Resource
Planning
AH
OVERVIEW OF THE
IMPLEMENTATION PROCESS
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Reprinted, with permission, by the Office of
Solid Waste, U.S. Environmental Protection
Agency, from the publication of the same
title by National League of Cities, United
States Conference of Mayors, Washington, B.C.
Preparation of this report was supported in part by the
Office of Solid Waste Management Programs, United States
Environmental Protection Agency, under Grant No. 802037.
Any opinions, findings, conclusions or recommendations
expressed herein are those of the National League of Cities
and the United States Conference of Mayors and do not
necessarily reflect the views of the Environmental Protec-
tion Agency.
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INTRODUCTION
Resource recovery increasingly is becoming a major con-
cern of city officials. Cities that undertake effective re-
source recovery programs can benefit in two ways. First,
the volume of solid waste can be significantly reduced, thus
prolonging the life of existing landfill sites. Second, re-
source recovery can produce revenues that will offset, at
least in part, refuse collection and disposal costs. How-
ever, no city should undertake resource recovery activities
with the expectation that a profit will be made.
A third factor may also bear consideration. There is an
increasing appreciation of the fact that the nation's re-
sources are finite. City officials may well wish to begin
considering resource recovery in anticipation that the re-
cycling of consumed materials may become national policy.
This factor could become even more important if the energy
shortage becomes more acute and costs again escalate
rapidly.
Successful implementation and management of resource re-
covery facilities is a difficult and complex venture for city
officials. This report outlining the critical components of
the implementation process has been developed to assist
the chief executive of the city.
The guide is designed to cover the issues of mixed waste
recovery: large scale, capital investment projects that
require precision planning and analysis of the financial,
technical, and administrative considerations.
Experience has shown that the cities that have been success-
ful in designing and operating resource recovery plants have
based their decisions on a comprehensive system and pro-
ject management approach, resulting in a resource re-
covery system compatible with community needs.
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The issues discussed in this report provide a framework
for approaching the major questions and problems related
to mixed waste recovery plants. The discussion of these
major issues will assist the local official in preparing
and mobilizing the investigation of the local resource
recovery opportunities.
This report, which was jointly authored for the National
League of Cities and the United States Conference of
Mayors by Peter Heidenreich, Department of Public Works,
Metropolitan Government of Nashville and Davidson
County, and Robert A. Lowe, United States Environmental
Protection Agency, is based on an eight«part series
entitled: Resource Recovery Plant Implementation: Guides
for Municipal Officials, prepared by the Office of Solid
Waste Management Programs, U.S. Environmental
Protection Agency. That series details more thoroughly
the issues discussed in this document, and offers further
direction for solving specific problems.
The League and the Conference are deeply appreciative of
the support provided by the Office of Solid Waste Manage-
ment Programs, U.S. Environmental Protection Agency,
and for the valuable assistance provided by those in OSWMP
responsible for guiding this project. Particular gratitude
is due Robert A. Colona, Director, and Nancy Dunne,
Program Analyst, Systems Management Division.
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CONTENTS
Page
Introduction iii
General Management Considerations 1
Staff and Study 5
Analysis and Selection 11
Implementation 17
Conclusions and References 21
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GENERAL MANAGEMENT CONSIDERATIONS
Vigorous, personal leadership is absolutely essential for
the success of a resource recovery investigation. The
magnitude of the project requires the coordination and
management of people and technologies, as well as a vast
amount of business and political common sense. Outlined
below are the critical issues regarding a realistic, pro-
fessional approach toward implementation of a resource
recovery facility.
ROLE OF THE CHIEF EXECUTIVE
More than any other single person, the chief executive of
the community must support, supervise, and direct the
resource recovery effort. Skill in developing a decision-
making atmosphere and policy will set the tone and style
of the implementation process. He or she must be pre-
pared to mobilize the people and machinery within the
local government, attract the support and assistance of
the private sector, and remain active and visible through-
out the life of the project.
The executive's ability to negotiate and compromise the
major issues during the implementation process, and keep
the project on course and on schedule is critical to its
success.
COMMUNITY GOAL SETTING
A mixed waste recovery plant will have an important role
in a community. Acquiring the proper facility requires
identifying and setting priorities on the solid waste and
resource recovery goals for a particular community. Goal
concerns for a resource recovery system should include
but are not limited to:
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cost
health and safety
land use
system life and dependability
acceptable community risks
Goal setting focuses attention on specific opportunities for
resource recovery and eliminates wasted time considering
unsuitable proposals.
PROJECT MANAGEMENT
There is a temptation on the part of municipal officials to
choose an outside consulting firm and allow it a great deal
of freedom in determining the city's resource recovery
posture. Although consultants are essential in the develop-
ment of the project, the municipality and not the consultant
must manage the project. The chief executive and the local
government team must decide on major objectives, control
consultants and other external assistance, manage conflicts
of interest, and make the final selection of options. The
city must be prepared to assign appropriate manpower and
money for project planning, analysis, and control.
PROJECT MANAGER
Next to the chief executive, the position of the project
manager is critical for the development and success of the
project. Experience has shown that whether the manager
is selected from existing staff, or newly hired, it requires
his or her full time attention.
In addition to the obvious leadership qualities expected of
the project manager, the post must have sufficient author-
ity to control task force activities. It may not be necessary
to place an engineer in this slot; a competent individual with
a diversified, business background may prove to be more
valuable,
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UNKNOWNS AND UNCERTAINTIES
Any undertaking the size of a resource recovery project
naturally includes many unknowns and uncertainties.
Major areas of uncertainty in resource recovery that re-
quire attention include:
waste stream quantity and composition
facility technology (construction and operation
costs)
markets for recovered products
Investing in a project where uncertainties exist requires
assumption of risk. Success in dealing with these uncer-
tainties is dependent upon a professional risk management
approach. The management of risk should include the
following steps:
1. Identification What are the risks? What is the
probability of the undesirable situation occurring?
and, What are the consequences associated with
them?
2. Reduction The chance that something will go
wrong (or the amount the city will have to pay)
can be reduced in two ways;
(a) By choosing the most reliable alternative.
(b) By assigning responsibility for specific sit-
uations to other project participants (e. g.
system vendors). Private companies will
assume risks (liabilities), but only for aspects
of the project over which they exercise control
and only if the potential profit is commensu-
rate with the amount of risk taken.
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3. Acceptance Assume only those risks that are
appropriate in nature and acceptable in magnitude.
Whenever risk is mentioned, it usually makes newspaper
headlines, and public officials have difficulty in justifying
support of a project involving risk. But this need not be
the case because, although it is not usually recognized,
there is risk in many city activities. For example, when
a city builds a parking garage, there is risk that business
will move and projected receipts will not be sufficient
to pay the bonded debu.
PUBLIC INFORMATION
A factual, honest dialogue with the citizens of a commun-
ity is vital for public support. Caution must be exercised
to encourage expectations that are realistic with regard to
the cost and capabilities of the facility. A resource re-
covery system requires a large amount: of money and must
be reviewed in terms of its long term economic impact.
In addition, landfills will always be required for unpro-
cessable waste and emergency alternatives.
Periodic reporting through the established media, as well
as public hearings and open meetings, provide the interest-
ed citizen with information to evaluate the impact of the
system on the environment.
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STAFF AND STUDY
Thorough investigation of local solid waste capabilities and
resource recovery requirements and alternatives requires
the cooperation of individuals representing various offices
within and outside of the city government. Including these
people in the decision making process can be accomplished
by the creation of a working group or task force. The
effectiveness of this group depends on the leadership of the
chief executive of the city, as well as on the experience
and ability of the project manager.
PARTICIPATION
The designated project manager should be the director of
the task force. The size of the task force should be held
to a minimum to promote efficiency; however, it is essen-
tial that key city departments such as legal, planning,
finance, pollution control, and public works be repre-
sented. Further, regional and state agencies concerned
with solid waste management and regulations and concerned
community interest groups should either be represented
on the task force or serve on an advisory committee to the
task force. Community groups that might appropriately
be represented include environmentalists, private waste
haulers, potential users of recovered products, and the
chamber of commerce.
The above types of constituencies bring many perspectives
to the investigation process to prevent subsequent delays
and mistakes. It is during the early phase of the assign-
ment that the task force has its greatest flexibility, and it
is important to invite as many inputs as possible.
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SCHEDULING
Successful resource recovery implementation requires
three to five years from conception to the first day of
operation. The task force should develop a reasonable
timetable for the study activities, along with a reliable
reporting mechanism. The project manager must be
rigid and serious about maintaining these controls.
Allocating sufficient time for completion of each study
issue is vital, but care must be taken to avoid unnecessary
delays.
AUTHORITY
The mandate of the task force requires it be given
sufficient authority to execute its duty. This should in-
clude prerogative of:
making policy recommendations
hiring consultants
preparing requests for proposals in cooperation
with the responsible purchasing agency
negotiating and signing contracts or review and
advisory responsibility
RESOURCES
A common mistake in resource recovery investigation is
to devote too little time and allocate insufficient funds for
the task force to carry out its responsibilities. A resource
recovery project could well be the largest public works
effort in the city, and it is essential that cities spend
money to obtain the information and advice that is necessary
to make sound decisions.
There should be every effort to obtain the most qualified
and experienced administrative, legal, engineering, and
financial consulting assistance available. A relatively
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small investment at this point in the venture can save
many times that amount in the long run. Delays incurred
after project start-up will cost thousands of dollars every
day.
STUDY
The major issues that must be researched by the task
force and its staff are described below.
Solid waste capabilities: The present and projected
quantity and composition of the local solid waste stream
must be documented. This information will help determine
plant size and function. All solid waste activities should
be reviewed, especially the collection and disposal pro-
cedures and costs.
One vital area often overlooked is the issue of waste
control. The city must determine whether it has the
capability to direct the necessary amount of waste to the
proposed facility. If it does not have the capability, the
city must take steps to obtain the waste through interlocal
agreements, or other mechanisms.
Market analysis: No resource recovery system can sur-
vive without selling its recovered products. Sale of pro-
ducts is dependent upon:
(a) the existance of a customer that is capable of pur-
chasing the product at a satisfactory price, and
(b) the ability of the facility to produce a product at a
price that meets the customer's requirements.
A detailed market study is essential to determine if waste
based products have significant value in the community.
This study should include data on:
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product specifications
quantities required
prices
guarantees for delivery
transportation costs
Financial capabilities: There are a variety of capital
financial options available to a municipality, including
revenue, general obligation, and pollution control revenue
bonds, and equity financing.
The task force should identify the options that are avail-
able, the special provisions or restrictions concerning
each option, the alternative institutional and legal arrange-
ments, and the cost of financing.
Sound financial judgement is one of the most important con-
siderations for the project, and a financial expert should
be included on the task force at the outset to evaluate the
feasibility of the proposed project financing. The financial
advisor, in addition to helping choose a particular financ-
ing mechanism, may also assist the local government in
preparing a bond offering.
Legal barriers: Separate attention must be given to legal
factors that may prevent or assist a municipality in ade-
quately planning, financing, procuring, or operating a
resource recovery facility. For example, a city may need,
but not have, the authority to enter into long term, multi-
dimensional contracts required for implementing a system.
The laws governing the wide range of activities a city will
become involved in should be identified and reviewed before
entering into contracts.
Organizational capabilities: A major resource recovery
system may go beyond the administrative capabilities of
existing departments within the local government. Civil
service restrictions, hiring limitations, and lack of budget
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flexibility may prevent the municipality from adequately
responding to project demands. It may be necessary to
reorganize existing structure or create a new arrange-
ment to insure that control, reporting, and personnel
activities will be considered during the implementation
and operation phases of the project.
Environmental standards: The standards for pollution con-
trol and environmental impact should be identified as soon
as possible with the assistance of the local and state health
departments. These regulations may serve as legal and
technical constraints in the development of a system, and
they must be met and enforced to guarantee continued
operation of the facility.
Technology survey: Obtaining direct and specific informa-
tion on different resource recovery technologies is a criti-
cal responsibility of the task force. The city may solicit
data by directly contacting private firms of their choice
with appropriate expertise in the resource recovery field.
A more sweeping approach is to issue a general request
for qualifications and proposals from interested system
designers, engineers, and consultants. Their response
should include the following information:
1. Technology system processes, hardware, final
products, markets, environmental impact, and
experience.
2. Economics capital, operating, and maintenance
costs and potential revenues.
3. Management available institutional arrange-
ments.
The task force should be cautious not to imply that this
request for conceptual proposals is a contract proposal,
and insist that only available technologies are reviewed.
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After elimination of responses that do not match the city's
goals and constraints, site visits to existing facilities are
recommended. These visits should include visual in-
spection of the physical plant and interviews with the solid
waste delivery personnel and facility managers, operators,
and maintenance personnel.
CONSULTANTS
Outside assistance through a variety of advisors, including
management, legal, financial and engineering consultants,
should be utilized whenever the task force lacks the time
or expertise to perform certain functions.
There are four rules of thumb to follow when considering
consultant assistance:
Outline the specific situation that must be re-
searched and define precisely the scope and detail
of the project.
Avoid potential conflicts of interest by avoiding
the use of consultants who have a financial interest
in the recommendations to be made or by making
consultants ineligible for follow-up work.
Select the appropriate consultant for the task: be
certain that the expertise and experience of the
consulting firm is appropriate for the task assign-
ment.
Monitor the progress of the consultant periodically
and ascertain that the prescribed information is
being collected.
Experienced consultants are a vital component of the task
force responsibilities, and-'with the professional guidance
of the city officials will make a large contribution toward
the success of the resource recovery facility.
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ANALYSIS AND SELECTION
The research and analysis conducted by the task force
should be directed toward making decisions and taking
action. Choosing the proper combination of options, by
blending the best judgement of the task force members,
will result in the development of a specific implementation
plan for resource recovery. The major decision points
and decision guidelines in this plan are discussed below.
SITE SELECTION
Choosing the appropriate location is important and should
be considered early. The following site data must be
reviewed:
cost
accessibility by waste delivery traffic
proximity to waste generators and to customers
for recovered products
public acceptance
The sale of certain products recovered from solid waste,
such as steam, may require the processing facility to be
located adjacent to the product consumer. The facility may
also require large quantities of energy, water, or other
utilities and services that will influence site selection.
Siting a facility may require the modification of the existing
zoning regulations. The possibility of future expansion
must also be taken into account.
TECHNOLOGY CHOICE
The task force study procedure will identify suitable tech-
nologies for the community's solid waste system. When
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reviewing and comparing these technology options in
anticipation of final selection, the following items should
be examined.
Stage of Development of Technology:
Size have previous plants operated at the size
and scale of the facility proposed in the commun-
ity?
Performance how long and how well have
similar facilities operated, and under what
conditions (hours per day and days per week)?
Markets: If the task force study proves that waste based
products are saleable within the community, long term
arrangements are required with the purchaser. The needs
and constraints of the product producer and buyer must
be taken into account, and a contract must be established
that defines the commodity exchange conditions and
guarantees, as well as who is responsible for them. It is
also wise to develop contingency plans and penalities if, in
fact, the contract should be violated.
Costs: The value of cost estimates depend on the amount
of engineering and related effort that goes into them.
Obviously, an estimate based on a final design with major
equipment items ordered is a more reliable predictor of
eventual actual costs than is an estimate based only on a
preliminary process flow diagram. Care must also be
taken to assure that cost comparisons are based on com-
parable systems (i.e. , similar size and processing steps).
Risk: No technology decision can be made without some
degree of uncertainty, but risks can be reduced and con-
trolled through a professional risk management approach,
as described in Section II.
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ECONOMICS
It may be wise to analyze the overall economic impact of
several resource recovery options on both the community
and the government. The economic survey should include
the following considerations:
Opportunity costs will the multimillion dollar
investment for a particular resource recovery
facility be the wisest expenditure of community
funds, or are there other long term alternatives
more worthy of the effort and money.
Break even point will the system theoretically
generate enough revenue and benefits over the
life of the project to offset the capital, financing,
operating, and maintenance costs.
Comparative economics the selection of a
resource recovery system should be justified
by comparing its costs and benefits with alterna-
tive systems.
CONTRACT REQUIREMENTS
As decisions are made concerning each of these functional
areas, the task force must keep in mind that each judge-
ment and agreement will eventually have to be consolidated
and recorded in a legal document.
This contract will be vital to the overall acquisition process,
for it must be comprehensive and must communicate the
requirements and obligations of both parties. Finalizing
contracts of this nature may require long periods of negoti-
ation.
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FINANCING
The city's goals and requirements for the project may have
a great deal to do with selecting a financing mechanism.
For example, if the city wants the project revenues (dump
fees and product revenues) to cover all project costs, then
revenue bond (project) financing may be desired.
Conversely, the particular financing mechanism that is
selected will have an important bearing on the major
features of the project. For example, if revenue bond
financing is selected, the supply of waste and the sale of
products will have to be guaranteed by contracts; and the
quality of these contracts will determine the financeability
of the project. Therefore, it is essential that the city's
goals, the financing mechanism, and the major project
features be considered jointly as early as possible. An
investment banker or financial advisor should be consulted
for this purpose. Too many cities delay consideration of
the project's financeability, and it costs them dearly.
PROCUREMENT STRATEGY
The procurement package will include a variety of services
that must be acquired:
design services
construction services
construction supervision
equipment and materials
shakedown services
facility management and operation services
There are three basic procurement approaches to choose
from. The service element responsibilities are assigned
differently in each approach.
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Architectural and engineering: The city retains an engineer
to design a facility and hires a contractor to construct the
facility. This approach usually places most of the risk
associated with the project on the city.
Turn-key: The city selects a system contractor to design
and construct the system. Once the facility is operational
and accepted by the city, ownership is turned over to the
city, which then becomes responsible for day to day
operation. Project risks are shared in this situation.
Full service: The city purchases a service from a
"systems contractor" who for a fee per ton finances,
builds, and operates a facility to provide the service in
accordance with a long term contract. Of the three options,
the full service approach places the least risk on the city.
The approach options discussed here provide city officials
with varying degrees of investment and control in a re-
source recovery system. Final choice will depend on
available financing, operational capabilities, and the
amount of risk the city is willing and able to assume, and
the expected cost of each approach.
PRECISE SCHEDULING
The task force must anticipate and allow sufficient time for
each activity. City officials should make themselves aware
of the time required by other communities for various pro-
ject stages, such as preparation of a request for proposals
or negotiation of interlocal agreements.
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IMPLEMENTATION
Once the general resource recovery plan has been
developed and approved, the appropriate services must
be obtained to carry out the plan. Guidelines and tech-
niques for procuring the services of a consulting engineer
or systems contractor, and negotiating a sound contract
are discussed below.
CONSULTING ENGINEER
Should the task force choose the traditional architectural
and engineering approach for acquiring a resource re-
covery facility, it will most likely have to hire a consult-
ing engineer. It must be kept in mind that resource re-
covery is a specialized field that requires close examina-
tion of the applicant's credentials. The engineer should
have experience in solid waste activities and especially
in the proposed technology.
After selection of a designer and contractor, an operating
manual should be developed. This document outlines a
management framework for plant operations and helps
determine who will be responsible for the various activities
during start-up and normal operations.
SYSTEMS CONTRACTORS
If the task force decides to implement a turn-key or full
service approach for acquiring a resource recovery system,
it will probably prepare and issue a. request for proposal
(RFP).
The RFP details technical specifications and management
requirements of the system. This document is the culmina-
tion of the study and analysis performed by the task force.
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General rules to follow for RFP preparation include:
Technology The RFP need not be exact con-
cerning system equipment, but it must be specific
concerning local constraints and the expected
performance of the system.
Organization Nontechnical factors must be
included in an RFP so the bidders understand
what is expected of them and so that the task
force can adequately compare bid packages.
Proposed business arrangements between the
municipality and the contractor must be well
defined in the RFP.
Proposals The actual format and design of the
proposals requested by the task force should be
clearly defined. The exact information desired
should be asked for in such a way that comparison
and evaluation of the different proposals is
simplified.
Qualifications Care must be taken to examine
the financial and technical capabilities of the
bidders. The city should establish minimum
standards of experience and reliability to protect
itself against contracting with a bidder who is
unable to fulfill its obligation.
PROPOSAL EVALUATIONS
The more comprehensive and precise the RFP, the more
comparable the proposals. The more comparable the
proposals, the easier it is to evaluate and select finalists
with whom to negotiate.
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CONTRACT NEGOTIATION
Even if the city issues the best RFP possible, experience
indicates that many important issues will still be unre-
solved. Contract negotiations are required to reach
agreement. Cities should consider negotiating with two
or more companies either sequentially or concurrently
to keep the companies in a competitive situation.
START-UP
Complex systems will require a period of time to get the
plant in working order. Ample time and money must be
budgeted to allow for delays in construction completion
and technical problems during early plant operation.
Caution must be exercised so that commitments for waste
delivery and product sales are not jeopardized by start-up
complications.
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CONCLUSIONS AND REFERENCES
Completion of a resource recovery system is the culmina-
tion of a long and sometimes tedious effort by many
municipal employees and private citizens.
This guide summarizes and highlights this complex venture,
and it is strongly recommended that each issue mentioned
here be thoroughly researched in light of local community
constraints and characteristics.
A more complete and exhaustive analysis has been pre-
pared by the Environmental Protection Agency in the eight
part series entitled Resource Recovery Plant Implementa-
tion: Guides for Municipal Officials upon which this report
is based. This series is suggested reading for all officials
interested in resource recovery and can be obtained from
the Office of Solid Waste Management, United States
Environmental Protection Agency, Washington, D. C.
The parts of the series are:
1. Planning and Overview (SW-157.1)
2. Technologies (SW-157. 2)
3. Markets (SW-157. 3)
4. Financing (SW-157. 4)
5. Procurement (SW-157. 5)
6. Accounting Format (SW-157. 6)
7. Risks and Contracts (SW-157. 7)
8. Further Assistance (SW-157. 8)
SW-567
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