[Finance] Draft Budgets

[Gagne, Zennon]

Great work Mark and Amanda at quantifying the costs associated with BV. The considerable amount of effort that has gone in to the analysis definitely helped me gauge how the operation is run and the costs associated with it. I've spent a significant amount of time looking at these costs:

1. The one thing I don't understand is how the 'service hours' are assigned to each capacity. As in, why is it 30 hours for 1250 capacity, 25 hours for 1000, and 10 hours for 500? Is this calculated on the first tab at the bottom? (See Bombers-1250 Cell B41 for the 30 hours).

2. If I read Tab 1 Cell B52-C52 right, we run at 75% of capacity on average. Is it realistic to believe that we can park over 1000 bikes in a game if we are not currently hitting capacity of 400?

3. What is the financial benefit to BV and Bike Winnipeg of an increase in capacity from 400 to 1250 bikes. Is there room on the bombers side to triple our rate per game for triple increase in capacity? If we do end up negotiating for the preferred 1250, will the rate paid by the bombers be increased accordingly? How will that work? I also think if we give the bombers too many options, they will opt for the lower amount to keep the costs as low as possible.

What do you think, overall awesome job on this, pretty cool to see how everything comes together as you have laid it out.

Zennon

-----Original Message-----
From: finance-bounces at lists.bikewinnipeg.ca [mailto:finance-bounces at lists.bikewinnipeg.ca] On Behalf Of Mark Cohoe
Sent: Monday, March 10, 2014 6:13 AM
To: finance at lists.bikewinnipeg.ca
Cc: 'jeremy at bikewinnipeg.ca'
Subject: [Finance] Draft Budgets

HI,

Amanda and I met over the weekend and did a detailed run through of the 
numbers for bicycle valet to come up with pricing for small (<50 bikes), 
medium (50-150 bikes) and large (> 150 bikes) setups. For the Bombers, 
we developed 4 scenarios based on capacities of 1250, 1000, 750 and 500 
bikes, 500 being the status quo. Amanda, I've made a few small changes 
to the numbers from what we had Saturday, but mainly to deal with the 
service hours. I also decided you were right about listing the capital 
costs under expenditures in the budget, so that's in there too.

To develop the prices, we broke down costs into fixed and operational 
costs. We borrowed Jeremy's idea of service hours to help factor fixed 
costs into the rates. To calculate a service hour fee, we assigned a 
fixed number of service hours to each setup type, multiplied that number 
by the estimated number of each contracted setup type to determine a 
service hours total for the season, and then divided fixed costs by that 
number to get a service hour cost. See the Cost Analysis Spreadsheet to 
review these calculations.

The service hour fee was then combined with estimated variable costs to 
get a total setup cost (which included transport and a fixed number of 
operational hours) and hourly rate for any additional hours.

Note that because the Bombers contract takes up such a large portion of 
our contract setups, the service hour costs depends on which capacity 
scenario the Bombers choose for 2014. The actual service hour charge is 
listed on each tab (Bombers-1250, Bombers-1000, etc.) as a fixed number 
rather than as a linked cell. In each case it was calculated by setting 
the service hours cell on the rates tab and adjusting the quantity of 
new stations and racks in the depreciation calculation.

I've marked the 1250 bike capacity option as the preferred option. If 
the Bombers go with that option, we would have to come up with an 
additional $12,000 for capital acquisition. Amanda and I thought it 
would be best to ask for a multi-year contract from the Bombers, so 
ideally this would give us ability to get a loan. We also recognized 
that regardless of what option is chosen by the Bombers, we will need to 
bill game by game to manage our cash flow.

For the BV and BW budgets, I've made calculations based on the Status 
Quo option, which gives capacity for 500 bikes/game. We had a capacity 
for 400-450 last year.

To balance the BV budget, I pushed the Bomber rate up a bit to 
$1300/game. The BW budget includes a contingency of 4% of expenses (BV 
and BW Core).

Cheers,
Mark

-- 
Mark Cohoe
Executive Director
Bike Winnipeg
www.bikewinnipeg.ca
204-894-6540


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