Budget Box: Contract vs. In-House Cost Review

In order to minimize increases in the Operating and Capital Reserves Fund budgets, Landings Association staff routinely evaluate opportunities to reduce costs. One way we do this is by conducting cost/benefit analyses of contracting versus performing necessary work in-house. Put more directly, our Public Works team, where qualified and schedules permit, competes against contractors to determine who will win the bid for the job. We have tested our competitiveness over time in both ongoing service delivery (including contract street sweeping routes and lagoon maintenance) as well as one-time projects. Several recent examples demonstrate the value of this comparative analysis in both the operating and capital reserves budgets.

Environmental: Public Works staff completed the replacement of the riprap weir (which regulates water flow and height) located in Lagoon 102 (between Marsh Haven Lane and Delegal Road) in 2019. The original budgeted amount of $20,000 was based on quotes from contractors and engineering estimates. However, after further review, staff determined that this replacement could be successfully completed by in-house employees. As a result, the work was performed at a cost of $7,500, including labor, for a savings of $12,500.

Construction: In 2019, Public Works staff replaced the non-functioning storm drain on Henry Clay Court that was causing the roadway to flood after rain/storm events. Three employees completed the installation of the storm drain, and Bennett Paving overlaid the road near the drain to further improve the drainage on Henry Clay Court. The total cost of materials and labor was $3,916, as opposed to contractor quotes of $9,000, a savings of $5,084.

Buildings and Grounds: In 2019, staff re-decked the community path bridge that connects Tanaquay Court to Pine Shadow Court. After an inspection of the bridge, staff determined that most of the deck boards were deteriorated beyond repair, requiring a full replacement to address safety and rideability concerns. This repair was budgeted in the Capital Asset Management Plan (CAMP) for $16,000. The total material and in-house labor costs for the project were $6,235, a savings of $9,765 compared to contracting.

Fleet: In 2018, a heater was replaced and installed in the Mechanics Shop by two in-house employees at a total project cost of $1,962, a cost reduction of $2,038 over outsourcing.

Landscaping: In 2018, TLA staff negotiated a flat three-year contract with BrightView Landscapes for 2019-2020 at a total annual cost of $1,064,424. The negotiations resulted in a slight annual cost reduction and included landscape enhancement credits valued at $83,865 in 2019. The negotiated credits were used to install additional plantings and trees at the Marinas, gatehouses, and other common property areas island-wide.

Your Public Works team continues to monitor projects and services on a case-by-case basis to determine if it is more beneficial to use in-house staff to perform work as opposed to contracting work. Cost savings always are balanced against maintaining the appropriate service levels and quality residents expect and deserve.