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    Cost Est

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    chaitanya_scribd
    The document provides a cost estimation and profitability analysis for a 300,000 ton/year monoethylene glycol (MEG) production plant. It estimates the total capital investment to be $239.554 million, and the total production cost to be $331.249 million. It further estimates that the plant would generate a net profit of $55.097 million per year, with a payback period of 2.63 years and a rate of return of 23%.

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    Cost Est

    Uploaded by

    chaitanya_scribd
    90 views6 pages
    The document provides a cost estimation and profitability analysis for a 300,000 ton/year monoethylene glycol (MEG) production plant. It estimates the total capital investment to be $239.554 million, and the total production cost to be $331.249 million. It further estimates that the plant would generate a net profit of $55.097 million per year, with a payback period of 2.63 years and a rate of return of 23%.

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    The document provides a cost estimation and profitability analysis for a 300,000 ton/year monoethylene glycol (MEG) production plant. It estimates the total capital investment to be $239.554 million, and the total production cost to be $331.249 million. It further estimates that the plant would generate a net profit of $55.097 million per year, with a payback period of 2.63 years and a rate of return of 23%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    90 views6 pages

    Cost Est

    Uploaded by

    chaitanya_scribd
    The document provides a cost estimation and profitability analysis for a 300,000 ton/year monoethylene glycol (MEG) production plant. It estimates the total capital investment to be $239.554 million, and the total production cost to be $331.249 million. It further estimates that the plant would generate a net profit of $55.097 million per year, with a payback period of 2.63 years and a rate of return of 23%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 6

    COST ESTIMATION AND PROFITIBILITY ANALYSIS

    A financial requirement of the project of 300000 ton/annum capacity setup in 2002 was 51.78 million $. Present cost = (original cost) x (cost index at present/cost index in past) x (Present capacity/original capacity)0.6 = 51.78 x 106 x (676.5/395.6) x (750000/300000)0.6 = 153.43 million $. Direct Costs (DC): Direct Cost is 70 to 80% of fixed cost of Investment (FCI) Sr. No. Item Purchased Equipment Cost(PEC) Installation cost Insulation Packing Yard improvement cost Land purchase cost Piping Installation Cost Electrical Cost Building process and auxiliary Service facilities Yard Improvement % of FCI/PEC 1 30 46.029 Cost ($ million)

    2 3 4 5 6 7 8 9

    40 13 6 45 15 40 50 12

    18.411 5.983 2.761 20.713 6.904 18.4116 23.014 5.523

    TOTAL DIRECT COST (DC) = 147.749 million $.

    Indirect Costs:

    71

    Sr. No. 1 2 3 4

    Item Engineering & Design Cost Construction expenses Contractor Fees Contingencies

    % of DC 15 10 4 12

    Cost ($. Million) 22.16 14.77 5.909 17.72

    Total Indirect Cost = 60.559 million $. Fixed Capital Investment (FCI) = Total Direct Cost + Total Indirect Cost = 147.749 + 60.559 = 208.308 million $. Working Capital Investment (WCI) = 15% of Fixed Capital Investment (FCI) = 0.15 x208.308 = 31.2462 million $. TOTAL CAPITAL INVESTMENT (TCI) = Fixed Capital Investment +Working Capital Investment = 208.308+31.2462 = 239.554 million $. Fixed Cost: (1) Depreciation = 10 % of Fixed Capital Investment = 0.1 x 239.554 million $ = 23.95 million $. (2) Local Taxes = 4 % of Fixed Capital Investment = 0.04 x 239.554 million $ = 9.582 million $. (3) Insurance Cost = 0.6 % of Fixed Capital Investment = 0.006 x 239.554 million $ = 1.437 million $. (4) Rent = 10% of building value = $ 0.2761 million TOTAL FIXED COST = Depreciation + Local Taxes + Insurance Cost+Rent =35.239 million $.
    72

    Total fixed cost Total production cost (TPC) Direct Production Cost:

    = 18% of Total production cost (TPC) = 195.77 million $

    (1) Raw material cost is 30% of TPC = 58.73 million $ (2) Utilities Cost = 13% of Total Production Cost = 25.45million $. (3) Operating Labor = 15 % of Total Production Cost = 29.365 million $. (4) Clerical Labor & Supervision Cost = 12% of Operating Labor = 23.4924 million $ (5) Maintenance and repairs = 8% of Fixed capital investment = 15.66 million $ (6) Lab & Other Service Cost = 15% of operating labor cost =29.36 million $ (7) Operating supplies = 15% of maintenance and repairs cost = 29.36 million $

    DIRECT PRODUCTION COSTS = Raw Material Cost + Utilities Cost + Maintenance and Repair Cost + Operating Labor + Lab & Other Service Cost+ Clerical Labor & Supervision Cost+ Operating supplies
    73

    =211.35 million $ Plant overhead Cost: These costs are 65% of (Operating Labor+ Operating supplies+ Maintenance and repairs) So, plant overhead cost is 44.53 million $. TOTAL MANUFACTURING COST = Direct Production Costs + Total Fixed Cost + Plant overhead cost = 291.119 million $. General Expenses: (1) Administrative Cost = 50% of Operating labor =14.682 million $. (2) Distribution & Marketing cost . (3) Research and development = 3% of Total production cost = 5.873 million $ Total General Expenses TOTAL PRODUCTION COST = 40.132 million $. = Total Manufacturing Cost +Total General Expenses = 331.249million $. = 10% of Total production cost = 19.577 million $

    PROFITABILITY ANALYSIS: Working days = 333 Selling price

    74

    Product MEG

    Amount tons/year 750000

    Selling Price $./ton 554

    Total Selling Cost (TSC)/year = 416.01 million $. Gross Profit = Total Selling Cost Total Production Cost = 416.01 331.249 = 84.76 million $. Tax Paid = 0.35 x Gross Profit = 0.35 x 84.76 = 29.66 million $. Net Profit = Gross Profit Tax Paid = 84.76 29.66 = 55.097 million $. PAY OUT PERIOD: It is given by P.O.P Fixed Capital Investment per year P.O.P = Net Profit + Depreciation

    208.308 = = RATE OF RETURN: It is given by R.O.R 55.097 + 23.95 2.63 Years

    75

    Net Profit R.O.R = Total Capital Investment

    55.097 x100 239.554

    = 23 %

    76

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