Rail salvage credit and bid allocation, Quail Gap Yard track removal

Rail and OTM weights and scrap value for five track segments and seven turnouts on the Quail Subdivision, net of cutting, handling and trucking, with a recommended way to carry the salvage credit in the bid schedule when negative unit prices are not accepted. Net salvage is $158,000 at the bid assumptions, and 42 percent of it sits in Additive Alternate No. 1, the industrial lead.

Bid documents: Quail Gap Yard Track Removal, Ochre Hills RailroadQuail Subdivision MP 37.10–37.58 plus 15,900 TF industrial leadScrap prices per bid assumptions, Nov 2026, gross tons (2,240 lb)Prepared Nov 5, 2026

Summary

Break-even by segment

The industrial lead loses money below $225 per gross ton

90 lb ASCE rail on timber ties yields 78 lb of steel per track foot against 93 lb on Track 2, and the lead's material has to be hauled by hi-rail to the set-out for $90/GT. Net salvage comes to $120/GT against $208–$246/GT in the yard. The lead is 59% of the scrap weight but 42% of the net (Track_Material_Inventory_Quail_Gap.pdf pp. 9–11, Lead_Access_and_Setout_Plan.pdf pp. 2–3).

The $380/GT bid assumption can drop 41% before the alternate's scrap stops covering its own salvage costs.

Credit against mobilization

Mobilization cannot carry the salvage credit

Taking the $91,717 net salvage for the base bid off Item 1 leaves mobilization at $21,583, 21% of its cost. The deduction is fixed while the scrap follows the quantities: if base bid quantities come in 20% under, $18,343 of credit is no longer covered. At $455/GT the item goes negative, which the bid form does not allow (Instructions_to_Bidders_QG_Track_Removal.pdf p. 15).

Recommended allocation

Credit salvage where it arises; the lowest item stays at 60% of cost

Each removal item is reduced by the net salvage from its own material, and the alternate's salvage is credited only within the alternate. The credit then tracks the quantities even if the alternate is not awarded. A flat 19.0% cut to every unit price looks more even but gives the alternate $24,217 more credit than its scrap is worth.

Salvage estimate and credit in the bid schedule

Change the scrap prices and cut length to see net salvage by track segment and turnout. Click a row for the calculation and source pages. The credit tab shows how the net salvage is carried in the unit prices under four methods, and what happens when quantities change or the alternate is not awarded.

Cut length
Scrap weight, rail and OTM
Net salvage after salvage costs
SegmentSectionQuantityRail (GT)OTM (GT)Revenue ($)Cutting ($)Handling and
trucking ($)		Net ($)Net ($/GT)

Sources and method

Sources

  • Instructions_to_Bidders_QG_Track_Removal.pdfRail, OTM and turnout material removed become the Contractor's property (p. 12); negative unit prices will not be accepted and materially unbalanced bids may be rejected (p. 15); Additive Alternate No. 1, industrial lead (p. 7)24 pages
  • Bid_Schedule_QG_Track_Removal.xlsxBid schedule with 8 base bid items and 2 alternate items10 items
  • Track_Chart_Quail_Sub_MP36-39.pdfTrack numbers, Sw. 11–17 and mileposts2 sheets
  • Track_Material_Inventory_Quail_Gap.pdfRail section, tie type, OTM and joints by track, turnout sizes and weights16 pages
  • Lead_Access_and_Setout_Plan.pdfSet-out at the public road crossing, hi-rail haul along the lead and road miles to the scrap yard5 pages
  • Scrap_Salvage_Assumptions_2026-11.xlsxCompany scrap prices, cutting, handling, scale fees and trucking2 tabs

Method

  1. Track lengths and turnouts were taken from the track chart; rail section, tie type, OTM (other track material) and turnout weights from the material inventory.
  2. Rail weight = track feet × 2 rails × section weight (lb/yd) ÷ 3 ÷ 2,240, using nominal weights for 136RE, 132RE, 115RE and 90 lb ASCE. OTM (tie plates, spikes, anchors, joint bars, clips) was taken per track foot by tie type.
  3. Salvage revenue = rail GT × rail scrap price + OTM GT × OTM scrap price.
  4. Salvage costs: cutting $9 per cut, loading and handling $24/GT, scale and yard fee $4/GT, trucking $6/GT + $0.42/GT-mile by road miles and, for the industrial lead, hi-rail haul to the set-out $90/GT.
  5. Allocation: the unit price without credit is cost plus a 10% markup. Method C reduces each item by the net salvage from its own material, with a floor at 30% of cost. Method D cuts all unit-price items by the same percentage.
  6. Variance vs. estimate is the change in net salvage minus credit given when quantities differ from the bid schedule or the alternate is not awarded.

Assumptions and limitations

  • Scrap prices are company bid assumptions for November 2026 in gross tons, not published market quotes. Settlement is on the scrap yard's certified scale weights.
  • OTM and turnout weights from the inventory, the salvage cost rates and the mobilization cost are estimating assumptions. The estimator should check them against current yard and trucking quotes before bid.
  • All rail is priced as scrap. No relay rail value is assumed.
  • The scrap price is assumed to be the same for every cut length. Any premium for short-cut rail is not included.
  • Removal item costs cover removal and stockpiling. Cutting, loading and trucking of scrap are carried only in the salvage estimate.
  • The variance assumes the same material mix per unit as in the bid schedule. Unit prices with credit are rounded to the cent below $1,000 and to the dollar above.
  • The 30% floor is a company internal screening guideline for when a unit price may be read as unbalanced. The bid documents set no threshold.
  • Ballast, signal and communication cable and grade crossing surfaces are not included.