Please note that the auxiliary equipment in this table are shown in a separate line in the end, because they are not utilized by specific sections, but are included in the total equipment purchase cost as well as the total direct fixed capital cost.
The following costing and economic evaluation reports can be generated:
● Economic Evaluation Report (EER)
● Cash Flow Analysis Report (CFR)
This report includes an executive summary that contains the key results of economic analysis for a project, a listing of all major capital cost items, process summaries for the major components of the operating costs, and finally a comprehensive table with profitability analysis. To generate this report, select menu Reports } Economic Evaluation (EER).
The EER includes the following sections:
1. Executive Summary
2. Major Equipment Specification and FOB Cost
3. Direct Fixed Capital Cost (DFC) Summary
4. Labor Cost - Process Summary
5. Materials Cost - Process Summary
6. Various Consumables Cost - Process Summary
7. Waste Treatment/Disposal Cost - Process Summary
8. Utilities Cost - Process Summary
9. Anual Operating Cost - Process Summary
10. Profitability Analysis
Any one of the above sections may be excluded from the report, if so desired. The options related to the contents of the report are edited from Report Options Dialog: Economic Evaluation Tab.
Most of the key economic indices are contained in this section (see below). The same amount of information is also presented by the interface on the Executive Summary Dialog: Summary Tab (select View } Executive Summary from the main menu to view the dialog). The key indices included in the executive summary are:
● Total Capital Investment: the total capital cost for the entire process (see Total Capital Investment).
● Capital Investment Charged to This Project: the fraction of total capital investment that is considered in this economic analysis; this may be less than 100% when the process simulated in this file is part of a multi-product facility (see Capital Investment Charged to This Project).
● Operating Cost: the annual operating cost (see Operating Cost).
● Credits: proceeds from streams and/or generated power types denoted as credit; proceeds denoted as ‘credit’ reduce the annual operating cost (see Net Operating Cost below) whereas proceeds denoted as ‘revenues’ increase the total revenues of the project (see Revenues below), see Credits. If the annual credits are zero this entry is omitted from this section.
● Net Operating Cost: the annual operating cost reduced by the amount of annual credits (see Net Annual Operating Cost). If the annual credits are zero this entry is omitted from this section.
● Revenues: the total annual revenues (proceeds from streams and generated power types denoted as revenue) of the project; for more details, see Revenues.
● Cost Basis Annual Rate (aka Unit Reference Rate) the flow basis (total flow or component flow) used to convert the annual operating cost to unit production cost (see below). It is also used to convert other annual cost items from an annual basis to a per-unit-reference basis. The main revenue rate is typically used (if defined, see Main Product/Revenue Rate) but a special rate can also be provided at the Rate Reference Flows Dialog: Unit Reference tab.
● Unit Production/Processing Cost: a per-unit-of-reference operating cost that is calculated by dividing the annual operating cost by the unit reference rate (see Unit Reference Rate (or Flow)); for more details, see Unit Production/Processing Cost.
● Unit Production/Processing Revenue: a per-unit-of-reference revenue term that is calculated by dividing the annual revenues by the unit reference rate (see Unit Reference Rate (or Flow)); for more details, see Revenues.
● Gross Margin: it is a measure of profit that reflects the percentage of annual revenues that become gross profit; for more details, see Profitability Analysis.
● Return On Investment (ROI): a profitability measure for the project that can be used to compare different investment options; for more details, see Profitability Analysis.
● Payback Time: another profitability measure of the project. It represents the time needed for the total capital investment to be recovered by the cumulative net profits; for more details, see Profitability Analysis.
● NPV (at low interest rate): yet one more profitability measure (similar to ROI) used to evaluate the viability of an investment or to compare the profitability of a number of different investments. NPV represents the total value of future net cash flows (spread over the lifetime of a project), at the beginning of the project. All future cash flows are discounted to reflect the time-value of money using the lowest of the two interest rates provided at the Economic Evaluation Parameters Dialog: Time Valuation Tab. For more details see Cash Flow Analysis.
● IRR (After Taxes): represents the interest rate for which the NPV of a project is zero; can be used as a reference rate to compare with interest rates (after risk assessment is included); for more details, see Cash Flow Analysis.
This section presents information related to the calculation of the free-on-board (FOB) cost for all equipment resources of the process. More specifically, it includes the following information for each equipment resource:
● Quantity: the number of equipment units represented by the equipment resource that are operated in parallel.
● Standby: the number of equipment units represented by the equipment resource that correspond to standby units.
● Staggered: the number of equipment units represented by the equipment resource that are operated in staggered mode.
● Description: this includes a short description of the type and size of the equipment resource.
● Unit Cost: this is the FOB cost per equipment unit.
● Cost: this is the FOB cost which is calculated by multiplying the unit cost by the total number of equipment units represented by the equipment resource.
● TOTAL: this is the total FOB cost of all equipment of the process.
For more details on the above variables, see Direct Fixed Capital (DFC).
A detailed cost breakdown of the direct fixed capital (DFC) for the entire process. For information on the cost elements appearing in this table, see Direct Fixed Capital (DFC).
It includes the unit cost, annual amount, and annual cost of all labor types that are engaged in the process; for more details, see Labor-Dependent Cost.
It includes the unit cost, annual amount, and annual cost of all raw materials utilized in the process; for more details, see Materials Cost.
It includes the unit cost, annual amount, and annual cost of all consumables utilized in a process; for more details, see Consumables Cost.
It includes the unit cost, annual amount and annual cost for treatment/disposal of all material exiting the process and designated as waste (see Exiting Material Output Classification); for more details, see Waste Treatment/Disposal Cost.
This section lists the annual amount and cost of all heat transfer agents and power types (collectively referred to as ‘utilities’) involved in the process; for more details, see Utilities Cost.
This section provides a detailed cost breakdown of the annual operating cost (AOC) for the entire process. For information on the cost elements appearing in this table, see Operating Cost.
This section lists the main figures (capital cost, operating cost, revenues/credits and profits) used by the profitability analysis as well as the main profitability indices (return on investment, payback time, etc.), calculated for the project. Note that this section is only available if the revenues of the project are not zero.
● Direct Fixed Capital: he fixed assets of the investment (for the entire process), such as plant and equipment; for more details, see Direct Fixed Capital (DFC).
● Working Capital: funds tied-up as required to be available when operating the process; for more details, see Working Capital.
● Startup Cost: before process becomes operative, any one-time expenditures incurred to prepare the process for operation; for more details, see Startup and Validation Cost.
● Up-Front R&D: cost of research & development (R&D) required before a product is manufactured (in a new plant); for more details, see Up-Front R&D Cost.
● Up-Front Royalties: payments for the use of assets, resources, patents, etc. prior to having the whole process in operation; for more details, see Up-Front Royalties.
● Total Investment: the total capital investment is the sum of the above capital cost elements; for more details, see Total Capital Investment.
● Investment Charged to This Project: the fraction of the total investment (above) that may be charged to this project may be less than 100% in situations where the process is part of a multi-product facility; for more details, see Capital Investment Charged to This Project.
For details on the terms in this section, see Income.
● Revenue/Credit Rates: this part of the table lists the mass flow rates of all streams that are specified as being ‘revenue’ or ‘credit’ streams in a process. A distinction is made between the revenue stream that is specified as the ‘main revenue’ stream through the ‘Stream Classification’ dialog and other revenue streams.
● Selling/Processing Price for Revenue/Credit: this part of the table lists the unit prices (selling price or processing fee) of all streams that are specified as being ‘revenue’ or ‘credit’ streams in a process. A distinction is made between the revenue stream that is specified as the ‘main revenue’ stream through the ‘Stream Classification’ dialog and other revenue streams.
● Revenues/Credits: this part of the table lists the annual revenues (the product of revenue rates and selling prices) for all streams that are specified as being ‘revenue’ or ‘credit’ streams in a process. A distinction is made between the revenue stream that is specified as the ‘main revenue’ stream through the ‘Stream Classification’ dialog and other revenue streams.
● Total Revenues: this corresponds to the total annual revenues of a project.
● Total Credits: this corresponds to the total annual credits of a project.
● Unit Production/Processing Revenue: this is a reference revenue that is calculated by dividing the annual revenues by the selected flow basis (total flow or component flow) of the stream that is specified as the Unit Reference’ stream through the ‘Rate Reference Flows’ dialog. Depending on whether the selected stream is a process input or output stream, the corresponding unit revenue is denoted as ‘processing’ or ‘production’, respectively; for more details, see Revenues.
● Annual Operating Cost (AOC): this is the sum of all operating costs of a plant (represented by the entire process) per year; for more details, see Operating Cost.
● Net AOC: this is calculated by subtracting the total credits from the actual AOC. Note that this is only displayed when the total credits are not zero.
● Unit Production/Processing Cost: this is a reference cost that is calculated by dividing the annual operating cost by the selected flow basis (total flow or component flow) of the stream that is specified as the Unit Reference’ stream through the ‘Rate Reference Flows’ dialog. Depending on whether the selected stream is a process input or output stream, the corresponding unit cost is denoted as ‘processing’ or ‘production’, respectively; for more details, see Unit Production/Processing Cost.
● Net Unit Production/Processing Cost: this is calculated similarly to the unit production/processing cost except that the net AOC is used instead of the actual AOC.
For details on the terms in this section, see Profitability Analysis.
● Gross Profit: this is the annual gross profit calculated by subtracting the AOC from the total revenues.
● Taxes: this is the fraction of annual gross profit that corresponds to the annual income taxes.
● Net Profit: this is the annual net profit calculated by subtracting the annual income taxes from the sum of the annual gross profit and annual depreciable amount; optionally, the latter amount may be excluded from the calculation of the net profit.
● Gross Margin: this is a measure of profit that directly tells you what percentage of the annual revenues is gross profit.
● Return On Investment: this is another profitability measure used to evaluate the viability of an investment or to compare the profitability of a number of different investments.
● Payback Time: this is the time (in years) needed for the total capital investment charged to this project to be exactly balanced by the cumulative annual net profits made over that time.
This report includes loan information and breakdowns of capital outlay, loan payment and cash flow for each year over the expected lifetime of a project. To generate this report, select menu Reports } Cash Flow Analysis (CFR).
The CFR consists of the following sections:
1. Cash Flow Analysis
2. Loan Information
3. Breakdown of Capital Outlay
4. Breakdown of Loan Payment
Any one of the above sections may be excluded from the report, if so desired. The options related to the contents of the report are edited from Report Options Dialog: Cash Flow Analysis Tab.
This section presents a cash flow breakdown for each year that the plant for this process is expected to be in operation (see Cash Flow Analysis). The calculated net present value (NPV) and internal rate of return (IRR) before and after taxes are also included. More specifically, the following economic variables are included:
● Capital Investment: the capital expenses for each year according to the capital outlay of the project. Note that the time schedule used to describe the DFC outlay can span up to five years. The positive capital expenditure in the final year of the project is due to the salvage value of equipment and the recovery of the working capital.
● Debt Finance: it represents the amount of money borrowed each year according to the capital outlay of the project.
● Sales Revenues: the total revenues for each year according to the operating capacity profile of the project.
● Operating Cost: the sum of all operating costs for each year.
● Gross Profit: the difference between sales revenues and operating cost for each year.
● Loan Payments: it is the fraction of total debt owed that is paid back each year.
● Depreciation: it represents the depreciable amount of a project’s assets for each year; it can be estimated either based on the straight-line method, or the declining balance method, or sum-of-the-years-digit method (see Depreciation).
● Taxable Income: the difference between gross profit and loan payments for each year.
● Taxes: a percentage on the gross profit that is taken as income taxes for each year.
● Net Profit: the sum of gross profit and depreciation minus taxes paid for each year. Note that depreciation may optionally be excluded from the calculation of the net profit (see Economic Evaluation Parameters Dialog: Financing Tab).
● Net Cash Flow: the sum of debt finance, net profit and depreciation, minus capital expenses for each year.
● NPV: the net present value (NPV) is a profitability measure used to evaluate the viability of an investment or to compare the profitability of a number of different investments; since it factors in the time-value of money it requires an assumed interest rate; it is calculated for three specified interest rates (low, medium and high).
● Interest %: three estimates of interest rates (low, medium and high) used to calculate the NPV of the project.
● IRR After Taxes: the internal rate of return (IRR) is the interest rate for which the NPV is zero; here, the NPV is calculated based on the net cash flow for each year.
● IRR Before Taxes: the interest rate for which the NPV, calculated based on the net cash flow plus income taxes for each year, is zero.
● Depreciation Method: the method used to estimate the annual depreciable amount of the project’s assets.
This section contains information about the loans taken to finance part of the total capital investment charged to this project. These may include loans for financing the direct fixed capital, working capital, up-front R&D and up-front royalties of a project; for more details on these capital cost items, see Total Capital Investment. The following information is listed for each of the above capital cost elements:
● Amount: the total amount that needs to be spent for the project.
● Equity (%): the percentage of the total amount that comes from equity financing.
● Debt (%): the percentage of the total amount that comes from a loan.
● Interest (%): the interest rate of the corresponding loan.
● Loan Time (yrs): the payment period of the corresponding loan.
For more details on the above variables, see Cash Flow Analysis.
This section presents an analysis of how investment capital is distributed among different types of capital expenses over the years throughout the expected lifetime of a project according to its capital outlay. Capital expenses include the direct fixed capital (DFC), working capital, startup cost, up-front R&D and up-front royalties; for more details on capital expenses, see Total Capital Investment; for more details on capital outlay, see Cash Flow Analysis.
This section presents an analysis of how loan payments are distributed among different loans and years throughout the expected lifetime of a project according to its capital outlay and loan information. The different loans include those financing the direct fixed capital, working capital, up-front R&D and up-front royalties; for more details on these cost items, see Total Capital Investment; for more details on capital outlay and loan payment, see Cash Flow Analysis.
This report presents the various cost components of the total annual operating cost (AOC):
1. Cost of Materials
2. Labor-Dependent Cost
3. Facility-Dependent Cost
4. Cost of Consumables
5. Laboratory, Quality Control (QC), Quality Analysis (QA) Cost
6. Waste Treatment and Disposal Cost
7. Utilities Cost
8. Cost of Transportation
9. Miscellaneous (advertising, selling cost, royalties, etc.)
You may exclude some of the components that contribute to the total AOC of a process through the Operating Cost Options Dialog. To access this dialog, select menu item Edit } Process Options } Operating Cost Options from the main menu (or select Operating Cost Options from the flowsheet’s command menu).
To generate the itemized cost report, select menu Reports } Itemized Cost (ICR). The default options for the generation of this report can be modified through the Report Options Dialog: Itemized Cost Tab. To access this dialog, select menu Reports } Options from the main menu of the application.
The running cost and its components are accumulated on a per year basis but they can be reported in this report on either per year (default) or per batch (for batch processes) or per unit of reference rate (see Unit Reference Rate (or Flow)).
By default, no charts are included in the ICR (e.g. pie charts showing the various components of the AOC). To include charts, make sure you check the ‘Include Charts’ option in Report Options Dialog: Itemized Cost Tab.
The ICR includes the following sections:
1. Overall Process Parameters
2. Cost Per Process Section
3. Breakdown per Cost Item and per Section
4. Material Cost
5. Labor Cost
6. Consumables Cost
7. Waste Treatment / Disposal Cost
8. Utilities Cost
This section lists the key production parameters of the process. These include the following:
● Operating Time: the assumed annual operating time for the process.
● Annual Production/Processing Rate: the reference rate (on a per stream or per component-in-a-stream basis) that was used to convert the annual operating cost to per-unit-of-reference cost. The application uses the Main Product/Revenue Rate Stream (as defined in the Stream Classification Dialog) as unit reference rate for this report but if needed, users can select another definition for the Unit Reference Rate’ based on any process stream using the Rate Reference Flows Dialog: Unit Reference tab. Depending on whether the unit reference rate used is based on a process input or output stream, the corresponding rate is denoted as ‘processing rate’ (if it is based on an input stream) or ‘production rate’ (if it is based on an output stream).
● Recipe Batch Time: the time required to complete a single batch.
● Recipe Cycle Time: the time between the start of two consecutive batches.
● Number of Batches per Year: the number of batches processed in a calendar year.
This section provides a list of the fixed cost items that make up the capital investment for each process section. See Total Capital Investment for details on how the capital investment is calculated.
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Please note that the auxiliary equipment in this table are shown in a separate line in the end, because they are not utilized by specific sections, but are included in the total equipment purchase cost as well as the total direct fixed capital cost. |
Assuming that the AOC of the process is the sum of AOC contributions of each process section, this part of the report shows how the each process section’s AOC contribution breaks down to all of the components that make up the operating cost (materials, labor, facility-dependent, etc.). Each cost item is expressed per reference amount, per batch and per year. Again the Auxiliary Equipment cost is tallied in separately, not as part of any specific section.
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The sum of AOC over all process sections may be lower than the AOC of the entire process as it does not account for the miscellaneous cost component (advertising/selling costs, running royalties and failed product disposal cost). This cost is only calculated at the process level and it cannot be associated with any particular section of the process. |
Assuming that the AOC of the process is the sum of all of the AOC’s cost items (materials, labor, etc.) this part of the report shows how each of the component cost items distribute to each of the process sections. Remember that a user may exclude (if need be) any of the component items (see Operating Cost Options Dialog). The costs are presented only at the cost basis chosen for the report (per year, per batch or per-unit-reference). If charts are included, this information may also be presented in the form of a pie chart.
Since material cost can be the biggest contributor to the total AOC of a process, this section presents various cost breakdowns of the material cost component of the AOC in order for the user to better understand where are the ‘hot spots’ for material cost. The three most important origins for material consumption are: as raw materials, as cleaning agents and as heat transfer agents. If requested, the consumption of each material on a per-origin basis can also be included. The total material cost and the costs per material consumption origin are presented in four corresponding subsections. These are:
1. Material Cost
2. Raw Material Cost
3. Cleaning Agent Cost
4. Heat Transfer Agent Cost
By default, only the first subsection is included in the ICR. For each subsection, four different cost breakdowns of increasing level of detail are presented in lower-level subsections:
a) Section Summary
b) Breakdown by Section
c) Breakdown by Material Type
d) Detailed Breakdown by Material Type
Similar lower-level subsections are included in the remaining three subsections. The contents of each lower-level subsection are explained below:
● Section Summary: This includes a cost breakdown by process section. The costs are presented in the selected cost basis (per year, per batch, or per reference amount). Optionally, this information may also be presented in the form of a chart.
● Breakdown by Section: This includes a cost breakdown by process section and then by material type. For each process section, the unit cost, amount and total cost of each material type utilized in that section is presented. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Breakdown by Material Type: This includes a cost breakdown by material type and then by process section. For each material type, the unit cost, amount and total cost of that material type are listed for every section that uses it. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Detailed Breakdown by Material Type: This includes a cost breakdown by material type, then by process section, and then by procedure. For each material type and for each section, the unit cost, amount and total cost of that material type are listed for every procedure of that section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
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If a process contains many unit procedures, the detailed breakdown per material type can become very long resulting in an exceeding long ICR. This portion of the ICR may be of interest for users who do not use process sections to breakdown their process representation. |
For more details on the variables listed in this section, see Materials Cost.
This section presents various cost breakdowns of a project’s labor cost. Four different cost breakdowns of increasing level of detail are presented in the following subsections:
1. Section Summary
2. Breakdown by Section
3. Breakdown by Labor Type
4. Detailed Breakdown by Labor Type
The contents of each subsection are explained below:
● Section Summary: This includes a cost breakdown by process section. The costs are presented in the specified cost basis (per year, per batch, or per reference amount). Optionally, this information may also be presented in the form of a chart.
● Breakdown by Section: This includes a cost breakdown by process section and then by labor type. For each process section, the unit cost, amount and total cost of each labor type utilized in that section is presented. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Breakdown by Labor Type: This includes the following two tables:
a) a summary table that lists the adjusted basic rate, lumped basic rate, annual amount and total cost of all labor types that are currently in use by the process; the total cost is presented in the specified cost basis (per year, per batch, or per reference amount);
b) a cost breakdown by labor type and then by process section; for each labor type, the unit cost, amount and total cost of that labor type are listed for every section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
● Detailed Breakdown by Labor Type: This includes a cost breakdown by labor type, then by process section, and then by procedure. For each labor type and for each section, the unit cost, amount and total cost of that labor type are listed for every procedure of that section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
For more details on the variables listed in this section, see Labor-Dependent Cost.
This section presents various cost breakdowns of the process consumables cost. Four different cost breakdowns of increasing level of detail are presented in the following subsections:
1. Section Summary
2. Breakdown by Section
3. Breakdown by Consumable Type
4. Detailed Breakdown by Type
The contents of each subsection are explained below:
● Section Summary: This includes a cost breakdown by process section. The costs are presented in the specified cost basis (per year, per batch, or per reference amount). Optionally, this information may also be presented in the form of a chart.
● Breakdown by Section: This includes a cost breakdown by process section and then by consumable type. For each process section, the unit cost, amount and total cost of each consumable type utilized in that section is presented. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Breakdown by Consumables Type: This includes a cost breakdown by consumable type and then by process section; for each consumable type, the unit cost, amount and total cost of that consumable type are listed for every section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
● Detailed Breakdown by Type: This includes a cost breakdown by consumable type, then by process section, and then by procedure. For each consumable type and for each section, the unit cost, amount and total cost of that consumable type are listed for every procedure of that section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
For more details on the variables listed in this section, see Consumables Cost.
This section presents various cost breakdowns of the process waste treatment/disposal cost. Four different cost breakdowns of increasing level of detail are presented in the following subsections:
7.1 Section Summary
7.2 Breakdown by Section
7.3 Breakdown by Waste Type
7.4 Detailed Breakdown by Waste Type
The contents of each subsection are explained below:
● Section Summary: This includes an amount and cost breakdown by process section. The corresponding values are presented in the specified cost basis (per year, per batch, or per reference amount). Optionally, this information may also be presented in the form of a chart.
● Breakdown by Section: This includes a cost breakdown by process section and then by waste type. For each process section, the unit cost, amount and total cost of each waste type of that section is presented. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Breakdown by Waste Type: This includes a cost breakdown by waste type and then by process section; for each waste type, the unit cost, amount and total cost of that waste type are listed for every section in which it is present. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
● Detailed Breakdown by Waste Type: This includes a cost breakdown by waste type, then by process section, and then by procedure. For each waste type and for each section, the unit cost, amount and total cost of that waste type are listed for every procedure of that section in which it is present. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
For more details on the variables listed in this section, see Waste Treatment/Disposal Cost.
This section presents various cost breakdowns of the process utilities cost. Four different cost breakdowns of increasing level of detail are presented in the following subsections:
1. Section Summary
2. Breakdown by Section
3. Breakdown by Utility Type
4. Detailed Breakdown by Utility Type
The contents of each subsection are explained below:
● Section Summary: This includes two tables:
a) an amount and cost breakdown of electricity by process section.
b) an amount and cost breakdown of heat transfer agents by process section
The corresponding values are presented in the specified cost basis (per year, per batch, or per reference amount). Optionally, this information may also be presented in the form of a chart.
● Breakdown by Section: This includes a cost breakdown by process section and then by utility type. For each process section, the unit cost, amount and total cost of each utility type of that section is presented. The latter two costs are presented in the specified cost basis (per year, per batch, or per reference amount).
● Breakdown by Utility Type: This includes a cost breakdown by utility type and then by process section; for each utility type, the unit cost, amount and total cost of that utility type are listed for every section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
● Detailed Breakdown by Utility Type: This includes a cost breakdown by utility type, then by process section, and then by procedure. For each utility type and for each section, the unit cost, amount and total cost of that utility type are listed for every procedure of that section that uses it. The latter two values are presented in the specified cost basis (per year, per batch, or per reference amount).
For more details on the variables listed in this section, see Utilities Cost.
