AC BC Addendum food scraps UPDATED 220303 Redacted.pdf

Business Case

High Complexity

Organics Processing

and Collection –Addendum

Enterprise PPM (Sentient) ID 31714, 19203, 15084,
15067, 31790

Business Case Lead: Terry Coe

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Contents

1
Document control .................................................................................................................................. 2
2
Project information................................................................................................................................. 4
3
Executive summary ............................................................................................................................... 5
4
Strategic Case ....................................................................................................................................... 8
5
Economic Case ................................................................................................................................... 15
6
Commercial Case ................................................................................................................................ 20
7
Financial Case ..................................................................................................................................... 23
8
Management Case .............................................................................................................................. 27
9
Approval and acceptance .................................................................................................................... 33
10 Appendices .......................................................................................................................................... 34

3  Executive summary
As committed to in our 2018 WMMP, Auckland Council has a target to reduce residential waste to landfil
from 160kg/cap/annum to 110kg/cap/annum. With food scraps making up 45% by weight of this waste, the
introduction of a food scraps collection service has been identified and endorsed as a core initiative to meet
this target. Without the roll-out of the food scraps collection service, Council wil  not meet this target
At a high level, the roll out of a region-wide food scraps col ection service is anticipated to deliver the
following benefits:
•  Meeting the WMMP target for reduction in residential waste to landfil
(from 160 kg/cap/annum to 110 kg/cap/annum)
•  Diversion of 39,000 tonnes of organic material from landfil  per annum increasing to 75,000 tonnes
over the 20-year project period.
•  Reduction in carbon emissions from waste by 125,000 tonnes CO2-e per annum increasing to
250,000 tonnes over the 20-year project period.
•  Recovery of energy and returning organic matter to soil through processing food scraps.
•  Refuse collection and disposal cost savings
•  Savings in Waste Disposal Levy and Emissions Trading Scheme costs
Note that there have been significant increases in the Waste Disposal Levy and ETS costs since 2013
($20/tonne to $114/tonne) increasing financial benefits. These charges are applied to the tonnes of refuse
disposed on top of landfil  disposal charges.
The region-wide roll out of the food scraps col ection service wil  be the largest waste services rol -out
undertaken in the Southern Hemisphere. To manage the scale of change, with every urban resident
impacted by the service introduction, Council wil  phase in the change over eight months and support
residents with extensive communication and engagement leading up to the change and during the
transition period. It is important that the roll out is well resourced to make this project a success, with long
term participation and support needed for the service.
Additional resources are required across multiple workstreams to deliver the following activities:
•  Design, construction and commissioning of food scraps processing and consolidation facilities
•  Mobilisation of collection contractors across all 7 collection areas, including truck orders,
conversions and fit out, and driver recruitment and training
•  Design, manufacture, supply and distribution of food scraps bins, caddies and liners
•  Planning, design and delivery of customer engagement programme to prepare residents for the
service change and then additional customer services and engagement support during roll out
•  Mobilisation and delivery of contract monitoring and enforcement and bin asset management
activities to support roll out and provide ongoing services support.
The purpose of this Business Case Addendum is to provide an update to the 2013 Indicative Business
Case for Organics Processing and Collection and seek funding approval for the upfront capital and
operating costs for the region-wide roll out of the food scraps collection service. The rol  out is scheduled to
commence in March 2023 and conclude by November 2023. The following schematic shows the high-level
roll out programme for the food scraps collection service.

4  Strategic Case
The purpose of this Business Case Addendum is to provide an update to the 2013 Indicative Business
Case for Organics Processing and Collection and seek funding approval for the upfront capital and
operating costs for the region-wide roll out of the food scraps col ection service.
The roll out is scheduled to commence in March 2023 and conclude by November 2023. The cost of the
food scraps collection service is approximately $180 mil ion over the next ten years, including $24.3 million
upfront project costs (Opex and Capex), $18.2 mil ion advanced grant (Opex) and $19.2 mil ion per annum
in ongoing costs (predominantly Opex).
Approval is sought for an increase in project funding of $5,886,000 relative to the 2021 LTP.
The region-wide roll out of the food scraps col ection service wil  be the largest waste services roll-out
undertaken in the Southern Hemisphere and is crucial to Council meeting its waste minimisation targets in
its 2018 Waste Management and Minimisation Plan (2018 WMMP). To manage the scale of change, with
every urban resident impacted by the service introduction, Council wil  progressively phase in the change
over eight months and support residents with extensive communication and engagement leading up to the
change and during the transition period.
Additional resources are required across multiple workstreams to deliver the following activities:
•  Design, construction and commissioning of food scraps processing and consolidation facilities
•  Mobilisation of collection contractors across all 7 collection areas, including truck orders,
conversions and fit out, and driver recruitment and training
•  Design, manufacture, supply and distribution of food scraps bins, caddies and liners
•  Planning, design and delivery of customer engagement programme to prepare residents for the
service change and then additional customer services and engagement support during roll out
•  Mobilisation and delivery of contract monitoring and enforcement and bin asset management
activities to support roll out and provide ongoing services support.

4.1  Background
A region-wide organics processing and collection service was first approved in 2012 as part of Council’s
first Waste Management Minimisation Plan (the 2012 WMMP), which followed the amalgamation of the
legacy territorial local authorities in Auckland.
This service change impacts every Auckland household, significantly increasing customer interactions that
our staff are required to plan for and manage. A service change of this scale impacts customer and digital
services, customer response, contract managers, contractors, as well as our community engagement,
communication and marketing teams. Dedicated resources are needed to focus on the project and so that
BAU activities do not suffer and staff do not burn out.
The 2012 WMMP proposed the organics col ection services as part of a suite of initiatives to reduce
kerbside residential waste in Auckland from 160 kg/cap/yr to 110kg/cap/yr and provide regionally-consistent
services (noting that there were seven different collection systems in legacy areas when amalgamation
occurred). As indicated in both the 2012 WMMP and 2018 WMMP, food scraps make up 45% of residential
kerbside refuse collection services by weight, the largest component of this waste stream (refer 2018
WMMP). If separated, the resources from food scraps can be recovered by using them to generate
electricity and return organic matter to soils. Without the roll-out of the food scraps collection service,
Council wil  not meet this target.
In 2013, an Indicative Business Case was prepared for the organics processing and collection service (the
2013 IBC) to meet the objectives and actions proposed in the 2012 WMMP. The IBC was approved in
December 2013 by the Project Control Group.
Following the 2013 IBC, costs for the new food scraps collection service for urban residents were approved
in the 2015-2025 Long Term Plan (LTP) and the introduction of the service endorsed by the Environment
and Community Committee in May 2016. In the 2015-2025 LTP the average cost for residential services
were estimated to be approximately $260 per year, an increase of $25 per year per household for current
costs. Services were to be introduced in Papakura first.

Also during this time, Auckland Council engaged the Auckland University of Technology to undertake
research into an ergonomic and safe collection vehicle and bin design, using a semi-automated approach
(manual loading of food scraps into a hopper with automated lift on the side of the truck). Council also
undertook a trial with 2,000 households on the North Shore to provide actual Auckland data on participation
rates and volume of food scraps collected. The North Shore trial commenced in April 2014.
Following the May 2016 endorsement, Council completed an internal commercial review of the food scraps
collection service and engaged external consultants, SLR Consulting, to provide an independent third-party
assessment. The internal review was completed in April 2016 and the external review, which followed, was
completed in May 2017. These reviews confirmed that the service could be delivered within the approved
LTP budget ($260 per household per year) and that the anticipated diversion was achievable.
Following these reviews, the Waste Political Advisory Group (in February 2017) and then the Environment
and Community Committee (in May 2017) endorsed progression of the food scraps collection service
(Resolution STR/2017/46). A Project Execution Plan was developed following this endorsement, in June
2017 (the 2017 PEP), and funding was approved for the project at that time (refer Financial Case section
for further details).
Procurement also got underway for the food scraps processing solution and, soon after, the integrated
three-bin collection contracts including region-wide food scraps collection in urban areas. Procurement
decisions were presented to the Strategic Procurement Committee from that time onward due to the high
value of the contracts being procured. Updates were also presented to the Strategic Procurement
Committee (Resolutions STR/2019/16 and STR/2019/70).
In 2018, Auckland Council adopted its second Waste Minimisation and Management Plan – Te Mahere
Whakahaere me te Whakaiti Tukunga Para I Tāmaki Makaurau (2018 WMMP) which committed to a
weekly collection of household food scraps from urban areas (Resolution ENV/2018/70).  The 2018-2028
LTP provided for the rol -out of this food scraps collection service, with no provision for opt-outs (Resolution
GB/2018/91).
The Papakura food scraps collection service commenced in March 2018. Waste Solutions is now preparing
for the service to be rolled out to the remainder of the region from March 2023 to November 2023.
The Strategic Procurement Committee approved the supplier recommendations for the integrated waste
collections contracts in 2019 (Resolution STR/2019/80) and for the food scraps processing contract in 2019
(Resolution STR/2019/77).
In 2020, the Government approved changes to the Waste Disposal Levy (gradually increasing the Levy
from $10/tonne to $60/tonne by July 2024) and increasing the cost of Emissions Units (eUs) in the New
Zealand Emissions Trading Scheme (increasing the ceiling price and introducing a cap on eUs, the ETS).
Combined, these initiatives are expected to increase the cost of waste disposal by around $70/tonne by
July 2024.
In November 2021, the Government released consultation documents for a new National Waste Strategy
and changes to waste legislation in New Zealand. It also released consultation documents for the
Government’s Emissions Reduction Plan. Both documents provide a strong signal to local government and
industry to reduce waste to landfil , in particular food scraps, further supporting Auckland Council’s decision
to introduce food scraps collection in Auckland.
This Addendum to the 2013 IBC provides an update to the original business case and seeks approval for
project funding for the region-wide roll out.
4.2  Opportunity/Problem
As committed to in our 2018 WMMP, Auckland Council has a target to reduce residential waste to landfil
from 160kg/cap/annum to 110kg/cap/annum. With food scraps making up 45% by weight of this waste, the
introduction of a food scraps collection service has been identified and endorsed as a core initiative to meet
this target. Without the roll-out of the food scraps collection service, Council wil  not meet this target.

Landfil ing of organic waste, including food scraps, contributes to methane emissions, a significant
greenhouse gas. By diverting food scraps from landfil , there is an opportunity to reduce the carbon impact
of residential waste collection services in Auckland.

Food scraps material diverted from landfil  is a resource. There is an opportunity to recover energy from
food scraps processing (both heat and electricity) and also return organic matter to soil, when processing
products (compost or digestate) are applied back onto land.

With the Waste Disposal Levy and ETS costs increasing, the cost of waste disposal is set to increase
significantly in the next few years. Diversion of food scraps from landfill will off-set the financial impact of
these cost increases for residents.

Council’s experience from the roll out of new services, including the North Shore trial and Papakura pilot
food scraps collections, shows that maintaining high participation and low contamination levels comes from
effective engagement with the community leading up to the new service introduction and then ongoing.
Significant additional resource is required to ensure information for the community and customer service
requests meets customer requirements.

Food scraps collection services require the collection of smal  (23 litre) bins from kerbside. A fully
automated collection system is not possible, however research has identified a semi-automated system that
can significantly reduce the health and safety risks associated with the manual components of the
collection. Ensuring this can be successfully implemented by Council’s col ection contractors has been an
important consideration when engaging suppliers to undertake the service.

4.3  Objectives
The 2013 IBC identified the following objectives for the investment in organics processing and collection:
•  Reduce waste to landfil
•  Provide a consistent level of service across Auckland for waste collection
•  Promote resource recovery from organic material

Additional objectives identified since 2013 IBC:
•  Reduce carbon emissions from waste
•  Avoid cost increases associated with Waste Disposal Levy and ETS cost increases
•  Maintain high participation and low contamination rates in food scraps collection services

4.4  High level benefits
At a high level, the roll out of a region-wide food scraps col ection service is anticipated to deliver the
following benefits:
•  Meeting the WMMP target for reduction in residential waste to landfil  (from 160 kg/cap/annum to
110 kg/cap/annum)
•  Diversion of 39,000 tonnes of organic material from landfil  per annum increasing to 75,000 tonnes
over the 20-year project period.
•  Reduction in carbon emissions from waste by 125,000 tonnes CO2-e per annum increasing to
250,000 tonnes over the 20-year project period.
•  Recovery of energy and returning organic matter to soil through the processing of diverted food
scraps.
•  Refuse collection and disposal cost savings
•  Savings in Waste Disposal Levy and Emissions Trading Scheme costs

Note that there have been significant increases in the Waste Disposal Levy and ETS costs since 2013
($20/tonne to $114/tonne) increasing financial benefits. These charges are applied to the tonnes of refuse
disposed on top of landfil  disposal charges.
Further details on measurable benefits can be found in Section 5.3 Benefits tables.

4.7  Constraints
Key constraints for this project are:
•  Processing facility commissioned and has capacity to process Auckland’s food scraps before
collections commence.
Organics processing and consolidation facilities must be commissioned and operational prior to food
scraps being delivered to these facilities. These facilities need to have their processing capacity built
up slowly. It is noted that Covid-19 has significantly delayed the construction of these facilities, but
that they are now on track to meet the roll out timeframes.
•  Food scraps bins and col ection vehicles must be available prior to collections commencing.
Food scraps bin and collection vehicles are being manufactured overseas and with restricted supply
chains. Delivery into New Zealand is dependent on international shipping, that has had restricted
capacity since Covid-19 has disrupted shipping. Manufacturing of bins and collection vehicles is
also constrained by the supply of materials for manufacturing and overall supply chain delays post-
Covid.
•  Availability of resources to support roll-out of this scale.
Roll out of new services on a region-wide basis is not BAU for the Waste Solutions team and
therefore requires dedicated resources to ensure the roll out and BAU remain adequately
resourced.
•  Guaranteed minimum food scraps volumes.
Council have guaranteed the supply of defined volumes of food scraps to the Reporoa organics
processing facility. If volumes fall below a certain limit, Council wil  be required to pay a penalty.
Residents need to be incentivised to divert sufficient food scraps to meet Council processing
thresholds.
•  Approval of Food Scraps Targeted Rate in Annual Plan.
Food scraps collections are funded by a targeted rate, with contributions from the Waste Levy.
Implementing the food scraps collections requires approval for the targeted rate to be applied to the
North Shore and Waitakere in 2022/23, and all areas in 2023/24. The application of the targeted
rate in 2023/24 needs to include the urban areas of Franklin and Rodney. The funding impact
statement needs to be worded to sufficiently cover the expansion of food scraps collections to new
urban areas as Auckland continues to grow outwards towards the Rural-Urban Boundary.

4.8  Dependencies
Key dependencies for this project are:
•  Move from weekly to fortnightly refuse collection, and associated cost savings, not possible without
food scraps being removed from refuse collection bins.
•  WMMP waste reduction targets not able to be met without a food scraps collection service available,
with food scraps making up 45% of refuse bins.
•  Meeting the greenhouse gas emission reduction targets in the Auckland Climate Plan.

4.9  Assumptions
Key assumptions for this project are:
•  Processing capacity of 39,000 tonnes per annum in year 1 of operation, rising to 51,000 tonnes per
annum in year 3 (following introduction of fortnightly refuse collection service)
•  3.2 kg/ presented bin when refuse collections are weekly. 4.2 kg/bin when refuse col ections are
fortnightly.
•  45% set out rate (number of bins col ected per eligible property each col ection cycle)
•  Contamination in kerbside collection bins is <10%

8.2 Project structure
The following project structure is proposed for the duration of the food scraps collection services implementation, that is February 2022 to November 2023.
Project management resources are a mixed of fixed-term staff and contractors, while workstream leads are staff whose BAU roles have been backfil ed
with fixed-term employees or contractors.

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10 Appendices
10.1 Appendix 1 – Project complexity assessment (PCAT)

This investment proposal has been assessed as high risk using the Auckland Council Project Complexity
Assessment Tool (PCAT).
A link to the PCAT can be found here:
U:\COO\IES\Solid Waste\WMMP Implementation\P2 Organics\Food Scraps Implementation 2023\IDF
Documentation\02 Initiate
10.2 Appendix 2 – Risk register

A link to the completed project risk register document can be found here:
U:\COO\IES\Solid Waste\WMMP Implementation\P2 Organics\Food Scraps Implementation 2023\Registers
and Logs
10.3 Appendix 3 – Change management plan

A Change Management Plan wil  be prepared alongside the updated Project Execution Plan in April 2022.
10.4 Appendix 4 – Communications management plan

A Communications Management Plan wil  be prepared alongside the updated Project Execution Plan in
April 2022.
10.5 Appendix 5 – Project execution plan

The existing Project Execution Plan, prepared in June 2017, will be updated in April 2022.
A link to the 2017 Project Execution Plan can be found here:
U:\COO\IES\Solid Waste\WMMP Implementation\P2 Organics\Food Scraps Implementation 2023\IDF
Documentation\02 Initiate
10.6 Appendix 6 – Indicative business case

The indicative business case for the project, prepared in July 2013, can be found here:
U:\COO\IES\Solid Waste\WMMP Implementation\P2 Organics\Food Scraps Implementation 2023\IDF
Documentation\02 Initiate

10.7 Appendix 7 – Cost Benefit Analysis

The 2017 Cost Benefit Analysis undertaken for the food scraps collection service, prepared in November
2017, can be found here:
U:\COO\IES\Solid Waste\WMMP Implementation\P2 Organics\Food Scraps Implementation
2023\Background Documents\Business Case Addendum Additional Docs

10.9 Appendix 9 – Detailed project budget

Community Engagement
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
New fixed term
1 staff full time,
s7(2)(i) Prejudice to negotiations
Workstream Lead role or backfil  for  1.82 years @ $s7(2)k   10%
secondment
per year
5 staff part time
1.08 years @
k
s7(2)(i)

Contingent Staff
Dedicated Waste  per year
Wise Advisors
2 staff part time 0.6  10%
years @ $s7(2)k  per
year
Contracting new
agencies or
additional work by  To be confirmed
Outsourced work
existing contractors  during Project
to deliver project- Execution Plan
10%
related community  finalisation.
engagement
activities
Total
Communications and Marketing
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
New fixed term
1 staff full time,
Workstream Lead role or backfil  for  1.82 years @ $s7(2)k   10%
s7(2)(i) Prejudice to negotiations
secondment
per year
Development,
printing and
To be confirmed
Outsourced work
distribution of
during Project
10%
marketing
Execution Plan
materials.
finalisation.
Total

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Customer Enhancement
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
New fixed term
1 staff full time,
Workstream Lead role or backfil  for  1.82 years @ $s7(2)k   10%
s7(2)(i) Prejudice to negotiations
secondment
per year
Dedicated
5 staff full time,
Contingent Staff
Customer Response  2370hrs @ $s7(2) p er  10%

Coordinators
hour
1 staff full time,
Fixed term Staff
Data analyst
4520hrs @ $s7(2) p er  10%

hour
Total
Contracts and Compliance
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
Workstream Lead  New fixed term
1 staff full time,
s7(2)

(Contracts)
role or backfil  for  1.82 years @ $ k  10%
s7(2)(i) Prejudice to negotiations
secondment
per year
Workstream Lead  New fixed term
1 staff full time,
(Contracts/Enforce role or backfil  for  1.82 years @ $s7(2)k   10%
ment)
secondment
per year
Monitoring for
4 staff full time,
Contingent Staff
enforcement and
s7(2)

contract
2130hrs @ $  per  10%
mobilisation
hour
Secondment/backfi
l  for conducting
1 staff full time,
Fixed term staff
site visits and
3800hrs @ $s7(2) p er  10%

compiling MUD
hour
database
Total

Digital and Customer Services
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
Internal time
charges for digital  1 staff 10hrs per
s7(2)(i) Prejudice to negotiations
Workstream Lead staff (can be split
between
week, 1105hrs @  10%
s7(2)

iknow/trainers as  $  per hour
well)
IT Development
Set-up online
platform
1
10%
Internal time
1 staff 10hrs per
Content Advisor
charges for digital  week, 190hrs @
10%
staff
$s7(2) pe

r ho ur
Dedicated
10 full time staff,
Contingent Staff
Customer Services  2240hrs @ $s7(2) p er  10%

Representatives
hour
Total
Project Management
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
1 full time staff, 2.1
Project Manager
Additional project
s7(2)

manager
years @ k per
10%
s7(2)(i) Prejudice to negotiations
year
Internal time
2 full time staff,
Project Manager
charge for existing  2.17 years @s7(2)k
10%

PM
per year
1 full time staff, 2.1
Project Coordinator Dedicated project
s7(2)

coordinator
years @ k per
10%
year
Total
Bin Liners
Contingency
Item
Description
Quantity
Description
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
Supply for bin
Bin Liners
distribution and
Per CE projections 10%
s7(2)(i) Prejudice to negotiations
retail
Total

Item
Opex FY 2021/22
Opex Contingency
Opex FY 2022/23
Opex Contingency
Opex FY 2023/24
Opex Contingency
Total
Total Project Opex (i.e. excludes bin costs that are Capex) FY22 to FY24
673,027
67,303
4,570,505
457,051
5,146,264
514,626
11,428,776
Fixed Term Staff costs
423,027
1,004,856
448,075
1,875,957
Fixed term staff costs - contingency
42,303
100,486
44,807
187,596
Temporary Staff costs
0
1,445,855
1,083,959
Tempoary staff costs - contingency
0
144,586
108,396
Bin Liner costs
0
857,094
1,961,080
2,818,174
Bin costs - contingency
0
85,709
196,108
281,817
Other costs
250,000
1,262,700
1,653,150
3,165,850
Other costs - contingency
25,000
126,270
165,315
316,585
Total Project Opex FY22-24, excluding contingency
10,389,796
Total Project Opex Contingency FY22-24
1,038,980
Project Management Costs - pre FY22 (previously approved)
694,043
Total Project Costs (pre-FY22, FY22, FY23, FY24)
12,122,819