KNOW-HOW ECONOMICS It is the considered judgment of Shell Development management that without the effective utilization of the cumulative know-how of past years, both in research, development, and operation of chlorination and hydrochlorination reactions, a project of this nature could not have been completed for less than $1,500,000. Far more than this amount has been spent in amassing the knowhow utilized. The project was actually completed for much less than this amount, including both research and development expense and all phases of engineering. The entire project was completed successfully within the desired period of one year, whereas a project of this complexity could normally be expected to require 3 years or more from inception to completion of a design suitable for construction purposes. It has been shown by this example that it is possible to save a major portion of the expense in time and money required to
complete development projects by the use of know-how. In addition, it has been shown how one may license a process with a considerable saving in time and expense and with the additional insurance of assistance from personnel who have both designed and operated identical or related plants.
literature Cited (1) Groll, H. P. A , , Hearne, G. W., Eurgin, J., and LaFrance, D.
S., (to Shell Development Co.), U. S.Patent 2,130,084 (1938). (2) “Resources for Freedom,” President’s Materials Policy Comm. (U. S.Govt. Printing Office, Washington 25, D. C.), Vol. IV, 1952. (3) Vaughan, W. E., and Rust, F. F. (to Shell Development Co.), U. S. Patent 2,246,082 (1941). RECEIVED for review dugust 9, 1954.
ACCEPTED February 7, 1955.
Costs in Developing Process Know-How J. S. REARICK
The C. W. Nofsinger Co., Kansas City, Mo. The development of process and engineering data on a pilot plant scale i s an important aspect of “know-how.” Some of the factors affecting equipment and operating cost are defined and discussed. Unit prices for a few commonly used equipment items are given together with an analysis of typical operations.
A
S THE use of continuous processing has become more wide-
spread in the chemical industry, the pilot plant has assumed a position of key importance in process development. The evolution of sound techniques for design and operation has improved the reliability of pilot plant data and increased its utility, both for the evaluation of new processes and for the engineering design of the full scale plants. As processing schemes have become more complex and as operating conditions have become more severe, the acquisition of pilot plant know-how has become increasingly expensive. “Know-how” is a particularly apt term for the practical experience essential to successful pilot plant design and operation. The value of such information has long been recognized in the petroleum industry and provision for exchange of pilot plant know-how is included in many licensing agreements.
Factors Affecting Development Costs One of the more important cost factors in developing process know-how is the scope of the program; this involves not only the pilot plant itself, but also such auxiliary work as development of analytical methods, experimental determination of thermodynamic data, or application tests of the final product. I n a catalytic process, it may be necessary to carry on studies to determine stability and life of the catalyst. The scale of the pilot plant work also has an important bearing on process development costs from the standpoint of both investment and operation. The pilot plant size will generally be the compromise that most nearly satisfies various requirements ( 3 , 7’). If samples of the product are required for evaluation, the output of the plant should provide the necessary amount in a reasonable length of time. Availability of feed stock or problems of disposal of waste products may act to limit the size of the plant. On the other hand, a given minimum capacity may be necessary to permit utilization of representative equipment May 1955
of certain types. If the over-all process can be broken down into several separate steps, it may be desirable to carry these out on different scales (4). The degree of integration is also a factor that requires study. Generally, for any particular situation, there is an optimum balance between the increased complexity of the completely integrated operation and the disadvantages of individual processing steps. Operations involving recycle streams must usually be integrated, but frequently it is more economical to separate product finishing or purification operations. The anticipated duration of the program will normally affect the relationship between investment and operating cost, since the longer the period of operation the greater the expenditure that can be justified to reduce operational manpower and expense. If the urgency is great, costs may be considerably larger than if time is available for a more orderly development program. Finally, there are a number of factors which are specific to the particular organization carrying on the work, rather than to the process itself. These include cost accounting practices, experience in similar work, extent of current activities, labor situation, philosophy of operation, and similar intangibles. Equipment Costs Occasionally, the only purpose of a pilot plant is to produce large samples of the product for market development or similar purposes. The function of such a plant is to provide product rather than process know-how. For the situation under consideration here, however, the extent of the pilot plant facilities and, indeed, even the necessity for a pilot plant a t all, is determined by the area of uncertainty in the design of the full scale plant. A recent study of twelve types of equipment representing seven unit operations indicated that for only three were pilot plant tests considered necessary ( 5 ) , provided certain characteristics of the materials were known. ,4n analysis of a processing
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ENGINEERING, DESIGN, AND PROCESS DEVELOPMENT sequence will usually reveal steps that need not be piloted. And in rare cases it may even prove economical to proceed with the full scale plant on the basis that the “ignorance” factors, which must be applied in design, or changes that may be necessary after completion will cost less than the pilot plant and its operation. It is probable that there will also be an appreciable reduction in the over-all time required to get into production. The estimation of plant and equipment costs has been extensively covered in the technical literature. There is, however, relatively little published information available on pilot plant costs. Extrapolation of cost data for commercial equipment to the small sizes required is generally difficult and unreliable. While much pilot plant equipment is too highly specialized to permit generalization, a few typical costs for commonly used types have been assembled. These, together with some general observations on estimation of the cost of various categories of pilot plant facilities, are given in the following: I n general, specific cost figures are based on comparable but rather limited data and are for equipment of the simplest practical design. Proper allowance for the effect of the factors mentioned previously and necessary additions for accessories should be made in their use.
ways, ladders, and similar material fall into this classification. It is desirable in the design to consider future usefulness for other pilot plants. Buildings intended specifically for pilot plant work frequently have provisions incorporated for supporting and providing access to equipment. For pricing, customary estimating units for steel work may be used with due regard for the relatively small tonnage involved.
.3 4 5 . 6 .8 I.
2
4
6 8 1 0
2030
CAPACITY-CUFT
Figure 2.
Cost
of pilot plant drums
c:
2 v)
6 a Y
c
8
0
20
40
60
80
HEAT TRANSFER SURFACE
Figure 1.
100
120
- SO. FT.
Cost of small heat exchangers
Buildings. The subject of buildings for pilot plant activities is too broad for detailed discussion here. Very often the proposed unit may be located in an existing building containing other pilot plants. On occasion the major part of the plant may not be housed, but in most instances some degree of weather protection is essential. Where a special building is needed, its cost may be estimated in the usual manner bearing in mind the special requirements for pilot plant work-good ventilation, adequate headroom for tall equipment, ease of access, and flexibility for future installations. Foundations. The amount of foundation work required varies considerably. I n a pilot plant installed within an existing building with a floor of adequate load-carrying capacity, it may be negligible. On the other hand, equipment built outdoors on soil of poor bearing quality may require piling and extensive foundations. In estimating such work, it should be remembered that the quantities involved are generally smaller than those on which customary estimating units for “concrete in place’’ are based, and the latter should be increased to cover the smaller pours and more extensive formwork required. Structural Steel. The supporting structure, platforms, stair-
988
Furnaces. This category in pilot plant work covers electric heaters, as well as direct-fired equipment. These are usually more convenient and easier to control than fired equipment, if the duty is small. The use of coils in electrically heated baths of molten lead or salt is particularly advantageous where it is necessary to avoid overheating the material next to the tube wall. The point a t which electrical heat becomes impractical will depend on the nature of the operation, the availability of power, the size of the coil,‘ the temperature level, and various other considerations. Normally, however, 100,000 B.t.u. per hour are about the upper limit for electric heaters. Costs may vary widely, but a rough figure for an electrically heated lead bath of 10-kw. capacity without wiring or control equipment would be about $600; a gas-fired helical coil furnace for 200,000 B.t.u. per hour without foundation or controls would be about $3000. Tubular Equipment. This includes heat exchangers, condensers, coolers, steam heaters, etc. The selection of the type should be based on the nature of the operation, the thermal characteristics, and the quantities involved. Standardized small exchangers in a variety of designs and materials are now available from several manufacturers. The costs of these depend on design and materials, but typical prices per square foot are given in Figure 1 for small helical coil exchangers using steel tubes in EL cast-iron shell. Substitution of copper tubes will reduce the prices t o about 75% of those shown, while the use of Type 304 stainless steel tubcs will increase them by about 55%. For Type 316 stainless steel construction throughout, costs will average 3 to 3.5 times as much. For still smaller units, a simple doublepipe arrangement will usually be the choice. Drums and Tanks. For pilot plants, these are frequently constructed from pipe and weld caps in sizes up to 24 inches outside diameter, Typical prices for carbon steel vessels of various sizes are shown in Figure 2. I n Type 304 stainless steel, these prices should be increased by a factor of 2.0 t o 2.5. Reaction Vessels. These are almost always special designs and frequently include features such as agitators, heating or cooling jackets, internal coils, catalyst supports, and the like
INDUSTRIAL AND ENGINEERING CHEMISTRY
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KNOW-HOW ECONOMICS (6). Consequently, it is difficult to give any good indication of cost. For example, a 25-gallon jacketed autoclave with a variable speed agitator designed for 300 pounds per square inch working pressure and constructed of stainless steel would cost about $3000, whereas a simple catalyst chamber of the same capacity made of carbon steel for 200 pounds per square inch working pressure would cost only about $500. Typical prices for carbon steel reactors, 5 feet long, flanged a t each end, and designed for 600 pounds per square inch a t 850" F. are: 2-inch, $225; 4-inch. $325; 6-inch, $430. Towers. This includes fractionating towers, absorbers, extraction columns, and similar equipment. Packed columns are widely used in pilot plant work in preference to tray towers because of their lower cost and ease of fabrication, although small bubble cap and perforated plate towers have been built for certain applications. Typical costs of small packed towers are shown in Figure 3. Special internals or appendages may increase these figures appreciably. Pumps. Many of the mechanical problems of pilot plant work crop up in this class of equipment. Where quantities are small and heads are high, variable stroke, so-called proportioning pumps are widely used. In many services they will deliver accurately metered amounts of liquid over long periods of time. Typical prices are shown in Figure 4. Where leakage through packing glands may be a serious problem, pumps are available that have no packing or sealing mechanism in contact with the process fluid. The cost of these is generally comparable a t the lower pressures. For quantities in the gallons-per-minute rather than gallons-per-hour range, standard rotary or centrifugal pumps may be used. Special Equipment. This category covers equipment, primarily mechanical and not covered elsewhere, which may either be purchased or specially designed. Obviously, it is not possible to give any cost figures, but it may be pointed out that a number of manufacturers of process equipment have pilot scale units available on a purchase or rental basis. It may, in certain cases, be desirable to incorporate such equipment into the pilot plant, or, in others, to carry out tests in the manufacturer's laboratory.
-0
4
8
12
16
20
24
TOWER DIAMETER- INCHES
Figure 3.
Cost of small packed towers
Instruments. Wide variations are found in the extent of instrumentation employed on pilot plants. However, when one remembers that each operating man-day represents a cost of a t least $35, it is apparent that any instrument t h a t will reduce the manpower required or increase the percentage of productive operating time will soon pay for itself. Availability of suitable control equipment for pilot plant work has improved greatly in recent years ( 1 ) ; cost of specific items can readily be obtained from vendors' price lists The cost of instrumentation tends to May 1955
remain fairly constant regardless of the size of the plant provided the scope is the same. For normal extent of instrumentation the cost will vary from about 15 to 5% as the over-all cost of the job increases. Piping. With relatively few exceptions, sizing of piping for pilot plants is not critical and pipe size is dictated by mechanical considerations rather than capacity. The cost of piping materials will, of course, depend on the type of plant but will normally run from 15 t o 259& of the total material cost. '
300 I
200
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-. k cl 6
90 80 70
60
50
n #
40
30 V
20
-
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9
1
8
0
Figure
IO
4.
20
30
40
50 CAPACITY-GALS. PER HOUR
60
70
Cost of small proportioning pumps
Electrical. Pilot plants involve a type of electrical work not usually found in larger units-heaters t o overcome radiation losses. Because of the higher surface to volume ratio, it is usually necessary to provide compensation for such losses on all equipment operating a t elevated temperatures; in almost every instance, electric heaters will be most satisfactory for this purpose. Suitable means of control should be provided for convenience in operation. In addition, of course, power wiring and controls for motor-driven equipment and instruments, and lighting are necessary. Electrical material and equipment will normally run about 10% of the total material cost. Insulation. Insulation is needed on the pilot plant t o increase the effectiveness of the compensating heaters as well as to conserve heat and protect personnel. It is important to select materials suitable for the anticipated temperatures and those which have no deleterious effect on the heaters. Because of the small sizes of the vessels pipe insulation is normally used. Material cost may be estimated in normal fashion, but if installed cost is desired, the customary units should be multiplied by a factor of 2 to 3 to allow for difficulty in application. Construction. The foregoing classifications have been considered primarily on the basis of material costs and are, in general, susceptible of somewhat less fluctuation than construction cost. Whether construction is handled by contractor or by the staff, jurisdictional and other restrictions imposed by union agreements, productivity and efficiency of organization, as well as skill in pilot plant construction, all have their effect. Generally, construction labor costs will run from 50 to 100% of the material costs depending on these factors, the nature of the plant, and local labor rates. Supervision will be 5 to 10% of the labor cost. To these must be added overhead items.
INDUSTRIAL AND ENGINEERING CHEMISTRY
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ENGINEERING, DESIGN, A N D PROCESS DEVELOPMENT Engineering. If the design and detailed engineering is handled by personnel familiar with pilot plant requirements and if close liaison is maintained between the process engineers, the designers, and the construction force, the cost should be 10 t o 15% of the total plant cost ( 8 ) . If this is not the case, the cost may far exceed these figures. Auxiliary Programs The development program in addition to the pilot plant work itself, as mentioned previously, may include various other types of experimental work, which will involve equipment as well as operating expense. il few typical examples from the development of one particular process are: 1. Development of an analytical method for individual aromatic hydrocarbons in a catalytically reformed product 2 . Determination of heats of reaction under various conditions in a specially designed calorimeter 3. Studies t o establish stability of catalyst to high temperatures and steam 4. Tests to determine the performance of the product under actual conditions of use
Operating Costs The operating cost of the pilot plant will be influenced by a number of factors. Certain basic service facilities are required; if the cost of these can be distributed over a number of operations, the share of the individual project will be less. Likewise, bcnefits will accrue in the form of an increased pool of trained manpower and perhaps some reduction in the cost of over-all supervision. Successful pilot plant operation calls for a nice blend of technical and practical skills-of the two, perhaps the latter is the more important. If the operating personnel have an adequate background of experience, productive operating time will be proportionately increased. For most process work, operation around the clock 7 days per week will be far more efficient than it would be on any other basis. Good design can contribute savings, both through mechanical dependability and by minimizing time required to reach equilibrium. As has been mentioned, accounting practices vary so greatly that one company’s figures may be quite different from those of another for a similar project. Recent surveys ( 2 ) have indicated that the average annual cost per research worker in the petroleum and chemical industries is about $9000. This is equivalent to approximately $4.50 per man-hour. Making due allowance for the fact that some of these workers are engaged in administrative, service, or other unallocated activities, it is probable that the realistic average figure will approach $6.00 per productive man-hour. An analysis of a considerable number of pilot plant development projects revealed the following approximate time distribution expressed in terms
of percentage of operating man-hours or a total of roughly one and one half man-hours per operating man-hour. Per Cent 86 29 27 7 4 4
Analvtical work Calcdation a n d correlation of data Maintenance a n d revisions Technical supervision Stenographic and miscellaneous Meetings and conferences
Thus, for a moderately complex pilot plant, the operating cost might run $750 to $1000 per day. The extent of the pilot plant program will, of course, depend on the particular process under development, but estimates of the number of runs necessary t o establish the required data tend to be optimistic. Also i t is not unusual for a considerable period of time to elapse before satisfactory operation of a new pilot plant is secured and even with most careful design, modifications of the equipment may have to be made before this goal is attained.
Conclusion The cost of acquiring process know-how in the pilot plant can easily reach a total expressed in six figures. For several processes with which the author is familiar, the development cost was well in excess of a million dollars before the first commercial plant was built. This points out very clearly the necessity for a thorough analysis of the problems a t the outset of the development program. By concentrating on these aspects of the process essential to the success of the large scale plant and disregarding those whose study cannot be justified on economic grounds, not only can the cost of the development program be reduced but also the time from laboratory to commercial production.
Acknowledgment The author wishes to acknowledge the contributions of R. J. Greenwell, Sample Brothers; 0. F. Longerbeam, the Darby Corp.; H. P. Orlebeke, Hills McCanna Co.; G. E. Shaffer, Jr., Milton Roy Co.; L. F. Wilson, Lapp Insulator Co., Inc.; and also the assistance of A. L. Coffman and P. N. Myers of the C. W. Nofsinger Co. in the preparation of this paper.
Literature Cited (1) Berg, C., IND.ENG.CHEM.,45, 1836-44 (1953). (2) Chern. Eng. News, 31, 566-70, 5080-2 (1953). (3) Conn, A. L., IND.ENQ.CHEX.,45, 1625-8 (1953). (4) Maerker, J. B., and Scholl, J. W., Zbid., 45, 1622-5-(1953). ( 5 ) Michel, L., Beattie, R. D., and Goodgame, T.,H., Chem. Eng. Progr., 50,332-5 (1954). (6) RiIoss, F. D., IND. ENG.CHEM.,45, 2133 (1953). (7) Payne, J. W., Zbid., 45, 1621-2 (1953). (8) Rearick, J. S., Mech. Eng., 73, 975--8 (1951). RECEIVED for review August 17, 1954.
$CCEPTED
February 25, 1955.
GUSTAV EGLOFF Universal Oil Products Co., Des Plaines, 111.
P
ROCESS know-how is vital to industry; it can determine whether a company can maintain its competitive position. The price that can be paid to obtain know-how must be carefully evaluated for specific cases, since the returns must be sufficient at least to defray the cost. Time is also a major concern and may be the determining factor in deciding how best t o acquire the know-how.
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Frequently the only method of obt,aining process know-how is by licensing. However, the acquisition of know-how by licensing is relatively foolproof. The process is tested and proved, and the cost is determined in advance and established by contract. Furthermore, the process know-how i,q available at the time it is needed, instead of at some indeterminate time in the future.
INDUSTRIAL AND E N G I N E E R I N G CHEMISTRY
Vol. 47,No. 5
