PTT 427 Process Plant Design ll

Transcription

1 PTT 427 Process Plant Design ll ENGINEERING ECONOMIC SITI NOR AZREEN BINTI AHMAD TERMIZI

2 Outcomes CO 3 : Ability to EVALUATE economic profitability analysis of the designed project Topic outcomes ; Equipment Cost Estimation Purchase Cost Total Cost Estimation Method of Guthrie, Cost of manufacturing (COM), Total Production Cost Project Cost And Profitability Analysis Cumulative (discounted) after cash flow diagram, CCR, PBP,ROI and others.

3 Introduction Total Capital Investment, C TCI Cost indexes Purchase cost, C P Method of Guthrie Cost of manufacture, COM Total Production Cost, C = COM +General Expenses Profitability measure Payback Period, PBP Return of Investment, ROI Venture Profit, VP Discounted cash flow rate of return, DCFRR

4 Equipment Cost Estimation Sources of equipment cost data Current vendor quotations Past vendor quotations Literature estimates

5 Cost Index Cost are not static because of inflation Estimate of the purchase cost at a later date is obtained by multiplying the cost from an earlier date by the ratio of a cost Index, I C P Later date Earlier date

6 Common Cost Indexes

7 Comparison of Cost Indexes

8 Chemical Engineering Plant Cost Index (CEPCI)

9 Example Cost of vessel in 1993 was 25,000, what is estimated cost today (Sept 2007 CEPCI = 500)?

10 Solution of Example C now I now 500 C 25, I $34,820

11 Equipment Purchase Cost

12 Centrifugal Pump C p = F T F M C B Pump Type Factor Material of construction Factor Q=flow rate, gpm H= pump head, ft

13 Compressor C p = F D F M C B Driving Factor Steam turbine drive = 1.15 Gas turbine drive = 1.25 Size Factor Material of construction Factor Stainless steel = 2.5 Nickel alloy = 5.0

14 Shell-and-Tube Heat Exchangers C p = F P F M F L C B Pressure Factor Material of construction Factor (P= Shell side pressure, 100 < P < 2000 psig)

15 Pressure Vessels and Towers (without Tray/Packings) C p = F M C V + C PL Material Factor Empty Vessel Factor Added cost for platforms and ladder (W = weight of shell and two heads) D i = vessels inside diameter, ft L=tangent to tangent length of the shell

16 Pressure Vessels and Towers (with Plates) C p = F M C V + C PL + C T C T = N T F NT F TT F TM C BT C BT is for sieve trays at CE cost Index of 394 ; 2 ft <D i <16 ft N T = the number of trays F NT = 1; N T > 20 N T < 20 F TT = Type of trays F TM = Material of construction

17 Pressure Vessels and Towers (with Packings) C p = F M C V + C PL + V p C PK + C DR V p is the volume of the packing, ft 3 C PK is the installed cost of the packing, $/ft 3 C DR is the installed cost of high performance liquid distributors Of packing materials

18 Preliminary Estimate (Individual Factors Method of Guthrie, 1969,1974)

19 Preliminary Estimate Carried out after completing: Optimal process design has been developed mass and energy balance equipment sizing Selection of materials of construction Development of a process control configuration The f.o.b. purchase cost of each piece of major equipment must be estimated The equation for the total capital investment by the Guthrie method is: C TCI =C TPI +C WC =1.18(C TBM +C site +C buildings +C offsite facilities )+C wc

20 Preliminary Estimate For each piece of equipment, Guthrie provides factors to estimate the direct cost + indirect cost Bare-module cost = direct cost + indirect cost C site => 10-20% of C TBM (grass root plant) => 4-6% of C TBM (for an addition to an integrated complex) C buildings => 20% of C TBM (grass root plant) => 5% of C TBM (for an addition to an integrated complex) C offsite facilities => 5% of C TBM

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22 Example of Bare-Module Cost (for Heat Exchanger) Table 16.10

23 Preliminary Estimate (Individual Factors Method of Guthrie) Step #1 Prepare Equipment List (size, material, temperature, Pressure) Step #2 Add the list of f.o.b. equipment purchase cost, C p and its cost index, I b Step #3 Determine the bare module cost using bare module factor, equipment design factor, pressure factor, material factor

24 Preliminary Estimate (Individual Factors Method of Guthrie) Step #4 Obtain the total bare-module cost, C TBM by summing the bare-module costs of the process equipment Step #5 Estimate the Total Permanent Investment and Total Capital Investment using 15% C TCI

25 Cost of Manufacture, COM labour feedstocks utilities Direct manufacturing costs maintenance Operating overhead Cost of manufacture Property taxes insurance Fixed costs depreciation

26 Total Production Cost, C COM General Expenses C Table 17.1

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31 Profitability Measure

32 Cumulative cash position flow diagram A B The investment required to design the plant. B C The heavy flow of capital to build the plant, and provide funds for start-up. C D The cash-flow curve turns up at C, as the process comes on stream and income is generated from sales. The net cash flow is now positive but the cumulative amount remains negative until the investment is paid off, at point D. Point D is known as the break-even point and the time to reach the break-even point is called the pay-back time. In a different context, the term break-even point is used for the percentage of plant capacity at which the income equals the cost for production. D E In this region the cumulative cash flow is positive. The project is earning a return on the investment. E F Toward the end of project life the rate of cash flow may tend to fall off, due to increased operating costs and falling sale volume and price, and the slope of the curve changes. The point F gives the final cumulative net cash flow at the end of the project life.

33 A Typical Cumulative Cash Flow Diagram for Evaluation of a New Project Prof. Adnan Alamer 3 Chemical Engineering Dept., KFUPM.

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35 A Typical Cumulative Cash Flow Diagram for Evaluation of a New Project (cont.) Project Life Required for evaluation of profitability of a project. Standardization of project life: When comparing different projects. Project lives of 10, 12 and 15 years are commonly used. Time value of money has to be considered when evaluating profitability. 4

36 Profitability Criteria for Project Evaluation 3 Bases for Evaluation of Profitability O Time 0 Cash ΠInterest Rate i 5

37 Profitability Criteria Profitability Criteria Non-discounted method do not take account of time-value of money. Discounted Non- Discounted Not recommended for evaluating new, large projects 6

38 Non-Discounted Profitability Criteria Time Criterion. Payback Period (PBP) PBP = Time required, after start-up, to recover the total capital investment, for the project The shorter the PBP, the better. 7

39 Non-Discounted Profitability Criteria (cont.) Cash Criterion. Cumulative Cash Position (CCP) CCP = Worth of the project at the end of its life Cumulative Cash Ratio (CCR) CCR > 1 implies that the project is potentially profitable.

40 Discounted Profitability Criteria Time Criterion. Discounted Payback Period (PBP) DPBP = Time required, after start-up, to recover the fixed capital investment, FCI L, required for the project with all cash-flows discounted back to time zero. The project with the shortest DPBP is the most desirable. 16

41 Non-Discounted Profitability Criteria (cont.) Cash Criterion. Net Present Value (NPV) NPV = Cumulative discounted cash position at the end of the project. Present Value Ratio (PVR) PVR > 1 implies that the project is potentially profitable.

42 Non-Discounted Profitability Criteria (cont.) Interest Rate Criterion. Discounted Cash Flow Rate of Return (DCFROR) If DCFROR is higher than the internal discount rate, then the project is considered profitable. 18

43 Approximate Profitability Measure Return of Investment (ROI), Payback Period (PBP), Venture Profit (VP)