Is Pipe Lining Worth It?

“Is lining pipe worth it? I hear all the sales guys tell me I need to line pipe, but I have a backhoe and it will install new sewer pipe regardless of anything else. So my question is: is it worth getting set up to install pipe when I have a proven method that works?”

I think you most likely have the answer if we provide you with the costs of installing liner into pipe and add in opportunity costs.  You can make a determination on your own without anyone telling you the answer.

Let’s start with material costs. You are currently paying about $1.25 to $ 1.50 per foot for 4” sewer pipe. The cost of materials to build a CIPP 4” sewer pipe runs about $12.50 per foot, so we’re looking at material costs of 10 times the cost of sewer pipe. If we stop there it would make no sense to go forward based on costs that are 10 times higher. For 100 feet of pipe we have a cost of $125 for the sewer pipe and $1250 in liner costs – we’re looking at material cost differences of $1125.

But there is more than just material costs to consider. We have labor, restoration, and time considerations that impact opportunity costs, and competition.

Let’s start with labor to install 100’ of 4” sewer pipe to replace old 4” clay tile. How much time will it take to complete the 100 job for each method. As far as excavating you have the time for 2 guys to open the trench which should be completed 4 to 6 hours to get the old pipe out. We have the time to separate the old sewer pipe out of the spoils and time to haul away the old pipe to the dump along with the disposal costs. The timeline for this should take two guys two – 8 hour days including disposal, backfilling the trench and clean-up. This totals 32 hours of work. You can plug your labor costs including taxes, insurance, transportation costs and wear and tear on equipment to get a fully loaded cost of the work. If we figure a very conservative cost of $25 per hour for the operator and another $ 15 per hour for the helper giving you a total of $40 per hour for the 2 guys for 2 days. That totals $1280 cost to you for labor. Any dump fees would be added to these costs.  Lining for this job should take 2 guys 4 hours each for a labor cost of $320 or $960 less than excavating.

Next is restoration costs. If you are in a rural southern climate with shallow buried pipe and no concern for landscape or hardscape, that isn’t a big deal with the exception of call backs for a trench that settles over time. But what if we need to cut a driveway? Cut a paved road and restore the asphalt/concrete? Permits for cutting the street?  We’ve seen this cost run from a few hundred dollars to over $20,000 in impact fees and restoration. You will need to figure that for each job. Lining costs would not incur these costs as there would be little if any restoration.

A third consideration is time and with time we’re talking about lost opportunity cost. For every hour you spend over the fastest method to complete a job lost opportunity costs comes into play. In this example 2 guys taking 1 ½ days over the time to line the pipe will lose the revenue you could have earned had they been available to work other jobs.

Here’s an example. If you generate revenue of $500,000 in a year and you work a normal 40 hour work week, your company is generating $240 per hour. If we have workload ahead of us and I multiply the $240 per hour times 24 hours of time you are spending on this job that you could have spent on another job, you will lose $5760 in gross revenue. If you run on a margin of 15% you would have lost $864 profit on the gross revenue you didn’t generate.

Recapping cost comparisons, we start in the hole of $1125 more cost for CIPP lining materials than conventional sewer piping. On the labor side we save $960 less with lining, Lets add in a savings of $200 for restoration.  However, your job will have specific costs associated with this item. At this point we’re $35 better off lining than excavating.

Now looking at the lost opportunity costs using our scenario you would have lost $5760 in revenue tying up your labor resources for the extra day and a half. When adding that lost profit of $864 on the $5760 you would have been better off financially by $899. (the $35 advantage to lining above plus the $864). For the contractors who’ve performed this calculation they’ve determined that lining is worth it.

Competition will eventually push to offer lining or leave the industry.

For more information call us at 888-354-6464 or 714-630-6311. You can also email us at [email protected].

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