1. Economics – Why Today? Collecting data Additional information for request –Single vs multiple units –Quantity –Quality Future decisions Economic analysis important

2. Budgets – keys Cash flow Cost estimates and planning Assets vs Liabilities Time value of money FIX Costs - Purchase price, salvage value, estimated life, taxes, insurance and coverage Operating Costs – Based on time of use / capacity –Power/Energy –Maintenance and Repair –Labor –Inputs

3. DiscountProfit Selling Expenses Overhead Tooling Labor Purchased parts Materials

4. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) 7.Yard improvements 8.Service facilities 9.Land

5. Example in Chemical Process Indirect Costs: 1.Engineering and Supervision 2.Legal expenses 3.Construction expenses 4.Contractor’s fee 5.Contingency

6. Example in Chemical Process Direct Costs: 1.Purchase equipment All equipment – from flowsheet Spare parts Inflation cost allowance Freight charges Taxes, insurance, duties Allowance for modification during installation.

7. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation Installation of all equipment Structural supports Equipment insulation and painting

8. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls Purchase, installation, calibration, computer control with supportive software

9. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping Process piping utilizing suitable structural materials Pipe hangers, fittings, valves Insulation

10. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems Switches, motors, conduit, wire, fittings, feeder, grounding, lightning, panels Electrical materials and labor

11. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) Process building Auxiliary building Maintenance shops Building services

12. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) 7.Yard improvements Site development – site clearing, grading, roads, walkways, railroads, fences, parking areas, materials handling, recreational facilities, landscaping

13. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) 7.Yard improvements 8.Service facilities Utilities (steam, water, power, waste disposal etc.) Non-process equipment (office furniture, cafeteria equipment, garage equipment, etc.) Distribution and packaging (raw material and product storage handling equipment, packing equipment, blending facilities, loading stations)

14. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) 7.Yard improvements 8.Service facilities 9.Land Surveys and fees Property cost

15. Example in Chemical Process Direct Costs: 1.Purchase equipment 2.Purchased-equipment installation 3.Instrumentation and controls 4.Piping 5.Electrical systems 6.Building (including services) 7.Yard improvements 8.Service facilities 9.Land

16. Example in Chemical Process Indirect Costs: 1.Engineering and Supervision Engineering costs Engineering supervision and inspection

17. Example in Chemical Process Indirect Costs: 1.Engineering and Supervision 2.Legal expenses Identification of applicable federal, state, and local regulations Preparation and submission of forms required by regulatory agencies Acquisition of regulatory approval Contract negotiations

18. Example in Chemical Process Indirect Costs: 1.Engineering and Supervision 2.Legal expenses 3.Construction expenses Construction, operation, and maintenance of temporary facilities Construction tools and equipment Construction supervision, accounting, timekeeping, purchasing, expediting Warehouse personnel and expense, guards Safety, medical, fringe benefits Permits, field tests, special licenses Taxes, insurance, interest

19. Example in Chemical Process Indirect Costs: 1.Engineering and Supervision 2.Legal expenses 3.Construction expenses 4.Contractor’s fee 5.Contingency

20. Rules of Thumb

21. Calls or Internet Exchanges

22. Annual Costs C a – annual cost, $/yr C f – fixed cost, $/yr U a – Units of annual use cap – capacity units/hr C o – operating cost, $/hr Z – timeliness penalty, $/hr

23. Fixed Costs

24. P – purchase price S n – salvage value r i – interest r tis – taxes, insurance, other n - estimated life

25. Operating Cost Units – U a – Units of annual use cap – capacity units/hr C o - $/hr

26. Operating Cost C o – operating cost, $/hr E – energy cost, $/hr R – repair and maintenance, $/hr L – labor, $/hr M – other inputs, $/hr

27. Poster Evaluation Poster Layout & Format (30%) –Creative Element –Good Use of Color/Texture –Balance of text, figures, pictures –Effective use of text – (Font selection & size) –Are you drawn to investigate in more detail? Content (50%) –Title and author clearly identified –Clear Headings – (example: Design Problem, Designs Considered, Conclusions) –Do you understand the Design Problem? –Do you understand the Solution(s)? –Does it convey the BIG Picture? Are main points understood? –Use of other aids (models, video etc. appropriate)? –Can the poster stand alone or is the team needed? Poster Presentation (20%) –Contact was in professional manner –Attention getting –Team was a distraction –Answered questions effectively –Whole team was interactive

28. Final Report Cover / Title page Executive Summary Problem Statement Scope of Work Introduction Design criteria Literature review Preliminary/Alternative design details Work plan - Timeline - Design schedule Summary and conclusions Resources / References Appendices –Design details including AutoCAD drawings –Detailed budget –Important design calculations –Data

29. Evaluation of Final Report The design report will be graded as follows: –Organization/Grammar/Neatness - 25% –Style and Clarity (appropriateness for intended audience) - 10% –Effective use of graphics, tables, etc.- 5% –Technical content - 40% –Overall quality of the draft design report – 20%

30. The Nine Stages of Design Confusion Frustration DespairResentment Anger Discovery Elation Disappointment Compromise