When landfill airspace is at a premium, here are some sticks and carrots you should consider.

By John Merritt

Basic Issues
Developing Measurement Standards
Compaction
Proposed Compaction Incentive Bonus Formula
Cover-Material Management
Proposed Cover-Material Incentive Bonus Formula
Proposed Cover-Material Damages Formula
Bonus and Penalty Calculating Models
Logistical Measurement Challenges in Practice
Trial Period to Establish Baselines

Many municipal officials have to oversee and judge the operation of landfill facilities. Sometimes they are managing their own public employees; in other cases they are managing an operations service contract with a private company. In either case, there are two parameters that can strip the value out of a landfill by wasting valuable airspace and shortening the useful life of the facility: compaction and poor management of daily cover. While researching "Space Wars," which appeared in the March/April 1997 issue of MSW Management, I had the opportunity to speak with landfill managers as well as equipment manufacturers and representatives about what the key issues are regarding maximizing the value of limited airspace. There was virtual unanimity regarding the importance of prudent application of daily cover and maximizing daily compaction.

Recently I supported the efforts of a Massachusetts city in reviewing its practice of hiring a private company to operate its landfill and whether or not to assume operations itself. The landfill is permitted to accept about 50,000 tpy and receives both MSW and construction and demolition (C&D) material. Two problems that emerged in initial discussions with city officials were past daily cover practices and low compaction rates. While deciding, in the end, to procure a private operator’s services, the city asked me to assist in establishing contractual elements that would provide measurement standards, as well as incentive bonuses for superior operation and liquidated damages for below-standard operation. I will describe the elements that were developed and the basis upon which the city’s new private operator and the city itself are entering this new phase. Whether you are in a position of managing your own landfill staff or oversee a contract operator, some of the lessons we learned along the way might prove helpful.

Basic Issues

For anyone who spends any time thinking about landfill management and operations, the ideas are commonplace that cover material should equal between 15% and 20% by volume of all material placed in a landfill and that compaction of MSW should result in an in-place density of between 1,000 and 1,200 lb./yd.³ or 0.6 ton/yd.³ for waste material. In practice, however, MSW densities well below 1,000 lb./yd.³ and volumes of total cover material well in excess of 25% are all too often found. As discussed below, however, a range of compaction data exists on either side of the norm–not only because of relative compaction efforts but also because of approach to calculating density.

There are differing approaches to calculating estimated in-place compaction performance. Compaction density is sometimes derived by tracking weight/volume of all material placed and reconciling that total with airspace used during the period, based on regular surveys of remaining airspace. Another method is to track total weight/volume of waste and cover, but "back out" cover volume, using fairly knowable densities of typical cover materials (e.g., sands and soils) and determine the density of waste by using the balance of volume used after cover is excluded from the calculation. I prefer a measurement approach that segregates the waste from the cover material, as that is where most compaction and reduction takes place. In-place soil densities are both stable and pretty well known. Since I have experienced data from facilities that use both methods to estimate compaction, there seems to be no clear standard currently in practice. As the city prepared its request for proposal (RFP) for operating services, recognition of the need for best management practices led to specific mention of SWANA’s Manager of Landfill Operations training cycle as good evidence of any proposer’s qualifications with respect to prudent operation.

In any event, however, one determines these values, it is clear that these parameters are fairly entwined and interdependent. For example, if more than the needed amount of cover is applied, but compacting practice is way above average, the overall compaction number might achieve the nominal 1,200 lb./yd.³, but airspace has still been lost. Candidly, I hadn’t appreciated how many ways these two elements are interdependent until I set out, with the city, to draft meaningful standards with a clear means for implementing those standards.

Developing Measurement Standards

There were two key steps in drafting the measurement standards: (1) capturing the sense of what we were trying to accomplish in words for reduction into contract terms and (2) developing a measurement protocol and operational practices that would accomplish those goals. The basics are pretty straightforward in that there is a nominal range for cover management and compaction that the city wants to require its operator to achieve. For performance that is better than nominal and preserves airspace, the city would offer a financial incentive in the form of an earned bonus. For subnominal performance, the city wants to receive liquidated damages, denominated at the fair value of the squandered airspace. The following language is modeled on that which was included in the RFP issued by the city to address these interests.

Compaction

Compaction ranges will be determined on an annual basis (at least) by a private engineering firm engaged by the city, using land and air topographic surveys and tonnage reports for all materials deposited. For the purposes of this RFP and the subsequent contract, the following formulas for bonus payments or damage assessments are proposed:

1. 1,000-1,200 lb./yd.³–no bonus payment or damage assessment
2. <1,000 lb./yd.³–damage assessment equivalent to the actual value of the capacity lost by undercompaction, to be determined by contractually agreed-upon formula (see Proposed Compaction Damage Assessment Formula below) using the facility’s average Spot gate rate during the period of loss.
3. 1,200 lb./yd.³–bonus payment equivalent to 10% of the actual value of the capacity saved by superior compaction, to be determined by contractually agreed-upon formula (see Proposed Compaction Incentive Bonus Formula below), using the facility’s average Spot gate rate during the measurement period. Bonus payments can only be earned if cover material management standards have been met or exceeded during the measurement period.

Proposed Compaction Incentive Bonus Formula

Bonus = Saved capacity in tons (capacity that would have been used at the maximum base case of 1,200-lb./yd.³ compaction minus actually saved capacity at higher compaction rate) x 0.10 x the average Spot gate rate during the measurement period

Damages = Lost capacity in tons (actual capacity used at lower compaction rate minus capacity that should have been used at the minimum base case of 1,000 lb./yd.³) x the average Spot gate rate during the measurement period

Cover-Material Management

Use of cover materials will be determined on an annual basis (at least) by a private engineering firm engaged by the city, using tonnage reports for all materials deposited. For the purposes of this RFP and the subsequent contract, the following formulas for bonus payments or damage assessments are proposed:

1. 15-20% by volume and consistent with Massachusetts Department of Environmental Protection (MA DEP) requirements: No bonus payment or damage assessment
2. <15% by volume and consistent with MA DEP requirements: Bonus payment equivalent to 10% of the actual value of the capacity saved by efficient cover material management, to be determined by contractually agreed-upon formula (see Proposed Cover-Material Incentive Bonus Formula below) using the facility’s average Spot gate rate during the period of measurement. Bonus payments can only be earned if compaction standards have been met or exceeded during the measurement period.
3. >20% by volume: Damage assessment equivalent to the actual value of the capacity that should have been reserved by efficient cover material management, to be determined by a contractually agreed-upon formula (see Proposed Cover-Material Damages Formula below) using the facility’s average Spot gate rate during the period of measurement.
4. Any occasion of the facility receiving a notice of noncompliance with respect to cover material management: Damage assessment of $250 per incident plus an amount equal to any fine resulting from the infraction.

Proposed Cover-Material Incentive Bonus Formula

Bonus = Saved capacity in tons (15% base case cover material minus actually used cover material) x .10 x current Spot gate rate

Proposed Cover-Material Damages Formula

Damages = Lost capacity in tons (actual cover material used minus the 20% base case cover material that should have been used) x current Spot gate rate

Please note that in no case will an incentive bonus be paid for either parameter if the minimum standard is not being met in the other parameter.

With respect to the implementation and measurement of the bonus-penalty schedule, there were two elements to address: (1) spreadsheet model including mathematical formula(s) to capture the intention of the language above and (2) management and operator activities required to apply the formula(s) uniformly and fairly.

As included in the RFP language above, a key element of these formulas was to be that the operator would neither be able to earn an incentive bonus for cover (if compaction was subnominal during the same period) nor earn an incentive bonus for compaction (if cover management was subnominal). So any measurement model would have to include interconnected modules for each parameter. The spreadsheets below represent the templates that were developed to establish the bonus or penalty that would be earned or lost by the operator, during any period. With respect to earning a bonus, to be eligible, operator performance for one or both parameters would have to be above nominal, while performance for neither parameter was below nominal. The operator is subject to penalties for the actual current value of lost airspace if performance for either parameter were below nominal. Because this was to be the first instance of establishing an incentive/penalty system, the city chose to use a generous base case standard of 15-20% cover by volume and a compaction-rate base case standard of between 1,000 and 1,200 lb./yd.³.

Bonus and Penalty Calculating Models

Bonus Case

The base case for the bonus-calculating model reflects the better end of the normal range. In order to earn a bonus with respect to compaction, the operator must achieve an in-place density of waste higher than 1,200 lb./yd.³ while maintaining at least nominal performance with respect to cover material management. To earn a bonus for cover material management, the operator must achieve a total percentage of cover material volume below 15%, while meeting all regulatory requirements and maintaining at least nominal performance with respect to compaction during the same period.

Penalty Case

The base case for the penalty assessment model reflects the lower end of the normal range. In order to be assessed a penalty with respect to compaction, the operator would have to have managed an in place density of waste lower than 1,000 lb./yd.³ To be assessed a penalty for cover material management, the operator would have applied cover material so that its volume exceeds 20% of all materials placed during the measurement period.

These models represent the mathematical side of the equation. In an ideal world, it would be easy to both choose appropriate base case standards and also determine the actual performance data to feed into the models above (i.e., exact cover material percent by volume and actual in-place waste compaction density). Real-world landfill conditions and operations, however, provide substantial challenges in adopting both fair standards and methods of measuring actual operator performance.

Logistical Measurement Challenges in Practice

Compaction

First, with respect to compaction, all lifts (layers of deposited waste at facility working face) are not created equally with respect to compaction potential. Both at the beginning and toward the end of the useful life of any landfill cell, total compaction achievable is less than it is through the heart of the cell. In the first few lifts, all compaction comes from running the landfill compactor over the deposited waste material, with the specialized wheels cutting and crushing, while the sheer weight of the equipment compresses the waste.

As more lifts are applied, however, the waste at the bottom is further densified by the additional weight of the material placed above it. The result is termed the "overburden" effect and, over time, leads to better overall average density of placed waste material. As the cell nears its final elevation and contours, obviously the overburden diminishes for each new lift, resulting in a decreasing average compaction of the waste. An unfortunate side effect of this phenomenon is that, since it takes time for the full benefit of overburden compaction in any cell, they frequently must be closed and capped before the process is complete. This results in a nonrecoverable loss of potential airspace.

In addition to these generic variations, the fact that the city’s facility accepts C&D material, as well as MSW, adds further complexity. The values given for compaction at C&D landfills and combination MSW and C&D landfills are more varied than for MSW alone. Reasons for this include the range of materials actually landfilled, rather than processed, and the relative proportion of MSW to C&D in combination facilities.

As the city developed ideas for nominal ranges, it became apparent that this inescapable variation created problems in selecting an appropriate base case standard for compaction that would apply fairly and equally to all phases of any given disposal cell. As the procurement proceeded, a vendor was selected and discussions began to establish contract terms, and it became clear that these factors were not lost on the winning vendor either.

Cover-Material Management and Densities

It was a specific intention, when including the cover management bonus/penalty scenario in the RFP, to spur proposers to give serious consideration to nonsoil alternative daily cover (ADC) approaches, including tarps and spray foams, that would preserve airspace routinely. We did, in fact, get many vendor queries during the procurement process about whether or not tarps or other technologies would be acceptable. The city’s uniform response was that any system meeting MA DEP standards for daily cover management would be acceptable. In the end, however, no proposals included ADC. As a practical matter, that came as something of a surprise, given the real potential to keep cover material use substantially below the base case we included in the RFP.

As with compaction, measurement problems also exist with respect to the management of cover material. These issues impact not only the ability to be clear on exactly what volume is being taken by cover, but also the derivative ability to "back out" that volume, to know the actual in-place volume of waste alone needed for accurate, in-place compaction measurement. Problems mainly arise because of the wide variety of soil-like materials regularly approved for use as daily cover, not to mention ADC strategies. Material from postprocessing fines generated at C&D management facilities, through gravels and even claylike materials, are regularly used in Massachusetts. At any given facility, the opportunity to obtain such material varies widely, depending on general conditions in the region. For example, if local circumstances result in large quantities of contaminated soils being available, otherwise suitable for placement in a lined landfill, facilities generally accept these materials at below-market disposal rates, but also avoid the cost of purchasing virgin cover materials.

The problem for our measurement model, resulting from this variation in materials, is the variation of in-place densities. So once again issues of how to accomplish the city’s legitimate objective to hold the operator to a performance standard, while ensuring that the actual method of measurement is fair to both parties, emerged in discussion of contract terms.

Trial Period to Establish Baselines

Given the specific circumstances of the city’s facility currently, at the start of a new cell, the compaction issues discussed above are of actual concern, particularly to the new operator. Also, the city has, in recent practice, accepted a wide variety of soil-like materials for use as cover, with a variety of densities. Given both of those facts–the disposal of MSW and C&D and the knowledge that any past data were a very bad basis for establishing any reasonable baselines for this specific facility–it was very important to find a reasonable method of moving toward the city’s goals while respecting the legitimate, expressed concerns of the new operator. As all parties were eager to begin a new relationship and both sides acknowledged that there are real challenges with respect to setting reasonable standards for measurement going forward, it was agreed that the contract would include a six-month trial period, during which time several things would take place.

First, the operations will receive regular review by city staff and the city’s engineer of record with respect to observed compaction and cover material management practices. If there are concerns on the part of either party, they will be addressed and resolved. Also, all weight and tracking data will be carefully recorded and reviewed by city staff. Ultimately, these data will constitute the basis for establishing measurement standards to be applied after the trial period. But they will also provide early warning if the ratios are not consistent with reasonable norms. Such variance would indicate that either there is an operational problem or variables are being experienced that should be taken into account when establishing the future measurement standards, or both.

Based on the experience of six months, the city and the operator will develop and agree to standards that will be applied for earning bonuses or being assessed penalties. Part of that agreement should include a reasonable effort to regularly review the standards with respect to accuracy and fairness to both parties, based on actual experience. I will be happy to provide updates as this process progresses.

John Merritt is principal with Merritt Communications at Natick, MA.