Privatizing your municipal street sweeping operation
can be highly cost effective.
The following is taken from the National Solid Wastes Management Association bulletin entitled Privatizing Municipal Waste Services: Saving Dollars and Making Sense, p. 4: "Street Sweeping Case Studies, Southern California and Newark, New Jersey."
Virtually the same benefits of privatization [as that of trash collection and disposal] have occurred with street sweeping. In the Southern California study, 20 sample cities were examined: 10 that used municipal workers and 10 that used private firms. Where sweeping was done by contractors, local governments paid an average of $9.52 per curb mile cleaned. Where city crews swept the streets, the rate rose to $15.21, an increase of 60%. One important reason was that, on average, contractors cleaned 6 curb miles more per 8-hour shift, a difference of 27%.
In another example, Newark, New Jersey, decided to create competition for its municipal street sweeping service in order to lower cost, improve service and increase productivity. Two areas of the city were contracted out, one in November, 1983, and the second in May, 1986. A single private company won both contracts, accounting for about 75% of the city. The firm has been retained ever since because the city found in 1988 that:
- The cost per curb mile of cleaning for the private firm was less than half that of the city.
- The private firm collected twice as many tons of material per sweeper,
- For every four miles that the city sweepers covered, the private sweepers covered six.
According to the manager of the city's engineering division, "All told, we're saving over a million dollars per year with our street sweeping privatization program."
Three factors explain the higher efficiency of contract crews:
- Management and supervision. Foremen in contract firms frequently supervise more employees than government foremen and achieve a much lower absentee rate. Often these employees also work longer shifts.
- Responsibility for equipment maintenance. Contractor employees are more likely than municipal workers to be held accountable for maintaining their own equipment. Moreover, when municipal equipment malfunctions, it is usually sent to a centralized repair facility where it waits in line with machines from other agencies. In contrast, contractors experience lower downtime rates and minimize the need for costly back-up equipment.
- Standardization. Contract firms tend to use the same types and models of equipment more often than city agencies. Enhanced efficiency can be achieved when operators and mechanics only need to be well acquainted with one or two types of equipment.
The California street sweeping study concluded that contracted municipal street sweeping crews are equally able to meet existing standards for clean streets (effectiveness) and to provide a uniform level of service in all jurisdictions (equity).
One additional point: Because private sweepers may serve several different customers, they often buy specialized equipment and offer a wide variety of services: power washing, sewer cleaning, snow removal, parking lot striping, etc. Many of these services are needed by smaller government entities that cannot afford to make the necessary investments on their own or pay for additional training. Even large municipalities may require a hand from time to time - for example, during periods of peak demand. Private contractors could help such agencies to satisfy public demand without increasing fixed cost and overhead.
Steven Changaris, the Manager of the National Contract Sweepers Institute, offers a commentary on the potential value of privatization to municipalities:
Our members who are promoting their private sweeping services have found this article to be a great 'leave behind' piece for public works directors. It's a fine example, featuring Newark, which was studied thoroughly. And the study came to some outstanding conclusions concerning what the cost savings are that can be received with contracted sweeping services.
A caution, though: Newark can be said to be typical of cities of a similar size and type as it. Readers shouldn't, however, lose sight of the fact that it is a large city. In New Jersey we have 567 municipalities, and two or three hundred of them are more the suburban-to-small town size community. Those are the communities that have a sweeper or two. They are also the ones which are most likely to decide not to re-buy, and instead choose a $40,000 to $50,000 contract for a contractor to do their municipal sweeping.
The same size variations exist in most of the states, and also among sweeper contractors. There aren't many out there who can do a Newark. For most contractors, if they can get two or three contracts from these smaller municipalities, then that represents a substantial chunk of business. The real market [for privatizing municipals], the bread and butter market, is not large cities like Newark, but medium-to-large suburban communities.
For an example, I was reading one of the local papers here: A couple of communities in the northern part of our county got together contractually with one another in what they called an "interlocal service agreement." This is an understanding between the city governments that says that the township buying the sweeper will share it between the other two towns. Based upon the agreement, it then went out and bought a sweeper for $125,000. The statement by an official in the town that bought the sweeper said that this arrangement should "clear our sweeper budget to zero, because of the payments received from the other communities."
Now, probably that means that they will be able to pay for the sweeper from the rental costs from the other cities, except for the cost of the driver, etc. In any event, if those three communities could have contracted with one private vendor of sweeping services, then they probably could all have saved money. That is an area where having private contractors makes a whole lot of sense, pretty much however it's looked at. Why should the one community pay for its sweeper entirely at the disadvantage of the others? Then, when you add in the types and quantities of possible savings, in terms of cost per road mile, etc., that some of the studies of private municipal contracting vs. municipal-run sweeping have shown, there are even more reasons why cities and counties should be, at the very least, taking a long, thorough look at what contracting out their services might bring to their bottom lines.
On the contractor's side: They need their approach to be that of creative problem solvers. By seeing the places where municipal contracts can be grouped, either actually or figuratively, they could have more selling tools and an increased opportunity to gain more business. This reduces their probable cost per curb mile, while at the same time bring a better rate of return on their sweeping equipment.
When selling to a municipality, contractors need to show conclusively why contracted services will be clearly better; if there's any doubt, then the city will keep services in-house. Fortunately, in many cases the numbers will show a clear dollar advantage to contracting. That, combined with the general trend of budget cutting and down-sizing, can't help but make privatizing municipal street cleaning a more attractive option as we move into the future.
This article is reprinted from American Sweeper magazine, v3 n1.
|
