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The fundamental nature of environmental cleanup projects is, in general, notably dissimilar to that of most of product, service or capital asset project types. Environmental cleanup projects exist primarily because of legal requirements imposed by governmental regulatory authorities. The specific efforts necessary to comply with the imposed requirements are unlikely to be related to the strategic goals and objectives of the obligated organization. Additionally, the cost of those efforts is often considered a financial liability that is subject to the recognition, measurement (i.e., estimating) and disclosure requirements of one or more applicable accounting standards.
Moreover, the remedial activities necessary to extinguish environmental obligations are generally performance based. For example, a project owner may be obligated to reduce the concentration of a particular contaminant present in groundwater to a level of 10 parts per million. The obligation is extinguished, at least in part, only when the reduction to 10 parts per million is achieved. The quantity of material, people, time and money required to do so is largely irrelevant. Even if no individual project or contract issued by the project owner is performance based, the underlying obligation is decidedly so. This performance-based characteristic is fundamental to environmental obligations and, accordingly, has a fundamental impact on environmental cleanup cost and schedule estimating.
Effectively managing an environmental cleanup obligation throughout its lifecycle requires a systematic approach to project control planning, implementation, measurement and assessment that interfaces with the strategic objectives, constraints and contexts of the obligated organization. This paper illustrates the synergistic application of the Total Cost Management (TCM) Framework [9] as an enabling process for ensuring consistency and comparability of environmental cost estimates prepared for a variety of uses and users within an organization.
USES AND USERS OF ENVIRONMENTAL ESTIMATES
Environmental cleanup cost estimates should be relevant and understandable to the multiple users within an organization that rely on them. Furthermore, a robust framework should be used so that estimates prepared for differing purposes (e.g., procuring cleanup contractors, settling litigation, or reporting liabilities in financial statements) are comparable and consistent even if not generally numerically equivalent. For example, estimate users within an organization should understand the differences between a procurement-specific owner's cleanup cost estimate and an environmental liability estimate prepared to comply with a specific accounting...