SOFTWARE TO EVALUATE THE PROFITABILITY OF POLLUTION PREVENTION INVESTMENTS USING METHOD OF "TOTAL COST ASSESSMENT"

Revision Date: 9/01
Process Code: Navy/Marines: N/A; Air Force: N/A; Army: N/A
Usage: Navy: Medium; Marines: Medium; Army: Medium; Air Force: Medium
Compliance Impact: Medium
Alternative for: Conventional Financial Analysis
Applicable EPCRA Targeted Constituents:
N/A
Overview: "Total cost assessment (TCA)" is a method to eliminate unjustified and misleading financial barriers in consideration of pollution prevention processes and projects. The TCA method’s focus is on the "true" profitability of proposed projects and differs from conventional financial analysis in four ways:
  • Cost, savings, and revenue summaries include indirect items like compliance, training, testing, liability, and affect on product and corporate image, all typically neglected from project analysis.
  • Costs and savings are directly allocated to specific process and product accounts rather than to overhead accounts.
  • Time horizons for calculating returns on investment are extended to capture longer-term benefits.
  • Other profitability measures include the time value of money for evaluating long-term costs and savings.

Using the TCA method, the Tellus Institute has completed several major studies including 1) a study for the EPA Division of Pollution Prevention entitled, "Total Cost Assessment: Accelerating Industrial Pollution Prevention through Innovative Project Financial Analysis," and 2) a study for the New Jersey Department of Environmental Protection and Energy entitled, "Alternative Approaches to the Financial Evaluation of Industrial Pollution Prevention Investments." Furthermore, Tellus has incorporated the TCA method into its software, "P2/FINANCE."

P2/FINANCE is spreadsheet software designed to guide companies in data collection and rigorous financial evaluation of potential pollution prevention projects. As a starting point or a complement to a company’s existing project evaluation procedure, P2/FINANCE assures that pollution prevention projects have accurate financial representation and receive due consideration when capital budgeting is done. In addition, the program can compare the costs of current practices to various alternatives based on a number of criteria: liability, cost, debt, interest and tax rates, inflation, and depreciation.

The program is available in either Microsoft Excel 5.0 or Lotus 1-2-3 for MS-DOS 3.1 (or higher) formats, and comes complete with a User’s Manual and user support, if desired. A mouse and color screen are optional, but they do simplify operation of the program. For larger groups and organizations, one day training on TCA and P2/FINANCE is available.
Compliance Benefit: "Total cost assessment (TCA)" may demonstrate the cost-effectiveness of various pollution prevention projects to funding personnel. This demonstration may help facility comply with all environmental regulations.

The compliance benefits listed here are only meant to be used as a general guideline and are not meant to be strictly interpreted. Actual compliance benefits will vary depending on the factors involved, e.g. the amount of workload involved.
Materials Compatibility: N/A


Safety and Health: N/A


Benefits:
  • TCA focuses on true profitability of proposed projects.
  • TCA method is more detailed than conventional financial analysis for pollution prevention projects.


Disadvantages:
  • Users may need to set aside time to educate themselves on the TCA method so that they will understand how to plan an analysis (plug in the appropriate variables) for accurate results.


Economic Analysis: The software is available free of charge for all U.S. government agencies. For those without a licensing agreement, a demo diskette and user’s manual can be purchased for $35.


Approving Authority: Approval is controlled locally and should be implemented only after engineering approval has been granted. Major claimant approval is not required.


NSN/MSDS:
Product NSN Unit Size Cost MSDS*
None Identified     $  


*There are multiple MSDSs for most NSNs.
The MSDS (if shown above) is only meant to serve as an example.

Points of Contact:
Civilian:
Tellus Institute’s “P2/FINANCE” software is licensed by the U.S. EPA. It is available free of charge to all U.S. government agencies by calling the EPA’s Pollution Prevention Information (P2I) Clearinghouse at (202) 260-1023. The P2I Clearinghouse will mail a diskette of the desired version (Lotus 3.4a and Excel 5.0) upon request. For those without a licensing agreement, a demo diskette and user’s manual are available from Tellus for $35. Details about the complete licensing agreements for individuals and organizations, which may include training and follow-up support, are also available from Tellus.

Ms. Deb Savage
Tellus Institute for Resource and Environmental Strategies
11 Arlington Street
Boston, MA 02116-3411
Phone: (617) 266-5400
FAX: (617) 266-8303

Vendors: Tellus Institute for Resource and Environmental Strategies
11 Arlington Street
Boston,  MA   02116-3411
Phone: (617) 266-5400 
FAX: (617) 266-8303
Contact: Ms. Deb Savage
Sources: The Tellus Institute’s P2/FINANCE documentation.


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