This paper will seek to:
- Explain the process we have undertaken since the EGM decision in January
- Show why we decided to renew IUK rather than try to replace it
- Examine the options that were considered for the Engine, Interior, Paint, and Instruments – with costing information
- Present the basic combinations that gave rise to the draft budget approved by the Board in February
- Show the complexity of the estimate/quote situation with overlapping bids from various suppliers, and why we chose to appoint Maxcraft as project manager
- Show the rationalised and completed quotes for the three options that Maxcraft presented at the April Board meeting. We will also look at what the costs might have been if we went more basic than what Maxcraft presented, and how much they could have escalated had we added other desirable instrumentation
- Describe the complete final package as approved by the Board
- Describe the timeline and process of the work.
On January 19th a Committee was formed under the Chairmanship of Stephen Head, to consider how to give effect to the club’s choice of a Piper Archer as our number two aircraft. The first question to be addressed was whether to keep and refurbish IUK; to look for an aircraft that was already everything we might want; or to find an aircraft that could be more effectively upgraded than could IUK. There were two avenues of research. One was to look for what aircraft were available for sale, what they offered in terms of specifications and value, and what would be involved in their acquisition. The other was to price out what work was necessary or desired to bring IUK up to the standard required. The aim was to have a recommendation ready for the February Board meeting.
One consideration for acquiring a different aircraft is whether BC provincial sales tax or HST would be applicable. To bring an aircraft into BC from the US, or from elsewhere in Canada, involves payment of a 12% tax. As an HST registrant, the club can claim back the tax paid on an aircraft from a vendor who is a GST/HST registrant. However, most private owners of aircraft in Canada are not GST/HST registrants. If the appropriate aircraft were to be purchased in Canada from a private vendor the effect of the purchase would be to add 12% to the price of the aircraft.
A number of aircraft were found for sale, mostly in the US. Typical examples are shown in the appendix. Their prices are in the range of $85K to $95K. On top of this is the cost of importation to BC. Our advice, from various sources, was that the minimum one might expect to pay for the necessary inspections (pre-sale, after entering Canada, and by the Minister’s Designate), travel and transportation, might be about $10,000. On top of this would be travel costs to preview each potential acquisition and the costs of arranging and effecting a pre-purchase inspection of each potential aircraft acquisition. These costs and the related time commitment by members would be incurred for each aircraft that we were interested in but abandoned at some stage of the process. So we considered that the final cost of investigating and importing an aircraft, bringing the aircraft on line would be uncertain but at least would be $15K to $20K higher than the aircraft’s advertised price.
To be able to compare aircraft we required a more-or-less agreed specification. So the committee agreed on a draft specification for the IUK upgrade option, for which pricing information was obtained from a number of suppliers. For the aircraft-purchase option the approach would assign approximated cost adjustments based on the differences in specifications between those offered for sale and the draft specification.
The draft specification for the IUK option included four general areas: Paint, Interior, Engine, and Instrumentation. There are also a number of smaller items like exterior plastic parts, door seals, and windows.
- Paint was the simplest to define — i.e. new paint. The consensus is that Upper Valley (UVA) does the best paint in this region, and their estimate was for just under $14K.
- The Interior needs to be completely redone — seats, carpets, trim, headliner etc., with the only real question being whether to do the seats in leather or fabric. The estimate from UVA was for $12.5k, or $13.5k with leather.
- The Engine is operating on-condition at present, and has already been overhauled three times. Our initial information from various sources was that a replacement overhauled engine would cost about $24K including removal and replacement. However, this was not the only option. A factory overhaul was estimated at $28k, and a factory rebuilt engine at $33k. More on this will follow later.
- For windows, exterior plastic etc., the estimates came to about $5.1K
- The instrumentation standard was the area most open to variation. The consensus was that IUK has always been the club’s IFR-capable aircraft, and that this capability should be retained. However, the basic flight instrumentation should remain analog and essentially unchanged, rather than being replaced by glass panel technology. The committee agreed on a draft specification, for comparison purposes, of Audio Panel; Dual NavComs; two VORs, one with glideslope indicator; ADF; transponder; moving-map GPS. Some of these items can be retained, i.e. one of the VORs, the ADF, and the transponder. Total installed costs for the other items was estimated by Advanced Avionics at $23.5K using the Garmin Aera 796 GPS, or $22K using the Garmin Aera 510. Other instrumentation was discussed (such as an engine analyser, horizontal situation indicator, other certified GPS units, PCAS) but was not included in the draft specification.
- We also needed to know the existing value of IUK. UVA had estimated it at $30k to $33k last year. They revised their estimates down to $25K to $30K, and also suggested that they would purchase IUK for $25k when they had reduced their existing inventory. Acquiring a replacement aircraft would necessitate the sale of IUK. The process and time line required to effect the sale of IUK would be uncertain, would likely require a substantial investment of members efforts and time to accomplish a sale and could result in the incidence of disposition costs such as storage and brokerage fees.
During this phase of the project the Committee spent a considerable amount of time researching vendors and delivered the aircraft to at least three vendors each for engine, paint and interior, spread around all of the local airports. The Committee also spoke to at least four or five mechanical vendors, three or more for paint, and at least three for the interior.
The total cost of refurbishing IUK up to this draft specification was estimated at $80K, which with its existing value of $30K gave a total finished aircraft ‘value’ of $110K. Using a factory rebuilt engine would add about $11K, and upgrading to a certified GPS might add another $6K to $10K. (Please note that these numbers are from the information collected at the time, and some were to be revised at a later stage in the project).
The aircraft advertised for sale were in the range $85K to $95K. We have already seen that another $15K to $20K might easily be incurred in bring the aircraft into BC, and BC Provincial sales tax may be applicable as well. On top of that, it was unlikely that any potential acquisition would have a zero-time engine, or brand new paint and interior, and their instrumentation packages were generally less capable than our draft specification. Considering that they also had unknown (to us) history, it was quite clear to the committee that sticking with IUK was obviously the best choice. This would also allow the project to continue without delay, rather than us starting to try to sell IUK at the same time as looking for a replacement.
The recommendation put to the Board in February was to keep IUK. The Board accepted this recommendation. The total estimate presented to the Board for refurbishment and upgrade to the draft specification was for $81K. It was recognised that options such as a factory rebuilt engine, and other instrumentation would increase the total cost. The Board approved a refurbishment budget of $81K with a contingency budget of a further $10K for unknowns.
The Committee progressed to the next stage. This was to include many aspects, such as:
- refine the project specifications;
- tie down estimates to become actual price quotes;
- choose which suppliers to use for what parts of the project;
- think of all the other details that might have been overlooked so far;
- think of the logistics of how to manage the project and to move the aircraft from one supplier to another in a timely manner;
- consider the choice of a single overall contractor for the project.
There are four possible approaches, and the first two can each be further divided in two. The Appendix includes an extract from ‘The Lycoming Flyer’ and provides detail additional to the following summary.
- Overhaul of one’s own engine is exactly what it says. It involves stripping the engine, checking all the parts, replacing those that have to be replaced, doing any necessary machining, and re-assembly. Exactly which parts get replaced and which get machined depends on who does the overhaul. Lycoming refers to these sub-options as ‘factory overhaul’ and ‘field overhaul’. There are also some differences in which ancillaries might be retained, and which replaced. The engine in IUK has already been overhauled three times, and it is far from certain that another overhaul is even possible.
- We could exchange our existing engine with one that has already been overhauled, (either ‘factory’ or ‘field’). This would give about the same final result as the previous option but would eliminate some of the downtime. Another important aspect is the core value of the engine that is removed. There is a normal expectation of a core value up to maybe $13K, but this is not guaranteed and depends on a detailed inspection. So you have to pay the full cost up front, then wait and see what core value might eventually come back – for an engine that has already been overhauled three times there may be very little remaining core value. For both this and the previous option, the total engine hours continue – only the hours since overhaul are reset to zero (hours SMOH).
- A rebuilt engine can only be obtained from the factory. It meets all the same specifications as a brand new engine, including any design upgrades, and the engine’s total hours really do start off at zero (new engine logbook). The design upgrades are very important at the moment because all new Lycoming engines have roller tappets, so that means their factory rebuilds also get the roller tappets, and to achieve that usually involves new engine cases. In fact, it can even mean that the ‘rebuilt’ engine is actually sometimes a completely new engine. On top of that, at present, for a very limited time only, Lycoming offers a guaranteed core value when exchanging for a factory rebuild, so long as the core engine is in the right range of serial numbers. engine in IUK does just qualify. This means that the cost of this option is reliable and does not depend on waiting for an assessment of core value that might be much less than one hoped. The Appendix shows a URL link to the relevant Lycoming service letter. The factory rebuild also has a two year warranty, whereas the factory overhaul has a 1 year warranty.
- The fourth option is to buy a brand new engine. It does not have much to commend it in comparison to the factory rebuild.
In Phase 1 of this project the engine costs were assumed as overhaul costs of about $24K. A non-factory overhaul or exchange would cost a little less, without any perceived loss in value. It was now clear that another overhaul of our existing engine might not be possible, and that a lack of core value could add up to $13K to the total cost. In comparison, to exchange for a factory rebuilt engine would cost a reliable $31.5K including installation costs and a new oil cooler. The Committee also considered it desirable to choose the updated roller tappet design, because this is an aircraft that we want to retain value for many future years and having the older design of tappets might detract from that. Clearly, the Committee’s recommendation was to go for the Lycoming factory rebuilt engine. At $31.5K complete, this would be $7.5K more than was assumed in Phase 1.
Single or Multiple Contractors?
The estimates collected during Phase 1 were from various suppliers. Some were only for their specific areas, and others were for the whole project and would involve the main contractor sub-contracting certain parts of the work. But in talking to the suppliers, and to their customers, one thing that emerged was that some companies are better than others at certain things. The overall consensus was that the best choice would be Upper Valley Aviation (UVA) for paint; Maxcraft for avionics; Port Aircraft Interiors (PIA) for the interior; and the engine could be sourced from a number of places, with its most important aspect being the factory rebuild. Co-ordination of their responsibilities and quotations quickly became very complicated and time consuming, even at this early stage. The quotations appeared to overlap in some places, and there was also the possibility of having missed something.
However, appointing a single contractor would not give the desired combination of actual suppliers. An alternative was to ask Maxcraft to manage the whole project on our behalf, and they agreed to do this for a maximum fee of up to $2,500. This meant that we would retain choice of each supplier, but would not have to deal with any suppliers directly. Further, it was agreed and understood that sub-contract prices would not be subject to mark-up by Maxcraft. Once work gets underway, Maxcraft would also co-ordinate the timelines and logistics of the work and aircraft movements. Maxcraft is experienced in this type of project management arrangement, and this was the recommendation of the Committee. The recommendation to accept the proposal to engage Maxcraft to manage the restoration project was approved by the Board.
It turned out that the interior estimate included in the UVA overall estimate was most probably sourced from PAI. PAI commonly works with Maxcraft and both are located at Pitt Meadows. Their direct quote for the interior work was $14.5K for a leather interior finish, it is not really clear why UVA originally estimated only $13.5K.
As a standalone contract UVA’s price for just paint came in at $15.2K, a little higher than as part of their overall estimate, but now including removal and repainting of cowlings, flight control surfaces, etc., and replacement of fuel tank screws.
Windows, Trim etc.
A one piece windshield was considered as overly expensive, without offering any real advantage. It is sensible for the windows, external plastic, glare shield, oil door hinge, etc. to all be handled during the painting operation at UVA. The total quote for these items came in at $5.1K.
This was an area that needed serious examination.
It was already agreed that IUK should be IFR capable — but that does not exactly define what equipment has to be installed. At present it has an audio panel; two com radios; two VORs (both with integral radio); ADF; DME; and transponder. There were questions about the serviceability of some items, and also discussion about how appropriate it would be to keep DME or ADF on an aircraft for the next decade or longer. The first step was to have Maxcraft assess their functionality. They determined the audio panel, and the com radios need to be replaced. The ADF is still useful, even though its indication does hunt somewhat. The DME is not serviceable and not worth retaining. The transponder is relatively new and obviously still usable.
The basic requirement for IFR flight is to have redundancy in all the instrumentation required in order to complete the intended flight. Consequently, two radios are obviously required. It is also common to have two VORs; or maybe one VOR and an ADF. The Committee agreed on the desirability of having two VORs and an ADF, so long as this meant retaining the existing ADF at little or no expense. One of the VORs should have glideslope indication. We also want a moving-map GPS. There are a number of different instrument combinations that might fit this bill, and prices were sought from Maxcraft for a number of combinations. At the same time the Committee looked at how each package might be fitted into the available space, which is limited. Undoubtedly, something would have to go over on the right side of the panel, and be less visible or accessible from the left seat.
The different instruments considered, in various combinations were:
- Garmin GMA350 audio panel $4.9K installed
- Garmin SL30 navcom radio $6.5K installed
- Garmin MD200-306 VOR course deviation indicator (CDI) with glideslope $2.1K installed
- Garmin SL40 com radio $3.5K installed
- Garmin Aera 796 GPS (non-certified) $3.4K installed
- Garmin Aera 510 GPS (non-certified) $2.0K installed
- Garmin GTN 650 navcom GPS (certified) $15.5K installed
- Garmin GTN 750 navcom GPS (certified) $20.5K installed
The Appendix provides URL links to the Garmin webpage specifications for each of these units. There are clearly big differences in the prices for the GPS units. The certified units are much more expensive, but because they are certified and also include a navcom radio, they can be considered as part of the IFR package, and this means that some other units are not required.
Screen size must also be considered:
- Garmin Aera 510 – 4.3” diagonal
- Garmin Aera 796 – 7” diagonal
- Garmin GTN 650 – 4.9” diagonal,
- Garmin GTN 750 – 7” inch diagonal
The Garmin Aera 510 is entry level in Garmin’s portable touch-screen GPS line-up and not as feature-rich, user friendly or intuitive to use as the Aera 796.
Of the IFR-certified navcom GPS units, the GTN 750 has the same touch-screen technology as the portable Aera 796, and appears to be extremely easy to use.
In the limited space of a Piper communications stack the size of each unit is very important. The Garmin Aera 510 is far too small to mount over on the right, but is compact enough to be located in the main comms stack. However, the Garmin Aera 796’s size requires it to be located in the right comms stack, making it much less visible or accessible from the left seat.
Both the GTN 650 and GTN 750 units can be mounted in the main stack Since they are combo units, they would replace the separate navcoms and GPS units of the more basic IFR panel setup. The GTN 750 also has the ability to remote-control an audio panel and transponder, giving the option of blind-mounting those units out of sight and allowing the pilot to use its touch-screen interface to control those units.
We also need work on the plastic panel that surrounds the instruments and provides the lighting. To remove and refurbish the existing plastic would cost $1.7K. Another option was to upgrade to a new metal panel, that would be powder coated in a color to be coordinated with the new interior including laser etched labelling, and upgraded new LED bezel instrument lighting for an additional cost of $1.8K for a total of $3.5k.
This is where we were by the time of the March Board meeting. There was good Committee consensus regarding the engine, paint, interior, etc., and on having Maxcraft take on the project management. However, opinions differed about what combination of instruments was required. The Board agreed with the recommendations for which there was consensus (recognising the value of the engine recommendation despite its increased cost estimate), and asked for further work to define the most appropriate instrumentation package.
The big remaining issue was to settle on an instrumentation package. It was agreed to ask Maxcraft to specify and quote a total price for each of three approaches.
- Well-equipped VFR package, not IFR capable
- Intermediate IFR package
- ‘Nicely equipped’ IFR package
It was not until the date of the April board meeting that this work was complete, and its results were presented by Maxcraft as a delegation at the start of the meeting. (It should be noted that during this period Maxcraft was also working with the other suppliers to define the logistics and timeline of the project and to prepare paint and interior finish options)
The three instrumentation package options presented by Maxcraft were:
‘Well-equipped’ VFR-only package – Price: $20.4k
Garmin GMA-350 audio panel
Garmin SL30 navcom radio
Garmin SL40 com radio
Garmin MD200-306 VOR indicator with glideslope
Garmin Aera 796 portable GPS (mounted to the right)
Intermediate IFR package – Price: $24.8k
GMA 350 audio panel
MD200-306 VOR indicator with glideslope
SL40 com radio
GTN 650 certified-IFR navcom GPS
‘Nicely equipped’ IFR package – Price: $31.0k
GMA 35 audio panel
MD200-306 VOR indicator with glideslope
SL40 com radio
GTN 750 certified GPS
NOTE 1: All the above packages assume the inclusion of one of IUK’s existing in-panel VOR units to provide redundancy in lieu of a 2nd Garmin SL30 navcom unit. Substituting a 2nd SL30 navcom instead of the SL40 would cost an additional $5.0k to upgrade. The packages also assume the inclusion of the ADF unit, provided its repair cost is reasonable.
NOTE 2: Some days after the meeting, Maxcraft also provided information on the cost of a basic IFR package. This will be described in the next section.
Maxcraft also showed samples of the interior leather, carpet and trim colour package and presented demonstration units of both the GTN 650 and the recommended Garmin GTN 750.
Later in the meeting the Board discussed the instrumentation package options, and were assisted in this by Bob Fatkin, Duncan Poynton, Ron Becker and Robert Fehr who had all been present from the start of the meeting.
The first VFR-only option was eliminated because the 796 GPS would have to be mounted too far away from the pilot to be useful. The remaining comparison focussed on the differences between the GTN 650 and the GTN 750, with the final decision in favour of the GTN 750 because of its bigger screen, newer screen technology, easier user interface, and integrated functionality (radio, audio, transponder). It was also noted in discussion that the GTN750 is a particularly good choice for VFR use.
So the total project cost would come to:
Engine and oil cooler $31.5K
Windows, trim etc. $5.1K
Paint, hull trim, etc. $15.2K
Avionics and instrument panel $34.5K
The Board approved a total budget of $102K in the hope that we might also be able to include the powder coated panel and updated LED bezel lighting once the detailed figures have been finalised. Maxcraft has since confirmed the upgraded panel and lighting can be obtained within the $102K approved budget.
The Committee paused to reflect on the decisions so far, and to consider the next steps.
One question we knew that Members would want to ask is “Couldn’t this have been done for less?”. Another way to frame this question is to look at how much money would be saved by downgrading the specifications in certain areas, with a consequent loss of function and/or value.
- The paint is to be basic white, with a tasteful red swoop of some sort, in order to relate somehow to the ZHQ paint scheme. There is no money to be saved here, and we will get good value.
- The interior does include leather seats, but this is a club aircraft that we expect to be flown a lot, by many different people for many years to come. The leather is a good durable choice.
- We have chosen what seems like an expensive engine option, but it will give us a completely updated, zero-time engine at a reliable cost. The other options would not update or zero-time the engine, and without guaranteed core value, they may even be more expensive in the end.
- Could the avionics package be downgraded in order to save money? Three options were presented by Maxcraft at the Board meeting, and they subsequently provided information on the cost of a basic IFR option.
The cheapest option presented would have been the VFR package, and this could be made even cheaper by choosing an Aera 510 instead of the Aera 796. This would have saved about $1.4K, but would be compromised by the smaller screen of the Aera 510.
There has always been consensus that IUK should be IFR-capable, but neither the Aera 510 or Aera 796 are certified, so a package that used either would rely on VORs to be IFR certified. This basic IFR package was not considered at the Board meeting, but information on its cost has since been provided by Maxcraft, and it is included now for comparison purposes.
Basic IFR package – Price: $19.9k
Garmin GMA-350 audio panel
Garmin SL30 navcom radio
Garmin SL40 com radio
Garmin GI-106 CDI VOR indicator w/glideslope
Garmin Aera 510 portable GPS
This option was not considered because of the limited space in the main communications stack. However, it has since been confirmed that it would actually fit in the space available. The most frequently used items (navcoms & GPS) would fit in the centre stack, leaving only the transponder and the ADF on the right. The transponder and ADF are accessed much less in flight and their location in the right stack would not be a hindrance. This option would provide basic IFR capability, and would have cost $11.1K less than the package actually chosen.
The Board did not consider the Basic IFR package using the Aera 510, and consider the Aera 796 unaccepable because it could only be mounted on the right of the main stack. As such, the choices were limited to panels that had either the GTN650 or GTN750 as either can be centre-mounted. The 750 costs $5K more than the 650 but has a much larger screen, has an easy user interface that never goes more than two levels deep on its menus and is better for VFR pilots than the 650 for those reasons.
For reference, the Committee did not recommend certain other instruments that were discussed early on, such as an engine analyser, or PCAS, or a full glass panel such as a Garmin G500. These would have added considerable cost and some added complexity.
The package chosen will provide excellent functionality for both VFR and IFR flying for many years to come.
It was also time to update all the Members more fully than has been possible from just the Board minutes and personal conversations. This is the purpose of this paper, and of the presentation planned for the May general meeting.
Maxcraft has already arranged a complete project timeline with the various suppliers. Things have been ordered, and deposits paid. Work will have started on the aircraft before the general meeting. The project is expected to be complete sometime in late June.
Earlier this financial year in November 2011, Board approved a budget which projected an increase in the value of our aircraft assets by expending $140K of club funds during the current fiscal year. This could be achieved by spending $140K on our current aircraft, or by selling current aircraft and spending the funds realised as well as $140K. At the time, no decision had been made about our number two and number three aircraft. The approximate values of HXT and IUK were believed to be about $30K each, so if we were to sell both, there would be about $200K available for replacements.
We now know that we are keeping both aircraft. With a final budget of $102K for the IUK renewal project, we are left with $38K in the budget, to spend on HXT and maybe also on ZHQ. However, we are not likely to spend it this financial year because our intention is to continue operating HXT on-condition at least over the summer and until the completion of the restoration of IUK and after all costs are known with certainty. Notwithstanding the above, if it is possible without too much downtime, we might go ahead with the replacement of the navcom radio in HXT which is almost completely unreadable at present.
Another question being looked at is the refurbishment of the engine for HXT, because we need to know (as soon as possible) whether it would be eligible for the same limited-time-only factory rebuild offer from Lycoming.
Since taking on this project in January the Committee has done a tremendous amount of work. It is chaired by Stephen Head, and its members are Paul Monchamp, Augie Rinz and Mark Thibault. IUK has been taken to many different local suppliers for assessments, estimates and quotes. Many other suppliers have been consulted as well. The options and recommendations have been researched thoroughly, and debated intensively. Stephen deserves particular commendation for his tenacity and patience in dealing with suppliers, the Committee and the Board. We have just passed a watershed in the project, but Stephen’s work, and that of the other Committee members continues. Under Maxcraft’s management, we will be moving IUK from one supplier to another at various times over the next few weeks. Doing it ourselves saves money. As each stage is completed it will be inspected by at least two members before being accepted. There will continue to be a host of detailed considerations and decisions to be made. The Committee deserves our sincere appreciation as it continues its efforts to provide the aircraft that the club has chosen.
Aircraft for sale
‘Lycoming Flyer’ about engine overhaul and rebuild options
Lycoming service bulletin regarding eligibility for exchange engine core value
Garmin Instrument Specifications