The Mileage Deduction should reflect both additional haulage costs incurred as a consequence of the Contingency Delivery Point being used and the fixed costs (direct and indirect) associated with the nomination of a Contingency Delivery Point. Therefore part of the deduction should be proportionate to the tonnage of waste diverted and the additional mileage (if any) travelled by the relevant vehicles. Another part of the deduction should be proportionate to the number of Delivery Points affected and the duration of the use of Contingency Delivery Points.
The Contract should contain provisions for agreeing the Contingency Delivery Point and oblige the Contractor to prepare and maintain a Contingency Plan which will detail how the Authority shall dispose of Contract Waste in the event that a Delivery Point is not able to receive Contract Waste.
The Contingency Plan should specify Contingency Delivery Points for each Delivery Point. The Contract should set out how the Contingency Plan will be maintained, updated and agreed on a periodic basis (see the Output Specification drafting in Module 5 Part II for an example of such provisions).
Authorities should be aware that collection and haulage costs will increase over time. In order to ensure that the Authority is adequately protected against increases in such costs, the Authority should consider linking deductions to an appropriate index (see Sections 3.2 and 3.3 on Cost Variations).
The Mileage Deduction should not cut across other financial incentives within the Payment Mechanism such as the acceptance of Contract Waste (where the incentive is provided through the Base Payment and Non Acceptance Deduction, which reflect haulage costs) and the diversion of Contract Waste (where the incentive is provided through the Diversion Performance Deduction).