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Tara Donaghy of the McGrath Group examines the true cost of waste to businesses and how the concept of the waste hierarchy can be systematically applied to reduce operating costs.


n 2009, Envirowise, which is now part of the Waste & Resources Action Group (WRAP) estimated that the average cost of waste to a business is approximately 4.5 per cent of its turnover. Sounds a lot doesn’t it? However, the cumulative impact of expenditure on disposing of waste materials generated by your business processes and the costs of replacing excess resources clearly represents a significant element of an enterprise’s overheads.

So where are these costs derived? The headline figure is actually the sum of many incremental direct and indirect costs.

DIRECT COSTS Let us look first at the more visible costs of disposing of waste generated by a company’s staff and its various operating processes. The most obvious direct expense is that paid to the waste collection provider. Typical charges for a complete waste management services e.g. container provision and collection service, on a regular basis can easily exceed the equivalent of £100 per tonne. Given that on average, each person throws away seven times their body weight in rubbish every year and transporting a year’s worth of UK waste would require five times the world’s fleet of supertankers or a nose-to- tail queue of juggernauts stretching six times around the globe these can easily mount to several thousand pounds for a medium sized business. With landfill tax rises this figure is set to continue increasing for the foreseeable future.

Many people, when calculating their waste costs look no further than these fees, but there are many other associated costs that need to be factored-in. There is the space that is taken up by the internal and external containers. An average-sized internal waste-bin will occupy approximately one square foot of floorspace; a recycling centre with colour- coded or labelled containers for collecting different waste streams could take-up several square feet in each room or floor. A standard 1100 wheelie-bin will require 15 square feet and a small skip four or five


times that, at least one parking space. For a business employing, say 50 people, each needing a bin, the cumulative space required to locate waste containers can amount to a significant cost, especially in inner city areas.

Then there are the costs of

consolidating the wastes from the internal bins into the external containers prior to removal by the contractor. The cleaning company will typically be responsible for emptying the internals bins and placing waste into sacks. This task may be complicated if segregation of materials needs to be maintained. The costs of this task will typically be itemised in the Cleaning Contract. Finally, there will be costs associated with time spent either by a facilities management company or internal facilities staff/office manager administering and managing the cleaners and waste providers. Although incremental, time allocated to instructing cleaning operatives, relocating containers, supervising collections and signing and collating consignment notes and Duty of Care documentation will add-up over the course of a year.

With various waste streams, a range of legislation to be compliant with, monitoring of performance and invoicing, a member of staff responsible for the contract management may spend several hours each week. This cost is often not considered when looking at the true cost of waste.


The evident, visible costs of collecting and disposing of waste material generated on-site are, according to Envirowise (WRAP), dwarfed by the indirect costs to a business of un-used resources (such as surplus raw materials and excess consumables), utilities and inactive equipment generated by inefficiencies in operation, over procurement and lack of planning Not only will these costs be reflected in additional expenditure in unnecessary procurement but they will also have subsequent impacts throughout the business such as increased storage and handling requirements, re-work and lost


production capacity. According to WRAP, these hidden costs can amount to over 25 times the direct costs of waste disposal. In some industries this has been more prevalent than others and good practice has been introduced to try and mitigate this. For example in the construction industry, increasingly pre fabrication is being introduced to reduce on-site waste production and mitigate lost materials. However, there are still significant improvements that can be made across all other organisations. Over ordering, single use packaging, disposable rather than reused consumables are all examples of wasted resources when considering the purchase cost.

When all of these issues and factors are aggregated we can see that the 4.5 per cent figure is maybe not an exaggeration after all. Indeed, unless steps are taken to reduce inefficiencies and the generation of waste at source the impact could increase further as costs of waste disposal rise due to rising landfill tax and cost of fuel. So how can the FM industry minimise the impact of these increases and reduce the negative impact waste has on their clients’ businesses?


Since the factors that contribute to the total costs of waste are many and diverse it is logical that a holistic, systematic approach is taken to identify and implement ways of reducing their impact. The hierarchy of waste is a best practice methodical framework for addressing all of the contributing factors to a company’s waste generation. It ranks waste management options in order of environmental preference i.e. prevention and minimisation should be considered before re-use, which is preferable to recycling and energy recovery with disposal

The waste hierarchy is now officially recognised as a method of best practice in UK waste legilsation

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