PROJECT MANAGEMENT CHE 620(Formaldehyde Plant)Prepared by;Mohammad Amirul Assyraf Bin Mohammad Noor2012805802

Nik Nur Shahira Binti Ibrahim2012209148

Ahmad Amir Firdaus Bin Mad Apandi2012865934

Siti Zuhairah Binti Zulkepli2012855924

Nur Syafiqah Binti Fadaly 2012662222

Anis Binti Abd. Gani2012805454

EH 220 6A

Prepared for;Dr. Abdul Hadi Faculty of Chemical Engineering

12 June 2015

1.0INTRODUCTION

2.0MARKET POTENTIAL

3.0PROCESS & TECHNOLOGY

4.0ORGANIZATIONAL STRUCTURE FOR PROJECT MANAGEMENTThe organization structure is effective for defining the role and responsibilty of the project manager and his/her team members during the plant construction. There must be a clear understanding of the reporting relationships of all member of the project team. Every department play their role and responsibility in order to achieve their goal for this project.

Figure 1: Organisational structure.

5.0THE WORK BREAKDOWN STRUCTURE (WBS)WBS is constructed to ensure that any task required is not overlooked, which may cause problems and delay of the project. No.TaskDurationPredecessorResourcesAssigned to

1Organization a) Task outline3 days

-

Planning & schedulingSafety & licensing, Engineering, Construction, Administration

2Designa) Design plant

b) Design safety measurement of plant 3 months

5 days1 (a)

2 (b)Engineering

Safety & licensingConstruction, Financial, Safety & licensingConstruction,

Engineering

3Financial

a) Site purchasingb) Equipment purchasingc) Construction cost

10 days8 weeks5 days

2 (b)2 (b)3 (a), (b)Financial, Engineering, Cost control

Construction, Engineering

4Construction

a) Installationb) Setup

8 months1 month

3 (c)4 (a)Engineering

Engineering, Administration

5Test and runa) Site clearing

b) Inspection for safety measurement

c) Test and run3 days

2 days

3 days4 (b)

4 (b)

5 (a), (b)Site work management

Occupational safety

EngineeringEngineering

Engineering

Licensing management

6Termination a) Final report5 days6 (a)Safety & licensing, Engineering, ConstructionAdministration

Table 1: Work Breakdown Structure (WBS) of the project.

14

6.0SCHEDULING (PERT/ CPM)114114109109309304304301300301298298298278278687868686363303FINNISH

START

Since activity-on-node (AON) network is easier to draw compared to activity-on-arrow (AOA) network, AON network is applied to display the project network.6 (a) 55 (c) 35 (b) 25 (a) 34 (b) 204 (a) 1643 (c) 53 (b) 412 (b) 52 (a) 601(a) 33 (a) 10

Figure 2: Activity-on-node (AON) network of the project.

7.0BUDGETING

7.1The Cost of Equipment

EQUIPMENTUNITPRICE PER UNIT (RM)TOTAL PRICE (RM)

Reactor125,43525,435

Distillation column21,716,4073,432,814

Heat exchanger53,433,50017,167,500

TOTAL MAIN EQUIPMENT COST65,175,34220,625,749

Table 2: Total Cost of Equipments

Price and cost of the main equipment have been evaluated based on Chemical Engineering Plant Cost Index (CEPCI). The total cost of equipment is RM 20,625,749.

7.2Fixed and Total Capital Investment

For total capital investment (TCI):Total Capital Investment = Fixed Capital Investment + Working Capital + Start Up

Specification Cost (RM)

DIRECT COST

1. ONSITE

Purchased Equipment20,625,749

Purchased Equipment Installation10% E2,062,574.9

Instrumentation (installed cost)13% E2,681,347.37

Piping Installed30% E6,187,724.7

Electrical Installation12% E2,475,089.88

Inflation 9.3% E1,918194.657

2. OFFSITE

Building30% E6,187,724.7

Yard Improvement10% E2,062,574.9

Land 4, 500, 000

Service Facilities30% E6,187,724.7

TOTAL DIRECT COST (RM)54,888,704.81

INDIRECT COST

Engineering and Supervisions30% E6,187,724.7

Constructor Expenses10% TDC2,062,574.9

Construction Fee6% TDC1,237,544.94

TOTAL INDIRECT COST (RM)9,487,844.54

Table 3: The Data of Fixed Capital Investment

Total cost (RM) = Total Direct Cost + Total Indirect Cost = RM 54,888,704.81+ RM 9,487,844.54 = RM 64,376,549.35

7.3Contingencies = 8% ( tot)= 0.08 (RM 64,376,549.35)= RM 5,150,123.95

7.4Fixed Capital Investment

() = () + ()= RM 64,376,549.35+ RM 5,150,123.95= RM 69,526,673.3

7.5Working Capital and Startup Expenses

SpecificationCost (RM)

Working Capital10% FCI6 952 667.33

Startup Expenses8% FCI5 562 133.86

Table : The Cost of Working Capital & Startup ExpensesTherefore,() = ( ) + +

= RM 69,526,673.3+ RM 6 952 667.33+ RM 5 562 133.86= RM 82 041 474.49Therefore, the total capital investment needed for Formaldehyde Plant is RM 82 041 474.49. The cost was includes all equipment cost, cost of working and startup expenses and also the direct and indirect cost in setting up the plant.

7.6Raw Material Consumption

Raw Material

Price of raw material

MethanolRM1552.27 / tonne

Raw material usage

Methanol2.884tonne/hr

Total cost of raw materialRM36 852 606

4476.75 / hr 24 hr / 1d 7d/1wk 49 wk/1 yr= RM 36,852,606 / yr7.7Total Production of Formaldehyde

Product

Price per product:

FormaldehydeRM 4338.86/tonne

Product Amount

Formaldehyde2.5479tonne /hr

Total Annual Sales for FormaldehydeRM91,004,595.36

7.8Estimation on operating labor

= (6.29 + 31.72 + 0.23)0.5 (1)Where:NOL = number of operator per shiftP = number of processing step involving the handling particulate solids(transportation and distribution, particulate size control, particulate removal)Nnp= number of non-particulate processing step and includes compression,heating and cooling, mixing and reaction.The equation (1) is derived for process with two solid handling steps and not acceptable for greater number of solid handling operation. = (2)The value of NOL is the number of operator required to run the process unit per shift. A single operator works on the average 49 weeks a year, 3 week vacation and sick leave, five 8-hour shifts per week. This amounts to:

=

A chemical plant normally operates 24 hours/day and requires, No. of shift per year = = The number of operators needed to provide this number of shift is:= 5.6 operatorMeans 6 operators are needed for each operation in plant in certain time. This number of operator in only for a labor and not include any support or supervisory staff.

EQUIPMENTNUMBER OF EQUIPMENTNnp

Reactor11

Distillation column2-

Heat exchanger55

TOTAL EQUIPMENT86

Table 3: List equipment for estimation of operating labor requirement

By using equation (1):N0L= (6.29 + 31.72 + 0.23)0.5= (6.29 + 31.7(0)+ 0.23(6)0.5= 2.77Number of labor required per shift: 5.6 2.77 = 15.512 person per shift 16

The total of labor needed for a plant: 16 persons per shifts 5 shift= 80 persons per operatorCost for a labor per year:= RM29.67 7 day= RM207.69 per week= RM207.69 52 weeks/year= RM10800 per yearTotal Labor Cost = RM10800 80 persons per operator = RM864 000 per year

7.9Total Production of Cost Estimation

Costs (RM)

Direct Manufacturing Costs

Patent and Royalties3 % FCI2 085 800.199

Maintenance and Repair10 % FCI6 952 667.33

Operating Labor Cost864 000

Operating Supplies10 % Operating Labor86 400

Direct Supervision & Clerical Labor25 % Operating Labor216 000

Laboratory Charges15 % Operating Labor129 600

Plant Overhead40 % Operating Labor345 600

Raw MaterialRM36 852 606

Total Direct Manufacturing Costs (RM)47 532 673.53

Indirect Manufacturing Costs

Insurances1 % FCI695 266.733

Total Indirect Manufacturing Costs (RM)695 266.733

Total Manufacturing Expenses = RM 48 227 940.26

General Expenses

Distribution & Selling Expenses15 % FCI10 429 001

Administration 10 % Operating Labor10% Direct Supervision10 % Maintenance86 40021 600695 266.733

Research & Development5 % FCI3 476 333.665

Total General Expenses = RM 14 708 601.4

Table 4: The Production of 85000 tonne of Acrylic Acid

Total Production CostsTotal production cost= Total Manufacturing Expenses + Total General Expenses = RM 48 227 940.26+ RM 14 708 601.4= RM 62 936 541.66Gross Profit, = , = RM 91,004,595.36 RM 62 936 541.66= RM 28 068 053.7Income Taxes = 20% ()= 0.20 (RM 28 068 053.7)=RM 5 613 610.74Net Annual Profit, = , =RM 28 068 053.7 RM 5 613 610.74= RM 22 454 442.96

Based on the overall evaluation, it can be concluded that this plant is indeed economically feasible and thus contributes a promising return to satisfy investments. So that, this plant of production of formaldehyde has a bright potential since the demands of the production as mention under needs and marketing analysis is continuously increasing.8.0TERMINATION

Project termination is one of the most serious decisions a project management team and its control board have to take. It can be carried out by using a brief checklists.Project Termination Checklist

#

Item

Results / Reference to Contract / Remarks

1Final presentation of the project results---

2Follow procedure for the final acceptance of project resultsFinal acceptance of all project results

3Handover of project results to the customer and/or user---

4Official celebration with all stakeholders---

5Complete and close all project controlling toolsAll controlling tools complete and closed

6Complete and close all reports or documentsAll reports and documents complete and closed

7Generate final project reports for the customerFinal project reports for the customer

8Close the contractContract closed, including all necessary signatures

9Issue final invoice and follow up on paymentPayment received

10Generate final project reports for other stakeholdersFinal project reports for other stakeholders

11Generate final project reports for our own organizationFinal project reports for our own organization

12Complete and close project management handbookProject management handbook complete and closed

13Lessons learned workshopFinal risk assessment;problems and solutions;changes;claims and their settlement

14Handover to the team that takes care of the warranty period or further customer supportHandover accepted

15Support all team members to find new assignmentsAll team members have new assignments

16Feedback of the customer (executive level)---

17Feedback of the customer (end user level)---

18Feedback of control board---

19Feedback of team members---

20Feedback of other stakeholders---

21Close all project accountsProject accounts closed

22Carry out the final project calculationFinal project calculation complete

23Have a party with your team---

24Release resources---