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WasteWise Update
WHAT IS RM... 2
RM CONTRACTING
AT GM ... 6
ENERGIZING
PSEG'S PROFITS
• • • • JT
STAKEHOLDERS'
INCENTIVES AT
CBRE .. .13
WHO IS
SUPPLYING RM
SERVICES? . . 16
ENHANCING
FUTURE WASTE
DIVERSION . .18
RESOU
MANAGEM
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STRATEGIC P
FOR RESO
Preserving Resources,
Preventing Waste
1 Printed on paper that contains at least 50 percent postconsumer fiber.
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Waste Wise Update
Finding Resource
Efficiency in
Solid Waste
Contracts
Despite tremendous initial
successes with recycling and
waste diversion programs,
the growth of recycling
rates in many states has
plateaued to only a few percentage points
increase each year. Even as the amount of waste
recycled nationwide has increased each year, it
has barely kept pace with increases in generation.
Although organizations that generate waste are often
eager to improve in this area, optimizing trash and
recycling services is often not a priority, given more press-
ing financial and strategic concerns. This suggests the need for
a new approach to help organizations better leverage waste management
resources to boost recycling rates and decrease generation.
Enter Resource Management (RM)—a new concept of partnering with contractors to improve recy-
cling rates, waste prevention, and other cost-saving resource efficiencies. Because contracts are used to
manage virtually all waste generated by non-residential sources and two-thirds or more of municipal
solid waste, RM presents a powerful means to advance waste reduction and recovery. More important-
ly to resource- and time-constrained waste generators, it provides the opportunity to influence external
expertise to achieve reductions while maintaining or decreasing base waste management costs.
The mention of any company, product, or process in this publication does not constitute or imply
endorsement by the U.S. Environmental Protection Agency.
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WasteWise Update
What Is RM Contracting?
RM is a strategic alternative to disposal contracting that
seeks to continually improve resource efficiency through
enhanced source reduction, recycling, and recovery. By tying
incentives to the value of services that foster prevention,
reuse, and recycling—with disposal as the last resort—RM
encourages alignment of contractors' activities with the cus-
tomers' in a new type of joint effort. This is currently the
exception, rather than the rule, in integrated solid waste
management contracting, however.
More Bang For The RM Buck
RM is based on the idea that contractors will pursue
resource efficiency opportunities when offered proper finan-
cial incentives. For example, RM contracts might cap dis-
posal costs based on current costs and then include a
gain-sharing arrangement for successful waste reduction pro-
jects initiated by the contractor. Thus, if contractors identify
cost-effective recycling markets for disposed materials or
techniques for preventing waste altogether, they receive a
portion of the customer's savings from their innovation.
This arrangement enhances recovery of readily recyclable
materials, such as corrugated cardboard and wood pallets,
while promoting market development opportunities for dif-
ficult-to-recover materials such as paint sludge and solvents.
As a result, RM fosters a business-driven, corporate com-
mitment to make waste reduction and pollution prevention
a priority. Although RM might improve corporate reputa-
tion, employee morale, safety, and other intangibles that
contribute to competitive advantage, potential RM cus-
tomers often understand issues better in financial terms. The
most appealing facet of RM to decision-makers, therefore,
might be its cost-saving or cost-neutral nature, which seeks
higher resource efficiency and additional services for each
dollar currently spent.
RM is not a new concept. Many progressive organizations
maintain that they have had RM-like contracts in place for
years. RM follows some of the concepts of the performance-
based contracts first utilized by energy service companies in
the 1970s. In the solid waste sector, WasteWise partner
General Motors adopted the term "resource management"
to describe their efforts to restructure contracts to reach cor-
porate waste reduction goals in the mid-1990s.
What Distinguishes RM
Contracting?
Typical disposal contracts send precisely the wrong
economic signal to waste management contractors: more
waste equals more profits. For this reason, they impede seri-
ous progress in resource efficiency by providing a profit
Figure 1: Contractor and Customer Incentives
in Traditional Disposal and RM Contracts
Traditional Disposal Contracts
Con flitting Intentives
CONTRACTOR
CUSTOMER
Wants Service
Increase
Service:
Hauling and
Disposal
Fee Driver:
Volume
Wants Service
Decrease
RM Contract
Aligned Intentives
CONTRACTOR
CUSTOMER
Wants Service
Increase
Service:
Resource
Efficiency (RE)
Fee Driver:
RE Cost
Savings
Wants Service
Increase
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Waste Wise Update
incentive for disposal. RM contracts contain the types of
incentives that align waste contractor incentives with those
of their customers (see Figure 1 on page 3)- The basic fea-
tures of RM contracts are fundamentally different from
those of traditional hauling and disposal contracts in three
key areas: compensation and incentives, the type of contrac-
tor-customer relationship engendered, and the nature and
variety of services offered (see Table 1 below).
By changing the ways in which organizations demand
and pay for integrated waste management services, RM has
the potential to transform the waste disposal industry into a
sector that profits from mutually beneficial resource efficien-
cy gains, rather than ever-in creasing quantities of waste.
Traditional waste management contracts specify services that
begin at the Dumpster and end at the ultimate point of dis-
posal—normally a landfill or incinerator (see activities
shown at far right of Figure 2 on page 5). In contrast with
this exclusively external focus, an RM contractor addresses
both external waste management activities and internal
activities that affect waste generation. In more advanced
forms, RM can lead to: more efficient material use, storage,
and ordering; reduced purchase costs; or ultimately more
resource efficient product or process design (see Figure 2).
The resource efficiency impacts of these activities tend to
multiply, so the value of these savings—and hence the prof-
itability for the RM contractor and customer under this
arrangement—can be quite large when compared to external
diversion savings alone.
RM can work in industrial and non-industrial settings. In
public institutions and/or small businesses, for example, RM
contractors might work closely with internal janitorial and
administrative staff to optimize resource efficiency. In
municipal residential settings, an RM contractor might
assume a more active role in public education and outreach
to foster increased participation in recycling. Regardless of
the organization type or source of resource efficiency, the
generator and RM contractor share the savings.
Partners Realize RM Results
This WasteWise Update features case studies demonstrat-
ing how WasteWise partners are using RM contracting to
increase resource efficiency and save money. As the RM con-
cept originated with General Motors, the first case study
shows how GM's Orion Assembly Plant managed to sub-
stantially improve its service levels and simplify contracts,
TABLE 1: DISTINGUISHING FEATURES OF TRADITIONAL CONTRACTS VS. RM CONTRACTS
Features
Traditional Waste Contracts
and Recycling Arrangements
RM Contracts
Scope of Service
Container rental and maintenance, haul-
ing, and disposal or processing. Contractor
responsibilities begin at the Dumpster and
end at the landfill or processing site.
Services addressed in traditional hauling and dispos-
al contracts as a last resort, plus services that inform
and influence waste generation (i.e., product/process
design, material purchase, internal storage, educa-
tion on material use and handling, data manage-
ment, reporting).
Contractor
Compensation and
Incentive Structure
• Unit price based on waste weight and/or
number of pick-ups.
• Recycling often non-contractual "add-on"
or "free" service provided by same con-
tractor or other provider.
Contractor incentive: Maximize waste ser-
vice and volume; no integration with
recycling/diversion/source reduction
• Decouple contractor profitability from waste disposal
and/or service levels by "capping" total organization-
wide waste and recycling costs, then tying compensa-
tion to waste minimization.
• Performance bonuses based on and financed from
demonstrated resource efficiency savings from docu-
mented baseline.
Contractor incentive: Seek savings through recycling/
diversion and other resource efficiency innovations.
Customer- Contractor
Relationship
Minimal interface and collaboration
between waste generator (including all
stakeholders influencing waste) and
contractor.
Strategic alliance: waste generator and contractor
work together to derive value from resource efficiency.
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WasteWise Update
Figure 2: RM Contract Scope in Typical Industrial Setting
Supply
Chain
Activity
Internal Material Life Cycle Stages
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Waste
Recycling
& Disposal
Activity
Waste/
Recycling
Contract
Scope
RM Contract Scope
achieving savings of 30 percent during the first 3 years of
the contract and improving the per vehicle recycling rate
from 7 percent to 38 percent.
For Public Service Enterprise Group, RM emerged with
the implementation of a supply chain management process
administered by its Resource Recovery Group. Accomplish-
ments through this program, which incorporates RM con-
tracting, include greater than a 90 percent recycling rate for
non-hazardous waste during the last 5 years, a 93 percent
reduction in hazardous waste generation from 1992 to 2000,
and cost savings of roughly 25 percent from 1994 to 1996.
CB Richard Ellis-Whittier Partners (CBRE) has imple-
mented several business practices at its One Beacon Street
property that are consistent with the spirit of RM contract-
ing. Although CBRE does not rely on or provide contractual
incentives to a single-source RM contractor (as the typical
RM model does), its success with its own internal approach
demonstrates how RM concepts can work to create partner-
ships to improve recycling and implement other cost-effective
resource efficiency efforts.
For a perspective on how potential suppliers of RM ser-
vices view this concept, read how WasteWise partner Waste
Management and others are benefiting from actively mar-
keting resource efficiency services. Finally, learn about the
next steps for RM, including upcoming WasteWise tools
and guidance on RM, and how to get started with this con-
tracting strategy.
Additional RM information and resources are available
on the WasteWise Web site at
.
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Waste Wise Update
Creative Contracting
at General Motors
"There ore no
waste streams,
only wasted
resources."
hen it comes to waste management contracts, General Motors (GM) Corporation
continues to think outside the box. GM, WasteWise Partner of the Year in 2001,
employs approximately 372,000 people at facilities around the globe and gener-
ated more than $183 billion in automotive sales in 2000. The company adopted
RM contracting as a logical outgrowth of its success with a similar performance-
based contracting system for chemical purchasing, use, and management.1 After pilot-
ing the idea at a German facility in 1991, GM expanded RM to five North
American facilities between 1996 and 1998. All GM plants in the United
States will have resource management by 2003 where it is viable.
- Raj Mishra, GM Corp.
The Orion Assembly Plant in Orion Township, Michigan, was GM's first
RM pilot facility in North America. The facility currently comprises more
than 4 million square feet and employs more than 4,000 workers. From
1996 to 2000, Orion produced an average of 185,000 cars and generated an
average of more than 17,500 tons of waste annually.
As Table 1 indicates, RM provided the Orion plant with
a substantial improvement in service levels and administra-
tive simplicity. The switch streamlined management by
reducing nine waste management contracts to one single
contract.2 More significant benefits included guaranteed
annual cost reductions, the full-time services of two onsite
resource managers, a waste tracking system, and improved
employee training. Table 2 (on page 8) details how the
Orion Assembly Plant utilized the contracting process to
enhance performance levels while decreasing fixed costs and
creating incentives for waste reduction and diversion.
Benefits of Resource Management
The Orion facility experienced substantial financial and
environmental benefits as a result of RM contracting.
Savings exceeded 30 percent during the first 3 years, and the
per-vehicle non-scrap recycling rate increased more than
TABLE 1: RM SERVICE ENHANCEMENTS AT THE
GENERAL MOTORS ORION ASSEMBLY PLANT
Services Before RM:
Nine Contracts
Hauling (2 contracts)
Disposal (4 contracts)
Consulting studies
(1 contract)
Waste Pad Assistance
(1 contract)
Sludge Clean Out
(1 contract)
Services After RM:
One Contract
Hauling
Disposal
Waste Pad Management
Comprehensive Studies
Two On-site RM Managers*
Offsite Support*
Comprehensive Recycling*
Environmental Reports*
Waste Tracking Systems*
Staff Training*
* = New Service
1 GM has practiced chemical management for more than 15 years. For more information on chemical management services, see
.
2 The Orion RM contract does not include metal scrap, which a separate corporate team handles because of its high value and the cost
advantage of using specialized scrap companies that provide the best return.
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WasteWise Update
400 percent during the life of the contract, from approxi-
mately 7 percent to approximately 38 percent. Michael
Schafran, senior environmental engineer, credits RM with
successfully helping Orion to decrease waste, improve recy-
cling rates, and reduce the costs for several waste streams.
The resource manager implemented new recycling programs
for fly ash, wood pallets, corrugated cardboard, plastic caps,
fluorescent bulbs, cafeteria grease, and batteries. The plant
also moved from spending to earning money on recycling.
Three highlights of RM at the Orion plant include:
• Recycling fly ash: The coal-burning process, which feeds
Orion's onsite powerhouse boilers, generates a significant
level of fly ash—more than 3,700 tons in 2000. Prior to
1997, the facility landfilled all of the ash. In 1997, the
resource manager began investigating new uses for the fly
ash, which represented GM's second largest waste stream
in tonnage and disposal costs in 1996. After approximate-
ly 6 months of investigation and experimentation, Orion
formed a partnership with the Scotts Company in
Michigan to utilize the fly ash in Scotts' Hyponex potting
soil. Although Orion pays Scotts to take the fly ash, the
arrangement reduces landfilling and saves the plant
approximately $10 per ton in tipping fees, amounting to
an estimated net savings of $40,000 in 1999-
• Recycling/reusing plastic
caps and plugs: Suppliers
deliver engines, pipes,
pumps, and many other
parts with plastic plugs and
caps to keep dirt and other
contaminants away from
part openings. These caps
and plugs number in the
millions annually, yet they
seemed relatively innocuous
when tossed individually
into the trash by workers.
When the resource manager
asked assemblers to place
the caps in recycling bins, the enormity of this waste stream
became clear. Orion now sends the caps and plugs to orga-
nizations employing disabled individuals to sort for recy-
cling and/or reuse at no cost to Orion. In 2000, this
program recycled or reused 44 tons of plastic. GM is
expanding this program to other facilities.
• Recycling cafeteria grease: Prior to the RM contract,
Orion's two onsite cafeterias generated one or two drums
of cafeteria grease per week. The plant added the drums
to its higher cost hazardous waste streams, but at the
direction of the resource manager, the cafeteria grease
3 This calculation does not include scrap metal. A separate team
at Orion recycles all scrap metal.
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Benefits of RM Implementation
at GM's Orion Assembly Plant
• 30 percent reduction in waste management expenses in
the first 3 years.
• 25 percent reduction in per-vehicle waste.
• 400+ percent increase in per-vehicle non-scrap recycling rate.
• Improved service levels (see Tables 1 and 2), including
enhanced data systems.
now goes to a company that refines it for use in dog food
and cosmetics. Orion pays the grease-refining company a
fee that is substantially lower than landfill fees.
Challenges of Resource
Management
Although GM currently operates a successful RM
program, the company encountered its share of obstacles. In
1999, for example, a new in-plant corrugated cardboard
recycling program diverted 615 tons from the waste stream;
however, this diversion decreased to 118 tons the following
year, partially due to a substantial reduction in revenues for
mixed cardboard recycling. The decreased price for card-
board discouraged the facility and the resource manager
from mobilizing additional resources to improve onsite sort-
ing of cardboard. This is understandable, considering that
RM contracts drive source reduction and waste diversion via
profit incentives, which encourage the RM contractor to
pursue those opportunities that will fetch the highest market
price. Future RM contracts can counter this tendency by
specifying minimum targets for recycling and linking perfor-
mance bonuses to those targets.
As the Orion RM program enters its fifth year, Mr.
Schafran contends that substantial waste reduction will be
more difficult to achieve, now that the plant has implement-
ed the easiest and most profitable recycling and reuse activi-
ties. To obtain higher waste reduction rates and further cost
savings, Orion might choose to seek source reduction
opportunities by refining production processes, which "raises
the bar," Mr. Schafran adds. Finally, RM provides an incen-
tive for GM's contractor to research and help create new
markets for materials that would otherwise be landfilled. As
it might become increasingly difficult for RM suppliers to
maintain profitability from recycling alone, a flexible com-
pensation structure might serve as a key ingredient that
allows the supplier to profit from implementing other
"upstream" resource efficiency improvements.
For more information about GM's experience with RM
contracting, please contact Warren Underwood at
248 680-5934 or send an e-mail to
.
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Waste Wise Update
TABLE 2: SUMMARY OF GM'S ORION ASSEMBLY PLANT RM PRACTICES
RM Practices
Establish baseline
cosl, performance,
and service levels
Transform
contractor roles and
relationships
Align waste and
resource efficiency
services
Establish
transparent pricing
for services
Cap compensation
for garbage service
Provide direct
financial incentives
for resource
efficiency
GM's Orion Assembly Plant
• Orion analyzed its waste streams and costs and prepared an internal cost book before
releasing a request for proposal (RFP) with cost targets for bidders to meet. Orion solicited
additional information from three of five original bidders before selecting the final contractor.
• The RM contract includes an annual cost review to reassess the validity of the baseline data
and to compare the anticipated waste reduction target with the actual achieved result.
Initially, both sides were uncertain about the accuracy of baseline data and the benefits of
the contract. Orion expressed concern that the contract might lock in high prices if market
prices dropped. On the other hand, the contractor was unsure about cooperating with
facility personnel to institute source reduction and waste diversion programs, both of which
contribute to the contractor's profits (see practice for capping compensation below). The
annual review helps assuage these concerns by allowing both parties to adjust the contract
to reflect actual waste data and waste management costs for the current year.
• A comprehensive waste data system required by the contract facilitates the annual cost
review. The resource manager now uses dated and numbered drums to keep track of waste
generated at all plant sites, as well as the location and status of the waste as it moves to
the waste pad and then off site.
• Orion's RM contract consolidated previous waste management services.
• The RM contract provides onsite resource managers to train GM staff, track waste, and pre-
pare environmental reports.
• GM also gained support for its RM program from the local chapter of the United Auto Workers.
• By combining responsibilities for waste handling, disposal, and recycling and creating an
enhanced data management system, the contract enables the in-plant resource managers
to identify opportunities to improve waste reduction.
• Orion's 3-year contract includes all of the services listed in Table 1 (page 6) for a single,
total annual fee. Except for management services, the RM contractor provides all services at
cost. GM created a staffing/management fee in the contract to separate profits from vol-
umes of waste (e.g., 1 cent per ton) with the intent of increasing price transparency and
removing disincentives for waste reduction or diversion.
• The contract requires a decrease in waste management costs each year to guarantee
savings for GM. Because the percent of waste reduction has decreased each year, marginal
gains will likely grow smaller over time. Additional savings either accrue directly to the
contractor or the contractor shares the savings with GM.
• Orion currently receives 50 to 70 percent of recycling revenues created by the contractor's
initiatives.
• The contract does not provide for direct profit-sharing related to reduced landfill fees.
Although the RM contractor reaps all profits related to reduced tipping fees during the year
that the benefits occur, the annual cost review ensures that Orion shares those benefits in
future years.
• The RM contractor also has the opportunity to capture additional business within the Orion
plant not originally included in the RM contract. For example, the contractor might be inter-
ested in providing other services such as industrial cleaning for demolition. By building trust
and establishing contacts within the plant, the resource manager might find it easier to win
such work from the plant, particularly when it involves smaller projects (i.e., under
$50,000) for which GM procurement regulations do not require open bidding.
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WasteWise Update
Resource Management
Energizes PSEG's Profits
For WasteWise partner Public Service Enterprise Group (PSEG), a
2001 Partner of the Year, implementing RM practices was a natur-
al step in the growth of the energy company's waste management
program. PSEG, a $21 billion energy services company, owns and
operates power generation and distribution facilities throughout the
world. The corporation employs approximately 13,000 employees and operates
approximately 120 fossil and nuclear power generation, distribution, and other
facilities in New Jersey, New York, Pennsylvania, and Ohio.
PSEG
Program Structure and Scope Contract Process and Structure
After initiating a corporatewide supply chain manage
ment process in 1993, PSEG formed the Resource
Recovery Group to provide integrated waste
management services. The supply chain
management process aimed to minimize
the life cycle cost of client services by
incorporating waste prevention
strategies into all components of
the material supply chain. The
Resource Recovery Group specifi-
cally administers initiatives for
hazardous waste minimization
and non-hazardous waste recy-
cling. Initially, PSEG intended
for the Resource Recovery
Group to consolidate the waste
management vendor base at its
120 facilities and to establish
strategic partnerships with
waste vendors to achieve high
environmental performance and
reduce waste disposal and man-
agement costs. Over time, the
program has evolved to obtain
value-added services to improve data
management, reduce waste, and
increase recovery of non-hazardous and
hazardous materials.
Through a competitive bid process, PSEG awarded a
2-year master contract for non-hazardous waste to
DiMarco Services in 1993 and an additional
1-year master contract for hazardous waste
to Clean Harbors in 1995- Intending to
develop and maintain a strategic sup-
plier partnership, PSEG awarded
"The beauty of the supply
chain management process is
that we now collaborate with
vendors to harvest the lost
recovery/recycling opportunities
that were apparent to us as
waste. In sharing the responsi-
bility and benefit, both parties
are now organizationally
aligned to the process."
-Al Fralinger, PSEG
these two master contracts with an
option to renew. PSEG extended
both companies' initial contracts
for two subsequent 3-year terms
without a competitive process.
In 2001, PSEG opened the
non-hazardous waste contract
for competitive bidding and
awarded the contract to Waste
Management, which acquired
DiMarco Services. PSEG
expects to re-bid the hazardous
waste contract at its expiration
in 2002.
When it began the supply chain
management process, PSEG con-
ducted a pilot program, initially
engaging 40 facilities. The program has
expanded to virtually all 120+ facilities
today due to its success. Although the two
master contracts are not exclusive, and opera-
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Waste Wise Update
10
tion units can select their own waste vendors, the Resource
Recovery Group finds that the two master vendors have an
advantage in offering competitive prices based on volume
leverage and cost reduction and providing additional no-
cost, value-added services.
For non-hazardous wastes, Waste Management is respon-
sible for hauling, off-site sorting/separation, recycling/reuse,
and disposal services for all regularly generated waste. Waste
Management transports commingled waste and recyclables
to its automated materials recovery facility to sort and sepa-
rate wastes for reuse and recycling. Offsite sorting and sepa-
ration ensures a high recycling rate—more than 94 percent
in 2000 (see Figure 1 at right)—and frees employees to
focus on PSEG's core business. Waste Management also
provides waste data in a format compatible with the
Resource Recovery Group's data systems and, like Clean
Harbors, uses a transparent self-audit process at its waste
disposal facilities, saving the Resource Recovery Group's
travel and labor expenses. The Waste Management contract
now excludes several non-hazardous waste streams, includ-
ing street lamps, coal ash, scrap metal, and electronics.
These waste streams are either sporadic in nature or have
existing recycling programs with product manufacturers or
specialized companies.
Under the present hazardous waste contract, Clean
Harbors not only provides regular treatment, transporta-
tion, and disposal services, but also helps with legal indem-
nification, provides onsite management services and single
TABLE 1: DRIVERS AND CHALLENGES
TO PSEG'S RM PROGRAM
Figure 1: PSEG's Level of Solid
Waste Generated and Recycled
(in tons) 1997-2001
Drivers
• Top management
support.
• Regulatory pressure
including mandatory
recycling.
• Society's demands
for corporate social
responsibility and
improved environmental
performance.
• Deregulated gas and
electricity market forcing
industry to cut costs and
boost efficiency.
• Inability to assess
baseline cost and
performance due to the
lack of data or inconsis-
tent formats from
numerous vendors.
Challenges
• Lack of data at the outset,
making it difficult and
time consuming to define
a direction, design a
program, and evaluate
potential benefits.
• Variable client requirements
and need for flexibility.
• Organizational change
and ensuring that man-
agement at the distinct
operation units think of
the company as a whole.
• A decentralized environ-
mental and purchasing
responsibility led to inter-
nal resistance as some
facilities feared losing
purchasing power.
100,000
80,000
60,000
40,000
20,000
0
93.17%
1997 1998 1999 2000 2001
Generated • Recycled
billing, and works with PSEG to reduce hazardous waste
generation (see Figure 2 on page 11). Additionally, Clean
Harbors offers hazardous materials and other training to
PSEG staff, provides waste accounting data, and self-audits
its waste disposal facilities for PSEG at no additional cost,
saving the client money that would normally be spent to
acquire services separately.
Benefits of Resource Management
PSEG has found that the RM model is invaluable for
building strategic partnerships with contractors to reduce
waste and the associated costs. RM simplifies the corpora-
tion's waste management processes and helps PSEG focus on
its core business. By using the RM strategy, PSEG:
• Reduced hazardous waste volumes from 1,460 tons to
103 tons between 1992 and 2000.
• Reduced total waste management costs for both hazardous
and non-hazardous waste from $6 million to $4.25 mil-
lion during an 18-month period from 1994 to 1996.
• Recycled more than 94 percent of non-hazardous waste,
representing 80,712 tons of materials in 2000.
• Reduced waste management supplier base from 40 ven-
dors to 1 for hazardous waste and from 35 vendors to 1
for non-hazardous waste, reducing contract management
costs and allowing for market share leveraging and part-
nership opportunities.
• Used strategic partnership to regularly work with ven-
dors and provided business opportunities to help solve
waste issues.
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11
WasteWise Update
Figure 2: PS EC's Hazardous Waste Generation Trends
ta
O
"V
YTD: July 2001
"V
"V
"V
"V
Allowed vendors to establish an understanding of client
processes and to build institutional knowledge that
augments their effectiveness in developing solutions.
Outsourced recycling and waste services to leverage
vendors' core competencies and obtain other affiliated
services, such as training and auditing for legal due
diligence, often free of charge. This allowed PSEG to save
internal resources for other business needs and at the
same time achieve a higher recycling rate.
Reduced the Resource Recovery Group's labor in estab-
lishing and maintaining a corporatewide central waste
accounting system by achieving standard waste stream
characterization and by profiling more than 170 waste
streams across the corporation's 120 facilities.
Achieved recognition for environmental performance,
differentiating PSEG from other utilities in a deregulated
energy market. PSEG has won multiple awards from the
New Jersey Department of Environmental Protection and
WasteWise.
Keys to Success
According to Al Fralinger, manager of the Resource
Recovery Group, PSEG has found successful RM implemen-
tation relies on the following efforts:
• Gaining support from senior management.
• Incorporating life cycle analysis throughout the supply
chain management process.
• Involving all internal stakeholders.
• Shifting from "squeezing" supplier prices to seeking cost
reductions and sharing opportunities.
• Piloting an RM program to sell its success for a corpo-
ratewide launch.
• Launching the program in phases by waste stream and
facility.
• Educating suppliers through pre-bid meetings and
continuing regular supplier development meetings to
encourage strategic partnerships.
• Establishing and maintaining a centralized waste account-
ing system with vendor's assistance.
For more information about PSEG's experience with RM
contracting, please contact Al Fralinger at 856 224-1638 or
send an e-mail to .
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Waste Wise Update
12
TABLE 2: SUMMARY OF PSEG'S CONTRACT STRUCTURES AND RM PRACTICES
RM Practices
PSEG
Establish baseline
cosl, performance,
and service levels
In 1993, PSEG established goals to achieve a 75 percent recycling rate for non-hazardous
waste and a 30 percent reduction in hazardous waste. After achieving these goals by 1 995,
the company set its current target to maintain a recycling rate above 94 percent for non-
hazardous solid waste.
PSEG established baseline waste generation rates and costs to evaluate bids and issue
contracts. Due to the uncertainty in its numbers, PSEG continually refines its data with input
from waste vendors.
The company set quantitative and qualitative internal performance targets, including waste
minimization, safety, timely responses, and training.
Transform
contractor roles and
relationships
PSEG conducted a series of pre-bid meetings to articulate goals of the resource recovery
program to all original vendors before the program's inception. The corporation continues
to meet with vendors to discuss operational issues and prepare vendor guidelines that
clarify PSEG and vendor expectations.
With the exception of specialized waste streams, PSEG consolidated all waste management
responsibility with one hazardous waste vendor and one non-hazardous waste vendor.
To supplement regular waste treatment and disposal services, the master contract provides
for value-added services such as staff training, audits of waste disposal facilities, timely waste
data in a readily useable format, and assistance in establishing electronic data interchange.
PSEG adopted a new strategic mindset to work with vendors to devise mutually beneficial
resource efficiency solutions. PSEG strives to provide its vendors with additional business
opportunities when they arise.
Align waste and
resource efficiency
services
The Resource Recovery Group manages all waste vendor contracts and services.
The group acts as an intermediary to facilitate communications between the master waste
vendors and the distinct operating facilities. This enhances a mutual understanding by both
parties and expedites identification of resource efficiency opportunities.
The overall strategy consolidates waste and recycling services with two vendors, opening
lines of communication and aligning all vendors to meet PSEG's resource efficiency goals. It
also avoids the administrative costs of managing multiple vendors.
Establish
transparent pricing
for services
PSEG created the present contracts using "unbundled" pricing structures, which delineate
hauling and disposal fees, such as cost per haul and cost per ton tipped, on a variable
basis. Some heavy and high volume materials have a per ton lump disposal fee that
includes transportation and recycling or disposal.
The corporation's contracts factor the revenue from recyclables into the unit price charged
for waste management and recycling services.
Cap compensation
for garbage service
Contracts do not specify compensation caps, and change orders are possible if the work
charged goes beyond the bid amount.
According to PSEG, the nature of the strategic relationship it has established is a de facto
cap that decouples contractors from the typical waste-equals-profit model. It is the
contractors' waste reduction performance that largely dictates their chance of extending the
master contracts, which would ensure long-term profit and other benefits.
Provide direct
financial incentives
for resource
efficiency
A waste reduction performance bonus incorporated in the first hazardous waste contract
motivated the vendor to achieve a 30 percent reduction in hazardous waste between 1995
and 1996. This was greater than the initial 10-percent reduction target.
In future contracts, PSEG might institute performance bonuses that will provide vendors with
incentives to continue to perform and find waste reduction opportunities.
PSEG committed to identify opportunities for additional work outside the original contract
scope for the hazardous waste vendor for achieving contract goals.
Although the present contracts do not lead to direct gain-sharing, the implied benefits from
maintaining a long-term strategic partnership with PSEG encourages waste vendors to
achieve high performance standards and meet waste minimization targets. Vendor benefits
include: locking in a long-term, high value contract for a large part of PSEG's business,
saving the contractor resources from a re-bid; gaining valuable experience by working with
the utility industry and enhancing their competitive edge within this sector; and gaining an
inside track to other potential business opportunities outside the contract's scope.
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13
WasteWise Update
CB Richard Ellis-Whittier
Partners Rises to the
Challenge CB O Richard Ellis
o
ne Beacon Street is a high-rise office building in Boston with more than 1.1 million
square feet and 3,500 various tenants. By implementing components ofRM,
WasteWise partner CB Richard Ellis (CBRE)— Whittier Partners, the buildings leas-
ing and property management company, reduced waste and recycling costs by 60 per-
cent and increased One Beacon Street's recycling rate by more than 60 percent.
Program Structure and
Scope
Jim Fox, CBRE's general manager of One
Beacon Street, oversees all custodial, waste
management, and recycling operations for
the property. Although CBRE does not
follow the typical RM model, it acts as
a resource manager in terms of the way
it structures contracts and determines
how to use savings to provide incen-
tives to tenants, custodial staff, and the
waste/recycling contractor. Initiated in
1990, the RM program primarily tar-
gets the recovery of fiber waste such as
mixed paper, newspaper, and corrugated
cardboard. Presently, each tenant partici-
pates in an orientation and receives recy-
cling and trash bins. Each day, the custodial
staff collects and transports trash and recy-
clables from the offices to loading dock com-
pactors, and a single waste/recycling contractor
collects materials on an as-needed basis. For CBRE, team-
work among all the stakeholders of One Beacon Street is a
key to RM success. Table 1 on page 14 depicts the build-
ing's stakeholders, their roles in RM implementation, and
the incentives that motivate them to achieve waste reduc-
tion goals.
Benefits of Resource Management
In addition to reducing One Beacon Street's landfilled
waste, RM helped CBRE realize cost savings and gain a
"Our program uses
cost savings on
disposal service to
fund internal recyc-
ling programs."
-Jim Fox, CBRE
competitive advantage due the resource efficiency efforts of
all stakeholders. The list below details the RM bene-
fits at One Beacon Street:
Increased the recycling rate from 28 percent
in 1990 to more than 60 percent in 1999
and 2000, as well as participation rates and
engagement of all stakeholders (e.g., custo-
dial contractor, tenants).
• Received five consecutive "Race
to Recycle" Awards from 1995
to 1999-1
• Reduced waste and recycling costs by
60 percent through avoided disposal
costs and increased recycling revenue.2
• Removed additional paper from the
waste stream, resulting in a 30 percent com-
paction of waste and a reduction in pick-ups
from five times per week to once per week. This
resulted in saving $21,000—approximately a 20
percent net savings—from reduced hauling and tip-
ping fees in the first year.
1 The "Race to Recycle" is an annual recycling competition
organized by WasteCap, the Building Owners and Managers
Association, and the Massachusetts Department of
Environmental Protection.
2 Traditional waste removal can cost up to $0.12 per square foot
for an office building. By reducing waste costs, CBRE's RM
program at One Beacon Street has reduced its costs by $0.048
per square foot. For One Beacon Street, this represents
$48,000 in net operating income or $564,700 in added value
when capitalized at 8.5 percent.
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Waste Wise Update
14
TABLE 1: PROGRAM STAKEHOLDERS AND INCENTIVES CREATED THROUGH PROGRAM
Stakeholder
Role in RM Program
Incentives
Waste/recycling
contractor
Provides containers as well as hauling
and disposal/recycling services.
Designs and delivers education and
orientation programs (video and posters).
Charges a flat fee ($120/ton) for recyclable material
to pay for recycling costs. When recycling commodity
revenues go above the flat fee, the two parties split
the difference evenly above the costs.
Establishes a long-term, stable relationship with
CBRE and One Beacon Street.
Custodial contractor
Transports waste and recyclables internally.
Coordinates pick-ups with trash/recycling
contractor.
Conducts education via desk memos for
tenants.
Tracks, monitors, and reports data.
Receives Thanksgiving turkeys for more than 90 staff
members as a thank-you for supporting the program.
Receives regular bonuses of $100 for custodial staff.
Receives a bonus of $1,000 for custodial manager if
One Beacon Street wins the "Race to Recycle" award.
Tenants
Support the program by recycling.
Provide feedback on potential program
improvements.
Attend an annual appreciation breakfast if they
achieve the highest recycling rate.
CBRE
Serves as the resource manager aligning
stakeholder interests and services to
maximize waste diversion.
Seeks continuous improvement and added value for
its clients at no cost.
Establishes incentives to encourage better relation-
ships with all stakeholders.
Differentiates itself from competitors.
Improved data tracking and information reporting,
resulting in more efficient decision making.
Upgraded services, including outreach, data tracking, and
reporting, from the custodial contractor and recyclables col-
lection from the waste contractor, at no additional charge.
Created a competitive edge for CBRE, which differenti-
ates its property management services from those of its
competitors through this program.
Keys to Success
CBRE has found that its success using elements of RM
relies on the following key efforts:
• Communicating with all stakeholders.
• Simplifying operations and compensation.
• Involving all stakeholders in team building process.
• Focusing on disposal cost avoidance (see Figure 1).
• Creating an incentive framework to allow for shared
responsibility and shared rewards.
• Evaluating performance.
For more information about CBRE's experience using
components of RM, please contact Jim Fox at 617 723-
8616 or send an e-mail to .
Figure 1: Value of One Beacon
Street Disposal Cost Avoidance
vs. Recycled Commodity Revenue
Focusing on cost avoidance in recycling rather than income
generation, CBRE can justify targeting the broader 65 per-
cent of its paper stream, instead of only "high value" fiber
commodity streams.
120
100
80
60
40
20
0
CD .2
Waste Removal Cost
Mixed Paper Value
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15
WasteWise Update
Contract Process and Structure
The table below details how CBRE's approach to contracting at One Beacon Street has aligned disposal and recycling ser-
vices, produced strategic partnerships with vendors, and created incentives for all program stakeholders to work at increasing
waste reduction and diversion.
TABLE 2: SUMMARY OF CBRE'S CONTRACT STRUCTURES AND RM PRACTICES
RM Practices
CBRE's One Beacon Street
Establish baseline cosl,
performance, and
service levels
CBRE continues to improve data tracking.
Monthly performance metrics include participation rates as well as waste and recycling levels.
CBRE established performance benchmarks and goals such as obtaining a minimum 65
percent waste reduction rate in 2000, assessing the possibility of increasing this percentage
each year, and winning the "Race to Recycle" Award.
Transform contractor
roles and relationships
CBRE worked closely with its custodial and waste/recycling contractors to ensure that there
would be virtually no or little incremental custodial costs for recyclable paper collection.
This resulted in the development of a two-bucket waste sorting system for tenants and a
two-compartment cart for janitors (i.e., clear for paper, black for trash).
CBRE engaged custodial staff to monitor the program and communicate with tenants about
contamination and participation.
The waste/recycling contractor assisted in designing an orientation video and educational posters.
CBRE seeks input from prospective contractors to solicit interest, participation, and feedback
from all stakeholders on a regular basis.
Align waste and
resource efficiency
services
CBRE manages all contract services, allowing for a systems approach.
Contractors interact with the tenants, who ultimately influence waste management and generation.
Establish transparent
pricing for services
CBRE directed its single-source waste/recycling contractor to "unbundle" pricing structures to
specify hauling and disposal charges on a variable basis (i.e., cost per haul, cost per ton
tipped) rather than charge flat monthly fees for all services.
The waste/recycling contractor charges a flat fee per ton for recyclable materials to cover
handling/processing and brokerage fees. This structure minimizes the contractor's risk of
volatile recycling markets.
The waste/recycling contractor specifies additional costs of recycling equipment and hauling
in addition to recycling revenue. The contractor charges a flat fee per ton to cover the cost
of service, to reduce the risk of volatile recycling markets, and to encourage recycling when
the market is strong.
The pricing system allows variable savings, such as avoided hauling and disposal, to flow
back into the program.
Cap compensation for
garbage service
CBRE limited waste hauling/disposal service by changing to an on-call service, which
requires the custodial contractor to request hauling services from the waste/recycling
contractor only when needed.
Provide direct financial
incentives for resource
efficiency
CBRE designed an incentive structure for all relevant stakeholders including the waste and
recycling contractor, custodial contractor, and tenants.
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Waste Wise Update
16
WASTE MANAGEMENT
Who is
supplying
RM services?
Ask a waste generator to con-
sider a switch to RM contract-
ing and you're likely to hear,
"This sounds great, but is anyone
actually supplying these services?" To create
and respond to the growing demand for RM, an increasing number of
companies are offering RM-like services—from industrial cleaning companies to
property managers to traditional waste hauling companies.
According to WasteWise partner Waste Management
(WM), the largest player in the U.S. waste industry, RM is
here to stay for the foreseeable future. WM established a
separate division to market these "total waste management"
services to its major accounts nationwide. Starting with a
staff of three in 1997, the division has grown to 170
account management employees today. WM focuses primar-
ily—but not exclusively—on targeting chemical, automo-
bile, and pharmaceutical companies whose annual revenues
range from small players of several hundreds of thousands of
dollars to billion dollar corporations such as General
Motors. WM has approximately 40 RM customers at 220
sites, representing approximately $100 million in contract
value, and it plans to expand to target other, less penetrated
sectors and geographic regions.
WM is not the only supplier in the game. Other small
and medium-sized companies from different service sectors
provide clients with value-added RM services. At an EPA-
sponsored forum in June 2001, nine regional and national
companies that currently provide or plan to offer RM ser-
vices shared their experiences and the benefits, challenges,
and potential opportunities of RM. While visibility for RM
in industry as a whole remains low, and RM's future is far
from assured, concrete evidence supports a bullish outlook
(see Benefits to Suppliers on page 17).
Suppliers Meet Challenges
Finding internal support. Although the level of interest
from potential RM suppliers is on the rise, several hurdles
must be overcome to be a successful RM contractor and
pave the way for a more prominent RM service industry. For
all suppliers—particularly RM suppliers accustomed to the
profits from disposal volume sales—having a champion
from senior management and achieving buy-in from
employees are key to successfully adding this new business
offering.
Increasing customer awareness. Contractors cite another
barrier to more rapid RM expansion—customers' lack of
awareness, understanding, and expectations of the RM service
model. RM represents a new supplier relations paradigm for
which little information is available. For this reason, potential
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17
WasteWise Update
customers might be suspicious of suppliers' motives in
encouraging RM. Recently, however, independent
sources have developed case studies on RM to
help increase awareness.
Working together. Both suppliers
and customers must change their
focus from unit cost of disposal to
total enterprise-wide costs and
potential savings from resource
efficiency. Some clients might
not recognize the inherent
"give-and-take" of RM, in
which the contract fosters a
strategic partnership through
shared savings. Although the
intent of RM contract terms
and conditions is to cultivate
such a transition, the change
in mindset from "squeezing"
the contractor to focusing on
joint opportunities for gain
through resource efficiency is
often difficult, given
entrenched habits.
RM Supplier Viewpoint..,
Other RM players, such as WasteWise Partner
National Disposal Solutions (NDS), incur low
capital requirements, as the RM service
emphasizes information
management services (NjS)
instead of ownership of
capital equipment.
recycling alone. Consequently, a key ingredient in sus-
taining progress is to provide a flexible compensa-
tion structure that allows the RM contractor
to profit from achieving the next level of
resource efficiency by optimizing
"upstream" processes to reduce waste.
This Update highlights three cases in
which successful supplier relation-
ships have been able to overcome
these challenges to achieve
remarkable results.
National Disposal
Solutions
Establishing a baseline.
Another concern of RM suppli-
ers is the lack of total baseline
service levels and costs from
which to document savings associ-
ated with RM innovations.
Without comprehensive baseline data
from management accounting systems,
establishing an equitable basis for com-
pensation is rather difficult, as is establish-
ing accountability for subsequent savings.
Sustaining profits. Finally, as an RM program
evolves and the supplier recovers the "low hanging fruit" from
the customers' waste stream, it might become increasingly
challenging for RM suppliers to maintain profitability from
"By determining the clients' waste reduction
goals and metrics of success up front, we can
align the applications of our resources to
meet these needs. NDS single-source ser-
vices begin with documentation of current
environmental cost structures. This helps in
the design of waste reduction programs,
data management, communication, and
training plans that reduce our clients' costs
on hauling and other support services
by 10 percent or more."
—Greg Leonard, National
Disposal Solutions
What Works
With Customers
The success of RM rests
not only on establishing a reli-
able, diverse, and competitive
supplier base, but also on
developing demand, which
ultimately hinges on providing
a marketable value to clients.
RM services provide one point
of contact for the customer,
alleviating the need to manage
multiple vendors and providing
a unified view of waste across the
enterprise through a standard data
reporting function. A universal
benefit cited by most suppliers is the
ability of customers—by shifting
"non-core" contract management and
other responsibilities onto its resource
manager—to rededicate these resources to
other mission-driven tasks. While volume-
based purchasing and consolidation might be an
immediate source of savings, the appeal of RM in the
longer term is in the ability to leverage and align their con-
tracts to harness the supplier's core competencies to achieve
higher long-term, cost-effective resource efficiency.
Benefits to Suppliers
Why have some companies taken Ihe lead in offering RM services? Suppliers lisl Ihe following benefits:
• Earn potential performance bonuses and shared savings for reaching customers' recycling and other performance targets.
• Build strategic partnerships that enhance suppliers' understanding of the plant activities, ability to identify cost-saving innovations.
• Find opportunities to broaden the scope of services, including:
— Providing wider range of high-value utility and environmental support functions.
— Addressing internal "upstream" (e.g., training, data management, material use) and external (e.g., hauling, recycling)
functions.
• Improve market position and financial valuation of public companies by diversification and differentiation of services.
• Retain customers in an environment of high account turnover due to added-value services.
• Need low capital requirements for entry into a market emphasizing knowledge-based management services.
• Share risks between supplier and client.
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Waste Wise Update
18
Resource Management:
Enhancing Waste
Diversion in the Future
s the case studies and testimony of suppliers attest, RM is making in-roads
as an alternative to traditional waste and recycling contracting practices. Applying
RM nationwide could enhance both suppliers' profitability and waste generators'
resource efficiency and cost effectiveness, leading to more sustainable practices in
sourcing, use, and end-of-life management of materials.
In 1999, approximately 110 million tons of waste dis-
carded in the United States were managed through contrac-
tual relationships.1 Experience to date
suggests that if uniformly adopted
and implemented on a nation-
wide basis, RM contracts
have the potential to
eliminate nearly half
of these discards
(55 million tons),2
through a combi-
nation of
enhanced recov-
ery of recyclables,
recycling market
development, and
waste prevention.
This would lead to a
national diversion rate
Coming Soon
tons), the United States would avoid 9 million tons of car-
bon equivalent (MTCE) of greenhouse gas emissions. These
savings are equivalent to keeping 6.8 mil-
lion cars off the road for a year, or
avoiding emissions from the
generation of electric power
As part of WasteWise's continuing efforts to keep partners for 5-4 million house-
informed about RM contracting strategies, EPA will be developing tools holds for one year.'4
and guidance materials so that WasteWise partners can investigate and suc-
cessfully implement RM. These tools and materials will include the following: RM holds the
of 52 percent, well above
EPA's national goal, and
would avoid more than $2
billion in disposal costs3 for generators.
Moreover, if RM helped recover half of the "contract-
ed" paper discard stream alone (approximately 12 million
promise of trans-
forming the way
the waste manage-
ment industry
defines the value
of its services and
the way it generates
profit. At this point,
RM is not common
knowledge to companies'
purchasing and environmen-
tal departments, nor is it broadly
understood by contractors. RM's
future rests on bringing the supplier and cus-
tomer community together to identify mutually beneficial
opportunities and overcome lurking challenges. Although
• Sample contract language to help partners revisit their
current waste hauling and recycling contracts.
• An assessment tool to allow potential RM users to gauge the
impact of this new approach on their organization.
A manual to provide partners with a step-by-step "how-to" guide on
developing an RM contracting model within their organization.
• Technical workshops to further demonstrate, educate,
and engage WasteWise partners.
As always, the WasteWise Web site will continue to provide
updates about RM and new resources as they become avail-
able; visit .
1 Assumes two-thirds of the 1 999 U.S. municipal solid waste stream reported in EPA's Characterization of Municipal Solid Waste: 1999
Update. Of this amount, approximately 55 to 65 percent is residential and approximately 35 to 45 percent is commercial. These
figures exclude construction and demolition debris, wastewater sludge, and some non-hazardous industrial wastes.
2 Based on RM research performed by The Tellus Institute at more than 20 organizations.
3 Assumes $50 per ton and no hauling or other disposal savings. Based on potential elimination of 55 million tons.
4 WasteWise Update: The Measure of Success—Calculating Waste Reduction. July 1999, EPA530-N-99-003.
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19
WasteWise Update
Keys to Successful RM Contracting
The experiences of GM's Orion Assembly Plant, PSEG, and
CBRE's One Beacon Street indicate several key actions for suc-
cessful RM contracting:
Establish waste/recycling baseline and data system. Establishing
baseline cost and service data on waste/recycling is crucial to
define goals, establish targets, and design the details of an RM
program, as well as to gauge the potential benefits of imple-
menting RM. Maintaining a centralized database enables both
the suppliers and customers to assess the RM program and
identify waste reduction opportunities.
Redefine confractor relationship and contract structure. The
essence of the RM concept is to align the incentives of the
customers and suppliers into a strategic relationship for mutual
gain from increased diversion. RM consolidates waste manage-
ment to one point of contact and incorporates incentives into the
contract to promote waste reduction, for example, direct incen-
tives for resource efficiency innovations and caps on disposal
compensation. Maintaining this relationship requires a new per-
spective by both parties and compensation structures to match.
Seek fop management support. Implementing RM in most cases
implies centralizing management of waste contracts and
redefining the scope of service from waste disposal and hauling
to more comprehensive, value-added services. Such organiza-
tional change often meets with resistance, for example, from
purchasing managers, who might feel they are losing autonomy
in supplier selection, or from environmental staff, who might be
concerned with diminished job responsibility. Senior manage-
ment support is critical for a smooth transition from the tradi-
tional disposal contract to RM practices.
Incorporate lifecycle thinking. The contractor might initially
focus on increasing recycling rates from the baseline for those
materials with lower capture rates. As the RM program matures,
however, the resources required to achieve incremental diver-
sion gains might become uneconomical. At this point, the RM
program could focus on waste prevention opportunities and
additional services. Thus, the compensation mechanism should
create incentives for the contractor to focus on waste prevention
and other value-added activities, such as training employees in
material conservation techniques. The viability and attractive-
ness of RM to a contractor will depend on its ability to ensure
long-term profitability through strategic and equitable partner-
ships with customers. Incorporating lifecycle thinking into the
entire supply chain can help achieve this.
One size does not fit all. Success of RM depends mainly on
cooperation between suppliers and customers. The case studies
highlighted in this WasteW/se Update serve as an illustration of
possible formats of RM practice. Success relies on creativity in
applying the practices and maintaining enough flexibility in the
contract to evolve over time with changing customer require-
ments, goals, and industry or other influencing circumstances.
RM is consistent with established and emerging business
trends, such as performance-based contracting and outsourc-
ing "non-core" functions, some customers and suppliers
need flexible, well-defined RM practices, tools, and informa-
tion before they are willing to take the road less traveled.
Ongoing work performed by The Tellus Institute and spon-
sored by U.S. EPA's Office of Solid Waste and other state
partners seeks to provide direct contract assistance to organi-
zations that rely on disposal and/or recycling contracts,
build RM supplier capacity, and develop tools and guidance
materials to spur broader adoption of RM nationwide.
Research to date demonstrates that RM is widely applica-
ble in commercial, industrial, institutional, and municipal
settings, although RM might not be the most cost effective,
appropriate, or feasible alternative in all cases. Nonetheless,
case studies demonstrate that RM is applicable in diverse
settings and uses standard replicable practices, including:
establishing and regularly updating baseline information on
contract costs and service levels; achieving support from
senior management and other internal players; and changing
contractor relationships and compensation (see Keys to
Successful RM Contracting above).
RM uses contracts to change the terms of business and
redirect funds from supporting trash service to encouraging
recycling and other more cost-effective resource-efficient
management methods. The total costs of trash and recycling
remains the same or even diminishes under RM, but the
nature of compensation radically changes contractor incen-
tives to decrease waste service and increase reduction, reuse,
and recycling. In doing so, RM transforms dollars spent on
waste contracting from a constraining liability to a liberating
asset, creating a voluntary, market-driven mechanism for
organizations to improve both their financial and environ-
mental bottom lines.
-------
United States Environmental Protection Agency
Solid Waste and Emergency Response (5306W)
EPA530-N-02-002
March 2002
www.epa.gov/wastewise
800 EPA-WISE (372-9473) or send a copy of this page, with the mailing label, back to WasteWise at the address below. Many WasteWise publications,
including the WasteWise Update, are available electronically on the WasteWise Web site at .
United States
Environmental Protection Agency
(5306W)
Washington, DC 20460
Official Business
Penalty for Private Use $300
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