18 Plant Design and Cost Russell roane 1.0 INTRODUCTION TO THE CAPITAL PROJECT LIFE CYCLE Capital cost projects begin when a need is defined that cannot be satisfied in existing facilities. Thus begins the life cycle of a capital project (Fig. 1). Once started, the project will progress through all of the following phases or be canceled. It all starts with the recognition of a need that will require capital plant. In the conceptual phase of the project, multiple approaches will be evaluated and one or more plans will be evaluated fo meeting these needs. The conceptual plan, if a process plant, will be defined in plant configuration drawings and process flow diagrams; if an architec tural project, by plant configuration and programming documentation. If it is a process plant, then a process flow scheme must be generated and a configuration for the facility conceived including any support requirements that must be included for the operationto function. If an architectural project, then all the spaces must be defined and the programming completed to a stage that assures that all required building functions are provided. Most times this phase is concluded with an order of magnitude estimate that is used to assess the economic viability of the project 759
18 Plant Design and Cost Russell T. Roane 1.0 INTRODUCTION TO THE CAPITAL PROJECT LIFE CYCLE Capital cost projects begin when a need is defined that cannot be satisfied in existing facilities. Thus begins the life cycle of a capital project (Fig. 1). Once started, the project will progress through all of the following phases or be canceled. It all starts with the recognition of a need that will require capital plant. In the conceptual phase of the project, multiple approaches will be evaluated and one or more plans will be evaluated for meeting these needs. The conceptual plan, if a process plant, will be defined in plant configuration drawings and process flow diagrams; if an architectural project, by plant configuration and programming documentation. If it is a process plant, then a process flow scheme must be generated and a configuration for the facility conceived including any support requirements that must be included for the operation to function. Ifan architectural project, then all the spaces must be defined and the programming completed to a stage that assures that all required building functions are provided. Most times this phase is concluded with an order of magnitude estimate that is used to assess the economic viability of the project. 759
760 Fermentation and Biochemical Engineering Handbook CAPITAL PROJECT LIFE CYCLE CONCEPTUAL DESIGN PRELIMINARY DESIGN DETAILED DESIGN CONSTRUCTION START-UP FULL OPERATION Figure 1. The life cycle of a capital project The second phase is normally called preliminary en objective is normally two fold: sufficient engineering to achieve overall definition of scope for the project and establish a firm budget for completion of the project. The estimate prepared at this point is normally called the authorization estimate. with this information the decision is made on whether the project is to be completed. To get to this point usually takes between 15 and 30%ofthe total design cost. Some will call this the definition phase of the project Next is the main design phase of the project, normally called detailed completed and the procurement for the project begins. The equipmellfpo engineering During this phase of the project, the design of the facility specified and purchased. All required design documentation is prepared and assembled into bid packages preparatory to construction. Somewhere during detailed engineering, the authorization estimate may be updated to become what some call the control estimate or, in an effort to more tightly control cost, this may be managed by continual tracking ofthe authorization estimate The project is then taken to the field. This is the construction phase of the project. This phase of the project can be managed with several types of organizations. In construction management form, the engineer, architect, or owner, puts together a construction management team. The work to be executed is then specified in subcontracts. Each subcontract contains the work centered around one craft or construction trade. The construction management team is then responsible for seeing that the work is completed ontime, as specified (of acceptable quality), and that field costs are controlled
760 Fermentation and Biochemical Engineering Handbook CAPITAL PROJECT LIFE CYCLE CONCEPTUAL DESIGN PRELIMINARY DESIGN DETAILED DESIGN CONSTRUCTION FULL OPERATION START-UP Figure 1. The life cycle of a capital project. The second phase is normally calledpreliminary engineering and its objective is normally two fold: sufficient engineering to achieve overall definition of scope for the project and establish a firm budget for completion of the project. The estimate prepared at this point is normally called the authorization estimate. With this information, the decision is made on whether the project is to be completed. To get to this point usually takes between 15 and 30% ofthe total design cost. Some will call this the definition phase of the project. Next is the main design phase of the project, normally called detailed engineering. During this phase of the project, the design of the facility is completed and the procurement for the project begins. The equipment is specified and purchased. All required design documentation is prepared and assembled into bid packages preparatory to construction. Somewhere during detailed engineering, the authorization estimate may be updated to become what some call the control estimate or, in an effort to more tightly control cost, this may bemanaged by continual tracking ofthe authorization estimate. The project is then taken to thefield. This is the construction phase of the project. This phase of the project can be managed with several types of organizations. In construction management form, the engineer, architect, or owner, puts together a construction management team. The work to be executed is then specified in subcontracts. Each subcontract contains the work centered around one craft or construction trade. The construction management team is then responsible for seeing that the work is completed on time, as specified (of acceptable quality), and that field costs are controlled
Plant Design and Cost 761 to budget. In direct hire form, the construction management team is expanded to allow direct supervision of the craft workmen on the project and the responsibility for performance of the subcontracts is not delegated. As the name implies, the craft workmen are directly hired. In the third form, general contracting, a multicrafted or key contractor is hired and he then becomes the responsible party for execution of the work. He will perform the project utilizing his own employees and subcontracting the craft work not common to his work force. In this form, quality oversight must be accounted for and performed. Construction's normal objective is what is termed mechanical completion. Mechanical completion is normally defined as a plant that is fully assembled and has been checked for operability, but has not been performance tested. An agreed level of clean out is part of mechanical completion. The project is ready for start-up, not operation a transition phase betwe dedication to full operation. It includes performance testing, final clean out, trial production phase, and the first full scale operations. Water batching is a common means of achieving both clean out and testing. Where water batching is not appropriate, solvent testing may be used, or selected as a second step, to achieve dry out and testing. The objective of either is to test the plant and prepare it for trial operation. Trial operation will be planned to risk a minimum amount of materials to performance-test the operation. It can take many forms, i.e, reduced operation through low flows, smaller batches, or utilization of substitute materials. The start-up phase is best shared between the designers, the constructors, and the plant operators. The designers contribute how the plant was designed to operate, the constructor do the required mechanical work, removing and replacing items of temporary installation, assisting with commissioning of specialty equipment, mechani cal adjustments, and other corrections that appear as the start-up progresses and the operating people learn how to operate their plant. Start-ups are best managed by the operations people with assistance by support groups. It is important to consider the people as well as the equipment in planning the start-up Overstaffing can lead to methods of operation that are expeditious, but not sustainable for the plant to be profitable. The plant staffis best supported by staff that plans to leave the project. When the plant proves itself capable of full operation by unaugmented staff, it can be declared out of start-up and dedicated to plant operations These are the phases that a capital project passes through from nception to dedication. Overlapping of the phases and compression of chedule is commonly achieved through an approach called fast tracking. It
Plant Design and Cost 761 to budget. In direct hire form, the construction management team is expanded to allow direct supervision ofthe craft workmen on the project and the responsibility for performance ofthe subcontracts is not delegated. As the name implies, the craft workmen are directly hired. In the third form, general contracting, amulticrafted or key contractor is hired and he then becomes the responsible party for execution of the work. He will perform the project utilizing his own employees and subcontracting the craft work not common to his work force. In this form, quality oversight must be accounted for and performed. Construction’s normal objective is what is termed mechanical completion. Mechanical completion is normally defined as a plant that is fully assembled and has been checked for operability, but has not been performance tested. An agreed level of clean out is part of mechanical completion. The project is ready for start-up, not operation. Start-up is a transition phase between mechanical completion and dedication to full operation. It includes performance testing, final clean out, trial production phase, and the first full scale operations. Water batching is a common means of achieving both clean out and testing. Where water batching is not appropriate, solvent testing may be used, or selected as a second step, to achieve dry out and testing. The objective of either is to test the plant and prepare it for trial operation. Trial operation will be planned to risk a minimum amount of materials to performance-test the operation. It can take many forms, Le., reduced operation through low flows, smaller batches, or utilization of substitute materials. The start-up phase is best shared between the designers, the constructors, and the plant operators. The designers contribute how the plant was designed to operate, the constructors do the required mechanical work, removing and replacing items of temporary installation, assisting with commissioning of specialty equipment, mechanical adjustments, and other corrections that appear as the start-up progresses, and the operating people learn how to operate their plant. Start-ups are best managed by the operations people with assistance by the other support groups. It is important to consider the people as well as the equipment in planning the start-up. Overstaffing can lead to methods ofoperation that are expeditious, but not sustainable for the plant to be profitable. The plant staff is best supported by staff that plans to leave the project. When the plant proves itself capable of full operation by unaugmented staff, it can be declared out of start-up and dedicated to plant operations. These are the phases that a capital project passes through from inception to dedication. Overlapping of the phases and compression of schedule is commonly achieved through an approach calledfast trachng. It
62 Fermentation and Biochemical Engineering Handbook comes to the fore any time where the benefits of early completion outweigh the added costs. Some will argue that there is no added cost since fixed costs duced to offset the limited inefficiency of redo required. What can be upon is that there is an optimum balance for each project, and time finding it will help to assure that the project will be a success 20 CONCEPTUAL PHASE The conceptual phase of a project starts before there is a project. This phase of the project is where a plan for satisfying a need will be conceived (Fig. 2). Definition of the need will start the process. a method of satisfying the need will be the result. The need may be for increased capacity, new product, elimination of bottlenecks in existing facilities, modernization, meeting new regulations, energy efficiency, and waste minimization, to name CONCEPTUAL PHASE A NEED MUST BE FILLED THE FIRST SOLUTION Figure 2. The conceptual phase One good approach at this time is to prepare multiple hope to find an optimum solution. Realize that this is the phase where the optimum solution can be found most economically, beyond this phase the solution chosen can be optimized, but to change the chosen solution will require returm and restart at this phase with a large portion of the work of later phases discarded The most important element at this phase of the project is that the project team shall have a varied experience base, i. e,, creating plans to satisfy needs is easily facilitated. Success comes with a team strong in three ways (i) experience in the industry, (i)experience in the various skills required for the project, and(iii) experience in this creative period of a project
762 Fermentation and Biochemical Engineering Handbook comes to the fore any time where the benefits of early completion outweigh the added costs. Some will argue that there is no added cost since fixed costs are reduced to offset the limited inefficiency of redo required. What can be agreed upon is that there is an optimum balance for each project, and time spent finding it will help to assure that the project will be a success. 2.0 CONCEPTUAL PHASE The conceptualphase of a project starts before there is a project. This phase of the project is where a plan for satisfying a need will be conceived (Fig. 2). Definition of the need will start the process. A method of satisfying the need will be the result. The need may be for increased capacity, new product, elimination of bottlenecks in existing facilities, modernization, meeting new regulations, energy efficiency, and waste minimization, to name a few. CONCEPTUAL PHASE A NEED MUST BE FILLED THE FIRST SOLUTION Figure 2. The conceptual phase. One good approach at this time is to prepare multiple solutions and hope to find an optimum solution. Realize that this is the phase where the optimum solution can be found most economically, beyond this phase the solution chosen can be optimized, but to change the chosen solution will require return and restart at this phase with a large portion ofthe work of later phases discarded. The most important element at this phase of the project is that the project team shall have a varied experience base, Le., creating plans to satisfy needs is easily facilitated. Success comes with a team strong in three ways. (i) experience in the industry, (ii) experience in the various skills required for the project, and (iii) experience in this creative period of a project
Plant Design and Cost 763 This phase of a project is best guided by the statement of the need Example: The sales projections for our product exceed our production capacity starting the middle of next year Start with the statement and collect ideas for solutions. Next, evaluate the solutions and select the ones with the most favorable features for further evaluation. As part of the evaluation procedure, determine the"must have features and the"would like to have features The final selections should have all the musts and as many of the high ranked wants as can be accommodated. Some of the ideas will be found unsuitable as their development begins Take the three or five best ideas and develop them with the objective of finding out their space requirements and their equipment requirements Develop them sufficiently to produce a first order cost comparison. In this phase of the project, the objective is to do sufficient development so that two things areestablished: (i) which solution you haveuncovered best satisfies the need at a justifiable cost, and (ii) what is the first order estimate of that cost Warning: The most overlooked items are not core to the process, but required as support for the project, i.e., facilities to produce utilities at the capacity required; sufficient laboratory, warehouse, waste disposal, or in- proce Each solution must be given an overall evaluation for hazards that impact safety and potential monetary loss. This need not be an itemized comprehensive review but it should encompass hazards to the employees and the environment, loss due to fire, or unplanned equipment failure, and most important, release of hazardous raw material, intermediate, or product This phase of the project is complete when a cost-effective means of fulfilling the defined need has been identified and estimated. Cost estimates at this stage in the project are not very accurate; plus or minus 50% is the norm. It is the basis for the decision whether to go ahead with additional effort to firm up the project 's budget. Many projects are underfunded and not viewed as a success if the estimate produced at this stage is used to fund the pro 3.0 PRELIMINARY DESIGN PHASE The preliminary design phase is where sufficient work is done to estimate the cost of the project to an accuracy that is consistent with the sponsoring organizations requirements for funding of a project. Estimating accuracy will be related to the percentage of total design cost spent stimating accuracy is usually in the range of 15%to +30%. A frequently
Plant Design and Cost 763 This phase of a project is best guided by the statement of the need. Example: “The sales projections for our product exceed our production capacity starting the middle of next year”. Start with the statement and collect ideas for solutions. Next, evaluate the solutions and select the ones with the most favorable features for further evaluation. As part of the evaluation procedure, determine the “must have” features and the “would like” to have features. The final selections should have all the musts and as many of the high ranked wants as can be accommodated. Some of the ideas will be found unsuitable as their development begins. Take the three or five best ideas and develop them with the objective of finding out their space requirements and their equipment requirements. Develop them sufficiently to produce a first order cost comparison. In this phase of the project, the objective is to do sufficient development so that two things are established: (i) which solution you have uncovered best satisfies the need at a justifiable cost, and (ii) what is the first order estimate ofthat cost. Warning: The most overlooked items are not core to the process, but are required as support for the project, i.e., facilities to produce utilities at the capacity required; sufficient laboratory, warehouse, waste disposal, or inprocess storage. Each solution must be given an overall evaluation for hazards that impact safety and potential monetary loss. This need not be an itemized, comprehensive review but it should encompass hazards to the employees and the environment, loss due to fire, or unplanned equipment failure, and most important, release of hazardous raw material, intermediate, or product. This phase of the project is complete when a cost-effective means of fulfilling the deked need has been identified and estimated. Cost estimates at this stage in the project are not very accurate; plus or minus 50% is the norm. It is the basis for the decision whether to go ahead with additional effort to firm up the project’s budget. Many projects are underfimded and not viewed as a success if the estimate produced at this stage is used to fund the project. 3.0 PRELIMINARY DESIGN PHASE The preliminary design phase is where sufficient work is done to estimate the cost of the project to an accuracy that is consistent with the sponsoring organization’s requirements for funding of a project. Estimating accuracy will be related to the percentage of total design cost spent. Estimating accuracy is usually in the range of 2 15% to +30%. A frequently