Preliminary Costing - Free Essay Example

Sample details Pages: 5 Words: 1375 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Level High school Did you like this example? Chapter 4 PRELIMINARY COSTING A large sum of money is required to purchase and install the necessary machinery and equipment before the full operation of industrial plant. Land and service facilities must be obtained and the plant must be constructed with all the piping system, controls and services, together with the money for the payment of expenses involved in the plant operation known as working capital Table 10.1: Equipment costs TOTAL PURCHASE EQUIPMENT COST EQUIPMENT Qty PRICE OF ONE UNIT ($) TOTAL PRICE ($) Supplier PRELIMINARY TREATMENT Receiving Chamber 1 20,903.7 20, 903.7 Personal contacts, local contractor. Compost/wood chips biofilter 1 4, 924.6 4, 924.6 Personal contacts, local contractor. Medium mechanically cleaned screen bars 2 12, 642.9 25, 285.8 Wuxi Gongyuan Environmental Equipment Technology Co., LTD. Fine mechanically cleaned screen bars 2 12, 642.9 25, 285.8 Wuxi Gongyuan Environmental Equipment Technology Co., LTD. Comminutor 1 22, 874.9 22, 874.9 DELUMPER (R) Div., Franklin Miller Inc. Livingston, NJ Aerated grit chamber 2 25, 762.0 51, 524.0 Personal contacts, local contractor Blowers 4 2, 000.0 8, 000.0 Continental Blower, LLC East Syracuse, NY Wet scrubber 1 61, 870.5 61, 870.5 Advanced Air Technologies, Inc. PRIMARY TREATMENT Primary Settling Tank (reinforced concrete) 4 41, 666.67 166, 666.67 Personal contacts, local contractor. Circular Scrapper 4 42,000 168, 000 Shandong Jinhaosanyang Environmental Protection Equipment Co., Ltd. Chemical tank for alum and lime 8 500 4, 000 Hebei Sinta FRP Trading Co., Ltd. Mixer + Impeller turbine 4 1, 500 6, 000 Jiangyin Fine Chemical MachineryCo. LTD Dosing pump 8 200 1, 600 Guangzhou Fenlin Sauna Equipment Co., Ltd. Primary sludge pump 4 1, 000 4, 000 Hebei Gaoxin Pump Industry Co., Ltd. Equalization tank (reinforced concrete) 3 197, 000 591, 000 Personal contacts, local contractor. Mixer + Impeller turbine 3 1800 5, 400 Jiangyin Fine Chemical MachineryCo. LTD Chemical dosing pump 6 200 1, 200 Guangzhou Fenlin Sauna Equipment Co., Ltd. Distributing Chamber 1 42, 366.67 42, 366.67 Personal contacts, local contractor. SECONDARY TREATMENT Concrete for Aeration Tank 1 154, 132.94 154, 132.94 Disk Diffuser 2142 4 8564 KellyShao Jiangyin City Yuanchang Metal Technology Co., Ltd. Propeller Mixer 70 9, 999 699, 930 Jiangsu Zonre Mechanical Equipment Co., Ltd. Concrete for Sedimentation Tank 5 17,365.42 86, 827.075 Scrapper 5 5, 598.68 27, 993.4 Wuxi Gongyuan Environmental Equipment Technology Co., LTD. Blower 7 2, 000 14, 000 Continental Blower, LLC East Syracuse, NY RAS Pump 4 3, 800 15, 200 Ms. Jane Wang Shandong Jinhaosanyang Environmental Protection Equipment Co., Ltd. Shandong, China (Mainland) WAS pump 1 9530.29 9530.29 Mr. Bella Chu Hebei Tongda Pump Co., Ltd. Hebei, China (Mainland) Centrifugal Pump 3 (capacity 27805 m3/day ) 2, 530.06 7590.19 Shijiazhuang An Pump Machinery Co., Ltd 1 Standard 2, 500 2500 TERTIARY TREATMENT Sand Filter 4 45, 800 183, 200 Balancing Tank 1 8, 140 8, 140 UV channel 4 12, 500 50, 000 Sand 442 442 DongtaiDongjiangShippingAssembly Co., Ltd. Gravel 650 650 DongtaiDongjiang Shipping Assembly Co., Ltd. Anthracite 825 825 Marketing Specialist of Shanghai GDS Industrial co.ltd Centrifugal Pump 2 865 1, 730 Shijazhuang And pump Co.LTD UV lamp 1152 100 115, 200 Trojan UV Technologies Inc. Uv Modules 144 500 72, 000 Trojan UV Technologies Inc. SLUDGE TREATMENT Scrappers in thickeners 2 3,500.00 7,000.00 Jiangsu Penyao Environmental Engineering Contract Co. Ltd Heat exchangers 6 2,500.00 15,000.00 Assumption Membrane cover for AD 2 7,690.90 15,381.80 Yijin Stage Truss Case Co. Ltd Draft tube impeller 4 500.00 2,000.00 Shijiazhuang Woman Industry Pump Co. Ltd Stirrers for conditioning 2 1,695.00 3,390.00 Shandong JinhaosanyangEnviromental Protection Co. Ltd Centrifuges 2 26,250.00 52,500.00 Liaoyang xianglong machinery Co. Ltd First Maturation tank 1 18,981.1 18,981.1 Zhangjiagang City Runfen Green Build. Support Co. Ltd Thickener 2 7,017 14,034 Contract Blending tank 1 1,360 1,360 Contract Gravity thickener 2 4,012.5 8,025 Contract Pumps 22 622 13, 684 BPH Pump and Equipment, INC BIOGAS TREATMENT Biogas holder 1 150, 000 150, 000 Chengdu Amoco Architecture Technology Co., Ltd. Biogas Production 333, 333.33 TOTAL PURCHASE EQUIPMENT COST/$ 3,304,046.77 TOTAL PPURCHASE EQUIPMENT COST/RS 99, 121, 403.05 Referring to Table 2: Estimation of Capital Investment Cost Don’t waste time! Our writers will create an original "Preliminary Costing" essay for you Create order Direct Cost 1. Installation painting From Table 2, the range of installation and painting is usually in the range 25 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 55 %, so an average is assumed since most of the equipment chosen for this plant have been considered with regards to its low installation cost, complex characteristics as well as ease of operation and Painting is preferably used for coding of pipes. Hence an average of 40% is considered. 2. Instrumentation and control Similarly, from Table 2, instrumentation and controls installed can be assumed in a range from 6 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 30 %. Since for ease of operation and treatment facility, a maximum control is preferred to reduce any hazard especially during the production of biogas, in Activated Sludge Process and Tertiary Treatment as well as to ensure a quality effluent and diminish cost of maintenance. Thus the upper boundary is preferred that is 30%. 3. Piping During the sludge treatment whereby a gravity thickener is involve, lots of piping is required, as well as in the Secondary Treatment whereby there are 15 channels and 5 clarifier, definitely huge amount of piping is required in this plant. However, the cost of piping is quite low as compared to other equipment involved in this design and also, some units require lots of piping while others do not. Hence an average value is considered in this case. Since the limit lies between 10 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 80%, an average of 45 % is considered. 4. Electrical Most equipment will be accompanied with electrical installations, however, not heavy installation is required, and an average is assumed. Hence a mean value for Electricals is taken to be 25 % B. Buildings, Process and Auxiliary The building and treatment facility will be constructed while considering adequate safety for employers at workplace as well as safety of the plant itself but this cost is quite low compared to the purchased equipment itself and since the plant is almost fully automated, an average value of 40% is considered whereby the range of buildings, process and auxiliary lies between 10 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 70 % referring to the table. C. Service Facilities and Yard improvements Service Facilities and Yard improvements represent 40 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 100% of the Purchased Equipment Cost, Yard improvement in itself will have a minor cost since a sewage treatment plant needs not to be stylish, it just need to represent the area by asphalting the road and a ccommodating a small parking area within the treatment area. Howerver, the service facilities with regard to Laboratory constructed on site should be quite representative and equipped with all the necessary equipment to do the required test. Hence, an average value is taken to be 70% of the Purchased equipment cost. D. Land Since a new plant is being built, land requirements is assumed to be high and since the price of land is quite expensive in Mauritius for example; it costs around Rs 25 million per acre for a plot of land in the North and taking for instance the aeration tank as well as the clarifiers, it do require land. Consequently, the maximum value is taken to be 8% of the purchased equipment cost while referring to Table 2. INDIRECT COSTS Engineering and Supervision To build a new treatment plant and accommodate it with all the necessary instrumentation and control while ensuring safety of the employees at work place as well as safety of the property, also taking into consideration the negative impact it can have to the environment if the process goes wrong and considering the effluent quality as well as some limiting factors such as economy of the country and finally to ensure a highly efficient treatment plant, lots of supervision and engineering skills are required. Hence, a maximum value of 30% is noted. Construction Expense and Contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s Fee The construction expenses and the contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s fee for the plant will be quite low as compared to the purchased equipment cost, so in order not to overestimate the expense, an average value of 18% of the direct costs is estimated. Noting that the construction will be effected by the contractors itself, these two factors are considered as one. Contingency The usual range for contingencies is 5 to 15%. A mean value of 10% is appreciable for a wastewater treatment facility to cater for unforeseen situations such as storm, cyclone or flood. total capital investment RANGE, % PE ASSUMED, % PE CALCULATION Cost ( Rs) DIRECT COST Purchased equipment (PE) Installation, including insulation painting 25 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 55 40 0.40 ÃÆ'— 99,121,403.05 39, 648, 561.22 Instrumentation and controls 6 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 30 30 0.30 ÃÆ'— 99,121,403.05 29, 736, 420.92 Piping 10 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 80 45 0.45 ÃÆ'— 99,121,403.05 44, 604, 631.37 Electrical 10 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 40 25 0.25 ÃÆ'— 99,121,403.05 24, 780, 350.76 Building, process auxiliary 10 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 70 40 0.40 ÃÆ'— 99,121,403.05 39, 648, 561.22 Service facilities Yard improvement 40 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 100 70 0.70 ÃÆ'— 99,121,403.05 69, 384, 982.14 Land 1 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2 8 0.70 ÃÆ'— 99,121,403.05 7, 929, 712.24 TOTAL DIRECT COST 255, 733, 219.90 INDIRECT COST Engineering supervision 5 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 30 30% DC 0.30 ÃÆ'— 255,733,219.90 76, 719, 965.97 Construction Expense Contractorà ¢Ã¢â€š ¬Ã¢â€ž ¢s fee 6 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 30 18 % DC 0.18 ÃÆ'— 255,733,219.90 46, 031, 979.58 Contingency 5 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 15 10% FCI 0.10 ÃÆ'— FCI 0.10FCI TOTAL INDIRECT COST 122,751,945.60 + 0.10 FCI FIXED CAPITAL INVESTMENT DC + IDC 420, 539, 072.70 WORKING CAPITAL 10 % TCI 46, 726, 563.64 TOTAL CAPITAL INVESTMENT 467, 265, 636.4 Since: FIXED CAPITAL INVESTMENT FCI = DC + IDC FCI = 255, 733, 219.90 +122,751,945.60 + 0.10 FCI FCI = Rs 420, 539, 072.70 TOTAL CAPITAL INVESTMENT TCI = FCI +W.C TCI = FCI + 0.10 TCI TCI = Rs 467, 265, 636.4 Calculating the Total Product cost (from table 1) T.P.C = Manufacturing cost + General expenses Manufacturing cost = Direct production costs + Fixed charges + Plant overhead Calculating the Direct Production cost 1. Raw materials No raw materials are necessary hence the cost for raw materials will be zero. 2. Operating labour St Martin Treatment plant has an overall plant maximum capacity of 69 000 m3 wastewater/day which is approximately similar to the one designed for a max flow of 70 000 m3/day. Hence the amount of personnel running the plant will be taken similar to that of the St Martin treatment plant. One employee will work 9 hours per day and there will be shift system. Note: the salary of each personnel member is taken from PRB, 2012