for
inoinerettor op>erettion.s
This report (SW-171s) was written by
Eric R. Zausner
U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
Public Health Service
ENVIRONMENTAL HEALTH SERVICE
Bureau of Solid Waste Management
1970
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hearth service publication no. SOS a
Library of Congress Catalog Card No. 75-606525
ENVIRONMENTAL PROTECTION AGENCY
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C., 20402 - Price 35 cents
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for
incinerettox- op>erettions
Eric- R. Zausner*
Effective solid wasle management requires an adequate
information system including data on activity and the costs
of operation and ownership. Although a cost accounting
system represents only one part of the total system, it does
facilitate the collection and later utilization of the data
obtained.
Present information on incineration and its associated costs
is both inadequate and nonstandardized. The proposed
system provides a guide to the type and quantity of informa-
tion to be collected, its classification, and the method of col-
lection. Incinerator supervisors and heads of agencies re-
sponsible for their operations will find the system useful.
A cost accounting system can aid a community in con-
trolling the costs and performance of its incinerator opera-
tions, as well as aid in formulating future plans.
* Chief, Management Sciences Section, Operational Analysis Branch, Division of Tech-
nical Operations, Bureau of Solid Waste Management.
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System Benefits
Some of the more imporlanl advantages are:
1. The system facilitates orderly and efficienl colleclion and
transmission of all relevant data. In fact, most of the data
recorded is probably being collected already, although per-
haps only sporadically and inefficiently. Hence, the added
cost of installing the proposed system is minimal.
2. Reports are clear and concise and present only that
amount of data required for effective control and analysis.
They can easily be completed and understood by incinerator
personnel.
3. Interpretation of results and comparison with data from
previous years or from other communities is simplified. This
allows analysis of relative performance and indicates areas
where corrective action is needed.
4. The system accounts for all relevant costs of operation.
5. Because the system indicates high costs and their under-
lying causes, the supervisor can control costs more effec-
tively. Similarly, performance and efficiency may be moni-
tored and controlled.
6. Accountability is superimposed on the system to indicate
who is responsible for the increased costs.
7. The data provided are in a form that aids in short- and
long-range forecasting of operating and capital budgets.
Future requirements of equipment, manpower, cash, etc., can
be estimated to aid budgeting and planning at all levels of
municipal govermeni.
8. The system, with only minor modifications, is flexible
enough to meet the varying requirements of incinerators of
different sizes.
Cost Centers and Cost Allocations
The complexity of incinerator operations requires a break-
down and description of operations to facilitate analysis. In
this report, the incinerator is assumed to consist of several
interrelated suboperations, each of which is analyzed sep-
arately. These suboperations are called cost centers because
costs are accumulated separately for each of the major func-
tional activities. Analysis and control are simplified if ex-
cessive costs or inefficiencies can be traced to a functional
activity or area of the facility.
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The number of cosl centers increases as ihe size and com-
plexity of operations increase. More cosl centers, however,
require ihe collection of more data and, therefore, increase
costs. For most facilities, four cost centers appear to collect
adequate data without incurring excessive collection costs.
Three of the four cosl centers (Receiving and Storage,
Volume Reduction, and Effluent Handling and Treatment)
are termed the direct cosl centers because they can be di-
rectly associated with certain incinerator operations and unit
processes. The operations included in each follow ihe process
flow from inpul of raw wasles lo oulpul of effluents (Diagram
I). The fourth, ihe Repairs and Maintenance cosl center, can-
not be direclly associated with waste processing. Therefore,
it is separated from other operations and not shown in the
diagram. Because it incurs a large percentage of operating
cosls, a separate analysis is needed.
Although fewer cosl centers would never be required,
larger operations may require more cosl centers. For instance,
the Effluenl Handling and Treatment cosl center could be
divided into Air Pollution, Water Treatment, and Residue
Handling cosl centers. Similarly, salvage' or heal utilization
operations should be put in separate cost centers.
These cosl centers classify ihe operations by function. The
cosls incurred are for labor, parts and supplies, utilities, and
overhead, and they must be allocated to the cosl centers in
an accurate and representative manner (Diagram II). Note
that cosls are firsl allocated to all four cost centers/ the Repairs
and Maintenance cosl center is then allocated lo the three
direcl cost centers. The result is the lolal operating cosl for
each direcl cosl center.
There are many alternatives for actually allocating the
operating costs. A straight-forward method for each type
of expense will be outlined. Labor cosls may be allocated lo
the four cost cenlers based on the relative number of hours
employees worked in each area and iheir respeclive wage
rates. Utilities may be allocated based on an engineering
estimate of the relative usage rales of ihe equipment in each
cost center. Both water and electricity should be allocated.
Parts and supplies will be allocated to each direct cost center
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afler first being recorded in the Repairs and Maintenance cost
center. General overhead, which includes supervision, in-
surance, etc., can be allocated equally to each cost center
or on the basis of the relative number of employees in each
cost center. The latter technique is recommended. Finally,
the Repairs and Maintenance cost center is allocated to the
three direct cost centers based on the actual expenses in-
curred in each one.
The sum of the costs of these three direct cost centers is the
total operating cost. The total annual cost of operations rep-
resents these operating costs plus the costs of financing and
ownership.
The actual forms are designed to facilitate the collection
and later allocation of costs to these cost centers.
Forms and Reports
The reports are most easily grouped into those that are used
to collect the data on operations and those used to reduce
and present the data for the purposes of analysis, decision
making, and control.
This data reduction and presentation cannot be accom-
plished without the daily recording of all pertinent activity
and cost information. Data not recorded daily are not re-
trievable at some later dale. Incinerator personnel, super-
visors, and others involved in operations primarily use the
following forms (1 through 4) to record the data required.
Weekly Labor Report (Form 1). Daily entries of labor ac-
tivity are recorded in duplicate at the site. One copy is for-
warded to the payroll department for determining weekly
wages. The incinerator supervisor and the accounting de-
partment use the other copy for computing total labor hours
and assigning these hours and associated costs to the four
cost centers.
Daily Truck Record (Form 2). The waste received and resi-
due removed, as well as the types and sources of waste re-
ceived, are recorded manually on this form for the entire
day. (If the incinerator has a scale that automatically records
the weight information, that part of the form would be re-
placed by the weight ticket or record of the scale.) Each
delivery is recorded separately by the weighmaster. A
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DAILY TRUCK RECORD
FORM 2
INCINERATOR:
DATE:
SIGNATURE:
SHIFT:
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
12
15
16
17
18
19
20
Truck *
identification
Totals
Time
X
Wastes
Source
X
Type*
X
Weight
in
X
Weight out
(or tare weight)
X
Net amount
Wastes
Residue
Instruction: To be completed by weighmaster for each delivery of waste or
removal of residue.
* Truck identification is number of the public truck; if private vehicle, the name
of company for billing purposes.
t Source: R ~ residential; C - commencal; I — industrial.
iType: R — rubbish; G — garbage (also unusual items).
BSWM (10/69)
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second weighing of the empty truck may be taken or the
vehicle's tare weight (as officially determined by a licensing
agency, etc.) may be substituted. The form is forwarded to
the accounting department at the end of each month. In
addition to utilizing recorded weight data to bill private users
later, the sources and types of waste data are useful in special
analyses of trends, compositions, and distributions of solid
wastes in the community.
Daily Report on Incinerator Operations (Form 3). When
there is actual downtime and repairs are required, the ex-
penses that will be allocated to the three direct cost centers
are recorded on the lower half of the two-purpose report.
These data are particularly useful in analyzing equipment
performance and cost. In addition, data on utility usage are
recorded on the form at the end of each month.
The lop of the report is used to summarize the daily oper-
ations. The employee and activity data give management
personnel who are not at the site daily, but who still require
daily feedback on operations, a quick and accurate summary
of the day's activities. The performance data are also useful
in assessing daily efficiency. The report is completed daily,
sent to the main office, and filed for later use.
Incinerator Capital Investment Report (Form 4). This form
is completed when construction is finished or when the cost
system is first implemented. Only when improvements or
new equipment are either constructed or purchased is it
updated. In addition to collecting the data required to cal-
culate depreciation for the period and allocating it to cost
centers, the form also summarizes the bond and interest in-
formation required to compute the total costs of financing
and ownership.
For the most part, Forms 1 through 4 are utilized to collect
the data associated with the construction and operation of an
incinerator. The cost of accumulating these data can only
be justified by its intensive and effective utilization. This is
accomplished by meaningful data reduction and presenta-
tion. The data must be presented clearly and quickly to the
personnel who can use it most effectively for analyses and
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FORM 3
DAILY REPORT ON INCINERATOR OPERATIONS
SITE:
DATE:
PERFORMANCE DATA
% Weight reduction (
residue
wastes burned •
Man hours per ton:
Tons of residue per trip:
Number of injuries:
EMPLOYEE HOURS
Cost center
Receiving
Volume
reduction
Effluent
Repairs
Totals
Shift
1
2
3
4
ACTIVITY DATA
Wastes received
Wastes burned
Left in pit
Residue
Loads
Tons
REPAIRS AND MAINTENANCE DATA
Equipment
description
Cost
center
Cause
Hours
down
Labor
hours
Labor
cost
Parts
cost
External
costs
Total
cost
UTILITY DATA
(Only complete this section at the end of the month)
Electric
Gas
Water
Meter reading
10
BSWM (10/61
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FORM 4
INCINERATOR CAPITAL INVESTMENT REPORT
INCINERATOR:
DATE:.
Description
Site:
Land
Surveys
Preparation
Roads
Other
Buildings:
Scale house
Pit
Offices.
Main building
Stacks
Other
Equipment:
Scales
Crane(s)
Furnace(s)
Air pollution
Water treatment
Residue removal (including vehicles)
Instrumentation and control
Other
Totals
Size, capacity,
amount, etc.
X
Date put
in use
X
Estimated
total life
X
New cost
Other
comments
X
Yearly
depreciation
X
Monthly
depreciatio
X
FINANCING DATA
Bond type
Face value
Premium
or discount
Interest rate
Yearly interest*
Monthly interest
Instructions: To be completed by supervisor or accounting department. Depreci-
ation may be straight-line or on an accelerated basis.
* Interest must account for net effect of premium or discount on bond sale.
11
BSWM (10/69)
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conlrol. The following forms (as well as Form 3) are designed
to fulfill these objectives.
Incinerator Operations Summary (Form 5). This form sum-
marizes six distinct groups of information about incinerator
operations for a specific period. For conlrol purposes, monthly
reports would be desirable, although less frequent prepara-
tion would be possible. The first two segments present
activity and operating cost data for the total operation. Costs
are broken down by type to aid the cost analysis, and the
activity and performance factors are designed to help
analyze inefficiencies and performance. The remaining four
sections break the costs into the four cost centers. Total oper-
ating costs are presented for each area as are other factors
that may be useful to analyze the functional activities. Obvi-
ously, there are many other factors and costs that could be
presented. The ones illustrated, however, are adequate for
most analyses. Nonetheless, modifications or additions should
be made for facilities with different operations and data
requirements.
This form, designed for control purposes, contains only
controllable expenses for which the supervisor can be held
accountable,- capital or financing costs are not included. The
form is prepared by the accounting department from the data
in Forms 1, 2, and 3 and additional data on file concerning
labor rates, insurance, fringe benefits and charges from other
departments, external expense billings, etc. Copies of the
form are forwarded to both the facility supervisor and to his
superior. Analysis of the form indicates excessive expenses
and aids the supervisor in taking corrective action.
Incinerator Total Cost Report (Form 6). All the activities
and costs incurred by the incinerator during the period are
summarized from data in present and past Incinerator Opera-
lions Summaries (Form 5) and from the depreciation and
interest data available in the Incinerator Capital Investment
Report (Form 4). Semiannual and annual preparation would
be sufficient. Form 6 — Alternate can be used if disposal
charges or other types of revenues are associated with incin-
erator operations.
12
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FORM 5
INCINERATOR:
INCINERATOR OPERATIONS SUMMARY
REPORT PERIOD: from
to
ACTIVITY AND PERFORMANCE
Tons incinerated
% Weight reduction
Total labor hours
% Capacity utilized
% Capacity available
% Utilized/ % available
Actual amount
± % Budget variance
OPERATING COST TOTALS
Total operating cost
Total labor cost
Utilities cost
Parts and supplies
Outside charges
Overhead
Actual amount
± % Budget variance
RECEIVING COSTS
Total operating cost per ton
Labor hours
Actual amount
± % Budget variance
VOLUME REDUCTION COSTS
Total operating cost per ton
Labor hours
Average operating temperature
Actual amount
± % Budget variance
EFFLUENT HANDLING COSTS
Total operating cost per ton
Gallons of water per ton
Tons of residue per load
Actual amount
•
± % Budget variance
REPAIRS AND MAINTENACE COSTS
Total operating cost
Receiving repair costs
Volume reduction repair costs
Effluent handling repair costs
Actual amounts
± % Budget variance
BSWM (10/69)
13
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Summary of Information Flow
Operating dala are accumulated daily at the incinerator
site and transmitted periodically to the accounting depart-
ment. The accounting department combines these reports
with additional information it accumulates to gel total oper-
ating costs. This summary is then returned to the supervisor
for his own use. Next, the accounting department combines
the operating cost dala with the depreciation and inleresl
cost dala (from the Incinerator Capital Investment Reports)
to compute total costs for ihe period. This tolal cosl informa-
tion is then given to ihe heads of departments of sanitation
and public works, or their equivalents.
System Utilization
Only with efficient and intensive utilization of ihe informa-
tion generated from the accounting system and forms can
the additional time, effort, and money required lo implement
and maintained the system be justified. The system's inten-
sive use promotes two major objectives: quality control and
cosl conlrol. Reduced costs must be accomplished without
delerioraling and operating quality. Similarly, quality is
interrelated with the costs of obtaining it.
All the factors that affecl the quality and effectiveness of
incinerator operations can be translated inlo costs. Amount
of volume reduction, residue characteristics, and the levels
of slack emissions and water pollution determine the quality
of operations. Cosl control does not call for economizing at
ihe expense of quality. On ihe contrary, once a level of
acceptable operation has been determined along with ihe
allendanl costs, ihe cost control system can help the super-
visor maintain that level of operation.
Effective cost control requires timely recognition of exces-
sive cosls and identification of responsibility for ihe increased
cosls. Comparing units cosls (cosl per ton of wasle inciner-
ated) with both the currenl budget and the corresponding
period last year helps indicate excessive cosls. The use of
unit cosl facilitates the analysis of costs, independent of
changes in the level of activity. The cosl-cenler breakdowns
help single out the responsible factor or person. This system
16
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allows bolh of these crilical factors to be determined; correc-
tive action may then be effectively initialed.
The Incinerator Total Cost Report (Form 6) can indicate to
the highest level of municipal management, i.e., the city
manager or the head of the sanitation department, if costs are
excessive. If so, the supervisor of the particular facility can
be held responsible to the extent that his operating costs
have increased. The supervisor, in turn, can analyze the
cause of this cost rise. He may trace the increased cost to
the type of cost, as well as the cost center, and possibly to
the employee or piece of equipment responsible. All of the
needed data are in Form 5 (the Incinerator Operations
Summary).
C.OVKRNMl VI I'HIN UNO Ol HC I 1970—395-982/107
17
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Agency
LI -.TV..'. - - .
1 North V.":.<- • '•' • - -
Chicago, Iliiuoia
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