Wednesday, October 15, 2014

Assess & Compare: Assess Cost

Assess Cost

Finally, alternatives should be assessed and compared based on their cost. While a full cost-benefit analysis of all the alternative options is quite costly and not essential, it is important to thoroughly consider relevant cost impacts, both positive and negative, on your company. Completing such an economic analysis will also help you make the business case for transitioning to safer alternatives. Some costs and benefits that you might consider in your evaluation include:

Direct Costs

  • Capital expenditures
  • Operating costs
  • Material costs
  • Maintenance costs

Indirect Costs

  • Supervision and administrative costs
  • Regulatory compliance costs
  • Worker health and safety costs (PPE, lost employee time, etc.)
  • Waste management expenditures, including hazardous waste disposal costs
  • Insurance, rent, taxes

Liability Costs

  • Penalties and fines
  • Personal injury
  • Worker Compensation
  • Property damage
  • Clean-up costs
  • Natural resources damage

Less Tangible Benefits

  • Increased sales due to improved product quality, enhanced public image, consumer trust in greener products, or other effects
  • Reduced health maintenance costs due to a safer work environment
  • Improved worker productivity due to cleaner working conditions
  • Increased worker productivity due to improved employee relations

Key Example

Cost Assessment Methodology

European Commission’s Cost Assessment Methodology

The European Commission’s Guidance on Minimizing Chemical Risk to Workers’ Health and Safety Through Substitution provides a detailed table to help small and medium-sized businesses identify costs to take into account. The table includes parameters for evaluating material costs, equipment costs, safety costs, time related costs, waste costs, and the costs of risk. This table is also useful for presenting the impacts and consequences of a substitution to management.

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