bidding strategies for bc timber sales

Report
Forest Economics 318
January 22, 2013
CREATING VALUE FROM
COASTAL FORESTS
J.W. (Bill) Markvoort R.P.F.
Table of Contents
 Value Parameters
 BC Timber Sales
 Bid Strategies
 Knowledge
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

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Know the Timber Sale and the Timber
Know the Market
Know the Rules and Regulations
Know Yourself
 Preparing a Winning Bid
 BC Timber Sale A74395, Conrad Creek


Information Bid Package
Winning Bidder
 Bid Spreadsheet
 Final Economic Results
 Conclusions
VALUE PARAMETERS
 Log values
 By species
 By log sorts
 Utilization
 Harvesting Costs
 Roadbuilding
 Logging
 Transportation
 Sorting
 Marketing
BC TIMBER SALES
 SBFEP formed in 1980
 Reorganized as BCTS in April 2003
 Strategy is to provide
 A credible point of pricing to harvest timber on public timberland
 Optimize net revenues to Crown
 Provide opportunities for customers to purchase timber in an open and
competitive market.
 BCTS manages and administrates
 Forest planning and timber cruising
 Engineering and layout
 Access road construction
 Silviculture and Free to Grow.
BID STRATEGIES

Know the Timber

Know the Market

Know the Rules and Regulations

Know Yourself
KNOW THE TIMBER SALE

BCTS Website
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Talk to the People who Know
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Timber Cruise
Tender Package Summary
Invitation for Application (Bid Sheet)
Key Maps (Location, Cruise, Harvest)
Road Layout, Profiles and Cross Sections
Sample TSL document
Advisories
Contact Person at BCTS
Local Knowledge on Roads, Dumps
Quotes on Towing, Barging, Sorting
Road and Dump Use Fees
Paper Recce



Put all information in a spreadsheet
Make go/no go decision on site visitation
More important on remote sales
KNOW THE TIMBER

Walk the Sale

Walk the road locations
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Walk the the blocks thoroughly (especially near boundaries)
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Identify harvesting systems
Identify reserves
Identify creeks and riparian areas.
Be aware of biodiversity and wildlife requirements
Assess the timber


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Reactivation
New Roads and bridges
Endhaul Requirements and pits
Deactivation requirements
With knowledgeable people
Compare visual estimates with cruise
Local defects (white speck, powderworm, kasuri)
Other Factors


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Log Dump Reactivation
Foreshore Tenures
Windfirming
KNOW THE MARKET

Domestic

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Accurate Prices based on Industrial Sorts
Specialty Sorts
Trends in Pricing
Pre-Selling
Export
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Surplus Tested
Longer Timeline
Extra Costs
Fee-in-Lieu
Requires greater Quality Control
KNOW THE RULES AND
REGULATIONS

Registration and Eligibility

Outstanding Stumpage Accounts

Deposits (Bid versus Total Security Deposit)

Term Extensions and Costs

Withdrawals and Failures to Enter Into the Licence

Pre Work Meeting

Forest Act and Regulations and Other Legislation
KNOW YOURSELF

Risk/Reward

Capital Requirements

Work in Process

Financing

Equipment

Experience

Location
PREPARING A WINNING BID

Prepare Spreadsheet Model

Lock in Log Values

Lock in Harvesting Costs

Stumpage is Locked In

Calculate Available Bid

Calculate Profit and Risk Margin

Bonus Bid
Notice ID:
Notice Type:
Issuing Office:
Title:
7618
BC Timber Sales
Strait of Georgia Timber Sales Office
A89069 McNeil Lake
Posted: 2013-01-09
Expires: 2013-02-07
Take notice that, pursuant to Section 20 of the Forest Act, Timber Sale Licence A89069 is being
offered for sale by the BC Timber Sales Strait of Georgia Business Area. Tenders will only be
accepted from individuals or corporations registered as a BC Timber Sales enterprise in Category 1, 2
and 3 under the BC Timber Sales Regulation.
Closing Date: FEBRUARY 7, 2013 at 11:00 a.m.
Closing Location: Applications will be accepted by the Timber Sales Manager, Campbell River Timber
Sales Office, at: 370 South Dogwood Street, Campbell River, BC V9W 6Y7.
Geographic Location: McNeil Lake
Estimated Volume: 23,676 - cubic meters, more or less
Estimated Area: 32.8 ha.
Estimated Species: Hemlock 10,236 m³ (43%), Douglas-fir 7990 m³ (35%), Cedar 4,374 m³ (18%),
Alder 1,076 m³ (4%), more or less.
The preceding volume and species estimates are based on samples from a Full Cruise. Please see
tender package for additional detail. Bidders are strongly advised to conduct a thorough field review of
the licence area to verify timber volume and grade estimates.
Licence Term: 12 months
Upset Stumpage Rate: $20.39/m³. The upset stumpage rate was determined in accordance with the
Coast Appraisal Manual and applicable to coniferous sawlog grades.
Open to Tender (18 days left)
Licence
A 89069 * February 07, 2013
Number:
Closing Time:*11:00 am Opening Time:11:00 am
Geographic
McNeil Lake
Area:
BCTS Area:Strait of Georgia (Campbell River)
District Area:Sunshine Coast
Volume:23,676 m3 Term: 12 months
Species:Hem 43%, D-Fir 35%, Ced 18%, Ald 4%
Upset
$20.39
Stumpage:
Tender Type:Bid Tender (sec 20) Category: Cat 1,2 or 3
Stand Type:78% 2nd Growth
Logging
Hoe Forwarding
System:
silviculture:CCWR, Windfirm treatment
Season:Dry Season
Road Building:New rd. construction 1.8 km
Sechelt/ Hwy 101/ Menacher Rd./
McNeill Lake FSR/ MNL034
Contact:Mike Romalis(604)485-0717
Avg Piece Size: .94 m3/tree
Net merch 721 m3/ha. 32.8 ha area.
Comments:
4,187 m3 non-competitive($.25)(no bonus)
4 Blocks
Access:
CONCLUSIONS

Knowledge is Key (no surprises)

Work within your level of expertise

Leave margins for both risk and reward

Bid within your limits

Keep re-evaluating your budgets
CONCLUSIONS

If you get it all right and with a bit of luck you end up with:
A Happy Forester
HOWEVER

If Lady Luck works against you

This is what could happen

Timber Sale A80080 Jennis Bay


Over $150,000 of roads already built plus deposits

Then on April 21, 2011
Thank You

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