CHAPTER 14
Closure
The closure of a facility is in itself a major project and must be managed with the same attention to community engagement and sustainability as is paid to the design and construction of new facilities. This can be a huge challenge because the closure of a facility is typically accompanied by job loss, potential legacy environmental damages, and poor relations with the local community. Project teams can be proactive by discussing closure openly with the local community, exploring opportunities to repurpose facilities and infrastructure, establishing long-term monitoring, and supporting job retraining.
The challenge of managing closure can be made easier if the project team planned for closure during the design and construction phases. Then closure issues would have been addressed from the start of the project and integrated into project design, delivery, and operations.
Infrastructure developed under a design-finance-build-own-operate (DFBOO) or other similar project structures may have a contract end for the operator, but not an end of life for the asset. Project teams involved in DFBOO projects should take the time to understand how sustainability issues will be managed as the contract comes to an end. Closure planning should also include transfer of relationships and employees to the new organization taking over operation of the facility to minimize disruption and maintain community support.
This chapter will explore how project teams can understand closure, develop plans to manage project closure, and manage the transition to closure through stakeholder engagement and proactive environmental management. We will also discuss how project teams can incorporate design for closure and progressive reclamation into the delivery projects and operations of facilities, in order to reduce the challenge and cost of future project closure.
14.1 Closure Planning
Project planning and impact assessments often look at short-term benefits of a project, such as job creation and tax revenue. Communities, however, are looking at additional, longer-term impacts as the project ages and eventually moves to closure. Anticipating and assessing long-term impacts can help improve community acceptance and engagement with project development by demonstrating that the project team understands the local community's long-term view of the project, rather than focusing only on the short time it takes build the project (as discussed in Chapter 2).
One way to think about this concept is to understand the life of project and the project's impact on the local community over time. Most projects create a positive impact during their construction and operating life as jobs, contracts, taxes, and royalties help to create prosperity in the local community. But, as the project moves into closure, the negative impacts will become apparent, and the economic benefits will diminish, leaving only residual project impacts.
This concept is demonstrated in the diagram in Figure 14.1, which looks at the impact to the local community at any one time in the life of the project. In a sustainable project, the expectation would be that the impact on the local community (community health and prosperity) will stay positive throughout the life of the project. This is a different approach than a traditional lifecycle analysis (LCA) model that looks at the summation of impacts across the project and often uses net present value analysis to calculate an overall impact of the project. The LCA approach allows the calculated overall impact to be positive without necessarily being net positive at the end of the project. In sustainability terms, this means that the current generation receives the benefits and future generations inherit the negative legacy.
In the life of a project diagram, we have proposed that sustainability of the project to the local community can be measured as community well-being (or community health and prosperity). This is a conceptual framework but can be understood as a balance between positive community impacts (like health, wealth, education and skills, culture, community infrastructure) and negative impacts (like environmental damage, loss of culture and social cohesion, and poor health).
Figure 14.1 Sustainable life of a project.
There is a hypothetical baseline where the positive and negative impacts remain at the same level as they were at the beginning of the project, which would occur if there were no project. There is also a negative impact version where the negative impacts accumulate over time and leave an overall negative impact when the project is over. This is often the case with natural resource projects where the project ends and leaves behind waste and environmental damage, while the jobs and resulting wealth are not sustained past closure.
In the positive impact version of the model, the positive impacts are maintained throughout the project and not only in the construction and operating phases. The community would still experience a loss of jobs at the end of the project, but the skills training and economic development supported by the project is capable of maintaining a local economy that is able to adapt and innovate to create new opportunities.
The life of a project diagram shows how benefits change throughout the project lifecycle and encourages project teams to examine long-term impacts (both positive and negative) to the local community. A well-managed project seeks to minimize negative impacts, like environmental damage and social disruption, and to maximize positive impacts like infrastructure community health and skills development over the life of the project.
14.2 Transition to Closure
Like other transitions between project phases that we have discussed in this book, the transition from operations to closure requires a focus on sustainability to ensure that environmental and social aspects are well managed. Transition to closure typically involves a decrease in the number of employees and the potential to lose vital information regarding community commitments, environmental data, and engineering data that can support future uses of the site.
The transition team should take the time to review all of the project commitments by checking the commitment register for any commitments that apply to closure. Depending on the life of the project, closure commitments were probably made many years ago and commitments may no longer be applicable. Or they may represent an old way of operating and need to be updated to reflect best practices.
If the project does not have a commitment register or community agreement, then it will be necessary to find old approvals documents and permits to understand closure requirements. It will also be necessary to work with the local community to understand what their expectations are and if there are any perceptions regarding commitments that have been made throughout operations.
Stakeholder Engagement
Stakeholder engagement for closure can be more difficult than engagement when the project is being developed. In the early stages of a project, the community can see the project as a new opportunity for jobs, income, and infrastructure, which creates optimism for the future. During closure, the realities of the project have sunk in and community support may have declined during operations. This can happen toward the end of operations in instances where an organization has stopped investing the time and effort required to maintain community support because they will soon be leaving the region.
In preparing for closure, stakeholder engagements will be focused on losses rather than gains: loss of jobs, loss of income, loss of medical benefits, loss of opportunity for youth who may choose to leave the community for opportunities elsewhere. Early engagement and closure planning well before closure of the facility can help to manage the sense of loss and allow the community to look forward and prepare for the future. Communities can work with the project team to find new opportunities for the project's infrastructure, collaborate on renewing traditional skills, or innovate new futures, or all of the above.
The project team should also engage with the local government to get support for retraining, opportunities for reuse of infrastructure, and plans for the future. The project team can use a community working group to bring together all of the parties to get input, plan for closure, and manage transition plans. See Chapter 6 for guidance on working groups.
The transition planning should look at key topics across the range of sustainability issues, including economic, environmental, and social transitions. Economic topics might include:
- How the local community can develop new economic opportunities
- Transition of skills and jobs to other opportunities in the local economy
- Financial planning for employees who will experience a decrease in available income
- Transfer of infrastructure to the local community, if it makes sense
- Reuse of facilities and infrastructure (roads, ports, etc.) for future economic opportunities
Environmental topics might include:
- Clean up of the facility
- Recovery and potential reuse of equipment
- Removal of waste and hazardous waste
- Re use of water and waste-water utilities
Social topics are related to the social impact of the facility closure and how the local community and families can manage the transition, including:
- Social and family disruption due to loss of income and changing social dynamics
- Pensions and benefits (medical and dental support) that families may no longer have access to once the facility closes
- Loss of opportunity for youth in the community, resulting in out-migration.
Engineering and Infrastructure
Another key area to manage during the transition to closure is to ensure that engineering design information for any facilities that will remain in place is collected and stored in an accessible location, such as local library or government office. The engineering data should include as-built drawings for the facility that have been updated to reflect any upgrades or maintenance activities. Design information can be used in the future if the facility will be redeveloped and the utilities and buildings are repurposed.
The engineering data should include underground structures or utilities that could become important resources or liabilities for future site redevelopment. Pipelines, sewers, tanks, vaults, wells, and other structures can leave behind pathways for residual contamination to move through the soil and can create future community safety risks due to land subsidence.
14.3 Design for Closure
Design for closure is an engineering approach that considers the end of life of the facility and how the areas will be decommissioned and restored. One key issue of designing for closure is to understand how closure security will be managed by the local government. Historically, project design would either ignore closure costs or would evaluate closure costs as part of the project financial calculations. But when you put closure costs into a typical net present value (NPV) calculation, closure costs would essentially have a zero cost to the project as expenses that occur 20+ years in the future are discounted by interest calculations, and therefore have a very low present value.
After many years of facilities being abandoned by organizations (especially in the natural resources industry), governments have started to apply closure bonding or closure security to ensure that sufficient money is allocated to decommissioning, rehabilitation, and closure. Governments assume that closure could be required at any time throughout the life of the project lifecycle and are therefore requiring financial security that is large enough to cover the closure costs, so taxpayers or governments do not inherit this burden. As a result, closure costs are now becoming a significant upfront cost for many major projects.
Design for closure takes into consideration these new requirements, seeking to minimize capital and operating costs and minimize potential closure costs so that financial security requirements can be reduced. For some organizations that are large enough to self-finance or secure a financial bond to cover closure, it can be viewed as a component of operating costs where the interest on the security or the annual cost of the bond is applied against the operating costs. For smaller organizations, the closure costs could be a direct and upfront cost that would increase the capital cost of the project and increase the amount of financing that is required to construct the project.
Design teams should work with the project finance team to understand how the closure costs will be incorporated into the project financing and cost analysis. When they are considering design options, they can then be sure to use a full cost analysis and make decisions that include the full cost to the project.
Design for closure that integrates sustainability can include:
- Develop project components that have a potential future use so that they can be reused instead of decommissioned.
- Design for decommissioning so that the design team has some idea how the facility will be taken down at the end of life rather than just being left to rust.
- Minimize the project footprint and construction footprint to reduce the area that will require reclamation and closure.
- Minimize waste generation during the project so that landfill design is smaller and requires lower closure costs.
- Design for recycling so that components can be taken apart, recovered, and recycled rather than just being landfilled.
- Determine what assets can be recovered (trucks and mobile equipment) instead of being disposed of in a landfill.
- Perform life-cycle assessment (LCA) on project components during design and decision making to determine the full impact of the design.
One strategy that can help with reducing closure costs is to identify project components that can be developed in cooperation with the local community. Typically, this would be project utility or infrastructure components like roads, ports, energy facilities, water supply, and wastewater treatment. If infrastructure is developed in cooperation with the local community, then it can be more easily transferred to the local community, rather than be decommissioned. Shared infrastructure can also be developed as a separate joint-venture organization with the local community, potentially using people-public-private-partnership (P4) structures (see Chapter 2), so that the project can demonstrate that the transfer of utilities will take place in the future. Every project situation is different but integrating infrastructure into a separate partnership or including utilities transfered into a community agreement may allow the organization to avoid or offset closure financing requirements.
Another key strategy for reducing closure costs is to incorporate progressive closure strategies into the project execution plan and construction plan, thereby dealing with closure tasks throughout construction and operations instead of leaving them all to the end of the facility life.
14.4 Progressive Reclamation
Progressive reclamation takes advantage of opportunities to repair and reclaim damaged areas of the project site as part of construction or operations, rather than waiting until the end of the project to complete permanent closure and reclamation. There are a number of key advantages to planning for progressive reclamation as part of the project delivery, including:
- Reduced closure costs and reduced financial security requirements
- Helping to build support with the local community
- Improved regulatory approvals
- Enhanced environmental protection
- More resilient facility operations
Reduced Costs
Progressive reclamation helps to reduce closure costs by taking advantage of the construction equipment, utilities, and personnel expertise that are still onsite. If all closure activities wait until the end of facility operations, then it is likely that you will need to bring in additional equipment as well as new workers who may need to be trained. Any reclamation that can be completed during construction should be planned and incorporated into construction planning. For example, construction of new roads requires land clearing around the road for access and construction activities. Reclaiming these areas while constructing the road minimizes the footprint at the end of the project, reuses stripped cover material to revegetate the areas around the access road, does not require the mobilization of new equipment, and provides an overall cost savings.
Community Support
As discussed above, community support for a project requires that the community experiences a positive impact throughout the project phases, including post closure. Planning for progressive reclamation and discussing these options with the local community helps to demonstrate that the project is interested in both the short-term and long-term impacts of the project.
Conversations with the community might also include reusing infrastructure and facilities and learning from traditional and local knowledge about the natural environment and how it will respond to being disturbed. Leveraging local knowledge to improve reclamation plans and identify knowledgeable resources in the local community to support will strengthen your reclamation strategies.
Regulatory Approvals
Progressive reclamation strategies can help to gain regulatory support because it demonstrates to the local government that the project is planning for reclamation, that it will reduce the environmental impacts of the project and aim to avoid long-term liabilities. Successful follow-through on progressive reclamation strategies during construction and operations can also help the project achieve regulatory approval for future expansion plans.
Environmental Protection
Progressive reclamation of the facility can help to minimize environmental damage over the life of the project. Disturbed lands that are not reclaimed during construction can continue to erode and degrade, which can lead to additional damage. Acting quickly can reduce overall costs by minimizing the area of land requiring reclamation.
Proper management and reclamation of waste management facilities will prevent the spread of contamination and reduce future reclamation costs. Proactive clean-up of spills or leaking tanks can also reduce overall costs by limiting the migration of contaminants and reducing the amount of soil and groundwater that requires clean-up at the end of the facility life.
Resilient Operations
Progressive reclamation can also have direct impact on the operations by reducing operating risks. Repairing damaged land and managing wastes can improve safety on the facility by reducing potential worker exposure to toxins and by reducing dust exposure during operations.
Reclamation becomes especially important with the increase in extreme storm events due to climate change. A facility that has progressively reclaimed disturbed surface areas, recovered vegetation, and restored natural drainage patterns will be more resilient to erosion and damage from extreme weather and drought.
14.5 Summary
Project teams may not see the future closure of the facility as a core problem that they need to address. Their focus is usually on creating something new and not on how that new facility will degrade over time, need to be replaced, or closed down. Integrating sustainability into a project requires that the team starts thinking about the long-term impacts of the project, and how that fits with the long-term requirements and needs of the local community.
Integrating the sustainability of closure into project management, design, and delivery can create advantages not only for the local community and local government, but also for the project owner and project team. Advantages include contributing to a smoother approvals processes, earning and retaining community support, and reducing financial security requirements.