How to Develop a Database for Forecasting Environmental Expenditures
Wong, Edward A., Strategic Finance
DESIGN AN INTERNAL E-COMMERCE APPLICATION.
CLEANING UP THE ENVIRONMENT IS BIG BUSINESS. In 1998, The Environmental Business Journal reported that environmental remediation was a $186 billion-a-year industry. And the industry is expected to continue growing well into the millennium.
The cost of remediation can have significant impact on the financial performance of any business involved in or impacted by environmental concerns. These businesses may include chemical and petroleum companies, real estate developers and construction companies, environmental consultants, engineers, and even the service firms that represent them.
It's very difficult to tell at a glance whether land or water is contaminated and how much it would cost to clean it up. That means there's a tremendous need for businesses to develop systems to forecast and monitor clean-up costs while using historical information to analyze trends. Many companies managing environmental work address these problems by developing databases to help collect and interpret critical data.
If your company is developing an environmental database, consider taking an internal e-commerce approach. Internal refers to the people and procedures inside your specific company, and e-commerce is the use of computer networks to complete business transactions.
Here's another way to look at it. Companies invest countless hours and financial resources developing web-sites and databases to capture information from Internet users. The website is designed to capture the user's attention, and the database is designed to capture the user's information.
Just as a website captures and makes use of data from external users, employees of a given company should be able to easily input or access data on their intranet--the system that serves those within the organization.
As companies develop their "B2B" (Business-to-Business) e-commerce plans, they shouldn't overlook the Internal User-to-Business interface. Putting an e-commerce perspective on the development of your internal database will create value for your company. If you don't, the company is missing an opportunity to enhance its performance.
As analysts, budgeters, planners, and forecasters, the amount of primary internal data we have available is quite extensive. From operations we have personnel utilization information, project performance data, budget and cost projections, agency impact discussions, and business plan information. Support groups provide cost data, historical trend analysis, real property information, and various types of industry forecast data. Our responsibilities lie in assimilating the data to develop coherent forecasts and business plans.
An internal e-commerce database can be an integral tool to help do that.
It could make it easier to answer questions such as:
* For what type of environmental activity is the company spending resources?
* Is geographic location a major cost driver?
* Is a specific contaminant common to the projects?
* How do varying levels of contamination impact remedial costs?
* Is spending seasonal or cyclical?
* Are cost efficiencies gained by improved purchasing?
* Is the company remediation performance comparable to industry best practices?
* What level of environmental expenditures can be forecasted?
If your company decides to pursue a database project, make sure you include the following steps in the development phase:
1. Define the objective of the database.
The objective of your environmental database must be focused and clear. The database should include all information pertinent to managing the environmental business. This information (entered as data fields) includes project information, site information, agency information, and past, present, and future cost information. …