Irrigation upgrade return on investment Cancel The title field is required!

1. Snell John R

   
   12/6/2012 10:12 AM

   I am looking for info on the savings incurred from replacing a stand alone system with a central control and all new pipe. Does anyone have experience or data showing savings in water, electric and repair and maintenance?

   
   
   
   
2. Corey Eastwood

   

   80 posts
   
   12/6/2012 11:12 AM

   Unfortunately it never pencils out. The $ savings would take tens of years to break even. The savings is in a complete disaster callapse at the wrong time. That is the positive argument.

   
   Corey Eastwood CGCS, Stockton Golf & CC, Retired
   
   
3. James Schmid

   

   1 posts
   
   12/6/2012 12:12 PM

   Corey Eastwood, CGCS said: Unfortunately it never pencils out. The $ savings would take tens of years to break even. The savings is in a complete disaster callapse at the wrong time. That is the positive argument.

   
   
   I put one together last year. 20 years minimum, and thats excluding the time value of money, and the return you could be earning on the money if you didnt do it. If you are going to spend 2 mil on a new system the alternative - invest the money - say you could get 5%. Thats 100k per year return. It's pretty hard to show that spending 2 mil on a system would save you over 100k per year - unless you are in a pretty extreme situation. And even if you can, that only covers the interest, you still have to cover the 2 mil in principal.
   
   Corey has it right. Risk of catastrophic failure/just plain worn out need to be the primary justification.

   
   
   
   
4. Michael Vogt

   

   2 posts
   
   12/6/2012 2:12 PM

   John:
   
   There are many factors to be considered. I have attached a worksheet in pdf that outlines savings that can be achieved. Of course there is no real ROI.
   
   Good Luck,
   Mike

   
   
   
   
5. Snell John R

   
   12/6/2012 4:12 PM

   There was one person that I was hoping to reply to this post. Michael D. Vogt. Thank you. Now that is helpful.
   
   Corey and James, I totally agree with you normally. This is a unique situation where the variables throw everything so out of range there is a possibility of a ROI within 10 yrs.

   
   
   
   
6. Richard Lavine

   

   3 posts
   
   12/6/2012 4:12 PM

   There are many items that just don't pencil out in a traditional ROI calculation. What will the ROI be on cart path replacement? Are you going to save THAT much money on cart suspension issues if you don't replace paths. What is the ROI on tree work; maintenance and/or replacement? Some of this is aesthetics. It just has to look good. In many ways, irrigation system replacement fits into this. What if you don't keep up on your aging irrigation system? How bad will the turf look?
   Why do utilities replace pipes, wires, and poles on a preventative maintenance schedule? I'm pretty sure they can do lots of band aid repairs cheaper than undertaking pipeline replacement projects, but they know that at some point this equipment will wear out, and the prudent thing is to budget for their replacement. Forward thinking BODs and owners know that this is just part of running a golf course. They might not like it, and the cost is hard to swallow, but it comes with the territory. Good Luck

   
   
   
   
7. Snell John R

   
   12/6/2012 8:12 PM

   Great points Richard, again it's a unique situation. How will the conditions improve? how many memberships will it help to sell. How much less attrition? All things that should be considered when determining the real ROI. And we are not talking about anywhere near $2 million.

   
   
   
   
8. David Brandenburg

   

   3 posts
   
   12/9/2012 8:12 PM

   It really depends on where you are in the world and what your costs for water and electricity are. Here in Wisconsin I can pump 15 million gallons for about $12,000 in electrical costs. Even if the new system used no water or electricity can I justify a new system based on ROI only.
   
   My justification will be better conditions going from a 35 year old single row system to a double row system. Yes we will use less water and electricity but that is just a bonus for us.
   
   Good luck.