-------

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                 A.3XT

      -A.CCO'UTTTIN'G-
                  for
solid  "wetste  collection
           This report (SW-27ts) was written by


              Eric R. Zausner
       Bnvironme-v^l ?.;:  H-{ ion Agency
       Library. "  -
       1 North WdOjjjr 1.T1V3
       Chicago, Illinois  60606

 U. S DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
              Public Health Service
           ENVIRONMENTAL HEALTH SERVICE
            Bureau of Solid Waste Management
                    1970

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                    heaJ.tli service pu.fc>lioa/tion no.  SO 3 3







                    ENVIRONMENTAL PROTECTION AGENCY




                     Library of Congress Catalog Card No. 79-606526
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 - Price 35 cents

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                                               for
                             solid  -waste  collection
V>
•O                                       Eric R. Zausner*

,3,^                    The increasing costs and complexities of solid waste col-
'^-                  lection require new,  more sophisticated  management tech-
rij                  niques. Because data on performance and the costs of opera-
'"                  lion and ownership are  essential  for the use of these man-
                    agement tools, an  adequate information system is  a  pre-
                    requisite to effective management. Although cost accounting
                    represents only one part of the total information system, its
                    design, installation, and utilization can represent the most
                    significant step in the development of effective solid waste
                    management.
                      Present information on collection activities and associated
                    costs is both inadequate and  nonstandardized. The proposed
                    system provides a guide to the type and quantity of informa-
                    tion to be accumulated,  its classification, and the method of
                    collection.  It is intended to be of use to municipal or private
                    personnel involved in collection operations. Because of the
                    complexity  of  solid waste collection, this system is  only in-
                    tended as a guide  to the types of data to  be collected, re-
                    duced, and  presented.  The  system can work  as presented,
                    but will be most efficient when modified to meet the  specific
                    requirements of a given operation.
                      Installation of a cost accounting system can aid the collec-
                    tion supervisor in controlling the costs and performance  of
                    the operation and also in planning for the future.

                        * Chief, Management Sciences Section, Operational Analysis Branch, Division of
                     Technical Operations, Bureau of Solid Waste Management.

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                     System  Benefits
  Installing a system such as the one described herein has
several important advantages:
1.  The system facilitates orderly and efficient accumulation
and transmission of all relevant data. In fact, much  of the
recommended data is probably being collected already, al-
though haphazardly and  inefficiently.  Hence,  the  added
cost of  installing the system  is minimal.
2.  Reports  are clear and concise and present only the data
required for effective control and analysis.  Because the per-
sonnel can complete and understand the reports, the system
can operate in a relatively foolproof manner.
3.  The  data are grouped in standard accounting classifica-
tions.  This simplifies interpretation of results and compari-
son with data from previous  years or other operations, and
in turn, allows analysis  of relative performance  and  opera-
tional  changes.
4.  The  system accounts for all relevant costs of operation.
5.  Accumulated data from the system can, over a period of
lime, lead to standards of performance and efficiency. These
standards are used to  control  costs.  They indicate  which
costs are high and the reasons.  The supervisor of operations
may then  lake  corrective action.
6.  The  system includes automatic provisions  for accounta-
bility.  Cost control becomes more effective when the individ-
ual responsible  for cost  increases can be ascertained.
7.  Use  of the collected  data  aids in short- and long-range
forecasting of operating and capital budgets. Future require-
ments  for  equipment,  manpower, cash, etc.,  can be more
accurately estimated; this, in turn, aids planning  at all levels
of management.  The data are also available for later evalua-
tion and analysis with the use of operations research tech-
niques.
8.  With only minor modifications,  the system  is flexible
enough to meet the varying requirements of communities
with collection activities of different size,  scope, and opera-
tional  procedures.
             Cos! Centers  and  Cost Allocation
   Two general types of costs are incurred by collection activi-
ties: operating costs and the cost of financing and ownership
(Table  1).  Operating costs include labor,  oil and  gis, parts
and  supplies,  utilities, supervision  and administration,

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                                  TABLE 1
                         SUMMARY OF COST TYPES
Labor
Oil and gasoline
Paris and supplies
Utilities
Supervision and administration
Charges from other departments
External contractual services
Miscellaneous
TOTAL OPERATING COSTS
Depreciation
Interest
TOTAL FINANCING AND OWNERSHIP COSTS

TOTAL ANNUAL COSTS

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charges by other departments, external contractual service,
and other miscellaneous expenses. Labor costs include direct
wages, overtime pay, and all associated fringe  benefits.  In-
cluded in fringe benefits are vacation pay, sick pay, group
life and  medical insurance, social security payments, and
pension  contributions.
  Ownership and financing costs are those associated with
the loss in value of fixed assets (both equipment and facili-
ties) and the costs of funds required  to purchase and retain
the fixed assets. More commonly, the terms  depreciation
and interest are used.
  Generally, most operational costs are expressed in the terms
mentioned above.  As operations become  more complex,
however, a more sophisticated method of accounting is re-
quired to facilitate analysis and control. To accomplish this,
collection activities are assumed to consist of several  inter-
related suboperations, each of which is analyzed separately.
These  suboperalions  are usually denoted as  cost centers,
because  costs are accumulated separately for each of them.
Analysis and control are  simplified if excessive costs or in-
efficiencies can be  traced to a functional activity or area of
the operation/ in large and  complex operations, tracing may
be  impossible without cost centers.
  The ideal number of cost centers increases  as the size and
complexity of operations increase. More cost  centers require
the collection of more data, however,  and, therefore, increase
the accounting costs.  For moderately sized collection  opera-
tions, without transfer operations, three cost  centers appear
to collect adequate information without incurring excessive
data accumulation  and reduction expenses.  A separate ac-
counting system should be employed to handle the transfer
operation.
  The three cost centers are: Route Service, Waste Hauling,
and Repairs  and Maintenance.  The first two  cost centers
are termed direct cost centers because they include activities
directly  related to collection. The Route Service cost center
accumulates all costs associated with the collection of wastes
on  the routes themselves.  The  Waste  Hauling cost  center
accumulates  all costs  associated with hauling  solid  wastes
from the routes to  the processing and disposal site or sites.
This cost center also includes the costs of going to and from
the garage or vehicle storage and repair area.

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  The Repairs and Maintenance cosl center, an indirect cost
center, accumulates all costs associated with the repairs and
maintenance of all collection facilities and equipment. Be-
cause repairs and maintenance activities can  represent a
substantial proportion of costs, these  activities and their  as-
sociated costs are analyzed by a separate cost center/  how-
ever, these  costs are then allocated  to the two direct cost
centers  because they use  the repair  and maintenance
services.
  The operating costs must be allocated to  the  three cosl
centers in an accurate and representative manner. Although
financing and ownership costs can be allocated to individual
cosl centers, the benefits do not justify  the additional cal-
culations. For general analysis  and control, operating  costs
are sufficient for cost center analyses. At infrequenl intervals,
when the additional  data are  required  (for lease-buying
decisions, elc.),  reconslruction is easily accomplished.  The
procedure for  allocating the operating  costs to  the  three
three cost centers and the relation of these operating  costs
and the financing and ownership  costs to the lotal  annual
cost has been illustrated (Diagram I).
  The melhod of allocation for  each type of  operaling cosl
is  as follows.-
  The labor cosl allocated to ihe cost cenlers is based on the
aclual number of employees in each cosl center and  iheir
associaled lolal wages and benefits.  For instance, mainte-
nance personnel would have their tolal labor costs assigned
to ihe Repairs and Maintenance cosl center. Drivers and  load-
ers would have their  associaled costs divided between the
remaining Iwo cosl cenlers based on the  percentage of their
lime utilized in each center.
  Oil and gasoline  costs are accumulated in tolal as well
as for each vehicle. They would be proportionately allocated
to ihe Roule Service  and Waste Hauling cost cenlers. The
percentage of lolal equipment hours traveled while engaged
in each cosl center's activity is an adequate melhod for allo-
cating these costs. Parts and supplies and utilities would
be charged totally lo ihe Repairs and Maintenance cost cen-
ter since this center firsl incurs these expenses. General  over-
head, which include supervision, administration, and charges
from olher departments (payroll, accounting,  other levels of
the sanitation department, etc.), could be allocated equally

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lo each of the three cosl centers or charged on Ihe basis of
ihe number of employees utilized  in each cosl center.  The
latter technique is recommended.
  The costs of the Repairs and Maintenance cost center would
finally be allocated to the two direct cosl centers/ the alloca-
tion would be based on ihe number  of  equipment hours
each  utilized.  Nole  thai in the route service  area, repair
costs  per  hour can be higher for certain types of  expenses
such  as brakes, clulches, etc.; whereas, in the Waste Hauling
cosl center, tires, etc., may incur more wear and be  a greater
expense.  Until more definitive data are available, however,
ihe "coarser" approach is suggested.
  The sum of the costs of ihe Route  Service and Waste Haul-
ing cosl centers is the total operating cosl. The actual system
is designed lo facilitate ihe accumulation and laler allocation
of costs lo these cost  centers.
              Reports and  Information Flow
  Information flows  through the cost system by the use of
reports, Ihe vehicles  thai Iransmil  information belween the
transmitter and  ihe receiver (Diagram  II).  The reports or
forms can be classified as those lhal are primarily used to
collect data and those that are  used lo reduce  and presenl
this dala for effective  management analysis  and control.

Data  Collection Forms •
  Cosl analysis and control through the preparation of peri-
odic  summary  reports cannot be accomplished wilhoul re-
cording all perlinenl activity and cosl information.  Dala on
activities  and costs, lo be retrievable at some later date, must
be  recorded at  the  time  it is generated.
  Weekly labor record (Form 1).  The foreman or supervisor
records daily labor activities at ihe garage. One copy is for-
warded weekly lo the payroll department for  determining
payroll checks. Anolher copy is forwarded lo the accounting
department (or used by the supervisor) for computing total
labor hours and assigning these hours lo ihe  various col-
leclion  activities and related cosl  centers.
  Daily collection activity report  (Form 2).   Each  day the
collection  vehicle driver  records  data  on the  collection
crew's routes, aclivilies, and performance. Of particular im-
portance  is the  check lisl  for equipment operation/ many
potential  equipment failures are routinely noled.  This aids

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             DIAGRAM  II
REPORTS AND INFORMATION FLOW
                   Wage rates, utility bills,
                charges from other departments
om purcf
rds or su
0
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FORM 1 J

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FORM 2 J

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~l maintenance 1 ^
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(Crew >>
FORM 7 y

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I
Time out
Time in

DAILY COLLECTION ACTIVITY REPORT
Mileage nut
Mil^agp in

Driver:
Loader:
Loader:

Time start




Total weight

Time finish





Weight





Remarks:

Route #





Nonproductive time
Hrs.





Cause





FORM 2
Date:
Truck #
T.rew * 	 	
Net time
Net miles
Gas purchased (gal.)
Check if abnormal:
Eng. temp. 1 J
Oil press. 1 — 1
Ammeter | 	 |
Packer | 	 |
Brakes | 	 |
Lights 1 	 1
Other 1 	 1
Check if relevant and
report to supervisor:
Pprdnpal injury |
Automotive accident | 	 |
Property damage | 	 |
     Instructions: The driver  is to complete this  form each day.  "Time out" and
"Mileage out" are to be completed when the truck leaves the garage in the morn-
ing.  "Time in" and "Mileage  in" are to  be  completed at the end of the day when
the truck is back at the garage. When the truck  reaches the first  route, the time
is noted in  the "Time start" column and the route designation is also noted. When
the truck  is  full or the route is  left for any  reason, "Time finished"  is entered.
Upon returning to  the same route or another (after a trip to the disposal site), the
next "Time start"  entry is made.  At the disposal site, the net weight of  wastes
collected is entered. Accidents, injuries, or any equipment  malfunctions are to be
noted in the boxes provided and a detailed explanation given in the  "Remarks" box.
                                     10
                                                                                            BSWM 11/69

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ihe foreman in scheduling  equipment maintenance. The
form also collects the data needed  to determine total lime
to service routes and to haul refuse to the disposal site, as
well as the weight of waste collected. Data on accidents and
injuries  are  also routinely noted.  Important data are re-
corded in the left and bottom margins for easy reference and
sorting.  Detailed instructions for completing this form are
included on the form.
  Complaint notice (Form  3).  The person receiving public
complaints records the complaint and sends the completed
form to the operational foreman  (supervisor).  From the col-
lection activity form that corresponds  to the dale and route
of the complaint, the foreman can locale the proper driver
and loaders.  If necessary, the supervisor may warn the crew
orally.
  Repairs and  maintenance  record  (Form 4).  Activities of
the maintenance department and the costs incurred in main-
taining each collection vehicle are recorded. One form is on
file for each vehicle, and entries are made only when main-
tenance or repairs are undertaken. Total costs for the depart-
ment as  well as the costs  for each  truck are accumulated.
The data are needed to assign the costs to the other two cost
centers and to  evaluate the efficiency of individual trucks.
  Collection  equipment inventory (Form 5). Data required
to calculate vehicle depreciation and interest costs and allo-
cate them to operations are collated on this report. The form,
which can include active  and inactive vehicles, should be
completed when the accounting system is installed and up-
dated only when new equipment is purchased or old equip-
ment is sold. It would  not be required where similar forms
for these  data are already in use.
  Collection facility inventory (Form 6). On this form, which
contains data similar to that in the previous form, total facility
costs and their associated interest and depreciation costs are
recorded and allocated to  the proper  operation.  This  form
should be completed when the accounting system is installed
and updated when improvements or modifications are made
to existing facilities or when additional  fixtures  are  pur-
chased. As with Form 5, this form may be deleted if a similar
form is already in use.
Data Reduction and Presentation Reports
  Reports 7 through 10 are completed  at less frequent inter-
                            11

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                                                                                         FORM 3
Date action taken:

Action taken:	
                                    COMPLAINT NOTICE
n
Date received: / / Time received: 1
Name:
Street:
Tvoe of comolaint:


AM
PM





                          Copy to be completed by supervisor or operational
                          foreman of employees involved.
Route:.


Driver:
Loader:.


Loader:
                                               12
                                                                                                 BSWM 11/69

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                                 REPAIR  AND  MAINTENANCE RECORD
                                                                                                       FORM 4
  TRUCK IDENTIFICATION:
                                                     PERIOD:  from
                                                                    to
 Date
 Odo.
mileage
Type service
 or repair
Hours
down
Labor
hours
Parts description
Labor
cost
Parts
cost
Outside
charge
Overhead
 (rate x
  labor
  hours)
Total
 cost
Totals
                                                       13
                                                                                                         BSWM 11/69

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vals than the data collection forms. These intervals depend
on the type of information transmitted. To be effective, cer-
tain types  of  control and analysis require more  frequent
feedback than other types. All of the following forms reduce
the data collected in Forms 1  through  6 in addition to other
data available  to  the accounting department.
  Crew performance evaluation report  (Form 7).   The ac-
counting department should compile the data  on labor per-
formance and efficiency weekly. This information, taken from
data in the Daily Collection  Activity Report (Form  2), is for-
warded to the supervisor or  foreman for his use and makes
possible short-term action to  control costs.
  Operations summary report (Form 8).   In this report, the
collection activity and its associated operating costs are sum-
marized. The report can be for the whole system or for each
district if the size of the system warrants it.  As a cost control
report, routine  and frequent preparation is  critical,- monthly
intervals should be sufficient.  The accounting department
prepares the report and forwards copies to both the super-
visor and his superior  (head of the sanitation department).
The report is particularly useful  for cost control,- the total unit
cost, as well as unit costs for the various cost centers, indi-
cates where excessive costs were incurred. In addition, vari-
ous measures of efficiency are presented to isolate the cause
or  causes of high  operating  costs. For instance, "ions per
number of trips to disposal site" adequately measures truck
utilization  and  the effectiveness of the routing schedule  to
ensure full truck loads  during  and at the end  of  the day.
Detailed definitions of terms and computations are included
on Form 8 — Supplement.
   Vehicle performance evaluation report (Form 9).   The data
accumulated on this form represent the total and individual
costs of operating the collection vehicles.  Because data are
accumulated separately for  each piece  of  equipment, indi-
vidual equipment efficiency  and cost can be evaluated and
when to sell or trade  presently owned equipment  for more
economic alternatives can be determined. Since this decision
involves long-term assets, only  quarterly or semiannual re-
ports are necessary. More frequent preparation would not
substantially improve making decisions that would minimize
the costs of operating these assets.  It may be desirable, how-
ever, lo prepare reports on  any given truck if c.nd when it
                            16

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                                                                                                           FORM  7
                              CREW  PERFORMANCE  EVALUATION REPORT
DISTRICT
WEEK OF:
Crew ident.



















Totals

Average
Total
hours






















Total hours
on route



















X


Tons
collected






















Tons/ hour
on route



















X


Injuries
This
week






















Year
to date






















# Complaints
This
week






















Year
to date






















Weighted
route difficulty



















X


Adjusted
tons/hour
on route



















X


                           Instructions:  To be completed  by  the  accounting  department.  "Weighted
                      route difficulty" should be based on past performance of all crews on each route;
                      i. e., if, on the average, "route A" takes twice as long to service as "route B," then
                      enter 2 for crew that did route A and 1 for crew that did  route B.  To determine
                      "Adjusted  tons/hour on route,"  multiply  "Tons/hour on route"  by  "Weighted
                      route difficulty." This is more  representative  of  crew  performance,  adjusted for
                      route differences.
                                                         17
                                                                                                             BSWM 11/69

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OPERATIONS  SUMMARY REPORT
                                                  FORM 8
                           PERIOD:
. from.
to.


Totals
Route Service
Cost Center

Hauling
Cost Center
Repairs
and
Maintenance
Cost Center
Factor
Tons collected
Total operating cost
Total operating cost/ton
Collection labor cost/ton
Equipment operating cost/ton
Overhead cost/ton
Number of accidents
"Cost Center" cost/ton
% Time on route
Tons/ direct labor hours on route

"Cost Center" cost/ton
Tons/number of
trips to disposal site
% Time hauling
Average miles/ hour
"Cost Center" cost/ton
Repairs and maintenance
cost/equipment hour
% Time equipment down
Parts cost
Amount for this period



















% Variance from
Budget



















Budget last period



















               18
                                                   BSWM 11/69

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                                                    FORM 8 - Supplement
                 DEFINITION OF TERMS
Tons collected
    Include ihe lolal weight (in Ions) recorded during the
    period on all completed Form 2's. This figure is used for
    all unit cost  calculations.
Total operating cost
    Include all labor costs and fringe benefits (vacation pay/
    medical  and life insurance, etc.),  parts and  supplies,
    utilities, supervision, charges by other departments, and
    external expenses incurred for repairs and other services.
Collection  labor  cost
    Include wages and fringe benefits of drivers and loaders.
Equipment operating cost
    Include gas,  labor,  parts, supplies, and external repair
    charges for all equipment repairs.
Overhead  cost
    Include supervision and other labor expenses, utilities,
    charges by other departments,  and miscellaneous ex-
    penses not  included in other areas.
Route Service Cost Center cost
    Multiply the collection labor cost plus equipment oper-
    ating cost plus overhead by the percent of lime on route.
    Percent of time on route can be computed for each truck,
    each crew, and the total collection system from time
    data on Form 2.
Hauling  Cost Center cost
    Multiply the collection labor cost plus equipment oper-
    ating cost  plus  overhead  by 1 minus the percent of
    lime on route.
Repairs and Maintenance Cost Center cost
    Add the cosls of repair and labor plus parts plus sup-
    plies plus  external charges plus  overhead.
Equipment hours
    Include lolal  hours on all Irucks for lolal period (recorded
    as net  lime for each truck on Form 2).
                            19

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                   VEHICLE PERFORMANCE EVALUATION REPORT
                                                                            FORM 9
GARAGE.
PERIOD: from.
to
quipment
ident.
























Totals
Averages

Budget
Total
miles
























X



Hours
down




























Hours down
Total hours
























X



Repairs and
maintenance cost




























Oil and gas
cost




























Repair and
maintenance/hour
























X



Fuel
cost/ hour
























X



Total
cost/hour
























X



Total cost




























                                                                             BSWM 1.1/69

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exceeds a given level of repair charges. For instance, each
vehicle's repair expenses can be compared wilh the average
of all vehicles, and when a vehicle exceeds  this average
by 25 or 50 percent, it can be singled out for further analysis.
The accounting department, which prepares this form, sends
a copy to the operational supervisor and the head of  the
sanitation department.
  Tolal collection cost summary (Form 10).  All the activities
and  costs associated wilh collection activities during  the
period are compiled on this report from data available in
the Operations Summary Report (Form 8) and the Collection
Equipment and  Facility Inventory forms,  (Forms  5  and  6).
The combined operating costs and the depreciation and in-
terest costs represent the total cost of collection activities for
the period.  The  accounting department can  complete this
form quarterly or semiannually and send  it to the  head of
the sanitation department or his equivalent. Form 10 — Alter-
nate can be used instead of Form 10 if user charges  or other
types of  revenues are associated with collection operations.
                 Report  Flow Summary
  A brief summary may help to put the system in perspec-
tive. The personnel directly engaged in collection activities
complete data accumulation forms daily.  These  are trans-
mitted periodically  to the accounting department.  The ac-
counting department collates the  information received and
adds additional information it already possesses to complete
the summary reports  on performance, activity, and costs.
These forms are then fed back to the supervisor for control
purposes. In  addition, selected  summary  reports  on  total
cost and equipment performance are compiled and forward-
ed to the supervisor and  his immediate superior.
                           21

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                    System Utilization
  Only with efficient and intensive utilization of the informa-
tion generated from the accounting system  and forms can
the additional time, effort, and money required to implement
and maintain the system  be justified.  The system's inten-
sive use promotes two major objectives: quality control and
cost control. Reduced costs must be accomplished  without
deteriorating operating quality.  Similarly, quality is  inter-
related with the costs of obtaining it.
  All the factors that affect the quality  and effectiveness of
collection operations can be translated into costs.  Cost con-
trol does not call for economizing at the expense of quality.
On the contrary, once a level  of acceptable operation has
been determined along with the  attendant  costs, the cost
control system can help the supervisor maintain that level of
operation.
  Effective cost control requires timely recognition of exces-
sive costs and identification of responsibility for the increased
costs. Comparing units costs (cost per ton of waste collected)
with both the current budget and the corresponding period
last year helps indicate excessive costs.  The use of unit cost
facilitates the analysis of costs, independent of changes  in
the level of activity. The cost-center breakdowns help single
out the responsible factor or person. This system allows both
of these critical factors to  be determined/  corrective action
may then be effectively initialed.
                            24

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Environmental 1-"•/',?'.-;:! on Agency
Library,  TU- ,; *. r-
I North  Wacl.c,- L,l\^
Chicago,  Illinois   C0606

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