What you probably know about financial assurance cost estimates is that they are to be used to ensure appropriate funding for landfill closure and post-closure care (and remediation where appropriate). However, what you may not know is that these estimates probably will be used to:
*determine liability for accounting purposes;
*calculate escrow payments;
*set tipping fees;
*compare costs with other facilities;
*decide whether or not a facility should be closed; and help make other political decisions.
The estimator will feel pressure from various sources. Regulatory agencies want the estimates to be as high as possible so they can be assured of sufficient funding if needed. Solid waste managers want the most accurate estimate possible so costs will be covered without raising and escrowing excess money. They also want estimates to be justifiable before elected or regulatory officials and the public.
Some elected officials and solid waste managers may want the estimates to be low if closure or post-closure care is not anticipated before they leave their office or position. However, if closure or post-closure care is eminent, these same elected people would want to ensure that funding is available so they do not have to find alternative funding sources.
Financial assurance cost estimates should begin with a checklist for each landfill and contain all items for which costs will be incurred. Regulations require that funds be escrowed to close the entire landfill at the same time. However, most large landfills actually are closed in phases of a few acres each, resulting in greater total construction costs.
The full closure cost must be shown as a liability. If phased closing is planned, this liability may be greater than the amount estimated for closure of the entire filled area as one construction project. Before beginning, the estimator must know if he is estimating a phased closing or a single construction project.
There is no single comprehensive source for the cost of each component in closure. Several information sources are available, but each must be used with care. An estimator only may ask venders and contractors for this information, but if estimates are developed where no work is eminent or where prices aren't influenced by competition, accuracy may be compromised.
Closure cost estimates usually are developed using construction contracts' unit costs, vendors and estimating guides, such as those published by R.S. Means Co. Inc., Kingston, Mass.
The estimator must adjust these unit costs to fit the quantity, working conditions and competitive situation for each landfill.
In many cases, estimating guides may not have synthetic material and installation costs. However, vendors can provide prices to compare against prices from construction contracts. Estimators should compare several sources to reach the most reasonable cost.
Post-closure care cost estimates are sometimes more difficult to prepare. Estimating these costs is subjective, unless the estimator has experience and/or documented landfill post-closure, cover, erosion and repair costs (which are seldom available).
The cover volume anticipated to be eroded and vegetative cover per acre to be replaced annually can be estimated, but little guidance or historical documentation is available. Additionally, the cost of liner repair is subjective when using a flexible membrane final cover.
Leachate management may be a large part of estimated post-closure care costs. Regulators frequently ask for a correlation between an operating and closed landfill's leachate generation quantities. Conditions completely change following the final cover installation in a conventional landfill without leachate recirculation or the addition of moisture to enhance degradation.
Leachate generation can be projected using water balance modeling programs such as the HELP model, available from the U.S. Environmental Protection Agency, Washington, D.C. However, final cover design and assumed cover condition greatly influence the amount of leachate generation projected.
For example, a drainage net above the synthetic top liner will drastically reduce the water predicted to enter the landfill through a hole in the top liner by reducing the head on the liner. Thus, consider all model input and compare actual versus theoretical results when possible.
Construction contracts can be used for the cost of mowing, fence repair, erosion repair or other activities. However, these costs may need to be modified to include separate mobilization or administrative charges, which were included elsewhere in the contract. Laboratory testing, water or gas monitoring, or mowing contracts also may provide reliable data.
Reviewing, Approving the Estimate A well-established procedure for reviewing estimates often doesn't exist. Each reviewer takes an individual approach. Estimates prepared by the engineer rarely are accepted by the regulators, who usually negotiate the final estimate with the reviewer.
The reviewing regulator's approach profoundly affects the final amount. Often, a reviewer compares the estimate's unit costs with other estimates and uses an "acceptable range" of costs.
Although convenient, this review can be one of the most inaccurate. All landfill closures are not created equal. Since various activities are specific to the site, each item should be viewed that way.
While such information might be difficult to refute, sometimes regulators are reluctant to consider cost information from existing contracts because:
*The costs on the existing contract fell below those previously approved on other estimates.
*If the state has to use the escrowed money to pay for monitoring or mowing, the prices quoted from the existing contract may not be available. Such information should be considered carefully, compared with other sources and used only where appropriate. As regulators gain experience with financial assurance cost estimates and become more willing to consider site specific anomalies, review methods will change.
Estimators should prepare estimates as accurately as possible, resisting the pressure to keep numbers low to minimize money to be escrowed.
Estimates that are "slightly inflated" may result in adverse effects on tipping fees and should be avoided. In preparing estimates:
*Decide if the landfill will be closed in phases or in one single construction event.
*Develop a checklist of items to be included.
*Work from the most detailed plans available. Do not try to assume a "general per acre cost" for landfill closure or post-closure care.
*Evaluate information from many sources, choosing the most appropriate.
*Use estimates from other sites for comparison, but be sure this data is appropriate for use at the subject site.
*Use estimates from vendors or contractors when necessary but evaluate or compare several such estimates when possible.
*Use costs from existing contracts but evaluate or compare several such costs if those in the contract appear to be unusual.
*Urge regulators to develop a standard financial cost estimate review procedure and protocol, minimizing dependency on comparison of the subject estimate with other estimates.