Topic 2: Technical

Analysis

Design and Planning

Prepared by: Pham Thai Binh, Ph.D

Learning Objectives

A. Need for Technical Analysis

B. Process of Technical Analysis

C. Factors Influencing Technology

D. Scope of Technical Analysis

E. Implementation of Technical Analysis

F. Environmental Impact Assessment and EIA Methods

Why Technical Several alternatives should be
Analysis? considered
• Once product specifications and production program
have been estimated, alternative approaches can be
selected to meet these requirements
• Consider more favourable alternative approaches in
terms of operating features and costs selected
• Plant capacity constraints should also be considered
and should be proportionate to optimise capital
utilisation
Why Technical Technology offers often fail to
Analysis? propose the best for the project
• If the reasonable alternatives are not properly examined,
they often fail to consider the best interests of investors
and clients
• It is crucial to examine the most recent and innovative
offered by the market, then select the one with the most
favourable characteristics.
Why Technical Different technologies for different
Analysis? project components
• Technology affects many relationships and industrial
process
• To meet project objectives, technology shall work in
synchronisation and harmony
• Technical analysis has to identify and correct
weaknesses that could jeopardise the project
Process of Technical Analysis
Environment Impact Assessment

Production Production Plant

Programme Schedule Capacity

Sales
Programme Technology Selection

Product Production Equipment

Analysis Process Selection

Material Manpower
Utilities
Inputs Planning

Location & Site Building

Implementation
Selection Design
Product Analysis
• Analyse Product Design: Assess technical feasibility of alternatives designs
• Disaggregate product:
o Define required subassemblies, industrial semi-products and raw materials for the
most promising designs
o Make or buy components decision is then examined
• Define properties of products, by-products, and waste:
o Set industrial standards in production, procurement, and plans for the disposal of
effluents and other waste materials
Internal Factors Influencing Technology Choice

Product Design and Quality Product specifications are a determinant of the required
accuracy and precision of a production process
Production Scale and Plant The project’s planned production programme must be
Capacity compliant with selected technology
Raw Materials Properties The quality of available materials and other required
and Price resources must be consistent with technology
requirements
Consumption of Scarce Interventions by regulatory authorities might ration or
Resources allocate the scarce resources
Labour vs. Capital Costs Labour intensive advantage: production flexibility
Capital-intensive advantage: offer better control of
product quality
Internal Factors Influencing Technology Choice

Reliability Considerations • Affect the level of risk of the planned production

programme
• Reliable technology tends to minimise costs of
maintenance and cost of lost production and sales
Part-load Performance Efficiency in operating at reduced levels should be
considered in case of under-performing sales level than
expected
Cost of Technology Each alternative's total cost and reliability should be
weighed against the acceptability of the products and
services from the consumers' sides
Capacity to Absorb Evaluate the possibility of internalizing technological
Technology processes rather than overrelying on expatriate staff
External Factors Influencing Technology Choice
Environmental, Economic and Technology shall assure positive impact over pollution
Social Impact emissions and the environment overall, improve good’s
affordable access and foster economic development
Sustainability under Local Increasing desires in cleaner technologies
Conditions
Infrastructure Existing utilities and digital infrastructure facilities should
be capable of deriving maximum capacity utilization of the
selected technology
Workforce Skills Evaluate workforce adaptation capacity and how
technology affect organisational change and social
behaviours
Priorities of Authorities Incentives may be offered for projects that tend to upgrade
country’s technological level and have positive social and
environmental impacts
The Equivalent Annualised Cost (EAC)
• The basis for the comparison of the cost of technology alternatives
• Reduces the cost of investment and operations over the technological life of each of the
alternatives to an 'average' value per year, essentially a common denominator of cost
The 'average' value
1. Determined by considering the pattern of cash outflows over the technological life
2. Reduce these flows to present value
3. Determining an annual cost equivalent
• The reason for using this process is that the technological lives of the alternatives usually differ;
there are differences in the pattern of acquisition, investment, operating and decommissioning
costs, and the value of the salvage
Production Programme and Scheduling
• Required for planning materials and supplies, HR requirements, and costs for financial
analysis
Define:
• Quantity of each product in the line to be produced in each production period
• The timing for production and takes into consideration cyclical variations:
• Planning production for each period over the life of the project
• Scheduling time for production (cyclical)
• Schedule for procurement of materials and supplies and inventory plan prepared
• In-plant storage requirements
Provides:
• Information for operating cost estimates and cash flows, essential input for the financial
analysis
Production Programme and Scheduling
• The production quantities are based on projected sales and inventory levels in each
project period over the planning horizon
• Inventories can be estimated based on turnover
• Consider primary products, by-products, and production wastes costs:
o Storage costs include product losses and cost of providing storage facilities
o A good quality control program will minimise rejected output
• Further processing of by-products can contribute to the profitability of the project
Machinery and Equipment Selection
1. Selection based upon quality and performance
• Production sequences need to be studied to assure precision and accuracy standards
upon completion
2. Energy efficiency analysis
3. Machinery and equipment should meet industrial standards
• Ensuring health and safety of workers/staff using the equipment
4. Advanced technology ensuring possibility to upgrade
5. Machinery and equipment selection alternatives should be weighted against social
impacts
Machinery and Equipment Selection Cost Estimation
Trace each
Break the project into component to
components physical facilities
needed

Use factors and

Visualise in physical percentages or “rule
terms of thumb” estimates
in early stages

Refine with offers

from reputable Cross-check
contractors, estimates where
suppliers, and possible
consultants
Project Inputs
Raw Materials Processed Manufactured Auxiliary Factory Utilities
Industrial Materials and Materials Supplies
Intermediates Parts

Unprocessed Packing Spare parts or Add on materials Packing Fuel, water,

materials such Materials and components that may not materials and steam, etc. that
as ores and other products bought as directly be other materials might be
agricultural purchased from finished reflected in the for repairs and required for the
produce other industrial products from product but are maintenance product
enterprises (e.g. other necessary for the
aluminium manufacturers quality and final
billets, steel and used directly benefits of
forms) in production. products
Material and Supplies Cost Estimation
• Listing each item with
o Item number or code, unit of measurement, unit cost, quantity, market, and total cost
per period
• Consider tariffs, duties, and transportation costs. Possible escalations should also be
considered in price estimates
• For quality analysis:
o Failure rate can be used to demonstrate product reliability
o Refer to industry, national, or international standards for accurate cost estimations and
risk avoidance
• Quantities:
o Established from production levels
o The yield factor: ratio of number of units of input per unit of output.
o Consider yield factors and losses in handling and storage; and factor in shelf life of
materials.
Human Resource Planning
• Identify:
o Classifications and the number of personnel
o Qualifications, training, and skills needed for each key position
o The local and expatriate labour should be investigated to determine the availability of
personnel
• Job descriptions should be developed for clarification of responsibilities and accurate
cost estimation
• Legal matters in dismissal practices, layoffs, etc. and compensations must also be
factored in
• Recruitment plan should enforce women’s empowerment, gender analysis, and inclusion
of vulnerable groups and youth for sustainable impact
• It is important to maintain the loyalty and social needs of staff. Furthermore, Labour/Union
Standards of the region or country will also have to be considered
Human Resource Planning Cost Estimation
• Classifications and the number of personnel depends on organisational structure
• Personnel costs should be identified separately for each project phase
• During the operations phase, the costs should be included for each functional area

Benefits and
Salaries and Wages Training Recruiment
Surcharges
The standard Costs of benefits Costs should be Must cover the cost
compensation for package should be added for each of onboarding the
each classification included in the classification employee
should be indicated salary and wage depend on the level
scale for each and the number of
classification employees
requiring training
Location and Site
• Location: In what country, region, town, or village should the plant be located
• Site: Where in the town, village, or region, should the plant be constructed?
• Location analysis is accomplished through rating each alternative location to a list of
weighted criteria using a point system

Production Site requirements Infrastructure Markets and Cost Factors

Factors Suppliers
The A site might be The extent to which A location in Investment and
environmental ideal strategically alternative proximity to operating costs and
effect of each but lack the locations provide customers or near the risks
prospective appropriate site to transportation, the supplier might associated with
location on build the plants communications, be convenient setting up and
operating and utility services depending on the operating the plant
efficiencies and business model
cost is of high
importance
Facilities Layout
Preliminary

• Bases for cost estimation of:

o Land: Total land cost is the acquisition cost plus the cost of preparing it for the plant
construction
o Buildings and civil engineering works: Consider the differential costs among
potential sites
o Outdoor works: Extension of existing public utilities would be required for some sites
Scope of Technical Analysis

Investment Production Decommissioning

Planning Phase
Phase Phase Phase
Technical Analysis Activities - Planning
Implementation and
Process Organisation Project Cost
Product Analysis Plant Design Decommissioning
Design Structure Estimates
Plan
Involves adjusting Design production Plant capacity is Designed to • Involves setting up Cost and timing of
design features and process and set; plant layout is manage the organization, investment,
specifications to assembly designed to fit operations and sourcing materials operations, and
align with sequences. The requirements; staff for and equipment, decommissioning
production technology is location and site is production, building facilities,
processes and cost selected and chosen. An marketing, and and hiring and
constraints production environmental distribution training staff.
programme is impact assessment functions • Focuses on
planned is required removing
hazardous
materials and
finalizing other
end-of-project
tasks critical for
environmental
protection.
Technical Analysis Activities - Investment
Detailed Procurement of Construction and Maintenance
Recruitment and Supervise Plant
Engineering Materials and Installation and Quality
Training Commissioning
Designs Equipment Supervision Control Plans
Site development Materials and Technical personnel Include the Technical staff are Commissioning and
plan, installation of machinery must be is required to procedures and required to recruit and start-up operations
civil works, procured to build manage and monitoring train management and are supervised by
installation plans the plant and for the supervise the methods. Project operating personnel technical personnel
for machinery and production process plant’s construction personnel is to verify capacity,
equipment and facilities and trained to foster resource
direct the implementation consumption,
installation of quality
machinery and requirements, and
equipment compliance of the
process with
product
specifications
Technical Analysis Activities - Production
Training Implementation of
Production Quality Control
Manufacturing Process Refinement Maintenance
Supervision Implementation
Personnel Programme

Is required pre and An ongoing Identify modifications Periodic plant Essential for minimizing
after operations start. responsibility of that would significantly maintenance production waste and
Production needs and technical personnel. As improve operating procedures should maintaining good relations
required personnel difficulty arise, performance when be implemented, with clients
skills tend to increase engineers and become familiarize including training
over time, requiring the technicians should with the characteristics and supervision of
recruitment and guide the correction of of the plant. maintenance
training of additional the problem while personnel
personnel deeply involving the
staff
Technical Analysis Activities - Decommissioning
For a project that have a finite and pre-determined life

Supervision of Project Arranging for Disposal of

Site Cleanup
Dismantling Materials
The decommissioning plan is Residual materials are disposed in
carried out under the supervision a safe and orderly manner. Safe for
of technical personnel and, if people and the environment
necessary, representatives of the
regulatory agencies
Role of Industrial Standards
• Reduce the risk of product or deficiencies and weaknesses
• Established and maintained by government bureaus, international bodies, and technical
societies, or by an enterprise

Advantage Disadvantage

• Assures compatibility with May obstruct the advancement of

world market recent technical solutions
• Assures and defines quality
• A source for ready-made
solutions to technical problems
Environmental Impact Assessment (EIA)
Definition
The study of the change in the environmental status because of the project, the 'with' and 'without
project' situations, and assessment of their significance for the existing environment.
• EIA involves pre-project and post-project environmental analysis
• During each project phase, the technical analysis shall take into consideration the linkages of
the project with the natural and socio-economic environment impact
EIA Activities

1. Describe 2. Measure 3. Analyse 4. Interpret 5. Evaluate 6. Communicate

Recorded data or Aspects of the Measured data is The project The consequences The results must
observations of environment that entered into context in terms of design be
the cannot be models analysis features, costs, and understandably
environmental quantified can at representing the interpretation impacts should be communicated to
situation, least be operative is best acceptable or decision-makers
described in “measured” systems in the determined by manageable and
objective terms qualitatively environment experts in the constituencies
field as no
model exactly
represents the
physical,
social, and
economic
environment
EIA Methods

Modelling and Systems Analysis Checklists Ad Hoc

A model is a simulation of the The environment is examined, and Methods that have been developed
environment based upon principles appropriate data is entered into the for a special or particular purpose,
of the biological and social checklist with no general applicability
sciences. The ecological system is
defined qualitatively and
quantitatively. Environmental
disturbances are superimposed on
the model to determine their
impacts
EIA Methods

Extended Cost Benefit

Networks Overlays Matrices
Analysis

Data structures showing Maps of the project area A horizontal list of project Includes assessment of
primary, secondary, and with a series of projected activities and a vertical environmental costs and
sometimes tertiary levels levels showing list of environmental benefits with some of the
of impacts characteristics common parameters impacts monetised.
to all areas
The Extent of EIA
Global
• Projects should prioritize environmentally
• Atmosphere friendly designs that maximize the use of
• Ocean renewable resources to ensure a satisfactory
return on investment
Regional • Ignoring environmental issues can lead to high
• Downstream (e.g. water quality) cleanup costs later, surpassing the expenses
• Leeward (e.g. emissions like radiation) of adopting clean technology initially
• Unregulated environmental damage from a
Local project may lead to stricter government
• At production site controls and significant economic liabilities
• Adjacent areas for health and ecological harms.