A Cost Comparison Framework
       for Use in Optimizing
Ground Water Pump and Treat Systems
              5
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Office of Solid Waste                           EPA 542-R-07-005
and Emergency Response (5203P)                         May 2007
                                     www.cluin.org
                                 www.epa.gov/superfund
     A Cost Comparison Framework
          for Use in Optimizing
 Ground Water Pump and Treat Systems

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                                        DISCLAIMER
This document provides references to technologies and processes in use by outside parties and other
Federal Agencies. Mention of these technologies and processes does not imply endorsement for specific
purposes.

This fact sheet is not intended to be a detailed instruction manual. In addition, this fact sheet is not a
regulation; therefore, it does not impose legally binding requirements on EPA, States, or the regulated
community, and may not apply to a particular situation based upon the circumstances. The document
offers technical information to EPA,  states and others who manage or regulate long-term ground water
remedies as part of any cleanup program. EPA and State personnel may use other approaches, activities
and considerations, either on their own or at the suggestion of interested parties. Interested parties are
free to raise questions and objections regarding this document and the appropriateness of using these
recommendations in a particular situation, and EPA will consider whether or not the recommendations are
appropriate in that situation. This fact sheet may be revised periodically without public notice.  EPA
welcomes public comments on this document at any time and will consider those comments in any future
revision of this document.

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                                        PREFACE
This fact sheet discusses a framework for comparing costs of remedial alternatives or modifications in
conjunction with the optimization of long-tenn ground water remedies, including pump and treat (P&T)
systems. It is part of a series of fact sheets that the EPA Office of Superfund Remediation and
Technology Innovation (OSRTI) is preparing to assist the ground water remediation community to
effectively and efficiently design and operate long-tenn ground water remedies. This series is available at
www.cliiin.org/optimization and consists of the following fact sheets, plus others that will be available in
the future.

       •      Elements for Effective Management of Operating Pump and Treat Systems
              OSWER 9355.4-27FS-A, EPA 542-R-02-009, December 2002

       •      Cost-Effective Design of Pump and Treat Systems
              OSWER 9283.1-20FS, EPA 542-R-05-008, April 2005

       •      Effective Contracting Approaches for Operating Pump and Treat Systems
              OSWER 9283.1-21FS, EPA 542-R-05-009, April 2005

       •      O&MReport Template for Ground Water Remedies (with Emphasis on Pump and
              Treat Systems)
              OSWER 9283.1-22FS, EPA 542-R-05-010, April 2005

       •      Options for Discharging Treated Water from Pump and Treat
              Systems, EPA 542-R-07-006, May 2007

       •      Optimization Strategies for Long-Term Ground Water Remedies (with Particular
              Emphasis on Pump and Treat Systems), EPA 542-R-07-007, May 2007
The ideas contained in this series of fact sheets are based on professional experience in designing,
operating, and optimizing long-term ground water remedies and on lessons learned from conducting
optimization evaluations called Remediation System Evaluations (RSEs) at sites with P&T systems.
RSEs have been conducted at Superfund-financed sites, Resource Conservation and Recover}' Act
(RCRA) sites, and leaking underground storage tanks sites. Reports from RSEs conducted by EPA are
available at www.cluin.org/optimization.

The content of these fact sheets is relevant to almost any long-tenn ground water remedy, particularly
those that involve P&T.  Therefore, these  documents may serve as resources for managers, contractors, or
regulators of any P&T system, regardless  of the regulatory program.

Access to a wider range of EPA documents is available at www.cluin.org.

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           TABLE OF CONTENTS

A.  INTRODUCTION	
.1
B. COST COMPARISONS AS PART OF THE
OPTIMIZATION PROCESS	1

C. COST COMPARISON FRAMEWORK	3

D. REFERENCES	10


APPENDIX A: ILLUSTRATIVE EXAMPLES
             A. INTRODUCTION
Federal agencies have conducted optimization
evaluations at approximately 100 operating pump
and treat (P&T) systems since 2000 and have
successfully identified hundreds of potential
opportunities for improving effectiveness in
protecting human health, reducing  operating costs,
and speeding progress toward site closure. Each of
these opportunities generally requires additional
consideration from the remedy project manager.
The decision to pursue a potential opportunity for
cost reduction can be particularly challenging
because the decision often involves consideration of
a variety of financial parameters, including capital
costs, life-cycle costs, payback period, and return on
investment.

This fact sheet has been prepared to provide a
framework for conducting cost comparisons to
evaluate whether or not to pursue potential
opportunities from an  optimization evaluation for
improving, replacing,  or supplementing the P&T
system. The target audience for this fact sheet
includes environmental project managers from
Federal and State agencies, environmental program
managers from private organizations, and
environmental  contractors involved in the operation
of long-term ground water remedies, particularly
those that involve pump and treat.  The cost
comparison framework that is discussed in this
document assumes that all of the alternatives being
evaluated provide adequate protectiveness of human
health and the environment. That is, the framework
does not encourage the reader to weigh the value of
potential cost reductions versus the protectiveness of
a remedy.
This document presents the following elements that
pertain to cost comparisons associated with long-
term ground water remedies:

       applicability of cost comparisons as part of
       the optimization process

       a framework for conducting cost
       comparisons

    •   illustrative examples of applying cost
       comparisons for various scenarios (see
       Appendix A)

This document also discusses factors that affect
economic decision making, such as discounting
future costs to net present value, the appropriateness
of pilot studies, and accounting for uncertainty.

The term operation and maintenance (O&M) is used
throughout this document to describe the activities
involved in operating and maintaining a P&T
system. For the purpose of this document, "O&M"
does not refer to any specific period of time or
regulatory status associated with the remedy.  For
example, the Superfund program generally refers to
the first 10 years of a Fund-lead ground water
restoration as Long-term Response Action (LTRA),
and the subsequent period as "O&M"'. However, in
this document both of those time periods are
considered to be types of O&M.
           B. COST COMPARISONS AS PART OF THE
                    OPTIMIZATION PROCESS
          P&T systems are generally long-term remedies that
          can last several decades. Over the course of the
          remedy, site conditions and/or regulations may
          change, the site conceptual model may be refined,
          knowledge and science may improve, and new
          technologies may emerge.  Optimization evaluations
          consider these factors in an attempt to identify
          opportunities to improve the remedy.  When a
          recommendation from an optimization evaluation
          pertains to improving the protection of human health
          and the environment, it is typically a straightforward
          decision to implement the recommendation.
          However, when a recommendation from an
          optimization evaluation pertains to reducing cost or
          speeding site closure, mere is generally a tradeoff
          between the capital costs of implementing the

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recommendation and the resulting reduction in
annual costs and/or remedy duration.  The cost
comparison evaluates those tradeoffs to provide a
basis for determining the best alternative.

The following scenarios for three hypothetical sites
illustrate situations where a cost comparison is
applicable.

   Hypothetical Site #1.  An optimization
   evaluation suggests that a P&T system could
   have lower annual costs if the
   ultraviolet/oxidation (UV/OX) system used to
   treat organic compounds in the  extracted ground
   water is replaced by an air stripper with granular
   activated carbon for off-gas treatment.
   However, this modification will require a capital
   cost to implement.  The remediation timeframe
   will not be impacted.  How does the project
   manager determine whether or not it is cost-
   effective to make the change?

   Hypothetical Site #2.  A P&T system currently
   provides hydraulic containment of the leading
   edge of a contaminant plume and  is considered
   to be protective of human health and the
   environment.  However, because the P&T
   system will not effectively remediate the source
   area, P&T will likely continue indefinitely.  An
   optimization evaluation suggests two feasible
   supplemental technologies to the current P&T
   system:  1) adding ground water extraction wells
   in the  source area to hydraulically contain the
   source and increase the potential for ground
   water restoration downgradient of the source
   area; or 2) implementing an in-situ technology in
   the source area, which may successfully
   remediate the continuing source of ground water
   contamination, but at a high capital cost and
   with significant uncertainty regarding likelihood
   of success. How does the site manager address
   the trade off between the capital and additional
   annual costs of adding an extraction well with
   the high capital costs of an in-situ remedy for the
   source area?

   Hypothetical Site #3.  An optimization
   evaluation suggests that aggressive source
   removal be considered in an effort to discontinue
   P&T in favor of monitored natural attenuation
   (MNA).   Site characterization efforts indicate
   that an MNA remedy will be appropriate, based
   on hydrogeological and geochemical data, if the
   source area is successfully remediated. The
   aggressive source removal requires significant
    capital costs, but long-term O&M costs will be
    substantially reduced (O&M costs associated
    with MNA will continue to be incurred until
    cleanup standards are met). Additionally, the
    optimization evaluation suggested potential
    opportunities to make the operating P&T system
    more cost effective.  The owner is planning to
    divest the property in the next few years, and the
    divestiture will be easier without an operating
    remedy.  Does the site owner optimize the P&T
    system and reject aggressive source removal, or
    does the owner conduct the aggressive source
    removal and discontinue the P&T system?
    Alternatively, does the site manager continue
    operating the remedy as is?

The decision  of whether or not to implement a
recommendation, particularly a recommendation
pertaining to  cost-reduction or speeding site closure,
can be difficult to make. Indecision can result in
substantial delays in realizing the benefits of
optimization, and hasty decisions can result in
unnecessary expenditures. Assuming all  of the
alternatives provide adequate protection of human
health and the environment, a cost comparison can
be used as a tool to help  project teams determine
which alternative is most appropriate to implement,
or if any more information (e.g., a pilot test) is
needed before making a  final decision or before full-
scale implementation.

A cost comparison does  not replace feasibility
studies and data collection that would be  used to
determine if an alternative is protective of human
health and the environment or meets other
parameters of an organization.  For example, Exhibit
1 provides the nine criteria for selecting a remedy at
a Superfund site. These  factors would also apply to
implementing significant changes at a Superfund
site, and cost is only one of these nine criteria.

Exhibit  2 illustrates the optimization process, and
indicates at what stages a cost comparison is
appropriate. Note that a cost comparison  is generally
conducted before a project team decides to conduct a
pilot test.  Although a pilot test may provide helpful
information for estimating the costs of full-scale
implementation,  it is generally preferable to know
whether or not full-scale implementation will likely
be cost-effective based on the range of possible costs
estimated prior to performing a pilot test.

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                   Exhibit 1
   The Nine Criteria for Remedial Alternatives
            Evaluation in Superfund

     overall protection of human health and the
     environment

     compliance with applicable or relevant and
     appropriate requirements

     long-term effectiveness and performance

     reduction of toxicity, mobility, or volume through
     treatment

     short-term effectiveness

     implementability

     cost

     state agency acceptance

     community acceptance
   C. COST COMPARISON FRAMEWORK
Tliis section presents a framework for conducting a
cost comparison for supplementing, improving, or
otherwise modifying an operating P&T system with
the intent of reducing cost. The framework
considers various financial parameters,  including
upfront costs, life-cycle costs expressed in net
present value, payback periods, and annual
percentage return. The framework allows for
comparison of the existing P&T system to an
optimized form of that P&T system or to other
appropriate remedial alternatives.

The five steps are listed below and are discussed in
more detail in the remainder of this document.  In
addition, Appendix A of this document  presents
three illustrative examples that demonstrate use of
the framework.

Step 1: Gather Background Information

    la. Existing P&T System - Organize routine
       annual O&M costs and non-routine costs
       associated with continuing to operate the
       current  P&T system or a modified version of
       the P&T system that incorporates changes
       needed  for the remedy to be protective.
    Ib. Optimized P&T System - Consider potential
       improvements to the P&T system
       effectiveness and efficiency (e.g.,
       recommendations from an optimization
       evaluation) and estimate the capital costs for
       implementing the recommendations, the
       routine annual O&M costs, and the non-
       routine costs associated with operating the
       optimized system.

    Ic. New Remedial Approach -Estimate the
       value of the costs for a full-scale application
       of a new approach and/or alternate
       technology under consideration (either in
       place of P&T or in addition to P&T),
       including implementation, routine annual
       O&M, and non-routine costs.

Step 2: Estimate Life-Cycle Costs

    2a. Use the information from Step 1 to document
       costs for each year of operation for the
       existing system, optimized system, and new
       remedial approach.

    2b. Apply an appropriate discount rate to the
       yearly and life-cycle costs for the existing
       system,  optimized system, and alternative
       remedial approach to obtain their net present
       value (NPV).

Step 3: Compare Costs of Each Option

    Compare various financial parameters for each
    option, including upfront capital costs, life-cycle
    costs, payback period, and annual percentage
    return.

Step 4: Determine the Need for Additional
Information

    Identify7 information that, if available, could
    significantly change the outcome of the analysis,
    and then estimate the costs of obtaining this
    information.

Step 5: Make and Document Decisions

    Document any decisions about which alternative
    to implement, and the rationale for those
    decisions, based on the results of Steps 1
    through 4 as well as any other information that
    was not otherwise quantified as part of the cost
    comparison.

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                                                 Exhibit 2
                      The Optimization Process and the Role of the Cost Comparison
                                         Optimization
                                       Recommendation
                                      Feasibility study of
                                      recommendation and
                                  determination of protectiveness
      Would
   implementation
meet other criteria (e.g..
 protection of human
    health and the
    environment)?
                                        Yes
                                                               No
                                                                      Reject recommendation
                                                                     and/or consider alternative
                                                                        recommendations
                                       Cost Comparison
                 Consider Financial and Non-Financial Parameters and Make a Decision
                       •    implement the recommendation
                       •    implement an alternative to the recommendation
                       •    conduct a pilot test to refine cost and performance estimates
                       •    do not implement recommendation
Possible decisions that the cost comparison helps to
make include the following:

    •    continue with the existing P&T system

        continue with a modified P&T system where
        optimization recommendations are
        implemented to lower costs and/or reduce
        system duration

    •    implement one or more alternate
        technologies in addition to the existing (or
        improved) P&T system

        implement an alternate technology in place
        of P&T
                           conduct one or more pilot tests regarding
                           modifications to the current P&T system
                           and/or potential new technologies, to refine
                           the results of the cost comparison prior to
                           making a final decision

                    Considering Uncertainty

                    The evaluation of future costs for a remedial option
                    is subject to many types of uncertainty. Some of
                    these uncertainties are presented in Exhibit 3.
                    Identifying the uncertainties may be straightforward,
                    but factoring them into a cost-comparison is
                    relatively complex.

                    In the absence of significant uncertainty or for a
                    relatively simple cost comparison that does not

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consider uncertainty, values for costs are estimated
for the "most-likely scenario"' of each alternative,
and the financial parameters from Step 4 for these
"most-likely scenarios" are then compared for each
alternative. To perform a more robust evaluation
that accounts for some of the uncertainties, costs can
be assigned for an "optimistic" scenario and a
"reasonable worst case" scenario. The likelihood
that each scenario will occur would also be
specified.

When comparing the various remedial approaches
that have inherent uncertainty, the "optimistic"
scenarios can be compared with each other, "most-
likely" scenarios can be compared with each omer,
              and "reasonable worst case" scenarios can be
              compared with each other.  In addition, expected
              values of specific financial parameters can be
              compared with each other.  The expected value of a
              specific financial parameter is achieved by
              weighting the parameter value for each potential
              scenario/outcome based on its likelihood of
              occurring. The illustrative examples in Appendix A
              use this more robust evaluation that involves
              developing "optimistic", "most-likely", and worst-
              case scenarios". Notes are provided to indicate the
              assumptions associated with the optimistic and
              reasonable worst-case scenarios.
                                                  Exhibit 3
                 Typical Uncertainties Associated with Common Ground Water Remedies
         Remedial Technology
                    Typical Uncertainties
 Pump and Treat
mass removal rate and loading to treatment system over time
area of influence and capture provided by extraction wells
 In-situ chemical oxidation
radius of influence of injection points
amount of oxidant lost to dispersion or naturally occurring organic matter
ability to access targeted contaminant mass
unexpected consequences of changing the aquifer's oxidative state (e.g.,
fouling existing monitoring or extraction wells)
number of applications/injections
ability to reach Maximum Contaminant Levels (MCLs) or target
contaminant concentration
 Enhanced in-situ bioremediation
radius of influence of injection points
amount of chemicals required to achieve targeted rate of biodegradation
number of applications/injections
ability to provide complete degradation of site contaminants and reach
MCLs or target contaminant concentration
potential to foul existing P&T system (if present)
release of arsenic or other naturally occurring contaminants due to a
change in the aquifer's oxidative state
generation of daughter products with greater toxiciry
 Air sparging and soil vapor extraction
radius of influence of sparge points and vapor extraction wells
influence of site stratigraphy on sparge zone
relative role of volatilization in mass removal versus contaminant
degradation through addition of oxidation
potential to foul existing P&T system (if present)
ability to address all targeted contamination
potential channeling or short-circuiting of sparged air
influent  concentrations to SVE system over time
 General
remedy duration
changes in regulatory environment
changes in site conditions
changes in available and practical remedial technologies
changes in discount rate (including effects of inflation)
potential failures in protectiveness and costs for appropriate redundancy

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Step 1: Gather Background Information

Step la: Organize Cost Information for Current P&T
System

The costs of an operating P&T system include
routine annual O&M costs as well as non-routine
costs that may be expected over the life-time of the
remedy.  Annual O&M costs include those routine
costs that are expected each year to keep the system
operating consistently and effectively. Non-routine
costs might include replacement of equipment or
additional investigations/evaluations.  For example,
if a P&T system  is expected to operate for a number
of decades, it may be appropriate to include the cost
of replacing major system components at some
point, perhaps every 20 years.  Exhibit 4 provides a
list of cost categories that typically contribute to
annual O&M and non-routine costs.

During this step it is also helpful to estimate how
long the P&T system will continue to operate.
There is typically significant uncertainty associated
with this parameter, and it may be appropriate to
consider optimistic, most-likely, and reasonable
worst-case scenarios.

The illustrative examples in Appendix A include
examples of documenting costs and estimated
remedy duration associated with an existing P&T
system.  Basic assumptions associated with the costs
are included in a "Notes" section.  In the examples.
the costs for future years are discounted to net
present value as part of Step 2. and this discounting
process accounts for inflation.  Costs in Step 1.
therefore, do  not include inflation, but do include
cost increases for other reasons.

Step Ib: Estimate Costs for Implementing Efficiency
Improvements to the Existing System and Operating
the Improved System

If the efficiency of an existing P&T system can be
improved as a result of optimization
recommendations,  it is helpful to consider the
expected costs of the modified system in the cost
comparison.  This is particularly true when an
alternative technology to P&T is also being
considered (i.e.. Step Ic), so that the alternative
technology is not just evaluated against the current
P&T system, but is also evaluated against a
potentially optimized P&T system.

For example, if an  optimization evaluation suggests
that a component of the treatment system can easily
                    Exhibit 4
    Typical Cost Categories that Contribute to
              Costs for P&T System

  Routine Annual O&M Costs

      labor
      o  project management, reporting, and technical
         support
      o  system operation
      o  ground water sampling

      utilities (electric, gas, phone, sewer, etc.)

      consumables (granular activated carbon,
      chemicals, etc.)

      discharge and/or disposal costs

      laboratory analysis

      other (parts, routine maintenance, etc.)

  Non-Routine  Costs

      additional evaluations or investigations

      non-routine maintenance, including major system
      component replacement

      other (non-routine community relations, upgrades
      to site security, etc.)
be removed from the treatment process to reduce
materials usage or the ground water sampling can be
reduced without sacrificing protectiveness, the cost
comparison would be more valid if the annual cost
savings associated with these changes were
documented and included. If it is determined that
the operating system needs modifications to be
protective of human health and the environment, the
costs of making these modifications should be
included in Step la rather than  Step Ib because the
cost comparison is designed for comparing remedial
alternatives that are protective.

For systems where optimization recommendations
are going to be implemented, the costs for the "early
years" will typically include the costs of continuing
to operate the existing P&T system, plus the costs
associated with planning and implementing the
optimization changes.  The costs for later years (i.e.,
after system modifications are implemented) would
include the costs for operating the optimized P&T
system. For this background step, it is important to

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estimate how many years the existing system will
operate before modifications are implemented.

Optimization evaluations typically include rough
estimates for capital costs and changes in annual
costs for each of the recommendations. Although
these estimates are a good starting point, the site
team may choose to obtain more refined estimates
prior to completing the cost comparison.  This might
include a feasibility analysis, gathering additional
field information, or performing preliminary design
activities associated with implementing optimization
alternatives.

The illustrative examples in Appendix A include
examples of documenting costs associated with
optimizing a P&T system.  As is the case with the
existing P&T system, basic assumptions are
documented in a "Notes" section of each example
and die costs do not account for inflation  (inflation is
considered in Step 2).

Step Ic: Estimate  Costs for Implementing and
Operating a New Remedial Approach

A new approach may include an alternate remedial
technology that augments the P&T system or that
replaces the P&T system. Accounting for the costs
for a new remedial approach is similar to  accounting
for costs of an optimized P&T system in that there is
continued operation of the existing P&T system
while the new approach is planned and implemented.

With a new remedial approach, there may be
uncertainty as to the performance of the technology
without conducting a pilot test. It is generally
helpful to use best estimates of performance for this
step of the process and to address the uncertainty by
developing "optimistic", "most-likely", and
"reasonable worst-case" scenarios. A pilot test can
be considered in Steps 4 and 5, and the decision to
move forward with a pilot test may be the result of
the cost comparison.

The illustrative examples in Appendix A address this
step in similar manner to Steps la and Ib.

Step 2: Estimate Life-Cycle Costs

Step 2a: Document Costs for Each Year of
Operation

Due to changes in O&M costs over time or non-
routine costs, the cost for one year of operation may
be different from other years.  It is therefore helpful
to document the estimated costs for each year of
operation for each remedial approach that is being
evaluated. For some operational years, this cost may
be limited to the O&M cost. For other operational
years, it may be the O&M cost plus the cost for
remedy modifications or an additional evaluation.
Documenting the costs for each year also
incorporates remedy duration. A remedy with a
longer operational life will have more years with
"non-zero" costs relative to a remedy with a shorter
operational life. By summing the costs from all
operational years, the life-cycle cost can be
calculated (without discounting).  The illustrative
examples in Appendix A show documented costs by
year for various remedial options.  For optimized
systems or new remedial approaches, the costs  for
the "early years" include the costs of continuing to
operate the existing P&T system for some time
period, plus the costs associated with planning and
implementing the optimization changes.

Step 2b: Calculate Life-Cycle  Costs in Net Present
Value

It is conventional for most organizations, including
the Federal government [U.S.  OMB, 1992], to
compare expected costs of various competing
approaches in net present value. This is because the
value of money changes overtime due to
investments and inflation. In general, it is expected
that investment returns will exceed inflation so that
money spent today has a greater present value than
money spent in the future. Exhibit 5 further
discusses the discounting of future values to net
present value and provides information regarding an
appropriate discount rate. Each of the examples in
Appendix A calculates the discount factor for each
year, discounts the price for each year of operation,
and calculates the life-cycle costs in net present
value.

Step 3: Compare Costs of Various Remedial
Options

Completing the above-mentioned steps should
provide enough information to compare the costs of
continuing to operate an existing P&T system,
optimizing an existing P&T system, or proceeding
with a  new remedial technology under consideration.
It is often helpful to compare various parameters,
including upfront costs, life-cycle costs, payback
period, and annual return on investment. In
addition, when using optimistic, most-likely, and
reasonable worst-case scenarios to account for

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                  Exhibit 5
      Discounting Future Cash Flows to
              Net Present Value

The present value for a cash flow in a future year is
calculated by applying an appropriate discount rate
to that cash flow according to the following equation.
               PV =
                       FV
= CxFV
where

PV is me present value
FV is the value in year "n" (i.e., future value)
i is the discount rate
C is the discount factor, which equals !/(!+/)"

If there are cashflows in multiple years, the cashflow
from each year is discounted to the present value.
Cash flows that are far in the future have a lower
present value than similar cash flows in earlier years.
A higher discount rate will result in a lower present
value.

The discount rate varies from organization to
organization and is typically linked to the risk-free
interest rate that organization pays or receives over
time. Each year, the U.S. Office of Management and
Budget (OMB) forecasts discount rates to be used for
discounting cash flows for Federal government
projects. The forecasts (called the "Real Discount
Rates") account for inflation and are provided in
Appendix C to Circular A-94: Guidelines and
Discount Rates for Benefit-Cost Analysis of Federal
Programs [U.S. OMB, 1992]. The rates differ
depending on the project duration. The rates for 1995,
2000, and 2005 are listed below for reference.
Year
1995
2000
2005
Project Duration
5-Year
4.5%
3.9%
2.0%
7-Year
4.6%
4.0%
2.3%
10-Year
4.8%
4.0%
2.5%
30-Year
4.9%
4.2%
3.1%
OMB suggests using linear interpolation for
determining appropriate discount rates for projects
with intermediate durations. For projects with
durations of greater than 30 years, OMB suggests
using the 30-year discount rate.

Private organizations will typically have a larger
discount rate than that used by the Federal
government by 1% to 2%.
uncertainty, it is often helpful to consider a weighted
average of the costs for those scenarios called the
expected value. Exhibit 6 discusses several
financial parameters that might be compared.
including the expected value.

A comparison of these parameters can help decision
makers determine an appropriate allocation of funds.
Some organizations may choose an option with
lower upfront costs even if the life-cycle costs are
higher because there are competing uses for the
upfront funding. On the other hand, some
organizations may choose an option that includes
higher upfront costs in an attempt to reduce the
remedy duration and/or life-cycle costs. Comparing
these financial parameters, as shown in Appendix A.
provides financial decision makers with appropriate
information on the various remedial options.

Step 4: Determine the Need for Additional
Information

Performing  Steps 1 to 3 may help identify
uncertainties that may be addressed with additional
investigation and/or data collection.  It is often
preferable to target information gathering to those
parameters that most greatly influence the potential
cost of one or more of the remedial approaches
under consideration. It is also often preferable to
determine the cost of gathering additional
information, particularly if that information
gathering includes field work and/or pilot testing.

In some cases, information gathering may involve
pilot testing of one or more technologies or
approaches. However, a pilot test is generally only
appropriate  if the site team has established that there
is a potential outcome of the pilot test that could lead
to that alternative ultimately being implemented on a
full scale basis (presumably based on the results of
Step 3).  If a full-scale  remedial approach is too
expensive for a site team to consider implementing.
based on the results of Step 3, then it is generally a
poor financial decision to move ahead with piloting
that remedial approach.

If the information gathering involves additional field
work, the site team may want to consider the
likelihood of getting reliable information.  After all,
the  field  work would be conducted with the purpose
of reducing  uncertainty, and if the field results will
not be of sufficient quality to reduce the uncertainty,
then there is generally little merit in moving forward
with that specific field work.

-------
                                                 Exhibit 6
                         Financial Parameters Considered When Comparing Costs
 Net present value of life-cycle costs - Comparing this parameter for two different scenarios helps determine which
 scenario will likely be most cost-effective over its operational life.  This parameter includes annual and capital costs, short-
 term and long-term costs, inflation, and the time value of money. It does not consider uncertainly unless multiple life-cycle
 costs are developed for a remedial approach using different scenarios.

 Upfront costs - This parameter represents the costs incurred over the short-term.  In some cases, the upfront costs may be
 those incurred over the first year. In other cases, the upfront costs may be incurred over several years. The upfront costs
 typically represent the capital being invested in making a particular remedial approach. Upfront costs might include
 continued operation of an existing P&T system in addition to the costs for designing and implementing an alternative
 remedial approach. An organization may use this parameter to determine if the necessary funds are available for
 implementing a particular remedial approach.

 Payback - This parameter measures the amount of time  it takes for the upfront costs of implementing a change to be paid
 back by the savings resulting from the implementation. Organizations typically favor shorter paybacks over longer
 paybacks, with some organizations expecting payback to occur in two to three years.

 Average annual percentage return (AAPR) - This parameter helps an organization determine the financial return for an
 approach so that it can compare that return with other investments it may be considering elsewhere within its organization.
 For the purpose of this document, the average annual percentage return is calculated between the time of the investment and
 the end of year 10 of the cost comparison.  It can be calculated with the following equation.
                               AAPR =
net savings at year 10] penod of ^
   invested capital    J
 Invested capital refers to the capital costs of making system modifications or implementing a new remedial approach. The
 period of investment would be the number of years from the initial investment to the end of Year 10. For example, if the
 investment was made in Year 1, the investment period would be 10 years (e.g., Years 1 through 10).  If the investment was
 made in Year 3, the investment period would be 8 years (e.g., Years 3 through 10).

 Expected value (EV) - This is a method of accounting for uncertainty in the above parameters by considering the various
 outcomes (e.g., optimistic, most-likely, and reasonable worst-case) for a remedial approach and the likelihood of each
 outcome. It is calculated as the average parameter value for the various scenarios, with each scenario weighted by its
 likelihood of occurring.
Step 5: Document Decisions and Rationale,
Including Pertinent Considerations Not Othenvise
Quantified

The last step of this process is to document the
decision that results from the financial comparisons
and other considerations. As discussed earlier,
possible decisions from the cost comparison include
the following:

    •    continue with the existing P&T system

    •    continue with a modified P&T system where
        optimization  recommendations are
        implemented to lower costs and/or reduce
        system duration
                    •   implement one or more alternate
                        technologies in addition to the existing (or
                        improved) P&T system

                    •   implement an  alternate technology in place
                        of P&T

                    •   conduct one or more pilot tests regarding
                        modifications  to the current P&T system
                        and/or potential new technologies, to refine
                        the results of the cost comparison prior to
                        making a final decision

                The alternative selected may not always have the
                lowest life-cycle  cost.  In some cases, a particular

-------
remedial approach may have the lowest life-cycle
costs relative to other approaches under
consideration, but the capital costs may be too high
for an organization to consider. Similarly, a new
remedial approach may substantially reduce costs
relative to the existing remedial approach, but an
organization may choose to use the capital for other
improvements or investments that are more central
to their organization's mission. Different
organizations also have different decision points
regarding a worthwhile investment. For these
reasons, this fact sheet does not attempt to tell
project teams what decisions to make.  Rather, this
fact sheet has been made available to provide a
framework for conducting these types of
evaluations.

Finally, a project team is reminded that cost is only-
one of the factors that go into making a decision
about a remedial approach. Protection  of human
health and the environment, regulatory  acceptance,
and community acceptance are just a few of the
other factors that may significantly influence the
decision making process. Although it may not be
practical to quantify some of these factors, it is
helpful to document their role  selecting an option or
making a decision.
       conclusions that can be drawn from the cost
       comparison

       tables and notes that correspond with the
       five steps outlined in this document

Hypothetical sites and conditions are used.
Approximate costs are provided for the purposes of
the example. Although the costs are reasonable
based on 2007 dollars, they are estimates for
illustrative purposes only, and do not reflect rigorous
pricing through vendors. The site conditions are
typical of what may be found at a particular site, but
the description is simplified so that the factors
involved in the cost comparison can be effectively
and clearly illustrated.
               D. REFERENCES
U.S. Office of Management and Budget (OMB)
Circular A-94, Guidelines and Discount Rates for
Benefit-Cost Analysis of Federal Programs, October,
29,1992
                 APPENDIX A
         ILLUSTRATIVE EXAMPLES
Three examples are provided to illustrate application
of the cost comparison framework for various
scenarios associated with a P&T remedy. Each
example consists of the following:

    •    brief background for the hypothetical site

    •    a description of the various remedial
        measures that are being compared

    •    a description of the cost-comparison
        concepts illustrated by the example
                                                    10

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                          Cost Comparison Framework
                             Illustrative Example #1
Brief Site Description
The site is an active manufacturing facility with a TCE plume migrating off property.
The plume is approximately 500 feet wide and 1,500 feet long and the highest ground
water concentration is approximately 4,000 ug/L. A P&T system currently operates with
two areas of ground water extraction, one to control the source area and the other to
capture the downgradient plume.  Biological degradation has been observed, and
monitored natural attenuation (MNA) is the selected remedy for the dilute portion of the
plume that has migrated beyond the downgradient extraction system.  The water table
aquifer is relatively permeable with a saturated thickness of over 50 feet. The Remedial
Investigation and subsequent monitoring suggest that DNAPL is not present.  The ground
water extraction rate is 80 gpm, and the influent concentration is approximately 500 ug/L.
TCE concentrations in ground water and treatment plant influent have decreased during
P&T operation, but concentrations are asymptotically approaching a value that is above
the cleanup standard. In addition to treating the TCE, the P&T system also needs to
remove iron and manganese to meet standards for discharging to surface water.

Although the P&T system operates effectively to control contaminant migration, it is
relatively expensive to operate due to the metals removal. The project team is interested
in evaluating alternative discharge locations because O&M costs could be substantially
reduced if discharge standards would not require treatment for iron and manganese. The
site team is also considering other remedial alternatives that do not involve extraction,
treatment, and  discharge of water.

The tables on the following pages document the project team's cost comparison.
Remedial Considerations for Cost Comparison

The site team is considering the following options:

   •   Continued operation of the current P&T system

       Continued operation of the current P&T system with reinjection of treated water
       instead of discharging to surface water

   •   Full-scale implementation of an enhanced bioremediation system
                                    Appendix A

-------
Concepts Illustrated

   •   The annual costs for O&M of the existing P&T system ($305,000 per year) are
       relatively well understood because the cost projections are based on three years of
       past invoices that demonstrate consistent costs from year to year.
       [Step la, Table 1]

   •   The ground water monitoring program was recently optimized. The changes have
       not been implemented yet, but the site team has a good understanding of what the
       cost reductions will be.  The reduced costs associated with the optimized program
       ($30,000 per year) are more representative of future O&M costs, so these reduced
       O&M costs are used in this cost comparison.  [Step la, Table 1]

   •   The annual costs for O&M of an optimized P&T system (using a different
       discharge option) will be lower, but there is some uncertainty as to what those
       O&M costs will be.  As such, a range of costs is used for optimistic ($173,000 per
       year), most-likely ($197,000 per year), and reasonable worst-case scenarios
       ($216,000 per year).  [Step Ib, Table 3]

   •   Future non-routine costs, such as replacement of major system components, are
       included in year 20 for both the current P&T system and the optimized P&T
       system, but the non-routine costs for the optimized system are lower because the
       system is simpler than the existing system.  [Step la, Table 3; Step Ib, Table 5;
       Step 2a]

   •   The analysis is conducted assuming that enhanced bioremediation will work.
       Generic  assumptions are used for determining the number of injection wells
       required in the optimistic, most-likely, and reasonable worst-case scenarios. If the
       analysis demonstrates that the new remedial approach is worth while, the site
       team can choose  to conduct a pilot test to determine if the technology will work
       and an appropriate number of injection wells.
Conclusions

The cost comparison shows that either new option (optimizing the system or replacing
the system with an enhanced bioremediation remedy) will prove more cost effective than
continued operation of the current system.  The life-cycle costs for both of these new
options are lower than the life-cycle costs for the existing system. In addition, the
upfront/short-term costs are very similar to that for the existing system and the payback
period for either investment is reasonable.  There is a wide range in the potential costs
associated with the new remedial approach, but the reasonable worst-case scenario for the
new remedial approach is similar financially to the optimistic scenario for the optimized
P&T system. Given the potential benefits of this new remedial approach and this wide
range in potential costs, it is likely appropriate to conduct a pilot test to determine the
effectiveness of the approach and to refine the costs of implementation.  The pilot test
                                    Appendix A

-------
would likely provide valuable information about the number of injection points, which
impacts both the capital costs and the long-term O&M costs associated with injections.
                                    Appendix A

-------
Step 1a: Background Cost Information - Existing P&T System
1. Annual O&M Costs
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario








$
Most-Likely
Scenario
$ 50,000
$ 150,000
$ 30,000
$ 30,000
$ 15,000
$ 7,500
$ 15,000
$ 7,500
$ 305,000
Reasonable Worst-
Case Scenario








$
Notes:
  - O&M costs were obtained from reviewing past three years of invoices.
  - The actual O&M costs are approximately $340,000 per year; however, the groundwater monitoring program was recently
  optimized, and the site team forecasts a decrease of $35,000 per year due to this optimization (a $20,000 per year reduction
  in groundwater sampling, a $10,000 per year reduction in reporting costs, and a $5,000 per year reduction in analytical costs).
  The forecasted costs are reported above because they are the best representation for future O&M costs.
2. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System
Optimistic Scenario
20 years
Most-Likely Scenario
30 years
Reasonable Worst-
Case Scenario
40 years
Notes:
3. Non-Routine Costs
Cost Category
Additional evaluation
system closure evaluation
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
replace/repair treatment components
- Item 2
- Item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost

$ 30,000










Year(s)
Incurred

20










Most Likely Scenario
Cost

$ 40,000



$200,000






Year(s)
Incurred

30



20






Reasonable Worst-
Case Scenario
Cost

$ 50,000



$300,000






Year(s)
Incurred

40



20






Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..."to refer to five-year intervals from the present.)
  - A system closure evaluation will likely be conducted to demonstrate that active remediation can be discontinued.
  - Replacement of major system components will likely be needed in year 20.  For the optimistic scenario, P&T operation will
  be discontinued before the replacement is needed.
                                                Appendix A

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Step 1b: Background Cost Information - Optimized P&T System

1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
1 year
Most-Likely Scenario
2 years
Reasonable Worst-
Case Scenario
2 years
2. Implementing/Planning Costs
Cost Category
Data analysis / Feasibility study
Remedy design, work plans, etc.
Permitting
Installation / Oversight
Other (three injection wells, lump sum)
List 1
List 2
Lists

Total
Optimistic Scenario
Cost
$ 20,000



$100,000




$ 120,000
Year(s)
Incurred
1



1





Most-Likely Scenario
Cost
$ 20,000



$125,000




$ 145,000
Year(s)
Incurred
1



2





Reasonable Worst-
Case Scenario
Cost
$ 20,000



$150,000




$ 170,000
Year(s)
Incurred
1



2





- Notes
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to
  two years from present and use "5, 10, ..."to refer to five-year intervals from the present.)
  - Analysis needed to determine the best location for injection wells such that injection will not adversely affect plume
  capture offered by the extraction system.
3. Annual O&M Costs of Optimized Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario
$ 50,000
$ 50,000
$ 30,000
$ 20,000
$ 3,000
$ 1,000
$ 15,000
$ 4,000
$ 173,000
Most-Likely
Scenario
$ 60,000
$ 60,000
$ 30,000
$ 20,000
$ 3,000
$ 1,000
$ 15,000
$ 8,000
$ 197,000
Reasonable Worst-
Case Scenario
$ 65,000
$ 70,000
$ 30,000
$ 20,000
$ 3,000
$ 1,000
$ 15,000
$ 12,000
$ 216,000
Notes:

- As with the costs for the "existing system", the costs above include the costs for the optimized groundwater monitoring program,
which are lower than the current costs but are more representative of the future costs to be incurred.
                                               Appendix A

-------
Step 1b: Background Cost
4. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System
Optimistic Scenario
20 years
Most-Likely Scenario
30 years
Reasonable Worst-
Case Scenario
40 years
Notes:
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
site closure evaluation
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
replace/repair treatment components
- Item 2
- Item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost

$ 30,000










Year(s)
Incurred

20










Most Likely Scenario
Cost

$ 40,000



$ 100,000






Year(s)
Incurred

30



20






Reasonable Worst-
Case Scenario
Cost

$ 50,000



$ 200,000






Year(s)
Incurred

40



20






Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to
  two years from present and use "5, 10, ..."to refer to five-year intervals from the present.)
  - A system closure evaluation will likely be conducted to demonstrate that active remediation can be discontinued.
  - Replacement of major system components will likely be needed in year 20. For the optimistic scenario, P&T operation will be
  discontinued before the replacement is needed. The costs of system replacement for this scenario are lower because the metals
  removal system will not have been used and will not require replacement.
                                                  Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach

1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of
Current P&T System During Planning
Optimistic Scenario
1 year
Most-Likely Scenario
2 years
Reasonable Worst-
Case Scenario
2 years
2. Implementing/Planning Costs
Cost Category
Conceptual design
Additional research and investigation
Pilot testing
Remedy design, work plan, etc.
Permitting
Installation and oversight
Documentation
Other (all of the above, lump sum)

Total
Optimistic Scenario
Cost
$ 5,000

$ 75,000
$ 30,000
$ 5,000
$ 150,000
$ 15,000


$ 280,000
Year(s)
Incurred
1

1
1
1
2
2



MostLikely Scenario
Cost
$ 5,000

$ 100,000
$ 30,000
$ 5,000
$ 250,000
$ 15,000


$ 405,000
Year(s)
Incurred
1

1
1
1
3
3



Reasonable Worst-
Case Scenario
Cost
$ 5,000

$ 125,000
$ 30,000
$ 5,000
$ 500,000
$ 15,000


$ 680,000
Year(s)
Incurred
1

1
1
1
3
3



Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer
  to two years from present and use "5, 10, ..." to refer to five-year intervals from the present.)
3. Annual O&M Costs of New Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAG, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario
$ 30,000
$ 15,000
$ 50,000
$
$ 7,000
$ 1,000
$ 10,000
$ 1,000
$ 114,000
Most-Likely
Scenario
$ 30,000
$ 25,000
$ 50,000
$
$ 12,000
$ 1,000
$ 10,000
$ 1,000
$ 129,000
Reasonable Worst-
Case Scenario
$ 30,000
$ 50,000
$ 50,000
$
$ 25,000
$ 1,000
$ 10,000
$ 1,000
$ 167,000
Notes:
  - The primary cost for implementation is installing new injection wells for nutrient addition. The optimistic, most-likely, and
  reasonable worst-case scenarios respectively assume 15, 25, and 50 injection wells will be needed for adequate nutrient
  distribution.  Pilot testing could refine this estimate.
  - The labor and consumables use depends on the number of injection wells.
                                                Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach (continued)

4. Estimated Operational Life

Years of Continued O&M Costs of
Current P&T System
Optimistic Scenario
10 years
Most Likely Scenario
15 years
Reasonable Worst-
Case Scenario
20 years
Notes:
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
system closure evaluation
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
additional injection points
- item 2
- item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost

$ 30,000










Year(s)
Incurred

10










Most Likely Scenario
Cost

$ 40,000










Year(s)
Incurred

15










Reasonable Worst-
Case Scenario
Cost

$ 50,000



$50,000






Year(s)
Incurred

20



5






Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer
  to two years from present and use "5, 10,  ..."to refer to five-year intervals from the present.)
  - A system closure evaluation will likely be conducted to demonstrate that active remediation can be discontinued.
  - The reasonable worst-case scenario assumes that additional injection points might be required in year 5.  The cost for
  conducting injections in these additional wells are reflected in the average annual O&M costs reported above.
                                                 Appendix A

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Step 2a: Life-Cycle Costs

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Existing P&T System
Optimistic
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 335,000
$
$
$
$
$
$
$
$
$
$
$ 6,130,000
Most-Likely
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 505,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 345,000
$ 9,390,000
Reasonable
Worst-Case
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 605,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 305,000
$ 2,943,485
$ 12,088,485
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Optimistic
$ 325,000
$ 273,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 173,000
$ 203,000
$
$
$
$
$
$
$
$
$
$ 3,915,000
Most-Likely
$ 325,000
$ 322,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 297,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 197,000
$ 426,874
$ 6,492,874
Reasonable
Worst-Case
$ 325,000
$ 366,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 416,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$ 216,000
$2,203,592
$ 8,926,592
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Optimistic
$ 420,000
$ 279,000
$ 114,000
$ 114,000
$ 114,000
$ 114,000
$ 114,000
$ 114,000
$ 114,000
$ 114,000
$ 144,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1 ,755,000
Most-Likely
$ 445,000
$ 394,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 129,000
$ 169,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 2,685,000
Reasonable
Worst-Case
$ 470,000
$ 682,000
$ 167,000
$ 167,000
$ 167,000
$ 217,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 167,000
$ 217,000
$
$
$
$
$
$
$
$
$
$ 4,425,000
Likelihood that Each Scenario Will Occur
20%
50%
30%
Notes:
-Noted costs are based on information provided in Steps 1a, 1b, and 1c.  Costs are not discounted in this Step.  They are discounted in Step 2b.
-The likelihoods for each remedial option adds to  100%.  These likelihoods are based on professional judgment and experience with previous applications of
the technology by the project team.
-Inflation is not considered in this step   The application of the discount rate in Step 2b  accounts for inflation.
- Costs that are incurred after year 30 have been  included as discounted values in year 30 using the discount rate from Step 2b.
-Operation of the optimized P& T system and the new remedial approach begin in the year that the capital expenses are made.

                                                                       Appendix A

-------
Step 2b: Net Present Value of Life-Cycle Costs
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Discount
Factor
3.1%
1.000
0.970
0.941
0.912
0.885
0.858
0.833
0.808
0.783
0.760
0.737
0.715
0.693
0.672
0.652
0.633
0.614
0.595
0.577
0.560
0.543
0.527
0.511
0.496
0.481
0.466
0.452
0.439
0.425
0.413


N/A
Existing P&T System
Annual Costs in Present Value
Optimistic
$ 305,000
$ 295,829
$ 286,934
$ 278,307
$ 269,939
$ 261 ,822
$ 253,950
$ 246,314
$ 238,908
$ 231,724
$ 224,757
$ 217,999
$ 21 1 ,444
$ 205,087
$ 198,920
$ 192,939
$ 187,138
$ 181,511
$ 176,053
$ 187,556
$
$
$
$
$
$
$
$
$
$
$ 4,652,131
Most-likely
$ 305,000
$ 295,829
$ 286,934
$ 278,307
$ 269,939
$ 261,822
$ 253,950
$ 246,314
$ 238,908
$ 231 ,724
$ 224,757
$ 217,999
$ 211,444
$ 205,087
$ 198,920
$ 192,939
$ 187,138
$ 181,511
$ 176,053
$ 282,733
$ 165,625
$ 160,645
$ 155,815
$ 151,130
$ 146,586
$ 142,178
$ 137,903
$ 133,757
$ 129,735
$ 142,337
$ 6,213,020
Reasonable
Worst-Case
$ 305,000
$ 295,829
$ 286,934
$ 278,307
$ 269,939
$ 261 ,822
$ 253,950
$ 246,314
$ 238,908
$ 231,724
$ 224,757
$ 217,999
$ 21 1 ,444
$ 205,087
$ 198,920
$ 192,939
$ 187,138
$ 181,511
$ 176,053
$ 338,720
$ 165,625
$ 160,645
$ 155,815
$ 151,130
$ 146,586
$ 142,178
$ 137,903
$ 133,757
$ 129,735
$ 1,214,396
$ 7,341,066
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Annual Costs in Present Value
Optimistic
$ 325,000
$ 264,791
$ 162,753
$ 157,859
$ 153,113
$ 148,509
$ 144,044
$ 139,713
$ 135,512
$ 131,437
$ 127,485
$ 123,652
$ 119,934
$ 116,328
$ 112,830
$ 109,437
$ 106,147
$ 102,955
$ 99,860
$ 96,857
$ 110,236
$
$
$
$
$
$
$
$
$
$ 2,988,452
Most-likely
$ 325,000
$ 312,318
$ 185,331
$ 179,759
$ 174,354
$ 169,111
$ 164,027
$ 159,095
$ 154,311
$ 149,671
$ 145,171
$ 140,806
$ 136,572
$ 132,466
$ 128,483
$ 124,620
$ 120,873
$ 117,238
$ 113,713
$ 166,281
$ 106,978
$ 103,761
$ 100,641
$ 97,615
$ 94,680
$ 91,833
$ 89,072
$ 86,394
$ 83,796
$ 176,116
$ 4,330,084
Reasonable
Worst-Case
$ 325,000
$ 354,995
$ 203,206
$ 197,096
$ 191,170
$ 185,422
$ 179,846
$ 174,439
$ 169,194
$ 164,106
$ 159,172
$ 154,386
$ 149,744
$ 145,242
$ 140,875
$ 136,639
$ 132,530
$ 128,545
$ 124,680
$ 232,905
$ 117,295
$ 113,768
$ 110,348
$ 107,030
$ 103,812
$ 100,690
$ 97,663
$ 94,726
$ 91,878
$ 909,138
$ 5,495,540
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Annual Costs in Present Value
Optimistic
$ 420,000
$ 270,611
$ 107,248
$ 104,023
$ 100,895
$ 97,861
$ 94,919
$ 92,065
$ 89,297
$ 86,612
$ 106,115
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,569,645
Most-likely
$ 445,000
$ 382,153
$ 121,359
$ 117,710
$ 114,171
$ 110,738
$ 107,408
$ 104,179
$ 101,046
$ 98,008
$ 95,061
$ 92,203
$ 89,431
$ 86,742
$ 84,133
$ 106,907
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 2,256,249
Reasonable
Worst-Case
$ 470,000
$ 661,494
$ 157,108
$ 152,384
$ 147,803
$ 186,280
$ 139,048
$ 134,867
$ 130,812
$ 126,879
$ 123,064
$ 119,363
$ 115,774
$ 112,293
$ 108,917
$ 105,642
$ 102,466
$ 99,385
$ 96,396
$ 93,498
$ 117,838
$
$
$
$
$
$
$
$
$
$ 3,501,311
Likelihood that Each Scenario Will Occur
20%
50%
30%
Notes:
- A discount rate of 3.1% has been used based on U. S. Office of Management and Budget Circular A-94, Guidelines and Discount Rates for Cost-Benefit Analysis of Federal
Programs. This rate includes the affect of inflation, so inflation is not considered separately. A higher discount rate would result in lower present value costs.
                                                                    Appendix A

-------
Step 3: Cost Comparison
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30


Optimized P&T System
Cum. Cash Flow (NPV) Relative to
Most-Likely Case for Existing System
Optimistic
$ (20,000)
$ 11,038
$ 135,219
$ 255,667
$ 372,493
$ 485,806
$ 595,712
$ 702,314
$ 805,710
$ 905,997
$ 1,003,269
$ 1,097,616
$ 1,189,126
$ 1,277,885
$ 1,363,975
$ 1,447,477
$ 1,528,467
$ 1,607,023
$ 1,683,216
$ 1,869,092
$ 1,924,482
$ 2,085,127
$ 2,240,942
$ 2,392,072
$ 2,538,658
$ 2,680,836
$ 2,818,739
$ 2,952,496
$ 3,082,231
$ 3,224,568
Most-Likely
$ (20,000)
$ (36,489)
$ 65,114
$ 163,662
$ 259,247
$ 351,958
$ 441,881
$ 529,100
$ 613,697
$ 695,751
$ 775,337
$ 852,530
$ 927,402
$ 1,000,023
$ 1,070,460
$ 1,138,779
$ 1,205,044
$ 1,269,317
$ 1,331,657
$ 1,448,110
$ 1,506,757
$ 1,563,641
$ 1,618,815
$ 1,672,330
$ 1,724,236
$ 1,774,581
$ 1,823,412
$ 1,870,775
$ 1,916,714
$ 1,882,936
Reasonable
Worst-Case
$ (20,000)
$ (79,166)
$ 4,563
$ 85,773
$ 164,542
$ 240,943
$ 315,046
$ 386,922
$ 456,636
$ 524,254
$ 589,838
$ 653,451
$ 715,151
$ 774,996
$ 833,042
$ 889,342
$ 943,949
$ 996,915
$ 1,048,288
$ 1,098,116
$ 1,146,446
$ 1,193,323
$ 1,238,790
$ 1,282,890
$ 1,325,665
$ 1,367,153
$ 1,407,393
$ 1,446,424
$ 1,484,281
$ 717,480
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Cum. Cash Flow (NPV) Relative to Most
Likely Case for Existing System
Optimistic
$ (115,000)
$ (89,782)
$ 89,905
$ 264,189
$ 433,233
$ 597,193
$ 756,224
$ 910,473
$ 1,060,084
$ 1,205,197
$ 1,323,839
$ 1,541,838
$ 1,753,283
$ 1,958,369
$ 2,157,289
$ 2,350,228
$ 2,537,366
$ 2,718,877
$ 2,894,930
$ 3,177,663
$ 3,343,288
$ 3,503,933
$ 3,659,748
$ 3,810,878
$ 3,957,464
$ 4,099,642
$ 4,237,546
$ 4,371,302
$ 4,501,037
$ 4,643,374
Most-Likely
$ (140,000)
$ (226,324)
$ (60,749)
$ 99,848
$ 255,616
$ 406,700
$ 553,242
$ 695,377
$ 833,239
$ 966,955
$ 1,096,651
$ 1,222,447
$ 1,344,461
$ 1,462,806
$ 1,577,592
$ 1,663,624
$ 1,850,762
$ 2,032,273
$ 2,208,326
$ 2,491,059
$ 2,656,684
$ 2,817,330
$ 2,973,144
$ 3,124,274
$ 3,270,860
$ 3,413,038
$ 3,550,942
$ 3,684,699
$ 3,814,434
$ 3,956,771
Reasonable
Worst-Case
$ (165,000)
$ (530,664)
$ (400,838)
$ (274,916)
$ (152,780)
$ (77,238)
$ 37,664
$ 149,111
$ 257,207
$ 362,053
$ 463,746
$ 562,382
$ 658,052
$ 750,845
$ 840,848
$ 928,145
$ 1,012,817
$ 1,094,944
$ 1,174,600
$ 1,363,836
$ 1,411,623
$ 1,572,268
$ 1,728,083
$ 1,879,213
$ 2,025,799
$ 2,167,977
$ 2,305,880
$ 2,439,637
$ 2,569,372
$ 2,711,709
Likelihood that Each Scenario Will Occur
20%
50%
30%
/Votes:
- The indicated values represent the cumulative difference in costs between the various scenarios for the indicated
remedial option and the most-likely scenario for continuing with existing P& T system as noted in Step 2b.  This difference
in costs over time can be used to track the "investment" made in optimizing the P& T system or moving forward with the
alternative remedial approach.
- Values in parentheses indicate an investment (i.e., a greater expenditure for the indicated remedial approach than for the
most-likely scenario for the existing P& T system).  Values without parentheses indicates income (i.e., savings relative to
the costs associated with the mostly likely scenario for the existing P& T system).
- The likelihoods for each remedial option adds to 100%.  These likelihoods are based on professional judgment and
experience with previous applications of the technology by the project team.
                                                       Appendix A

-------
Step 3: Cost Comparison (continued)

NPV of Life-Cycle Costs
Year 1 cash flow
Year 2 cash flow (discounted)
Year 3 cash flow (discounted)
Cum. cash flow at year 5 (discounted)
Total investment*
Year with highest investment*
Year of payback**
Net cum. cash flow at year 1 0
Average Annual Percentage Return
(AAPR)asofYearlO**
Existing P&T System
Most-Likely
Scenario
$ 6,213,020
$ (305,000)
$ (295,829)
$ (286,934)
$ (1,436,009)
N/A
N/A
N/A
Expected
Value
$ 6,083,167
$ (305,000)
$ (295,829)
$ (286,934)
$ (1,436,009)
N/A
N/A
N/A
N/A N/A
N/A N/A
Optimized P&T System
Most-Likely
Scenario
Total
$ 4,330,084
$ (325,000)
$ (312,318)
$ (185,331)
$ (1,176,762)
$ 145,000
Net Change
Compared to
Existing
System
$ (1,882,936)
$ (20,000)
$ (16,489)
$ 101,603
$ 259,247
$ 145,000
2
YearS
$ 695,751
$ 695,751
21 .6%
Expected Value
Total
$ 4,277,231
$ (325,000)
$ (310,863)
$ (183,920)
$(1,171,200)
$ 145,000
Net Change
Compared to
Existing
System
$(1,805,936)
$ (20,000)
$ (15,034)
$ 103,014
$ 264,809
$ 145,000
1.70
YearS
$ 707,375
$ 707,375
22.6%
New Remedial Approach
Most Likely Scenario
Total
$ 2,256,249
$ (420,000)
$ (270,611)
$ (107,248)
$ (1,002,777)
$ 405,000
Net Change
Compared to
Existing
System
$ (3,956,771)
$ (115,000)
$ 25,218
$ 179,687
$ 433,233
$ 405,000
3
Year 4
$ 966,955
$ 966,955
16.48%
Expected Value
Total
$ 2,492,447
$ (447,500)
$ (443,647)
$ (129,262)
$ (1 ,267,389)
$ 442,500
Net Change
Compared to
Existing
System
$ (3,590,720)
$ (142,500)
$ (147,818)
$ 157,673
$ 168,621
$ 442,500
2.80
YearS
$ 833,133
$ 833,133
15.84%
Notes:
- "Net Change Compared to Existing System" is taking the "Total" and substracting the corresponding value from the existing system.
* Investment refers to capital costs "invested" in system modifications or a new remedial technology (based on information documented in Step 1).
** Payback is defined as the number of years (from the year with the highest investment) that it takes to get a positive cumulative cash flow.
*** For this example, AARP is calculated using the following parameters:
  ''Total investment" from the above table corresponds to the "invested capital" from Exhibit 6.
  '"Net cum. cash flow at Year 10" from the above table corresponds to the "net savings at year 10" from Exhibit 6.
  - The number of years from the "Year with the highest investment" to Year 10 corresponds to the "period of investment" from Exhibit 6.
                                                                                    Appendix A

-------
Step 4: Information Gathering
1. Information to Gather
Information
Pilot test (lump sum)
- item 2
- item 3
- item 4
- item 5
- item 6
- item 7
- item 8
- item 9
- item 1 0
- item 1 1
- item 12
- item 1 3
- item 14

Optimistic
Scenario
Cost
$ 75,000














Total} $ 75,000
Most Likely
Scenario
Cost
$ 100,000














$ 100,000
Reasonable
Worst-Case
Scenario
Cost
$ 125,000














$ 125,000
Notes:
  - The pilot test would be conducted to help determine the spacing and number of injection points,
  which could impact both capital costs for implementation and long-term O&M costs.
                                    Appendix A

-------
Step 5: Conclusions and Decision

Conclusion
The cost comparison shows that either new option (optimizing the system or replacing the system
with an enhanced bioremediation remedy) will prove more cost effective than continued operation
of the current system. The life-cycle costs for both of these new options are lower than the life-
cycle costs for the existing system.  In addition, the upfront/short-term costs are very similar to
that for the existing system and the payback period for either investment is reasonable.  The
reasonable worst-case scenario for the bioremediation option is comparable financially to the
optmistic case for the optimized P&T system, suggesting that further consideration of the
bioremediation option is merited.
Decision
The bioremediation option merits further consideration because of its potential to shorten the
duration of the remedy and reduce life-cycle costs. The organization has decided to pursue a pilot
test to test the feasibility of the technology at this site and to help refine the costs of
implementation.  The decision to move forward with a full-scale bioremediation option will be
based on the outcome  of the pilot test.
                                        Appendix A

-------
                          Cost Comparison Framework
                             Illustrative Example #2
Brief Site Description
The site is the location of a former metal finishing plant where a leak in an underground
waste storage tank resulted in a release of TCE to soil and ground water. The water table
aquifer is highly permeable with a saturated thickness of over 50 feet.  The Remedial
Investigation and subsequent monitoring suggest that DNAPL is  not present.  The
maximum ground water concentration at the site after 10 years of P&T operation is
approximately 200 ug/L (at one monitoring well in the source area). The P&T system
effectively captures the TCE plume.  The ground water extraction rate is 100 gpm, and
the influent concentration is approximately 20 ug/L.  TCE concentrations in ground
water and the treatment plant influent have decreased during P&T operation, but the
concentrations have asymptotically approached their current values. There is no evidence
of reductive dechlorination at the site.

Although the P&T system operates effectively to control contaminant migration, it is
uncertain how long the system will continue to operate efficiently.  The project team is
interested in how the cost of aggressive treatment of the source area with the potential
shut down of the P&T system compares to continuing to operate the existing P&T
system.

The tables on the following pages document the project team's cost comparison.
Remedial Considerations for Cost Comparison

The site team is considering the following options:

   •   Continued operation of the current P&T system

       Continued operation of the current P&T system with an additional extraction well
       in the source area

   •   Full-scale implementation of an air sparging and soil vapor extraction (AS/SVE)
       system in the source area in place of P&T


Concepts Illustrated

   •   The annual costs for O&M of the P&T system ($117,000 per year) are relatively
       well understood because the cost projections are based on three years of past
       invoices that demonstrate consistent costs from year to year.  The primary source
       of uncertainty is how long the system will operate (20, 30,  or 40 years).  [Step la,
       Tables 1 and 2]
                                    Appendix A

-------
   •   The P&T system with a new extraction well in the source area is considered an
       optimized P&T system in this cost comparison. Implementation of AS/SVE is
       considered the "new remedial approach".

Conclusions

The cost comparison demonstrates that the discounted life-cycle costs for both the
optimized P&T system and the new remedial approach are lower than continuing to
operate the existing system.  The short term costs for the optimized P&T system are
marginally higher than short term costs for the existing system, but the investment for the
new remedial approach has the same approximate value as three years of operating the
existing system.  Although the optimized P&T approach provides a low life-cycle cost
coupled with a low implementation cost, the new remedial approach has the potential to
achieve closure at the site faster, and the reasonable worst-case scenario for the new
remedial approach is financially similar to the optimistic case for the optimized P&T
system. Therefore, it makes sense to move forward with the new remedial approach.  An
appropriate step would be to begin with the modeling effort and pilot test to determine
which of the three new remedial approach scenarios is most likely to occur and to assist
in planning and design of a full-scale air sparging system.
                                   Appendix A

-------
Step 1a: Background Cost Information - Existing P&T System
1. Annual O&M Costs
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario








$
Most-Likely
Scenario
$ 40,000
$ 30,000
$ 15,000
$ 15,000
$ 3,000
$ 1,500
$ 7,500
$ 5,000
$ 117,000
Reasonable Worst-
Case Scenario








$
Notes:
  - O&M costs were obtained from reviewing past three years of invoices.
  - System has been performing reliably and was recently optimized.
  - Ground water sampling and reporting conducted annually.
2. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
20 years
Most-Likely Scenario
30 years
Reasonable Worst-
Case Scenario
40 years
Notes:
3. Non-Routine Costs
Cost Category
Additional evaluation
- item 1
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
Replace/repair components for 10 more
years of operation
- Item 2
- Item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost












Year(s)
Incurred












Most-Likely Scenario
Cost












Year(s)
Incurred












Reasonable Worst-
Case Scenario
Cost





$100,000






Year(s)
Incurred





30






Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..." to refer to five-year intervals from the present.)
                                             Appendix A

-------
Step 1b: Background Cost Information - Optimized P&T System

1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
1 year
Most Likely Scenario
2 years
Reasonable Worst-
Case Scenario
2 years
2. Implementing/Planning Costs
Cost Category
Data analysis / Feasibility study
Remedy design, work plans, etc.
Permitting
Installation / Oversight
Other (one extraction well, lump sum)
Listl
List 2
Lists

Total
Optimistic Scenario
Cost




$30,000




$ 30,000
Year(s)
Incurred




1





Most-Likely Scenario
Cost




$35,000




$ 35,000
Year(s)
Incurred




2





Reasonable Worst-
Case Scenario
Cost




$40,000




$ 40,000
Year(s)
Incurred




2





3. Annual O&M Costs of Optimized Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario








$
Most-Likely
Scenario
$ 40,000
$ 30,000
$ 15,000
$ 16,000
$ 3,000
$ 1,500
$ 8,000
$ 5,000
$ 118,500
Reasonable Worst-
Case Scenario








$
Notes:
- O&M costs for system with new well represent a small increase in costs for utilities and laboratory analysis.
                                         Appendix A

-------
Step 1b: Background Cost Information - Optimized P&T System (continued)

4. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System
Optimistic Scenario
10 years
Most-Likely Scenario
20 years
Reasonable Worst-
Case Scenario
30 years
Notes:
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
- item 1
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
- item 1
- Item 2
- Item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost












Year(s)
Incurred












Most-Likely Scenario
Cost












Year(s)
Incurred












Reasonable Worst-
Case Scenario
Cost












Year(s)
Incurred












Notes:
 - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
 from present and use "5, 10, ..."to refer to five-year intervals from the present.)
                                            Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach

1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of
Current P&T System During Planning
Optimistic Scenario
1 year
Most-Likely Scenario
2 years
Reasonable Worst-
Case Scenario
2 years
2. Implementing/Planning Costs
Cost Category
Conceptual design
Additional research and investigation
Pilot testing
Remedy design, work Plan, etc.
Permitting
Installation and oversight
Documentation
Other (all of the above, lump sum)

Total
Optimistic Scenario
Cost







$ 350,000

$ 350,000
Year(s)
Incurred







2


Most-Likely Scenario
Cost







$ 400,000

$ 400,000
Year(s)
Incurred







2


Reasonable Worst-
Case Scenario
Cost







$ 450,000

$ 450,000
Year(s)
Incurred







3


Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..."to refer to five-year intervals from the present.)
3. Annual O&M Costs of New Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAG, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario
$ 30,000
$ 15,000
$ 15,000
$ 15,000
$ 3,000
$ 500
$ 4,000
$ 1,000
$ 83,500
Most-Likely
Scenario
$ 30,000
$ 15,000
$ 15,000
$ 15,000
$ 3,000
$ 500
$ 4,000
$ 1,000
$ 83,500
Reasonable Worst-
Case Scenario
See note
See note
See note
See note
See note
See note
See note
See note
See note
Notes:
  - For the reasonable worst case scenario, the sparge system would operate
  sparging is completed, monitoring would suggest that the remaining portion
  P& T system would resume for another 5 years at $117,000 per year.
for four years at $83,500 per year, but that after air
of the plume is not stable, and operation of the
                                               Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach (continued)

4. Estimated Operational Life

Years of Continued O&M Costs of
Current P&T System
Optimistic Scenario
1 year
Most-Likely Scenario
3 years
Reasonable Worst-
Case Scenario
See note
Notes:
  - For the reasonable worst-case scenario, the sparge system would operate for four years at $83,500 per year, but after air
  sparging is completed, monitoring would suggest that the remaining portion of the plume is not stable, and operation of the
  P& T system would resume for another 5 years at $117,000 per year.
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
- item 1
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
- restart P&T system
- item 2
- item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost












Year(s)
Incurred












Most-Likely Scenario
Cost












Year(s)
Incurred












Reasonable Worst-
Case Scenario
Cost





$50,000






Year(s)
Incurred





4






Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..."to refer to five-year intervals from the present.)
  - The optimistic and most-likely scenarios assume that the air sparging system will address remaining contamination and allow
  for air sparging system shut down in 1 and 2 years, respectively.
  - The reasonable worst-case scenario assumes that P& T must resume after air sparging is completed. It is assumed that up to
  $50,000 would be required to restart the P& T system after four years of not operating.
                                                  Appendix A

-------
Step 2a: Life-Cycle Costs

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Existing P&T System
Optimistic
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$
$
$
$
$
$
$
-
$
$
$ 2,340,000
Most-Likely
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 3,510,000
Reasonable
Worst-Case
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$ 1,209,960
$ 4,602,960
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Optimistic
$ 147,000
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$
$
$
$
$
$
$
$
$
$
-
-
-
-
$
$
$
$
$
$
$ 1,213,500
Most-Likely
$ 117,000
$ 152,000
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$
$
$
$
$
$
$
$
$
$
$ 2,402,000
Reasonable
Worst-Case
$ 117,000
$ 157,000
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 118,500
$ 3,592,000
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Optimistic
$ 117,000
$ 467,000
$ 83,500
$
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
$
$
$
$
$
-
-
-
$
$
$ 667,500
Most-Likely
$ 117,000
$ 517,000
$ 83,500
$ 83,500
$ 83,500
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$ 884,500
Reasonable
Worst-Case
$ 117,000
$ 117,000
$ 567,000
$ 83,500
$ 83,500
$ 83,500
$ 83,500
$ 167,000
$ 117,000
$ 117,000
$ 117,000
$ 117,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,770,000
Likelihood that Each Scenario Will Occur
20%
50%
30%
Notes:
-Noted costs are based on information provided in Steps 1a, 1b. and 1c.  Costs are not discounted in this Step.  They are discounted in Step 2b.
-The likelihoods for each remedial option adds to  100%.   These likelihoods are based on professional judgment and experience with previous applications of
the technology by the project team.
-Inflation is not considered in this step.   The application of the discount rate in Step 2b accounts for inflation.
- Costs that are incurred after year 30 have been included as discounted values in year 30 using the discount rate from Step 2b.
- Costs for system replacement are not included for the "most-likely" scenario of the "new remedial approach" because it is assumed that the existing
components will last for the remaining few years of operation.
-Operation of the  optimized P&T system and the new remedial approach begin in the year that the capital expenses are made.

                                                                                   Appendix A

-------
Step 2b: Net Present Value of Life-Cycle Costs
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Discount
Factor
3.1%
1.000
0.970
0.941
0.912
0.885
0.858
0.833
0.808
0.783
0.760
0.737
0.715
0.693
0.672
0.652
0.633
0.614
0.595
0.577
0.560
0.543
0.527
0.511
0.496
0.481
0.466
0.452
0.439
0.425
0.413


N/A
Existing P&T System
Annual Costs in Present Value
Optimistic
$ 117,000
$ 113,482
$ 110,070
$ 106,760
$ 103,550
$ 100,437
$ 97,417
$ 94,488
$ 91,647
$ 88,891
$ 86,218
$ 83,626
$ 81,111
$ 78,673
$ 76,307
$ 74,013
$ 71,787
$ 69,629
$ 67,535
$ 65,505
$
$
$
$
$
$
$
$
$
$
$ 1,778,145
Most-likely
$ 117,000
$ 113,482
$ 110,070
$ 106,760
$ 103,550
$ 100,437
$ 97,417
$ 94,488
$ 91,647
$ 88,891
$ 86,218
$ 83,626
$ 81,111
$ 78,673
$ 76,307
$ 74,013
$ 71,787
$ 69,629
$ 67,535
$ 65,505
$ 63,535
$ 61,625
$ 59,772
$ 57,974
$ 56,231
$ 54,541
$ 52,901
$ 51,310
$ 49,767
$ 48,271
$ 2,334,071
Reasonable
Worst-Case
$ 117,000
$ 113,482
$ 110,070
$ 106,760
$ 103,550
$ 100,437
$ 97,417
$ 94,488
$ 91,647
$ 88,891
$ 86,218
$ 83,626
$ 81,111
$ 78,673
$ 76,307
$ 74,013
$ 71,787
$ 69,629
$ 67,535
$ 65,505
$ 63,535
$ 61 ,625
$ 59,772
$ 57,974
$ 56,231
$ 54,541
$ 52,901
$ 51,310
$ 49,767
$ 499,194
$ 2,784,994
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Annual Costs in Present Value
Optimistic
$ 147,000
$ 114,937
$ 111,481
$ 108,129
$ 104,878
$ 101,724
$ 98,666
$ 95,699
$ 92,822
$ 90,031
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,065,366
Most-likely
$ 117,000
$ 147,430
$ 111,481
$ 108,129
$ 104,878
$ 101,724
$ 98,666
$ 95,699
$ 92,822
$ 90,031
$ 87,324
$ 84,698
$ 82,151
$ 79,681
$ 77,285
$ 74,962
$ 72,708
$ 70,521
$ 68,401
$ 66,344
$
$
$
$
$
$
$
$
$
$
$ 1,831,934
Reasonable
Worst-Case
$ 117,000
$ 152,279
$ 111,481
$ 108,129
$ 104,878
$ 101,724
$ 98,666
$ 95,699
$ 92,822
$ 90,031
$ 87,324
$ 84,698
$ 82,151
$ 79,681
$ 77,285
$ 74,962
$ 72,708
$ 70,521
$ 68,401
$ 66,344
$ 64,349
$ 62,415
$ 60,538
$ 58,718
$ 56,952
$ 55,240
$ 53,579
$ 51,968
$ 50,405
$ 48,890
$ 2,399,837
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Annual Costs in Present Value
Optimistic
$ 117,000
$ 452,958
$ 78,554
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 648,512
Most-likely
$ 117,000
$ 501,455
$ 78,554
$ 76,192
$ 73,901
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 847,102
Reasonable
Worst-Case
$ 117,000
$ 113,482
$ 533,416
$ 76,192
$ 73,901
$ 71,679
$ 69,524
$ 134,867
$ 91,647
$ 88,891
$ 86,218
$ 83,626
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,540,443
Likelihood that Each Scenario Will Occur
25%
50%
25%
Notes:
- A discount rate of 3.1% has been used based on U.S. Office of Management and Budget Circular A-94, Guidelines and Discount Rates for Cost-Benefit Analysis of Federal
Programs. This rate includes the affect of inflation, so inflation is not considered separately. A higher discount rate would result in lower present value costs.
                                                                      Appendix A

-------
Step 3: Cost Comparison
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+


Optimized P&T System
Cum. Cash Flow (NPV) Relative to
Most-Likely Case for Existing System
Optimistic
$ (30,000)
$ (31,455)
$ (32,866)
$ (34,235)
$ (35,562)
$ (36,850)
$ (38,099)
$ (39,310)
$ (40,485)
$ (41,625)
$ 44,593
$ 128,219
$ 209,331
$ 288,003
$ 364,310
$ 438,323
$ 510,110
$ 579,739
$ 647,274
$ 712,778
$ 776,313
$ 837,938
$ 897,710
$ 955,684
$ 1,011,915
$ 1,066,456
$ 1,119,356
$ 1,170,666
$ 1,220,434
$ 1,268,704
Most-Likely
$
$ (33,948)
$ (35,359)
$ (36,727)
$ (38,055)
$ (39,343)
$ (40,592)
$ (41,803)
$ (42,978)
$ (44,118)
$ (45,223)
$ (46,295)
$ (47,335)
$ (48,344)
$ (49,322)
$ (50,271)
$ (51,191)
$ (52,084)
$ (52,950)
$ (53,789)
$ 9,745
$ 71,370
$ 131,142
$ 189,116
$ 245,347
$ 299,888
$ 352,789
$ 404,098
$ 453,866
$ 502,137
Reasonable
Worst-Case
$
$ (38,797)
$ (40,208)
$ (41,577)
$ (42,905)
$ (44,192)
$ (45,441)
$ (46,653)
$ (47,828)
$ (48,967)
$ (50,073)
$ (51,145)
$ (52,185)
$ (53,193)
$ (54,172)
$ (55,120)
$ (56,041)
$ (56,933)
$ (57,799)
$ (58,639)
$ (59,454)
$ (60,244)
$ (61,010)
$ (61,753)
$ (62,474)
$ (63,173)
$ (63,852)
$ (64,509)
$ (65,148)
$ (65,766)
Likelihood that Each Scenario Will Occur
30%
40%
30%
New Remedial Approach
Cum. Cash Flow (NPV) Relative to Most
Likely Case for Existing System
Optimistic
$
$ (339,476)
$ (307,960)
$ (201,200)
$ (97,650)
$ 2,787
$ 100,204
$ 194,691
$ 286,338
$ 375,229
$ 461,447
$ 545,073
$ 626,184
$ 704,857
$ 781,164
$ 855,177
$ 926,964
$ 996,593
$ 1,064,128
$ 1,129,632
$ 1,193,167
$ 1,254,792
$ 1,314,563
$ 1,372,538
$ 1,428,769
$ 1,483,310
$ 1,536,210
$ 1,587,520
$ 1,637,287
$ 1,685,558
Most-Likely
$
$ (387,973)
$ (356,457)
$ (325,889)
$ (296,240)
$ (195,803)
$ (98,386)
$ (3,899)
$ 87,748
$ 176,639
$ 262,857
$ 346,483
$ 427,594
$ 506,267
$ 582,574
$ 656,587
$ 728,374
$ 798,003
$ 865,538
$ 931,042
$ 994,577
$ 1,056,202
$ 1,115,973
$ 1,173,948
$ 1,230,179
$ 1,284,720
$ 1,337,620
$ 1,388,930
$ 1,438,697
$ 1,486,968
Reasonable
Worst-Case
$
$
$ (423,346)
$ (392,778)
$ (363,129)
$ (334,371)
$ (306,478)
$ (346,858)
$ (346,858)
$ (346,858)
$ (346,858)
$ (346,858)
$ (265,746)
$ (187,074)
$ (110,767)
$ (36,754)
$ 35,033
$ 104,662
$ 172,197
$ 237,702
$ 301,237
$ 362,861
$ 422,633
$ 480,607
$ 536,839
$ 591,379
$ 644,280
$ 695,590
$ 745,357
$ 793,628
Likelihood that Each Scenario Will Occur
20%
50%
30%
Notes:
- The indicated values represent the cumulative difference in costs between the various scenarios for the indicated
remedial option and the most-likely scenario for continuing with existing P& T system as noted in Step 2b.  This difference
in costs over time can be used to track the "investment" made in optimizing the P& T system or moving forward with the
alternative remedial approach.
- Values in parentheses indicate an investment (i.e., a greater expenditure for the indicated remedial approach than for the
most-likely scenario for the existing P&T system).  Values without parentheses indicates income (i.e., savings relative to
the costs associated with the mostly likely scenario for the existing P& T system).
- The likelihoods for each remedial option adds to 100%.  These likelihoods are based on professional judgment and
experience with previous applications of the technology by the project team.
                                                        Appendix A

-------
Step 3: Cost Comparison (continued)

NPV of Life-Cycle Costs
Year 1 cash flow
Year 2 cash flow (discounted)
Year 3 cash flow (discounted)
Cum. cash flow at year 5 (discounted)
Total investment*
Year with highest investment*
Year of payback**
Net cum. cash flow at year 10
Average Annual Percentage Return
(AAPR)asofYeaMO**
Existing P&T System
Most-Likely
Scenario
$ 2,334,071
$ (117,000)
$ (113,482)
$ (110,070)
$ (550,863)
N/A
N/A
N/A
Expected
Value
$ 2,302,570
$ (117,000)
$ (113,482)
$ (110,070)
$ (550,863)
N/A
N/A
N/A
N/A N/A
N/A N/A
Optimized P&T System
Most-Likely
Scenario
Total
$ 1 ,831 ,934
$ (117,000)
$ (147,430)
$ (111,481)
$ (588,918)
$ 35,000
Net Change
Compared to
Existing
System
$ (502,137)
$
$ (33,948)
$ (1,411)
$ (38,055)
$ 35,000
2
Year 21
$ (44,118)| $ (44,118)
Net Loss
Expected Value
Total
$ 1,772,335
$ (126,000)
$ (139,137)
$ (111,481)
$ (589,625)
$ 35,000
Net Change
Compared
to Existing
System
$ (530,235)
$ (9,000)
$ (25,655)
$ (1,411)
$ (38,762)
$ 35,000
1.70
Year 21
$ (44,825)| $ (44,825)
Net Loss
New Remedial Approach
Most Likely Scenario
Total
$ 847,102
$ (117,000)
$ (501 ,455)
$ (78,554)
$ (847,102)
$ 400,000
Net Change
Compared to
Existing
System
$ (1,486,968)
$
$ (387,973)
$ 31,516
$ (296,240)
$ 400,000
2
Year 9
$ 176,639
$ 176,639
4.15%
Expected Value
Total
$ 970,790
$ (117,000)
$ (392,338)
$ (192,270)
$ (427,577)
$ 400,000
Net Change
Compared to
Existing
System
$ (1,331,780)
$
$ (278,855)
$ (82,200)
$ 123,286
$ 400,000
2.30
Year 1 1
$ 59,308
$ 59,308
1 .60%
Wofes:
- "Wef Change Compared to Existing System" is taking the "Total" and substracting the corresponding value from the existing system.
* Investment refers to capital costs "invested" in system modifications or a new remedial technology (based on information documented in Step 1).
** Payback is defined as the number of years (from the year with the highest investment) that it takes to get a positive cumulative cash flow.
*** For this example, AARP is calculated using  the following parameters:
  -"Total investment" from the above table corresponds to the "invested capital" from Exhibit 6.
  '"Net cum. cash flow at Year 10" from the above table corresponds to the "net savings at year 10" from Exhibit 6.
  - The number of years from the "Year with the highest investment" to Year 10 corresponds to the "period of investment" from Exhibit 6.
                                                                                      Appendix A

-------
Step 4: Information Gathering

1. Information to Gather
Information
Pilot test (lump sum)
Modeling effort and analysis
- item 3
- item 4
- item 5
- item 6
- item 7
- item 8
- item 9
- item 1 0
- item 1 1
- item 12
- item 1 3
- item 14

Optimistic
Scenario
Cost















Total | $
Most Likely
Scenario
Cost
$ 50,000
$ 25,000













$ 75,000
Reasonable
Worst-Case
Scenario
Cost















$
Notes:
  - The pilot test would be conducted to help determine the spacing for the sparge points and soil
  vapor extraction points.
  - I he modeling effort and analysis would be conducted to determine if the plume would be stable
  and/or decreasing in area if the source area were addressed.  If the modeling effort demonstrates
  that the plume would be stable and/or decreasing, then the P&T system would likely be shut down
  once  air sparging was implemented. If the modeling effort demonstrates that the plume would not be
  stable after the source area was addressed, continued P&T might still be required as is represented
  in the reasonable worst-case scenario for the "new remedial approach" in Steps 1, 2, and 3.
                                                Appendix A

-------
Step 5: Conclusions and Decision

Conclusion
The cost comparison demonstrates that the discounted life-cycle costs for both the optimized
system and the new remedial approach with air sparging are lower than continuing to operate the
existing system.  Both of these options, however, also have capital costs associated with them.
For the optimized P&T system, the capital costs are paid back by approximately Year 20. For the
new remedial approach, the payback will likely be around Year 10. Over the first 10 years, the
only option that is likely to provide a positive return is the air sparging option; however, that
return on investment is relatively low compared to some other investment options.  With the air
sparging option, it is  relatively likely that the site can be closed substantially earlier than
continuing with P&T.
Decision
The cost comparison demonstrates that for this organization, the potential benefits of reducing
cost and closing the site earlier are worth the capital investment of gathering more information
about an air sparging option. The organization will proceed with a modeling effort to determine
the likelihood of the plume to remain stable  or decrease in size in the absence of pumping after the
source is addressed with air sparging. If the modeling suggests this is likely, then the organization
will proceed with a pilot test to determine the appropriate spacing for sparge points and soil vapor
extraction wells. If the pilot test demonstrates that air sparging is practical, then the organization
will move forward with a full-scale application.
                                          Appendix A

-------
                          Cost Comparison Framework
                             Illustrative Example #3
Brief Site Description
The site is the location of a former chemical manufacturing plant where several thousand
gallons of benzene and chlorinated benzene compounds (e.g., chlorobenzene,
dichlorobenzene, and trichlorobenzene) where released into the subsurface. The water
table aquifer (50 feet of saturated thickness) is impacted by both dissolved phase
contamination and DNAPL. The dissolved plume is over 10 acres in area and the
DNAPL plume (both free and residual phase) is approximately 2 acres. A P&T system
has been operating at the site for over five years and has effectively prevented further
horizontal or vertical migration of dissolved contamination.  The shallow aquifer, which
extends to a depth of 100 feet below ground surface, is underlain by a silt/clay aquitard
that is approximately 50 feet thick and has effectively prevented additional vertical
migration of DNAPL.  The DNAPL plume has been relatively stable and no horizontal
migration of DNAPL has been observed since the Remedial Investigation over 10 years
ago.

The P&T system has an extraction rate of approximately 50 gpm and a total VOC
influent concentration of approximately 2,000 ug/L. Ground water extraction occurs
downgradient of the source area. The treatment system consists of an air stripper, off-gas
treatment with vapor phase GAC, and discharge of treated water to a nearby creek.
Although the P&T system operates  effectively to control contaminant migration, it is
expected to operate for an "indefinite period", and the project team is interested in the
cost-effectiveness of aggressive removal of the DNAPL to substantially reduce the
operational life-time of the P&T system.

The tables on the following pages document the project team's cost comparison.
Remedial Considerations for Cost Comparison

The site team is considering the following options:

       Continued operation of the current P&T system (which has recently been
       optimized)

   •   Full scale in-situ chemical oxidation in the source area to restore that portion of
       the aquifer and hopefully allow for P&T system shutdown within 15 years


Concepts Dlustrated

       The annual costs for O&M of the P&T system (with or without the application of
       in-situ chemical oxidation) are relatively well understood because the cost
                                    Appendix A

-------
       projections are based on three years of past invoices that demonstrate consistent
       costs from year to year. As such, only "most-likely" annual O&M costs
       ($160,000 per year) are entered, with a likelihood of 100%.  [Step la, Table 1]

   •   Future non-routine costs, such as replacement of major system components, are
       included in year 20. Costs for evaluations associated with Five-Year Reviews are
       included every five years.  Alternatively, these costs could have been averaged
       into the  annual costs. [Step la, Table 3]

   •   In cases where a remedy is expected to operate for more than 30 years, the
       discounted costs of continuing remediation beyond year 30 are included as a one
       lump cost. For the "Existing P&T System", the costs for years 30 to 60 are
       included under the "most-likely" scenario and for years 30 to 90 under the
       "reasonable worst-case" scenario.  The costs for these "out years" is determined
       by averaging the annual cost  (including non-routine costs) and applying that
       average  cost over the specified time frame using the discount factor from Step 2b.
       [Step 2a, "Year 30+"]

   •   The system was recently optimized, so the sections of the form  dealing with an
       optimized system were not used.  However, if the site team wished to include an
       option that might lower the annual O&M costs after an up-front capital
       investment, the information could have been entered into the "optimized system"
       sections of the form.  [Step Ib]

Conclusions

The conclusion  from the cost comparison and the decision made by the hypothetical
organization are provided on the last page of this example. The cost comparison for the
chemical oxidation alternative shows lower life-cycle costs but a relatively long payback
period and a negative return on investment over the first 10 years. Different
organizations might interpret these results differently.  An organization that wants a
chance at removing the environmental liability from its balance sheet in a relatively short
time frame, and does not have a competing use for the money, might elect to move
forward with the new remedial approach.  Similarly, an organization that chooses not to
discount future  costs would notice a  substantial  decrease in life-cycle costs associated
with the chemical oxidation alternative (see "Totals" under Step 2a). However, an
organization that has a competing use for additional capital associated with the new
remedial approach (such as investing in its product line or advertising)  may opt for the
competing use of the money because it is a better investment for that organization over
the long term. This particular project team does not see the value in proceeding with the
new remedial approach on a full-scale basis, it has decided against a pilot test, and costs
that would have been incurred for  conducting a pilot test can be reserved for other
activities at the  site (or within the organization).
                                    Appendix A

-------
Step 1a: Background Cost Information - Existing P&T System
1. Annual O&M Costs
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario








$
Most-Likely
Scenario
$ 40,000
$ 30,000
$ 25,000
$ 15,000
$ 32,500
$ 2,500
$ 10,000
$ 5,000
$ 160,000
Reasonable Worst-
Case Scenario








$
Notes:
  - O&M costs were obtained from reviewing past three years of invoices.
  - System has been performing reliably and was recently optimized.
  - No additional optimization opportunities forcasted.
  - Ground water sampling and reporting conducted annually.
2. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
30 years
Most-Likely Scenario
60 years
Reasonable Worst-
Case Scenario
90 years
Notes:  The operational life for the P&T system is "indefinite".  Three separate time frames are provided to demonstrate the
effect of operational life on the cost comparison with the remedial alternative.
3. Non-Routine Costs
Cost Category
Additional evaluation
- Five-year review
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
- Replace air stripper
- Building repairs
- Replace other system components
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost












Year(s)
Incurred












Most-Likely Scenario
Cost

$ 20,000



$100,000
$ 10,000
$ 50,000




Year(s)
Incurred

5,10,15...



20,40,...
20,40,...
20,40,...




Reasonable Worst-
Case Scenario
Cost












Year(s)
Incurred












Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..." to refer to five-year intervals from the present.)
  - Five-year reviews are expected to be conducted every five years.
  - Replacement of major system components will likely be needed every 20 years.
                                                Appendix A

-------
Step 1b: Background Cost Information - Optimized P&T System



1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
N/A
Most-Likely Scenario
N/A
Reasonable Worst-
Case Scenario
N/A
2. Implementing/Planning Costs
Cost Category
Data analysis / Feasibility study
Remedy design, work plans, etc.
Permitting
Installation / Oversight
Other
List 1
List 2
Lists

Total
Optimistic Scenario
Cost
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

$
Year(s)
Incurred










Most-Likely Scenario
Cost
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

$
Year(s)
Incurred










Reasonable Worst-
Case Scenario
Cost
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

$
Year(s)
Incurred










3. Annual O&M Costs of Optimized Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAC, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
Most-Likely
Scenario
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
Reasonable Worst-
Case Scenario
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
Notes:
                                      Appendix A

-------
Step 1b: Background Cost Information - Optimized P&T System (continued)

4. Estimated Operational Life

Years of Continued O&M Costs of Current
P&T System During Planning
Optimistic Scenario
N/A
Most-Likely Scenario
N/A
Reasonable Worst-
Case Scenario
N/A
Notes:
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
- item 1
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
- item 1
- Item 2
- Item 3
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost












Year(s)
Incurred












Most-Likely Scenario
Cost












Year(s)
Incurred












Reasonable Worst-
Case Scenario
Cost












Year(s)
Incurred












Notes:
- No additional optimzation likely... system already optimized.
                                         Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach

1. Years of Continued O&M Costs of Current P&T System During Planning

Years of Continued O&M Costs of
Current P&T System During Planning
Optimistic Scenario
2 years
Most-Likely Scenario
2 years
Reasonable Worst-
Case Scenario
3 years
2. Implementing/Planning Costs
Cost Category
Conceptual design
Additional research and investigation
Pilot testing
Remedy design, work Plan, etc.
Permitting
Installation and oversight
Documentation
Other (all of the above, lump sum)

Total
Optimistic Scenario
Cost







$1,250,000

$1,250,000
Year(s)
Incurred







3


Most-Likely Scenario
Cost







$1,500,000

$1,500,000
Year(s)
Incurred







3


Reasonable Worst-
Case Scenario
Cost







$ 1,750,000

$ 1,750,000
Year(s)
Incurred







4


Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..."to refer to five-year intervals from the present.)
3. Annual O&M Costs of New Remedy
O&M Category
Labor: project management, reporting,
technical support
Labor: system operation
Labor: groundwater sampling
Utilities (gas, electric, water, sewer, etc.)
Consumables (GAG, chemicals, etc.)
Discharge or disposal costs
Laboratory analysis
Other (parts, routine maintenance, etc.)
O&M Total
Optimistic
Scenario








$
Most-Likely
Scenario
$ 40,000
$ 30,000
$ 25,000
$ 15,000
$ 16,000
$ 1,000
$ 10,000
$ 5,000
$ 142,000
Reasonable Worst-
Case Scenario








$
Notes:
  - The primary cost for implementation is in-situ chemical oxidation. Costs forin-situ chemical oxidation is based on detailed,
  site-specific estimates provided by multiple vendors. The estimates do not provide a guarantee of performance.
  - All cases assume approximately 100 injection points, 50 in the shallow/intermediate portion of the water table aquifer and 50
  in the deep portion of the water table aquifer.
                                                Appendix A

-------
Step 1c: Background Cost Information - New Remedial Approach (continued)

4. Estimated Operational Life

Years of Continued O&M Costs of
Current P&T System During Planning
Optimistic Scenario
10
Most Likely Scenario
15
Reasonable Worst-
Case Scenario
30+
Notes:
  - Time frames indicated denote operational life after the implementation of chemical oxidation.
5. Non-Routine Costs of Optimized Remedy
Cost Category
Additional evaluation
- Five-Year Review
- Item 2
- Item 3
Non-routine maintenance/equipment
replacement
- replace air stripper
- building repairs
- replace other system components
Other
- Item 1
- Item 2
- Item 3
Optimistic Scenario
Cost

$ 20,000










Year(s)
Incurred

5,10,...










Most Likely Scenario
Cost

$ 20,000










Year(s)
Incurred

5,10,...










Reasonable Worst-
Case Scenario
Cost

$ 20,000



$ 100,000
$ 10,000
$ 50,000




Year(s)
Incurred

5,10,...



20,40,...
20,40,...
20,40,...




Notes:
  - "Year(s) incurred" refers to the number of years from the present as used in Steps 2 and 3 (e.g., use "2" to refer to two years
  from present and use "5, 10, ..."to refer to five-year intervals from the present.)
  - The optimistic case assumes two applications ofFenton's reagent followed by two confirmation monitoring events. The P&T
  system can be shut down in 10 years.
  - The most likely case assumes three applications of Fentons' reagent, including three progress/confirmation monitoring
  events.  The P&T system can be shut down in 15 years.
  - The reasonable worst-case assumes four applications of Fentons' reagent, including four progress/confirmation monitoring
  events.  The P&T system will continue to operate for 30 or more years.
                                                  Appendix A

-------
Step 2a: Life-Cycle Costs

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Existing P&T System
Optimistic
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 340,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 5,080,000
Most-Likely
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 340,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 3,561,160
$ 8,461,160
Reasonable
Worst-Case
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 340,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 180,000
$ 160,000
$ 160,000
$ 160,000
$ 160,000
$ 4,916,186
$ 9,816,186
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Optimistic
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-
-
-
-
$
$
$
$
$
$
$
Most-Likely
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Reasonable
Worst-Case
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Likelihood that Each Scenario Will Occur
N/A
N/A
N/A
New Remedial Approach
Optimistic
$ 160,000
$ 160,000
$ 1 ,250,000
$ 143,500
$ 163,500
$ 143,500
$ 143,500
$ 143,500
$ 143,500
$ 163,500
$ 143,500
$ 143,500
$ 143,500
$
-
-
$
$
$
$
$
$
$
$
$
-
-
-
$
$
$ 3,045,000
Most-Likely
$ 160,000
$ 160,000
$ 1,500,000
$ 143,500
$ 163,500
$ 143,500
$ 143,500
$ 143,500
$ 143,500
$ 163,500
$ 143,500
$ 143,500
$ 143,500
$ 143,500
$ 163,500
$ 143,500
$ 143,500
$ 143,500
-
-
-
-
-
-
-
-
-
-
$
$
$ 4,032,500
Reasonable
Worst-Case
$ 160,000
$ 160,000
$ 160,000
$ 1 ,750,000
$ 162,000
$ 142,000
$ 142,000
$ 142,000
$ 142,000
$ 162,000
$ 142,000
$ 142,000
$ 142,000
$ 142,000
$ 162,000
$ 302,000
$ 142,000
$ 142,000
$ 142,000
$ 162,000
$ 142,000
$ 142,000
$ 142,000
$ 142,000
$ 162,000
$ 142,000
$ 142,000
$ 142,000
$ 142,000
$ 668,466
$ 6,708,466
Likelihood that Each Scenario Will Occur
25%
50%
25%
Notes:
-Noted costs are based on information provided in Steps 1a,  1b. and 1c.  Costs are not discounted in this Step.  They are discounted in Step 2b.
-The likelihoods for each remedial option adds to 100%.  These likelihoods are based on professional judgment and experience with previous applications of
the technology by the project team.
-Inflation is not considered in this step.  The application of the discount rate in Step 2b accounts for inflation.
- Costs that are incurred after year 30 have been included as discounted values in year 30 using the discount rate from Step 2b.
- Costs for system replacement are not included for the "most-likely" scenario of the "new remedial approach" because it is assumed that the existing
components will last for the remaining few years of operation.
-Operation of the new remedial approach begins in the year after the capital expenses are  made.

                                                                                   Appendix A

-------
Step 2b: Net Present Value of Life-Cycle Costs
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30+
Totals


Discount
Factor
3.1%
1.000
0.970
0.941
0.912
0.885
0.858
0.833
0.808
0.783
0.760
0.737
0.715
0.693
0.672
0.652
0.633
0.614
0.595
0.577
0.560
0.543
0.527
0.511
0.496
0.481
0.466
0.452
0.439
0.425
0.413


N/A
Existing P&T System
Annual Costs in Present Value
Optimistic
$ 160,000
$ 155,189
$ 150,523
$ 145,997
$ 159,308
$ 137,349
$ 133,220
$ 129,214
$ 125,329
$ 136,755
$ 117,905
$ 114,360
$ 110,922
$ 107,586
$ 117,395
$ 101,214
$ 98,171
$ 95,219
$ 92,356
$ 190,355
$ 86,885
$ 84,273
$ 81,739
$ 79,281
$ 86,510
$ 74,585
$ 72,343
$ 70,168
$ 68,058
$ 74,263
$ 3,356,471
Most-likely
$ 160,000
$ 155,189
$ 150,523
$ 145,997
$ 159,308
$ 137,349
$ 133,220
$ 129,214
$ 125,329
$ 136,755
$ 117,905
$ 114,360
$ 110,922
$ 107,586
$ 117,395
$ 101,214
$ 98,171
$ 95,219
$ 92,356
$ 190,355
$ 86,885
$ 84,273
$ 81,739
$ 79,281
$ 86,510
$ 74,585
$ 72,343
$ 70,168
$ 68,058
$ 1,469,232
$ 4,751,440
Reasonable
Worst-Case
$ 160,000
$ 155,189
$ 150,523
$ 145,997
$ 159,308
$ 137,349
$ 133,220
$ 129,214
$ 125,329
$ 136,755
$ 117,905
$ 114,360
$ 110,922
$ 107,586
$ 117,395
$ 101,214
$ 98,171
$ 95,219
$ 92,356
$ 190,355
$ 86,885
$ 84,273
$ 81,739
$ 79,281
$ 86,510
$ 74,585
$ 72,343
$ 70,168
$ 68,058
$ 2,028,276
$ 5,310,484
Likelihood that Each Scenario Will Occur
30%
40%
30%
Optimized P&T System
Annual Costs in Present Value
Optimistic
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Most-likely
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-
Reasonable
Worst-Case
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-
Likelihood that Each Scenario Will Occur
N/A
N/A
N/A
New Remedial Approach
Annual Costs in Present Value
Optimistic
$ 160,000
$ 155,189
$ 1,175,960
$ 130,941
$ 144,705
$ 123,185
$ 119,481
$ 115,889
$ 112,404
$ 124,219
$ 105,746
$ 102,567
$ 99,483
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 2,669,770
Most-likely
$ 160,000
$ 155,189
$ 1,411,152
$ 130,941
$ 144,705
$ 123,185
$ 119,481
$ 115,889
$ 112,404
$ 124,219
$ 105,746
$ 102,567
$ 99,483
$ 96,492
$ 106,634
$ 90,776
$ 88,047
$ 85,399
$
$
$
$
$
$
$
$
$
$
$
$
$ 3,372,310
Reasonable
Worst-Case
$ 160,000
$ 155,189
$ 150,523
$ 1,596,842
$ 143,377
$ 121,898
$ 118,232
$ 114,677
$ 111 ,229
$ 123,080
$ 104,641
$ 101,495
$ 98,443
$ 95,483
$ 105,656
$ 191,041
$ 87,126
$ 84,507
$ 81,966
$ 90,699
$ 77,111
$ 74,792
$ 72,543
$ 70,362
$ 77,859
$ 66,194
$ 64,204
$ 62,274
$ 60,401
$ 275,790
$ 4,737,634
Likelihood that Each Scenario Will Occur
25%
50%
25%
Notes:
- A discount rate of 3.1% has been used based on U.S. Office of Management and Budget Circular A-94, Guidelines and Discount Rates for Cost-Benefit Analysis of Federal
Programs. This rate includes the affect of inflation, so inflation is not considered separately. A higher discount rate would result in lower present value costs.
                                                                      Appendix A

-------
Step 3: Cost Comparison
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30


Optimized P&T System
Cum. Cash Flow (NPV) Relative to
Most-Likely Case for Existing System
Optimistic
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Most-Likely
$
$
$
-
$
$
$
$
$
-
$
$
$
$
-
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Reasonable
Worst-Case
$
$
$
$
$
$
$
$
$
$
-
$
$
$
-
$
$
$
$
$
$
$
$
$
$
$
-
$
$
$
Likelihood that Each Scenario Will Occur
N/A
N/A
N/A
New Remedial Approach
Cum. Cash Flow (NPV) Relative to Most
Likely Case for Existing System
Optimistic
$
$
$ (1,025,437)
$ (1,010,381)
$ (995,778)
$ (981,614)
$ (967,876)
$ (954,551)
$ (941,626)
$ (929,090)
$ (916,931)
$ (905,138)
$ (893,699)
$ (786,113)
$ (668,717)
$ (567,503)
$ (469,333)
$ (374,114)
$ (281,758)
$ (91,403)
$ (4,518)
$ 79,755
$ 161,494
$ 240,775
$ 327,285
$ 401,870
$ 474,213
$ 544,381
$ 612,438
$ 2,081,670
Most-Likely
$
$
$ (1,260,630)
$ (1,245,574)
$ (1,230,970)
$ (1,216,806)
$ (1,203,068)
$ (1,189,743)
$ (1,176,818)
$ (1,164,282)
$ (1,152,123)
$ (1,140,330)
$ (1,128,891)
$ (1,117,796)
$ (1,107,035)
$ (1,096,597)
$ (1,086,474)
$ (1,076,654)
$ (984,298)
$ (793,943)
$ (707,058)
$ (622,785)
$ (541,046)
$ (461,765)
$ (375,255)
$ (300,670)
$ (228,327)
$ (158,160)
$ (90,102)
$ 1,379,130
Reasonable
Worst -Case
$
$
$
$ (1,450,845)
$ (1,434,915)
$ (1,419,463)
$ (1,404,476)
$ (1,389,939)
$ (1,375,840)
$ (1,362,164)
$ (1,348,900)
$ (1,336,034)
$ (1,323,555)
$ (1,311,452)
$ (1,299,712)
$ (1,389,540)
$ (1,378,496)
$ (1,367,783)
$ (1,357,393)
$ (1,257,737)
$ (1,247,962)
$ (1,238,482)
$ (1,229,286)
$ (1,220,367)
$ (1,211,716)
$ (1,203,325)
$ (1,195,186)
$ (1,187,293)
$ (1,179,636)
$ 13,806
Likelihood that Each Scenario Will Occur
25%
50%
25%
Notes:
- The indicated values represent the cumulative difference in costs between the various scenarios for the indicated remedial option and
the most-likely scenario for continuing with existing P& T system as noted in Step 2b.  This difference in costs over time can be used to
track the "investment" made in optimizing the P&T system or moving forward with the alternative remedial approach.
- Cumulative cost differences are not indicated for an optimized P& T system because an optimized P& T system is not being considered.
- Values in parentheses indicate an investment (i.e.,  a greater expenditure for the indicated remedial approach than for the most-likely
scenario for the existing P&T system).  Values without parentheses indicates income (i.e.,  savings relative to the costs associated with
the mostly likely scenario for the existing P& T system).

- The likelihoods for each remedial option adds to 100%.  These likelihoods are based on professional judgment and experience with
previous applications of the technology by the project team.
                                                       Appendix A

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Step 3: Cost Comparison (continued)

NPV of Life-Cycle Costs
Year 1 cash flow
Year 2 cash flow (discounted)
Year 3 cash flow (discounted)
Cum. cash flow at year 5 (discounted)
Total investment*
Year with highest investment*
Year of payback**
Net cum. cash flow at year 10
Average Annual Percentage Return
(AAPR)asofYeaMO**
Existing P&T System
Most-Likely
Scenario
$ 4,751 ,440
$ (160,000)
$ (155,189)
$ (150,523)
$ (771,017)
N/A
N/A
N/A
Expected
Value
$ 4,500,663
$ (160,000)
$ (155,189)
$ (150,523)
$ (771,017)
N/A
N/A
N/A
N/A N/A
N/A N/A
Optimized P&T System
Most-Likely
Scenario
Total
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Net Change
Compared to
Existing
System
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Expected Value
Total
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Net Change
Compared
to Existing
System
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
New Remedial Approach
Most Likely Scenario
Total
$ 3,372,310
$ (160,000)
$ (155,189)
$ (1,411,152)
$ (1,766,795)
$ 1 ,500,000
Net Change
Compared to
Existing
System
$ (1,379,130)
$
$
$ (1 ,260,630)
$ (995,778)
$ 1,500,000
3
Year 30
$ (1,164,282)| $ (1,164,282)
Net Loss
Expected Value
Total
$ 3,538,006
$ (160,000)
$ (155,189)
$ (1,037,197)
$ (1,994,176)
$ 1 ,500,000
Net Change
Compared to
Existing
System
$ (962,656)
$
$
$ (886,674)
$ (1,223,159)
$ 1 ,500,000
3.25
~ Year 30
$ (1,154,955)| $ (1,154,955)
Net Loss
Wofes:
- "Wef Change Compared to Existing System" is taking the "Total" and substracting the corresponding value from the existing system.
* Investment refers to capital costs "invested" in system modifications or a new remedial technology (based on information documented in Step 1).
** Payback is defined as the number of years (from the year with the highest investment) that it takes to get a positive cumulative cash flow.
*** For this example, AARP is calculated using the following parameters:
  -"Total investment" from the above table corresponds to the "invested capital" from Exhibit 6.
  '"Net cum. cash flow at Year 10" from the above table corresponds to the "net savings at year 10" from Exhibit 6.
  - The number of years from the "Yearwith the highest investment" to Year 10 corresponds to the "period of investment" from Exhibit 6.
                                                                                      Appendix A

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Step 4: Information Gathering
1. Information to Gather
Information
Pilot test (lump sum)
- item 2
- item 3
- item 4
- item 5
- item 6
- item 7
- item 8
- item 9
- item 1 0
- item 1 1
- item 12
- item 1 3
- item 14

Optimistic Scenario
Cost















Total | $
Year
Incurred
















Most Likely Scenario
Cost















$
Year
Incurred
















Reasonable Worst-
Cost















$
Year
Incurred
















Notes:
  - Based on Steps 1 to 3, collection of additional information is not being considered.
                                           Appendix A

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Step 5: Conclusions and Decision

Conclusion
The cost comparison demonstrates that the discounted life-cycle costs for the new remedial
approach (aggressive source remediation) are lower than continuing to operate the existing
system. However, up-front capital costs and are not paid back for 20 to 30 years.  In addition, the
return on investment over a 10-year period, as measured by the average annual percentage return,
is negative, indicating a net loss over a 10-year period.
Decision
Based on the cost comparison, this organization decided that the capital costs associated with
implementing the "new remedial approach" (i.e., chemical oxidation) should be reserved for other
activities.  These activities could be in another division within the organization or might involve a
different remedial alternative that is considered in the future. Because  a full-scale application of
chemical oxidation will not be applied at this site, no further study (such as a pilot test) will be
conducted for that technology at this site.  This decision does not indicate a shortcoming of
chemical oxidation as a remedial technology; rather, it indicates that the organization believes it is
better applied at other sites. An organization that wants a chance at removing the environmental
liability from its balance sheet in a relatively short time frame, and does not have a competing use
for the money, might elect to move forward with the new remedial approach.
                                          Appendix A

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                                            NOTICE:


This document may be downloaded from EPA's Clean Up Information (CLUIN) System at http://www.cluin.org.
Hard copy versions are available free of charge from the National Service Center for Environmental Publications
(NSCEP) at the following address:

U.S. EPANSCEP
P.O. Box 42419
Cincinnati, OH 45242-2419
Phone: (800) 490-9198
Fax: (301) 604-3408
nscep@bps-lmit.com

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United States
Environmental Protection
Agency
Office of Solid Waste and
Emergency Response
EPA 542-R-07-005
May 2007
www.cluin.org
www.epa.gov/superfund

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