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    Waste Assessment

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    Subhasis Bhaumik
    This document discusses key concepts for evaluating the economic viability of waste management strategies. It outlines factors to consider such as compliance, costs, and natural resource conservation. Methods are presented for estimating capital costs, operating costs, fixed costs, variable costs, and revenue. Metrics like payback period, net present value, internal rate of return, and benefit cost ratio are also introduced as measures for analyzing the profitability of different waste management options.

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    Waste Assessment

    Uploaded by

    Subhasis Bhaumik
    11 views25 pages
    This document discusses key concepts for evaluating the economic viability of waste management strategies. It outlines factors to consider such as compliance, costs, and natural resource conservation. Methods are presented for estimating capital costs, operating costs, fixed costs, variable costs, and revenue. Metrics like payback period, net present value, internal rate of return, and benefit cost ratio are also introduced as measures for analyzing the profitability of different waste management options.

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    This document discusses key concepts for evaluating the economic viability of waste management strategies. It outlines factors to consider such as compliance, costs, and natural resource conservation. Methods are presented for estimating capital costs, operating costs, fixed costs, variable costs, and revenue. Metrics like payback period, net present value, internal rate of return, and benefit cost ratio are also introduced as measures for analyzing the profitability of different waste management options.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    11 views25 pages

    Waste Assessment

    Uploaded by

    Subhasis Bhaumik
    This document discusses key concepts for evaluating the economic viability of waste management strategies. It outlines factors to consider such as compliance, costs, and natural resource conservation. Methods are presented for estimating capital costs, operating costs, fixed costs, variable costs, and revenue. Metrics like payback period, net present value, internal rate of return, and benefit cost ratio are also introduced as measures for analyzing the profitability of different waste management options.

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    of 25

    MODULE 4

    BASICS OF ECONOMIC
    ASSESSMENT
    Importance of Economic Analysis of
    Waste Management Strategies

    • Long-term performance of a business


    Reasons to Evaluate Waste
    Management Options
    • Compliance with governmental regulations
    • Reduction of disposal costs
    • Conservation of natural resources
    • Reduction in the use of landfills
    • Development of a positive customer
    relationship
    Elements of Cost Analysis
    • Capital costs

    • Operating costs
    Capital Costs
    • Costs incurred in the planning and
    construction phases of a project and the
    equipment costs for processing and
    handling of wastes/residues
    Operating Costs
    • Definition: costs associated with the daily
    operation of a facility

    • Types
    – Direct costs
    – Indirect costs
    Direct Costs
    • Definition: those costs directly involved in
    operating the facility.
    • Examples: labor, materials, maintenance
    and maintenance supplies, replacement
    parts, and utilities costs
    Indirect Costs
    • Definition: costs associated with, but not
    directly involved in, operating a business.

    • Examples: overhead, administrative fees,


    local property taxes, and insurance fees.
    Method of Cost Estimation
    • Fixed costs

    • Variable costs

    • Revenue
    Fixed Costs
    • Costs that do not change with the level of
    operation
    • Examples
    – Depreciation
    – Interest on investments
    – Taxes and insurance
    – Permit and licensing fees
    Depreciation
    • Definition: a method of allocating the cost
    of a capital asset over the anticipated life of
    the asset
    • Methods
    – Straight-line method
    – Accelerated depreciation method
    Methods
    • Straight-line method
      Cost of asset – Trade-in Value .
      Service life of asset in years
    • Accelerated depreciation method
    – More depreciation in the early periods and
    less in the later periods
    Interest on Investments
    • Interest on depreciated value
    • Interest on half of cost new
    • Interest on total cost new
    Interest on Investments

     Interest on investment =
     [1/2(depreciable cost + Estimated salvage
    value)] x (Interest rate)
    Other Fixed Costs
    • Taxes and insurance

    • Permit and licensing fees


    Variable Costs
    • Definition: operating expenses that vary
    directly with the level of the activity and the
    location
    • Examples
    – Direct costs
    – Indirect costs
    Direct Costs
    • Labor
    • Utilities cost
    • Maintenance and repair costs
    • Raw material
    Indirect Costs
    • Local property taxes
    • Insurance
    • Administrative fees
    • Fines and penalties
    Revenue
    • Government grants received
    • Tipping fees charged from outside
    operations
    • Revenues from sales of compost or
    recyclables
    • Avoided costs associated with project
    Method of Cost Estimation
    • Total costs estimation:

      Total costs = Fixed costs + (Variable cost


    per unit) x (Expected volume)
    Measures of Profitability
    • Payback period
    • Net present value
    • Internal rate of return
    • Benefit cost ratio
    Payback Period
    • The estimation of the length of time it will
    take to recover the initial capital investment

    Initial investment
    Payback period = -----------------------------------
    (in years) Net annual cash saving
    Net Present Value
    • Represent future receipts in present dollar
    terms

    n CFt
    NPV =  ------------- - Initial investment
    t-1 (1+ r)t
    Internal Rate of Return
    • Measure the value of long-term investment
    using the discounted cash flow concept.

    A1 A2 A3
    A0 = --------- + ---------- + …+ ---------- - IC
    (1+ i) (1+ i)2 (1+ i)n
    Benefit Cost Ratio
    • The ratio of total benefits to total costs of a
    project

    • A value greater than 1 indicates that a net


    profit is generated

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