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    Cost Estimation & Plant Economics

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    KhalidMadani
    The document estimates the costs for a proposed 100 TPD methanol plant. It estimates: 1) The fixed capital investment to be Rs. 10.96 crore. 2) The total capital investment including working capital to be Rs. 14.975 crore. 3) The total product cost to be Rs. 13.5399 crore, which is greater than the initial assumption of Rs. 12.3764 crore. 4) The annual rate of return to be 48.4% and payback period to be 2 years.

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    Cost Estimation & Plant Economics

    Uploaded by

    KhalidMadani
    18 views2 pages
    The document estimates the costs for a proposed 100 TPD methanol plant. It estimates: 1) The fixed capital investment to be Rs. 10.96 crore. 2) The total capital investment including working capital to be Rs. 14.975 crore. 3) The total product cost to be Rs. 13.5399 crore, which is greater than the initial assumption of Rs. 12.3764 crore. 4) The annual rate of return to be 48.4% and payback period to be 2 years.

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    Methanol_Cost-2520Estimation&Economics

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    The document estimates the costs for a proposed 100 TPD methanol plant. It estimates: 1) The fixed capital investment to be Rs. 10.96 crore. 2) The total capital investment including working capital to be Rs. 14.975 crore. 3) The total product cost to be Rs. 13.5399 crore, which is greater than the initial assumption of Rs. 12.3764 crore. 4) The annual rate of return to be 48.4% and payback period to be 2 years.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views2 pages

    Cost Estimation & Plant Economics

    Uploaded by

    KhalidMadani
    The document estimates the costs for a proposed 100 TPD methanol plant. It estimates: 1) The fixed capital investment to be Rs. 10.96 crore. 2) The total capital investment including working capital to be Rs. 14.975 crore. 3) The total product cost to be Rs. 13.5399 crore, which is greater than the initial assumption of Rs. 12.3764 crore. 4) The annual rate of return to be 48.4% and payback period to be 2 years.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    COST ESTIMATION & PLANT ECONOMICS

    Methaonol Plant Capacity=100 TPD


    Cost in 1971=Rs 3.6 x 108 ; Cost index ,year 1971=132[4 ]
    Cost index,year 2002=402
    Fixed capital investment=3.6 x 108 x402/132 i.e,FCI=Rs.10.96x 107 This is nothing but
    the present cost of the plant.
    Using Peter & Timmerhaus
    Estimation of total investment cost:
    a. Direct cost:
    A. i.Purchased equipment cost(PEC)
    Taking a 25% FCI,PEC=Rs. 2.74 x 108
    ii. Installation cost
    Taking a 35% PEC,this is=0.822 x 108
    iii. Instrumentation & Control cost
    Taking a 15% PEC,this cost=Rs.0.411x 108
    iv Piping,installed cost
    Taking a 50% PEC,this is=1.37x 108 Rs
    v. Electrical & installed cost
    Taking a 25%PEC, this is=Rs.0.685 x 108
    B. Building,process,auxillary
    Taking a 45% PEC,this is=1.233 x 108 Rs.
    C. Services- facilities & yard improvement
    Taking a 75%,this is =2.055 x 108 Rs.
    D. Land
    Taking a 6%,this is =0.1644 x 108 Rs.
    Then Total Direct cost=9.4804 x 107 Rs. Which is around 86% of FCI
    b. Indirect costs
    A. Engineering & supervision cost:
    Taking a 15% of D.C. this is=1.42206 x 108 Rs.
    B. Construction expenses & contractor’s fee;
    Taking a 10%,this=0.94804 x 108
    C. Fixed Capital Investment=Direct cost+ Indirect cost
    i.e, new FCI=12.7273 x 108 Rs.
    D. Working capital
    Taking 15% TCI, WC=0.15 TCI

    Total Capital Investment,TCI=FCI+WC


    Solving,TCI=14.975 x 108
    WC=2.246 x 108

    Estimation of Total Product Cost:


    1. Manufacturing Cost=Direct Product cost+ Fixed charges + Plant overhead cost
    A. Fixed Charges:
    Depreciation=1.30972 x 108 Rs.
    Local taxes-taking a 2.55 of FCI, is =0.318 x 108 Rs.
    Insurance – taking a 0.7% of FCI, is =0.089 x 108 Rs.
    Rent =0.13974 x 107 Rs.
    Then total Fixed Charges= 1.85646 x 108 Rs.

    B. Diect Production cost: We know FC is about 10-20% of TPC.Taking a


    15%,TPC=12.3764 x 108 Rs.

    Raw materials-taking a 25% of TPC, is=3.0941 x 108 Rs.


    Operating lobour- taking a 15% of TPC, is = 1.856 x 108
    Direct supervisory & clerical labour-taking a 15% ,is = 0.278 x 108 Rs.
    Utilities –taking a 15% of TPC,is=Rs.1.856 x 108
    Maintenance & repairs-taking a 5%,is = 0.6364 X 108
    Operating supplies-taking a 15%,is = 0.0955 x 108
    Laboratory charges-taking a 15% of OL,is=0.2784 x 108 Rs.

    Total Direct Production cost=8.0944 x 108 Rs. Which is about 60.54% of TPC

    C. Plant Overhead Costs:


    Taking a 8% of TPC, this is=0.99 x 108 Rs..

    Therefore total manufacturing cost=10.9409 x 108 Rs.

    2. General Expenses = Administrative cost+ Distribution & selling cost + research


    development cost
    Administrative cost-taking a 4% of TPC,is= 0.495 x 108
    Distribution & Selling cost- taking a 12% of TPC,is = 1.485 x 108 Rs.
    Research & Development cost- a 5% of TPC= 0.61882 x 108 Rs.
    Then General E xpenses=2.599 x 108 Rs.

    3. Total Product Cost = Manufacturing cost + General Expenses = 13.5399 x 108 Rs.
    This is greater than the assumed value(12.3764 x 108)

    PROFIT ANALYSIS:
    A. Earnings:
    Total gross earnings= Total income – TPC = 1.2 x 109 Rs.
    Calculation of total income:
    Annual working days=340
    Annual methanol prodution =100 tonnes
    Wholesale price of methanol = Rs.85/kg
    Annual total income= 2.55 x 109 Rs.

    B. Annual Rate of Return=gross profit/TCI =48.4 %


    Gross profit = gross earnings – tax
    Tax = 30% of gross earnings

    C. Pay-back period = 100/R.O.R = 2 years

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