Projects - Capital Investments
Believe it or not, it is not always nice to have a lot of money in the bank. At least, not for big companies. Money can cost money...
INFLATION - Due to inflation the value of money decreases over time. Money in the Bank will lose it's value. Actually, a lot of banks nowadays Charge money for savings.
TAXES - Governments will charge Capital tax for money you will have laying around. They will also charge you when you make huge profits.
A possible Solution is investing it. Investment costs can be deducted from taxes, they lower the profit in the short term. If you invest in your own business you expect a higher profit in the long run.
Some multi million dollar projects I worked on earned themselves back within less then 5 or 10 years! After that, the extra money earned can be invested again to keep the company growing while at the same time lowering taxes paid.
Types of Projects
We differentiate different kinds of projects:
1.1 "Green field Projects"
Projects starting to build from Zero, a green empty Field (of grass).
It is an approach used when you're starting fresh and with no restrictions or dependencies.
A greenfield project is one that lacks constraints imposed by prior work on the site. Typically, what a greenfield project entails is development on a completely vacant site. Engineers and Architects can start completely from scratch.
Challenges:
- No proven practices to rely on. New technologies can be risky and project results are
often unsure.
1.2 "Brown field Projects"
A brownfield project is one that carries constraints related to the current state of the site. In other words, the site might be contaminated or have existing structures that architects have to tear down or modify in some way before the project can move forward.
Land that was used for industrial purposes may have environmental issues (Contamination) and/or the buildings and structures on it might not be up to code.
Challenges:
- Data from the existing plant is not always accurate. Locations need to be checked. New
pipes and Equipment can "Clash" with items in the existing plant.
- status and condition of items need to be checked. Can it be re-used or do we need to
buy new?
- DANGER! We are working in a plant that is "LIVE" or in service. Complete plant shutdowns
are rare and therefore proper security measures to ensure the safety for the people
working in the plant need to be in place.
1.3 Mixed field Projects
A lot of the times, projects are a mixture of Green and Brownfield. An empty area is used for new constructions and a new part of the plant and is later connected to the Brownfield Area's through "Piping Tie-ins".
Challenges - All of the above
1.4 Revamp Projects
Technically, a revamp is a renovation, a project that is focused on an existing facility. It includes the act, process, or work of replacing, restoring, repairing, or improving a facility.
A Revamp is however rarely a standalone project, it is mostly combined with a Brownfield project to expand production.
Challenges - All of the above
2.0 Project investment Goals
The Goal for every Project is always the Same :
1. Earning extra Money
2. Saving Money in the long run
2.1. Earning Extra money
The Client has a demand. When you are able to meet the demand, you can make money, simple as that!
An example -> Crude oil. There is no demand for crude oil. But since men found out the principle of Oil Distillation we created new, usably and until today quite profitable products.
2.2. Saving money
During various processes there is always a waste of material, residu or energy. Once we start re-using this items, money can be made from waste.
One Example is Cogeneration. Cogeneration, also known as Combined Heat and Power (CHP) is the production of electricity and heat from a single source.
Below is an Schematic describing that the Hot Exhaust gasses, normally lost are recovered and used to produce Hot water or steam. This can be used inside the plant to reduce electricity and heating costs, or sold to external parties.
Wasted energy is normal Power plants can be up to 60-70%!
in a CHP type of Plant, this can be reduced to 10-20%
