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Appendix C

C.1 Cost Methodology

This section describes the methodology used to determine life-cycle costs for comparison of alternative treatment, storage, and disposal facilities. Life-cycle costs include preliminary planning, design, construction, operation, secondary waste disposal, and post-operation decommissioning. These costs are distributed along a timeline, and then converted to an equivalent cost in terms of the current value of money. Major components of life-cycle costs include building, equipment, operation and support manpower, and secondary waste disposal costs. The purpose of the cost model is to provide data that can differentiate between treatment options. The cost model consistently applies the same assumptions, such as labor cost rates, building square-footage costs, and others, to the estimating process. Conceptual design estimates for planned facilities and actual estimates for existing facilities are used where possible. For the purpose of this environmental impact statement (eis), the U.S. Department of Energy (DOE) developed cost assumptions using Westinghouse Savannah River Company standard estimating techniques. For appropriate comparison, DOE assumed that treatment facilities that do not already exist would be located onsite. Each facility estimate includes option-specific costs for the major equipment, the number of man-hours per year required to operate the facility, the facility start-up date, the operating life of the facility, and the required design basis throughput.

Projected facility costs and manpower requirements differ between the draft and final eis. This is due to the following factors: a refinement of the parameters that determine operating manpower, building, and equipment costs; a correction to the scope of no-action alternative costs to make them consistent with the other alternative - waste forecast estimates; and new initiatives in alternative B that lowered facility costs for this alternative. In addition, the costing methodology bases construction manpower requirements on building and equipment costs; therefore, both operating and construction employment differ between draft and final eis. This, in turn, affects projections of socioeconomic and traffic impacts. Cost differences are shown in Table C-1. The cost analysis was changed to be consistent with the Baseline Environmental Management Report (DOE 1995) developed by DOE to ensure consistent reporting on estimating future facility construction and operation costs. This report is used to establish future budgetary requirements for the DOE complex.

Table C-1. Estimated cost of facilities for each alternative and waste forecast in the draft and final eis.

In most instances, the estimates are based on facilities for which there has been little, if any, conceptual design. The estimates were prepared only for the purpose of identifying salient cost differences between technologies. These facility estimates are not sufficiently mature to be used for budgeting purposes.

C.1.1 RELATIONSHIP TO SRS DRAFT SITE TReaTMENT PLAN COST METHODOLOGY

The cost model developed for the SRS Draft Site Treatment Plan (DOE 1994a) was used as a basis for the eis cost model. The major difference between the two models is the difference in scope of the two efforts. The draft sit treatment plan proposes specific treatments over the next 5 years for a known mixed waste inventory. This eis examines alternatives for treating, storing, and disposing of wastes that would be generated over the next 30 years and investigates the consequences of each alternative. The eis cost analyses consider low-level, hazardous, mixed, and transuranic wastes; the site treatment plan deals only with mixed wastes. The uncertainties in this eis that affect the modelling of costs include the waste forecasts (amounts of waste generated), schedules (treatment need dates), and availability of funds.

C.1.2 APPLICATION OF COST METHODOLOGY FOR OPTIONS SELECTION

Process and materials descriptions were developed for full treatment, storage, and disposal options evaluated in the in-depth analysis in Section 2.3 of this eis. From these descriptions, a list of the required processing equipment, the sizes and types of buildings needed, and the necessary support equipment was developed. To provide equivalent comparisons of the options, it was initially assumed that 1,000 cubic meters (35,300 cubic feet) of waste would be processed per year by each facility. The costs for processing equipment, buildings, and support equipment were developed using Savannah River Site (SRS) experience and information from a waste management facilities cost report (Feizollahi and Shropshire 1992) prepared for the DOE Idaho National Engineering Laboratory. The manpower requirements were estimated with the COSTPRO (Hess 1994a) program used by Westinghouse Savannah River Company for estimating onsite work.

Because the in-depth options analysis evaluated individual treatability groups, it was not sufficiently broad to identify an integrated system of treatment, storage, and disposal facilities for the entire SRS. The in-depth options analysis was supplemented with a second analysis that considered the availability of excess capacity in existing facilities and the environmental advantages and economies of scale achieved by expanding planned facilities to accommodate additional treatability groups that would otherwise require other stand-alone treatment, storage, and disposal facilities. The cost to dispose of secondary waste was developed from existing SRS facilities and included in the cost model.

As an example, Table C­2 (and Figure C-1) illustrates the economies of scale for the non-alpha vitrification facility. It displays the total cost and the total and incremental cost per unit volume of throughput. The calculation procedure is described in detail in Section C.2. The table indicates that unit costs decreases from approximately $7,700 to $2,000 per cubic meter when annual throughput increases from 1,000 to 5,000 cubic meters.

Table C-2. Economies of scale for the non-alpha vitrification facility

a. Source: Hess (1995).

b. To convert to cubic feet, multiply by 35.31.

c. To convert to $ per cubic feet, divide by 35.31.

Figure C-1.

C.1.3 APPLICATION OF COST METHODOLOGY FOR ALTERNATIVE TReaTMENT, STORAGE, AND DISPOSAL SCENARIOS

Facility costs vary with the amount of waste treated per year. Therefore, the cost model used for this eis for equipment and buildings based on a 1,000 cubic meter (35,300 cubic feet) annual throughput was modified to account for the actual volume of waste the facility would be required to treat annually. The estimates from the Idaho National Engineering Laboratory facilities cost report were used as the basis for this part of the model. The equipment and facility descriptions in the Idaho National Engineering Laboratory report were examined to see how closely they matched the specifications of the treatments and processes described in this eis. The Idaho National Engineering Laboratory estimates were modified as required to match the specifications in this eis. Linear and exponential curves were fit to the Idaho National Engineering Laboratory costs versus capacity estimates. The linear model closely matched the data, so it was used. For further cost development, both equipment and building costs were defined as the coefficient (cost per cubic meter of waste processed) times the annual volume of waste plus a fixed cost. The coefficients and fixed values come from calculations that determine those values which provide the best fit between actual Idaho National Engineering Laboratory data and the linear (straight line) approximation (i.e., cost = cost coefficient ÷
yearly volume + fixed cost ). The COSTPRO model facility operating labor hours were also developed into a linear model. (Annual labor = labor coefficient ÷
yearly volume + fixed labor; Tables C-3, C-4, and C-5 list the fixed values and coefficients developed for equipment cost, building cost, and labor, respectively.)

The costs for storage and disposal facilities, most of which do not have equipment costs, were developed differently. The labor hours on a per-cubic-meter basis were developed with COSTPRO. The cost to build each facility was estimated by assuming that new facilities would hold the same amount of waste as existing facilities, dividing the waste that would need to be stored or disposed of by the facility volume capacity, and multiplying the resulting number of facilities needed by the cost of completed existing facilities.

Table C-3. Examples of equipment cost factors for waste management facilities considered in this analysis.

a. Source: Hess (1995).

b. To convert to $1,000 per cubic foot per year, divide by 35.31.

Table C-4. Examples of building cost factors for waste management facilities considered in this analysis.

a. Source: Hess (1995).

b. To convert to $1,000 per cubic foot per year, divide by 35.31.

Table C-5. Examples of annual labor cost factors for waste management facilities considered in this analysis.

a. Source: Hess (1995).

b. To convert to manhours per year per cubic foot, divide by 35.31.

C.1.4 SPECIAL CONSIDERATIONS FOR COST CALCULATIONS

DOE decided to assign costs to wastes with required treatments differently than to wastes for which treatment was optional. In the cost model, wastes with required treatments were assigned both the fixed costs for treatment and the variable costs associated with their specific volume (including equipment, building, and labor costs). The wastes with optional treatments were only assigned the variable costs associated with their additional volume. This methodology assumed that these wastes would use the excess capacity in facilities built to support required treatments. It also burdened wastes with specified treatments more than wastes with optional treatments.

A spreadsheet was developed for each alternative/forecast which listed the individual treatability groups and the options for treatment and disposal. The waste volume assigned to each option was entered along with the yearly fixed programmatic costs, the variable waste costs, and the volume reduction ratio achievable by that treatment option for the specific waste type. The variable waste costs included the cost to dispose of the secondary waste produced by the treatment. These inputs were summed and averaged over the 30­year analysis period and put into a specific treatment cost model. The total waste to be processed was averaged over the operating period of the facility for the sizing, costing, and operating manpower calculations. Based on waste volume, fixed costs, variable costs, volume reduction ratio, the facility operating period, and the input dates for design start and operations start, the treatment cost model calculated the equipment and building costs, total operating manhours, the pre-project costs, the total estimated cost to build the facility, the costs to decommission and dispose of the facility after all the waste has been treated, and the secondary waste disposal costs. The various costs were distributed over the appropriate time periods. The costs were then escalated and discounted to get a life-cycle cost, the present worth cost for the treatment option, and a cost per cubic meter of input waste. Costs calculated in the treatment cost model were returned to the spreadsheet for summation, which yielded the total option cost. The specifics of how these calculations were performed are discussed in Section C.2.

Another spreadsheet calculated the manpower required for each facility. Engineering, operation, and support manpower were included over all phases of the life cycle. The life cycle includes pre-project planning, design and construction operations, and facility decontamination and decommissioning. A master labor spreadsheet collected the individual facility manpower calculations and generated totals for each treatment, storage, and disposal alternative.

C.2 Typical Cost Estimate

This section describes the calculation procedure for determining life-cycle cost. For illustration, each component is explained and calculated for the non-alpha vitrification facility (Hess 1994b, 1995).

Each component of the cost is calculated in units of thousands of dollars and shown as a total dollar value in parenthesis. The values have been rounded to the nearest thousand following calculation; they do not always equal the sum or product of the listed values.

C.2.1 TOTAL FACILITY COST

The total facility cost consists of pre-project costs, design and construction costs, contingency costs, operating costs, and post-operation costs. Escalation and discount rates are applied to the costs as they are incurred to determine life-cycle costs.

Each step of the calculation is illustrated for a typical facility. The cost factors for the non-alpha vitrification facility are presented in Table C-6.

C.2.1.1 Assumptions

The cost estimates are based on the following assumptions:

- Annual manpower (manhours/year) is calculated using the COSTPRO program and the assumption from the in-depth options analysis that 1,000 cubic meters (35,300 cubic feet) per year of waste would be processed through each facility.

- A uniform, fully burdened labor rate of $75/manhour in 1994 dollars is assumed for all workers for all activities, including design, construction, operation, and decontamination and decommissioning. The labor rate includes salary, benefits, and indirect expenditures (i.e., overhead).

- The year in which project planning and preconceptual design start occurs is assumed for each facility to be 2 years before the detailed design and construction start.

- The operation start is the year in which the facility would begin operating.

- The operation period, in years, is the length of time the facility would be operating.

- The facility waste volume (throughput in cubic meters per year) is calculated from the total volume to be treated averaged over the operational period of the facility. Averaging the waste volume defines a realistic design capacity for the equipment and building, not the peak waste generation rates.

- The manner in which the treated waste would ultimately be disposed is based on the disposal cost (calculated in dollars per cubic meter; to convert to dollars per cubic foot, divide by 35.31). The variable costs include the cost to build and operate the final disposal facilities.

- A volume reduction ratio (x:1) is used for each specific waste through each specific facility. The final disposal volume (after volume reduction) is multiplied times the disposal costs per unit volume of waste and added to the facility costs as a portion of the facility life-cycle costs.

Table C-6. Total facility cost for the non-alpha vitrification facility

a. Administrative and other support personnel.

b. Resource Conservation and Recovery Act.

c. A weighted average of volume reduction ratios for each waste type based upon experience with vitrification facilities.

C.2.1.2 Construction Costs

Construction costs consist of equipment costs, building costs, field indirect costs (e.g., auxiliary support personnel), field direct costs (e.g., temporary construction facilities), field and design engineering costs, construction management, and project management costs.

C.2.1.3 Total Estimated Cost (TEC)

Total estimated cost is construction cost plus contingency (C). The contingency is the funding required to give an 80-percent confidence level that the project will be completed within the estimated funding and schedule. Estimates done at the conceptual planning level are typically + 40 percent. For this effort a contingency of 35 percent of the construction cost was used.

C.2.1.4 Pre-Project Costs

Based on experience with projects at SRS, the planning costs for project definition and implementation of DOE Order 4700, "Project Management System" requirements were estimated as 5 percent of the total estimated cost, as calculated above, and preconceptual design costs were estimated as 10 percent of the total estimated cost.

The permitting costs are based on an estimate of the need for new permits or required modifications to existing permits. A Resource Conservation and Recovery Act (RCRA) Part A permit or modification is estimated to cost $150,000. A RCRA Part B permit is estimated to cost $1,500,000.

Costs associated with preparation for operations (e.g., a procedure document) are estimated to be $150,000.

C.2.1.5 Facility Operating Costs

Two types of manpower requirements are considered. Operating manpower consists of personnel who actually operate the facility as estimated by the linear model developed from the COSTPRO program. Waste type support manpower includes administrative and other support personnel based on a distribution of these requirements to each waste type as reported in FY 1993 SRS Waste Cost Analysis (Taylor, McDonnel, and Harley 1993).

Utilities costs vary from 4 percent to 20 percent of the operating manpower cost. The variance is the following function of the equipment cost: F = 1 + 4 ÷
equipment cost ÷
maximum equipment cost. The maximum equipment cost of the facilities identified in this eis is 14,882 (or $14,882,000).

C.2.1.6 Post-Operation Costs

The cost of decontamination and decommissioning the facility following its useful life is estimated as 80 percent of the initial equipment and building costs.

C.2.1.7 Total Unescalated Costs

C.2.2 COST DISTRIBUTION

Unescalated costs (based on the value of money in 1994), escalated costs, and discounted costs are listed by year in Table C-7.

C.2.3 ESCALATION

The escalation rates were taken from the DOE guidelines (DOE 1994b) for future-year estimating. The escalation rates are typically 3 percent, with the exception of 2.9 percent and 3.1 percent for fiscal year 1995 and fiscal year 1998, respectively.

Escalation factors are calculated as the previous year's escalation factor compounded by the appropriate escalation rate. For example, the escalation rate in 2000 is 3 percent. Therefore, the 2001 escalation factor is the 2000 factor (1.194) times 1.03 or 1.230. The escalated costs are the product of the unescalated cost and the corresponding escalation factor (Table C-7).

Table C-7. Cost distribution for the non-alpha vitrification facility

C.2.4 DISCOUNTING

Discounting is the determination of the present cost of future payments. The present cost is less than the future payment because the money could be invested with some rate of return and be worth more later. The rate of return is assumed to remain constant at 6 percent per year; this rate is judged to be consistent with current prime lending rates and long-term rates of return.

Discounting is calculated in a manner similar to escalation; the previous factor is discounted by the appropriate discount rate. For example, the discount factor for 2001 is the 2000 factor (0.705) divided by 1.06 or 0.665. Discounted costs are the product of the escalated cost and the discount factor (Table C­7). Figure C-2 presents a graphic representation of the discounted, unescalated, and escalated costs.

C.3 Cost of Facilities

Costs for proposed facilities are presented for each alternative and waste forecast (Table C-8). The costs include those for pre-project, design and construction (except for existing facilities, which have already incurred design/construction costs), operation and maintenance, secondary waste disposal and facility decontamination and decommissioning. They are expressed as present 1994 costs and are based on draft site treatment plan escalation (approximately 3 percent) and a 6­percent discount rate.

Table C-8. Cost of facilities in the SRS Waste Management eis ($ million).

Table C-8. (continued).

a. Source: Hess (1995).

b. Shaded areas indicate the alternatives that do not use the facility.

C.4 References

DOE (U.S. Department of Energy), 1994a, SRS Draft Site Treatment Plan, Savannah River Operations Office, Savannah River Site, Aiken, South Carolina.

DOE (U.S. Department of Energy), 1994b, Draft Site Treatment Plan Cost Guidance, (Revision 1), Office of Field Management, Washington, D.C.

DOE (U.S. Department of Energy), 1995, Baseline Environmental Management Report, Office of Environmental Management, Washington, D.C., March.

Feizollahi, F., and D. Shropshire, 1992, Waste Management Facilities Cost Information Report, EGG­WTD-10443, EG&G, Idaho Falls, Idaho.

Hess, M. L., 1994a, Westinghouse Savannah River Company, Aiken, South Carolina, Interoffice Memorandum to H. L. Pope, U.S. Department of Energy Savannah River Operations Office, Aiken, South Carolina, "Synopsis of Estimating Models," ESH-NEP-94-0194, October 14.

Hess, M. L., 1994b, Westinghouse Savannah River Company, Aiken, South Carolina, Interoffice Memorandum to H. L. Pope, U.S. Department of Energy Savannah River Operations Office, Aiken, South Carolina, "Draft In-Depth Option Analysis for Review and Comments," ESH­NEP­94­0099, July 29.

Hess, M. L., 1995, Westinghouse Savannah River Company, Aiken, South Carolina, Interoffice Memorandum to H. L. Pope, U.S. Department of Energy Savannah River Operations Office, Aiken, South Carolina, "WSRC Data Transmittal-Complete Copy of Cost Model for WMeis," ESH-NEP-95-0078, May 5.

Taylor, B. K., W. R. McDonnel, and D. P. Harley, 1993, FY 1993 SRS Waste Cost Analysis, WSRC­RP­93-942, Westinghouse Savannah River Company, Aiken, South Carolina, July 31.