Calculation Cost Model: Area Oriented Approach · This manual describes how to use the Cost Calculation Model: Area Oriented Approach (CCM: AOA) software. The ... Appendix 2 Risks

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Calculation Cost Model: Area Oriented Approach Manual Version 2.0, 1 February 2013

Calculation Cost Model: Area Oriented Approach - Manual Version 2.0, 1 February 2013 2

Summary

This manual describes how to use the Cost Calculation Model: Area Oriented Approach (CCM: AOA) software. The

software can be downloaded from http://www.citychlor.eu/sites/default/files/installer_2.0_english.zip

The Cost Calculation Model: Area Oriented Approach (CCM: AOA) is a standardized method that allows an objective

assessment for organization and implementation of an area oriented approach. The model supports the financial

consideration in decisions about multiannual AOA both in the planning phase and during transfer to the management

phase.

This application was developed by a consortium of organizations under SKB project PP 5304. Extension of the model for

AOA was developed by Interreg IVB NWE CityChlor. Technical realization: Valid Ware

The Cost Calculation Model: AOA provides a standard to assist in an objective consideration of the costs for an Area

oriented Approach. The model assists the financial consideration in decisions about AOA locations, both in planning

phase and during transfer to management phase. Besides the import of regular cost the model also includes a method

on how to deal with financial windfalls or setbacks in decision making.

AgencyNL and its Dutch partner the Municipality of Utrecht participate in the European CityChlor project, operating under

the INTERREG IV B program for Northwest Europe. The Utrecht remediation approach for an AOA – the

“Biowasmachine” – is a pilot in this CityChlor project. From this position the initiative for a cost calculation model is

initiated as a part of the “Socio economic” work package; giving financial preconditions for a AOA and support to design

and implementation phase of an AOA approach.

The report “Cost Calculation Model Area Oriented Approach - tool for financial management” can be used as an

introduction for new users of the model. The scope of this report is to give a short presentation the CCM: AOA and

background readings to the building process of the model.

http://www.citychlor.eu/sites/default/files/installer_2.0_english.zip

http://www.citychlor.eu/sites/default/files/CCM_AOA.pdf


Table of content

Summary .................................................................................................................................... 2

Table of content ......................................................................................................................... 3

1 Introduction ........................................................................................................................ 5

1.1 Background ................................................................................................................. 5

1.2 Objective ..................................................................................................................... 5

1.3 Execution .................................................................................................................... 6

1.4 Description of the application ...................................................................................... 6

1.5 Version history ............................................................................................................ 7

1.6 Manual contents ......................................................................................................... 7

2 Initial familiarisation ........................................................................................................... 8

2.1 Introduction ................................................................................................................. 8

2.2 Installation .................................................................................................................. 8

2.3 Select application language ....................................................................................... 8

2.4 Let's get started .......................................................................................................... 8

2.5 Making changes ....................................................................................................... 10

2.6 Adding and deleting ................................................................................................. 10

2.7 Reports ..................................................................................................................... 11

2.8 Important guidance for use ...................................................................................... 11

3 Installation and data management .................................................................................. 12

3.1 System requirements ............................................................................................... 12

3.2 Installation ................................................................................................................ 12

3.3 Data storage and exchange ..................................................................................... 12

4 Program manual .............................................................................................................. 14

4.1 Opening an estimate ................................................................................................ 14

4.2 Creating an estimate ................................................................................................ 15

4.2.1 Create new estimate .......................................................................................... 15

4.2.2 Explanation of the main screen .......................................................................... 16

4.2.3 Objects ............................................................................................................... 16

4.2.4 Costs structure sub-screen ................................................................................ 17

4.2.4.1 General ............................................................................................................... 17

4.2.4.2 Tree structure menu options .............................................................................. 18

4.2.4.3 Copy and paste actions ...................................................................................... 18

4.2.5 Costs list sub-screen ...................................................................................... 18

4.2.5.1 General ............................................................................................................... 18

4.2.5.2 Assessing the net present value ........................................................................ 19

4.2.5.3 Alternative display .............................................................................................. 19

4.2.6 Detail information sub-screen ............................................................................. 20

4.2.6.1 General ............................................................................................................... 20

4.2.6.2 Estimate details screen ...................................................................................... 20

4.2.6.3 Cost group details screen ................................................................................... 21

4.2.6.4 General settings details screen .......................................................................... 22


4.2.6.5 Financial settings details screen ........................................................................ 23

4.2.6.6 Phasing settings details screen .......................................................................... 24

4.2.6.7 Cost item details screen ..................................................................................... 25

4.2.6.8 Aggregation item details screen ......................................................................... 28

4.2.6.9 Risk/financial windfall details screen .................................................................. 29

4.3 Basic key figures ...................................................................................................... 30

4.3.1 General ............................................................................................................... 30

4.3.2 Creating lists of basic key figures ....................................................................... 31

4.3.3 Application of basic key figures .......................................................................... 32

4.3.4 File management ................................................................................................ 33

4.4 Calculation and reporting ......................................................................................... 35

4.4.1 Calculation of Net present value: ....................................................................... 35

4.4.2 Reports ............................................................................................................... 35

4.5 Sensitivity analysis ................................................................................................... 36

4.5.1 General ............................................................................................................... 36

4.5.2 Setting sensitivity analysis parameters .............................................................. 36

4.5.3 Interpretation of the results of the sensitivity analysis.......................... 37

4.6 Multilingual estimates ............................................................................................... 38

4.6.1 Introduction ......................................................................................................... 38

4.6.2 Choice of the language to be used..................................................................... 38

4.6.3 Multilingual input during set-up ........................................................................... 39

4.6.4 Input a translation retrospectively....................................................................... 39

4.6.5 Selection of the language that is currently active ............................................... 40

5 Account ............................................................................................................................ 41

Appendix 1 Risks and financial windfalls ............................................................................ 42

Appendix 2 Risks : example and check list ......................................................................... 47

Appendix 3 Calculation of NPV ........................................................................................... 49


1 Introduction

1.1 Background

The CCM: AOA is a standardized method that allows an objective assessment for organization and implementation

of an area oriented approach. The model supports the financial consideration in decisions about multiannual AOA

both in the planning phase and during transfer to the management phase.

This application was developed by a consortium of organizations under SKB project PP 5304. Extension of the

model for AOA was developed by Interreg IVB NWE CityChlor. Technical realization: Valid Ware

As a result of the developments in the soil policy in recent years in the Netherlands, contamination is remaining in

the soil for longer and more residual contamination is being left behind following remediation. The scope of the

(after) care task is thus expanding. Modification to the Soil Protection Act means than aftercare is now also better

embedded in legislation as a result of which the aftercare/management task is better safeguarded.

A often recurring stumbling block with respect to aftercare/management/management is the need for good cost

estimates and any potential financial risks. There is no standard and broadly supported method of determining and

quantifying the (after) care costs and risks of soil remediation. However various models have been developed on an

ad hoc basis (mostly for own use and also partly for other types of for aftercare/management/management, each

with its own method, set up and specific objective as well as specific flaws.

The absence of an effective and broadly supported costs and risks model results in inaccurate and unreliable

estimates (they can too low as well as too high) of and discussions regarding the aftercare/management costs.

Possible consequences in practice include: a wrong variant is selected in the evaluation phase of the remediation

process, difficult takeover procedure from aftercare/management locations because uncertainty is translated into

(probably too) high premiums, problems in budgeting operating costs and stagnation on projects/developments.

In short; a standard calculation model will mark a major step forward in safeguarding the continuity and quality of

soil remediation aftercare/management.

1.2 Objective

The objective of the SKB project 'Area Oriented Approach Cost Calculation Model (AOA:CCM') is to create a widely

supported and freely available calculation model for the aftercare/management costs of soil remediation sites. The

calculation model could set a solid financial basis for aftercare/management and enable soil quality processes to

be further optimised.


1.3 Execution

This initiative has been executed as SKB Project PP5304. Various organisations have come together to form a

consortium to help to finance and execute the project:

Public Works Department (Gemeentewerken) Rotterdam – Pipeworks and underground management

department (Leidingenbureau en Beheer ondergrond) (main contractor)

Grontmij Nederland BV

Public Works Department Engineering Agency (Ingenieursbureau Gemeentewerken Rotterdam)

Rotterdam Development Agency (Ontwikkelingsbedrijf Rotterdam)

Province of Zuid-Holland aftercare/management agency

Province of Utrecht

Limburg aftercare/management (Nazorg/beheer Limburg)

SBNS

Municipality of Dordrecht

A&G milieutechniek

DCMR Environmental Protection Agency

Soil+

As part of an exploration and definition phase, a quick scan was carried out of the existing relevant information

while the consortium determined the required functionalities during brainstorm sessions. Next, they selected which

calculation modules should be built.

In the research and construction phase, the necessary information was collated and the calculation modules were

created in a software application.

1.4 Description of the application

The AOA:CCM calculation model creates a standard to support objective consideration of aftercare/management

variables. The model helps with financial considerations with respect to decisions concerning

aftercare/management sites both during the planning phase and when handing over to the management phase.

The model also includes an approach for dealing with setbacks/windfalls in financial decision-making.

The model is designed to develop both simple as well as complex estimates/budgets. While in principle focused on

use for 'genuine' aftercare/management locations, the model could also be used for former landfill aftercare or

industrial area soil remediation locations, for example.

As well as the input of standard cost items, the application also supports the input of risks and financial windfalls.

For recording and quantifying risks to be entered in the application, please see paragraph 4.2.6.9.


1.5 Version history

Version 1 was the original release of the application (2010). This was followed by two bug fix releases in 2011.

Version 2 included extensions to make the software suitable for international use. In addition to the existing Dutch

user interface, an English version has been made available. Furthermore, users can now input estimates in four

languages (Dutch, English, German, French)

A more detailed description of the application version history can be found on the AOA:CCM website.

Since version 2, the application has been called:

Dutch: Rekenmodel Nazorg/beheer en Beheer (abbreviated as: RNB)

English: Cost Calculation Model: Area Oriented Approach (abbreviated as: CCM AOA)

The set-up of version 2 includes two standard estimates for area oriented groundwater management: a short and

an extended version. These two estimates are available in two languages (English and Dutch). They can also be

downloaded separately from http://www.citychlor.eu/sites/default/files/installer_2.0_english.zip

The following versions of the manual have been published:

Version 1.0 is the version supplied with application version 1.0.

Version 2.0 is (this) version which is supplied with application version 2.0. It is available in both Dutch and English.

1.6 Manual contents

The follow-up to this manual deals with each of the following subjects in order. Chapter 2 is a familiarisation with the

application so that you can get started quickly. Chapter 3 explains how to install the application and proposes how

the manage the data (basic key figures and estimates). In chapter 4 there is a detailed look at all the application's

functionalities.



2 Initial familiarisation

2.1 Introduction

The aim of this chapter is to help you get started working with the software quickly. You will find a more detailed

description in chapter 4.

Broadly speaking, working with the application comes down to the following:

Opening an existing or new estimate;

Adding/editing cost items;

Reporting to Excel.

2.2 Installation

The software first needs to be installed. In the majority of organisations, user rights for doing this are restricted and you

will need to contact your systems administrator. The installation procedure is described in more detail in paragraph

3.2.

2.3 Select application language

You can select the application language to be used. The application language determines the standard text on

buttons, screen, reporting windows etc.

The latest version supports the English and Dutch languages.

You can change the application language at any time by using the ‘App. language' button in the toolbar. If you

change the application language, the application will be restarted.

2.4 Let's get started

The installation procedure creates quick links in your start-up menu and on your desktop. You can start the application

by double clicking on the quick link.

After starting the application, the first screen you will see is ‘Estimates file management’. This shows the various

estimate projects which are available in the estimates file to which there is a link at the top of this screen. Two

standard estimates are provided during installation.


The screen shows which language the estimate was input in using flag icons.

Select the estimate you want and click on 'Open'.

The estimate will be uploaded and displayed in the application main screen:

To become familiar with this screen, click on something in the costs structure on the left. Detailed information for the

elements you have clicked in the costs structure is displayed in the sub-screen on the bottom right.

Click on an item for each element type (indicated by the various icons) and view the detailed information.


2.5 Making changes

In this paragraph, we are going to make a change.

Click on the top item ('Sample estimate 1').

Enter something in the comments field. The save button will now be activated.

Click on this save button (or: use Ctrl+S) to save your change.

This system is used in every details screen.

Try to make a change to another item, for example a cost item (indicated by the icon ).

2.6 Adding and deleting

You can add and delete by right clicking on the costs structure menu. For

example, right click on the 'Manage' costs group. The menu will open.

We can now select 'Add cost item' for example.

In the cost item details screen, you can enter the name of the cost item

and the properties such as frequency, amount etc.

You can delete via the 'delete' option from the right-hand mouse button

menu.

Also explore the other options under the right-hand mouse button menu.


2.7 Reports

You can export your estimate to Excel by using the report button in the

main menu. Click on this button. You will now see a window where you

can enter certain specifications. For now, you can use the standard

settings.

Click on ‘OK’. The application will now export the estimate to Excel.

The Excel report will display a table showing the calculation on the net

present value (NPV) and of the estimate.

So you have now had a brief view of how the application works. We

have looked at the application only in broad terms. You can find a full

description of the functionalities in chapter 4.

2.8 Important guidance for use

Although the model offers flexibility in terms of retrospectively move cost items, create a new type of classifications or

apply other changes to structure, it is advisable - particularly in the case of larger projects - to think about:

logical and consistent classification into cost groups (see paragraph 4.2.6.3). For example, you can classify

by type of activity (maintenance, inspection, replacement), by the type of facility (groundwater extraction

system, cover sealing), by sub-sector, etc. Consistent classification provides you with a solid overview during

operations and the same for readers of the Excel reports that will be generated.

phasing (see paragraph) 4.2.6.6). The use of 'phasing settings' is not mandatory but it is recommended. If

you input one or more phasing settings you will add structure to the 'time' factor and save on inputting time.

This is explained further in paragraph 4.2.6.6.

Another important observation concerns the security of the data you have input. The application saves what you have

input in databases. You can choose the file location where you want to save databases and you can apply different

principles (see paragraph 3.3 for further explanation).

In this paragraph, you are advised that the file location you select should be included in your network's daily back-up.

We strongly advise that you should not place databases on a local hard drive.


3 Installation and data management

3.1 System requirements

The application works on the Windows XP, Windows Vista, Windows 7 and Windows 8 operating systems and uses

Microsoft.NET Framework version 3.5. Depending on the Windows installation history on your computer, this will

already be installed or will be installed as part of the software installation process. To save data, the program uses

Microsoft SQL Server Compact Edition. This (free) package is also installed during the installation process.

3.2 Installation

The software can be downloaded from http://www.citychlor.eu/sites/default/files/installer_2.0_english.zip

Download and unzip the file: installer 2.0 english.zip

From the unzipped files use the standard msi installer.

During installation, a quick link is created on your desktop and in the start menu (Programs Validware AOA:CCM

calculation model).

3.3 Data storage and exchange

The structure of the calculation model is shown in the figure below.

The application includes the user screens and the program code for calculations/operations. The data (details you

have input and basic key figures) are saved separately in databases. There is a database for the estimates (file

extension .rnbR) and for key figures (file extension .rnbK). The databases are of the type Microsoft SQL Server

Compact Edition.

Application

Data file estimates

(*.rnbR)

Data file key

figures



The arrows in the diagram show that the databases can be linked to the calculation model application. In the

application, you can indicate which estimates database and which key figures database you want to link to, similar to

how you would open a spreadsheet in Microsoft Excel or a Word file in Word.

The application does not dictate where you must locate the estimates and key figures databases. However it is

recommended that you agree strategy in this respect within your organisation/with your colleagues.

Possible strategies for data storage:

1. Fully centralised

All estimates are saved in a single estimates database on the network. All key figures are saved in a single

key figures database on the network. All the users within an organisation use the same databases

2. Semi-centralised

In this version, an estimates database is used per estimate/location. The subsequent estimates databases

are saved in separate project directories. The key figures database is saved centrally so that all users use the

same key figures.

3. Fully centralised

All estimates databases and key figures databases are created per user per project.

4. Per user

Every user uses his own estimate databases and key figures databases.

Other strategies are also possible. Every organisation can select its own policy. Estimates databases can be linked in

the same way as you would save Word and Excel files, for example. Key figures databases can be linked in in the

same way as you handle standard documents, templates etc.

In any case, it is recommended that you place the databases on the network and not on a locale PC for the following

reasons:

If the databases are on the network, they will be included in the daily back-up. In the case of disaster, you can then get

your system administrator to restore a backup.

If you are working from a different PC, you can also connect to the files.

The sdf files can be exchanged between users in the same way as you are able to exchange Word and Excel files.

An import function has also been implemented in the application to allow estimates or lists of basic key figures to be

imported from another sdf filed in the linked sdf file.


4 Program manual

4.1 Opening an estimate

When you start the application, the 'Manage estimates' screen will be opened, see figure below. This shows the

estimates from the database to which the application is linked (see paragraph 3.3). The estimates are indicated by

their name and one or more flag icons which show which language the estimates were entered in.

If the application is not able to establish the database it needs to link to, you will be given the option to select a

database.

Use the 'change…' button to link to a different database. You can do this only if you have not yet opened an estimate.

Use the 'new…' button to create a new database and save it in the file location of your choice.

The buttons beneath the screen have the following functions:

Delete: delete the estimate selected; this cannot be undone;

New: Create a new estimate which will then be displayed in the main screen (see paragraph 4.2.2);

Cancel: the screen is closed with no further action;

Open: the estimate selected is opened in the main screen;


If you click on the 'exchange' button you can link to a second database, the so-called 'exchange database'.

See the figure below. You can select an exchange database of your choice. Use the '>>' and '<<' buttons to copy

estimates from one file to another.

The exchange databases are full databases. You can use an exchange database as an archive or backup, but as a

means of e-mailing multiple estimates to another user of the AOA:CCM application.

4.2 Creating an estimate

4.2.1 Create new estimate To make the application accessible to beginners, a distinction is made

between simple and complex estimates.

A number of functionalities are available only for 'complex' estimates. These

functionalities relate to:

Phasing;

Aggregation items;

Sensitivity analysis;

Price level correction;

You can change an estimate from simple to complex at any time. However

you cannot change an estimate from complex to simple.

You need to provide a name of the estimate and the price level in which you want to enter the prices.

When you click on OK, the main screen will be displayed in which you can further populate the estimate which has

been created.


4.2.2 Explanation of the main screen The main screen is shown in the figure below:

The main screen comprises 3 parts:

left: sub-screen with costs structure shown hierarchically;

top right: sub-screen with the costs list;

bottom right: sub-screen with detail information.

The size of the sub-screens can be changed by dragging the vertical and horizontal borders between the sub-screens.

4.2.3 Objects The model assumes a hierarchical allocation of cost items into cost groups. Cost items and cost groups are the two

most important objects in the model.

The overview below provides a complete summary of all the model objects:

General settings: settings and data which provide information to the user but which do not influence the calculation result. See paragraph 4.2.6.4.

Financial settings: settings and data which apply to all cost items in an estimate and which relate to the calculation method/parameters of the net present value calculation. See paragraph 4.2.6.5.

Cost group: a group of associated cost items. See paragraph 4.2.6.3.

Estimate. An estimate is the cost group at the highest level in the hierarchy. An estimate is a cost group which has only child but no parent cost groups.

Cost item. An activity/facility with which costs are associated. See paragraph 4.2.6.7. If the amount or the

Cost structure Cost list

Detailed information


frequency of a cost item changes over time, this is a phased cost item ( ).

Risk/financial windfall: an item entered as a net present value.

Aggregation item (only for 'complex' estimates: a cost item whose value is calculated from the value of the other cost items within the same cost group. One example of this is the item 'Unforeseen', the value of which is equivalent to 10% of the value of a number of other cost items. For more detailed explanation, see paragraph 4.2.6.8.

Phasing settings (only for 'complex' estimates): settings which apply to phased cost items ( ). See paragraph 4.2.6.6.

4.2.4 Costs structure sub-screen

4.2.4.1 General The costs structure sub-screen is on the left and shows the hierarchy of the cost groups and child cost items. It gives a

complete overview of all the objects that are present. By clicking on the plus and minus buttons you can expand and

collapse a cost group. If you left click on the name of a item,the other two sub-screens will be activated with the

information that belongs to the item selected.

Right clicking on an item from the tree structure opens a menu with the actions which may be performed. See the

example below.

The options are explained in the following section.


4.2.4.2 Tree structure menu options

The following options are available:

Expand all child nodes

Collapse all child nodes

Open current estimate. This opens an estimate from the active database. Multiple estimates can be shown at the same time in the tree structure.

Add new estimate. This adds a new estimate to the active database.

Add cost group to the selected cost group

Add cost group to the selected cost group Shortcut key: Ctrl+N

Risk/add financial windfall to the selected cost group

Copy the selected item. See explanation in paragraph 4.2.4.3

Paste the item that is in the copy buffer. See explanation in paragraph 4.2.4.3

Delete the selected item. All child items in the hierarchy are automatically deleted.

Add aggregation item to the selected cost group (only for 'complex' estimates)

Add phasing settings to the selected cost group (only for 'complex' estimates)

Close the estimate.

The options which are active depend on the item you have right-clicked on.

4.2.4.3 Copy and paste actions The application supports the copying and pasting of objects in the tree structure. However there are limitations to

some actions. For example, phased cost items cannot be copied to a cost group where other phasing settings apply. If

specific actions are not permitted, the options in the menu will be deactivated (grey coloured) or if you try to perform

the action a message will be displayed showing more information.

4.2.5 Costs list sub-screen

4.2.5.1 General This sub-screen is found to the top right. The aim of this screen is to provide an overview of the most important

properties (start year, end year, costs) of all the cost items in the cost group selected. This screen cannot be edited.

Each un-phased cost items occupies one row in this screen. If a cost group is phased, each phase occupies a row.

The detailed information is displayed for each row along with the calculated (or in the case of a risk/financial windfall:

the input) net present value. Finally, the 'Check' column indicates whether the net current value calculation has been

successfully completed.

If you click on a row in this sub-screen, the item in question will also be selected in the costs structure sub-screen (on

the left in the image). The item will also be displayed in the detail information sub-screen (in the bottom right of the

image). If you select an un-phased cost item, the 'details' tab will be displayed. If you select a phase from a phased

cost item, the tab associated with the phase in question will be displayed.

Double clicking on a cost group in this sub-screen enables you to 'enter' the costs groups so that the child cost items

are displayed.


4.2.5.2 Assessing the net present value The net present value (NPV) is the capitalised value of (on or multiple) expenditure items. The method of calculating

the NPV is explained in appendix 3.

The NPV of the item displayed has been calculated.

The NPV of the item displayed has not been calculated.

This assessment is recursive and pessimistic.

Recursive means that it relates to the item displayed and, if it relates to a cost group, all the child items, as well as the

items below these, etcetera.

Pessimistic means that if all the child items in a cost group except one have the result then the cost group will have

the result .

In other words: if somewhere deep in the hierarchy, one cost item shows an error when determining the NPV, then at

the estimate level ( ) the result will also be . Therefore the estimate is not suitable for a formal report if at the

estimate level, the result is .

4.2.5.3 Alternative display Checking 'sort by NPV' and 'show child cost items' allows different costs list displays to be set.

Sort by NPV

The cost items are displayed as standard in the same order as in the costs structure on the left of the image. However

you can request a different order of sorting by selecting the 'sort by NPV' check box.

If you check this box, the cost items will be sorted in descending order according to net current value (NPV). This

enables you to see at a glance which cost items are determinative.

Show child cost groups

As standard, cost groups are also included in the costs list. You can double click on a cost group to 'go into' it.

However in some cases, it may be more transparent to view all the child cost items in the costs list without having to

click through to child cost groups. You can do this by using the 'show child cost items' box. If you have selected the

highest level (the estimate ) in the costs structure and selected the option 'show child cost items', the costs list will

display all the cost items from the whole estimate.


4.2.6 Detail information sub-screen

4.2.6.1 General The sub-screen showing detail information is at the bottom right of the image and shows, depending on the type of

object (see paragraph 4.2.3) a different screen. The details screen displays all the data for a single object and is also

where changes can be made.

To the top right of the details screen is the menu bar with the following buttons:

Undo changes to an item. Shortcut key: Ctrl+Z

Save changes to the item. Shortcut key: Ctrl+S

Copy the item

Delete the selected item.

If the screen is in 'read mode' (the standard mode), the and buttons are activated whereas the and

buttons are deactivated. Once the screen is in 'change mode' (because you have started to make a change), the

situation is reversed.

If the screen is in 'change mode', you must first click on or before you can select another item.

Tip to make your work easier

It is recommended that you use the available shortcut keys:

- use Ctrl+Z instead of the button

- use Ctrl+S instead of the button

- use Ctrl+N to create a new cost item.

The paragraphs below look at the details screen for each object.

4.2.6.2 Estimate details screen The estimate is the highest level in the

costs structure. See figure. In addition to

the name of the estimate and any

comments, you can change the estimate

type from simple to complex in the details

screen. This change cannot be undone.

Simple estimates can be changed to

'complex' but not the other way round.

Since version 2.0 of the application, this screen includes the functionalities which relate to the multilingual character of

an estimate.

Via the 'Current language' pull down box, you can set which translation you want to see displayed on the screen at the

current moment.

Use the 'language selection' link to indicate which languages you want to input your estimate in.


Use the 'open translation form' to view and update all the multilingual texts available in the estimate. We look at this in

more detail in paragraph 4.6.

You can also manage the locking of an estimate in this details screen. A locked estimate cannot be edited. You can

use locking to, for example, 'close off' a final estimate, or to e-mail an estimate file to third parties who are permitted to

view the estimate but not to make changes to it.

Locking: To lock an estimate, you must enter a password.

After locking, the program uploads the estimate again. The details screen displays the symbol and the input boxes

and button can no longer be used until the estimate is unlocked again.

Unlocking:

When unlocking, you can choose between two options.

Unlock session: the unlock is effective for as long as you are working on the estimate but as soon as the

estimate is closed and re-opened, it will be locked again.

Permanently delete unlock: the password is erased and the estimated can again be modified by anybody.

4.2.6.3 Cost group details screen A cost group may form part of a parent cost group and in turn have its own child cost groups. The aim of cost groups is

to give structure and transparency to the estimate, just as chapters and paragraphs do for a text. You can determine

the structure to be applied yourself.

Some examples of grouping:

by the nature of the physical facility ('Cover sealing', 'Groundwater extraction', 'Monitoring well measurement

network', etc.);

by provider/responsible body ('Contractor X', 'Agency Y', etc.);

by cost item type ('Replacements'”, 'Maintenance', 'Monitoring', etc.);

in accordance with the classification of headings in the remediation plan/specifications/aftercare/management

document;

by geography ('Segment A', 'Segment B', etc.).


See the figure below. In this screen, you enter the name of the cost group and any comments.

4.2.6.4 General settings details screen In this screen, you enter general details. Some details are pre-defined (location name, Globis code (Dutch), etc.) and

you can also enter your own data. See the figure below.

Participants

Use the button to create tabs to add participant details. A participant can be an organisation or an individual who

plays a role in the estimate. For example municipal authority/province/consultancy/residents' representative groups,

etc.

A participant tab looks like this:

The role that you enter in the top input field becomes the title of the tab.


4.2.6.5 Financial settings details screen In this screen, you enter the calculation parameters needed to calculate the NPV. See the figure below.

At the top of the screen, you enter the interest rate to be used for the capitalisation calculation.

Below this is the price level of the amounts which you enter under the cost items. You can now change the price level

by using the 'Change' button (only for 'complex' estimates).

The NPV calculation will be performed with effect from the calendar year which you enter under

'aftercare/management start year'. If you have defined cost items which begin prior to this year, the NPV calculation

will use only the incidents of expenditure which fall in the years from the 'aftercare/management start year'.

The inflation percentages are used for:

discounting of the inflation effect in the capitalisation calculation

adjusting the price level of an estimate (using the 'Change…' button);

converting basic key figure amounts which are applied to estimates with a different price level than the list of basic key

figures.

If you assume constant inflation when performing the calculation, one row will be sufficient. As

standard, the application enters an inflation percentage of 2%, applicable from 1 January 1980.

Price level change (only for 'complex' estimates)

If you press the 'Change…' button under the 'Price level' section, the following screen will be displayed:


Here, you can indicate what the new price level/year should be. If you have already entered cost items in the budget in

question, you can adjust the amounts in these cost items to the new price level. Checking the 'Correct amounts

already entered' option means that existing amounts are adjusted by the correction factor shown. The correction factor

is calculated on the basis of the inflation percentages you have entered. For display on the screen, the factor is shown

with maximum 4 decimal points.

Notes with regard to changing the price level;

1 The price level correction changes all amounts entered by the correction factor given. This update cannot

be undone. It is advisable to create a backup of the of the estimate before performing such an update;

2 The price level correction cannot be performed on items of the type 'Risk/financial windfall'. Given that the

interest/inflation effect is discounted in these amounts, you need to check for yourself whether they need to

be (manually) adjusted. In such cases, the application gives you a reminder via a notice on the progress

screen.

3 The formulae which you have entered in the aggregation items include possible numerical values which are

related to a price level (although this is best avoided). If the price level is changed, the application indicates

a that you must check whether the adjustment or the formula is necessary.

4.2.6.6 Phasing settings details screen This screen is available only for 'complex' estimates.

A phasing setting can be entered per cost group. The setting applies to all cost items in that group. If no phasing

setting has been created in a cost group, the phasing setting from the cost group above will be applied. If your entire

estimate is based on the same phasing, you need to create a phasing setting only at the estimate level ( ).

Use of the phasing functionality is not mandatory. An estimate can also be created without this functionality. However

working with phasing brings the following added value:

Explicit designation of dynamics:

In more complex remediation cases, the activities generally change over time. For example groundwater

remediation is completed within a number of years, or a location gets another use over time. Making explicit

reference in the estimate to these changes over time provides a clearer relationship between the concrete

remediation act and the estimate.

This offers the following benefits:

o While inputting the estimate in the application: if there is a time dynamic this generally has an effect

on multiple cost items. By anchoring the dynamic in a phasing setting, you will encourage the

originator to think about which cost items change over time in the same way when inputting the cost

items.

o In the report (print-out) it is clearer when what happens because a specified time span is easier to

interpret than a litany of separate years.

Simplified updating of the estimate:

Because the 'time' aspect is not entered separately for every cost item, but only in a few places (the phasing

settings) the time dynamic can be changed quickly in the interim. Imagine that after one year's groundwater

remediation, it emerges that the targeted final objective can be achieved sooner, the duration only needs to

be modified in one place in the estimate, i.e. in a 'groundwater remediation' phase. All the cost items related

to this phase are thus updated automatically.


Simpler variants analysis:

Connects to the previous point. If multiple variables need to be compared on costs, it is easier if the onus of

inputting is kept to a minimum for comparing variables. Variable in the 'time' aspect can be compared more

quickly when working with phasing settings.

A phasing settings has three options (see the screenshot above)

'There is no phasing ': this option means that the cost items in this group cannot/may not be phased;

'Use phasing from parent cost group'. This is implicitly also the setting used if you do not create a phasing

setting in a cost group.

'The following phasing applies'. With this option, you can enter a series of phases used in this cost group. Per

phase you enter:

o The name of the phase;

o The duration of the phase in years. If the final phase is perpetual, you can enter '-1' there.

The table displays the following information (not editable)

'From-to': This is the timespan of the phase calculated on the basis of the 'financial settings' on the screen

(see paragraph 4.2.6.5) 'start of aftercare/management' year entered;

'applied'. This indicates at how many points in your estimate a cost item refers to this phase. Phases applied

once or more in a cost items may not be deleted.

You can change the order of the phases by using the arrow buttons ( and ) to the right of the table. You can

delete the phases by using the and buttons.

4.2.6.7 Cost item details screen This details screen is where you enter the properties of the cost items used in the NPV calculation.

An example of a cost items is 'monitoring observation wells', [replacement of dam wall', or 'inspection of top layer'.

Characteristics of cost items in the calculation model are that they have a start year, end year, a fee and a specific

frequency of repetition.

Cost items may change over time: these are phased cost items. One example of this is 'monitoring groundwater

quality' which is intensive during the first 15 years and then becomes more extensive, for example.


Tab 1: General

See the figure below.

Under this tab, you enter:

The name of the cost item;

The concurrence percentage. There is concurrence if a cost item is fully paid for within your estimate. For

example, if your estimate includes costs for a top layer construction where it is agreed that 45% will be

financed by the municipal authority in the context of redevelopment plans (and therefore does not need to be

paid for out of the remediation/aftercare/management budget for which you are creating an estimate), you will

enter '45%' here.

o 0% means: no concurrence: the costs are fully met by this estimate. This is the standard setting;

o 100% means: the costs are not charged to this estimate. You can complete this if you want to

include a specific cost item for the sake of completeness, although the costs de facto do not need to

be included.

Or if this is a phased cost item. It it is: you need to indicate which phases this cost item applies to. This option

is available only for 'complex' estimates.

An explanatory comment. You can provide an explanation of the content or refer to a source document

(remediation plan/aftercare/management plan/specifications)

Depending on whether you indicate in this tab that the cost item is phased, one or more of the following tabs will be

displayed.


Tab 2: Details of the cost item (un-phased)

If the cost item is un-phased, the tab will be laid out as per the figure below.

Under this tab, you enter:

The frequency, i.e. how often the cost item occurs

The costs each time there is expenditure on this cost item.

The start year in which this cost item will first play a role. Here, you can choose to enter the start year as a

calendar year or as the year of the start of the aftercare/management (start year of the NPV calculation).

Aftercare/management year 1 is the first year of the aftercare/management phase.

The end year. This is the last year in which the cost item occurs. In addition to the options

aftercare/management year/calendar year, here you are also given the option to indicate the end year

(perpetual).

One comment.

The 'Basic key figure' box is dealt with further under working with basic key figures, see paragraph 4.3.3.

Tab 2 and beyond: Details of a cost item (phased cost items)

Several tabs are available only for phased cost items under 'complex' estimates.

If the cost item is phased, a tab will be displayed for each phase which you have checked under the 'General' tab. See

the figure below.

For each 'phase tab', you enter the frequency and the costs per occurrence. You do not need to enter the start and

end year which come from the duration of the phases.


4.2.6.8 Aggregation item details screen An aggregation item is a cost item which is determined via arithmetic processing of other cost items. The aggregation

items re in particular designed to create allowances per cost group on the sub-total of the cost group. Examples:

Definition of the item 'unforeseen' of which the amount is a percentage of the sum of a number of other cost

items;

Definition of general costs (insurance, supervision) as a percentage of the sub-total.

Definition of the costs of management, design etc.

See the screen below. In that example, an aggregation item is used to define an 'Unforeseen' item. The cost item is

derived by adding together a number of costs and multiplying the total by 0.10.

A formula editor is implemented in this screen. You can use the following algebraic operators: + - / * and then use of

real figures (negative and positive whole values and decimal values). The use of brackets is permitted.

Method:

In the 'Available cost items' option list you will see the cost items in the current cost group. These are the cost items

you can select from when creating an aggregation formula. You can include a cost item in the formula as follows:

Double click on the cost item in the option list. The cost item is entered in the formula editor at the position of

the cursor;

Click on the cost item and then press the button. The cost item is entered in the formula editor at the

position of the cursor;

Click on the cost item then right click in the right-hand window on the position where you want to enter the

cost item.

In addition to the individual cost items, there is an option 'ALL COST ITEMS IN THIS COST GROUP'. With this option,

you can quickly make updates to the sum of all cost item. Only standard cost items are included in this. Risks/windfalls

and other aggregation items are not included.


The use of tabs, enters and spaces is recommended to increase legibility of the formulae.

It is recommended that you do not use prices or price level-dependent values in aggregation formulae to avoid having

to update the formula if the price level changes (see paragraph 4.2.6.5).

When you save the cost item, the bar below the formula editor indicates whether the formula contains any errors.

View costings

If you click on the 'view costings' button,the

screen below is displayed.

The aim of this screen is to give you insight into

the way in which the model calculates the

annual costs for an aggregation item over the

whole aftercare/management period. Because

the various cost items to which the aggregation

item formulae refers may have different start

and end years, the aggregation item may have

different values in different years.

You indicate an aftercare start/management

end year and the number of years you want

insight into in the calculation. You then click on

'Show calculations'. The application displays your formula (with the same spacing, line breaks etc.) and instead of the

name of the cost items, the number of euros applicable in the year in question.

4.2.6.9 Risk/financial windfall details screen In this screen, (already capitalised) values for risks/financial windfalls can be entered.

When determining the risk costs, the roadmap in appendix 1 can be used. The roadmap includes a chart in which the

risks can be classified. For outcomes of two types of risk (squares II and III) can be processed in the model.

For the risks in square II, a cost item risk allowance can be added to the relevant risk item. Another option is to add an

aggregation item (see paragraph 4.2.6.8).


In addition to the overview provided by appendix 1, appendix 2 includes a sample calculation and a check list which

may help when determining the risk amounts to be entered in the application. The probability and cost savings for

financial windfalls can be entered per event in the same way as the risk costs calculation. An example is included in

appendix 2. This item must be entered as a negative number (negative costs = revenue).

NB: when entering a capitalised amount always ensure that the capitalised amount is calculated with the same

parameters (interest, inflation, aftercare/management start year) as you entered under the 'Financial settings' tab.

4.3 Basic key figures

4.3.1 General The screen for maintaining the basic key figures is opened using the 'Basic key figures' button. See the figure below.


Basic key figures are your archive of values for frequencies, life spans and prices of cost items. The aim of the basic

key figures functionality is:

To be able to put together an estimate in a shorter time.

Because the application can make direction use of a list of prices, life spans and, you can create cost items

quickly;

Grouping of knowledge/experience. If employees within your organisation use the same key figures file (see

paragraph 3.3), the knowledge/experience accumulated by employees is made accessible to other

employees in various estimates.

Encouraging standardisation of prices, frequencies and life spans in estimated created by your organisation.

The use of basic key figures is an optional functionality. Estimates can also be created without using basic key figures.

When the calculation model is launched, a list of basic key figures is provided which is derived from the IPO check list

for landfill sites (source: www.nazorg/beheerstortplaatsen.nl).

This list cannot be edited. The lists created by users can be edited.

4.3.2 Creating lists of basic key figures The way of changing basic key figures is comparable with changing an estimate.

Just as costs are accommodated in cost groups, basic key figures are also accommodated in groups. The following

model objects and their symbols play a role:

/

List of basic key figures, editable/uneditable

Basic key figures group, designed to bring order to the basic key figures

/

Basic key figure, editable/uneditable

A list of basic key figures is always found in a specific price level. This price level applies to all minimum and maximum

prices in the list in question.


Each basic key figure is characterised by 4 variables which ultimately determine the NPV value, i.e.:

frequency;

costs per occurrence

start year;

end year.

These variables are entered as bandwidth, i.e. with a minimum and maximum value or a total of 8 variables.

It is not compulsory to enter all these 8 variables for every figure. By checking or unchecking the check box next to the

name of the variable, you can indicate whether the variable applies.

For example if you want to enter basic key figures for life spans of vertical dam walls, you will probably use only the

frequency (e.g. 1x every 75 years).

However it is recommended that you include as much information as possible per basic figure.

For example a value for 'lifespan' is not very informative from a costs perspective if it is not clear what the replacement

operation will cost.

This is especially the case because 'frequency' and 'costs per occurrence' in particular are usually logically connected.

have a longer lifespan but will also have higher costs per occurrence than equipment with a shorter lifespan.

So although the model allows you to input, for example, only life spans (replacement frequencies), it also possible to

attach other variables which determine costs, such as frequency, where such information is desirable and available.

If you enter figures for costs, you must do this in the list of basic key figures price level.

It is compulsory to enter the scope of application/limiting conditions before using the figure. For example if you give a

figure for the lifespan of an observation well and the observation well material is not resistant to specific chemicals, this

is relevant information which must be reported.

4.3.3 Application of basic key figures There are two functionalities built into the application for application of the basic key figures.

1 Drag basic key figures

In the basic key figures screen in the tree structure, you can select a figure and drag it to an item in the tree

structure of the screen with cost items.

1.1 Drag to cost item: If you drag the item to an existing cost item the figure's values are entered in the cost

item. If a minimum and maximum value for a figure have been entered, the application takes the average

of these two as the input value.

1.2 Drag to cost group: If you drag the item to a cost group, the application creates a new cost item based on

the figure in question.

2 button on the cost item details screen

If you are editing a cost item, on the 'Details' tab you will see button for that cost item with the symbol . If

you click on this, the 'basic key figures' screen will be opened. You can search on a basic figure there and


then click on the button 'Apply figure…' (symbol ). The basic figure is then applied to the cost item you

are editing.

Before the figure is actually edited, you will see a pop-up asking you to confirm:

If the basic figure includes price information and has a different price level from the estimate, you will be notified of this

in this pop-up. When the key figure is used, the application will first rework the amounts to the price level of your

estimate. For more information about price level reworking, see paragraph 4.2.6.5.

After a basic figure is applied, on the 'Details' tab of that cost group in the 'Basic figure' group will include information

about the name of the basic figure. See the figure below. Use the arrow ( ) to open and close information. The

following information is available:

The name of the figure

The file which the key figure came from;

The basic key figure group which the figure came from;

The date on which the figure was assigned to the cost item

The ID of the figure

4.3.4 File management When you start the application, the 'File management' screen will be opened, see figure below. This shows the lists of

basic key figures from the database to which the application is linked (see paragraph 3.3).

Use the 'change…' button to link to a different database. You can do this only if you have not yet opened a list of basic

key figures.


Use the 'new…' button to create a new database and save it in the file location of your choice.

The buttons beneath the screen have the following functions:

Delete: delete the selected list of figures;

New: Create a new list of figures which is then opened for editing;

Cancel: the screen is closed with no further action;

Open: the selected list of figures is opened;

If you click on the 'exchange' button you can link to a second database, the so-called 'exchange database'.

See the figure below. You can select an exchange database of your choice. Use the '>>' and '<<' buttons to copy lists

of basic key figures from one file to another.

The exchange databases are full databases. You can use an exchange database as an archive or backup, but as a

means of e-mailing multiple lists of basic key figures to another user of the AOA:CCM application.


4.4 Calculation and reporting

4.4.1 Calculation of Net present value: After saving a cost item, the NPV for the cost item in question is determined.

Calculation of the net present value (NPV) of the whole estimate occurs:

After completing a price level correction (see paragraph 4.2.6.5);

After clicking on the 'Calculate' button in the main menu;

After clicking on the 'Reports' button in the main menu;

While the NPV is being calculated, a progress screen is displayed which shows the calculation result per cost item. If

errors are encountered during the calculation, this is reported on the progress screen. This information is useful in

quickly identifying and changing cost items which are causing problems.

The NCW is calculated based on:

- the properties of the cost item;

- the parameters entered under 'Financial settings';

The NPV is not calculated for cost items of the type 'risk/windfall'; the value input is in this case itself the NPV.

The calculation method is further explained in appendix 3.

4.4.2 Reports Clicking on the 'Reports' button in the main menu brings up the following form:


In this form, you can choose which reports should be generated.

NPV report

This report shows the NPV per cost item (including the parameters and variables on which the calculation is

based). A sub-total is reported per cost group.

You can choose how you want to see the start and end years of the cost items reported: as

aftercare/management year, calendar year, both or as you have input them.

Budget report

This report shows the expenditure per cost item per budget year. You can put in what

(aftercare/management) year the report should start from and over how many years the report should be

generated. The amounts can be printed out in a fixed price level (price level input), or per estimate year in the

price level for that year.

If you click on OK, the application will first perform a (re-)calculation of the NPV (see paragraph 4.4.1). Excel will now

be started. Progression of the process is displayed in the progress information screen. Depending on the speed of

your computer, running reports may take some time.

4.5 Sensitivity analysis

4.5.1 General Open the screen to calculate a sensitivity analysis via the 'Sensitivity analyse' button on the main menu. The sensitivity

analysis serves to provide insight into the impact on the target equity of changing certain parameters.

4.5.2 Setting sensitivity analysis parameters To perform a sensitivity analysis, you need to set a number of parameters in the left-hand side of the screen (see the

figure below).

First specify whether you want to perform a sensitivity analysis for:

the whole estimate. All cost items are calculated;

only the selected cost group. This option is available only if you

have selected a specific cost item before opening this screen.

Use this option if you are interested in a sensitivity analysis for a

specific cost group and children cost groups. The impact on

parent cost groups up to the top level are not calculated.

You then indicate which scenarios should be calculated. You can select

between:

Change in frequencies. You can use this option to, for

example, determine the effect of lower maintenance

frequencies or to establish whether longer lifespans have a

significant effect on the total cash value. In the screen,

enter by what factor the frequency values input should be multiplied during the sensitivity analysis.


o N.B. 1: Processing of the factor input:

Frequencies are input in the model as either n times per year or 1x per n years. If a value of 2

is entered, the model interprets this has: the cost item occurs 2x per so often. A cost item with

an input frequency of 2 times per year then becomes: 4 times per annum. A cost item with an

input frequency of 1 x per 10 years becomes: 1x every 5 years.

o N.B. 2: Rounding of frequencies:

The sensitivity analysis allows for real numbers (numbers with decimal places) to be input as

the factor. The frequencies to be investigated then also result in whole numbers in the first

instance. Before starting the sensitivity analysis, the model rounds this frequency down to the

nearest whole number. An example. If the frequency of replacement is 1x per per 5 years, and

you perform a sensitivity analysis at a frequency with factor 1.2, the model will calculate a

sensitivity analysis for 1x per 4 years (and not 1x per 5/1.2 = 4.years).

o N.B. 3: Interpretation of the outcome:

Cost items input as as 1x per n years and which have an established end year (i.e. they have

not been input with a 'perpetual' end year) will not only occur more/less often over time in the

frequency sensitivity analysis, they may also happen more/less frequently in totality. By way of

illustration: Ten-yearly replacement of a facility during the first 50 years of

aftercare/management means that the cost item will occur in year10, 20, 30, 40 and 50 (i.e. 5

times). If the frequency in the sensitivity analysis with factor 1.5 is equal to fifteen-yearly

replacement, this means that the cost item will occur in year 15, 30 and 45 (i.e. 3 times). The

NPV according to the sensitivity analysis is thus lower due to the fact that the replacement

takes place later in time, and there are 3 replacements rather than 5.

Change in interest rate/inflation

You can indicate by how many percentage points both the interest rate and inflation which have been

set should be modified.

4.5.3 Interpretation of the results of the sensitivity analysis The results are displayed in table form in the right-hand section of the screen (see the figure below).


The first four columns (standard font) show the details of the cost item, the standard NPV in euros and the standard

NPV as a percentage of the total NPV of the estimate (the target equity).

The other columns (in italics) show the results of the sensitivity analysis. The 'scenario' column shows which of the

parameters you have set relate to the calculations.

The 'NPV (€)' and 'NPV (%)' columns show the NPV for the scenario.

The 'Increase in NPV (€)' and 'Increase in NPV (%)' show the comparison between the standard NPV and the

sensitivity analysis scenario. The 'Increase in NPV (€)' is the most informative. The rows are therefore sorted in

descending order based on the values in this column. A sharp increase (negative or positive) in the NPV means that

the cost item/cost group in question has a significant impact on the NPV under the scenario calculated.

The 'Increase in NPV (%) column indicates by what how many per cent the NPV is higher in the sensitivity analysis

scenario than in the standard calculation. This relative indicator shows the sensitivity of a cost item to the scenario, but

this sensitivity does not necessarily have any impact on the total target equity of the estimate, which of course

depends on the absolute amount (€) of the cost item.

4.6 Multilingual estimates

4.6.1 Introduction

Version 2.0 supports multilingual estimates. This functionality enables you to create a single estimate for a project

which can then be reviewed/edited by people who speak different languages.

The following actions are involved in multilingual inputting:

Choice of the language to be used

Multilingual input when preparing the estimate

Translation once an estimate has been set up

Selection of the language that is currently active

Most of these actions are performed via the estimate details screen (paragraph 4.2.6.2). We look at these actions in

greater detail in the sub-paragraphs below.

4.6.2 Choice of the language to be used In the estimate details screen, click on the 'language selection' link to open the 'Translations' screen. By checking the

box, you can indicate which language from the choice of German, French, English and Dutch you want to use in your

estimate. You can change this selection at any time. If you uncheck a language for which you have already input

translations, the application will give you a warning that all your texts in that language will be deleted.


4.6.3 Multilingual input during set-up When inputting the estimate, you can input the text in multiple languages. The text fields which support multilingual

input are indicated by a button with a globe icon ( ). If you click on one of these buttons, the online translation form

will be opened; see the figure below.

You can enter the translations in this form, 1 language per line.

4.6.4 Input a translation retrospectively You can also opt to first input the estimate in one language and then add the translations retrospectively. You can do

this by using the buttons with the globe icons as described in the previous paragraph. However you can also use the

special translation form. This allows you to view and edit all the translations of the entire estimate on a single screen.

Open the translation form via the 'open translation form' link on the estimate details screen (paragraph 4.2.6.2).

The following screen will then be opened:

The image above shows an overview of the items to be translated, 1 column per translation.

The list displays the items in the same order as in the costs structure sub-screen (paragraph 4.2.4) and is thus

synchronised. If you activate an item in the list (by clicking on it), this becomes the active element in the costs

structure.


At the bottom of the image you will see 'editor translations'. Here, you can edit and save the active item from the

summary list.

This screen is particularly suited in situations where someone takes over the translation task but has limited

experience of working with the application. This individual can undertake translation of an estimate without a significant

learning curve.

4.6.5 Selection of the language that is currently active On the estimate details screen (paragraph 4.2.6.2) you can use the 'Current language' pull down box to select the

language to be activated. After you make your selection, the application immediately displays the multilingual texts in

the chosen language. You do not need to save this setting since it is not a property of your estimate, simply a display

option during your session.

The active language selected is also used for reports (paragraph 4.4.2).


5 Account

Title AOA:CCM Manual version 2

Date 1 Jan 2013 Project Area Oriented Approach Cost Calculation Model - PP5304

Consortium members Public Works Department (Gemeentewerken) Rotterdam,

Pipeworks and underground management department (Leidingenbureau en Beheer ondergrond) (main contractor) Grontmij Nederland BV Public Works Department Engineering Agency (Ingenieursbureau Gemeentewerken Rotterdam) Rotterdam Development Agency (Ontwikkelingsbedrijf Rotterdam) Province of Zuid-Holland aftercare/management agency Province of Utrecht Limburg aftercare/management (Nazorg/beheer Limburg) SBNS Municipality of Dordrecht A&G milieutechniek DCMR Environmental Protection Agency Soil+

Technical implementation Validware Groningen


Appendix 1 Risks and financial

windfalls

When determining the total aftercare/management costs associated with soil remediation, an allowance generally

needs to be included to cover the costs of risks or undesirable events.

The occurrence of unexpected events may lead to activities which differ from the expected aftercare/management

activities as described and budgeted for in an aftercare/management plan. This is not covered by the standard

bandwidth of aftercare/management costs. These are events which, although they are recognised, there is such

uncertainty as to whether measures or provisions are required to deal with them that they cannot be taken into account

in the aftercare/management plan.

In this paragraph, a roadmap is proposed for dealing with risks when estimating the aftercare/management costs of

soil remediation by constructing a calculation model.

Description of the problem

The AltVAR study reveals that we cannot quantify the long-term risks (sufficiently objectively). in the

aftercare/management market in general and to stagnation in the transfer of aftercare/management obligations in

particular.

The current (IPO) models used to calculate aftercare/management costs and risks are fine for Environmental

Management Act landfill sites (i.e. for well-defined IBC systems), but do not provide a solution for more complex

situations. This is because the technical risks are difficult to determine and to quantify and non-technical risks appear

to play a much greater part.

This situation concerning risks results in stagnation in aftercare/management; risks are not really dealt with effectively.

By developing a roadmap for risks, there is hope that this stagnation may be reduced.

This roadmap comprises 5 steps:

Before discussing this roadmap, we below take a brief look at the risks to be considered.

What are the risks?

What sort of risks are we talking about? The AltVAR study (Allocation of long-term responsibility, liability and (residual)

risks), SKB, June, 2005) differentiated between the following risk groups.

A. Technical risks, for example as the result of source and plume measures, systems failure or unfavourable

dispersion forecasts

B. Legal risks, for example as the result of valid or invalid claims by third parties

C. Operational risks, for example as the result of improper use of the location (by third parties or by the standard

operator)

D. Environmental risks, for example as the result of the impacts of (spatial) developments on or from the

environment


E. Administrative/legal risks, for example as the result of changes to legislations and regulations or government

decrees

F. Economic risks, for example as the result of changes in the investment climate or unfavourable economic

developments putting the aftercare/management budget under pressure

The AltVAR study examines these risks in greater detail. It also indicates which risks have low, moderate or significant

financial consequences.

The occurrence of an undesirable event (risk) results in a situation which is a threat to the environment. Remedying

the situation then incurs costs. These costs are known as ‘costs of repair’.

How is the roadmap?

Below we show a roadmap which can be used to make the risks of aftercare/soil remediation management

manageable.

This roadmap can be used not only in the preparatory phase (SO, SP or NZ plan) to reduce risk (where it is more a

case of risk management) but also to ensure they can be discussed in negotiating positions.

Using the roadmap for aftercare/soil remediation management risks

In developing this roadmap, use was made of experiences accumulated other fields of work facing similar issues

(commercial construction and civil engineering).

The roadmap comprises the following steps:

A. Risk identification

B. Prioritisation of the risks

C. Sorting of risks

D. Exclusion of risks

E. Discounting of risks

Step A – Risk identification

A risk analysis is the basis of ensuring risks are talked about and become manageable; it should at least facilitate open

and transparent communication on the subject.

First of all, the risks need to be identified – preferably classified according to the six risk types below.

Step B – Prioritisation of the risks

Once the risks have been identified, we can start to prioritise the risks.

One tool to help in doing this is by positioning the risks in the risks matrix. Risks are positioned within this matrix

according to the probability of them occurring and their consequences.

Below is an example of such a risks matrix.

IPO BO-19 report provides a structure for prioritising the risks. However the report is not comprehensive enough to

cover all the risks which may arise.


RISKS MATRIX Low probability of occurring

High probability of occurring

Minor effect

1. … 2. … 3. … 4. …

1. … 2. …

Major effect

1. … 2. … 3.

1. … 2. … 3. … 4. … 5. …

Step B – Prioritisation of the risks

Once the risks have been identified, we can start to sort them.

This is done using the four different squares I to IV in the risks matrix.

Square I (low probability – minor effect)

Risks in this square of the risks matrix are part of the ‘normal risk’ of a project. Examples include: the

probability that an observation well from a large monitoring and measurement network needs to be

replaced prematurely because of vandalism.

These risks are not normative. It is not productive to accord them extra attention.

Square II (high probability – minor effect)

Risk in this square of the risks matrix may be caused by a 'sensitive' aftercare/management system.

Examples include: the probability that an observation well from a large monitoring and measurement

network needs to be replaced on a regular basis because of vandalism.

These risks are not normative.

If the decision is taken not to reduce the probability, the risks in square II can be made manageable by

applying a low risk-allowance to those specific cost items with a high probability and minor effect. This

can be met with a previously established percentage allowance.

Square III (low probability – major effect)

Risks in this square of the risks matrix merit further consideration.

Examples include: the probability of groundwater contamination caused by unfavourable delivery from

the source.

These risks may be normative. In terms of the aftercare/management location's risk profile, it is

productive to accord attention to this; after all the consequences are major and therefore potential

normative for the total risk amount. There are several ways of tackling these risks:

Reducing the consequences;

Limiting the risk;

Taking out insurance.

I II

III IV


Square IV (high probability – major effect)

In principle, the risk can be determined in exactly the same way as with square III (risk = probability x consequence).

Given that this generally leads to unacceptable risks, we may quickly conclude that risks which appear in this square

of a risk matrix should really not be allowed to occur; not only in terms of stability of the technical solution but also

stability of the management organisation.

They warrant special attention because they are normative.

There are multiple solutions for dealing with these risks; one obvious solution is adapt the aftercare/management

measures: to adopt an approach of 'consequence reduction' and 'probability reduction. This would quickly prove cost-

effective. The risk needs to be shifted to squares I, II or III. See the text to each square for how to subsequently deal

with the residual risk.



Minor effect

1. … 2. … 3. … 4. …

1. … 2. …

Major effect

1. … 2. … 3.

1. … 2. … 3. … 4. … 5. …

Figure 2 Probability reduction and consequence reduction

Step D - Exclusions of risks

In addition to the events described in step C, which are classified as foreseeable risks, a distinction can also be made

between unforeseeable risks.

If these events are within the scope of the aftercare/management – of buyout payment – they can be excluded from

settlement in the risk amount.

Consideration can also be given to excluding the risks in square IV and not including them in the cost estimate. If the

aftercare/management is transferred, such risks fall outside the buyout payment and remain with the recipient of the

disposition on the aftercare/management.

Step E - Discounting risk

Step C indicated how risks can be discounted. Figure 3 is provides a summary of how risks can be included in an area

oriented approach cost calculation model .

The figure assumes that measures such as probability and consequence reduction or additional remediation measures

have already been completed.

Measure involving consequence reduction

Measure involving probability reduction




Minor effect

Included in the standard 'profit/risk' item of the aftercare/management estimate

apply a low risk-allowance to risky item which for example fall under 'maintenance'

fixed percentage based on, for example, rule of thumb, check list or empirical figures

Major effect

exclude conduct an extended risk

analysis per item (risk = probability x consequence).

Rules of thumb for fixed set of 'consequences'?

Additional tools: see the summary of step A

Input insurance policies and the insurance premium into the calculation model

Static underpinning?

Exclude Input insurance policies and

the insurance premium into the calculation model

N.B. the risks in this square should

not generally be allowed to occur with

appropriate risk management

(consequence and probability

reduction)

Figure 3 Method of discounting risk


Appendix 2 Risks : example and check list

Calculation of risk costs

project

file

date:

failure event probability costs risk (probability x costs) Note

1 monitoring system

unforeseen substances 0.5 50000 25000

wrong lay-out of monitoring system 0.25 100000 25000

wrong frequency monitoring 0.01 100000 1000

2 extraction wells

well obstruction 0.25 15000 3750

wrong dimensioning 0.25 25000 6250

foundation damage (gw extraction) 0.01 200000 2000

3 water purification

technical failures 0.5 50000 25000

capacity too low 0.1 200000 20000

energy outage 0.01 80000 800

increased competition. Influent 0.5 100000 50000

more stringent discharge standards 0.25 100000 25000

longer maintenance of water

purification 0.25 200000 50000

4 Cover sealing

cover sealing structurally damaged 0.01 200000 2000

5 vertical

pile in barrier 0.1 80000 8000

screen leak/design error 0.01 200000 2000

6 extraction system drainage area

delivery pipe explosion, recontamination 0.25 0.25 20000 5000


Calculation of financial windfall

project:

file:

date:

failure event probability cost saving windfall Note

1 monitoring system

contamination not measured 0.1 100000 10000

substantial proportion (25%) of location =clean)

2 extraction wells

cleaning less frequently 0.1 15000 1500 clean wells 1 x 4 years instead of 1x every 2 years

3 water purification

shorter maintenance of water purification 0.1 200000 20000

maintain 1 less water purification

4 Cover sealing

use cover sealing for longer 0.01 2000000 20000

6 ha sand betonite sealing

to last 5 years longer

5 vertical barrier

use cover sealing for longer 0.1 80000 8000 100 m foil barrier 6m to last 5 years longer

6 extraction system drainage area

delivery pipe explosion, recontamination 0.25 0.25 20000 5000 50 m3 of ground recontaminated

total cost saving (financial windfall) 64500

the opportunities below may result in lower aftercare/management costs (check list)

more flexible policy;

stable situation (already reached);

redevelopment..core is removed;

new remediation techniques (more effective);

new concentrations/circumstances for remediation (w.r.t. cold and heat storage));

more flexible return remediation value;

area-oriented approach

dilemma of infinity (if you wait long enough, some problems resolve themselves);


Appendix 3 Calculation of NPV

General description of the capitalisation method

Formula (1) describes the effect of inflation (=price increase) on a cost item which at the point in time

tp is equivalent to Ktp. At a later point in time tu, a higher amount Ktu is needed as a result of inflation

in order to finance this cost item.

In which: Ktu: calculated cost item at t=tu [€] Ktp: input cost item at t=tp [€] i: inflation [as a per cent /100]

tp: calendar year price level of input cost items [calendar year] tu: calendar year in aftercare/management phase in which the cost item applies.

[calendar year]

The half-yearly correction ensures that all expenditure in the middle of the year is assumed.

Formula (2) describes the effect of the interest rate on formation of the funds. To have available on tu funds to the

amount of Ftu, a lower amount Fts is needed at an earlier point in time.

In which: Fts: fund size on t=ts [€] Ftu: fund size on t=tu [€] r. interest rate [as a per cent /100] ts: calendar year of start of aftercare/management [calendar year]

tu: calendar year in aftercare/management phase in which the fund is approached to finance expenditure. [calendar year] The half-yearly correction ensures that all expenditure in the middle of the year is assumed.

In order to finance a cost item Ktu at a point in time tu in the aftercare/management phase, the size of the fund Ftu at

that time must be equivalent to the amount of the cost item.

In formula:

)5,0()1(

tptu

tptuiKK

)5,0()1(

1

tstututsr

FF

tutuKF

(1)

(2)


Combination of formula (1) and (2) then results in:

Formula (3) establishes the required size of the fund at the start of the aftercare/management, Fts, which is necessary

at a moment in time tu to finance a cost item Ktp which is expressed in a price level for calendar year tp.

The size of the total fund calculated is derived from the sum of the contributions Fts from the individual cost items.

There are also cost items (risks/windfalls) already input as net present value which are added to the capitalised

standard cost items.

In which: D: target equity [€]

NPVr,m risks input as NPV, windfalls [€]

Use in the application

The formulae above are translated into programming code.

The following are calculated per cost item, and per aftercare/management year:

an inflation factor in that year which is a result of all the inflation percentages from the year's price level input;

the level of expenditure in that year based on the value input and the inflation factor (formula 2);

the number of euros needed for that expenditure year at the start of aftercare/management (formula 3) based on the

(fixed) rate of interest;

All these outgoings per cost item are added together and allocated to the cost item's total NPV. The net present value

(NPV) of the cost item is thus determined. The NPV of the estimate as a whole is a sum of these sub-totals.

)5,0(

)5,0(

)1(

1)1(

tstu

tptu

tptsr

iKF

(3)

mrts

NCWFD, (4)

Validware

Document description

Title: Calculation Cost Model: Area Oriented Approach - Manual Version 2.0, 1 February 2013

Deposit number: -

Number of Pages: 51

Editor: Jan Frank Mars

Date of publication: February 1, 2013

Contact: Floris de Jong

Key words: CCM: AOA

Translations:

Summary: The CCM: AOA is a standardized method that allows an objective assessment for

organization and implementation of an area oriented approach. The model supports the financial

consideration in decisions about multiannual AOA both in the planning phase and du

Calculation Cost Model: Area Oriented Approach · This manual describes how to use the Cost Calculation Model: Area Oriented Approach (CCM: AOA) software. The ... Appendix 2 Risks

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