Consulting budgets

How well a landfill operates is measured to a great extent by how environmentally responsible it is. However, landfills must also be economically responsible. Good intentions are fine, but to stay in business, the landfill must be financially sound.

All landfills are unique, yet in spite of some variation, most sites exhibit some typical costs. For example, in our experience we have found that engineering costs represent only about 4 percent of the total cost of operation. Equipment costs often represent only about 18 percent of the total cost. 

In fact, airspace in a typical landfill accounts for the largest daily cost at over 60 percent of the total. You may not think of the airspace you use every day as having value, but it is, in effect, the product that landfills are in the business of selling. Based on your tipping fee, you probably use up $thousands each day in airspace inventory. 

Once the airspace is gone, it needs to be replaced just like a retail store replaces its product inventory. If your budget isn't accounting for replacement costs (constructing a replacement facility when the current one is full), you will need to adjust it accordingly. 

A detailed, site-specific operating budget is vital to getting a balanced perspective of where most of the money is spent. For example, how do labor costs compare to equipment costs? Are your tipping fees covering all your costs including future replacement costs, if necessary? If you have to cut 10 percent off your operating costs, which 10 percent will you cut? When you compare your budget to actual operating costs are there any discrepancies that can be remedied by improving efficiency? A detailed operating budget can answer these questions and more, by examining capitol costs and operating costs.

Capital Costs

The capital cost portion of a landfill budget accounts for costs associated with installing liner, closing portions of the landfill, constructing buildings, etc. The capital cost component shows when the capital costs will occur, as well as the amount of each cost. Obviously, in order to be effective and realistic, the capital costs must be tied directly to the long-term sequence plan and the annual access plan. In order to quantify a site's capital costs, we consider historical capital cost data, current price quotes, as well as client information. We then combine that information with site specific data into an interactive spreadsheet that will determine when capital costs will occur. Finally, we put it all into a calendarized (timeline) format.

Operating Costs

The operating cost budget accounts for costs associated with day-to-day operation of the site. This component is divided into numerous sections including site development, personnel and administration, equipment maintenance, operations, cover, leachate and gas management, expansion, and closure. Whereas the capital cost budget component shows a broad, long-range schedule of costs, the operating cost budget component shows the operational costs in detail. This component is also set up in an interactive spreadsheet format, linking information such as equipment owning and operating costs, optimum density, and optimum cell size to basic budget calculations. As an example of the level of detail provided by a Blue Ridge budget, consider that a typical operating cost spreadsheet will have 400+ cost items.

The results

The final result will be a realistic, site-specific guide to your landfill's finances including:

• a 5-year budget which is updated annually 
• an annual budget and a monthly budget
• an excavation budget
• a list of key indicators (i.e., labor and equipment cost per ton)
• a list showing recommended manpower and equipment
• information regarding planned equipment rebuild costs
  

Read on for information on site operating budgets we've done for landfills throughout the west. And call our references for their experience with our budgeting capabilities.