Page 183 - Solid Waste Analysis and Minimization a Systems Approach

STEP 7: DETERMINE, EVALUATE, AND SELECT WASTE MINIMIZATION ALTERNATIVES 161

regarding potential shutdowns. Required modifications to work flow or production
procedures should be analyzed as well as required training and safety concerns relat-
ed to the equipment purchase or modification. From an operational standpoint, atten-
tion should be given to how the alternative will improve or reduce productivity and
labor force reductions or increases.
If a waste minimization alternative involves a process change or a material change,
the affected areas should be identified and feedback gathered from the area managers,
employees, maintenance staff, and engineers (if applicable). With the process
changes, training requirements should also be discussed. Also, the impacts on pro-
duction, material handling/storage, and quality should be addressed. A material-testing
program is highly recommended for new items with which the engineering team may
not be familiar, to analyze quality and throughput impacts. A design of experiment
(DOE) that tests the changes versus the current material is an excellent method to
gauge impacts. A DOE is the design data gathering tests where variation is present,
whether under the full control of the experimenter or not. Often the experimenter is
interested in the effect of some process or intervention, such as using a new raw mate-
rial, on some outcome such as quality.
From an economic standpoint, traditional financial evaluation is the most effective
method to analyze alternatives. These measures include the payback period, (discounted
payback period), internal rate of return, and net present value for each alternative. If the
organization has a standard financial evaluation process, this should be completed for
each alternative. The accounting or finance department would have this information. To
perform these financial analyses, revenue and cost data must be gathered and should be
based on the expectations for the alternatives. This is more complicated than it sounds,
especially if a project will have an impact on the number of required labor hours, util-
ity costs, and productivity, not to mention initial investments. A comprehensive esti-
mation of the cost impacts (revenues and costs) per year over the life of the alternative
is required to begin the analysis. The first step of the economic evaluation process is to
determine these costs. These costs include capital costs (or initial investment), operat-
ing costs/savings, operating revenue, and salvage values for each waste minimization
alternative.
Capital costs are the costs incurred when purchasing assets that are used in pro-
duction and service. Normally they are non-reoccurring and used to purchase large
equipment such as a baler or plastic grinder. Capital costs include more than just the
actual cost of the equipment; they also include the costs to prepare the site for pro-
duction. Following is a brief list of typical capital costs; also known as the initial
investment:

■ Site development and preparation (including demolition and clearing if needed)
■ Equipment purchases, including spare parts, taxes, freight, and insurance
■ Material costs (piping, electrical, telecommunications, structural)
■ Building-modification costs (utility lines, construction costs)
■ Permitting costs, building inspection costs
■ Contractor’s fees
■ Start-up costs (vendor, contractor, in-house)
■ Training costs