The True Cost of Waste

Waste disposal is frequently seen to be a relatively trivial cost, for example in the construction industry (regarded by many as being a “wasteful” sector) the cost of waste disposal is typically “only” 0.2% – 0.5% of a project’s construction cost. But the disposal cost is just one of many factors that contribute to the “true” cost of waste.

As soon as you start to think of waste as a resource that you’ve bought, managed, and never used, the other factors start to become apparent:

  • Purchase of raw materials. Obviously, all of the materials you’re now throwing away had to be bought in the first place. So, the notional 10%, or 5% or 2% over-order (on building materials especially) built into most purchases is really there to fill the site skips, although it may be “rationalized” for as being for other purposes – damage / loss on site, inaccurate taking off, just in case of changes, etc. But the bottom line is that you’ve bought extra just to fill up the skips, which you are now going to pay someone to take away.
  • Transportation & storage. Having bought the materials, they have then been delivered to site, and you’ve moved them around, stored them somewhere (taking up valuable site space), perhaps moved them to the work area only to put them back into storage when you didn’t use them (and maybe thrown them away as they got damaged in the process) stored them until the end of the contract “just in case”, and finally, as the project finishes, dumped them unused into the skips as part of the final site clearance.
  • Collecting waste on site. Even if you’ve used them, there’s still the collection of off-cuts, damaged goods, discarded packaging, etc., from wherever they’ve been used, and transport to the skips for disposal. You may ask your subcontractors to do this rather than doing it yourself, but whenever someone has to do anything, it costs.
  • Site management. And don’t forget that someone is always responsible for managing the skips themselves, and the more skips there are, the more time it takes to do, and the more it costs you. Or you do it “casually” because your site team is busy, and you risk non-compliance and potential prosecution.

In 2002/3 Amec did an analysis on the cost of waste (Darlington Study 2003 – quoted in many subsequent documents) They found that the materials in an 8 yard skip had cost £1095 to buy, and estimated that the labour cost to fill the skip was £163. So, a skip with a disposal cost of £85 had hidden costs of £1258 – nearly 15x the disposal cost. And perceived wisdom in the industry (often quoted) is that the true cost of waste is 10-20 times the disposal cost.

Applying the 10x-20x factor to the typical cost of waste on construction projects (0.2-0.5%) the true cost of waste on a construction project is between 2% and 10% of the build cost.

Taking steps to minimize and recycle your waste can make a big difference to the bottom line, especially in the present economic climate. In 2010, Willmott Dixon had a turnover of £989.5m with a pretax profit of £26.6m (http://tinyurl.com/44amvuo) and in their 2010 sustainability report (http://tinyurl.com/6bktbk8) recorded a £2.3m saving in “disposal costs, landfill tax, and the value of materials otherwise sent as waste”.

10% added to pretax profits by reducing waste. Makes you think.

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