SCHOOL OF CHEMICAL ENGINEERING

School of Chemical Engineering

Universiti Sains Malaysia
Engineering Campus
Nibong Tebal, Penang

EKC 453 : Plant Design and Economics

Due date : 16 March 2018

Weightage : 360 marks
Design Task #1
[Each member in the group should contribute equally in the of task]

PLANT AND EQUIPMENT COST ESTIMATION

In PFD, you have identified all the equipment needed for your project. In the economic
evaluation, the first task is to obtain a capital cost estimate for the plant.

1. PFD Marks

Update the PFD by adding the table for the component mass and 40
energy balances.

2. Planning and execution of the project 40

Gantt Chart, minutes of meeting, work distribution and execution
of the task

A. Equipment Cost Estimation Marks

[a] List down all the equipment, with their proper specification sheets 40
showing equipment No., capacity/size, materials of construction and
operating conditions (pressure and temperature).

[b] Estimate purchase cost of each equipment using correlations, Aspen One 40
Economic Evaluation and graphs/equations. Compare your values of
the equipment cost using different methods.

Tabulate all the purchase equipment cost calculated from graphs,

equations and software using EXCEL and make the comparison, analyse
and make final recommendation. Select the most appropriate value of the
equipment cost in the calculation of total cost estimation

[c] Give full details of the supplier, type of equipment (capacity/size),

country and other details. Please write which of the equipment are
available in Malaysia.

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[d] Show the summary of utility requirements for the equipment identified in 40
PFD and obtains total yearly utility costs for the process in a Tabular
form using EXCEL.

List down the utility services with their design capacity and cost.

B. Total Cost Estimation Marks

[a] Use a suitable method to obtain a total capital cost estimate for the plant 40
(Study Estimate) based on the purchase equipment cost.

Compare total capital cost estimation using different methods such as the
Ratio method and Factorial (Lang Factor) method and Method of Guthrie.
Write down which method gives the reliable value.

[b] Calculate the cost of manufacture (COM) for the product using the plant 40
process. Include the cost of operating labor, utilities, waste treatment and
raw materials. Represent different components of COM by pie
diagram/chart with the total investment (ie. the whole pie). Calculate the
total production costs.

C. Project Cost, Profitability And Sensitivity Analysis Marks

The project cost of the plant should be break into different costs of: 40

(i) Land cost

(ii) Fixed Capital Investment
(iii) Working Capital
(iv) Plant life
(v) Start-up time
(vi) Design capacity and operating capacity
(vii) Revenues from sale
(viii) COM (without and with depreciation)
(ix) Tax Rate = 35%
(x) Depreciation Method
(xi) Internal rate of return = 10% p.a.
(xii) Plant operation = 330 days

Length of time over which profitability is to be assessed = 10 years

after start-up.

1. Use EXCEL to show all the calculations.

2. Draw a cumulative (discounted) after tax cash flow diagram with the
table. Showing all discounted values in a tabular form.

3. Calculate :-

(i) Cumulative cash position (CCP) and CCR

(ii) Payback period
(iii) Rate of return on investment
(iv) Venture Profit

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(v) Net present value and NPV ratio

(vi) Discounted payback period
(vii) Discounted cash flow rate of return (DCFROR)

Write down the recommendations based on the profitability analysis.

Calculate the sensitivity cost of manufacturing, revenue and fixed capital 40

investment and plot these sensitivities with respect to the NPV.

Explain any unusual results that you find.

Write down the measures to increase the profitability of the process plant
by cutting down the costs/changes to be made in the process. Relook at
your process plant flow diagram (PFD) and check if there is any
possibility to reduce the cost and increase the profitability.

Make your recommendations based on cost reduction and increase in

profitability.

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