Rijkswaterstaat Environment

Cost Calculation Model Area Oriented Approach

The Cost Calculation Model: AOA provides a standard to help achieve an objective consideration of the costs of an Area-Oriented Approach. The model supports financial considerations relating to decisions about AOA locations, both in the planning phase and during the transition to the management phase. Besides calculating the regular costs, the model also includes a method on how to deal with financial windfalls or setbacks in decision-making. AOA:CCM is not a decision-making model; the model serves to support the capitalisation of long-term management and after-care, thus clarifying the costs.

Some features of the AOA:CCM

  • AOA:CCM is a flexible programme that can be used for an overall first finger exercise in order to clarify expenses, for negotiations in buyout situations or for a detailed calculation of the annual management and/or after-care expenses which may serve as a financial basis for a proposed area-oriented approach;
  • The built-in sample estimates give a sense of the cost items you may be dealing with within various forms of management projects;
  • AOA:CCM supports the implementation of a generally accepted structure for the budget financing;
  • The built-in sensitivity analysis provides insight into the effect of changes to certain parameters on the allocated funds. For example, you can adjust the interest and inflation rate, but also the frequency with which you perform certain activities. You can use this option, for example, to determine the effect of lower maintenance frequencies, to compare alternative measurement methods or to determine whether a longer useful life will have a significant impact on the total net present value;
  • AOA:CCM supports the clarification and qualification of risks for management options, resulting in clarity to support the decision-making process;
  • The risk of overestimating or underestimating the management expenses is reduced, because too many aspects are included in the cost estimate;
  • It offers clear reports that provide you with information relating to the costs of your management project. They show both the annual costs and the amount to be reserved at the start of the project when you proceed from one-off funding by means of a fund, for example;
  • Apart from a quick entry of regular cost items, it is also possible to enter basic indicators;
  • A feature of the application is to enter risks, windfalls and buyout agreements. These can be used to make the effect of a buyout payment transparent.

Scope

The CityChlor project initiated the development of the CCM:AOA. The aim of the model is to facilitate both the 'top-down' and 'bottom-up' approach in the design and implementation of an AOA:

  • Top down: offering structured guidance in the design process of an AOA plan. All AOA tasks, policies and the choice of the party to be responsible for the implementation of the plan will probably be discussed in the preparation phase;
  • Bottom up: support the development of AOA plans in calculating the costs of developing and implementing the plan.

Technically, the scope of the model is a generic tool to be used for a user-specific situation. The tool should meet the facility of a ready-to-use 'fill in form' using a standard set of cost elements. On the other hand, the model allows user-specific tailoring, e.g. by adding or deleting specific cost elements or own categories of costs. The focus of the current model is restricted to activities involved in implementing an AOA plan according to the provisions of the Dutch Soil Remediation Act. However, by adding or deleting cost elements the model can be used anywhere and be adapted to local laws and requirements. Activities which are likely to be combined with the implementation of an AOA plan, e.g. exploitation of an Aquifer Thermal Energy Storage or production of drinking water, are not included (but may be added to the model by the model user). The benefits of an AOA are pre-incorporated in the model to a certain level of detail, as they can have many more benefits than merely offering an efficient solution for complex soil remediation situations in urban areas.

CityChlor

AgencyNL/Soil+ and its Dutch partner the Municipality of Utrecht participated in the European CityChlor project, operating under the INTERREG IV B programme 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 was initiated as a part of the 'Socio-economic' work package: giving financial preconditions for an AOA and support to the design and implementation phase of an AOA approach.

The report Cost Calculation Model Area Oriented Approach - tool for financial management may be used as an introduction for new users of the model. The scope of this report is to give a short presentation on the CCM:AOA and background readings to the building process of the model.

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