I/EC SPECIAL FEATURES When to Contract for Pilot Plant Work JAMES F. THORNTON, President, The Lummus Co., N e w York, Ν . Υ.
You Should Engage an Outside Firm When
If
your own research, engineering, and fabricating staff
. . .you would have to a d d to your permanent staff for any of these reasons, investigate the possibility of retaining an out side engineering firm
— IS TOO SMALL — HAS GAPS — LACKS EXPERIENCE IN THE SPECIAL AREA INVOLVED — IS TIED UP ON OTHER PROJECTS your pilot plant facilities
. . .buildings and equipment a r e e x p e n s i v e — a n d sometimes un — ARE CRAMPED p r e d i c t a b l e — c a p i t a l investment — LACK CERTAIN TYPES OF is necessary; an outside firm's EQUIPMENT f e e is known and can be written — WOULD REQUIRE EXPENSIVE off in one y e a r
ALTERATIONS FOR SAFETY REASONS — ARE ALREADY LOADED these time factors exist
— PILOTING MUST BE COMPLETED RAPIDLY — PRODUCT-SAMPLES ARE NEEDED
. . .the competitive situation is such that you must get into com mercial production q u i c k l y — o r if you need samples right a w a y f o r market d e v e l o p m e n t — t h e outside firm with experience and existing facilities is faster on its f e e t
But Do It Yourself If
When your own research, engineering f a b r i c a t i n g staff
and
— IS LARGE ENOUGH — IS VARIED ENOUGH — HAS THE SPECIALIZED EXPERIENCE NECESSARY — HAS FREE TIME your pilot plant
facilities
— ARE LARGE ENOUGH — HAVE MOST OR ALL OF THE SPECIAL EQUIPMENT NEEDED — ALREADY MEET THE SAFETY REQUIREMENTS OF THE PROCESS (if it is hazardous)
— HAVE UNUSED CAPACITY
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INDUSTRIAL AND ENGINEERING CHEMISTRY
. . .you have enough of the right kind o f p e o p l e a l r e a d y on your p a y r o l l , and if you a l r e a d y have the investment in facilities, you'll save b y doing your own p i l o t i n g ; and you'll have the a d d e d a d v a n t a g e that more of your own staff will be getting intimate knowledge o f the proc ess
Prompt decision-making is the hallmark of a progressive com pany. Contrariwise, indecision annually costs some companies many thousands of dollars. The unfortunate thing is that it need not be so. An enterprising com pany will hesitate to make the most basic decision out of igno rance or fear or just plain red tape. O n the other hand, this same company may rightfully assume leadership in its cate gory by its very boldness in oper ation. The discussion which fol lows makes no attempt to form a pattern for decision-making but rather offers some thoughts as to what are the basic con siderations in making decisions on the " w h o " in pilot plant work
I OUR company has developed a new chemical. I t is essential that you get it on the market before com petition. What is equally impor tant is that you put out a superior product. M a n y long and costly hours of development time and effort have been lost by rushing a partially proved product on the market solely for the sake of being first. A n d , i f it does not prove acceptable to the general public, a company's reputa tion can suffer badly. Factors which will affect the de cision to pilot plant or not to pilot plant were discussed in an earlier issue [ I / E C , 50, No. 4, 577 (1958)]. Once the decision is made that the pilot plant step is necessary, the next important question is " W h o should do it?" Should you attempt to do it yourself, using your own staff and existing facilities, or should vou retain the services of an outside design, engineering, and construc-
t i o n firm? T h e r i g h t choice can save your c o m p a n y money, get y o u r pilot w o r k completed sooner, a n d p u t you o n the m a r k e t ahead of competition. Manpower
The successful c o m p a n y relies o n careful e x a m i n a t i o n o f a l l factors before m a k i n g an i m p o r t a n t decision. Even the most insignificant detail gets a good going over before being accepted or rejected. T h e w h o l e picture is studied i n relation to its parts a n d the parts i n relation to the whole picture. T h e " w h o " i n pilot p l a n t w o r k then is as i m p o r t a n t as the " h o w ! " T h e first question to ask is: C a n the present staff handle the job? T o answer this consider : (1 ) number, (2) personnel " m i x , " (3) experience, and (4) w o r k l o a d . A r e there enough hands to d o the j o b — n o t just i n total n u m b e r — b u t enough of each type o f t r a i n e d w o r k e r : research, engineering, fabr i c a t i n g personnel? D o they have experience i n this type of process or w i l l they learn b y m a k i n g mistakes at y o u r expense? A n d finally, are they free to w o r k o n this project n o w or w i l l they have t o let equally i m portant projects slide? I f the answer to a n y o f these questions is " n o , " there are t w o choices— staff-up or call i n a n outside f i r m . Staffing-up has its problems. I t is not always easy to find good, experi-
Lummus can b e g i n w o r k on most pilot plant projects almost immediately a f t e r the contract is s i g n e d ; t h e equipment, facilities, a n d skilled personnel a r e a l r e a d y there. A b o v e , left, skid-mounted charging unit holds tanks, heaters, pumps for transfer a n d metering. Process equipment is in background, center. A t right is electrical control cabinet. All switches, relays, a n d controls not housed in explosionproof boxes a r e enclosed in this cabinet. It is pressurized with outdoor air to exclude process vapors
enced people i n a h u r r y . T r u e , y o u can hire a n d train, b u t time w i l l be lost a n d perhaps a great deal o f effort expended for l i t t l e or no r e t u r n . W h e n the project is completed, other things must be found for these people to do. A d d i n g m o r e people can cause administrative problems, too. Present employees m a y get their "noses o u t of j o i n t " over questions o f status, seniority, salary level, etc. Small details, perhaps, b u t they can be troublesome l o n g after the project has been completed. C o n t r a c t i n g w i t h a good, reliable design, engineering, a n d construction firm to d o pilot p l a n t w o r k is often the best answer. Such a firm does 'work for à w i d e range o f process industries—chemical, petroleum, petrochemical. I t m a y well have on its p a y r o l l a staff b i g enough a n d varied enough to plunge r i g h t into
your project. A n outside firm's engineers are more likely to k n o w the technology o f all the steps i n the process, because they are exposed to a wide variety of jobs. I t is also probable that they are more u p to date o n the latest developments. T h e n too, these engineers are better trained to recognize the engineering significance of the results i n terms o f a full scale plant, since they also w o r k for the construction a r m o f the company. W h e n the m a r g i n o f error exceeds acceptable limits, they are more likely to recognize i t a n d go after more precise data. Some companies dislike to contract pilot p l a n t w o r k because they w a n t their o w n staff to be t h o r o u g h l y familiar w i t h the process. T h e y have the feeling that relying o n an outside firm for this type of w o r k w i l l d u l l the initiative o f their engineer-
These Factors
Affect
W i l l you have t o a d d to your staff? .
Manpower
W i l l you have to invest in additional facilities? Pilot plant work often requires improvisation in piping a n d equipment. A well e q u i p p e d shop, staffed with e x p e r t mechanics, is a v a i l a b l e for constructing a n d modifying units
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C a p i t a l outlay A r e you fighting time? M a r k e t position |s your secret safe? :
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Patent position
AUGUST 1958
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part of it is that many of them are never started again or initiative is lost by delay. Capital O u t l a y
The question of investment is an important one, as it may involve capital investment, sometimes sizable. Some of the factors which will influence a decision here are: Do you have all the types of equipment for the project? Is the capacity large enough to give reliable data? I f the process is hazardous, is your present equipment properly housed? As with staff, i f the answer to any of these questions is "no," there are two choices—invest more i n facilities, or retain an outside firm. Investing in pilot plant facilities and structures is expensive. For example, at The Lummus Co.'s Engineering Development Center at Newark, N . J., pilot plant costs range from $15,000 to over $100,000. Certain of the units may be used
only a few times a year but are maintained in stand-by conditions for operation when needed. A situation like this could hardly be tolerated in a process industry. I f the plant you intend to build has a payout time of, say, 3 years, a delay of 4 months in piloting can represent over 10% of the investment. W i t h the trend i n construction costs continuing upward, every month's delay will mean tens of thousands or more dollars in extra building costs. This added cost is not too often thought of in considering the economics of putting a new product on the market. The same attention to detail i n deciding who should do the pilot plant work should be exercised in consideration of timing. When you do the pilot plant work yourself, the equipment may be useful only as scrap—or at least may sit idle for long periods—once the project is completed. Then too, it may not be easy to find the "off-the-shelf" equipment needed and waits for
Comparative Analysis of Costs Small-volume, dual-purpose units such as these are suitable f o r obtaining preliminary d a t a as well as representative samples f o r market research and development. Technicians a r e well acquainted with the units, so that significant details of operations can be used to scale-up to larger units f o r more precise d a t a or larger samples
Case A , Company Undertakes Program Pilot plant facilities ' Available Capital outlay to construct Cost of commissioning Capital investment
No $145,000 10,000 $155,000
Case B , Outside F i r m Executes 0 Program for Company
