11 Process Economics Operation and design of any large chemical plant requires meticulous planning in order for a feasible, lengthy and profitable life cycle to be achieved. Large responsibility falls upon the cost estimator who is required to ensure that the estimation technique utilised is both accurate and cost effective. Current economic conditions mean that costing is more important than ever, with numerous contracting companies chasing the same elusive contracts. Overestimation could result in dismissal from the chemical companies whereas a short coming in the pricing would most definitely cause major damage to the contractors/Cost-estimators reputation. However, the procedure that must be endeavoured in order to accomplish an acceptable overall price for a project is far from simple and extends far beyond the basic cost addition of individual components to obtain a total monetary figure. With little further research it can be seen that the initial erection of the chemical plant is only one half of the story. Careful analysis and prediction of the global economy and markets must also be performed prior to construction in order to guarantee the future longevity of the plant during operation. The success/acceptance of any potential proposal depends enormously on achieving a fine balance between time and cost. Often, feasibility studies are carried out prior to the declaration of any formal decision with regards to the release of funds 37. The four main project phases; Design, Procurement, Construction and Commissioning must all be considered extensively, both in terms of cost and timings. Both cost and construction time can be reduced in a number of ways. For example inessential items could be omitted from the design to save both money and time; other methods include reducing intermediate storage and instead purchasing the intermediates (Ammonium Carbamate, NH2CO2NH4, in the case of Urea production)38 from other sources. Regardless of the practice employed, these approaches are in essence ‘cutting corners’ and also have several disadvantages37. The

difficulties in obtaining the balance referred to earlier can be seen clearly in the following useful example which considers the procurement of equipment37. When purchasing standardised equipment, various vendors offer competitive prices with reliable delivery estimates available. However when unique and specific design is required, the date of delivery can be somewhat uncertain which may lead to potential problems in the future. If say, the piece of machinery was to be located at the heart of the chemical plant, any delays would be disastrous as the construction of many other plant sectors would have to be put on halt in order for the installation of the delayed equipment to take place. In the unfortunate case that a problem occurs due to omissions made by the engineers or errors on the contractor’s part, it is customary to have a contingency allowance in place39. This allowance is in place to cover unforeseen costs such as design modifications, plant testing and final alterations/adjustments. Many additions to the initial start-up costs arise inevitably due to some form of human error during construction. Common issues encountered include faulty wiring, leaking pipes/valves and defective equipment, all of which are likely to be present in some form during any plant assembly39. The extent to which these frequent issues transpire can be reduced to minor insignificances by conducting thorough inspections of all aspects of the plant throughout construction. This on the contrary, would of course mean that high salary engineering supervisors/inspectors would need to be employed, possibly incurring a larger expenditure than rectifying the faults themselves. Another important consideration that must be made is the variation in labour, equipment and material costs across different regions of the world. For example in the US alone there is significant disparity between labour expenses over the numerous states, with New York encompassing the largest median hourly labour rate ($5.45/hour compared to $3.02/hour in Georgia)39. These discrepancies in prices extend far beyond the relatively small distance between American states and are in fact a global occurrence. There are many complex and

intertwining factors that govern the difference in worldwide costs including availability of raw materials and fees such as freight charges, entrance duties and other import taxes39. As mentioned before, the cost of labour plays a substantial part in the deliberation over which region the chemical plant is best located. As well as the cost of labour, it is also important to account for the productivity rate of the workforce, itself not an easy task. Past studies have shown that well-rested employees provided with a good level of healthcare will perform at a higher rate of productivity. This area raises ethical issues over large corporations exploiting lower economically developed countries (LEC’s) whose population must work longer hours for a comparatively lower wage than an average US citizen39. http://www.wisegeek.com/what-is-urea.htm http://www.ch.ic.ac.uk/rzepa/mim/environmental/html/urea_text.htm http://www.scribd.com/doc/23407080/urea http://www.chm.bris.ac.uk/motm/urea/urea.html global supply and demand for urea, k.h soh, paris, international fertiliser industry association. http://www.scribd.com/doc/77029060/30134331-Urea http://www.extension.umn.edu/distribution/cropsystems/dc0636.html