-------
-------
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
-------
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.
-------
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.
-------
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
-------
DIAGRAM II
REPORTS AND INFORMATION FLOW
Wage rates, utility bills,
charges from other departments
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FORM 2 J
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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
-------
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
-------
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
-------
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
-------
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
-------
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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