PB88-113691
REMEDIAL ACTION COSTING PROCEDURES MANUAL
JRB Associates
McLean, VA
Oct 87
U.S. DEPARTMENT OF COMMERCE
National Technical Information Service
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EPA/600/8-87/049
October 1987
REMEDIAL ACTION COSTING PROCEDURES MANUAL
by
12 1
Brian Burgher, Mike Culpepper, and Werner Zieger
EPA Contract 68-03-3113
EPA Project Officer
Douglas Anunon
Associates, McLean, VA 22102
22
CH2M Hill, Atlanta, GA 30339
OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE
OFFICE OF EMERGENCY AND REMEDIAL RESPONSE
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, DC 20460
HAZARDOUS WASTE ENGINEERING RESEARCH LABORATORY
OFFICE OF RESEARCH AND DEVELOPMENT
U.S. ENVIRONMENTAL PROTECTION AGENCY
CINCINNATI, OH 45268
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TECHNICAL REPORT DATA
(Please read Instructions on the reverse before completing/
1 REPORT NO.
EPA/600/8-87/049
3 RECIPIENT'S ACCESSION NO
PB88 113691/aS
4. TITLE AND SUBTITLE
Remedial Action Costing Procedures Manual
5 REPORT DATE
October 1987
6. PERFORMING ORGANIZATION CODE
7 AUTHOR(S) 12 1
Brian Burgher, Mike Culpepper and Werner Zieger
1 JRB Associates 2 CH,M Hill
8 PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
1JRB Associates 2CH_M Hill
8400 Westpark Drive Atlanta, GA 30339
McLean, VA 22102
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO
68-03-3113
12. SPONSORING AGENCY NAME AND ADDRESS
Hazardous Waste Engineering Research Laboratory
Office of Research & Development
U.S. Environmental Protection Agency
Cincinnati, OH 45268
13. T
RIOD COVERED
14. SPONSORING AGENCY CODE
EPA/600/12
IS. SUPPLEMENTARY NOTES
Douglas Ammon
Project Officers: Bruce Clemens
513/569-7876
N/A
16. ABSTRACT
This manual provides 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
audience for this manual includes EPA Regional Project Officers, remedial
investigation/feasibility study contractors, and state and local remedial action
personnel and other Federal agencies. 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.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b.lDENTIFIERS/OPEN ENDED TERMS C. COSATI Field/Group
18. DISTRIBUTION STATEMENT
Release to public
19. SECURITY CLASS (Tins Report)
unclassified
21. NO OF PAGES
2O. SECURITY CLASS (Tinspage)
unclassified
22. PRICE
EPA Form 2220-1 (R«v. 4-77) PREVIOUS EDITION is OBSOLETE
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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
pollution.
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.
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ABSTRACT
This manual is intended to 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-magnitude (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
Page
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
Feasibility Study Alternative Development and Screening
Process
3-3
3-1
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
vn
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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 the 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 Amraon
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 Amraon
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
U.S. EPA/HWERL
U.S. EPA/OERR
U.S. EPA/OERR
U.S. EPA/OERR
U.S. EPA/OERR
U.S. EPA/OERR
U.S. EPA/OERR
U.S. EPA/OERR
JRB Associates
U.S. EPA/OERR
We also appreciate the assistance extended by the American Association of
Cost Engineers.
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 Superfund 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 summarizes 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 -30% 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 to 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
Task
Subtask
Scope
LOW COSTS
People Days Labor
(p) (d) $
Expenses
Workplan Preparation
& Initial organisation
1.1 Organization
& admin.
o Assign teams, meet
with EPA & State
o Gather accessible
background data fro
EPA & State
$2,400 $200/p/d
$1,200
1.2 Initial site
visit
1.3 Draft & final
workplan
1.4 Project QA
plan
o Prepare site visit
health & safety
plan
o Perform site visit
3 $1,200
2 32,400 $240/P/d
$1,440
S $4,000
3 91,200
II
IRM Plan
III
[RM Costs
Prepare initial
remedial mea-
sures plan
3.1 Develop list
of remedial
measures
3.2 Determine order
of magnitude
cost estimate
for construc-
tion activities
o Assess needs for IRM
o Develop plan for IRM
o Determine technical
requirements & costs
related to these tasks
o Submit draft & final
plan
o Perform alternative
analysis
o Expand list developed
in IRM Plan
o Apply list of remedial
measures to costs from
Remedial Action Cost
Compendium to determine
project construction
costs
2 $1,600
5 $4,000 $500
5 $4,000 $1,000
*Labor based on $SO/manhour; it may be necessary to adjust these appropriately to reflect
regional variation in labor rates.
Note: Numbers with a "*" (e.g., $3,000+) indicate costs are a minimum and could ultimately be higher.
2-6
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HIGH COSTS
Total
$
Comment>
People
(p)
Days
(d)
Labor
Expenses
Total
$
Comments
$1,600 Includes travel
$1,200 Assume 1st tine
entry completed
by TAT
$1,840 Level C, includes
travel
$4,000 Includes initial plana
for all subsequent taaks
$1,200 Includes site data
management plan and
procedures
$1,600 Limited IRM (fences,
etc.). Implementation
costs are function of
actions special to the
site
2 $4,000 $300/p/d
$3.000
5 $4.000
5 2 $4.000 $500/p/d
$5.000
4 30 $48,000
$4.000
10 $16.000
$7,000 NOTE: WP must alao
be set up to address
changes in scope
baaed on incoming data
aa the investigstion
progresses
$4,000 No initial entry by
FIT
$9,000 Level B, includes
travel
$48,000 Same aa low costs
$4,000 Same aa low costs
$16,000 Numerous & complicated
IRM (alternative water
supply, drum removal,
etc.)
$8,000
$16,000
$4,500 Total cost of the
remedial measure will
consist of construction
costs as well as non-
$5,000 construction costs such
as planning & engineering
(continued)
2-7
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TABLE 2-1.
REMEDIAL INVESTIGATION/REMEDIAL MEASURE COSTS
Task
IV
H&S Plan &
Inplenencation
Sub task Scope
4.1 Develop Health o Assess risks at site
& Safety Plan in detail
People
(p)
2
LOW COSTS
Days Labor
(d) $
3 $2,400
Expenses
-
4.Z Establish
mobile onaite
facility
o Review baseline data
o Present detailed H&S
Plan to EPA
o Acquire separate
decontamination facil-
ities & separate
trailers
$600/m shower
$250/n office
$100/ii utilities
+ $1,000 hookup
Additional Record
VI
Comunity Relations
VII
Plan & Perform
Topographic
Survey
o Obtain other infor-
mation not readily
available for pre-
vious efforts
o Conduct personal
interviews
6.1 Develop Com- o Prepare comaunity
•unity Relations relations program
o Public meeting pre-
paration and attendance
o On-going public
o Advertising
o Travel
$3.200 $1,000
7.1 Prepare site
topographic
survey plan,
select subs
o Prepare bid documents
o Evaluate HBE, SBE, LSA
subcontractors
o Select subcontrsctors
o Receive and evaluate
subcontrsctors1
workplan
5 $4,000
5 $1.200
5 $1.000
$ SOO
$1,000
$2,000 $1,000
*Labor baaed on $50/manhour; it may be necesaary to adjust these appropriately to reflect
regional variation in labor rates.
Note: Numbers with a "»" (e.g., $3,000+) indicate costs are a minimum and could ultimately be higher.
2-8
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HIGH COSTS
Total
$
Comenti
People Daya Labor
(p) (d) $
Expenses
Total
9
Cotmnenta
$2.400
$11.200 $4,000
$15,200 Level B - "Bad Site"
$2,000+ Electricity.
vater eaaily
accessible
$800/m shover
$50/m office
$100/m utilities
+$2,000 hookup
$6,000+ Office and decon
trailer, utilitiea
(including wacer)-
coats aaaune power
$4.200 Note that thia
taak will always
be necessary. It
should be done
concurrent with
UP development
$5,600 $1,000
$6,600
$4,000
$1,200
$1.000
$500
$1.000
2
2
1
10 $8,000
S $4,000
10 $4,000
$1,500
$5,000
$8,000
$4.000
$4.000
$1.500
$5.000
$3,000
$3,200 $1,500
$4.700
2-9
(continued)
-------
TABLE 2-1.
REMEDIAL INVESTIGATION/REMEDIAL MEASURE COSTS (Continued)
LOW COSTS
Task
Subtaik
Scope
People Days Labor
(p) (d) $
Expenses
7.2
Perform topo-
graphic survey
(subcontractor) .
Prepare topo-
graphic survey
map
o Aerial survey
o Tie-in evaluations
manually, including
areas of interest
(storm drains, etc.)
o Scale and contour
determined in plan
-
0-25 acre -
$5,000
25-50 acre -
$7,000
50-75 acre -
$10,000
>7S acrea •
$130/acre
VIII
Plan & Perform
Geophysical Survey
8.1 Prepare Geo-
physical Survey
Plan, select
subcontractors
8.2 Subcontractor
perform geo-
physical survey
o Re-evaluate previous
data
o Investigate use of:
- seismic reflection (SR)
- electrical resis-
tivity
- ground penetrating
radar (GPR)
o Prepare bid documents
o Evaluate subcontractors
o Select subcontractor
o Receive & evaluate
subcontractor vorkplan
o As outlined in plan
o Includes report by sub-
contractor
o Monitor subcontractor
o Resistivity
o Magnetometer
o GPR
o Seismic reflection
o SR interpretation
o GPR interpretation
8 $3.200 $1,000
8.3 Prepare report o Develop report for EPA 1
$5.000 min.;
$1.000/acre
$400/acre
$300/aere
$1,000-2.000/d
$750-1,200/d
$300-500/1000 ft
$2SO-400/crev-
day
$2.000 $500
•Labor based on $50/manhour; it may be necessary to adjuat these appropriately to reflect
regional variation in labor rates.
Note: Numbers with a "»" (e.g.. $3.000+) indicate costs are a minimum and could ultimately be higher.
2-10
-------
Total
$
$5.000
$7.500
$1.000
$1.250
People Days Labor
Comments (p) (d) $
Minimum. These costs ~
sre sensitive to site
to site conditions and
should be computed on
a project-by-project
basis
Total
Expenses $
0-25 acre •
$6.000
25-60 acre -
$8.500
50-75 acre -
$12.000
>75 acre -
$150/acre
Comments
$6,000 minimim. These
costs are sensitive to
site conditions and
should be computed on
a project-by-project
basis
$4.200 Simple site; shallow
investigation required-
no drums, etc.; no
GPR uncage; little
electromagnetic inter-
ference (buried cablea,
overhead vires, etc.);
relatively simple geo-
logical strata.
Level C or D site
20
$8.000 $3.000
$11.000 Very difficult site;
requiring all 4
investigative methods
Cor a big area (>40
acres) with difficult
terrain & high poten-
tial for electro-
magnetic problems.
Level B H&S
$5.000*
$2.500
Level C or D site
Based on simple site,
requiring shallow
seismic & ER. Rote on-
site survey will be done
ss well as the area sur-
rounding the site.
Costs are based on
actual site of the site.
Level C site
$10,000 min.
$3,000/acre
$4.000 $1,000
$10,000+ Level B site, same
comments for subtaak
7.1. Per acre method
may overestimate costs
for large sites. For
other methods of cost-
ing, consult technical
assistance group.
$5000 If sub does not develop
report or site very
detailed.
(continued)
2-11
-------
TABLE 2-1.
REMEDIAL INVESTIGATION/REMEDIAL MEASURE COSTS (Continued)
LOW COSTS
Taak
Subtask
Scope
People Daya Labor
(p) (d) $
Expenses
IX
Conduct Environ-
mental Investigation
& Sampling Program
9.1 Hydrogeologi-
cal investiga-
tion (monitor
well instal-
lation. GW &
aoili sampling
& analysis)
Rote: Divided
into sub sub-
taskf (you may
want to separ-
ate Taak VIII
into several
taaki)
a Prepare hydrogeological
plan. Select subcon-
tractors (aa in Taak 6)
o Have aubcontractor per
fom tasks, prime con-
tractor monitors
sub-contractor
10 $4.000
S30/ft;
$1.000 tain.
9.2
o Sample existing water
supply wells,
sample monitoring
walla
o Characterize ground-
water (GC/NS priority
pollutants)
o Analyze aoil aamplea
taken during well
installation (or
engineering character-
iatica aa well aa
EP toxicity (including
priority pollutant acan)
1 $3,600
o Report
Surface water,
leachate, and
sediment samp-
ling & analysis
10
3
$8,000
$3,600
$300/well *
JSOO/p
expenses,
minimum of
$2,000
$300/aample/d,
$SOO/p/d
expenses,
$2,300 min.;
for analysis,
see Taak 8.1.4
•Labor baaed on $SO/oanhour; it nay be neceaaary to adjuat theae appropriately to reflect
regional variation in labor rates.
Note: Numbers with a "+" (e.g., $3,000*) indicate coata are a minimum and could ultimately be higher.
2-12
-------
HIGH COSTS
Total
$
Comments
People
(p)
Days
(d)
Labor
$
Expense*
Total
$
Comments
$4.000
20
$8.000
$8.000
$1,000+ Shallow wells, easy
access; drilling through
sand, clay; Level C
protection; PVC pipe
$60/ft; $3.000 $3,000+ Couple* geology.
minimum crossprotection of
aquifer required
deeper Chan 200*.
difficult access,
drilling through rock,
stainless steel pipe.
Level B protection
$6,400
$5,600* Baaed on 3 people,
sampling maximum of 4
walla per day, lodging &
food. Note: paperwork
ia extensive
Analytical coats vary
with the type of labs
used (EPA contract or
private). Contact CH2M
Hill laba for actual
coaca
$400/well *
$SOO/p expenses;
$3,600 minimum
$10,000
QC paper-
work
4 deep wells per day,
highly contaminated.
20 $16,000
4 $6,400
$8.000
$6,100*
$400/sample,
$5007p expenses;
$3,400 minimum
$16,000
$9,800*
3 people taking 4
samples per day. Note:
paperwork is extensive
Large area, difficult
terrain (swamp, etc.)
(continued)
2-13
-------
TABLE 2-1.
REMEDIAL INVESTIGATION/REMEDIAL MEASURE COSTS (Continued)
LOW COSTS
Task Subtask Scope
9.3 Air quality
sampling &
analysis
9.4 Onaite waste o Lagoons
sampling
People Days Labor
(p) (d) $ Expenaes
2 2 $1,200 $160/d for
equipment;
for analysis,
see Taak 8.1.4
3 2 $2,400 $570/d for
equipment;
QC
for analysis
see Task 8.1.4
o Drums & Barrels
$4,800 $560/d for
equipment;
for analysis
see Task 8.1.4
Develop Site
Assessment Report
9.5 Bioassay Costs
10.1 Prepare site
assessment
report
10.2 Site evalu- With EPA, State
at ion meeting
10.3 Revise site
assessment
report
2 4 $3,200 $200/d for
equipment
2 20 $16,000
2 2 $1,600 3500/p -
$1,000
2 10 $8,000
•Labor baaed on $SO/manhour, it may be necessary to adjust these appropriately to reflect
regional venation in labor rates.
Note: Numbers with a "*" (e.g., $3,000+) indicate coats are a minimus and could ultimately be higher.
2-14
-------
HIGH COSTS
Total
$
nts
People Days
(p) (d)
Labor
$
Expenses
Total
$
Comments
51.520*
$1.540+
$7.040*
$4.000
$16.000
$2.600
$8.000
Equipment includes wind-
speed directional
instrument w/recorder,
high volume sampler, OVA
(1 unit organic vapor
entrapment)
3 sample locationa
(aurface, mid, sludge);
boat sample; shipping,
QC paperwork, Level C
Low to medium hazard,
Level B. Equipment
includes drum openera
(manual), sample tubes;
sampling 3 druma/hr with
a 6 hr decon.
2 $800 $430d/for
equipment
5 $10,000 $S70/d
10 $16,000 $740/d
8 $9,600 $1.200
30 $24.000
4 $3,200 $600/p -
$1.200
IS $12.000
3 OVA units, more high
volume samplers
$1,660*
$12.850*
$23,400* High hazard, Level B
or A, remote drum
puncturing apparatus
$10.800
$24.000
$4.400
$12,000
2-15
-------
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-magnitude 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 analysis 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
U)
r
| Identify
| Site
rrouiems
• (Remedial
• Investigation)
1 m
i *
Identify
General
Response
Actions
Conduct
Environmental
ana ruoiic
Health
Screening
Identify and
Screen
Technologies
Conduct
PftCt
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
1
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 Super fund
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 and 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
Controls contamination at or
near the source of release
(source control measures)
Results in the mitigation
of a release
Action is of limited duration
(generally less than 4 years)
Contaminant levels can be
identified to mark the end
of the remedial action
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-term 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 Development 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
-------
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
-------
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.
3.2.1.4 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
-------
FIGURE 3-3. WORKSHEET 1: CAPITAL COST
Cose
Component
DIRECT CAPITAL COSTS
1. 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
-------
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
-------
3.2.2.1 Estimating O&M Costs
In 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 includes annual
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
-------
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 consulted 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
-------
FIGURE 3-5.
WORKSHEET 3: ANNUAL OPERATING COSTS
Cost 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.
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
Year/
Period
3-16
-------
The following are the major sources available for estimating remedial
action costs:
o Remedial Action Cost Compendium
o Vendor estimates
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
-------
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 (F /F ] (1)
n o
where: C = new (updated)cost
C = old cost
o
F = current index factor
F = index factor corresponding to date of old cost.
3-18
-------
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
-------
FIGURE 3-6. WORKSHEET 4: COST ANALYSIS WORKSHEET
u>
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
ac t ion.
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
-------
The present value of expenditures occurring over the life of the remedial
action is determined using the following equation:
PW = \ ' Xt (2)
(l + i)C
where:
PW = Present worth
x = expenditures for the remedial action in year t
i = discount rate (i.e., 10%)
t = year in which expenditureCs) 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
-------
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 (%)
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
-------
FIGURE 3-7. WORKSHEET 5: SUMMARY OF COST ANALYSIS
Cost Factor
Capital Costs ($).
(* IOOO) ya»r O
Present Worth ($):
(.* loom
Annual
Costs
($/ Years)
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
-------
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
-------
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 site 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
-------
FIGURE 3-8. WORKSHEET 6: SENSITIVITY FACTORS
Sensitivity Factor
Justification for
Consideration
Range
Justification for
Range
3-27
-------
FIGURE 3-9. WORKSHEET 7: SUMMARY OF SENSITIVITY ANALYSIS
Cost Factor
Capital Costs ($)•
Present Worth ($):
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
-------
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
o Provide facilities for treating plume (SCL 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
-------
FIGURE 3-10. WORKSHEET 1: CAPITAL COST (EXAMPLE)
Cost
Component
DIRECT CAPITAL COSTS
1. 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
2 250,000
1,3*0,000
SSfc, 2.00
4, iSto, 2^0
2,0^,000
72.0, OCO
3frO, 000
^r.^o
1, /75; 400
Srt, SOD
1, 017, OOO
6197, 500
2. 034, ooo
0
o
toooa
90.000
9,543,600
75&.2S*
) . feOT 1 / 2
—
2,^3^00
)!, 907,000
Basis of
Estimate
S7e oCcL-.rtt)-
Cos+
!7% of direeV
Co*+
i^cludUct in-
/••^* 1.
Year
Incurred
O
O
0
o
o
0
6
o
o
0
o
o
0
<3
C
O
C)
0
o
O
0
0
3-30
-------
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 $2,678,400.
3-31
-------
FIGURE 3-11.
WORKSHEET 3: ANNUAL OPERATING COSTS (EXAMPLE)
Cost Component Estimate($)
0 & M Costs
1. Operating Labor
a. l^oor $SO,ooO
b.
c.
2. Maintenance
Materials and
Labor
a. u>€/l rayfn/mnft* &3\tOOO
D • *
c.
3« Auxiliary
Materials and
Labor
a. fbf^ef * 3i,0oo
b. TretriH^rvr $sys4. 000
aWjM.icA.is
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
A 1A.WH *--''-\
0
r\ww* ^
ua. ^
Year/
Period
J-30
••>•
|-3o
3-32
-------
FIGURE 3-12. WORKSHEET 4: COST ANALYSIS WORKSHEET (EXAMPLE)
u>
U)
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 =1(2.%
5. Present Worth
(Product of Lines 3 and 4)
Cost/Year Cost Occurs (Thousands of Dollars)
0
M,W
X
11,407
1.00
M,W
1
w
w
.Hf
u\
2
sit
in
3
.7J7
711
4
.W
fci
lot
24
JO/
fc
25
.092
*7
26
.OH
«o
27
.0%
72
28
•Of
6?
29
.013
60
30
T
.«$7
5V
Total
Present
Worth
($1000)
Z0,?33
-------
FIGURE 3-13. WORKSHEET 5: SUMMARY OF COST ANALYSIS (EXAMPLE)
Cost Factor
Capital Costs ($)
Present Worth ($)
Annual
Costs
IS/ Years)
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
&ttwiflc
ll.W CY
20,133
<\
>
Pf
2
Par6)
3
4
5
6
3-34
-------
Estimated costs for the plume treatment 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
I. & i-W
2.
Slu
rru
3.
> * 1,000,000
A ^1,000,000
> i i, 000,000
oi
up
:
$1,0*0,000
is
42.7 ^ill.-
JO
3-36
-------
FIGURE 3-15. WORKSHEET 7: SUMMARY OF SENSITIVITY ANALYSIS
(EXAMPLE)
Cost Factor
Baseline
Cost
Sensitivity Factor Examined/ Results
/. Lauaec
3.
4.
r. ->•>•*,
Capital Costs (SI
(x. io«a\ «ar o
Present Worth ($)
fx
22,57?
Annual
Expenditures
($/ Years x
1.000)
10
12
13
14
15
16
17
18
19
_20_
21
22
23
24
25
26
27
28
29
30
447
^47
$47
V
3-37
-------
FIGURE 3-15. WORKSHEET 7: SUMMARY OF SENSITIVITY ANALYSIS
(EXAMPLE) (Continued)
Cost Factor
Capital Costs ($1
ft- \0oo\ iCa.rO
Present Worth ($)
ft iiiao\
Annual
Expenditures
IS/ 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
«?s?r
1? ',151
*&>•?
i,n4
t
i
i
i
I
Sr
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 H. 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
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