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Environmental Due Diligence Boot Camp
 
 
Lesson 8:  Environmental Assessment - How Much Is This Going To Cost ?
 
Part 2  -  A Fixed Price  vs.  A Price Range 
 
 
 

 

 
Here’s the situation:  When we first start a Phase 1 Environmental Site Assessment (ESA), we know nothing about the subject property.  Our obligation is to pursue all avenues of inquiry necessary to render an accurate opinion as to whether the property is at risk for having been adversely impacted by environmental contaminants, or for containing other environmental hazards.

 

Based upon the size, type, and location of the subject property, we may know that a Phase 1 ESA of the property will most likely cost somewhere in the $ 2,800 - $ 3,400 range.  But exactly how much effort and expense will be required to make the definitive final judgment is not known to us when we first start the process.  

 

If conditions turn out to be simple and straight-forward, then the final cost for the assessment is likely to be at the lower end of the price range.  However, if in order to offer an opinion about the environmental quality of the property, there is a need to pursue additional avenues of inquiry or research, or additional records and documentation must be acquired, the cost is likely to push towards the higher end of the range.

 

I will tell you quite bluntly that many firms that provide Phase 1 ESAs for a fixed price conduct their inquiries up to that dollar amount and then stop, whether they’ve acquired enough information to render an accurate and valid opinion or not.

 

 

 

When conducting a Phase 2 ESA, the conditions that are found as the on-site work proceeds will often dictate the final scope of the project.  For example, the detection of contamination in one area of the subject property may point to other areas of the property that should be investigated.  Additionally, the initial analytical results will often indicate that analysis of the samples for other potential contaminants is warranted.  There is just no way to anticipate the exact costs that will be experienced in conducting a Phase 2 ESA until all the necessary work has been completed.

 

 

Asking someone to provide a firm price for a Phase 2 ESA is somewhat like asking a contractor to provide a fixed cost to construct a building, without being told how big the building will be or what materials will be used.

 

 

Many firms that conduct Phase 2 ESAs for a fixed price complete only the specified work plan, and absolutely nothing more, even if it is obvious that additional sampling or analytical work is required.  This doesn’t really save you any money in the long run - you are going to have to eventually pay someone to re-mobilize to the site and finish the additional work that is needed (and in some cases duplicate the work (like re-drilling boreholes) that was done the first time around).

 

 

 

It is for these reasons that I have always believed that offering a range of anticipated costs is the most fair and honest way to conduct environmental assessment activities.  

 
 
 
 
 
PART 1 
                                                                                                                                                                                                                                        
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POSTED:  7 January 2011