PROJECT MANAGEMENT (CPE520)

MINI PROJECT REPORT

Biodiesel Production from Waste Cooking Oil

Prepared for
DR. ALAWI HJ SULAIMAN

Prepared By:

ARIF HANAFI BIN MD ZAKI 2020983171

MUHAMMAD IMRAN BIN SALLEH 2020983133

MUHAMAD AZRIN BIN MOHAMAD YAMIN 2020975413

HAIQAL NAZMIEN BIN MAZRIMI 2020947135

TENGKU NADIA SAHERA BINTI SHAMSUDIN 2020983043

29 January 2021

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 Table of Contents

CHAPTER 1 ______________________________________________________________ 3

1.0 Chemical Selection ___________________________________________________________________ 3

1.0.1 Biodiesel production ______________________________________________________________ 4
1.0.2 Diesel production ________________________________________________________________ 5
1.0.3 Petrol Production ________________________________________________________________ 7

1.1 Location Selection ____________________________________________________________________ 7

1.1.1 Scoring table for location selection __________________________________________________ 8
1.1.2 Locations description _____________________________________________________________ 8

CHAPTER 2 _____________________________________________________________ 10

2.0 Feasibility Study of Market ___________________________________________________________ 10

2.1 Feasibility Study of Process ___________________________________________________________ 13

CHAPTER 3 _____________________________________________________________ 14

3.0 Company Set-up ____________________________________________________________________ 14

3.1 Job Description _____________________________________________________________________ 15

CHAPTER 4 _____________________________________________________________ 18

4.0 Mind Map of Project Planning ________________________________________________________ 18

4.1 Work Breakdown Structure __________________________________________________________ 19

4.2 Project Scheduling __________________________________________________________________ 20

4.2.1 Activity/work package Duration ____________________________________________________ 20
4.2.2 Project Schedule _________________________________________________________________ 20

4.3 Critical Path Analysis ________________________________________________________________ 21

CHAPTER 5 _____________________________________________________________ 23

5.0 Monitoring and Controlling Planning of the Plant Development ____________________________ 23

5.1 Project Budgeting and Costing ________________________________________________________ 27

5.1.1 Equipment cost _________________________________________________________________ 28
5.1.2 Raw Materials Cost _____________________________________________________________ 30
5.1.3 Operating Labor Cost ___________________________________________________________ 31
5.1.4 Site Location Cost _______________________________________________________________ 32
5.1.5 Estimated Project Budget ________________________________________________________ 32
5.1.6 Cash Inflows ___________________________________________________________________ 32
5.1.7 Payback Period _________________________________________________________________ 32

5.2 Termination Procedure of the Project __________________________________________________ 33

REFERENCE ____________________________________________________________ 34

2
CHAPTER 1

1.0 Chemical Selection

Table 1.1: The weighted factor scoring method for each production.
Selection Weightage Biodiesel Diesel Petroleum
Criteria Score Weighted Score Weighted Score Weighted
score score score
Marketibility 10 2 20 2 20 3 30

Raw material 10 3 30 2 20 2 20
availability
Production 10 3 30 2 20 2 20
equipment
Environmental 5 3 15 2 10 2 10
factor
Total weighted score 95 70 80
1 :Bad, 2 :Moderate, 3 :Good

There are few criteria to be taken into consideration before choosing the product by using a
scoring method. Table 1.1 shows the weighted factor scoring method for each production. Based on
the scoring method, biodiesel production was chosen to expand the company business because it has
the highest weighted score compared to diesel and petrol production.

3
 1.0.1 Biodiesel production

The first product that we would like to propose is Biodiesel. Biodiesel is a fuel that usually used
for heavy transport such as truck, lorry, van and others. Biodiesel is an alternative way to recover the
Diesel production since the Diesel is not a renewable source. But most of the vehicles cannot use
100% of Biodiesel because engine specification. Hence, Biodiesel need to be blend with Diesel at
certain fraction. Figure 1.1 show the Biodiesel’s sources from different feed stock.

Figure 1.1: Biodiesel’s sources from different feed stock.

Since Malaysia is one of the largest palm oil producers in the world and it is renewable source,
so there is no problem about raw material availability for Biodiesel processing. Besides using crude
palm oil as feed stock, waste palm oil such as waste cooking oils also can be used as Biodiesel feed
stock. The major component of oil and fat is triglycerides. When the triglycerides react with alcohol
in the presence of base catalyst, this is called transesterification. In this reaction, triglycerides are
converted to diglyceride, monoglyceride, and finally converted to glycerol. The reaction mechanism is
shown in Figure 1.2 and the process flow shown in Figure 1.3

Figure 1.2: Reaction Mechanism

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 Figure 1.3 Process flow of Biodiesel production

1.0.2 Diesel production

Diesel fuel is used to move consumer goods by rail and ship, to generate power, and to power all
manner of agricultural and heavy-duty equipment. Similar like Biodiesel, but Diesel is not a
renewable source because it is from fossil fuel. The composition of Diesel in crude oil shown in
Figure 1.4.

Figure 1.4: The composition of oils and gases in the crude oil

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 Crude oil refining starts with heating up the viscous liquid to over 400 degrees Celsius. This
process turns the liquid into a vapor. The vapor then enters a fractional distillation tower. As the vapor
rises, it starts to cool down. The vapor reaches a certain temperature point and the hydrocarbon chains
within it return to a liquid state. At different levels of the tower are distillation plates that capture the
liquids as they emerge.

The longest hydrocarbon chains have a boiling point over 400oC. As soon as the chains enter
the distillation tower, they start turning into liquid again. This emerges as asphalt or bitumen and exits
at the bottom. As the vapor rises, shorter hydrocarbon chains begin to liquefy. Fuel oil emerges when
the vapor cools down below 370oC. This process continues up the tower, with various distillates
emerging as the vapor cools further.

When the vapor reaches between 200oC and 350oC, diesel fuel begins to emerge. The vapor
collects on the distillation plates where it is siphoned off into a diesel holding tank. Distillation
process done by using distillation tower that shown in Figure 1.5

Figure 1.5: Distillation process to separate various type of oils and gases

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 1.0.3 Petrol Production

Petrol fuel is used to move common engines such as cars, motorcycles, and others. Similar like
Diesel which is not a renewable source because it is from fossil fuel. The composition of Petrol in
crude oil shown in Figure 1.4.

The process of Petrol fuel nearly similar to Diesel processing, but with different boiling point.
Petrol’s boiling point around 100oC to 160oC. Crude oil were heated in distillation tower until
vaporize. When the vapor reaches between 90oC and 160oC , petrol fuel begins to emerge. The vapor
collects on the distillation plates where it is siphoned off into a petrol holding tank. Distillation
process done by using distillation tower that shown in Figure 1.5.

Both petrol and diesel production use a lot of equipment and the risk are very high since the
petroleum are easily to combust. Beside, there are lot unwanted chemical found in petroleum process
such as mercury, benzene, carbon monoxide and sulphur which can occur hazards to the
environments, peoples and equipment.

1.1 Location Selection

This section will propose location selection for this project. There are few locations that have
been taken into consideration. Three sites in Malaysia were selected for further consideration: Teluk
Bahang, Pulau Pinang; Subang Jaya, Selangor and Santong Paka, Terengganu.

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1.1.1 Scoring table for location selection

Table 1.2: The weighted factor scoring method for each site selection.
Selection Weightage Teluk Bahang Subang Jaya Santong, Paka
criteria (Pulau Pinang) (Selangor) (Terengganu)
Score Weighted Score Weighted Score Weighted
score score score
Raw materials 5 2 10 3 15 2 10
availability
Energy 5 2 10 2 10 2 10
availability
Waste 5 2 10 3 15 3 15
disposal
Market 5 3 15 2 10 3 15
accessibility
Community 4 3 12 2 8 3 12
factors
Water supply 3 3 9 2 6 3 9

Transportation 2 2 4 3 6 3 6
facilities
Site 1 2 2 3 3 3 3
characteristics
Total weighted score 72 73 80
1 :Bad, 2 :Moderate, 3 :Good

Based on the scoring method in Table 1.2 to choose the best site location, Santong Paka,
Terengganu is the best choice out of the three. After taking into consideration of criterias for the
location selection, the weighted score was then calculated and the location with the highest weighted
score was decided.

1.1.2 Locations description

In Table 1.3, some of the descriptions or the explanations of each of the location’s aspects were
summarised. The aspects are the same with the criterias in the scoring table which are raw materials
availability, energy availability, waste disposal, market accessibility, community factors, water
supply, transportation facilities, and site characteristics.

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 Table 1.3: Description for each of the aspects for the selected locations.
Selection Teluk Bahang Subang Jaya Santong, Paka
criteria (Pulau Pinang) (Selangor) (Terengganu)

Raw materials Far from the supplier Near with town & Crude palm oil from
availability food industries that Felda Kerteh Palm Oil
can supplies used Miller
cooking oil
Energy TNB Gelugor Power Stesen Janaelektrik YTL Power Station,
availability Station Sultan Salahuddin Paka
Abdul Aziz
Waste disposal E-Waste Atlas Resource Sdn NRS Waste
Management (M) Bhd provides Management Sdn Bhd
Sdn. Bhd industrial waste
management service
is nearby
Market No biodiesel plant FIMA Biodiesel Sdn Ajil Biofuel Sdn Bhd
accessibility nearby Bhd
FatHopes Energy
Biodiesel Plant
Sime Darby Oils
Biodiesel Sdn Bhd
Community Less population in Crowded population Less population in the
factors the industrial area in the industrial area industrial area
Water supply Perbadanan Bekalan Syarikat Bekalan Utilities Kertih,
Air Pulau Pinang Air Selangor Sdn Bhd PETRONAS Gas
Sdn. Bhd (SYABAS) Berhad

Transportation  No public  Traffic jam  No public transport

facilities transportation frequently occurs  No traffic jam
 No traffic jam  Various types of  Near with residential
 Far from feed public transport are for workers
supplier  Near with  Near with feed
 Bad road condition residential area for supplier
 Far from residential workers
area for workers  Near with feed
supplier

Site Surface not too flat Flat surface Flat surface

characteristics due to hilly area
1 : Bad, 2 : Moderate, 3 : Good

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CHAPTER 2

2.0 Feasibility Study of Market

Biodiesel is manufactured from vegetable oils, yellow grease, used cooking oils or animals fats.
Biodiesel is produced through transesterification process where it converts fats and oils into biodiesel
and glycerin as by product.
Figure 2.1: Biodiesel Consumption In 2019

This product is worldwide consumed where the highest consumption is the United States with
60 thousand barrels per day. Above figure is to show the consumption of biodiesel throughout the
globe. This shows that the demand for propylene is high. However, Malaysia is at 27th place with 2.6
thousand barrels/day.

According to World Health Organisation, air pollution in Malaysia had caused 6251 deaths up
to 2012. Malaysia’s poor air quality was first assosciated with the haze in 1983 which also sever
disruptions to life. The main cause was still unsure but, one of the contribution is by the vehicles.
Therefore, one of the steps to ensure the air pollution is controlled is by the usage of biodiesel in
vehicles. Environmental Protection Agency (EPA) research indicates that biodiesel emits 11% less
Carbon Monoxide (CO) and less particulate matter if to compare with petroleum diesel.

In this process, the required feedstock is waste cooking oil (WCO). Instead of producing more
raw material, the usage of waste cooking oil is primarily used while preventing water pollution. Raw
materials can be found from hotels, restaurants, and other food industries. WCO can be found to be
economically feasible method. Other feed stock for biodiesel production is stated below.

10
 Figure 2.2: Global market value of biodiesel

The global market value of biodiesel is projected to surpass USD47.90 billion in 2025 stated
inside the GlobeNewswire. This shows that the demand through the globe is widely increase making
the world production of biodiesel to be in competition. Biodiesel is also increasingly being used in the
automotive industry as the fuel in the engine system. It generates power to run electricity generators.
The global biofuel market overall is estimated to be impressively grow in the coming years.

The feedstock availability was developed through few collaboration agreements. The first
agreement was made with the waste management company which is to collect WCO. Second is the
agreement with the company responsible for WCO recovery from domestic users, restaurant, hotels
and others in the town. The agreement was made with the purchase of RM0.5 per litre of WCO. In
Subang Jaya SS14 ‘rukun tetangga’ make its own collection in a collection drum nearby park. So, this
method is also is taken into account for the agreement of RM0.5/litre.

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 Table 2.1: below shows few places that we manage to get WCO from; with the agreement
Places Capacity

Teluk Bahang, Pulau

Pinang

Production of WCO in Teluk Bahang.

The total volume obtained for 30 participants done by Hanisah et. al. is
400-500kg in a month.

SS14 “Rukun
Tetangga” in Subang
Jaya

120 litres of WCO for every 2 months.

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 2.1 Feasibility Study of Process

This process is done by the presence of catalyst, Sodium Hydroxide (NaOH) to form biodiesel
to glycerine with ratio of 10:1. Alkaline NaOH catalyst is used due to its low cost and higher reaction
rate compare to other catalyst such as acids and lipase catalyst. Biodiesel is pre-treated with acid
catalyst to undergo esterification reaction. Second process is to undergo transesterification process
where biodiesel is obtained.

Bio-Power SDN BHD which consist of esterification process part is mainly using a reactor at
temperature of 80-90oC and 1 atm pressure which is first supplied by the mixed acid-catalysed and
alcohol (methanol) in the mixing tank. The feed stock which is WCO is pre heated first before being
supplied to the reactor. Cooling process is taken place after the reaction occurs as it cooled down the
product to 45oC. It is then flow through the settling tank and for the top product is the methanol and
bottom is water. The methanol produce is reused.

Second process is the Transesterification process. The catalyst and methanol are mixed in the mixer
and products obtained from process 1 are taken into the second reactor column. Reactor temperature
is to be maintained at 65oC and 1 atm pressure. At 1:6 molar ratio of oil to alcohol, the products of
transesterification are then fed into separator 2. Distillate product is to enter the methanol column for
the recovery of methanol that is to be used back as the feed. Biodiesel is then washed with hot water
and sent to separator 3 to remove the water and the biodiesel as the main product is produced.

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CHAPTER 3

3.0 Company Set-up

Figure 3.1: Organizational Chart of the Project

Directors

Project Manager
(ARIF)

Accounts & Quality Assurance Safety & Health Human Resource

Production Dept. Engineering Dept.
Finance Dept Dept. Dept Dept.
(AZRIN) (HAIKAL)
(IMRAN) (NADIA) (EMPLOYEE) (EMPLOYEE)

Production Mechanical Managerial

Quality Manager Safety Officer Office Support
Planning Engineer Accountant

Production FInancial
Electrical Engineer Inspection Safety Engineer Training Group
ENgineer Accountant

Warehouse Chemical Engineer Tac Accountant Tools Specialist Emergency Team Liasoning

As shown in the figure 3.1-1, the organizational structure is led by directors and project
manager of this project. Project manager has full responsibility upon the project with
instruction front the upper level which is directors.

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 3.1 Job Description

1. Directors

 In charge of management of the company businesses.

 To make sure that the project fulfilled company’s obligations.
 Avoid conflict of interests.
 Interact with stakeholders.

2. Project Manager

 Develop a project plan.

 Establish a project schedule and determine each phase.
 Provide regular updates to upper management.
 Appoint tasks to the sub-team.
 Overseeing the whole project.

3. Production Department

 Planning and organizing production schedules.

 Overseeing production processes.
 Organizing the repair and routine maintenance of production equipment.
 Assemble goods on production lines.

4. Engineering Department

 Responsible for leading, developing and managing the technical solutions within the
technology directorate.
 Prepare plans with detailed drawings that include project specifications and cost estimates.
 Present analysis results and project solutions to technical leads, senior leaders and clients as
necessary.

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5. Accounts & Finance Department

 Preparing the project profit and loss, and balance sheet reports along the project
completing.
 Tax reporting and inventory processing.
 Collecting and analyzing data, which is then used in the preparation of weekly and
monthly estimates.
 Advising on estimates for project funding.

6. Quality Assurance Department

 Ensure the final product observes the company’s and project quality standard
 Responsible for the development and implementation of inspection activities, the detection
and resolution of problems, and the delivery of satisfactory outcomes.
 Checking that raw materials or components involved in the production process are of suitable
quality.
 Communicating with other departments such as project management and engineering to
coordinate scheduling for QA testing.

7. Safety & Health Department

 Ensure compliance and to promote a safe conduct of work.

 Provide training to all workers regarding safety.
 Conducting risk assessment and enforcing preventative measures.
 Oversee installations, maintenance, disposal of substances etc.
 Prepare reports on occurrences and provide statistical information to upper management.

8. Human Resource Department

 Ensures preparation, evaluation, and assessment of employee job outcomes through educating
staff to mentor and discipline workers.
 Arranging management conferences with management teams; hearing and addressing
employee grievances; and counseling workers and superiors.
 Establish systems for compensation and rewarding the employees.

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 Table 3.1: List of staffs involved in this project
Department Team Position Pax
Management Director 4
Project Manager 1
Assistant PM 1
Production Production Manager 1
Executive Production 1
Production Engineer 1
Design Engineer 1
Warehouse Manager 1
Executive Warehouse 1
2 Teams (Shifts) Production Technician 6
Boardman 5
Engineering Mechanical Engineer 1
Electrical Engineer 1
Chemical Engineer 1
Site Engineer 1
Technician 3
Account & Finance Managerial 1
Accountant
Financial Accountant 1
Tax Accountant 1
Senior Executive 1
Quality Assurance Quality Manager 1
Inspection manager 1
Executive Inspector 1
2 Teams (Shifts) Technician 4
Safety & Health Safety Officer 1
Safety Engineer 1
Senior Executive 1
2 Team (Shifts) Emergency team 8
Human Resource Human Resource 1
Manager
Admin Manager 1
Training Executive 1
Executive HR 1
Secretary 1
Total No of Staffs 57

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Chapter 4

4.0 Mind Map of Project Planning

Figure 4.1: Mind Map of Biodiesel Production Chemical Plant (Plant Set-Up Flow)

Figure 4.2: Mind Map of Biodiesel Production (Production Set-Up Flow)

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4.1 Work Breakdown Structure

Figure 4.3: Work Breakdown Structure of Biodiesel Production Chemical Plant

(Plant Set-Up Flow)

Figure 4.4: Work Breakdown Structure of Biodiesel Production

(Production Set-Up Flow)

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4.2 Project Scheduling

4.2.1 Activity/work package Duration

Time is one of the most important elements in every project. Time is controlled to ensure that the project
can be completed within the project durations. The duration for each activity needs to be allocated in
order to manage the time. The table below shows the duration in unit month for each work package.

Table 4.1: Duration for each phase

Phase Duration (Months)

Organization Start-Up 14
Procurement 11
Construction 14
Commissioning and Operation 5

4.2.2 Project Schedule

A more detailed activities or tasks under each phase have been listed in the project schedule. Gantt
Chart is one of the methods used to monitor the activities of the project. The Gantt Chart is only a plan
or a based guideline for the project while the actual progress needs to be monitored in order to keep
track if there is any delay in the project. Thus, time management is important to get things done and
make the project success on time.

Table 4.2: Detailed Activity for Each Phase with Duration

Phase Activity Duration (Month)
Organization Start-Up A – Team Development 3
B – Project Charter 4

C – Location 6

D – Safety Analysis 1

Procurement E – Legal Approval 3

F – Contract & Purchasing 8
Construction G – Installing Equipment 5
H – Wiring 3
I – Piping 3
J – Site Work 3
Commissioning and Operation K – Testing Equipment 2
L – Start-Up Operation 3

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 4.3 Critical Path Analysis

Critical path analysis can be analysed using Critical Path Method (CPM). In order to control
the project, finding the critical path is important. We calculated the critical path by calculating two
distinct starting and ending time for each activity. In CPM, any activities that fall onto a critical path
have zero slack time, which means that these activities cannot be delayed. If they did, it cause the whole
project behind schedule.
Critical path for this project is analysed from activity on node (AON) network as shown below.
This network illustrates the relationship of all the activities.

Table 4.3: Network of the activities

Activity Duration Predecessor ES EF LS LF Slack Time

A 3 - 0 3 0 3 0
B 4 - 0 4 4 8 4
C 6 A 3 9 3 9 0
D 1 B 4 5 8 9 4
E 3 C, D 9 12 9 12 0
F 8 E 12 20 12 20 0
G 5 F 20 25 20 25 0
H 3 F 20 23 24 27 4
I 3 F 20 23 24 27 4
J 3 G, H, I 25 28 27 30 2
K 2 G 25 27 25 27 0
L 3 K 27 30 27 30 0

Earliest Start Time (ES): This is the earliest time an activity can be started, allowing for the fact that
all proceeding activities have been completed.

Earliest Finish Time (EF): This is the earliest time an activity can be finished or completed.

Latest Start Time (LS): This is the latest time an activity can be started without delaying the start of
following activities that would put the entire project behind the schedule.

Latest Finish Time (LF): This is the latest time an activity can finish in order to keep on a project
schedule.

Activity Slack Time (Slack): The amount of slippage in activity start or duration time which can be
tolerated without delaying the whole project.

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AOA Network

Figure 4.5: Activity on Arrow (AOA) Network

AON Network

Figure 4.6: Activity on Node (AON) Network

The red line in the activity on node (AON) network above indicates the critical path activities.
The critical path for this project is A→C→E→F→G→K→L. Thus, this project needed to be done
within 30 months.

Figure 4.7: Gantt chart

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CHAPTER 5
5.0 Monitoring and Controlling Planning of the Plant Development

In plant development, the monitoring and controlling a project is one of the important steps to
detect and react appropriately according to deviations and changes to plans, so that “the real work” can
be done. It is very important that every project must be monitored and controlled in order to ensure the
project and its output are in full compliance with the law as well as with the expectations of both senior
management and the client.

The three fundamental items to be monitored and controlled are time, cost and scope where
these items is very important in plant development in order to ensure the project stays on schedule, does
not exceed its budget, and meets its specifications. Monitoring involves collecting, recording and
reporting of project information and controlling uses the monitored data and information to bring actual
performance into agreement with the plan.

Frequency counts format is the first monitoring method that can be used for collecting the data
in this project. This method counts the occurrence of an event. The recorded data in frequency counts
format will shows the frequency of accidents in a day, employees’ attendance per day, inspection of
equipment per month and inventory of raw materials per month. This format much important to ensure
that all equipment, materials and employees are available when needed.

The second method used in this project is raw numbers format. It is to indicate the amount of
tons reactant consumed, the number of hours required to finish a reaction and the total MYR spent. Raw
number format very important to compare and see the differences between planned and actual progress
so that we can control the differences back to plan.

For the technique for monitoring and controlling in this project, the earned value analysis can
be used. Earned value analysis is an objective measurement of how much work has been accomplished
on a project. It evaluates the performance of the project based on cost and time spent to date. Earned
value (EV) of a task or a project is defined as below

23
 Next, the difference between planned and actual performance can be seen through an earned
value chart. Figure 5.2-1 below shows the cost versus time graph which is also known as earned value
chart.

Figure 5.1: Earned Value Chart

Below are the guidelines or definitions of each term used in the chart and for calculating the
variances:

24
 By using two guidelines, the performance of the project can be evaluated by identifying the
several variances. First, if it is a negative variance, the meaning is the work might be behind the schedule
or overrun the cost. Second, cost and schedule variances can be identified by subtracting the earned
value with some other measure. The earned value variances formula is shown in Table 5.2-1 below.

Table 5.1: Earned Value Variance Formula

Term Formula

Cost Variance 𝐶𝑉 = 𝐵𝐶𝑊𝑃 − 𝐴𝐶𝑊𝑃(-ve value: cost overrun)

Schedule Variance 𝑆𝑉 = 𝐵𝐶𝑊𝑃 − 𝐵𝐶𝑊𝑆(-ve value: behind schedule)

Time Variance 𝑇𝑉 = 𝑆𝑇𝑊𝑃 − 𝐴𝑇𝑊𝑃(-ve value: delay)

Cost Performance Index 𝐶𝑃𝐼 = 𝐵𝐶𝑊𝑃/𝐴𝐶𝑊𝑃

Schedule Performance Index 𝑆𝑃𝐼 = 𝐵𝐶𝑊𝑃/𝐵𝐶𝑊𝑆

Time Performance Index 𝑇𝑃𝐼 = 𝑆𝑇𝑊𝑃/𝐴𝑇𝑊𝑃

Earned value analysis

Activity Duration Predecessor Budget Cost (RM) Actual Cost (RM) % Completed

A 3 - 60 000 50 000 100

B 4 - 1 000 900 100
C 6 A 20 000 000 15 900 000 100
D 1 B 10 000 10 000 100
E 3 C, D 2 000 1 000 100
F 8 E 60 000 000 55 000 000 100
G 5 F 200 000 200 000 100
H 3 F 100 000 100 000 100
I 3 F 300 000 200 000 100
J 3 G, H, I 1 200 000 1 100 000 100
K 2 G 25 000 20 000 100
L 3 K 40 000 30 000 100
Total cost 81 938 000 72 611 900 81 938 000

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BCWP = RM 81 938 000
ACWP = RM 72 611 900
BCWS = RM 81 938 000

Cost Variance, CV
CV = BCWP – ACWP
CV = RM 81 938 000 – RM 72 611 900
= RM 9 326 100
Based on the cost variance calculation it shows that the project is over budget.

Schedule Variance, SV
SV = BCWP – BCWS
= RM 81 938 000 – RM 81 938 000
=0
From the schedule variance, it can be conclude that the activity is on schedule.

Critical Ratio
 Cost Performance Index, CPI
𝐵𝐶𝑊𝑃 RM 81 938 000
CPI = = = 1.13
𝐴𝐶𝑊𝑃 RM 72 611 900

According to the calculation, it can be concluded that the project is over budget because the CPI
exceed 1.0

 Schedule Performance Index, SPI

𝐵𝐶𝑊𝑃 RM 81 938 000
SPI = = = 1.00
𝐵𝐶𝑊𝑆 RM 81 938 000

For SPI, it is concluded that the project is on schedule because of the ratio is at 1.00

26
 5.1 Project Budgeting and Costing

In order to come up with a project budgeting for this specific project, there are several items that need
to be determined first which are as follows:
1. Equipment purchase cost
2. Operating labor cost
3. Raw materials cost
4. Site location cost
5. Yearly cost

Equipment purchase cost

After determining the new chemical for the new company’s project, a specific production process was
chosen to be able to predict the total equipment purchase cost. Production of biodiesel was selected
because of the many advantages such as high return on investment (ROI), environmental friendly,
high process reliability and commitment to continuous innovation.

From Figure 5.2, the list and the cost of each equipment for first process which is pretreatment of high
free fatty acid feed-stock with acid-catalyzed reactor process was shown. As for second process which
is alkali-catalyzed treatment of pretreated waste cooking oil process system to produce biodiesel is
listed in Figure 5.3. In addition, Figure 5.4 shows the cost and flowrate needed for the raw materials
and products for the biodiesel production.

27
5.1.1 Equipment cost

Table 5.2: Equipment purchase list for process 1

No Equipment name Quantity Individual cost Total Cost
(with link) (US$) (US$)
1 Alcohol tank 1 17,800 17,800
(https://rb.gy/zm6ijg)
2 Acid catalyzed tank 1 25,000 25,000
(https://rb.gy/puelq2)
3 Feed Tank 1 13,000 13,000
(https://rb.gy/l73xpa)
4 Mixer 1 47,600 47,600
(https://rb.gy/dzbdjw)
5 Esterification reactor 1 10,000 10,000
(https://rb.gy/7qkqm7)
6 Heat exchanger 2 1000 2000
(https://rb.gy/fl9nsq)
7 Chemical filter 1 3,478 3,478
(https://rb.gy/uvfos5)
8 Settling tank 1 32,740 32,740
(https://rb.gy/sbxjuz)
9 Distillation column 1 50,000 50,000
(https://rb.gy/cloe0e)
Total equipment cost 201618

Total equipment purchase cost = $ 201 618

Malaysia currency conversion = $ 201 618 × 4.04
= RM 814 536.72

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 Table 5.3: Equipment purchase list for process 2
No Equipment name Quantity Individual cost Total Cost
(with link) (US$)) (US$))
1 Alcohol tank 1 17,800 17,800
(https://rb.gy/zm6ijg)
2 Acid catalyzed tank 1 25,000 25,000
(https://rb.gy/puelq2)
3 Feed Tank 1 13,000 13,000
(https://rb.gy/l73xpa)
4 Mixer 1 47,600 47,600
(https://rb.gy/dzbdjw)
5 Centrifugal pump 2 30,000 60,000
(https://rb.gy/f9l1k2)
6 Transesterification reactor 1 72,000 72,000
(https://rb.gy/cjlcsv)
7 Gravity separator 2 20,000 40,000
(https://rb.gy/7zyjrc)
8 Knockout drum 2 30,000 60,000
(https://rb.gy/g3e1ge)
9 Distillation column 1 50,000 50,000
(https://rb.gy/cloe0e)
10 Storage tank 3 50,000 150,000
(https://rb.gy/xrr2ao)

Total equipment purchase cost = $ 621 800

Malaysia currency conversion = $ 621 800 × 4.04
= RM 2 512 072

29
5.1.2 Raw Materials Cost

The raw materials that will be needed in this chemical plant can be seen in Chapter 2. The feedstock is
waste cooking oil (WCO) only. Table 5.4 shows the feed and product values along with flowrate for
the production of 394,000-MTA Biodiesel.

Table 5.4: Raw materials and products with flow rate

Material Price Price Flow rate Flow rate
(US$)/unit) (US$)/MT) (MT/h) (MTA)
Feed:
Waste Cooking 0.12/L 600 55 481800
Oil
Products:
Biodiesel - 1090 25 219000
Glycerol 395 15 131400

Note: MT/h = metric tons per hour; MTA = metric tons per annum.
Total raw materials cost per MTA = $ 600 × 481800 MTA = $289 080 000
Malaysia currency conversion = $289 080 000 × 4.04
= RM 1 167 883 200

30
5.1.3 Operating Labor Cost

Table 5.5: Manpower cost

Position Monthly Epf 11% Socso Staff Socso EIS 0.2% Net salary
salary (RM) (RM) contribution company (RM) (RM)
0.5% (RM) contribution
1.75% (RM)
Director 15,000.00 1650 75 262.5 30 12,982.50
Project 13,500.00
Manager 1485 67.5 236.25 27 11,684.25
Production Department
Production 10,500.00
Planning 1155 52.5 183.75 21 9,087.75
Production 7,500.00
Engineer 825 37.5 131.25 15 6,491.25
Warehouse 3,000.00 330 15 52.5 6 2,596.50
Engineering Department
Mechanical
Engineer 6,000.00 660 30 105 12 5,193.00
Electrical
Engineer 6,000.00 660 30 105 12 5,193.00
Chemical
Engineer 6,000.00 660 30 105 12 5,193.00
Finance Department
Managerial
Accountant 4,000.00 440 20 70 8 3,462.00
Financial
Accountant 4,000.00 440 20 70 8 3,462.00
Tax
Accountant 4,000.00 440 20 70 8 3,462.00
Quality Assurance Department
Quality
Manager 4,000.00 440 20 70 8 3,462.00
Inspection 3,000.00 330 15 52.5 6 2,596.50
Tools
Specialist 3,000.00 330 15 52.5 6 2,596.50
Safety & Health Department
Safety Officer 4,000.00 440 20 70 8 3,462.00
Safety
Engineer 6,000.00 660 30 105 12 5,193.00
Emergency
Team 2,100.00 231 10.5 36.75 4.2 1,817.55
Human Resource Department
Office Support 3,100.00 341 15.5 54.25 6.2 2,683.05
Training Group 2,100.00 231 10.5 36.75 4.2 1,817.55
Liasoning 2,100.00 231 10.5 36.75 4.2 1,817.55
Total Salary RM 108,900.00 Total Net Salary RM 94,252.95
Total Salary = RM 108,900.00 × 12 Total Net Salary = RM 94,252.95 × 12
Anually = RM 1 306 800.00 Anually = RM 1 131 035.40

31
5.1.4 Site Location Cost

Table 5.6: Land cost

Location Budget
Santong, Paka (Terengganu) RM 1 590 000/acres
Total cost = RM 1 590 000 × 10 acres
= RM 15 900 000

5.1.5 Estimated Project Budget

Now, a full estimated project budget (EPB) can be determined after coming up with the costs that
would be used in the project which are equipment purchase cost, operating labor cost, raw materials
cost, utility cost and yearly cost. The formula to calculate the estimated budget can be seen below.

EPB = equipment purchase cost + raw materials cost + operating labor cost + location cost
EPB =(RM814 536.72 + RM2 512 072) + (RM1 167 883 200) + (RM1 306 800) + (RM15 900 000)
= RM 1 188 416 609

5.1.6 Cash Inflows

Table 5.7: Cash inflow annually

Substances Price (RM/year)
Biodiesel = 1090 (US$/MT) × 4.04 (RM/ US$/) × 219000 (MT/year)
= RM 964 388 400
Glycerol = 395 (US$/MT) × 4.04 (RM/ US$/) × 131400 (MT/year)
= RM 209 688 120
Total profit = 964 388 400 + 209 688 120
= RM 1 174 076 520

5.1.7 Payback Period

Initial Project Budget

=
Annual Cash Inflow

RM 1 188 416 609

=
RM 1 174 076 520

= 1.01 years

32
5.2 Termination Procedure of the Project

Termination of a project can be done quickly or slowly depending on criteria of termination.

The criteria include 1) the willing to invest time and cost required to compute the project; 2) the
degree to which the project has met its goals and objectives; and 3) the degree to which the project
qualifies a set of factors generally associated with success or failure. The factors can be technical,
economic, market and others. On top of that, there also generic factors associated with project success
which are 1) efficiency of project execution; 2) customer satisfaction and use; 3) impact on the firm
conducting the project; 4) contribution to the project firm’s future.
Hence, a procedure to terminate this project is proposed in Figure 5.2. There will be 4 main
elements that need to be catered in the termination phase process which are organization, financial,
purchasing, and site. Each element has other tasks that must be done for a success and complete
termination. Under finance, the most important task is the final report. It mainly contains the project
performance, administrative performance, organizational structure, project teamwork and lastly, the
project management techniques.

Figure 5.2: Project termination procedure.

Project close-out

Organization Financial Purchasing Site

Close out Compliance Close down

Charge audits
meeting documents facilities

Reassignment Collect Supplier Equipment

plan receivables notifications material disposal

Personal reports Final report Final payments

33
REFERENCE
1. Alternative Fuels Data Center: Biodiesel Production and Distribution. (2021). Energy.Gov.

https://afdc.energy.gov/fuels/biodiesel_production.html#:~:text=Biodiesel%20is%20produced%2

0from%20vegetable,and%20glycerin%20(a%20coproduct).

2. World Biodiesel Consumption by Country (Thousand Barrels per Day). (2021). Indexmundi.com.

https://www.indexmundi.com/energy/?product=biodiesel&graph=consumption&display=rank

3. RESYA HANI AHMAD. (2019, August 28). We’re unaware that air pollution is a silent killer.

NST Online; New Straits Times. https://www.nst.com.my/opinion/letters/2019/08/516887/were-

unaware-air-pollution-silent-

killer#:~:text=The%20World%20Health%20Organisation%20had,importance%20of%20tackling

%20air%20pollution.

4. Hearst Autos Research. (2020, April 22). Biodiesel vs. Diesel: Everything You Need to Know.

Car and Driver; Car and Driver. https://www.caranddriver.com/research/a31883731/biodiesel-vs-

diesel/

5. Adroit Market Research. (2020, June 25). Biodiesel Market to grow at 4.7% CAGR to hit US

$47.90 billion by 2025 – Global Insights on Key Stakeholders, Leading Players, Value Chain

Analysis, Regulatory Framework and Business Opportunities: Adroit Market Research.

GlobeNewswire News Room. https://www.globenewswire.com/news-

release/2020/06/25/2053297/0/en/Biodiesel-Market-to-grow-at-4-7-CAGR-to-hit-US-47-90-

billion-by-2025-Global-Insights-on-Key-Stakeholders-Leading-Players-Value-Chain-Analysis-

Regulatory-Framework-and-Business-Oppo.html

6. Are you disposing used cooking oil responsibly? Here’s what your neighbourhood can do - Epic

Journal. (2018, November 28). Epic Journal - Stories for Communities.

https://journal.epic.my/responsible-used-cooking-oil-disposal-neighbourhood/

7. Ay, T. (2013). The Management of Waste Cooking Oil: A Preliminary Survey. Health and the

Environment Journal, 4(1). http://www.hej.kk.usm.my/pdf/HEJVol.4No.1/Article08.pdf

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