Problems and issues

Decision to be taken by the Department of National

Defence
To close the military base between
The Vancouver, BC
Halifax, Nova Scotia
What factors contribute towards closing the naval
base:
Military and political factors
Cost Savings


Analyzing the Data
Vancouver Base, BC
Initial building cost-$100 million
Operating cost-$400 million per year
No lease rental payment for using the land as the land is owned by ND
Disposal value of land-$500
Halifax base, Nova Scotia
Initial building cost-$150 million
Annual lease payment for land-$3 million
5 % Interest can be earned which is $3 million by investing $60 million in a fixed
income note
Operating cost-$ 300 million
additional operating cost $100 million will be increased if Vancouver Base is closed



Relevant and irrelevant factors
Vancouver Base, BC
Initial building cost-$100 million-sunk cost-Irrelevant
Operating cost-$400 million per year-relevant
No lease rental payment for using the land as the land is owned by ND
Disposal value of land-$500-Relevant
Future increase of the land will be irrelevant because Vancouver Base must be kept
open if Halifax Base is shut down and will not be able to sell the land in future date
Halifax base, Nova Scotia
Initial building cost-$150 million-Irrelevant being sunk cost
Annual lease payment for land-$3 million-Relevant
5 % Interest can be earned which is $3 million by investing $60 million in a fixed
income note-Relevant
Operating cost-$ 300 million-Relevant
additional operating cost $100 million will be increased if Vancouver Base is closed-
Relevant
More relevant information
Relevant factors if Vancouver is closed
Disposal value of land-$500 million
Operating cost savings-$400 million
Additional cost to be borne by Halifax-$100 m
Net savings= $500 + $400-$100 or $800
Relevant factors if Halifax is closed
Operating cost savings-$300 million
Lease payment savings-$3 million
Interest earned-$3
Investment savings- $60 million
Net savings= $300 + $3-$3+$60 or $360
Decision Criteria-Quantitative

Net savings of $ 440($ 800 - $ 360) to The Department of
National Defence if Vancouver Naval Base is closed inspite of
argument for closing the Halifax Naval Base by The British
Columbia delegation



Decision Criteria-Qualitative

Uses of land at Vancouver base may be questionable or
objectionable from environmentalist as the land will be
sold to private developers