What is Total Cost Assessment?
Total Cost Assessment was developed in 1991 by the Tellus Institute for the EPA and New Jersey Department of Environmental Protection. It is based on methods and programs developed by GE to better select and justify waste management investment decisions that are environmentally sound and reduce long-term liabilities. A sequence of studies provided the theoretical background for Total Cost Assessment. Later, the AIChE developed a full methodology around the TCA concept. The AIChE methodology is described here.
Total Cost Assessment is the consideration of all environmental and health (E&H) costs associated with a decision, including direct costs, risks and liabilities, and costs borne by others. The TCA methodology prompts the user to consider all these costs, but the user may also select a subset of costs to consider. Click here for the Total Cost Assessment Methodology Manual developed by the AIChE.
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Direct costs (recurring and non-recurring) Manufacturing site costs; capital investment, labor, raw materials, and waste disposal costs; capital, operating, and maintenance costs.
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Indirect costs (recurring and non-recurring) Corporate and manufacturing overhead costs not directly allocated to product or process.
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Future and contingent liability costs Costs including fines and penalties caused by non-compliance; clean-up, personal injury and property damage lawsuits; natural resource dam-ages; industrial accident costs.
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Intangible internal costs (Company-paid) Includes difficult-to-measure costs such as promoting consumer acceptance, customer loyalty, worker morale, worker wellness, union relations, corporate image, and community relations.
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External costs (Not directly paid by company) Costs borne by society, including deterioration of the environment by pollutant dispersions that comply with applicable regulations.
To read a detailed Case Study, click here. (PDF file)
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