Understanding the value of polyethylene pipe fittings can help you win bids. Here’s how.
Let’s say you are submitting a proposal to a city to refurbish its water supply piping network; how do you go about winning the bid? Besides leaning on past accolades, experience, and price, the winning bid is generally the one that presents the best overall deal. And for a city, that often means safe long-term solutions with very low recurring costs. To a city, every project is an investment and they will want to know what returns they can expect from choosing your solution over a competing bidder.
Want to win the bid? Develop a proposal that adds value for the client and demonstrates the city’s potential return on investment (ROI) by selecting you. If you are not sure where to start or are looking for some new ideas, then read on. In this article, we will discuss ways you can determine the ROI for a water supply piping network, starting with pipe fittings.
Developing a proposal with ROI: Understanding valuations
Calculating ROI relies on understanding the financial value of as many aspects of the project as possible. The more you understand the value of something, the easier it will be to calculate ROI. One area that has been difficult to value in the area of water piping systems has been choice of material for the pipes and fittings.
First, you have to consider the price, which varies somewhat between ductile iron, PVC, and polyethylene (PE). In general, PE fittings costs less than ductile iron but more than PVC. Once you’ve determined the total material cost, you can start calculating costs directly associated with the choice of material. For example, PE and PVC is cheaper to transport than ductile iron because they weigh less. There is also the cost of installation in terms of time and complexity. Many types of PE fittings are electrofusion compatible, which means that they can be easily fusion welded using automated welding machines. PE is also more flexible than PVC or ductile iron, which opens up installation options.
Next, you should look into the value that your choice of material brings to your project. Value, in the case of a water piping system, fall under many categories including durability (service life) and reliability (maintenance costs). On paper, the expected service life of all three material categories when it comes to pipes and fittings is around 100 years. However, that number tends to drop depending on environmental conditions and other factors such as the chemical composition of the water. Ductile iron, for instance, can have its service life drop by more than half when exposed to corrosive environments. Polyethylene, on the other hand, is resistant to corrosion and demonstrates a service life of 100 years when materials, products, and installation practices meet the appropriate requirements (1).
Beyond the material’s service life, there’s also the matter of reliability and long-term maintenance. Many installations with ductile iron and PVC fittings use gasketed bell and spigot joints, which are simple to install but are held to standards that include an acceptable leak rate per joint. Leakage from joints is a source of exfiltration that can impact nearby structures and increase the need for regular maintenance. In contrast, PE standards do not allow leaking at joints.
Closing the deal with ROI: Presenting value
Ultimately, your goal should be to demonstrate a higher ROI than your competitors. Typically, the formula is presented as ROI = [(Financial Value – Project Cost) / Project Cost] x 100 (2). For an infrastructure project, financial value comes from various sources. For instance, choosing PE pipe fittings can save money every year from reduced maintenance costs. You can also save money by having a system in place that doesn’t need to be replaced as soon, quantifying value based on the cost of replacement and typical service life of competing materials.
Because PE pipe fittings do not allow leaks, you can take your ROI calculations further by adding the money saved from preventing leaks and water loss. Look at the project and calculate the annual water loss based on the size of the piping network and number of households served, presenting this figure as additional value for choosing PE. Additionally, damage and other issues associated with water exfiltration can be added as further savings.
- 1. “100 Year Service Life of Polypropylene and Polyethylene Gravity Sewer Pipes.” (2014). Accessed online 6 August 2020 at https://www.teppfa.eu/wp-content/uploads/Lifetime_Polyolefin_Sewers_Leaflet_-_Final-1.pdf.
- 2. “How to Calculate ROI to Justify a Project.” Harvard Business School. (2020). Accessed online 6 August 2020 at https://online.hbs.edu/blog/post/how-to-calculate-roi-for-a-project.