
Centralized
Decentralized
Decentralized/
Centralized
250,000
$34.82
$66.79
1.92
500,000
$23.71
$54.04
2.28
1,000,000
$18.56
$47.46
2.56
2,000,000
$15.54
$44.25
2.85
4,000,000
$13.96
$43.13
3.09
8,000,000
$13.49
$42.32
3.14
Table 6 illustrates the relationship between program length and cost per test. The longer
the length of the program, the greater the time over which capital investments and start-up
costs can be amortized. As a result, costs per tests are substantially lower for programs
that are five to seven years in length compared to shorter programs.
Table 6
Cost Per Test vs. Program Length
(44% Exempt, Biennial ASM Testing, 4 Million Vehicle Population)
Program Length Centralized Decentralized
1 Year
$28.26
$72.75
2 Years
$19.84
$54.82
3 Years
$17.07
$49.02
4 Years
$15.58
$46.24
5 Years
$14.79
$44.68
6 Years
$14.43
$43.73
7 Years
$13.96
$43.13
Although the combinations of program parameters that can be evaluated with the models
are essentially unlimited, there are certain combinations that should be avoided.
-39-
-------
Parameter combinations to avoid include those for which there is no evidence of
practicality. For example, increasing the minimum number of centralized test facilities
beyond a certain level will result in large cost increases. For decentralized programs,
reducing the enforcement resources in the body of the spreadsheet would result in a
relatively ineffective program.
###
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