Debunking the Child Care Facility Savings Myth
Original post made by Student, Menlo Park: Central Menlo Park, on Nov 6, 2006
The overstated child care savings, repeated frequently by Winkler, and then again below by Dick Poe (who exaggerates still more) is exposed below.
The actual savings of the "police station remodel" (which includes a portable) is about $1M over the 30-year span of the facility.
Winkler's $3M in savings actually includes two huge errors. She counts $750,000 in "sunk costs" for the design of the new facility as a "savings" even Menlo Park spent this money. And secondly, few people know that the remodeled police station provided less than half as much space as the propose new facility. To add more space required a modular, whose rental cost is $48,000/year. The 30-year rental cost of the modular is "hidden" as a yearly operational cost rather than shown as an up-front capital cost.
If you make a Net Present Value ("NPV") calculuation on a 30-year payment of $48,000/year it comes to $1.2M.
Hence, Winkler's $3M "savings" includes a $750,000 mistake, and hides $1.2 current value of the 30-year rental costs. That's about $2M that won't really be saved.
A capital savings of $1M over a 30-year period is not very much, and if you look at the space, a new facility provided $13,700 square feet versus 9100 square feet provided by the police station + modular.
Finally, the new facility accommodates more students at a higher space per student.
In every way, the decision to remodel the police station was a bad decision that iconifies all that is wrong with Winkler and Duboc's decision-making.
"Police Station + Modular" Costs New Facility
Sunk Wasted $0.75 $0.75 Design Costs Sunk
New Remodel Costs $3.4 $5.5 Build new costs New
Modular Rental (NPV) $1.2 $0.0 Modular Rental (NPV)
Total New Costs $4.6 $5.5 Total New Costs
Total Sunk + New $5.4 $6.2 Total Sunk + New
"Usable Space(square feet)"
Police Station 5900 13700 New Facility
Modular 3200 -
Total 9100 13700
Police Station 103 180 New Facility
Modular 60 0
Total 163 180 Total
Police Station 57 76 Police Station
Modular 53 0
Average 56 76 Average
I am not drinking Greenheartís expensive potion
By Martin Lamarque | 32 comments | 966 views