Analysis at One Point in Time
This section examines what can be regarded as an analysis at one given point in
time. This “instant” analysis is normally confined to a typical period in the life of
the project, usually 1 year. This is the usual type of economic analysis and is also
the type found in Chem Systems’ reports, SRI’s reports, etc.
An analysis of this type normally entails three parts:
• Capital summary
• Production cost summary
• Reporting parameters
In the first part, capital summary, we tabulate those items that may be candidates
for depreciation, amortization, or interest charges for both long-term and short-term
capital. Typical items are:
• Erected plant cost
• Erected offsite cost
• Interest during construction
• Catalyst and metals inventory
• Working capital
If the economic analysis is intended to account for tax effects, a far more detailed
breakdown is required for capital items since, for tax purposes, the depreciation
schedules may vary considerably from item to item, principally as concerns the
treatment of machinery, equipment, and offsites.
The second part, production cost summary, provides a condensed tabulation of
the various items that contribute toward the final cost of the manufactured product.
There are two basic ways of conducting an “instantaneous” economic analysis as
described herein: (a) to arrive at a cost of production or (b) to arrive at a given return
on capital (ROI). Both formats are similar in concept and execution, the only
difference being that the latter, (b), requires the assignation of cash values to the
main product or products.
The following items are normally included:
Variable credits (often shown as credits against variable costs)
Materials
Product revenue (only shown if required to set margins)
By-product credits
Utilities
Utility credits
Variable costs
Materials
Raw materials costs
Catalysts and chemicals
746
D.S.J. Jones and P.R. Pujado ´
This section examines what can be regarded as an analysis at one given point in
time. This “instant” analysis is normally confined to a typical period in the life of
the project, usually 1 year. This is the usual type of economic analysis and is also
the type found in Chem Systems’ reports, SRI’s reports, etc.
An analysis of this type normally entails three parts:
• Capital summary
• Production cost summary
• Reporting parameters
In the first part, capital summary, we tabulate those items that may be candidates
for depreciation, amortization, or interest charges for both long-term and short-term
capital. Typical items are:
• Erected plant cost
• Erected offsite cost
• Interest during construction
• Catalyst and metals inventory
• Working capital
If the economic analysis is intended to account for tax effects, a far more detailed
breakdown is required for capital items since, for tax purposes, the depreciation
schedules may vary considerably from item to item, principally as concerns the
treatment of machinery, equipment, and offsites.
The second part, production cost summary, provides a condensed tabulation of
the various items that contribute toward the final cost of the manufactured product.
There are two basic ways of conducting an “instantaneous” economic analysis as
described herein: (a) to arrive at a cost of production or (b) to arrive at a given return
on capital (ROI). Both formats are similar in concept and execution, the only
difference being that the latter, (b), requires the assignation of cash values to the
main product or products.
The following items are normally included:
Variable credits (often shown as credits against variable costs)
Materials
Product revenue (only shown if required to set margins)
By-product credits
Utilities
Utility credits
Variable costs
Materials
Raw materials costs
Catalysts and chemicals
746
D.S.J. Jones and P.R. Pujado ´