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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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PROJECT DEFINITIONS 2
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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PROJECT DEFINITIONS 3
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
Section Item Sub item
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
Section Item Sub item
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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