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Load:
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1. komponenta
| Lecture type | Total |
| Lectures |
30 |
| Seminar |
15 |
* Load is given in academic hour (1 academic hour = 45 minutes)
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Description:
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COURSE OBJECTIVE:
Mastering the basics of process economics, adapted to students of technical faculties. To teach students to assess the profitability of an engineering project.
THE CONTENTS OF THE COURSE:
Week 1. Introductory lecture. The profession of chemical engineer and process economics. Why does a chemical engineer need to know the basics of economics? Concepts of economy vs. economics. Basics of economy. Enterprise as a production and business system. Business goals and limitations.
Week 2 Engineering economic analysis. Cost and value of property. Company cash flows. Terminology in the basics of financial accounting. Investment and time value of money. Examples.
Week 3. The time value of money. Interest-bearing procedures. Time base for a complex interest account. Continuous interest. Examples. Cash flow diagram or CFD diagram. Calculations from cash flow diagrams.
Week 4. Periodic payments (annuities) and discounting. Calculating annuities from the present and future value and vice versa. Examples. Inflation and calculation of the effective interest rate which includes inflation. Depreciation (decrease in value) of assets and what is subject to depreciation. Cash flows, net profit and depreciation. Examples.
5. Week Partial test
Week 6 Criteria of profitability of investment in the project. Non-discounted and discounted profitability criteria. Calculating criteria from CFD.
Week 7. Project analysis. Meaning of NPV (Net Present Value) or NPW (Net Present Worth), for comparison of large projects. Examples. Significance of NPV in equipment selection. Capitalized value method. Annual operating cost method. Common denominator method. Examples.
Week 8. Risk assessment in profitability analysis. The impact of supply and demand on product price and project profitability. Supply and demand factors. Quantification of supply, demand and risk. Examples.
Week 9. Costs in production systems. Costs and production capacity. Terms: fixed and variable costs, average fixed and variable costs. Examples.
Week 10. Partial test
Week 11. Costs and laws of returns. Examples. Marginal cost and marginal yield. Coefficient of reactivity (elasticity). Examples.
Week 12.Short-term and long-term costs. Costs and the plant capacity. Company growth theory and growth management. Company growth goals. General conditions for growth-internal and external. Growth factors, growth conditions and company growth paths. Examples.
Week 13. Product price structure. Cost structure. Price calculation methods. Break-even point and safety factor.
Week 14 Static and dynamic criteria of an investment evaluation.
Week 15 Partial test.
DEVELOPMENT OF GENERAL AND SPECIFIC COMPETENCIES OF STUDENTS:
The acquired knowledge will enable the student to understand the basics of financial accounting, profitability assessment, costs that occur in processes and the assessment of financial efficiency, in order to participate equally in making economic decisions. This knowledge is important in the preparation of a Feasibility Study, where the economic evaluation of the project is one of three essential units of the Study.
STUDENTS OBLIGATIONS AND THEIR PERFORMANCE: Mandatory attendance of lectures and seminars.
CONDITIONS FOR OBTAINING A SIGNATURE: Attending at least 75% of lectures and seminars.
TEACHING METHODS: Auditorium for lectures and seminars.
METHOD OF EXAMINATION OF KNOWLEDGE AND EXAMINATION: Three partial tests. The average grade is the overall grade of the course. Otherwise, written and oral exam.
METHOD OF MONITORING THE QUALITY AND PERFORMANCE OF COURSES: Student survey
LEARNING OUTCOMES AT PROGRAM LEVEL:
1. Linking the profession of chemical engineer and its impact on the adoption of economic decisions
2. Preparation of a feasibility study.
3. Application in sustainable industrial activities (environmental impact study, cost-benefit analysis)
4. Understand the costs of production systems
TEACHING UNITS WITH ASSOCIATED LEARNING OUTCOMES AND EVALUATION CRITERIA
Teaching unit 1. Process economics and the profession of chemical engineer
Learning outcomes
-define the terms economics (management) and economics
-give examples of management in production systems
-reproduce the steps of engineering economic analysis -explain the cash flow tree in a manufacturing company
-explain the structure of the factory and the goals and limitations of the company
-give an example of a complex banking transaction
Evaluation criteria
-interpret the steps of engineering economic analysis
-state examples of management in production systems
-interpret cash flows in the company (know the difference between profit and profit)
-understand a complex banking transaction from the point of view of costs and profits
Teaching unit 2. Time value of money and types of interest
Learning outcomes
-select examples of different interest rates -explain the time value of money and how it affects the cash flow.
-develop a cash flow diagram (CFD diagram) using an example
-select examples of calculations derived from cash flow diagrams (future value, present value, periodic investments, arithmetic gradient)
-explain the terms: inflation and depreciation, declining equipment values and equipment (process) life
Evaluation criteria
-explain the meaning of the time base for complex interest
-development of tasks related to interest
-know the calculations resulting from the cash flow diagram -sketch a CFD diagram based on a given task
-understand the difference between depreciation and equipment (process) life
Teaching unit 3.Profitability analysis
Learning outcomes
-calculate discounted and non-discounted profitability criteria
-reproduce the calculations of profitability criteria on examples of investment in process project (analytical and graphic) -interpret NPV (net present value) as a measure of profitability
-give examples of NPV application
Evaluation criteria
-know the discounted and non-discounted project profitability criteria
-for a given example, develop a CFD diagram and determine the NPV value for a given time observations -know the application of NPV in the selection of equipment and methods used, through examples
-select the currently profitable investment in the project based on the calculation of NPV
Teaching unit 4. Costs in production systems
Learning outcomes
-explain the division of costs based on different sizes
-explain the difference between total and average costs and their connection with laws of returns
-reproduce the terms marginal cost and coefficient of elasticity through examples
-connect costs and size (capacity) of the plant
Evaluation criteria
-understand and distinguish between fixed and variable costs
-calculate marginal cost and coefficient of elasticity on a given example -interpret costs over a long period of time and relate costs to capacity Facility
Teaching unit 5. Enterprise growth
Learning outcomes
-describe the external and internal conditions of company growth
-explain the difference between company growth factors and company growth paths
-give the structure of the selling price of the product
-reproduce calculation methods
-show examples of calculating the safety factor and link them to the breakeven point
Evaluation criteria
-calculate the break-even point in an example
-calculate the safety factor and explain the meaning on a given example
-know how to graphically show the breakeven point and the relationship with the total income and financial result
-know the types of cost calculations and the structure of a product cost.
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Learning outcomes:
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- Differentiate between economy and economics.
- Identify types of interest and explain the time value of money
- Develop a cash flow diagram of a project.
- Evaluate a project using different profitability criteria.
- Identify costs in production systems and connect them to return laws.
- Choose a product cost calculation method.
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Literature:
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Plant Design and Economics for Chemical Engineers, M.S.Peters, K.D. Timmerhaus, McGraw Hill, 2002.
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Analysis, Synthesis and Design of Chemical Processes, R. Turton, R. C. Bailie, W. B. Whiting, J. A. Shaeiwitz, Prentice Hall, 2003.
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Troškovi u poslovnom odlučivanju, I. Santini, Hibis, 1999.
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Engineering Economy, T.G: Eschenbach, Oxford University Press, 2003.
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Systematic Methods of Chemical Process Design, L.T. Biegler, I.E. Grossman, A.W. Westerberg, Prentice Hall, 1999.
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Prerequisit for:
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Enrollment
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Passed
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Chemical plant design I
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Pristupačnost
