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What is Resource Management?
Unlike traditional solid waste service contracts, resource management (RM) compensates waste contractors based on performance in achieving your organization's waste reduction goals rather than the volume of waste disposed. As a result, RM aligns waste contractor incentives with your own goals as you both explore innovative approaches that foster cost-effective resource efficiency through prevention, recycling, and recovery.
Coined by WasteWise partner General Motors Corporation (GM), RM was a logical outgrowth to its success with performance-based contracting in the area of chemical purchasing, use, and management. GM adopted RM in response to an internal waste reduction goal and the recognition that existing hauling and disposal contracts limited waste reduction efforts across its more than 70 North American facilities. GM's objective in executing RM contracts was to "provide a systems approach to resource efficiency that motivates cost reduction and conservation of plant resources."
Research to date demonstrates that RM is widely applicable in business, institutional, and municipal settings. Because most WasteWise partners rely on disposal contracts and some partners already use performance-based contracting practices, RM might be a useful model for WasteWise partners.
Traditional Hauling & Disposal Contracts
|Contractor Compensation||Unit price based on waste volume or number of pick-ups.||Capped fee for waste hauling/disposal service. Performance bonuses (or liquidated damages) based on value of resource efficiency savings.|
|Incentive Structure||Contractor has a profit incentive to maximize waste service and volume.||Contractor seeks profitable resource efficiency innovation.|
|Waste Generator-Contractor Relationship||Minimal generator-contractor interface.||Waste generator and contractor work together to derive value from resource efficiency.|
|Scope of Service||Container rental and maintenance, hauling, and disposal or processing. Contractor responsibilities begin at the Dumpster and end at landfill or processing site.||Services addressed in hauling and disposal contracts plus services that influence waste generation (i.e., product/process design, material purchase, internal storage, material use, material handling, reporting).|
1. Establish Baseline Cost, Performance, and Service Levels
- Define scope and service levels.
- Identify existing contract and compensation methods.
- Establish cost and performance benchmarks.
- Establish goals.
2. Seek Strategic Input from Contractors
- Convene pre-bid meetings with contractors to articulate goals and address questions.
- Allow or require bidders to submit operations plans for achieving specified improvements in existing operations.
3. Align Waste and Resource Efficiency Services
- Coordinate, integrate, and formalize all contracts and services included in the baseline scope identified in Practice 1.
- Ensure that contractor has access to "internal" stakeholders that influence waste management and generation.
4. Establish Transparent Pricing for Services
- Delineate pricing information for specific services such as container maintenance, container rental, hauling, disposal, etc.
- Allow variable price savings, such as "avoided hauling and disposal," to flow back to generator and/or be used as means for financing performance bonuses.
5. Provide Direct Financial Incentives for Resource Efficiency
- Establish compensation that allows contractor to realize financial benefits for service improvements and innovations.
- Assess liquidated damages for failing to achieve minimum performance benchmarks or standards.
6. Cap Compensation for Garbage Service
- Establish a cap on waste hauling/disposal service compensation that decreases gradually over time.
- Decouple contractor profitability from waste generation and/or service levels.
- Base compensation initially on reasonable estimates of current hauling and disposal service and costs as per Practice 1.
WasteWise Partner Example
One year after implementing RM contracts at several of its North American plants, GM realized a 20 percent reduction in overall waste generation (30,000 tons), a 65 percent increase in recycling (from 50,000 tons to more than 82,000 tons), and a 15 to 30 percent decrease in waste management costs.
GM's Orion Assembly Plant, Michigan
Before RM: Services provided by 9 contracts
- Hauling (2 contracts)
- Disposal (4 contracts)
- Waste Pad Assistance (1 contract)
- Consulting Studies (1 contract)
- Sludge Clean Out (1 contract)
After RM: Services provided by 1 contract
- Waste Pad Management
- Comprehensive Studies
- Two On-Site RM Managers*
- Off Site Support*
- Comprehensive Recycling*
- Environmental Reports*
- Waste Tracking Systems*
- Staff Training*
You will need Adobe Reader to view some of the files on this page. See EPA's PDF page to learn more.
WasteWise Resource Management:
Innovative Solid Waste Contracting Methods
To help organizations gain a firm grasp on the concept of Resource Management and negotiate their waste hauling contracts to focus on resource conservation, WasteWise developed this extensive "how to" manual. Available to download, the manual is broken into the following sections:
Cover (PDF) (1 pg, 104K)
Chapters 1 - 6 (PDF) (41 pp, 1.1MB)
Appendix A: RM Resources (PDF) (2 pp, 82K)
Appendix B: Sample RM Presentations (PDF) (12 pp, 157K)
Appendix C: Sample Work Plan (PDF) (3 pp, 82K)
Appendix E: RM Compensation Options (PDF) (5 pp, 105K)
Appendix F: Comparison of Cost Proposals (PDF) (3 pp, 98K)
Appendix G: Climate Change Benefits (PDF) (3 pp, 87K)
Resource Management in Clark County,
Nevada (PDF) (45 pp, 691K)
In August, 2002, EPA Region 9 investigated how Resource Management (RM) contracting might assist Clark County, Nevada, to achieve higher recycling rates. Unlike traditional solid waste service contracts, RM compensates waste contractors based on performance in achieving waste reduction goals rather than the volume of waste disposed, creating an incentive to reduce waste, rather than increase it.
EPA's report found that there are significant opportunities to increase both recycling rates and recycling revenues, despite the fact that Clark Countys current franchise agreement and solid waste ordinance provide little incentive to increase recycling.
to Resource Management: Reinventing Waste Contracts and Services (PDF)
(9 pp, 56K)
This document will help WasteWise partners answer basic questions about RM including: What is RM contracting? How is RM put into practice? How does RM benefit waste generators? How does RM benefit waste contractors? Because this concept paper is a work in progress, we would appreciate any comments from WasteWise partners. Please e-mail comments to email@example.com.
Strategic Contracting Increases Waste
Prevention and Materials Recycling (PDF)
(4 pp, 81K)
This article from the March 2001 issue of Resource Recycling highlights RM advancement among several Nebraska organizations.
Advancing Resource Management in Nebraska:
A Research and Demonstration Project (PDF)
(43 pp, 195K)
This report summarizes the results of a project sponsored by the Nebraska Environmental Trust in 2001.