PRECOSIS

Prepared by:
George Beetle, George Beetle Company

Prepared for:
U.S. Environmental Protection Agency,
Center for Environmental Research Information, Cincinnati, Ohio

Application:
Financial analysis:
Environmental impact analysis: ---
Waste management/P2:
Environmental cost listing/database: ---
Cost estimation: ---
Alternative product/process comparison: ---

Financial analysis of waste reduction projects.

Development/publication date and updates:
1989. There have been some enhancements and updates.

Public availability:
Available

Purpose and current use:
The software was designed to support participants at a series of seminars on waste minimization sponsored by the EPA in 1989. Approximately 1000 copies of the older version (uncompiled and more difficult to use than the current version) were distributed at the seminars. The method has since been enhanced and placed in general distribution under license by the George Beetle Company.

Cost information:
~ $50

System requirements:
Manual and software. A menu-driven program consisting of ten data input tables and two output reports containing financial calculations. Requires an IBM-compatible computer with 512 KB (or more) of base memory.

Summary of methodology

The method first prompts users to describe the current process. Then they enter cost data for labor, materials, facilities and waste management, revenue data, and financial parameters.

Cost data are grouped into three categories:

Users need to enter unit cost data for labor, materials, facilities, and waste management. Also, users need to specify the number of units needed for the current process. Users are asked for cost information concerning the following activities for the current practices and the alternative practices:

  1. labor resources and labor requirements by labor class, average hourly labor rates, benefits by labor class
  2. materials usage rates, delivery costs
  3. facilities equipment and building sizes and capacities, average service life, typical salvage value, usage rates
  4. revenues from current production rates for primary and secondary products and expected changes for alternative practices, revenue rates for products
  5. waste management quantities, waste management costs including monitoring and reporting, insurance for workers and third parties

PRECOSIS calculates various financial indicators to evaluate the profitability of alternative processes. Data on other alternative strategies can be entered to compare financial differences between alternatives (can compare up to 5).

Life-cycle stages covered

Raw material acquisition ---
Manufacturing stage
Use/reuse/maintenance
Recycle/waste management

These life-cycle stages are considered within the confines of a company.

Type of costs considered

Conventional
Potentially hidden
Contingent ---
External ---

Method of cost estimation

Users enter cost data for labor, materials, facilities and waste management, revenue data, and financial parameters. To calculate costs associated with the alternative process, users need to enter an expected increase or decrease (called 'effects') in the number of units used, waste generated, and product produced as a result of the process change. The software calculates the net present value, estimated payback period, internal return on investment, and other financial indicators.

Generation of financial indicators

Net present value (NPV)
Payback period
Internal rate of return (IRR)
Benefits cost ratio ---
Other

Attributes

PRECOSIS facilitates the side-by-side comparison of up to five waste reduction alternatives. Improvements in production due to waste reduction alternatives are considered. Facility and equipment salvage values are also entered into the equations. The software is a menu-driven program consisting often data input tables and two output reports containing financial calculations.

Limitations

The approach does not consider contingent and external costs. It is not designed for life-cycle cost analysis. Users need to spend some time understanding the methodology and structure of PRECOSIS (different from conventional project financial analyses). Most of the calculations are not explained in the user's manual, nor would the typical user be able to examine the formulas in the software.

Basis for evaluation:
The information provided here is based on a profile of the tool presented in Weitz et al. (1994) and in White et al. (1991). Subsequent reviews were done through telephone communications with George Beetle in May 1995.

Contact information:
533 Arbutus Street
Philadelphia, PA 19119
George Beetle
215-438-0598
215-438-7876 (FAX)

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