A Waste Contract That Looks Cheaper
A district council must renew its household waste contract. Bid A is a standard weekly kerbside collection of mixed recyclables and residual waste, costing 4.1 million per year with a 55% recycling rate. Bid B is 3.6 million per year with fortnightly residual collections, separate food waste, and a 62% recycling rate, but requires a 2 million capital spend on new bins and vehicles and a public information campaign. The council's landfill tax exposure is about 90 per tonne, and current residual tonnage is 48,000 per year. Residents have complained about fortnightly collections in neighbouring areas, and the council has a legal recycling target it is currently missing.
1. Compare the two bids on whole-life cost and on target compliance, showing your reasoning.
Read the worked answer
Bid A costs 4.1 million per year and leaves the council missing its target, risking penalties and reputational damage; it also keeps residual tonnage high. Bid B costs 0.5 million less per year and should cut residual tonnage: a rise from 55% to 62% recycling on 48,000 tonnes is roughly 3,400 tonnes less landfilled, saving about 0.3 million per year at 90 per tonne. Add that to the 0.5 million operating saving and Bid B recovers its 2 million capital in about 2.5 years, after which it is clearly cheaper. It also meets the legal target. Bid A's apparent simplicity hides the target failure. Recommendation: Bid B, provided the public campaign is funded properly, because the savings depend on residents actually separating food waste.
2. What risks could undermine the savings, and how would you manage them?
Read the worked answer
Contamination in mixed recycling could lower the recycling rate and raise processing costs; manage with clear bin labelling and periodic audits. Fortnightly residual collections may cause fly-tipping or side waste; manage with a small residual allowance, a bulky waste service, and a first-year monitoring hotline. Food waste participation may start high and fade; run sustained engagement and report participation. Capital costs may overrun; fix the price in the contract. If the recycling rate falls short, the landfill tax saving shrinks, so build a break clause and annual review. The savings are real but conditional, so the contract should tie payment to measured tonnage and quality.