project handbook v1

8/20/2019 Project Handbook V1

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CHEMICAL ENGINEERING

ENVIRONMENTAL ENGINEERINGIQA

Technical University Federico Santa María

Institute of Chemical and Environment Engineering

Prof.-Ing. Daniel Ramirez

Specific Project

Project Handbook

Developed by: Nicolás Antonio Ramos Ojeda

Registration # 2951003-2

Spring Term 2015

Supervisors: Prof. -Ing. Daniel Ramirez

Revised: Valparaíso, October 5th 2015


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Introduction

The present report aims to help the personal work of the students during the development of their

personal projects.

In this course, the role of the student is to complete three prefeasibility studies as an external

engineer. Taking into account the credit points of the course, the workload for the semester is

approximately 200 hours. Hence, the student must be able to organize their own time to deliver a

proper project. Many drawbacks appear while the student elaborates the report, thus it recommends

to prioritize the most important tasks and do not hesitate to ask to the teachers.


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LIST OF FIGURES III

Table of Contents

Introduction II

1

Project Definitions 1

1.1 Market Study ................................................................................................................ 2

1.2 Technical Study ............................................................................................................ 2

1.3 Economic Study ........................................................................................................... 3

2 Project Contents 4

2.1

Market Study ................................................................................................................ 4

2.2 Technical Study ............................................................................................................ 6

2.3 Economic Study ........................................................................................................... 7

3

Recommendations 9

3.1 Common Mistakes ........................................................................................................ 9

3.2 Information Sources ................................................................................................... 10

3.3

Time Scheduling ......................................................................................................... 10

4 Formal Aspects 11

4.1 Redaction ................................................................................................................... 11

4.2

Figures and Tables ...................................................................................................... 11

4.3 References .................................................................................................................. 12

Appendix A: Template Table of Content 13

Bibliography 17


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LIST OF FIGURES IV

List of Figures

Figure 1-1 Project Stages ......................................................................................................................................................................... 2

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LIST OF TABLES V

List of Tables

Table 1-1 Project Characteristics ............................................................................................................................................................ 1

Table 2-1 Market Study Contents ........................................................................................................................................................... 4

Table 2-2 Technical Study Contents ...................................................................................................................................................... 6

Table 2-3 Economic Study Contents ..................................................................................................................................................... 8

Table 3-1 Common Mistakes ................................................................................................................................................................... 9

Table 3-2 Information Sources ............................................................................................................................................................ 10


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LIST OF SYMBOLS VI

List of symbols

Abbrevations

DIA Declaración de Impacto Ambiental

EIA Estudio de Impacto Ambiental

IRR Internal Rate of Return

NPV Net Present Value

SWOT Strenghts Weaknesses Opportunities Threats


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PROJECT DEFINITIONS 1

1 Project Definitions

In order to facilitate the completion of the prefeasibility studies, the following report is developed.

First of all, it defines the concept of Project.

Project: “It’s a temporary group activity designed to produce a unique product, service or result. A

project is temporary in that it has a defined beginning and end in time, and therefore defined scope

and resources. And a project is unique in that it is not a routine operation, but a specific set of

operations designed to accomplish a singular goal. So a project team often includes people who don’t

usually work together – sometimes from different organizations and across multiple geographies.”

(Project Management Institute, 2012)

“A project is a non-routine, non-repetitive one-off undertaking, normally with discrete time, financial

and technical performance goals.” (Harrison & Lock, 2004)

Taking this into account, Table 1-1 summarizes the main characteristics of a Project.

Table 1-1 Project Characteristics

Characteristic Definition

Uniqueness and novelty of task Projects are different from ordinary work. Theyare intended to change things and to promote

innovation.Specific time frame Projects have a timeframe with a beginning andan end

Complexity Projects have to be planned. Projects requireevaluation – the criteria for evaluation need to

be established from the beginning.

Interdisciplinary cooperation Projects involve people.

Limited set of resources Projects use resources and need a budget.

Uncertainty Projects have an outcome, which is notnecessarily known at the beginning


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Furthermore, a project has different progress stages. Figure 1-1 shows the main stages of a project.

Focussing in the scope of this course, the students must work in the fist stage of the project

(Project Definition). Particularly, defining project boundaries and analyzing the project’s context and

background. Besides, it must elaborate a first definition of problems, goals, tasks, responsibilities and

risks, as well as a first project cost estimation. To accomplish this objective, it utilizes a methodology

based on three studies: Market, Technical and Economical (Prefeasibility Studies). The next sections

detail the most important aims of the prefeasibility studies.

1.1

Market Study

The market study must stablish a global and target market, expressed in product volume and

specifications. All the collected information should support the main results of the market study.

Therefore, as part of the market study is required market data, market projection, product

specifications and strategic analysis, such as Porter Five Forces or SWOT matrix (FODA in

Spanish). A complete review of the contents is presented in section 2.

1.2

Technical Study

The main target of the technical study is the complete specification of the process to allow a first

estimation of the project cost.

Taking into account the market study, it has the target market or possible market share of the

project. These values address the development of the required process, since it follows the required

raw materials, services and installations. As was mentioned before, a clear specification of these

parameters allows a first estimation of the project cost.

ProjectDefinition

Project PlanningProject Executionand Controlling

ProjectCompletion

Figure 1-1 Project Stages


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1.3

Economic Study

The main purpose of the economic study is to give an investment recommendation. In view of that,

is required an evaluation via profitability indicators as means to establish an investment decision,

considering an analysis of the surroundings, environmental aspects among others.

This study requires the results of the technical study and market study, since they provide the

information to consider in the investment and operational costs.


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PROJECT CONTENTS 4

2 Project Contents

This Chapter shows the most relevant aspects related to the project contents of the feasibility

studies. These are presented as a recommendation to include in the feasibility studies. It appeals to

the students to take their own decisions about the appropriate topics, which must include their

projects. It must remember that the lack of information would weaken the support of the results.

2.1 Market Study

The market study contents answer the questions related to the relevant aspects of the market. For

example: How is the trend of the demand in the last year, how is responding the offer to the

consumption, which are the product price and demand forecast. The correct fulfillment of themarket study allows estimating a market target. Table 2-1 shows the table of contents of the market

study.

Table 2-1 Market Study Contents

Section Item Sub item

1 Technology of theProduction

PropertiesProduction Methods

Raw Material Suppliers2 Production Quality of the Product

Production TrendCurrent Situation of Main Producers

3 Exports andImports

Exports and Imports Volume in TargetMarket

Main Exports and Import Flows ofProduct Suppliers

Product Suppliers Export and Import,Characteristic

4 Product Pricing International PriceDynamic on the Export Import Prices

5 Consumption Supply and Demand EquilibriumMain Uses

Consumption Trend or PatternsMain Corporate Consumers

6 Forecast Production, Consumption and PriceForecast

7 Strategic Analysis SWOT MatrixFiver Porter Forces Analysis


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PROJECT CONTENTS 5

The first section, about the technology of the production is based in one main aspect, the

identification of the product through its properties. Once the product is described, it is possible to

identify the process or productions methods. Now, the process needs the appropriate raw material

and therefore is important to collect the related information. This logic, it ensures coherence and

cohesion along the whole project and benefit the fluency of the text. This idea will be explained with

more detail in section 4.

Furthermore, in section 2 it is required a concrete and technical definition of the product. For

example, the maximum percent of one component or the minimum percentage requested to sell the

product in the market. Then after, it must illustrate the production along the last years. The analysis

of the trend of the figure is the most important part, since it informs to the investor a rough

estimation of the prospective target production.

Section three; it collects the topics about the behavior of the product trade. The relevance of this

topic is the definition of the worldwide target markets, for example, emergent countries, specific

countries or continents.

Such as section 2, for the product pricing and consumption, the essential part is the analysis of the

trends. Hence, an appropriate way of the information presentation aids the reading. It suggest bar or

distribution plots.

For the forecast, it has two possibilities. The first of all is the presentation of projections by other

authors or companies. If there is no information, the forecasts may be elaborated by means of

moving average or linear regression.

The strategic analysis is opportunity to diagnose the market of the project. Completing the previous

points, it has relevant information to develop a useful SWOT matrix or Porter’s five force analysis.

Finally, the executive overview must summarize the information. In order to capture the attention of

the investor, the results, sentences and paragraphs must be precise, concise and important.

Therefore, from every section, it should get useful conclusions to show in the executive summary.


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PROJECT CONTENTS 6

2.2

Technical Study

First of all, the technical study uses the information of the market study. The reconnection with the

market study allows defining the target production, location of the project, lifetime of the project,

and process election. Taking this into account, it proceeds to develop the technical study.

Table 2-2 Technical Study Contents


1 ProcessDescription

Technical BackgroundGeneral Description

Process Flow Diagram

2 Balances Mass BalanceEnergy BalanceService Specifications

3 Process Equipment List of Equipment and SpecificationsMain Equipment Design

Secondary Equipment Specifications4 Environmental

AspectsEmissions

Industrial Liquid WasteSolid Waste

5 Project Location LocationLayout

Logistic of Raw Materials, Services andProduct6 Applicable

RegulationsGeneral Regulations

Environmental Regulation7 Appendix Mass Balance

Design AlgorithmOthers

As the titles shows, the contents of every section are fairly clear. Nevertheless, it comments some

topics. In the process description, it is quite relevant to develop an understandable process flowdiagram. Then, in order to explain clearly the process, the numeration of the equipment and streams

is mandatory.

The presentation of the balances summarizes the requirement of raw materials and services.

However, the way to show the results is fundamental to keep the attention of the readers. It suggests


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PROJECT CONTENTS 7

firstly a schematic process diagram with the inlets and outlets streams. In case of many stages, then it

adds these ones to the diagram. A common way to present the balances is the use of tables per

process stage. As was mentioned before, with the balances, it can concludes, which are the main raw

materials and services. No calculations or equations should be included on the project, since these

are part of the appendixes.

The energy balance provides the requirement of steams, thermal and electrical energy. Taking into

account the energy and mass balance, it can specify the flux of services streams and their properties.

Once the process has been defined, it enumerates the process equipment. The description of the

equipment must inform important characteristics such as, dimensions, material, substances to handle

and quantity. A positive equipment list allows a well cost estimation and therefore less error rate in

the economic study. As part of the course requirement, it demands to the students the design of the

main equipment of the project. In this section, the basic information to design must be specified,

then after, the results of the design are presented on the appropriate datasheet. The algorithm of

design is not part of the project body, thus it is on the appendix included.

Section 4 collects all the information related to environmental aspects. Therefore, it makes explicit

the possible emissions, industrial liquid or solid waste.

The location of project is crucial to address further points, such as the logistic and the layout, since

the place has to fulfill the space requirements and facilitate the logistic.

The regulations are included in the last part. It is important to recognize the particular laws

applicable to the project. It has special relevance the application of DIA or EIA to the project.

Finally, the executive summary condenses the information, such as yearly production, general

process description, services and raw material consumption and applicable regulations.

2.3 Economic Study

The economic study is subdivided in three main chapters. Table 2-3 exhibits the contents of this

study. The first one deals with the bases of the economic evaluation. Henceforth, information related

to the market is mandatory, such as the market background, price, production and raw material cost

projections. Furthermore, it presents the investment cost with the depreciation of the fixed actives.

The last point of the first chapter is the distribution of the costs; variable and fixed costs.


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PROJECT CONTENTS 8

The financial background refers to the applicable taxes, discount rate and financing alternatives.

Table 2-3 Economic Study Contents


1 EconomicEvaluationFramework

Market BackgroundProjectionsCurrency

Financial BackgroundLife Expectancy of the Project

List of InvestmentDevaluation Criteria

Cost Details2 Economic

EvaluationProject Evaluation Criterial

Cash Flow

Evaluation of Profitability IndicatorsEvaluation of Economic CriteriaSensitivity Analysis

Results3 Investment

Recommendation

The economic evaluation (Section 2) considers the criterial and project costs of the first chapter to

elaborate the cash flow, whose results allow the comparison of the different financing alternativesthrough the profitability indicators. These indicators are the Net Present Value (NPV), the Internal

Rate of Return (IRR) and the Payback.

Additionally, it can elaborate a sensitivity analysis with the most important variables of the project.

For example, how it is the profitability of the project affected by the investment costs, price or costs

variations.

The results of section two and three are presented on the executive summary.


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RECOMMENDATIONS 9

3 Recommendations

The purpose of this handbook is to facilitate the personal work of the students along the course.

Therefore, all the content of this document are merely suggestions. On the next, it shows commonmistakes in the elaboration of the project by the students. Besides, it gives some information sources

and time scheduling tips.

3.1 Common Mistakes

The review of the student projects has shown the existence of common mistakes. In order to avoid

them and to improve the quality of the student works, these mistakes have been enumerated in the

table.

Table 3-1 Common Mistakes

Mistake Brief Description

Information Inconsistency The information presented in one section differs inother one.

No references source It is not quoted the sources of the information.Duplicated Information It shows the same information in tables, figures, or in

further sections. It is better to recite the information.Incomplete Process Flow

Diagram There is no stream numbers and equipment numbers. The mass balance is not presented on the process flow

diagram.Inadequate Mass Balance

PresentationOne common mistake is the presentation of the massbalances through a set of equations, which disfavorthe fluency of the text. It suggests box diagrams and

use of tables.Lack of Information Analysis The information is presented without comments,

conclusions. If any figure or table is presented, itrequires commenting the most relevant information.

Misuse of significant figures(cifras significativas)

Excess of significant figures. They do not help in thedocument understanding, thus it is unnecessary.

Incomplete or excess of

Information on the listequipment section

The list of equipment must show only the design

parameters, which allow the cost estimation and abetter process understanding.No Project Cohesion The topics are presented as single units, without

cohesion between the different parts.


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RECOMMENDATIONS 10

3.2

Information Sources

In order to help the data gathering, Table 3-2 summarizes some information sources.

Table 3-2 Information Sources

Item Sources

Prices Sunsirs Commodity Data Group, Index Mundi, Alibaba, Chemical Marketing Reporter

Energy Ministerio de Energía, Comisión Nacional deEnergía, Sistema Interconectado Central

Oil and Oil Derivatives ENAP, Henry Hub PriceMining COCHILCO, SERNAGEOMIN

Industries Yearly and Sustentability Reports Wine Wine Institute, Vinos de Chile

Pulp Arauco, CmpcSalmon Salmon Chile Water Dirección General de Aguas, Ministerio de Obras

Públicas, Superintendencia de Servicios SanitariosChilean Importation/Exportation Checkpoint

Process and Projects Handbooks Example: Acid Sulfuric Handbook,Lithium Handbook, Theses, Bibliotheca USM,Servicio de Evaluación de Impacto Ambiental

Chemical Plant Design and CostEstimation

Peters Timmerhaus Plant and Design andEconomics for Chemical Engineers, Online Cost

Estimator Tool Equipment Costs, Plant Desing and

Economics for Chemical Engineers, MatcheDepreciation Servicio de Impuestos InternosFinancing Alternativs Banco Chile, Banco Central, Bonos de Empresa

Others INE, ODEPA, FAO, EPA

3.3

Time Scheduling

It recommends to the students to elaborate a Gantt chart. Many mistakes of the project are due to

the lack of time and the big workload the days previous to the project delivery.


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FORMAL ASPECTS 11

4 Formal Aspects

Part of evaluation depends on formal aspects, such as redaction, orthography and presentation of the

information. In this section, some advices are detailed.

4.1 Redaction

Two important aspects must be considered in the project redaction. These are the coherence and

cohesion of the contents. Every part has to contribute to the understanding of the project and the

information must be consistent. At the start of every section, it is advised a brief description about it

and some comments related with the previous chapters, since it helps to the reading and

understanding of the project.

4.2

Figures and Tables

The information of the figures must be readable. Furthermore, in case of blurred plots from another

sources, it request the personal elaboration of them.

Besides, the uniformity of the figures and tables, with similar sizes and colors shows professionalism,

thus it is better to add figures and tables with the same format.

The enumeration of the figures and tables is mandatory. Every table or figure must be mentioned onthe text.

To paste Figures from another MS Office programs, such as Excel or Visio, it recommends:

1. Select the Figure

2. Select the tab “Inicio”

3. Click on the small arrow below the icon “Pegar”

4. It will appear two options, “Pegado Especial”, “Establecer Pegado Determinado”.

Select “Pegado Especial”

5. Within the options, select “Imagen (metarchivo mejorado)”

This format (“metarchivo mejorado”) keeps the quality of the images, even in case of large zoom.


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FORMAL ASPECTS 12

4.3

References

The information used along the project has to be properly quoted. The style used in this course is

APA sixth edition. This can be made automatically by MS Word. The settings are on the tab“Referencias”, then “Estilo”.


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APPENDIX 14

Technical Study

1 Process Description

1.1 Technical Background

1.2 General Description

1.2.1 Part 1

1.2.2 Part 2

1.3 Process Flow Diagram

2 Balances

2.1 Mass Balance

2.2 Energy Balance

2.3 Service Specifications3 Process Equipment

3.1 List of Equipment and Specifications

3.2 Main Equipment Design

3.3 Secondary Equipment Specifications

4 Environmental Aspects

4.1 Emissions

4.2 Industrial Liquid Waste

4.3 Solid Waste5 Project Location

5.1 Location

5.2 Layout

5.3 Logistic Raw Materials and Products

5.3.1 Raw Materials

5.3.2 Electrical Energy

5.3.3 Fuel

5.3.4 Water

6 Applicable Regulations

6.1 General Regulations

6.2 Environmental Regulations

Bibliography


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APPENDIX 15

Economic Study

1 Economic Evaluation Framework

1.1 Market Background

1.2 Projections

1.2.1 Production Projection

1.2.2 Price Projection

1.2.3 Costs Projection

1.3 Currency

1.4 Financial Background

1.4.1 Taxes

1.4.2 Financing Alternatives1.4.3 Discount Rate

1.5 Life Expectancy of the Project

1.6 Devaluation Criteria

1.7 List of Investments

1.8 Cost Details

2 Economic Evaluation

2.1 Project Evaluation Criteria

2.2 Cash Flow2.3 Evaluation of Profitability Indicators

2.4 Evaluation of Economic Criteria

2.5 Sensitivity Analysis

2.6 Results

3 Investment Recommendation

Bibliography


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APPENDIX 16

Appendix

Appendix A: Mass Balance Relations

Appendix B: Rotary Dryer Design Algorithm

Appendix C: Other Data

Appendix D: Fixed Actives Depreciation

Appendix E: List of Investment

Appendix F: Cost Estimation

Appendix G: Cost Details

Appendix H: Cash Flow

Without External Funding

External Funding Long Term Credit 100 % of External FundingExternal Funding Short Term Credit 100 % of External Funding

External Funding Long Term Credit 50 % of External Funding

External Funding Short Term Credit 50 % of External Funding


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BIBLIOGRAPHY 17

Bibliography

Harrison, F. L., & Lock, D. (2004). Advanced project management. A structured approach.

Project Management Institute. (2012). What is Project Management. Retrieved from

http://www.pmi.org/About-Us/About-Us-What-is-Project-Management.aspx


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