Professional Documents
Culture Documents
Dave Mody
Engineering Design
2/4/2009
Example
http://www.lemonadegame.com/
2/4/2009
2/4/2009
100 90 80 70 60 50 40 30 20 10 0 0
Capacity Factored
100 90 80 60 50 40
% Work Completed
32
Estimate Accuracy
70
Equipment Factored
Detailed
Construction Begins
30 20 10 0
20
40
60
80
100
Capacity Factor
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Capacity Factor
The exponent (0.7)
Product Ethylene Acetaldehyde Ammonia Phosphoric Acid Formaldehyde Process Route Refinery Gases Ethylene Steam Reforming Calcium Phosphate/H2SO4 Methanol Exponent 0.85 0.70 0.70 0.60 0.55
Perrrys
TIME!
HEY ! What Changed?
2/4/2009
33
Plant Type Fluid Processing Plant Solid-Fluid Processing Plant Solid Processing Plant
2/4/2009
Equipment Cost
Garage Cost
# Cars
2/4/2009
EQUIPMENT FACTOR
PURCHASE COST
INSTALLED COST
36-37
35
2/4/2009
Tanks and Vessels Columns and Trays Pumps and Compressors Exchangers Heaters
36-37
Equipment Factors
Shop Fab. Vessels Compressors Exchangers Fired Heaters Pumps Material Handling Equipment 2.0 - 2.5 1.5 - 2.5 1.7 - 2.5 1.7 - 2.5 2.5 - 3.5 1.5 - 3.0
37
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Detailed Estimates
10
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Detailed Estimate
% Time vs Estimate Accuracy & % Completion
100 90 80 70 60 50 40 30 20 10 0 0
Capacity Factored
100 90 80 60 50 40
% Work Completed
32
Estimate Accuracy
70
Equipment Factored
Detailed
Construction Begins
30 20 10 0
20
40
60
80
100
Whats Economics?
11
2/4/2009
Angkor Wat Built by a series of kings at huge cost Bankrupt the Khmers
12
2/4/2009
DECISION MAKING $$
$ $
Today The Future
13
2/4/2009
PV = FV / (1+i)n
$
Today
$
The Future
PV = FV / (1+i)n
?
Today
$
2 YEARS
$
3YEARS
$
4 YEARS
14
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$ $
Today 2 YEARS
$
3YEARS
$
4 YEARS
$ $
Our Initial Cost
$
Revenue
15
2/4/2009
PV = FV / (1+i)n
$ $
Our Initial Cost
$
Revenue
$ $ $
16
2/4/2009
$ $
Our Initial Cost
$
Revenue
PV = FV / (1+i)n
$ $ $
=
Our Initial Cost Net Present Value
17
2/4/2009
Discount Rate
Large Discount Rate Values = LOWER NPVS
Typical MARR or Hurdle Rates in Industry
Industry Industrial Chemicals Petroleum Pulp and Paper Pharmaceuticals Metals Paints Fermentation Products
Low-Risk Projects 11 16 18 24 8 21 10
Average Projects 25 25 28 40 15 30 30
PV = FV / (1+i)n
$ $
=
Internal Rate of Return (IRR)
i when NPV = 0
18
2/4/2009
Net Present Value A $ amount exceeding the hurdle interest rate Internal Rate of Return Equivalent Interest Rate of Your Initial Cost
Investment Comparison
You have $200, how do you make the most money in 6 years? A. Put in Bank B. Lemonade C. Soap Box Car
B. Lemonade Stand (i=10%) A. Put Money in Bank (i=10%)
400 300 Dollars ($) 200 100 0 -100 -200 Years 0 Dollars ($) 250 200 150 100 50 0 -50 -100 0 1
354.3122
100 50
2
100 50
3 4
120
130
0 1
0 2
0 3
0 4
0 5
-150 -200
-200
Years
-200
250
Dollars ($)
-50
1 2 -100 3 4 5 6
Years
19
2/4/2009
Risk Analysis
Understand the risk and effects to the project
30
20
2/4/2009
Risk Analysis
Test one value (Tornado Plots)
Develop 3 scenarios
30
Risk Analysis
Monte Carlo
Probability
-50%
-10%
+10%
+50%
30
21
2/4/2009
So This is Engineering Economics Conversion of British Columbia Mountain Pine Beetle Wood to Natural Gas via Syngas Utilize a Turbine to reduce pressure and produce electricity The design of a Water For Injection Utility for a bio/pharma plant
22