Project Everest

[FEB 19] [REPURPOSE] Experiment Results - Cost Optimisation

Reference to the Experiment Design Post

 

Lean Phase: Cost structure

 

Assumption: There is a cheaper way to store recycled material (other than warehouse → $150/month)

 

Results:

 

Over the course of the month the team explored numerous avenues into finding a cheaper solution to store collected waste, from considering alternative warehouse solutions to contacting construction companies.

 

Initially the team played with the idea of purchasing used shipping containers and storing them in Kasafa on Antonio’s (Hopesellers) land and running our operation from out there as suggested by Antonio in his last meeting. However, despite the offer, Antonio’s machinery was determined not to be valuable to ERS at the current time. Furthermore, additional logistics costs of collection would need to be considered. Despite this, research was still conducted into the costs of shipping containers incase open land became available to us in the near future.

 

No local option was found for purchasing shipping containers, however, the average purchase price for a 20ft and 40ft container came to US$1600 and US$1950 according to ebay. These prices were verified by Scott Sproules (Verdeka) who regularly exports and imports goods. Additionally, Scott said Singapore was our best bet on the used shipping container market, and that he would be able to ship it into Timor-Leste free of charge for us. Looking away from costs and into required space, the total volume we would need, in order to be able to make the Ximenes deal financially viable would be 83.68 meters cubed per month. This would require two 40ft containers giving a total usable space of 135.45 meters cubed of space per month compared to the current 307.97 meters cubed of space. This lack of space in addition to the initial capital cost of around $4000 plus ongoing land rent make the purchasing of shipping containers unviable. Additionally to offering to ship in a container for us, Scott and Eka (Verdeka) both confirmed they would introduce us to Mr Ricardo, their contact into real estate in Timor-Leste. However, due to a lack of project time this is an avenue for future teams.

 

Contact was also made with Joaninha Marcal, a local businesswoman looking to sell land in Tibar and the surrounding area. Joaninha could not offer us any warehouses at the current time but currently leases a 1000 square meter facility to a client for US$2000 per month. However, Joaninha offered 3 empty lots of land, being 1 hectare (10000 m2), 3.5 hectares and 4000 m2. Respectively, she offered the first two blocks of land for US$0.35 per meter squared a month and the third for US$0.50 per meter squared a month. Although these land options are not viable for ERS at the current time, Joaninha passed on a local contact Kayo Joel in the construction industry who may in the future be able to quote a warehouse cost. Due to a lack of time no quote was finalised. Subsequently, enquiries were made into warehouse costs through other local companies. RMS Civil (Erik Stokes) and Concept Constructions (Chris Jackson) gave initial quotes of US$800 and US$400 per metre squared. Both quoted options require significant capital investment plus on going land rent costs.

 

With this collated data the February team has achieved an orange light success metric, where ERS Collection team understands the required number of plastic bottles to be collected to keep the current warehouse sustainable according to the Ximenes Deal.

 

Validated Learning:

 

The data collected throughout the month contradict our hypothesis. Both land and other storage solutions that were found were determined not to be financially viable and would cost ERS more than US$150 per month. However, further analysis should be considered in the future as many warehousing solutions in Dili are found through word of mouth rather than online searches. Additionally, future storage options may be determined dependant on a possible deal being struck with Verde. This data does not warrant a further post validating the cost structure of ERS.

 

Next Move:  

 

This experiment should be continued within the coming months, considering the Ximenes deal and moving further into considering the financial details of a possible collaboration with Verde.

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