Investments reasons

For the above reasons, gas Is typically economic to develop only if it can be used locally, i.e. if a local demand exists. The exception to this is where a sufficient quantity of gas exists to provide the economy of scale to make transportation of gas or liquefied gas attractive. As a guide, approximately 10 Tcf of recoverable gas would be required to justify building a liquefied natural gas (LNG) plant. Globally there are few such plants, but an example would be the LNG plant in Malaysia which liquefies gas and transports it by refrigerated tanker to Japan. The investment capital required for an LNG plant Is very large typically in the order of 10 billion. 

The positive results and savings due to use of NDT and TD are hundred times grater than made investments. This is the main reason why the philosophy of safety management was changed, i.e. from the philosophy to react and correcf to the principle to predict and reduce the losses . The use of NDT and TD allows to foresee the results of economic-technical activity, to make mostly efficient decisions, to reduce the risks, to simulate mutual processes relations in technogenic, ecological and social-economical fields. 

Measuring the barrier properties of polymers is important for several reasons. The effects of formulation or process changes need to be known, new polymers need to be evaluated, data are needed for a new apphcation before a large investment has been made, and fabricated products need to have performance verified. For some apphcations a full range of data is necessary, including P, Z9, and S plus the effects of temperature and humidity. 

The full brake dynamometer, when properly instmmented and controlled, reflects the actual brake performance in a vehicle with reasonable accuracy. High initial investment is recovered through operation independent of the climatic conditions and by a fully automatic operation for extended periods, minimizing personnel costs. 

The nondepreciable investments, ie, land and working capital, are often assumed to be constant preoperational costs that are fully recoverable at cost when the project terminates. Equipment salvage is another end-of-life item that can represent a significant fraction of the original fixed capital investment. However, salvage occurs at the end of life, can be difficult to forecast, and is partially offset by dismantling costs. Eor these reasons, a zero salvage assumption is a reasonable approximation ia preliminary analysis. 

Most large electrochemical processing faciHties are located where raw materials, including electric power, are readily available at reasonable costs. Other factors influencing the location of electrochemical plants are proximity to markets, estabHshed transportation faciHties, availabiHty of water, and a source of labor. Large electrochemical plants are capital intensive, requiring large capital investment cost per employee. 

It is also the responsibihty of management to estimate the probabilities for the success of individual projects after due consideration of all the data provided by the various departments. The rate of return on investment that is acceptable to management is a function of these responsibihties. Each industry has a reasonably well defined return on investment that reflects the degree of risk inherent in that industry. If management decisions are faulty, the company either will overspend or will miss opportunities. 

The same money invested in a project with a (DCFRR) of 10 percent would, by Eq. (9-108), obtain an entrepreneurial return i = 8.37 percent on the whole investment, i.e., 8.37/ 100. Investment of the entrepreneur s own money would only achieve an aftertax return of (0.1)(1 — 0.40) = 6 percent on 50, or 3/ 100 of total investment. The incentive to the entrepreneur to manage the projeci thus corresponds to a tax-free income of 5.37/ 100 of total investment. In practice, money is borrowed from more than one source at different interest rates and at different tax liabihties. The effective cost of capital in such cases can be obtained by an extension of the above reasoning and is treated in detail by A. J. Merrett and A. Sykes Capital Budgeting and Company Finance, Longmans, London, 1966, pp. 30 8). 

Working capital can range from about 10 percent to almost 100 percent of the invested capital, depending on the industry, and is an important fac tor in the profitability index of a business. For this reason, it is best to compare the performance of an individual company with that of others that are as similar as possible. 

Types and Accuracy of Estimates Capital-cost estimates may be required for a variety of reasons, among others to enable feasibility studies to be carried out, to enable a manufacturing company to select from alternative investments, to assist in selection from alternative designs, to provide information for planning the appropriation of capital, and to enable a contractor to bid on a new project. It is therefore essential to achieve the greatest accuracy of estimation with a minimum expenditure of time and money. 

A wide variety of size-reduction equipment is available. The chief reasons for lack of standardization are the variety of products to be ground and product quahties demanded, the limited amount of useful grinding theory, and the requirements by different industries in the economic balance between investment cost and operating cost. Some differences exist for the sake of difference sometimes similarities are advertised as differences [Rumpf, Chem. Jng. Tech., 37(3), 187-202 (1965)]. 

Two main benefits accrue from a systems approach to materials handling and packaging. First, a trade-off of investment and operating costs is made possible nigher costs in some parts of a system become permissible in return for much lower costs in other parts. The net result is usually the lowest overall cost. If this is not the case, the reasons for incurring the higher costs can be identified and justified. The second benefit is that customers are not offended by ill-conceived packages, delivery vehicles, or product characteristics. 

Although a mass-flow bin is obviously preferable to a funnel-flow vessel, the additional investment generally required must be justified. Often, this can be done by the reduced operating costs. But when installation space is limited, a compromise must be made, such as providing a special hopper design and sometimes even a feeder. Certainly, with mass-flow bins the feeder is not required for flow, but it might still be used for other reasons, such as conveying the material to the next process step. 

There are many reasons for significant investment in FCC power trains and, thus, power train maintenance. These power recovery machines handle catalyst-laden gas at high temperature. Because the recovery system is connected to the processing plant, the steam pipe network and the electrical power grid, a power train upset is likely to rapidly extend from the FCC unit to the entire plant. 

From an economic standpoint, electricity production from a new natural gas plant versus a newly built coal-fired plant heavily favors natural gas, because natural gas-fired plants are cheaper to build. However, older coal-fired plants built 20 to 30 years ago are often more profitable than newly built gas plants, because — among other reasons — coal is cheaper than natural gas, and the older plants have long since paid for their capital investments through depreciation. 

Another reason why we can question whether such a technology investment really makes sense is the fact that emissions-control requirements tend to be less stringent when it comes to older coal-fired plants. In the United States the great majority of NOj emissions from the power sector come from existing coal-fired plants, many of which were built between 1950 and 1980. 

Although the reasoning seems sound, opportunity costs are not really expenses. Though it is true that the cash will be unavailable for other investments, opportunity cost should be thought of as a comparison criteria and not an expense. The opportunity forgone by using the cash is considered when the project competes for funds and is expressed by one of the financial analysis factors discussed earlier (net value of present worth, pay back period, etc.). It is this competition for company funds that encompasses opportunity cost, so opportunity cost should not be accounted directly against the project s benefits. 

Keep in mind that we are not reeommending that your drivers should not be trained. On the eontrary, if it is reasonable to train the drivers, it is an exeellent idea. However, the truek driver population often is transient by nature. After you have invested time and money to train a driver it ean be diflfieult to ensure that you will be able to reap the benefits from this training. Drivers ean be dispatehed to a variety of plaees for a variety of reasons. Keeping this in mind, it makes sense to manage so that the drivers would not be required to be HAZWOPER trained. 

Another reason for investing in error reduction is to conform with regulatory standards. Error reduction yields regulatory relief. 

Measuring and monitoring PSM installation helps assure consistency and quality control in addition, effective monitoring helps keep local expenditures and schedules on track. In effect, these activities protect the investment you, your team, and your company have made in the course of your work so fac and for this reason they warrant continuing attention. 

An additional reason for investing resources in error reduction measures is to improve the ability of the industry to conform to regulatory standards. It is likely that as the relationship between hximan error and safety becomes more widely recognized, regulatory authorities will place more emphasis on the reduction of error-inducing conditions in plants. It is therefore important that the Chemical Process Industries take the lead in developing a systematic approach and a defensible position in this area. 

---