United States
             Environmental Protection
             Agency
Office of
Solid Waste and
Emergency Response
     oEPA
               DIRECTIVE NUMBER:  9355.0-10
               TITLE:  Re'nfvUal Action Costing Procedures Manual

               APPROVAL DATE: 39 01 85
               EFFECTIVE DATE: 09/01/85
               ORIGINATING OFFICE: OERR/PAS
               3TINAL
               Z DRAFT
                STATUS:

               REFERENCE (other documents):
  OSWER     OSWER     OSWER
VE   DIRECTIVE   DIRECTIVE   Dl

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03/19/87       United States Environmental Protection Agency
                      Washington, D.C. 20460
 EPA   OSWER Directive Initiation Request
                                 1. Directive Number


                                     9355.0-10
                            2. Originator Information
Name of Contact Person
    SMITH
    Mall Code
Office
  OERR/PAS
Telephone Number
 383-2200
3. Title
      REMEDIAL ACTION COSTING  PROCEDURES MANUAL
4. Summary of Directive (Include brief statement of purpose)

  Provides guidance for  the preperation of detailed
  feasibility cost estimates  of remedial action
  alternatives required  under the revised NCP.
  Provides project managers and decision makers in
  government and industry  with procedures for
  developing and evaluating cost estimates for
  alternative remedial responses to the uncontrolled
  releases of hazardous  substances.  (September 1985)
     NOTE:  Table of contents  and fron matter only.
  Manual  available from  Center for Environmental
  Information, 26 West St. Clair Street, Cincinnati,
  Ohio 45268.  Reference:  9355.0-10.
5. Keywords

    SUPERFUND, CERCLA, REMEDIAL ACTION, REMEDY SELECTION,  REMEDIAL
    ACTION PLANNING, PLANNING,  ETC.
6a. Does this Directive Supercede Previous Dlrectlve(s)?|  ~| yes
                         No
                What directive (number, title)
b. Does it Supplement Previous Directives^)?
             yes
       No    What directive (number, title)
7. Draft Level

    A-SignedbyAA/DAA
B • Signed by Office Director
      C - For Review & Comment
          In Developmen
This Request Meets OSWER Directives System Format
8. Signature of Lead Office Directives Coordinator
                                 Date
9. Name and THIe of Approving Official

    HEDEMAN
                                 Date

                                  09/01/86
       OSWER          OSWER            OSWER
                DIRECTIVE        DIRECTIVE

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OSWER Directive 9355.0-10                                      September  1985
                      REMEDIAL ACTION COSTING PROCEDURES MANUAL
                    HAZARDOUS WASTE ENGINEERING RESEARCH LABORATORY
                         OFFICE OF RESEARCH AND DEVELOPMENT
                        U.S. ENVIRONMENTAL PROTECTION AGENCY
                                CINCINNATI, OH  45268
                       OFFICE OF, EMERGENCY AND REMEDIAL RESPONSE
                     OFFICE OF  SOLID WASTE AND EMERGENCY RESPONSE
                         U.S. ENVIRONMENTAL PROTECTION AGENCY
                               WASHINGTON, D.C.  20460

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                                    NOTICE
The information in this document has been  funded, wholly  or  in  part,  by  the
United States Environmental Protection Agency under  Contract No.  68-03-3113  to
JRB Associates.  It has been subject to  the Agency's  peer and administrative
review and has been approved for publication as an EPA document.

This handbook is intended to present procedures for  preparing detailed
feasibility cost estimates for remedial  action alternatives.
                                      11

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                                  -FOREWORD
     The U.S. Environmental Protection Agency was created because of
increasing public and government concern about the nation's environment and
its effect on the health and welfare of the American people.  The thousands of
uncontrolled hazardous waste sites across the Nation pose a potentially
significant threat to the quality of our natural environment.   The complexity
of that environment and the interplay of its components require concentrated
and integrated programs to adequately address this serious problem.

     Under the authorities of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), the Office of Emergency and
Remedial Response and the Office of Waste Programs Enforcement are responsible
for overseeing the development and implementation of the Government's program
for response to uncontrolled releases of hazardous substances.  These
responses ensure that threats to public health, welfare, or the environment
are appropriately addressed through the effective management of CERCLA's
enforcement and funding authorities.  The Hazardous Waste Engineering
Laboratory develops new and improved technologies and systems to prevent,
treat, and manage.hazardous waste pollutant discharges from municipal and
community sources, to preserve and treat public drinking water supplies, and
to minimize the adverse economic, social, health, and aesthetic effects of
po11ut ion.

     This document is a cooperative effort between the Office of Solid Waste
and Emergency Response and the Office of Research and Development.   It is one
of a series of reports being published to implement CERCLA, otherwise known as
Superfund.  These reports provide an array of information necessary  for
compliance with the National Contingency Plan (NCP, 47 FR 31180, July 16,
1982), including:  guidance for remedial investigation and  feasibility
studies, guidance for exposure assessments, analytical and engineering methods
and procedures, research reports, technical manuals, toxicological and
engineering data bases, and other reference documents pertinent to Superfund.

     This document provides guidance for the preparation of detailed
feasibility cost estimates of remedial action alternatives required  under the
revised NCP.  It provides project managers and decision makers in government
and industry with procedures for developing and evaluating cost estimates for
alternative remedial responses to the uncontrolled releases of hazardous
substances.  In conjunction with other publications in this series,  it will
assist in meeting the national goal of adequately protecting public  health,
welfare, and the environment.
                                      111

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                                   ABSTRACT
     This manual is intended Co provide specific procedures for the cost
estimating and economic analysis steps required for preparing engineering cost
estimates for selecting remedial action alternatives in response to the
requirements of the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) and the National Contingency Plan (40 CFR 300).  This
manual is designed to be used in conjunction with EPA's manual entitled
Guidance on Feasibility Studies Under CERCLA (1985).  The anticipated audience
for this manual includes EPA Regional Project Officers, remedial investiga-
tion/feasibility study contractors, and state and local remedial .action
personnel and other Federal agencies.

     Remedial action costing is divided into three phases:  (1) an initial
site response assessment plan phase; (2) an alternative development and cost .
screening phase; and (3) a detailed cost estimation phase for feasibility
studies.  The remedial action cost estimation process begins with the initial
site response assessment which is a plan for undertaking remedial actions at a
hazardous waste site.  The plan summarizes existing site information,
addresses the types of remedial activities required at the site, recommends
initial remedial measures, addresses community relations concerns at the site,
and estimates remedial response budget and schedule requirements.

     The feasibility study cost estimation process begins with the development
of specific alternatives based on general response actions identified in the
remedial investigation to address site contamination problems.  EPA's manual
entitled "Remedial Action Cost Compendium" is used along with other sources
referenced in this document to estimate screening costs for the various avail-
able remedial action alternatives.  These estimates are used to eliminate
those alternatives whose costs are order-of-raagnitude (i.e., more than 10
times) greater than competing alternatives yet do not provide commensurate
environmental and public health benefits.

     Alternatives that pass the screening cost process undergo detailed cost
analyses to provide the decisionmaker with information for selecting the most
cost-effective remedial alternative.  Detailed procedures are provided for
generating estimated capital and annual operating costs, calculating annual
costs and present worth for each remedial action alternative, and performing
sensitivity analyses of the cost estimates to determine the impact of changes
to various cost input parameters.  Worksheets are provided to assist the user
in developing the feasibility cost analyses.  An example cost analysis is
provided to illustrate these procedures.
                                      IV

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                              "TABLE OF CONTENTS


                                                                       Tage

Notice	   ii

Foreword	   iii

Abstract	   iv

Figures.		   vii

Tables	   viii

Acknowledgements	   ix


1.   INTRODUCTION	     1-1


2.   INITIAL SITE PLANNING COSTING	     2-1

     2.1  INITIAL SITE PLANNING REPORT FORMAT. .	     2-1

     2.2  INITIAL SITE PLANNING DATA	     2-4

     2.3  FACTORS AFFECTING COSTS	     2-10

     2.4  UPDATING COST DATA	     2-10

     2.5  ADDITIONAL SOURCES OF COST INFORMATION 	     2-10


3.  FEASIBILITY STUDY COSTING	     3-1

     3.1  OVERVIEW OF FEASIBILITY STUDY COSTING	     3-1

          3.1.1  Screening Cost Analysis	     3-1
          3.1.2  Feasibility Cost Analysis	  .     3-2

     3.2  COST ESTIMATION	     3-2

          3.2.1  Capital Costs	     3-7
          3.2.2  Annual Operating Costs	     3-11
          3.2.3  Sources of Cost Information	     3-15
          3.2.4  Cost Updating	     3-18

     3.3  ECONOMIC ANALYSIS	»	     3-19

          3.3.1  Capital Costs	     3-19
          3.3.2  Annual Costs	     3-19
          3.3.3  Present Worth Analysis	     3-21

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                    TABLE OF CONTENTS (Continued)


                                                                  Page

     3.3.4  Presentation Cost Analysis Results	     3-22

3.4  SENSITIVITY ANALYSIS	     3-25

3.5  EXAMPLE	     3-26

     3.5.1  Capital Costs	     3-29
     3.5.2  Annual Operating Costs	     3-31
     3.5.3  Annual Costs	     3-31
     3.5.4  Present Worth Analysis	     3-31
     3.5.5  Sensitivity Analysis	  .     3-31

 REFERENCES	     R-l
                                 VI

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                                    FIGURES
                                                                       Page
3-1   Feasibility Study Alternative Development and Screening
      Process	   3-3

3-2   Remedial Action Detailed Feasibility Costing Process 	   3-4

3-3   Worksheet 1:   Capital Cost	   3-12

3-4   Worksheet 2:   Basis of Capital Cost Estimate	•   3-13

3-5   Worksheet 3:   Annual Operating Costs 	   3-16

3-6   Worksheet 4:   Cost Analysis Worksheet	   3-20

3-7   Worksheet 5:   Summary of Cost Analysis	  .   3-24

3-8   Worksheet 6:   Sensitivity Factors	   3-27

3-9   Worksheet 7:   Summary of Sensitivity Analysis	   3-28

3-10  Worksheet 1:   Capital Cost (Example)	   3-30

3-11  Worksheet 3:   Annual Operating Costs (Example)	   3-32

3-12  Worksheet 4:   Cost Analysis Worksheet	   3-33

3-13  Worksheet 5:   Summary of Cost Analysis (Example) 	   3-34

3-14  Worksheet 6:   Sensitivity Factors (Example)	   3-36

3-15  Worksheet 7:   Summary of Sensitivity Analysis (Example).  . '.  .   3-37
                                      VII

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                                    TABLES
                                                                       Page

2-1   Remedial Investigation/Remedial Measures (Costs) 	   2-6 -

3-1   Criteria for Distinguishing Between Remedial Action
      and Operation and Maintenance (O&M) Clean-Up
      Response Activities. . 	   3-6

3-2   Discount Factors 	   3-23
                                     Vlll

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                               ACKNOWLEDGEMENTS
     This document was prepared for Che Office of Emergency and Remedial'
Response and the Hazardous Waste Engineering Research Laboratory in partial
fulfillment of Contract No. 68-03-3113, by JRB Associates.  Mr. Douglas Ammon
of the Hazardous Waste Engineering Research Laboratory (HWERL) and Mr. Bruce
Clemens  of the Office of Emergency and Remedial Response (OERR) were the EPA
co-Project Officers.  Mr. Robert Cochran and Ms. Virginia Hodge were
successive project managers with JRB Associates.

     This report is the compilation of the efforts of several major
contributors, which include:
     Brian Burgher
     Mike Culpepper
     Werner Zieger
JRB Associates
CH2M Hill
JRB Associates
     Preparation of this guidance document was aided greatly by the
constructive criticisms of the following reviewers:
     Mr. Douglas Ammon
     Mr. Bruce Clemens
     Mr. Bill Hansen
     Mr. Jim Jowett
     Mr. Jim Lounsbury
     Mr. Steve Smith
     Mr. Jim Spatarella
     Mr. Rick Stanford
     Mr. Roger Wetzel
     Ms. Nancy Willis
     EPA/HWERL
     EPA/OERR
     EPA/OERR
     EPA/OERR
     EPA/OERR
     EPA/OERR
     EPA/OERR,
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S. EPA/OERR''
JRB Associates
U.S. EPA/OERR
     We also appreciate the assistance extended by the American Association of
Cost Engineers.
1
 Currently with Clean Sites, Inc.
"Currently with PRC
                                     ix

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                                  . CHAPTER 1

                                 INTRODUCTION
     As the number and scope of remedial actions at uncontrolled hazardous
waste disposal sites .increase, there is a corresponding need for standard
procedures for preparing engineering cost estimates for proposed remedial
solutions.  The National Contingency Plan (NCP) outlines a general approach
for conducting remediation at Super fund sites.  The purpose of this manual is
to provide specific procedures for the cost estimating and economic analysis
steps required for the various remedial action planning phases.  These phases
are:

     o  Preparing an initial assessment of remedial action alternatives to
        establish a general cost for the remedial  investigation/feasibility
        process and initial remedial measures

     o  Screening remedial action alternatives during feasibility analysis to
        eliminate those alternatives for which the costs are substantially
        greater than .other alternatives and yet do not provide a commensurate
        public health or environmental benefit

     o  Preparing detailed cost estimates for  feasibility studies to aid  in
        selecting a remedial action alternative.


     This manual presents procedures and provides worksheets to  accomplish the
cost analysis objectives of the above phases.  The guidance presented has been
developed for generalized conditions at uncontrolled hazardous waste disposal
sites.  The user should modify these procedures where necessary  to accommodate
site-specific conditions.

     The anticipated audience for this document includes those persons respon-
sible for Superfund remedial actions:  EPA Regional Project Officers, remedial
investigation/feasibility study contractors, state and local remedial action
personnel, and other Federal agencies.  This manual should also  be useful to
those involved in planning state- and private-lead and voluntary actions,
particularly to demonstrate to the public and  other interested parties that
the selection of a remedial action alternative was conducted according to EPA
approved procedures.
                                     1-1

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     Chapter 2 of this manual addresses initial site planning cost estimating,
Site response assessment costing is important, because it sets the tone  for
the remedial investigation and feasibility study, and gives a rough estimate
of the level of effort and funding necessary to address site problems under
Superfund.  It is a fairly straightforward procedure requiring minimal time
and effort to complete as will be evident in the discussion in Chapter 2.  It
should be noted that these initial costs will be superceded by costs derived
during the feasibility study process.

     Chapter 3 describes how costs are developed for the remedial alternative
screening process and the more detailed feasibility analysis.   A series of
worksheets are included to simplify the cost estimating exercises and to
provide a format for presentation of data.  An example is given at the end of
Chapter 3 to illustrate the feasibility cost analysis and the use of these
worksheets.
                                     1-2

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                                   CHAPTER 2

                     INITIAL SITE PLANNING COST ESTIMATING
     A site response assessment is a plan for undertaking remedial actions at
a hazardous waste site.  It sunmarizes existing site information, addresses
the types of remedial activities required at the site, recommends initial
remedial measures (IRM's), addresses community relations concerns at the site,
and estimates budget and schedule requirements for subsequent remedial
response activities.  The EPA uses the site response assessment  to plan  future
site response actions and to provide general direction to the future
activities associated with the remedial investigation and feasibility  study
(RI/FS) process.

     Because data available at the site response assessment stage are  very
general any costs derived for this plan will be of an order—of-magnitude or
lesser level of accuracy.  This accuracy has been defined as a final construc-
tion cost which will fall within the range of +50% to -302 of the cost
estimated at the site response assessment stage.

     The purpose of this section is to define the steps of the site response
assessment process and offer guidelines as to how costs for each of these
steps may be derived.  With this data the reader should be able  to:

     o  Construct a site response assessment report outline and  identify areas
        which require estimating.

     o  Assign order-of-magnitude costs to the applicable sections of  the site
        response assessment report format.

     o  Determine total order-of-magnitude costs for site RI/FS  activities and
        remedial alternatives available at the site response assessment  stage.

     The site response assessment report generally follows the outline  shown
below but should be adapted to the specific site response assessment needs.


2.1  Initial Site Response Assessment Report Format

     The format for the Initial Site Response Assessment Report  is as  follows:
                                     2-1

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     1.0  INTRODUCTION

          1.1  Purpose of Report
          1.2  Site Location
          1.3  General Approach
          1.4  Limitations and Disputes Including Community Relations
          1.5  Initial Remedial Measures
          1.6  Remedial Investigations
          1.7  Source Control Remedial Actions (if applicable)
          1.8  Off-site Remedial Actions (if applicable)
          1.9  Cost/Schedule

Note:     The executive summary contains an explanation of the nature of a
          site response assessment, along with the conclusions developed as
          part of the response assessment.  The introduction may also contain
          a cost/schedule table relating to the recommended RI/FS and remedial
          activities.  The introduction should not reference other sections of
          the site response assessment and should stand alone as an
          independent summation.

     2.0  DATA EVALUATION

          2.1  Objective
          2.2  Background
               2.2.1  Site Location and Description
               2.2.2  Site History
               2.2.3  Chronology Including Permit and Regulatory Action
                      History

          2.3  Hazardous Materials Characterization
               2.3.1  Hazardous Material Sources
               2.3.2  Types and Quantities of Hazardous Material

          2.4  Environmental Setting
               2.4.1  Physiography
               2.4.2  Geology
               2.4.3  Hydrology
               2.4.4  Geohydrology
               2.4.5  Air Quality
               2.4.6  Ecology
               2.4.7  Socioeconomics

          2.5  Assessment of Potential Impacts
               2.5.1  Public Health and Safety
               2.5.2  Environment
               2.5.3  Socioeconomics

          2.6  Data Limitations/Sources
                                     2-2

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Note:      Since the generation of new data is not within the scope of site
          response assessment development, only available information is used
         . in this section. •  If no information is available on air quality, for
          example, that fact is to be noted as a data gap if it is determined
          air quality data are required .to characterize the site.

     3.0  REMEDIAL ACTIVITIES

          3.1  Remedial Action Plan
               3.1.1  Overall Approach to Site
             •  3.1.2  Master Site Schedule
               3.1.3  Sequencing, Timing, Correlations of Projects

          3.2  Initial Remedial Measures
               3.2.1  Objectives
               3.2.2  Recommended Initial Measures (if any) with Justification
               3.2.3  Estimated Cost/Schedule/ Deliverables
               3.2.4  Community Relations Activities
               3.2.5  Data Limitations/Needs

          3.3  Remedial Investigation/Feasibility Study (assuming the remedial
               investigation/feasibility study is to be the first recommended
               remedial action.  This section is to be the basis for the RI/FS
               work plan.)

               3.3.1  Objectives
               3.3..2  Scope of Work (Task Descriptions -.including community
               •   •'   relations implementation)
               3.3.3  Remedial Investigation/Feasibility Study Estimated Cost/
                      Schedule/Deliverables
               3.3.4  Data Limitations/Needs

          3.4  Source Control Remedial Actions
               3.4.1  Objectives
               3.4.2  Remedial Action Alternatives
               3.4.3  Order-of-Magnitude Level Costs/Schedule
               3.4.4  Data Limitations/Needs

          3.5  Off-site Remedial Actions
               3.5.1  Objective
               3.5.2  Remedial Action Alternatives
               3.5.3  Order-of-Magnitude Level Costs/Schedule
               3.5.4  Data Limitations/Needs

Note:      This effort centers primarily on the Remedial Investigation and
          Feasibility Study activities.  Source control and off-site remedial
          actions are not to be developed if there is insufficient information
          to do so.
                                     2-3

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     4.0   COMMUNITY  RELATIONS ASSESSMENT

           4.1   Background
                4.1.1  History of  Community  Relations  Activities
                4.1.2  Community Relations Issues  and  Actions

           4.2   Objectives and Techniques
                4.2.1  Objectives
                4.2.2  Techniques

           4.3   Schedule of Activities

     5.0   SITE  VISIT HEALTH AND SAFETY PLAN
2.2  Initial Site Planning Data


     As shown in the initial site planning report format, cost estimates  are
required  for various sections of the site response assessment.  These sections
of the initial site planning report format are shown  in Table 2-1.  This  table
is broken down into different sections as described below:

     o  Task - Lists the major categories for which costs must be determined.'
        These categories correspond to assessment report  format sections
        3.0 through 4.0 of the format for assessing remedial responses at
        .sites.

     o  Subtask - Shows major cost categories within  each Task.

     o  Scope - Defines Subtasks into cost line items.

     o  Low Costs - Offers guidelines for determining the minimum labor and
        expenses necessary to accomplish a particular Task"!  (Actual numbers
        shown on Table 2-1 are considered minimum for each Task.)

     o  High Costs - Offer guidelines for determining the maximum labor and
        expenses necessary to accomplish a particular Task.  (Actual numbers
        shown on Table 2-1 are considered maximum for each Task.)

     o  Comments - Offer clarifying, additional or limiting information
        relating to a particular Task.

     It should be noted that one area of Table 2-1 not specifically detailed
on the site assessment response format is "III RM (Remedial Measures) Costs".
It is the goal of the EPA uo determine at the assessment stage an order-of-
magnitude construction cost estimate for each recommended alternative (i.e.,
costs in  a range of +50% to -30%).  These costs will  be used to evaluate
alternatives and to budget future work.  Costs for the recommended alternative
should be determined by applying costs from the Remedial Action Cost
Compendium (1) to the list of remedial measures to determine project
construction costs.

                                     2-4

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2.3  Factors Affecting Costs
     Costs and level of effort shown in Table 2-1 should be. considered as a
guideline only with/ costs for each individual site tailored to fit the
characteristics of that site.  It should be mentioned however that the
guideline costs shown in Table 2-1 are the recommended low and high costs for
personnel protection levels D and B, respectively.  Costs for Level A sites
should be examined individually on a site by site basis because productivity
and type of waste material usually require special measures for these sites.
Additional guidance on estimating the effects of health and safety require-
ments on site response costs can be found in "Completed Scenario Bid
Packages—Costs of Remedial Actions of Uncontrolled Hazardous Waste Sites,"
U.S. EPA, In Print.  Guidance has also-been compiled in the "Compendium of
Cost of Remedial Technology at Waste Sites" U.S. EPA, In Print, on the effects
of a variety of site characteristics on the costs of remedial actions.  The
compendium includes both historical cost data and recently developed estimates
on remedial action technologies.  Tables are contained within this document
which will assist the user in organizing component costs for mobilization,
demobilization, site preparation, and remedial activities with respect to work
safety cost components.


2.4  Updating Cost Data


     Costs shown on Table 2-1 should be updated by applying the indices from
the Remedial Action Cost Compendium.  Labor and expense costs used in this
section should include allowances for overhead, profit, and. contingencies.
Copies of the worksheets should be included' with the initial site planning
report as cost support data.  Worksheets and tables are available from several
sources.  The sources and their uses are referenced in Section 3.2.4.
2.5  Additional Sources of Cost Information
     Various cost sources may be used when determining site assessment
response costs.  The following are sources listed in recommended order of
importance:

     o  Remedial Action Cost Compendium - The Cost Compendium represents a
        compilation of remedial action costs from hazardous waste projects
        performed nationwide over the past several years.  Costs included here
        offer a wide range of hazardous waste cost data  from which  to adapt to
        a specific project scope of work.

     o  Other Remedial Actions - These costs may include data from  other
        remedial projects conducted in the vicinity of the site and not
        included in the compendium.  These costs could include cost estimates
        of projects as well as actual project costs.
                                     2-5

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                                            TABLE  2-1.

                    REMEDIAL  INVESTIGATION/REMEDIAL  MEASURE  COSTS
                                                                            LOW COSTS
        Taek
                             Sub cask
                                                       Scop*
                                            People   Daya   Labor
                                              (p)    (d)      $
                                                                                             Expenses
I
Uorkplan Preparation
4 Initial organiaation














II
IRH Plan





1.1 Organixacion
4 admin.



1.2 Initial ait*
viait



1.3 Draft & final
workplan
1.4 Project QA
plan

2. Prepare initial
remedial mea-
sures plan



0 Assign teams, meet 3 2 $2,400 3200/p/d -
with EPA 4 State $1,200
0 Gather accessible
background data from
EPA 4 State
o Prepare aite viait 1 3 $1,200
health 4 safety
plan
o Perform site viait 3 2 $2,400 $240/p/d -
$1,440
2 5 $4,000

1 3 $1,200


o Aaaeaa need* for IRH 2 2 $1,600
o Develop plan for IRH-
o Determine technical
III
IRM Coats
3.1  Develop Hat
    of  remedial
    aeaaurae
                                             requirement*  & coata
                                             related to cheae taaka
                                           o Sutxait draft  & final
                                             plan
                                           o Per fora alternative
                                             analyaia
                                           o Expand liat  developed
                                             in IRH Plan
                        3.2 Oeteraine order  o Apply liat  of  remedial
5    $4,000   $500
                                                       5    $4,000   $1,000
                           of Magnitude
                           coat eatiaate
                           for conatruc-
                           tion activitiea
                      meaaurea to coats  frun
                      Remedial Action Cost
                      Compendium to determine
                      project construction
                      costs
*L»bor  baaed on $SO/aanhour; it may be neceaaary to adjuat  these appropriately to reflect
 regional variation in labor ratea.

Note:   NuBb«r» with a "»" (e.g., $3,000*)  indicate coata are a auniaum and  could ultimately be higher. •.
                                                 2-6

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                                                                      HIGH COSTS
Total
  S
               Coooents
People
 (p)
Day*
(d)
Labor
  $
                            Kxpenie*
Total
  $
                                                                                                 Content*
$1,600    Include* travel
$1,200    Assume Ut tine
          entry completed
          by TAT

$1,840    Level C, include!
          travel

$4,000    Include! initial plan!
          for all subsequent calk*

$1,200    Include* lite data
          management plan and
          procedure*
$1.600    Uaited TRH (feneei,
          etc.).  Implementation
          coati are function of
          action* (pecial to the
          site
                                               2     $4,000    $JOO/p/d
                                                               $3,000
                                               5     $4,000
           2     $4,000    3500/p/d
                           15,000

          30     $48,000
           5     $4.000
          10     $16,000
                                             $7,000     HOTt:   UP milt  alio
                                                        be set  up to addre**
                                                        change* in «cope
                                                        bated  on incoming data
                                                        a* the  investigation
                                                        progresses

                                             $4,000     No initial entry by
                                                        tit
                                    $9,000     Level B, include*
                                               travel

                                    $48,000    Save a* low costs
                                    $4,000     Sam •• lov colt*
                                    $16,000    Numerous & conplicited
                                               IRM (alternative water
                                               supply, drua removal,
                                               etc.)
$8,000
                                                                                 $16.000
$4,500    Totel cost of the
          remedial measure will
          consist of construction
          cost* a* well aa non-
55,000    construction costs such
          ai planning & engineering
                                                                                                        (continued)
                                                     2-7

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                                             TABLE  2-1.

                     REMEDIAL  INVESTIGATION/REMEDIAL MEASURE  COSTS
Titk
IV
MS Plan &
lapleieentation

Subtaak Scop*
4.1 Develop Health o Aaaeea riik* «t iic<
& Safety PUn in detail

People
(p)
2
LOW COSTS
Daya Labor
(d) $
3 $2,400

Expcntei
-
                        4.2 Eatabliah
                            •obiI* onaite
                            facility
                    o Review baaeline  data
                    o Preaent detailed MS
                      Plan to EPA

                    o Acquire aeparate
                      decontamination  facil-
                      itiee t aeparate
                      trailera
                                                 S600/» ahover
                                                 $250/« office
                                                 JlOO/a utilitiea
                                                 » $1,000 hookup
Additional  Record
VI
Coeanmity telationa
VII
Plan & Per ton
Topographic
Survey
                                            o Obtain other infor-
                                              mation not readily
                                              available for pre-
                                              viou* efforta
                                            o Conduct peraonal
                                              intervieva
6.1 Develop Coar-     o Prepare coaeiunity
    •unity Relationa   relationa program

                    o Public Meting pre-
                      paration and attendance

                    o On-going public

                    o Advertiaing

                    o Travel
                                                             $3,200    $1,000
7.1 Prepare aite
    topographic
    aurvey plan,
    aelect auba
o Prepare bid  dociaaenta
o Evaluate MSB,  SBE, LSA
  aubcontractora
o Select aubcontractora
o Receive and  evaluate
  aubcontractora'
  vorkplan
                                    5     $4,000


                                    5     $1,200


                                    5     $1,000

                                         $   500

                                         $1,000
$2,000   $1,000
    •Labor baaed on  550/»anhour; it aay be neceaaary to adjuat theae appropriately to reflect
     regional variation  in  labor ratea.

    Note:.  NuBbcra with  a "»" (e.g., $3,000*)  indicate coata are a ainiauB  and could ultiaately be higher.
                                                 2-8

-------
                                                                  HIGH COSTS
Total
  $
People   Daye    Labor
 (p)     (d)       $
                            Cxpaniea
Total
  $
52,400
          14     $11.200   $4,000
$19,200    Uv«l B - "Bad Site"
$2,000*   Electricity,
          water eaaily
          accaaaible
                           $800/ai • hover
                           $50/« office
                           $100/« utilitiea
                           •52,000 hookup
$6,000+    Office and decon
           trailer, utilitiea
           (including water)-
           coiti tlttmt power
$A,200    Note chat thia
          taek will alwayi
          b« neceiaary.  It
          should b« done
          concurrent with
          WP de«elop*«nt
                 $5,600    $1,000
$«.«00
$4.000


$1.300
          10     58,000
                 $4,000
$8,000


$4,000
 $1,000

 5500

 $1,000
          10     $4,000
                           $1,300

                           $5,000
$4,000

$1,300

$3,000
 $3,000
                 $3,200    $1,500
$4,700
                                                    2-9
                                                                                                    (continued)

-------
                                             TABLE 2-1.

            REMEDIAL  INVESTIGATION/REMEDIAL  MEASURE  COSTS  (Continued)
        Teak
VIII
Plan 4  Per font
Ceophyaical Survey
                                                                          LOW COSTS
                             Subtaek
                                                       Scop*
                                             People   Daye   tabor
                                               (p)    (d)      $
                                                                                             Expenaea
7.







,2 Per fora topo-
graphic aurvey
(aubcontractor) .
Prepare topo-
graphic aurvay
•ap


o Aerial eurvey
o Tie-in evaluationa
manually , including
araaa of inCereac
(atora draina, etc.)
o Seal* and contour
determined in plan
•
- - - 0-25 acre "
$3,000
25-50 acre •
$7,000
50-75 acre •
$10,000
>75 acrea •
J HO/ acre
S.I Prepare Geo-
    phyeical Survey
    Plan,  aeleet
    aubcontractora
o Re-evaluate previoua
  data
o Investigate uae of:
  - aeiaeiic  reflection (SI)
  - electrical reeie-
    tivity
  - ground penetrating
    redar (CPU)
o Prepare bid doeueenta
o Evaluate aubcontractora
a Select  aubcontractor
o Receive i  evaluate
  aubcontraactor vorkplan
                                            o Aa  outlined in plan
                                            o Ineludea report by tub-
                                              contractor
                                            o Monitor aubcontractor
                                            o Reaiativity
                                              Magnetometer
                                              GPR
                                              Seimic reflection
                                              SR  interpretation
                                              CPR interpretation
                        8.3  Prepare report   o Develop  report for EPA
$3,200   $1,000
S.2 Subcontractor
    per fora geo-
    phyaical aurvey
                                                 $5,000 -in.;
                                                 Sl.OOO/aere

                                                 $400/«cre
                                                 $300/acre
                                                 31,000-2,000/d
                                                 S7JO-l,200/d
                                                 $300-500/1000 ft
                                                 $250-400/crev-
                                                         day
                                                                                    $2,000   $500
   •Labor baaed on $50/aanhour; it aay be  neceaaary to adjuat  theae appropriately to  reflect
    regional variation  in labor ratea.

   Note:  Muaibera with  a "»" (e.g., 33,000*)  indicate coata are  a auniauai and could ultimately be higher.
                                                2-10

-------
Total
$
$5,000

$7.500

$1,000

$1.250

People Daya Labor
Camunt* T5 Kit -
$130/«ert
CooBMnt*
$6,000 nininiaa. Theie
cott* arc icniitive to
lie* condition! and
(hould be covputad on
a proj«ct-by-proj«ct
baaia


$4,200    3i«pl€ «it«; ahallo*
          invvatigation required-
          no dru>a, «tc.;  no
          CPI ua»*t«; littl*
          al*ctroaa|n«tic  intar-
          f«r«nc« (buried  cablet,
          overhead virea,  etc.);
          relatival* aiaple geo-
          logical atrata.
          Level C or D ait>
                                            20
                                                   $8,000    $3,000
                                                                     $11,000    Very difficult aite;
                                                                                requiring all 4
                                                                                inveatigative methoda
                                                                                tar a big area O40
                                                                                acraa) with difficult
                                                                                terrain 4 high poten-
                                                                                tial for electro-
                                                                                magnetic probleaa.

                                                                                Level B H&S
$5,000*
$2,300
          Level C or D aite
Baaed on aiaple aite,
requiring ahallov
aeiaaic 4 ER.  Note on-
aite aurvey vill be done
aa «•!! aa the area aur-
rounding the aite.
Coata ar* baaed on
actual aise of the ait*.
Level C lite
$10,000 «in.
$3,000/aere
                                                   $4,000    $1,000
$10,000*   Level B aite, i«e
           covaenta for aubtaak.
           7.1.  Per acre aethod
           •ay overeatiaata coeti
           for large aitea.  For
           other nethoda of coat-
           ing, conault technical
           aaaiatance group.
                                                                     $5000      If aub doea not develop
                                                                                report or aite very
                                                                                detailed.
                                                                                                      (continued)
                                                    2-11

-------
                                             TABLE  2-1.

             REMEDIAL INVESTIGATION/REMEDIAL  MEASURE COSTS  (Continued)
                                                                           LOU COSTS
        Tick
                             Subtaak
                                                       Scop*
                                             P«opl«  . Daya   Labor
                                               (p)     (d)      $
                                                                      Expenaaa
IX
Conduct  Snviron-
•ental  Inveatigation
& Sampling Program
9.1 Hydrogeologi-    o Prepare
    c«l inveatige-
    tioo (monitor
    (Mil inatel-
    lition.  CW •
    •oilt aampling
    4 analytia)

    Hot*: Oividtd
    ioco tub aub-
    taaka (you may
    vine to  tepat-
    

                                            o Report
                                                        1    $3,600
                                                                     »300/vell «
                                                                     >500/p
                                                                     expenaea,
                                                                     •iniatuB of
                                                                     S2.000
                                                      10

                                                       3
                                                            $8,000

                                                            $3,600 ,
                                                                                            $300/taBple/d,
                                                                                            3500/p/d
                                                                                            expeniet,
                                                                                            52,500 «in.;
                                                                                            (or analyaia,
                                                                                            aee Taak 8.1.4
•Labor baaed on $IO/aaahaur;  it  »ay be nececaary to adjuat theae appropriately to redect
 regional  variation in labor  ratec.

Nate:  Number* with a "»" (e.g., $3,000*) indicate coata  are a minimum and could ultimately be higher.
                                                   2-12

-------
                                                                          HIGH COSTS
Total
               Co •ant«
                                        People    Oaya  .   Labor
                                                                   Exp«naea
                                                                                    Total
                                                                                      $
                                                                                                    ConMnta
$4,000
                                                  20
                                                         $8,000
                                                                                    58,000
51,000*   Shallow wclla, eaay
          aceeat; drilling through
          •and, clay; Laval C
          protection; ?VC pip*
                                                                   540/ft; 43,000    $3,000*
                                                                                               Coeiple* geology,
                                                                                               croeeprotection of
                                                                                               aquifer required
                                                                                               d««p«T than 200' ,
                                                                                               difficult *cc«»,
                                                                                               drilling through rock,
                                                                                               atainlaaa »tetl pipe,
                                                                                               Lav«l t protection
                                                         36,400
55,600*   l«a«d on 3 p»opla,
          aa«plia| Basiawi of 4
          «Mll« p«r day, lodsisc t
          food.  Mot*:  paperwork
          it «tenaiva

   -      Analytical coat* vary
          vith the typa of laba
          ua«d (EPA. contract or
          private).  Contact CH2H
          Hill laba for actual
          coata
                                                                  4400/wall *
                                                                  5500/p «sp«na«a;
                                                                  55.600 aini
910,000

QC p*f«r-
wrk
A 4*«p mlla p«r day,
highly contaaiinaMd,
58,000

56.100*
                                         2         20    $16,000      -               $16,000

                                         4          4    96,400    5400/aaBpla,       59,800*
                                                                   5500/p ixpenia>;
                                                                   53,400 «ini«tai
          3 people taking 4
          •aaplei per day.  Mote:
          paperwork  ia extenaiv*
                                                                                               Large area, difficult
                                                                                               terrain (iwa»p, etc.)
                                                                                                         (continued)
                                                       2-13

-------
                                            TABLE  2-1.

            REMEDIAL  INVESTIGATION/REMEDIAL MEASURE  COSTS  (Continued)
        T««k
                            Subtend'
                                                                          LOW COSTS
                                                      Scope
                                            People   Deyi   Labor
                                              (p)    (d)      $
                                                                                            Expeaeee
                        9.1 Air quality
                           «e>plin| 4
                           eaelyeie
                                                           $1,200   $160/d for
                                                                   equipment;
                                                                   for eaelyii*,
                                                                   •ee T«ek 8.1.4
QC
                        9.4 Oneite wot*
                                                      2    $2.400   SS70/d far
                                                                   tquipaant;
                                                                   for enhour;  it «ey be neceeeiry Co edjueC  Chcee eppropriecely to reflect
  regiooel verietion in lebor  recee.

 Mace:  Nuaber* vith e "»" (e.g., $3,000*)  indicece coec* ere « •ini»>» end could ultiaecely be higher.
                                                2-14

-------
                                                                      HIGH COSTS
    Total
      $
Daya    Labor
(d)       $
                                                                Expena«a
                                                                       Total
                                                                         $
                                                                                                 CoBMnct
$1.520*
$1.540*
$7.040*
»*,000


116,000



M7600


$8,000
CquipaMnt includes vind-
ap«ad directional
inacriaMot w/raeordtr,
high voliaM aaaplar, OVA
(1 unit organic vapor
•ncrapaattt)

3 «a»pla location*
(aurfaci, aid, alud(«);
boat aaapla; ahipping,
QC papatwork, Laval C
Low to Mdiiai haiard,
Laval B.  Equipawnt
includaa druai opcnara
(••nual), aaapla tubaa;
aaaipliaf 3 driaaa/hr with
a 6 hr dvcon.
J800
                    $430d/for
                    equipannt
          $10,000    $S70/d
                                                10      $16,000    $740/d
                                      8     $9,600    $1,200

                                      30     $24,000
                                      4     $3,200    $600/p
                                                      $1,200

                                      15     $12.000
                                                                                   $1,660+     3 OVA  uniti, aara  high
                                                                                              volma saaplera
                                                                                   $12,850*
                                      $23,400*   High haxard,  Leva I  B
                                                 or A, ra*oca  drvfli
                                                 puncturing apparatu*
                                      $10,800

                                      $24,000



                                      94,400


                                      $12,000
                                                      2-15

-------
o .Standard Cost Guides - Standard cost guides include any number of
   available books published by R.S. Means Co., Inc.; Dodge Guide;
   Richardson Engineering Services, Inc.; or others.  Because
   productivity at a typical hazardous waste site varies considerably
   from the norm, costs from these standard guides should be adjusted
   accordingly to compensate for the difference.
                                2-16

-------
                                   CHAPTER 3

                           FEASIBILITY STUDY COSTING
     This chapter describes standard procedures for preparing cost estimates
for remedial action alternatives being evaluated during feasibility analysis.
Initial site planning cost estimating efforts, discussed previously in Chapter
2, are based solely on existing data and are performed to provide general cost
data associated with RI/FS activities, Remedial Removal measures, and remedial
alternatives.  Feasibility study cost estimating is aimed solely at providing
remedial alternative costs using information collected during the remedial
investigation.  The following sections provide an overview of the costing
process for both screening and detailed feasibility analysis of alternatives
(Section 3.1); guidance on preparing capital and annual operating cost
estimates (Section 3.2); procedures for economic analysis (Section 3.3);
guidance on the use of sensitivity analysis (Section 3.4); and an example
illustrating these cost analysis procedures (Section 3.5).  Additionally,
worksheets are provided to assist the user to estimate, analyze, and present
costs for remedial action alternatives.
3.1  Overview of Feasibility Study Costing


     Two sets of cost estimates are generated within the overall  feasibility
study process.  Initially, order-of-«agnitude costs are generated to screen
out disproportionately expensive alternatives.  Subsequently, feasibility
costs are developed and used in selecting an alternative. While the basic
procedures for generating these cost estimates are essentially identical, the
user should achieve a greater level of accuracy for the feasibility costs
through the use of more extensive data sources and a more detailed preliminary
design based on information available from the remedial investigation.  At
least one alternative should be costed that complies with Federal hazardous
substances and waste management regulations and standards.


     3.1.1  Screening Cost Analysis


     The objective of the screening cost analysi* is to eliminate alternatives
that have costs an order-of-magnitude greater than those of other alternatives
but do not provide greater environmental or public health benefits or greater
                                     3-1

-------
reliability.  Such order-of-magnitude evaluations or comparisons are defined
as those values that are ten times or more as  large as other values (9).

     Screening cost estimates are generated during the alternative development
and screening process depicted in Figure 3-1.  These estimates are used to
eliminate those alternatives whose costs are significantly greater than
competing alternatives yet do not provide commensurate environmental and
public health benefits.

     The user should primarily rely on "Remedial Action Cost Compendium" to
estimate screening costs along with the other sources referenced in that
document.  The accuracy of the costs should be in the +100% to -50% range.
The time and level of effort to prepare these costs should not normally exceed
one week and 80 man-hours, respectively.


     3.1.2  Feasibility Cost Analysis


     Following initial screening, a manageable number of remedial action
alternatives should remain for the feasibility cost analysis.  Cost estimates
for feasibility cost analysis are intended to provide a measure of the total
resource costs over time associated with any given remedial alternative.

      The development of cost estimates for remedial action alternatives
involves the following steps which are also illustrated in Figure 3-2:

     1.   Estimation of Costs - estimate capital and annual operating and
         maintenance costs for each remedial action alternative.

     2.   Present Worth Analysis - using estimated costs, calculate annual
         costs and present worth for each remedial action alternative.

     3.   Sensitivity Analysis - evaluate the sensitivity of cost estimates to
         changes in key parameters.

     4.   Input to Alternatives Analysis - summarize input data to the
         alternatives analysis for selection of a remedial action alternative.


     Feasibility analysis costs are typically derived from a number of
sources, including vendor estimates, and should be accurate within a range of
+50 to -30 percent; this accuracy range represents an order-of-magnitude for
cost estimating as defined by the American Association of Cost Engineers.  The
time and level of effort to complete this analysis should not normally exceed
two weeks and 120 man-hours, respectively.
                                     3-2

-------
               Figure 3-1. Feasibility Study Alternative Development and Screening Process
I
U)
| Identify
| Site
• (Remedial
I Investigation)




1
1
| »





Identify
General
Response
Actions


Conduct
Environmental
Health
Screening






Identify and
Screen
Technologies


Conduct
f*net
Screening
Assemble
" Alternatives


Alternatives
for
Detailed
Analysis







-------
  Figure 3-2. Feasibility Study Cost Evaluation  Process
                                 Remedial
                               Investigation
                              Estimation of
                                 Costs
                              Present Worth
                                Analysis
  Feasibility
    Study
Cost Evaluation
  Activities
                                Sensitivity
                                 Analysis
                                 Input to
                               Alternatives
                                 Analysis
                               Selection of
                            Remedial Alternatives
                                     3-4

-------
 3.2  Cost  Estimation
      This section describes -procedures for estimating capital and annual
 operating costs for remedial action alternatives.   Sunk costs are not to be
 included in this evaluation; sunk costs include investments or commitments
 made prior to or concurrent with remedial action planning.   The various cost
 components that should be considered and sources for cost data are identified.
 Worksheets are provided to assist the user in organizing and presenting the
 cost data for each alternative and can be used for both screening and detailed
 costing.  The reader is also .referred to such books as Principles of
 Engineering Economy by Eugene L. Grant and W. Grant Ireson, and Economics of
 Water Resource Planning by Douglas James and Robert Lee, for comprehensive
 discussions of the procedures presented in this section.

      Federal construction programs have traditionally distinguished between
 capital costs and operation and maintenance (O&M)  costs.  Federal partici-
 pation in public works projects such as highways and wastewater treatment
 plants has been limited to construction, involving the funding of a major
 share of project capital costs.  Following construction, costs for operation
 and maintenance are the responsibility of state or local government.  However,
 the distinction between the construction and- operation phases of a Superfund
 cleanup response is not as easily made.  The completion of construction will
 not achieve public health or environmental protection in many instances.  Such
 protection may be afforded only after operation of the remedial technology for
 a period of time.  Nevertheless, a distinction must be made in order to
 determine which costs are eligible for Superfund.

      EPA has divided Superfund response activities into two phases:  (1)
.remedial action, and (2) post-closure or operation and maintenance (O&M).
 Only costs incurred under the remedial action phase will be fund eligible.

      EPA defines a remedial action as consisting of those activities required
 to prevent or mitigate the migration into the environment of hazardous waste
 released at an uncontrolled disposal site.  It may include activities usually
 considered to be O&M in situations where construction, by itself, will not
 achieve health or environmental protection.  However, a remedial action will
 have a limited duration and a well-defined end-point.

      The post-closure or O&M phase occurs after completion of the remedial
 action and includes those activities necessary to continue stopping migration
 of releases of hazardous waste into the environment.  Post-closure will
 typically control area-wide off-site contamination and will require long term
 or indefinite activities.

      Table 3-1 summarizes the criteria for distinguishing between the remedial
 action arid O&M phases of a Superfund cleanup response.

      While the distinction between the remedial action and O&M phases of a
 cleanup is important for determining fund eligibility, it should not be a
 factor in feasibility cost analysis.  The purpose here is to develop
                                      3-5

-------
TABLE 3-1.  CRITERIA FOR DISTINGUISHING BETWEEN REMEDIAL
       ACTION AND OPERATION AND MAINTENANCE (O&M)
              CLEAN-UP RESPONSE ACTIVITIES
        Remedial Actions
                                           O&M
o  Controls contamination at or
   near the source of release
   (source control measures)

o  Results in the mitigation
   of a release

o  Action is of limited duration
   (generally less than 4 years)

o  Contaminant levels can be
   identified to mark the end
   of the remedial action

o  Results in a significant.
   protection to public health
   or the environment
                           o   Controls  area-wide  and  off-site
                              contamination (off-site measures)

                           o   Required  to stop or control  continued
                              migration

                           o   Requires  long-terra  or indefinite
                              activities

                           o   Activities required to  maintain the
                              effectiveness following completion
                              of the  remedial  action
                          3-6

-------
comparative Life-cycle, cost..information for the-remedial action alternatives
under consideration for use in the alternative selection process.  These
alternatives include both the remedial'action and O&M phases." Thus, for
purposes of feasibility costing, the user should observe the conventional
distinctions between capital and O&M costs, where capital and initial
construction costs are analogous.
3.2.1  Capital .Costs


     Capital costs are those expenditures required to initiate and install a
remedial action.  They are exclusive of costs required to maintain or operate
the action throughout its lifetime.  Capital costs include only those expen-
ditures that are initially incurred to develop and incorporate a remedial
action (e.g., installation of a cap or slurry trench) and major capital
expenditures anticipated in future years (e.g., replacement of a cap or slurry
trench).  This differentiation between capital costs and operation and
maintenance costs does not necessarily reflect a determination as to the  fund
eligibility of the costs.

     Capital costs consist of direct and indirect costs.  Direct costs are
those expenditures necessary for installation of remedial actions.  Indirect
costs include expenditures for engineering,  financial, supervision and other.
necessary services that are not part of actual installation activities.

     The user should consider both direct and indirect costs  in the develop-
ment of capital costs of remedial actions, regardless of level of accuracy
required.  This section presents guidance for estimating capital costs for two
levels of accuracy:  screening remedial action alternatives and feasibility
study cost estimates.  The procedures used to develop cost estimates—
screening and feasibility study—are similar.  They differ only in the level
of detail of the alternative preliminary design and sources used to develop
cost components and hence their level of accuracy.


         3.2.1.1  Direct Capital Costs


     Direct costs include equipment, labor and materials necessary for
installation or construction of remedial actions.  These include costs for:

     o  Remedial action construction

     o  Component equipment

     o  Land and site development
     o  Buildings and services
     o  Relocation of affected population where ^appropriate
     o  Disposal costs of waste materials.
                                     3-7

-------
 Each of  these  individual direct  capital  cost  components  are discussed  in  the
 following  sections.

     The user  should consider the  impact of on-site health and  safety
 precautions on construction and  installation  costs.  Many of these precautions
 can significantly  increase costs by decreasing productivity.  Guidance  is
 provided in the "Remedial Action Cost Compendium"  (1)  for estimating the
 impact of  different levels of health and safety requirements at remedial
 action sites.
         Remedial Action Construction Costs-


     Construction costs, one of the major components of direct capital costs,
are expenditures for equipment, labor and materials required to install a
remedial action.  Construction activities would include:

     o  Site modifications such as installation of slurry walls, cap system,
        and run-off controls; excavation of contaminated materials; and site
        preparation for remedial action equipment

     o  Installation of remedial action equipment such as construction of
        leachate collection, pumping systems, and treatment systems

     o  Installation of testing and monitoring equipment such as soil borings
        and construction of monitoring wells

     o  -Surface controls (e.g., grading and erosion control).
     Construction costs are typically available for individual activities
(e.g., excavation and backfill) and include itemized equipment labor and
material components.  Labor costs will include all fringe benefits, worker's
compensation and contractor fees.  The user should be careful that these costs
reflect reduced labor productivity resulting from the health and safety
precautions necessary during construction of the remedial action alternative.


         Component Equipment Costs—


     Equipment costs are those expenditures required for equipment necessary
to conduct a major remedial action.  Major equipment expenditures are
generally required for remedial actions involving on-going treatment
operations such as groundwater treatment and waste destruction.  Equipment
typically required for remedial action operations includes:

     o  Pumping systems

     o  Treatment systems

     o  Monitoring and sampling equipment.


                                     3-8

-------
         Land and Site Development1 Costs—'
     Land-related expenses consist of both the purchase of -new land and the
development of existing property.  New land purchases are typically not
required but may be necessary for sites which have small land areas, limited
access or are located in nearby population centers.  Property development will
commonly be needed to develop a remedial action.   Components of property
development include:

     o  Development of access roads

     o  Incorporation of access control (e.g., gates, fences)

     o  Site preparation for equipment and buildings.


     Land-related expenses are typically a small  part of total capital costs,
but may be significant in some cases.


         Buildings and Services Costs—


     Installation of remedial actions may require construction of temporary
and permanent buildings as well as establishing support services.  Building
costs may include both process structures (e.'g.,  piping supports, concrete
pads) and non-process structures (e.g., laboratories, control buildings,
temporary engineering and supervision buildings).  Service costs may include
temporary or permanent utility connections for these facilities, including
water and sewer lines, electric substations and connections, and energy
sources.  These costs include equipment, labor, and materials needed for
construction or installation.


         Relocation of Affected Population Costs—


      Costs for relocating people living near a site property may be necessary
in some remedial actions.  These costs may include temporary or permanent
accommodations for nearby residents, moving allocations, and other necessary
associated costs.  Assistance for relocation costs is available' on a
case-by-case basis from the Federal Emergency Management Administration
(FEMA).
         Disposal of Waste Material Costs—
     Disposal of waste materials generated during the course of remedial
actions must be considered when estimating capital costs.  Waste materials
such as waste treatment residuals, soil excavation materials, and waste
                                     3-9

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 excavation materials must  be  properly  disposed  in  off  site  disposal  areas.
 The  costs associated with  transportation  and  off site  disposal  are  included  in
 capital  costs.


          3.2.1.2   Indirect Capital  Costs

      Indirect capital costs consist  of engineering,  financial,  supervision and
 other  services necessary to carry-out a remedial action.  They  are not
 incurred as  part of actual remedial  actions but are  ancillary to direct or
 construction costs.  Indirect capital costs include  costs for design,
 engineering, and contingency allowances.

     Each of these components are discussed in the following sections.


          Engineering Expenses—


     Design and construction of remedial actions involves engineering expenses
 incurred by internal staff administration and outside contractor support.
Engineering expenses include costs for:

     o  Administration and supervision

     o  Design and development
     o  Drafting

     o  Monitoring and testing

     o  Project and cost engineering.

Typically engineering expenses are in the range of 7 to 15 percent of total
direct capital costs (2).  Nevertheless, certain sites will require additional
resources for legal fees, obtaining  license/permits, and start-up and shake-
down of equipment.

     Expenses are typically required as part of site remedial actions for
legal fees  and administrative and technical personnel necessary to obtain
licenses and permits.   Construction permits and temporary or long-term
operating permits,  such as building, electrical connection and water supply
permits may be required from Federal, state and local jurisdictions to
complete a remedial action.  Similarly, legal advice may be necessary to
obtain licenses or negotiate construction and operating contracts.  Legal and
 license/permit costs are typically in the range of 1 to 5 percent of total
remedial action costs (2).

     The user should include costs for system start-up and shake-down to
achieve design operating parameters  for remedial actions involving long-term
operating activities,  such as treatment operations.  Costs include those for
operation,  testing equipment and materials required  for remedial action
equipment,  "debugging" and testing, operator training, and initial field
                                     3-10

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monitoring.  Such costs are considered separate from contingency .allowances as
they are expected as part of remedial action start-up.  Start-up and shake-
down costs can be expected to involve 5 to 20 percent of total: capital costs
where system operations are involved (2, 3).  Start-up costs are -not required
for remedial actions, such as excavation and site modification actions> which
do not include operating equipment.


          Contingency Allowances—


     Contingency allowances are added to total capital costs to account for
unforeseen circumstances which result in additional costs.  Contingencies may
include adverse weather conditions, strikes by material suppliers, and
inadequate site characterization (particularly subsurface).  Contingency
allowances typically-fall in a range from 15 to 25 percent of total capital
costs.
          3.2.1.3  Sources of Capital Costs


     Data sources for preparing capital cost estimates include  the Remedial
Action Cost Compendium (1), equipment vendors, construction companies, similar
projects, and standard costing references.  These sources are discussed  in
Section 3.2.3.
          3.2.1.A  Updating Costs


     Costs are often available based on data several years old and must be
updated to a common year.  Procedures for updating capital costs are provided
in Section 3.2.4.
          3.2.1.5  Presentation of Capital Costs


     The user should present remedial action alternative capital costs  in a
consistent format which displays all cost estimates and their source  in an
organized manner.  Worksheets 1 and 2 are provided in Figures 3-3 and 3-4 for
presenting capital costs.  Each cost component should be itemized, where
possible.


     3.2.2  Operation and Maintenance (O&M) Costs
     Operation and maintenance costs are  those post-construction/installation
costs necessary to ensure continued effectiveness of a  remedial  action.  This
section presents procedures  for both screening and  feasibility cost analysis.
                                     3-11

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FIGURE 3-3.  WORKSHEET 1:  CAPITAL COST
Coat
Component
DIRECT CAPITAL COSTS
I. Construction Costs
a. Equipment
b. Labor
c. Materials
Subtotal
2. Equipment Costs
	 Installed
Purchased
3. Land and Site Development
a. Equipment
b . Labor
c. Materials
Subtotal
4. Buildings and Services
a.. Equipment
b. Labor
c. Materials
Subtotal
5. Relocation Costs
Subtotal
6. Disposal Costs
Subtotal
TOTAL DIRECT COSTS
INDIRECT CAPITAL COSTS
1. Engineering and Design
2. Contingency Allowance
3. Other Indirect Costs
a. Legal fees
b. License/ permit Costs
c. Start-up & Shake-down
Subtotal
TOTAL INDIRECT COSTS
TOTAL CAPITAL COSTS
Cost
Estimate

•
















Basis of
Estimate






-











Year
Incurred












1





                  3-12

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                                  "FIGURE 3-4.




                 WORKSHEET 2:  BASIS OF CAPITAL COST ESTIMATE*
COST ITEM:                             COST COMPONENT:
BASIS:
CALCULATION/SOURCE:
*CompLete for each capital cost component as necessary.
                                     3-13

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          3.2.2.1  Estimating O&M Costs


     la order to estimate O&M costs, the user should identify the cost
components for each remedial action alternative, identify sources and methods
for developing cost estimates, and, where necessary, update estimates to the
current year.

     The post-construction/installation activities necessary to ensure con-
tinued effectiveness of a remedial action may involve the following cost
components:

     o  Operating Labor - This includes all wages, salaries, training,
        overhead, and fringe benefits associated with the labor needed for
        post-construction operations.  The user should identify the labor
        requirements by skill categories for each remedial action alternative.

     o  Maintenance Materials and Labor - This includes the costs for labor,
        parts, and other materials required to perform routine maintenance of
        facilities and equipment associated with a remedial action
        alternative.

     o  Auxiliary Materials and Energy - This includes such items as chemicals
        and  electricity needed for plant operations, water and sewer service,
        and  fuel costs.

     o  Purchased Services - This includes such items as sampling costs,
        laboratory 'fees, and other professional services for which the need
        can  be predicted.

     o  Administrative Costs - This includes all costs associated with
        administration of remedial action operation and maintenance not
        included under other categories such as labor overhead.

     o  Insurance, Taxes and Licenses - This includes such items as:
        liability and sudden and accidental insurance; real estate taxes on
        purchased land or right-of-way (for private-lead actions); licensing
        fees for certain technologies;  and permit renewal and reporting costs.

     o  Maintenance Reserve and Contingency Costs - This includes1annual
        payments into escrow funds to cover anticipated replacement or
        rebuilding of equipment and any large unanticipated O&M costs,
        respectively (for private lease actions).

     o  Other Costs - This includes all other items which do not fit into any
        of the above categories.

     The limited time and resources available for developing screening cost
estimates—in addition to the objectives with respect to accuracy and detail—
dictate that the sources used be restricted to the "Remedial Actions Cost
Compendium"  (1) and other readily available sources such as Initial Planning
for Remedial Measures.
                                     3-14

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     The level of accuracy-needed, for, the-detailed feasibility analysis
requires that the O&M cost estimates be based on site-specific information.
The following sources should be ronsulted in addition to those, used for
screening:

     o  Equipment vendors

     o  Estimates for similar projects

     o  Actual experience at similar projects

     o  Standard costing guidance references.

   " These sources are discussed in more detail in Section 3.2.3.

     O&M cost estimates based on data a year or more old should be updated to
the current year using an appropriate cost index.  Procedures for updating
cost are discussed in Section 3.2.4.


          3.2.2.2  Presentation of Operation and Maintenance Costs


     The user should summarize O&M cost estimates on Worksheet 3 (Figure 3-5)
to facilitate calculation of annual costs and present worth in subsequent
steps.  The user should identify each component, enter the annual cost
estimate and note the basis for the estimate in the appropriate columns.  The
remaining columns should be used to indicate whether the cost is expected to
occur annually or-less frequently and the year or period over which a cost is
expected to occur.  For example, for a remedial action with a twenty-year
planned life, a cost that occurs annually over the entire life would be
recorded as "annually" under "frequency" and "1-20" under "year/period."
Furthermore a major maintenance item which is required every five years would
be recorded as "5, 10, 15" under "year/period" (presumably, this maintenance
would not be performed in the final year).

      The completed worksheet now contains annual operating cost information
necessary to calculate annual costs and present worth.


     3.2.3  Sources of Cost Information
     The user should rely primarily on the "Remedial Action Cost Compendium"
(1) plus other readily available sources, where appropriate, for screening
cost estimates.  Additional sources, including vendor estimates, should be
used for detailed feasibility analysis to achieve the desired level of
accuracy.  Nevertheless, the accuracy of cost estimates depend more on the
level of detail of the preliminary design of a remedial action alternative
than on the sources of cost information used.  The remedial investigation
should provide sufficient site information to permit the necessary refinement
of preliminary remedial action designs for the detailed feasibility analysis.
                                     3-15

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             FIGURE 3-5.




WORKSHEET 3:  ANNUAL OPERATING COSTS
Cose Component Estimate($)
0 & M Coses
1. Operating Labor
a.
b.
c.

2. Maintenance
Materials and
Labor
a.
b.
c .

3. Auxiliary
Materials and
Labor
a.
b.
c.

k. Purchased Services
a.
b.
c.

5. Administration
6. Insurance, Taxes,
Licenses
a.
b.
c.

7. Maintenance
Reserve and
Contingency Costs
8. Other
Basis of Estimate








Frequency








Year/
Period








                3-16

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     The. following - are the.major sources available for estimating remedial
action costs:

     o ,. Remedial Action Cost Compendium

     o  Vendor «stimates
     o  Estimates for similar projects
                *
     o  Standard costing guidance.

The following sections describe these sources in more detail.


         3.2.3.1  Remedial Action Cost Compendium


     The major source of cost data for remedial actions is provided by the
"Remedial Action Cost Compendium," (1)  which is a comprehensive compilation
of cost data covering the full range of remedial technologies outlined in the
NCP.  The costs are based on past remedial actions and generic costs developed
where actual remedial action applications do not exist.  All costs were
updated to the common base year (1983).


          3.2.3.2  Vendor Estimates
     Based on detailed site and design information, equipment vendors, and
construction companies can provide site-specific remedial action construction
and equipment costs for capital cost estimates.  Construction estimates
typically include equipment mobilization, operation and leasing costs, labor
costs, and contractor fees.

     Equipment vendors can also provide information on the O&M requirements
for the equipment they manufacture.  Recommended maintenance schedules can
provide an indication of maintenance costs, although these are often estimated
as a percentage of capital costs.  Specifications often provide information on
auxiliary materials and energy usage costs.


          3.2.3.3  Estimates for Similar Projects


     Estimates developed for similar projects—or, preferably, actual experi-
ence with such projects—are good sources of capital and O&M cost information.
Where necessary, these costs should be updated according to the procedures
discussed in Section 3.2.4.
                                     3-17

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           3.2.3.4   Standard Costing Guidance
     Construction cost estimates can be developed  from standard guidance
references, such as the Dodge Guide (5) and Means  Guide (4).  These sources
provide unit costs for a wide variety of construction activities, including
those relevant to remedial actions.  Estimates using these sources must be
adjusted  to reflect reduced labor productivity resulting from the health and
safety precautions required during construction of a remedial action
alternative.

     Labor and energy cost information is published by the Bureau of Labor
Statistics (U.S. Department of Labor) and U.S. Department of Energy,
respectively.  These sources are particularly useful for determining regional
differences in labor, materials, and energy costs.

     In addition to these standard references, cost engineers frequently use
estimating factors (based on percentages of other cost items, such as capital
costs) to develop O&M cost estimates.  Some of the factors typically used
include:

     o  Labor fringe benefits — 20-30% of wages (4)

     o  Equipment O&M Costs — 3-5% of purchase price

     o  Insurance — 1% of capital costs (exclusive of environmental
        impairment liability)

     o  Reserve fund — 1% of capital costs.


     3.2.4  Cost Updating


     Estimates of capital and O&M costs may be based on information that is a
year or more old and must be updated to the current (base)  year of the
remedial  action.  This can be done using a cost index by means of the
following formula:

                         c  =• c  (r /F }                                   (i)
                          n    o ^  n  of


where:  C  »  new (updated)cost
        C  «  old cost
        F  •  current index factor
        F  *  index factor corresponding to date of old cost.
                                     3-18

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     A variety of indices are -available to assist, the cost engineer in
updating, including:          .<•_.'
       ?
     o  Engineering News Record (ENR) Construction Cost Index is. .generally
        most appropriate for updating construction capital cost -estimates

     o  Chemical Engineering plant cost and equipment cost indices or the
        Marshall Stevens Index may be more appropriate where treatment
        facility costs are to be updated

     o  Annual operating costs should be updated using American City and
        County's Municipal Index or the Producer Price Index for Finished
        Goods published by the U.S. Department of Labor in the Monthly Labor
        Review.
3.3  Present Worth Analysis
     This section presents recommended procedures for evaluating costs over
the planned lives of remedial action alternatives.  Present worth analysis
provides a method of evaluating and comparing costs that occur over different
time periods by discounting all future expenditures to the present year.

     The user should complete Worksheet 4 (Figure 3-6) to facilitate calcu-
lation and presentation of annual costs and present worth analysis for each
alternative.
     3.3.1  Capital Costs


     Initial capital costs should be considered to occur in Year 0.  The user
should enter the estimate from Worksheet 1 (Figure 3-3) under Year 0 on line 1
of Worksheet 4 (Figure 3-6).  For an alternative involving phase construction,
the user should enter the capital costs for each phase on line 1 under the
year when its implementation is planned.  Likewise, the user may include any
subsequent major capital expenditures not considered to be routine O&M costs
on line 1 under the year in which they are expected to occur.


     3.3.2  O&M Costs
     O&M costs represent the expenditures necessary to cover all remedial
action costs as they occur during each year of the planned life of the action.
These costs include any anticipated post-construction capital expenditures in
addition to annual O&M costs.  The user should enter annual O&M costs in
Worksheet 4 (Figure 3-6) using the data from Worksheet 3 (Figure 3-5).  O&M
costs should be entered on line 2.
                                     3-19

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                      FIGURE 3-6. WORKSHEET 4: COST ANALYSIS WORKSHEET
U)
I
N>
O
Cost Component

1. Capital Costs
2. O&M Costs
3. Annual Expenditures, x(
(Sum of Lines 1 and 2)
4. Discount Factors
Annual Discount Rate = 	 %
5. Present Worth
(Product of Lines 3 and 4)
Cost/Year Cost Occurs (Thousands of Dollars)
0





1





2





3





4





5





6





7





8





9





10





11





12





13





14





15






1. Capital Costs
2. O&M Costs
3. Annual Expenditures, x,
(Sum of Lines 1 and 2)
4. Discount Factor
Annual Discount Rate = 	 %
5. Present Worth
(Product of Lines 3 and 4)
16





17





18





19





20





21





22





23





24





25





26





27





28





29





30






Total
Present
Worth
($1000)


-------
     Annual costs are Che sum of the. capital costs (line 1) and total O&M
costs (line 2) for each year of the life of the remedial action.  The user
should enter this sum on line 3 of the worksheet for each year.
     3.3.3  Calculating Present Worth


     Present worth analysis is a method of evaluating expenditures that occur
over different time periods.  The costs for different remedial action alter-
natives can be compared on the basis of a single figure for each alternative
by discounting all costs to a common base year.  This single figure -- the
present worth or value of a project —- represents the amount of money, which,
if invested in the initial year of the remedial action and disbursed as
needed, would be sufficient to cover all the costs associated with a remedial
action.

     Three assumptions are necessary for calculating present worth:

     o  Inflation or escalation rate

     o  Discount rate
     o  Period of performance.

     It is recommended that the current Office of Management and Budget (OMB)
guidance be followed.  OMB Circular No. A-94 (6) specifies that costs in
future years should not be escalated to account for general price  inflation,
except where there is a reasonable basis for predicting differences in the
relative escalation of costs (or benefits) associated with the project.
Otherwise the analyst should use constant (i.e. base period) dollars.  Given
the difficulty in forecasting relative price changes over an extended period,
it is recommended that the user not attempt such forecasts, except perhaps as
part of the sensitivity analysis.  OMB currently specifies a discount rate of
10 percent, which represents "the average rate of return on private invest-
ment, before taxes and after inflation" (6).

     The period over which a remedial action requires maintenance  and/or
operation (period of performance) is also an important factor in present worth
analysis.   Remedial action alternatives requiring perpetual care  should not
be costed beyond thirty years, for the purpose of feasibility analysis.  The
present worth of costs beyond this period become negligible and Have  little
impact on the total present worth of an alternative.  Also, it may be
appropriate to consider the salvage value of equipment, buildings, and land at
the completion of the remedial action.  These benefits should be discounted to
the present from the last year of the period of performance.
                                     3-21

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      The  present  value  of  expenditures  occurring  over the life of the remedial
 action  is determined  using  the  following  equation:
                                      X
                       PW =»             t                                    (2)
where:

PW *  Present worth

x  a  expenditures for  the remedial  action  in  year  t

i  *  discount rate (i.e., 10%)

t  3 year in which expenditure(s) occurs

     The user should include initial capital costs  occurring  in Year 0  in  the
present worth total with discounted  future  costs.

     Worksheet 4 (Figure 3-6) has been provided to  facilitate calculation  of
the present worth of capital and O&M costs  occurring after Year 0.  The user
should determine the annual expenditure (x  in the  equation above)  for  each
year of the period.of performance by adding the capital costs (line 1)  and O&M
costs (line 2).  These  figures should be entered on line 3 in Worksheet 4.
The user should use the discount factors for a discount rate of 10  percent
presented in Table 3-2  to simplify calculations of  present worth.   (Discount
factors for rates other than 10 percent can be calculated using the equation
l/(l+i) , where i is the discount rate and  t is the year in which costs
occur.)  The product of the annual expenditures (line 3) and the discount
factor (line 4) for each year represents the present worth of the costs
occurring in that year, which should be entered in  Line 5.  The sum of  the
present worth values for each year over the period  of performance represents
the present worth of the alternative's cost.


     3.3.4  Presentation of Cost Analysis Results


     The user should summarize the results of  the present worth analysis on
Worksheet 5, presented  in Figure 3-7, in order to facilitate comparison of
cost information for each alternative.  The user should enter the alternatives
in the worksheet in order (lowest to highest)  of their present worth and enter
the present worth and annual expenditures data in the appropriate column for
each alternative.
                                     3-22

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                       'TABLE 3-2.   DISCOUNT FACTORS
Plan Year
0
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
"Discount Rate (Z)
10.000
1.000
0.909
0.826
0.751
0.683
0.621
0.564
0.513
0.467
0.424
0.386
0.350
0.319
0.290
0.263
0.239
0.218
0.198
0.180
0.164
0.149
0.135
0.123
-0.112
0.101
0.092
0.084
0.076
0.069
0.063
0.057

*Factor calculated from (1/0+i)  where i ™ discount rate and t • year,




                                3-23

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FIGURE 3-7. WORKSHEET 5: SUMMARY OF COST ANALYSIS
Cost Factor
Capital Costs ($):
fx iseo^ Vfer 0
Present Worth (SI:
(X IOMS
Annual
Costs
(VVears)
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
Remedial Action Alternatives/Costs
1.
































2.
































3.
































4.
































5.
































6.
































                      3-24

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3.4  Sensitivity.. Analysis


     The objective of "this-manual has been to recommend procedures that will
yield the most accurate cost estimates possible within given constraints of
time and resources.  Accuracy is important, because the choice of remedial
alternatives rests to a large extent on the cost estimates obtained.

     Nevertheless, errors in estimating key variables may have a large effect
on the accuracy of the overall cost estimate.  Thus, a sensitivity analysis is
conducted to assess the effects of variation in specific assumptions associ-
ated with the design, implementation, operation, and effective life of a
remedial action strategy on the estimated cost of the strategy.  These
assumptions are based on the accuracy of the data developed during the
Remedial Investigation and on predictions of the future behavior of the
remedial technology and the economy, and are "subject to varying degrees of
uncertainty.

     Sensitivity analysis is especially concerned with those factors that
could bring about  a significant change in overall costs with only a small
change in the value of the factors.  Other factors chosen for analysis should
be those for which the value is most uncertain.  Results of the analysis can
be used to identify "worst case" scenarios and to revise estimates of
contingency or reserve funds.

     Sensitivity analysis also can be used to optimize the design of a
remedial action alternative.  This is particularly useful where design param-
eters are interdependent, such as for treatment plant capacity for treating
contaminated groundwater and length of remedial action (period of
performance).

     The following factors are primary candidates for consideration in
conducting sensitivity analysis:

     o  Effective life of remedial action - If the remedial action alternative
        relies on a new technology or a technology that has not been tested
        over a 30-year period, the analysis should consider the possibility
        that all or a portion of the technology may need to be replaced during
        the life of the remedial action.  In estimating replacement cost, use
       •base-period dollars; do not adjust for inflation.

     o  O&M costs - 0 & M costs, if required, are likely to represent a sub-
        stantial portion of total project cost, because they may be repeated
        each year for as long as 30 years.  The major components of O&M cost
        should, therefore, be considered for examination in the sensitivity
        analysis.

     o  Duration of clean-up - The duration of clean-up, or period of perfor-
        mance, is often a key variable (e.g., in% actions that require the
        operation of treatment systems for a period of time based on moni-
        toring results).  Various assumptions as to the length of period of
        performance may be suitable candidates for analysis.

                                     3-25

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     o   Uncertainty  regarding  site conditions - Even  after  the  conclusion  of  a
         remedial  investigation, significant  uncertainties may exist  regarding
         the extent of clean-up necessitated  by sita conditions.  Examples  are
         the volume of groundwater to be  treated,  the  number of  drums  to be
         excavated, the type of materials present, and  the treatment/disposal
         options to be used.  Various assumptions  regarding  such parameters may
         need to be examined.

     o   Inflation -  Inflation  should not generally be  examined  under  OMB
         costing guidelines, but it may be considered  under  two  conditions:
         first, if there is good reason to believe that the  future prices of
         materials or services required by a  remedial  action alternative will
         increase at  a significantly faster or slower  rate than  the general
         level of prices in the economy; or second, if  the inflation rate for
         the area in  which the site is located can be  expected to vary
         significantly from the national average.

     o   Cost of borrowed capital - In private or  state actions  the cost of
         capital may  be a major factor in determining  the overall cost of a
         remedial action and may be tested in the  sensitivity analysis.

     Worksheets 6 and 7 are provided to assist the analyst  in conducting a
sensitivity analysis.  In Worksheet 6 (Figure 3-8), Sensitivity Factor
Worksheet, the user  should list cost factors to be examined, the reasons why'
they are to be examined, the range of values to be studied, and the
justification for the choice of range.

     Worksheet 7 (Figure 3-9), Sensitivity Analysis Summary Worksheet, should
be used  to present the results of the analysis, for comparative purposes.
Prior to completing  this worksheet, it is necessary to cost each option over
the life of the action using Worksheet 4:  Annual Costs and Present Worth
Analysis (Figure 3-6).                                *

     An  example of the sensitivity analysis with completed worksheets is
presented in Section 3.5.5 of this report.
                                                              /

3.5  Example


     An  example remedial action alternative  is presented in this section to
illustrate the major cost analysis procedures discussed in  this chapter.  This
example  is for illustration only and should not be assumed  to be an actual
remedial action alternative for an existing site.

     This example pertains to a landfill from which hazardous waste has
migrated into an aquifer used as a potable water supply.  This  example
examines a remedial  alternative involving construction of a slurry wall, con-
struction and operation of a groundwater extraction and treatment system to
control  the contaminated plume, and replacement of drinking water wells which
                                     3-26

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        FIGURE 3-8. WORKSHEET 6: SENSITIVITY FACTORS
Sensitivity Factor
Justification for
 Consideration
Range
Justification for
   Range
                                   3-27

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FIGURE 3-9. WORKSHEET 7: SUMMARY OF SENSITIVITY ANALYSIS
Cost Factor
Capital Costs ($):
Present Worth (SI:
Annual
Expenditures
($/ Years x
1,000)
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
Baseline
Cost
































Sensitivity Factor Examined/ Results
'





































































































































































































                           3-28

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also requires construction of a-water supply transmission main.  This alterna-
tive is one of several that has passed initial screening and for which
feasibility cost estimates must be developed.
     3.5.1  Capital Costs


     Capital cost estimates were developed using standard cost estimating
resources such as equipment vendors, estimates for similar projects,  actual
experience at similar projects, and standard costing references.  The capital
cost components of the alternative and their estimated cost are as follows:

     o  Replace .public water supply wells to supply 1.5 million gallons a day
        (9 wells at 200 foot depth, gravel packed with 24 inch diameter outer
        casing, and 18 inch diameter inner casing with 18 inch diameter well
        screen) - $1,417,500

     o  Provide water supply transmission main (17,000 feet of 42 inch pipe
        connected to existing 60 inch main) - $2,232,000

     o  Construct abatement well for control of contaminated plume (one
        2 million gallon per day well) - $67,500

     p  Provide facilities for treating plume (SO. gas addition for iron
        control, air stripping, granular activated carbon adsorption, lime
        addition and operations building) - $2,637,000

     o  Provide holding basins for iron settling and an effluent pump station
        - $423,000

     o  Construct force main for discharge of effluent from treatment facility
        to nearby creek (30 inch diameter) - $198,000

     o  Construct a slurry wall to surround the landfill area (130 feet depth)
        - $2,478,600

     o  Engineering and contingencies (25% of the subtotal of other capital
        costs) - $2,363,400

     o  Disposal of waste materials - $90,000.

     The total estimated capital cost is $11,907,000.  Figure 3-10 presents a
summary of these costs using Worksheet 1, Capital Cost (Figure 3-3).
                                     3-29

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FIGURE 3-10.  WORKSHEET 1:  CAPITAL COST (EXAMPLE)
Co»t
Component
DIRECT CAPITAL COSTS
1. Conic ruction Costs
a. Equipment
b . Labor
c. Materials
Subtotal
2. Equipment Costs
^Installed
Purchased
3. Land and Site Development
a. Equipment
b . Labor
c. Materials
Subtotal
4. Buildings and Services
a.. Equipment
b. . Labor
c. Materials
Subtotal
5. Relocation Costs
Subtotal
6. Disposal Costs
Subtotal
TOTAL DIRECT COSTS
INDIRECT CAPITAL COSTS
1. Engineering and Design
2. Contingency Allowance
3. Other Indirect Costs
a. Legal fees
b. License/ permit Costs
c. Start-up & Shake-down
Subtotal
TOTAL INDIRECT COSTS
TOTAL CAPITAL COSTS
Cost
Estimate
2,250,000
1,353,000
55^ too
4, iSfc, 2tfO
2,0*t,0oo
11Q,OCO
3frO, 000
qr.'wo
1, /7$; 400
3i«, 500
1, 0)7, 000
fcft7,5od
2, 054, ooo
0
0
toooa
40,000
9,543,6#>
7S&. 2St
1 . feOT, ) ' 2

—
2,343,400
)l, 90>7;000
Basis of
Estimate












%% of dirrd
Cost
»•?% o? d'cS«t
ir\c)u^Udi in.
/•^H^ /.



Year
Incurred
O
O
0
O
o
O
0
O
O
0
0
O
0
<3
0
O
a-
0
0
O


0
0
                      3-30

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     3.5.2  Operation and Maintenance Costs "


     Annual operating costs were estimated for the plume abatement and
treatment facilities as follows:

     o  Operating labor and materials
        -  personnel ($50,000)
        -  treatment chemicals ($834,000)

     o  Maintenance materials and labor ($31,000)

     o  Power ($32,000).

     The total estimated O&M costs are $947,000 annually.  Figure 3-11
presents a summary of these costs in the Annual Operation and Maintenance
Costs Worksheet (Figure 3-5).


     3.5.3  Annual Expenditures

     Annual expenditures were calculated using the information presented  in
Figures 3-10 and 3-11 and summarized in the example Worksheet 4, Present Worth
Analysis Worksheet, shown in Figure 3-12.  These data would then also be
entered on the example Worksheet 5, Summary of Cost Analysis, as shown  in
Figure 3-13, to facilitate comparison with other alternatives.


     3.5.4  Present Worth Analysis


     Present worth analysis for a 30 year period results in a sum of
$20,833,000 as shown in Figure 3-12.  A discount rate of 10% was assumed  for
this analysis.  Capital costs were assumed to be incurred for year 0  of the
analysis, while operation and maintenance costs were assumed for years  1
through 30.                                     ,


     3.5.5  Sensitivity Analysis


     Sensitivity of the estimated costs for this alternative are evaluated for
the major cost items (those costing more than $1,000,000 in this case)
including replacing public water supply wells, providing transmission mains,
constructing plume treatment facility, and constructing a slurry wall to
surround the landfill area.

     Estimated construction costs for water supply wells and water trans-
mission mains are based on the estimator's extensive experience in these
technologies and thus may range from +20% to -10% of estimated costs.   There-
fore, costs for water supply wells may range from $1,403,325 to $1,701,000 and
costs for water transmission may range from $2,008,800 to $2,678,400.

                                     3-31

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                  FIGURE 3-11.




WORKSHEET 3:  ANNUAL OPERATING COSTS (EXAMPLE)
Cost Component Escimate($)
0 & M Coats
1. Operating Labor
.. U\x>r $SO,ooO
b.
c.

2. Maintenance
Materials and
Labor
«. u>dl n&fcn/nt},,* £31,000
b ^ /vuii/WHtf ncx
c.

3. Auxiliary
Materials and
Labor
a. l^per ^32.fooo
b. Tratj-iK/nf $^34-, 000
aKm»CA.Ii
C •

4. Purchased Services
a.
b.
c.

5. Administration
6. Insurance, Taxes,
Licenses
a.
b.
c .

7. Maintenance
Reserve and
Contingency Costs
8. Other
Basis of Estimate






-

Frequency
Awu*«AU
ArvHvu.Hu
0
AtNKUAHu
AwiuMw





Year/
Period
/-30
}-lo
\-Zo
l-So





                     3-32

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               FIGURE 3-12. WORKSHEET 4: COST ANALYSIS WORKSHEET (EXAMPLE)
CJ
I
co
Co
Cost Component

1. Capital Costs
2. O&M Costs
3. Annual Expenditures. x(
(Sum of Lines 1 and 2)
4. Discount Factors
Annual Discount Rate = JLQ.%
5. Present Worth
(Product of Lines 3 and 4)
Cost/Year Cost Occurs (Thousands of Dollars)
0
•»,*?
X
rt,W
1.00
M,1tf
1

w
«W7
.HI
841
2





a*
in
3





.757
7«
4





.MI
44?
5





.6*1
ar
6





.*,

.zw
2K.

1. Capital Costs
2. O&M Costs
3. Annual Expenditures, x(
(Sum of Lines 1 and 2)
4. Discount Factor
Annual Discount Rate = 1 O %
5. Present Worth
(Product of Lines 3 and 4)
16

w
,

>»

.•$7
5V


Total
Present
Worth
($1000)
ZO,f*J

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FIGURE 3-13. WORKSHEET 5: SUMMARY OF COST ANALYSIS (EXAMPLE)
Cost Factor
Capital Costs IS):
Present Worth (Si:
Annual
Costs
IS/YearsI



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
Remedial Action Alternatives Costs
1.
11,107 ft
20,1 n
w




























>




























f
2.
*ro)































3.
































4.
































5.
































6.
































                             3-34

-------
     Estimated costs for the plume treatme-nt facility were based on reasonably
accurate vendor quotes and may vary between +15% and -5% of estimated costs.
Therefore, costs may range from $2,505,150 to $3,032,550.

     Construction costs for slurry walls are highly variable -because of site-
specific problems and the 130 foot depth of the wall in this example and may
range from +60% to -20% of the estimated cost.  Therefore, costs may range
from $1,664,280 to $3,965,760.

     Two other factors tested are the effective life of the slurry wall and
O&M costs.  Experience with long-term performance of slurry walls at hazardous
waste sites is limited, and it is not certain what the effective life of a
slurry wall will be.  The sensitivity analysis, therefore, examines the
possibility that major portions of the slurry wall will have to be replaced
after fifteen years (i.e., in year 16), at a cost of $1.5 million.

     Finally, in the O&M category, treatment chemicals account for 88% of
total O&M cost.  Expenditures on treatment chemicals total $16,680,000 over
the life of the remedial action, the largest single category of expenditures.
Using historical data, real (inflation-adjusted) costs of treatment chemicals
were seen to vary in a range of -10% to +20% of the estimated value. The
sensitivity analysis, therefore, examines the effect of the low and high ends
of .this range on total costs.

     Figures 3-14 and 3-15 show completed Worksheets 6 and 7 for the sensi-
tivity analysis.  The example Worksheet 6, Sensitivity Factors (Figure 3-14),
explains the variables tested, the justification for testing them, the range
over which they-were tested, and the justification for the choice of range.
The example Worksheet 7, Sensitivity Analysis (Figure 3-15), displays the
results of the analysis.  Results range from a best case of $18,745,000 to a
worst case of $26,167,000 in present values.
                                     3-35

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        FIGURE 3-14. WORKSHEET 6: SENSITIVITY FACTORS (EXAMPLE)
     Sensitivity Factor
Justification for
 Consideration
Range
Justification for

   Range
     wdkr *u/»f U
2.  frffetWe

$.
                            $1,000,600
                              i  000000
                               ,    ,
              J
             1
                     **k*
                                                        42.7 nM
                                                                10
                                   3-36

-------
FIGURE 3-15. WORKSHEET 7: SUMMARY OF SENSITIVITY-ANALYSIS
                                (EXAMPLE)
     Cost Factor
  Capital Costs IS):
   (x. }
    Baseline
     Cost
    I/, 107
                                    Sensitivity Factor Examined /Results
                        1. Lftoer
                                                 4. r 20 7e
  Present Worth ($):
                                 2^051
    Annual
  Expenditures
   IS/ Years x
     1.0001
             10
             12
             13
             14
15
16
             17
             18
             19
            _20_
             21
             22
             23
             24
             25
             26
             27
             28
             29
             30
                           447
                                                ZS1
                                      3-37

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FIGURE 3-15. WORKSHEET 7: SUMMARY OF SENSITIVITY ANALYSIS
                        (EXAMPLE) (Continued)
Cost Factor
Capital Costs IS):
fmcco\ VfiarO
Present Worth iSI:
ft );5no\
Annual
Expenditures
(S/Years x
1.000I
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
Baseline
Cost
































Sensitivity factor Examined Results
7. UorsV-
^6»ie-
fZ ?+t\
* ' /
ir,/si
fl?6,/(/7
1, 111


I
i
I
i

1
!
1
1
1
i

!

,


i

r




!

!
1
V





































































































































































                             3-38

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                                  REFERENCES
1.   U.S. Environmental Protection Agency, Compendium of Costs of "Remedial
     Technologies at Hazardous Waste Sites, January, 1984 In Print.

2.   Perry, Robert H., and Cecil tL. Chilton (eds.), Chemical Engineers
     Handbook,-McGraw-Hill Book Company, New York, New York, 1973.

3.   U.S. Environmental Protection Agency, A Standard Procedure for Cost
     Analysis of Pollution Control Operations, EPA-600/8-79-018, June 1979.

4.   Robert Snow Means Company, Inc.,. Building Construction Cost Data 1983,
     Kingston, Mass., 1983.

5.   McGraw-Hill Information Systems Company, Dodge Guide, New York, New York,
     1981.

6.   U.S. Office of Management and Budget, Circular No. A-94, revised 3/27/82.

7.   U.S. Environmental Protection Agency, Preparing a Facility Plan, MCD-46,
     revised May 1975.

8.   Grant, Eugene L., and Ireson, W. Grant, Principles of Engineering
     Economy, The Ronald Press Company, New York, New York, 1970.

9.   American Heritage Publication Co., Inc. and Houghton Mifflin Co., The
     American Heritage Dictionary of the English Language, New York, New York,
     1970.

10.  Completed Scenario Bid Packages—Costs of Remedial Actions of
     Uncontrolled Hazardous Waste Sites, USEPA, In Print.
                                     R-l

-------