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The SBWMA Consultant will review the year to year variance analyses performed by the Contractor and the Contractor's explanations for significant variances. If the SBWMA Consultant is not satisfied with the explanations of significant differences will be investigated and explanations sought from Contractor management. In the initial review the sBWMA Consultant will compare projections included in Contractor's proposal with actual results. Costs will be correlated with the revenues and operating statistics provided by the Contractor and explanations for unusual trends or variances will be sought. For example, the SBWMA Consultant may wish to correlate changes in the numbers of route personnel to subscription revenues and disposal volumes. Explanations should be requested from the Contractor for all significant variances and explanations should be reviewed both for reasonableness as well as for conformance to the service standards of the Agreement and the Contractor's Projected Cost. Any adjustments to the Contractor's projected expenses shall be documented and discussed with the Contractor's management. D. Review of Compensation Calculations The SBWMA Consultant shall review the calculation of Contractor's compensation as described in Section III of these guidelines. SBWMA Consultant shall identify any discrepancies in the calculation of compensation and recommend adjustments to the calculations as appropriate. E. Projections The SBWMA Consultant will review Contractor's documented assumptions used in preparing the projections and the support for those assumptions for reasonableness. This could involve reviewing historical trends (i.e., growth in customer base or changes in subscription levels), management's plans for new or revised diversion programs or collection methodologies, and governmental indices (e.g., CPI or PPI). The SBWMA Consultant should also ensure that these assumptions are consistently applied (e.g., if collection costs are projected to increase due to growth in number of customers, revenue should also be increased to reflect the additional rate revenue generated by these customers) . F. Review of Allocations The SBWMA Consultant will review the allocations of costs to the various services and among the jurisdictions for reasonableness. The SBWMA Consultant should compare the allocation bases to those established in the Agreement (as they may be amended from time-to-time) to ensure that they are consistently applied. The SBWMA Consultant shall SBWMA Compensation Adjustment Guidelines June 6, 2000 PAGE 21