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Process and general plant design 

# Plant design (3)
# Process engineering
# Process design
# Information in a flow diagram (2)

# Plant design
- all engineering aspects involved in the development of a new / modified / expanded commercial process in a chemical plant performed by a chemical engineer 
- e.g. developing plant layout, economic evaluation of new processes 
- sometimes reduced to items directly related to complete a plant (e.g. plant layout...) 

# Process engineering
economic evaluation and economic analyses of commercial processes 

# Process design
Design of equipment and facility 

Information in a flow diagram
- flow diagram: Implementing the basic operation
- type and name of machinery, flow path & direction & quantity of energy / input / output / main material, characteristic operation conditions
- Piping & Instrumentation: technical details for implementation of the equipment building up & process 
- type and name of machinery / instrument / apparature / pipes / reserve / drive, isolation, task setting of measuring & control technique

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Process and general plant design 

# Typical design steps for chemical processes  (14)

# Typical design steps for chemical processes​
1. Idea: Identification of societal / engineering need via market analysis.
2. Investigation Research: Find solutions to meet the need (patent, literatur...)
3. Process research: Preliminary pcoess synthesis (EHS concerns, operating conditions)
Following Development phase: 

4. Assess the profitability of preliminary process
5. Refine required design data (key unknowns in the process, ...)
6. Prepare detail engineering design (flow chart, size equipment, costs, integrate and optimize process, process controllability,...)
7. Check again the economic viability
8. Check again EHS concerns of the process
9. Create written process design report for management decision
10. Final design: Complete final Engineering Design (equipment layout & specification, P&I diagram, ask for offer for equipment)
11. Final design: Procurement plant / equipment
12. Realisation: Construction
13. Realisation: Start up
14. Realisation: Initiate Production 

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Process and general plant design 

​# Criteria for process route selection (8)
# Need for a pilot Plant (3)
# Concept of BAT (4)

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​# Criteria for process route selection
- efficiency (see picture), yield, costs, stoichiometry, reaction conditions, by-products, sustainability (safety, economic, environmental, occupational health), amount

# Aim for a pilot plant 
- Task: Testing model simulations, reduce the risk (mainly economical risk due to large prcess plants), study new technology (evaluate data for full-size plant)
- Scale up Problems: Reaction kinetics, chemical equilibrium, material properties, thermodynamics, equipment selection
- Note: large size differences in meaning of pilot plant between industry and continious/batch flow 

# Concept of Best Available Techniques
- reference documents to prevent or at lease minimize the emission and the environmental impact.
- considers the most effective and advanced stage in the development of activities and their methods of operation.
- Technique = technology / the way in which the installation is designed/built/maintained/operated etc., available technique considers also economically and technically viable conditions, best means most effective to protect the environment as a whole.
- European technical reference documents (called BREF) for BAT are the requirement for the permission of environmental relevant industrial plants & existing plants.
- BREF is directly linked to chemical industry (e.g. Production of polymeres / large volume organic chemicals /...)

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Process and general plant design 

# Technology Readiness Level (9)
# Timetable of Project Development Activities 
# Development stages in a plant life from the idea to commercial operation 

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# Technology Readiness Level
1. Observe basic principles
2. Formulate technology concept
3. Experimental proof of concept
4. Validate the technology in lab (Give evidence that the concept will work.)
5. Validate technology in relevant environment (industrially relevant environment when key enabling technology) (Give evidence that the concept will work.)
6. Demonstrate technology in relevant environment (industrially relevant environment when key enabling technology) (Show that the concept works)
7. Demonstration the system prototype in operational environment (Show that the concept works)
8. System complete and qualified
9. Actual system proven in operational environment (or in competitive manufacturing)

# How to distinguish 4,5,6,7
- Development phase of technology / components
- Level of integration of subcomponents 

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- Profitability 
- Revenue 
- expense
- net income 
- Return
- Return on Investment 
- Equity Capital 
- Equity Return
- Inpayment / Outpayment
- Cash Flow
- Payback, payback period
- Profit, Loss 
- costs 

Lizenzierung: Keine Angabe

- Profitability: Profitabilität

- Revenue: Ertrag, is an apprectiation of goods & services / are the earnings of the business. 
- Expense: Aufwendung, is an conspumtion of goods & services, they constitute an outflow of assets. 
- net income: Revenue - expense 

- Return: Ertrag

Return on Investment: Kapitalrendite, Gewinn+Fremdkapitalzins/Gesamtkapital
Also consider Interests on borrowed capital if you want to know, how much profit a company did independly of the source of borrowed capital.

- Equity Capital: Eigenkapital 

- Equity return: Eigenkapitalrendite, also return on equity, net income/equity

Inpayment / Outpayment: Einzahlung, Auszahlung 

- Cash Flow
Gegenüberstellung Einzahlung / Auszahlung innerhalb eines bestimmten Zeitraums, wie liquide ist das UN? 

- Payback / payback period: Amortisationszeit, Duration of the expenses for an object that is needed to cover the costs by the resulting income.

​- Profit / Loss: Gewinn / Verlust

- costs: Value of all consumed goods & services per period for the production of the output of the company.

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Investment appraisals / Project Profitaility Assessment
​(How to determine, whether a plant project will be profitable?)

# When do you need assessments? (4)
# Criterias for assessing (4)
# Overall overview static vs. time-adjusted method (3 each) 
# Disadvantages Static Technique vs. Time-adjusted Technique (5 vs.8)

Lizenzierung: Keine Angabe

When do you need assessments?
1. Evaluate advantages of an plant investment
- yes / no decision
- increase of investor's advantage
- economic lifetime
2. Choose between different investment alternatives
- check competing alternatives
- economic lifetime
3. Replace the investment
- economic lifetime
4. Disinvestment
- liquidation is better than further usage

# Criterias for assessing
Environmental (emission, waste), social (health, safety), economic (cost, Capital value, ROI, payback), combination of it. 

# Disadvantages Static Technique vs. Time-adjusted Technique​
Static Technique
- How to determine the representative period?
- Temporal changes of the profit over each year are ignored
- depending on the selection of the representative period, it can cause a loss of precision of planning
- only for small & short term projects
- not every costs / revenues causes an in-or out-payment, this technique considers costs/revenues 

Time-Adjusted Technique
- Basic: Compound/Discount, considers cash in- and outflow (not costs) and therefore depreciation are also considered within the time-adjusted method
- Several simplifications are made
- Assumtion: perfect market where resources can be (re)invested with an uniform interest rate i, but such a market does not exist. 
- difficult to assign a proportionate in-payment or out-payment to a single investment
- Every investment is risky
- Trouble when estimating the costs of the investment 
- Trouble when estimating the costs coming along with an investment.
- Deterministic methods with assumption (predicted financial outcome) that can change.
- No consideration of non-financial / qualitative aspects: Decision for / against investment can not only based on the Investment appraisal methods

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Investment appraisals / Project Profitaility Assessment 

a) Static technique
# Concepts
- Comparative Cost Method (3, 3 problems)
- Profit Comparison Method (2)
-Return-Oriented Methods (3)
-Payback Methods (4)

Comparative Cost Method
- Summation of all costs per investment (all decision relevant costs, also general fix costs caused by others than the investment) and compare them per investment. Choose the invest with the lowest costs
- Critical point Xcrit is the intersection of different investment alternatives. 
- Problem: Only costs and no revenues are part of the consideration, only applicable if the revenues (price*quantity) are identical, hard to assign the revenues to one single unit within a production system). 

Profit Comparison Method
- Calculate the achieveable profit per investment (costs and revenues) and choose the investment with the highest profit.
- Break Even Point (BEP): Intersection of costs & revenue per invest, Output < BEP = loss so don't invest 
- Problem: Does not consider temporal changes of the profit during a period. 

Average Return Method
- two methods: Return on total investment vs. equity return. Choose the invest with the highest ROI / equity return. 
- ROI with interest on borrowed capital to analyse, how much profit is gained independantely from the source of capital.
- Equity return without considering the interest. The focus in on the return of equity capital. 

Payback Method
- calculate the payoff t* of each investment to see, what time is needed until the investment is covered by the net cash flow. Choose the investment with the lowest payoff time. 
- this method also considers the risk tendency of the investor (by planned payoff time)
- Net cash flow (approx.)= profit + deprecation + (imputed) interests. Depreciation and interests are considered while calculating the Profit because they ut did not result in outpayments (they are still available in the company)
- not suitable for uncovering investments with low risk 

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Investment appraisals / Project Profitaility Assessment
​(How to determine, whether a plant project will be profitable?)

b) Time-adjusted methods / discounted cash flow method 
# Concepts 
- Capital / Net Present Value Method (6) (⇔ Profit comparison method)
- Annuity Method (5) (⇔Profit comparision method) 
- Internal Interest Rate of Return Method (5) (⇔ average return method) 
- Time-Adjusted Payback Method (3) (⇔payback method) 

Lizenzierung: Keine Angabe

Capital / Present Value Method
- Calculation the expected net monetary gain of a project by discounting the expected in- and out-payments to the present time. Do the investment, where the net present value is the highest 
- Result: Capital value / present value 
- Capital Value: Difference between the sum of present value of all inpayments - sum of present value of all outpayments. 
- When Net present value > 0 invest, because return > capital costs (or capital value > 0 then return > interest rate)
- PVA: Present value of annuity factor
- In-/Out-payments unknown, then approximation of cash flow: profitt + depreciationst + interestt (which did not lead to an out-payment)
- Problem: Assumtion: perfect market where NET CASH FLOW can be (re)invested with an uniform interest rate i during the whole time of the proejct but such a market does not exist. 

Annuity Method
- Expansion of the result of the net present value method
- Comparison of average yearly in- vs.out-payments. Chose the one with the highest annuity r
- Reason for that method: Variation of in-and outpayments over the time causes different capital values. The annuity transfers the payments into an uniform series from t=1 to n (useful lifetime of the project) 
- Considers, that the early generated net present values are more valuable since they can be repeated over the project period. 
- Annuity: a regular annual cash payment, which consists of interest and repayment.

Internal Interest Rate of Return Method
- also time-adjusted rate of return method / internal rate of return method 
- Calcluate the interest reate at which the capital value is zero and choose the investment with the highest interest rate 
- Determine Interest rate via graphic / simulation with PC / approximation 
- Problem: Assume a perfect market where the NET CASH FLOW can be reinvested with uniform interest rate i. 

Time-adjusted Payback Time Method
- similar to static payback method 
- taking into account (different) cash flows in combination with the different periods 
- Choose the one with the shortest payback time.