by Jim Skoza, VP AIM Recycling and Demolition
and Mark DeLisle, CEO DeLisle Associates, LTD
Amid the current discussions about the “New Infrastructure for America” which is to hopefully kick-start our economic recovery, there is a vital and so-far-overlooked question: What are we to do with the OLD infrastructure in order to make way for the new? Certainly we cannot as a nation afford to simply “build new,” turning our backs on over one hundred years of industrial investment.
What will become of the old machinery, materials and industrial capacity of the past century? Will it be replaced with new equipment and, if so, who will remove it? Will it be retooled and updated with
new technologies? And if so, who will uninstall and reinstall it? What’s the environmental impact? And most importantly, how will we pay for it?
In making critical choices regarding what to rebuild, what to retool and how best to achieve these objectives, the costs associated with equipment removal and renovation, as well as environmental studies and abatement that must be performed, will have an enormous impact. Some otherwise desirable projects—retooling an old automotive plant or reconfiguring an inefficient power generation station— may be judged cost-prohibitive based on such expenses alone.

Yet in reality, new techniques and technologies for evaluating and decontaminating old industrial equipment—combined with the efficiencies of an end-to-end, strategic approach to recycling—can transform the economics of the “New Infrastructure.” There are numerous examples of such projects that have brought costs back in favor of the facility owner by combining more cost-effective equipment removal with enhanced recycling revenues.

Understanding the Process

The first step in evaluating the true costs of plant renovation is understanding what’s really involved.
The major tasks include:

• Project evaluation and planning
• Environmental impact evaluation per federal, state and local laws
• Demolition
• Equipment removal and transport
• Environmental health and safety monitoring
• Hazmat monitoring and abatement
• Equipment and scrap valuation and recycling

• Ongoing project management

It’s Not “Just Scrap”

Obviously, such a diverse menu of responsibilities goes far beyond the old “scrap dealer” mentality. Cost-effective renovation today requires an integrated and strategic approach in order to provide the kind of forward thinking that will create a “win-win” outcome. Such integration can take several forms. Some recycling contractors maintain expertise in demolition as well as lead and asbestos (hazmat) abatement in-house. The largest of these include well-structured in-house safety
departments with Site Safety Officers (SSOs) on staff. Other contractors opt to retain third party independent safety and health consultants, or work in partnership with several firms offering
specific expertise.

Regardless of the type of team selected, it is imperative that the contractor be able to bring proven expertise in the areas shown above, as well as outstanding communication skills. This will allow the
contractor to grasp a true sense of what the project is intended to accomplish, and successfully manage all the health and safety aspects as well as the physical demands of the renovation.

Finding Hidden Value

Such a careful approach will help assure the greatest possible revenue generation for any given project. For example, plants have stockpiled (and sometimes buried) old equipment around their properties for decades. Any one piece may not in itself represent significant value, but in the context of a new renovation project, there may be a clear opportunity to create a revenue-generating scenario.

Remember, too, that the same passage of time that now requires infrastructure replacement also affects the value of some equipment. What was discarded as nearly worthless years ago may have surprising value in today’s market. If such items were identified and included in the original scope of work, the decision to proceed with that work may become an easier one. This is not conjecture. The authors have participated in dozens of projects, large and small, where precisely such added value has turned a costly renovation into a no cost or revenue generating one.

Avoiding Hidden Costs
Just as important as identifying and cataloging all of the scrap materials that may be profitably recycled is completing a comprehensive survey based on those materials. The main purpose of this information
would be to determine if any materials fall into the hazardous categories and, if so, what the costs of abatement will be to meet all applicable regulations.

Choosing the Team
The goal is to partner with the reputable scrap processor best able to help identify items that will generate the most income, then manage the project to minimize risk and maximize revenue. To start, consider this list of qualifications:
• An active member of the Institute of Scrap Recycling Industries (ISRI)
• A number of years experience in the recycling industry
• Background in demolition. Active member in the National Demolition Association (NDA) would be an important plus
• Specific experience recycling scrap materials relevant to the project at hand.
• An established health and safety program

• Experience with environmental monitoring and abatement

Major renovation projects must be approached professionally in order to yield the desired revenue offsets. Scrap processors who are active in the demolition industry should have “Request for Proposal” (RFP) documents on hand for review. There is no substitution for proper Due Diligence.

Reprinted from ASSET 2.0, the Investment Recovery Business Journal, Vol. 1, 2009

© The Investment Recovery Association