Cost and Effectiveness Analysis for Clean Water State Revolving Funds
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Form #:  15-004
Guidance Documents
Revised: 12/16/16

Summary

With new changes to the Federal Water Pollution Control Act (FWPCA), all Clean Water State Revolving Fund (CWSRF) loan recipients must conduct a Cost and Effectiveness Analysis for applications submitted on or after October 1st, 2015. This requirement consists of preparing an engineering document evaluating the cost and effectiveness of the processes, materials, techniques, and technologies for carrying out the proposed project or activity, and selecting, to the extent practicable, a project or activity that maximizes the potential for efficient water use, reuse, recapture, and conservation, and energy conservation, taking into account the full lifecycle costs of the entire project, minimum performance requirements, constraints, goals, preferences, values, and other factors or considerations that impact effectiveness or add value.

A Cost and Effectiveness Analysis is an eligible cost for CWSRF assistance and it must be completed as a preliminary step before developing the final design for construction.

Introduction

On June 10, 2014, the Federal Water Pollution Control Act (FWPCA) was amended by adding Section 602(b)(13). See Interpretive Guidance WRRDA at the end of this document for EPA’s interpretation on Cost and Effective Analysis that fits within the broader context of other FWPCA amendments.

EPA provided specific guidance on the Cost and Effectiveness Analysis. Please see links to the draft federal guidance Draft Supplemental Interpretive Guidance_602(b)(13) and Appendix III at the end of this document.

The Cost and Effective Analysis as written in the amendment is given below:

Section 602(b)(13)

As amended, the FWPCA now includes section 602(b)(13), which states:
(13) beginning in fiscal year 2016, the State will require as a condition of providing assistance to a municipality or intermunicipal, interstate, or State agency that the recipient of such assistance certify, in a manner determined by the Governor of the State, that the recipient—
(A) has studied and evaluated the cost and effectiveness of the processes, materials, techniques, and technologies for carrying out the proposed project or activity for which assistance is sought under this title; and
(B) has selected, to the maximum extent practicable, a project or activity that maximizes the potential for efficient water use, reuse, recapture, and conservation, and energy conservation, taking into account—
(i) the cost of constructing the project or activity;
(ii) the cost of operating and maintaining the project or activity over the life of the project or activity; and
(iii) the cost of replacing the project or activity;

Cost and Effectiveness Analysis

1. A professional engineer must certify they have studied and evaluated the processes, materials, techniques, and technologies to maximize the potential for efficient water use, reuse, recapture, and conservation, and energy conservation cost effectively for each feasible project alternative.

1.1. If a CWSRF loan requires a Preliminary Engineering Report (PER), then the certification must be included in the Report. The PER must be sealed by a professional engineer. The seal fulfills the certification requirement.

1.2. If a CWSRF loan does not require a PER, then certification must be submitted before the Finding of No Significant Impact (FONSI) or the Categorical Exclusion is issued. The certification must be signed by a professional engineer. The signature fulfills the certification requirement.

2. Identify the design criteria of the project that includes minimum performance requirements, project constraints, aid recipient’s goals, preferences, and values.

3. Describe the technical feasible alternatives that satisfy the design criteria. A project may be broken into parts. Each part may consider several alternatives that address the needs for that part of the project such as different types of wastewater collection and conveyance, storage, treatment, land application, solids handling, etc. The alternatives for each part of the project are compared to find the most cost effective project part. Moreover, the project parts should integrate with the project as a whole to find the most overall cost effective project.

4. Consider the processes, materials, techniques, and technologies for carrying out the proposed project or activity that maximize the potential for efficient water use, reuse, recapture, and conservation, and energy conservation.

5. Calculate the lifecycle costs of each feasible alternative (see Lifecycle Cost Discussion at end of this document).

6. Compare feasible alternatives side by side showing lifecycle costs, effectiveness at meeting minimum performance requirements, and other factors or considerations that impact effectiveness or add value. Use numerical or qualitative ratings to show the advantages and disadvantages of each alternative. An engineer selects with aid recipients agreement the proposed project from the alternatives considered. Provide the recommendation in a narrative summary. If applicable, include in the discussion the factors or considerations that were decisive for choosing a higher lifecycle cost project.

7. Describe the outcomes of the project (project justification). Summarize the main outcomes of the proposed project and the secondary benefits. Describe the outcomes from each construction phase if the proposed project will be built in phases. Prioritize the outcomes as follows: 1) health, sanitation, and security, 2) regulatory compliance, 3) sustaining assets, i.e. restoring existing asset effectiveness, protecting existing assets, or reducing inflow and infiltration (I/I), 4) extending service to underserved areas or adding capacity, 5) other major outcomes/secondary benefits. In addition, describe needs that will not be addressed by the proposed project and discuss consequences or impacts if no project is undertaken.


Resources
Tools that may be used in conjunction with best judgment include rating the project with the ISI Envision rating tool found at http://www.sustainableinfrastructure.org/rating/* or HDR INC Sustainability Return on Investment tool: http://www.hdrinc.com/about-hdr/sustainability/sustainable-return-on-investment*. Similarly, other comprehensive rating systems or return on investment tools with robust environmental sustainability valuing system may be utilized as well.

* This Page contains links to Non-NDEQ websites, these links will open in a New Tab or Window

Produced by: Nebraska Department of Environmental Quality, P.O. Box 98922, Lincoln, NE 68509-8922;
phone (402) 471-2186. To view this and other information related to our agency, visit our web site at http://deq.ne.gov.
This material is not meant to substitute for applicable Nebraska environmental regulations.