construction project initiation and feasibility study part...
TRANSCRIPT
Project and Construction Management
Lecture #2
Construction Project Initiation and Feasibility Study
Part 2: Technical Assessment
Department of Civil Engineering, Sharif University of Technology
By: Dr. Amin Alvanchi and Dr. Hamed Kashani
Construction Engineering and Management
Outline
Introduction
a. Methods of producing service/ product
b. Capacity analysis
c. Equipment & material to be constructed
d. Material & supplies required for operation
e. Organization required for operation
f. Utility and auxiliary equipment to be constructed
g. Buildings & facilities required to be constructed
h. Location analysis
i. High level schedule
2
3
Introduction
Why this project?
Project Feasibility
Studies
Project Charter
1. Market assessment
2.Technical Assessment
3. Financial Assessment
4. Conclusion
4
Introduction
1. Market assessment
2.Technical Assessment
3. Financial Assessment
4. Conclusion
a. Methods of producing service/ product
b. Capacity analysis
c. Equipment & material to be constructed
d. Material & supplies required for operation
e. Organization required for operation
g. Buildings & facilities required to be constructed
h. Location analysis
i. High level schedule
f.Utility and auxiliary equipment to be constructed
5
A technical assessment in many cases requires specific areas of
expertise to be able to do the assessment. Examples:
Technical assessment of a power plant project
Technical assessment of a refinery project
Technical assessment of a dam project
Technical assessment of a steel mill project
Can you find a person who knows technical issues of all these projects?
What are we expected to do during the “technical assessment” stage?
We, as construction project managers, are not expected to be familiar
with the technical details of all projects we manage; we are not expected
to directly conduct all parts of the project’s “technical assessment”.
Introduction
6
In many cases we need to hire consultants (individual or company) who
are familiar with the technical aspects of our project.
Our main mission is to properly define what we expect out of the
technical assessment work and to be able to use the findings for the rest
of our feasibility study.
Introduction
“Technical
assessment”
responsibility
distribution:
Technical
expert in
charge with
FS expert
supervision
FS expert in
charge with
Technical
expert
consultation
a. Methods of producing service/ product
b. Capacity analysis
c. Equipment & material to be constructed
d. Material & supplies required for operation
e. Organization required for operation
g. Buildings & facilities required to be constructed
h. Location analysis
i. High level schedule
f.Utility and auxiliary equipment to be constructed
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a. Methods of producing service/ product
Here we identify, detail and analyze possible methods for producing service/
product required!
A person familiar with technical aspects of required service/ product should be in
charge of this part.
A comprehensive literature review should be conducted to be able to identify
prevalent alternative methods of doing the job!
This step is a good candidate for doing a Value Engineering (VE or مهندسی ارزش)!
VE is a systematic method to improve the value (= output / input) of products/
services in need. It follows three basic steps:
1) Function analysis; to identify critical functions 2) Alternative method creation;
how to meet the need 3) Alternative evaluation; to choose the best alternative
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a. Methods of producing service/ product
Main outputs of this step are 1) detail explanations of alternative methods of
producing service/ product 2) comparison between advantages and
disadvantages of different methods 3) a service/ product production method(s)
recommended
Decision tree is a main tool for evaluating and selecting/ recommending most
suitable alternatives. We are going to discuss it more in later lectures!
Example: Different alternatives for responding to Tehran-Shomal transportations
needs:
1) Upgrading current roads including: Haraz, Firoozkooh and Chaloos
2) Setting new economical and fast transit bus from Tehran to Shomal
3) Building a new freeway
4) Building a high-speed railway
You need to explain the detail of each alternative method! What does every
method mean? What are the extent of their implementation methods?
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a. Methods of producing service/ product
Example (cont’d): Advantages and disadvantages
Score alternative project methods and pic the best one which fulfills the
requirements!
Advantages Disadvantages
Upgrading
roads
- Relatively a cheap method
- Relatively in short construction time
- Limitations of the initial design
- Lengthy routes
Transit bus
- The cheapest method
- Shortest construction duration
- Possibility of income
-Responds to a portion of demand
- Can be used as complementary
method to the others
Freeway
- Can respond to most of demands
- Can reduce the road length
- Can reduce fuel consumption
-Can increase travel safety
- Possibility of income
-The most expensive method
- Long implementation time
Railway
-Can increase travel safety
-Possibility of income
- An expensive method
- Long implementation time
-Responds to a portion of demand
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a. Methods of producing service/ product
Example (cont’d): Advantages and disadvantages/ ranking
After choosing the alternative method, you need to outline the selected
method’s steps!
Advantages Disadvantages Mark
Upgrading
roads
- Relatively a cheap method (10)
- Relatively in short construction time
(10)
- Limitations of the initial design (10)
- Lengthy routes (5)5
Transit
bus
- The cheapest method (15)
- Shortest construction duration (10)
- Possibility of income (5)
-Responds to a portion of demand (X)
- Can only be used as complementary
method to the others (X)
X
Freeway
- Can respond to most of demands (20)
- Can reduce the road length (5)
- Can reduce fuel consumption (10)
-Can increase travel safety (10)
- Possibility of income (5)
- -The most expensive method (20)
- - Long implementation time (10)20
Railway-Can increase travel safety (10)
-Possibility of income (5)
- An expensive method (10)
- Long implementation time (10)
-Responds to a portion of demand (X)
X
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a. Methods of producing service/ product
Main steps of freeway construction (sample high level method):
1) Freeway preliminary study and conceptual design
2) Freeway detail design
3) Freeway construction
1) Cleaning and excavation,
2) Sub-base layers construction
3) Base layers construction
4) Surface layers construction
5) Bridges construction
6) Tunnels construction
7) Utility (light, drainage system, phone, etc.)
8) Traffic elements installation
9) Service buildings construction
4) Freeway Operation and maintenance
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c. Capacity analysis
Scale of the project and the output capacity of constructed project
during operation phase depends on several effective factors, including:
Net demand/ need: basically main incentive for the project construction is
to respond to the need/ demand identified for the project.
Question: What if the service/ product produced after a project’s construction
(or during operation phase of a project) does not meet the need for the
project?
Question: What if output service/ product goes beyond the demand?
Example: There is a power supply shortage of 20 MW during the high
demand hours of the day for a city. Our suggestion for the capacity of the new
power plant to be constructed is 20 MW!
Example: Current north-south roads can respond to maximum of 20k p-car/h.
If the city’s rush- hour demand for north-south roads is 25k p-car/h. We
recommend a road capacity of 5k p-car/h to the city.
13
b. Capacity analysis
Example: Currently there is a room for additional cement export of 15 M
Ton/year. Our recommended capacity to a cement plant investor is the
maximum capacity of 15 M Ton/year.
Technical possibility: Capacity of a project is depended on many technical
effective factors, including size and number of equipment, supply rate of raw
material and supplies, space availability, etc. Often these effective factors limit
us to specific number of project capacities.
Example: When it comes to the road construction, the minimum car traffic
capacity we can get for a two-way road is a road with two lanes provide a
capacity of (for example) 1000 cars per hour. In such cases we can not
construct a road with exact capacity of 1150 cars per hour. We are either to
choose 1000 or 2000 cars per hour capacity!
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b. Capacity analysis
Economic possibility: Normally, a higher capacity results in a lowered
overhead cost per service/ product unit and causes a decreased cost of
service/ product units. In other word facilities with higher capacities usually
have more competitive advantages. For many industries a minimum
economic capacity, below which owners can not sell their services/ products
in economical prices, is defined. This economical capacity is changed over
time due to the supply and demand as well as raw material, resources and
technological changes.
Example: Minimum refinery capacity to stay in an economic scale is 200k
barrel/day.
Other factors: Other factors such as number of working shifts, number of
working days, etc. also affect final capacity of project during operation phase.
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What type of equipment and technology is required for producing
product/service?
What costs are involved for purchasing and setting up the equipment?
What costs are involved for operating the equipment?
Equipment suppliers:
Who are the potential suppliers of the equipment?
Where are they located?
What source of service and warranties do they provide?
How long it will take to acquire the equipment and begin operations?
c. Equipment and material to be constructed
16
For every alternative method of production we need to collect information
or different set of machineries.
Specifications, capacities & costs must be described in detail. Example
1, 2.
Make sure to consider customs duty, transportation, insurance and
possible legal costs and fees of equipment.
c. Equipment and material to be constructed
17
d. Material & supplies required for operation
How much material and supplies is required to produce products/ services? How
much do they cost?
Volume of material is determined from every alternative method process
considering the capacity chosen!
Volume of supplies (including water, electricity, natural gas, lubricants, spare
parts, etc.) are determined from equipment specification.
Cost of main materials (e.g., natural gas for a power plant, bitumen and
aggregate for a asphalt plant, cement, water and aggregate for concrete batch
plant) need to be accurately determined!
We need to get quotes from main suppliers to make sure about the cost.
Sometimes we need to use forecasting methods to estimate the cost of material
during the operation phase
18
How much material and supplies is required to produce products/ services? How
much do they cost?
Volume of material is determined from process of every alternative method
considering the capacity chosen!
Volume of supplies (including water, electricity, natural gas, lubricants, spare
parts, etc.) are determined from equipment specification.
Cost of main materials (e.g., natural gas for a power plant, bitumen and
aggregate for a asphalt plant, cement, water and aggregate for concrete batch
plant) need to be accurately determined!
d. Material & supplies required for operation
19
Many times you need to get quotes from main suppliers to make sure
about the cost.
Exact specification of materials need to be determined for any possible
preparation for material transportation and storage!
Example 1
d. Material & supplies required for operation
20
e. Organization required for operation
How project is going to be run after construction?
Which organizational departments are needed?
What expertise are required?
How many workers are going to work with in different work stations?
What is the expected salary for each group of workers?
Example 1
21
f. Utility & auxiliary equipment to be constructed
Utility or auxiliary equipment include service machineries and facilities
(e.g., generator, water tank, boiler, etc.) need to be constructed!
In industrial projects majority utilities and auxiliary equipment are going
to be used for operating main equipment. So main portion of capacity
estimation is calculated based on volume estimated for equipment
supplies.
Organization’s staff also require utilities. We need to update utility and
auxiliary equipment volume after completing building and civil work
calculations!
Example 1
22
g. Buildings & facilities to be constructed
Production buildings is calculated based on equipment sizes and layouts
Warehouses and storage rooms is calculated based on material and supplies
for operation (e.g., area to store material and supplies of one month of operation)
Office buildings is calculated based on organizational chart
Service buildings (restaurant, medical room, praying room, etc.) is calculated
based on organizational chart
Security room
Parking area is calculated based on organizational chart
Power house and utility buildings is calculated based on utility and auxiliary
equipment calculated (you might need to update utility required after estimation
of other building areas)
Land is calculated based area of different buildings calculated
Example 1
23
h. Location analysis
Different factors are consider for selecting a project location:
Close to the target market
Close to the raw material
Existence of experts
Tax incentives and supportive laws
Local concerns for developing a region
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i. High level schedule
Consider main technical requirements to develop a high level
schedule.
Time to complete the design
Time to deliver equipment
Time to construction buildings
Time to install equipment
Time to do trial operation and testing
Example 1
25
Home assignment 3
After complete market assessment, we ended up with a net
demand for a 150 beds general hospital in the west Tehran.
Follow technical assessment steps and prepare your (up to 10
pages) technical assessment report for this project.
Due one week!
Thank you!