Alternative design proposals may be considered where:

• Watercare’s standardised design is not suitable

• Watercare’s Health and Safety in design minimum standards are achieved
• The design features do not involve extraordinary operational, maintenance or renewal obligations
• The alternative design is able to demonstrate that the required performance outcomes are met

Acceptance of an alternative design in concept does not conclude approval of any design criteria, construction
technique or material selection. Specific approval must be sought during the design process.

9. Pipeline economics
1. Capital cost: The capital outlay to design, fabricate, install and commission the pipeline. Components include
the pipe, balancing tanks, valve, fittings, meter stations, chambers, cathodic protection, control systems,
consents, design, construction, commissioning and management of the project.

Typical capital cost spread for straight pipeline construction is:

• Consents and legal agreements = 4%

• Design = 6%
• Material = 45%
• Labour = 40 %
• Incidental = 5%

For straight length pipelines the capital cost can be expressed as:

Pipeline capital cost = Pipe diameter(mm) x (Average total construction cost per mm-diameter-km) x
Length(km)

Detailed breakdown is required for some specific pipeline scenarios in instances such as control chambers,
balancing tanks, bridge or stream crossings and rail crossings.

The capital cost spread for detailed components typically is:

• Consents and legal agreements = 5%

• Design = 20%
• Material = 25%
• Labour = 48 %
• Incidental = 2%

The detailed cost is added to the pipeline cost as a lump sum to obtain the total capital cost:

Capital cost = Pipeline capital cost + Detailed costs

2. Operation and maintenance cost: The operational cost for energy consumption, utility cost such as
telecommunication, lease costs, routine inspections (staff, vehicles and other resources) and component
replacements or renewals. This cost is typically estimated based on operational history of similar systems.

3. Depreciation cost: The loss of value of the pipeline assets over time. The typical useful life expectancy of
various material types is listed in the Watercare Material Supply standard.

Annual Depreciation = (initial cost – salvage value) / useful life in years

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