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PROJECT MANAGEMENT CHE 620
(Formaldehyde Plant) Prepared by;
Mohammad Amirul Assyraf Bin Mohammad Noor 2012805802
Nik Nur Shahira Binti Ibrahim
2012209148
Ahmad Amir Firdaus Bin Mad Apandi 2012865934
Siti Zuhairah Binti Zulkepli
2012855924
Nur Syafiqah Binti Fadaly 2012662222
Anis Binti Abd. Gani
2012805454
EH 220 6A
Prepared for;
Dr. Abdul Hadi Faculty of Chemical Engineering
12 June 2015
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INTRODUCTION
Formaldehyde (CH2O) is known as the first series of aliphatic
aldehydes. The occurrence of
formaldehyde is abundant in air and is also a byproduct of
several biological processes. The
average person produces 1.5 ounces of formaldehyde per day as
part of normal human
metabolism. Plants and animals produce formaldehyde as their
byproducts. For example,
Brussels sprouts and cabbage emit formaldehyde when they are
cooked.
Formaldehyde can be produced by oxidation of methanol with air
in the presence of catalyst.
Formaldehyde may be produced at a relatively low cost, high
purity, and from a variety of
chemical reactions, making formaldehyde one of the most produced
industrial chemicals in the
world. Formaldehyde industries have been grown since 1972, from
a yearly global production
volume of 7 million metric tons up to 24 million metric tons in
recent years. In addition,
commercial uses of formaldehyde have widespread industrial
applications, which showcase how
important the chemical is in our everyday lives.
Physical and chemical properties
Formaldehyde has a colorless and distinctive pungent smell even
can be detected in low
concentrations. It is a highly flammable gas, with a flashpoint
of 50C. The heat of combustion is
134.l kcal/mol or 4.47kcal/g. Formaldehyde is soluble in a
variety of solvents and miscible in
water. Formaldehyde usually sold as 37 weight percent solution
in water known as formalin.
Product description and usage
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Formaldehyde, HCHO or CH2O is the simplest of aldehydes. At
ordinary temperature it is a gas
with a very pungent odor. Formalin is a trade name for a
solution containing 40% formaldehyde
and 60% water or water and methyl alcohol. In photography,
formaldehyde is used in low
concentrations for process C-41 (color negative film) stabilizer
in the final wash step, as well as
in the process E-6 pre-bleach step, to obviate the need for it
in the final wash. Formaldehyde is
used extensively in the woodworking and cabinet-making
industries. Urea-formaldehyde is used
in the glues that bond particle board together. The particle
board is used underneath wood veneer
and plastic laminate. Cabinets, bank counters, and veneered and
laminated woodwork all use
particle board containing urea-formaldehyde under the plastic
laminate and wood veneer.
Formaldehyde is a common building block for the synthesis of
more complex compounds and
materials. Products generated from formaldehyde include urea
formaldehyde resin, melamine
resin, phenol formaldehyde resin, polyoxymethylene plastics,
1,4-butanediol, and methylene
diphenyl diisocyanate. The textile industry uses
formaldehyde-based resins as finishers to make
fabrics crease-resistant. Formaldehyde-based materials are key
to the manufacture of
automobiles, and used to make components for the transmission,
electrical system, engine block,
door panels, axles and brake shoes.
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Demand Formaldehyde has been manufactured primarily from
methanol since the beginning of the
century. Because of its low cost and high purity, formaldehyde
has become one of the most
important industrial and research chemicals in the world.
Consumption of formaldehyde depends mainly on the construction,
automotive and furniture
markets. Formaldehyde is usually produced close to the point of
consumption since it is fairly
easy to make while it cannot be shipped easily over long
distances. It can develop stability-
associated problems during transport. As a result, world trade
in formaldehyde is minimal.
Its demand is expected to increase in the coming years quite
significantly due to a healthy
demand from the formaldehyde-based resin and automobile fuel
sector. The growth in demand
for methanol in Malaysia is expected to be at the rate of five
percent during the forecast period,
and the majority of domestic demand would be fulfilled by
imports.
The five largest markets are North America, Europe, Latin
America, Middle East and China.
Formaldehyde demand growth slowed down in 2008-2009, this was
due to a slowdown in the
global property market. However, it is believed that from 2010
this should improve on the back
of demand for specialty chemicals.
According to SRI Consulting (researchers and consultants that
gather and analyze critical data
from around the globe on chemical markets, processes, companies
and developments.), world
consumption is forecast to grow at an average annual rate of
4.0% during 20092014.
SRI Consulting further says that significant-to-rapid demand
growth in Asia, mainly China, for
most applications will balance out moderate growth in North
America, Western Europe, Africa
and Oceania. Central and South America, the Middle East, and
Central and Eastern Europe are
forecast to experience significant growth in 2009-2014 due to
increased production of wood
panels, laminates and MDI (Methyl di-p-phenyleneisocyanate).
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Figure below shows world consumption of formaldehyde. China
shows the most consumer
follow by Western Europe and United States. The least consumers
are Ocenia. Malaysia are
among the least consumer in the world.
Figure 6.0: World consumption of formaldehyde
(http://chemical.ihs.com/nl/Public/2010/1001/1001.html)
There are a lot of companies mentioned in demand for
formaldehyde such as Petroliam
NasionalBhd (PETRONAS), Eastman Chemical Company, Linde AG,
LyondellBasell
Industries, Praxair IncTerra Industries, Inc/CF Industries.
World consumption is forecast to experience significant growth
during 2011-2016. In
conclusion, it is believed that formaldehyde demand will depend
on economic recovery,
especially in the housing and construction industries.
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SUPPLY The commercial production of formaldehyde was first
started in Germany in the 1880s but the
development of a methanol synthesis route in the 1920s gave the
spur to the development of
large-scale manufacture.
The methanol industry in Malaysia accounts for only around three
percent of the overall
production in the Asia-Pacific region.
For example, in Malaysia there is have a company name Hexzachem
Sarawak Sdn. Bhd.
(formerly known as Hexza-Neste Chemicals Sdn. Bhd.) is a company
registered in Malaysia
with a license to produce formaldehyde and formaldehyde-based
resins in Sarawak.
There are also some suppliers for formaldehyde. It is Integrated
Sales SdnBhd which based in
Malaysia. Supply ability per day for the company is 10 metric
tons.
Besides, Newquest (Trading) Pte Ltd. supplies chemicals to
various industries, including soap
and detergent, glass, adhesives, petrochemicals and oilfields.
Within the company, there are two
adhesive manufacturing plants (Bintulu Adhesives & Chemicals
and Petanak Enterprises Sdn.
Bhd.) operating in East Malaysia. These plants acquire the
chemicals from NewQuest to produce
urea formaldehyde resin, phenol formaldehyde resin and low
formaldehyde emission resin. The
resins are used for the manufacturers of plywood, chipboard and
MDF board in the Asean
region. The plants also produce urea formaldehyde pre-condensate
for the fertilizer industries.
Formaldehyde can be store as a liquid and gas. The figure below
shows that formaldehyde is
store in liquid state.
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Figure 7.0: Formaldehyde in liquid state
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Table 1.0: World supply for formaldehyde
in 2013 (thousand tonnes)
Country / Region Production Consumption
North America
Canada 675 620
Mexico 136 137
USA 4650 4459
South and Central America 638 636
Western Europe 7100 7054
Eastern Europe 1582 1577
Middle East 454 438
Japan 1396 1395
Africa 102 102
Asia
China 1750 1752
Indonesia 891 892
Malaysia 350 350
Republic of Korea 580 580
Others 789 795
Australia and New Zealand 304 304
Total 21 547 21 091
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FUTURE MARKETING POTENTIAL
Formaldehyde is a chemical compound that is widely used in
industrial manufacturing and a
number of other industries. It is the best to select the least
toxic materials, which is not always as
simple as it appears. At times, a more toxic material may be a
better performer and less
expensive. In general, the risk to occupants from a toxic
product is lower if the agent is not
inhaled or touched. There are many examples of products that use
formaldehyde such as floor
polish, sheet vinyl flooring, softwood plywood and wall
coverings.
Nowadays, the cabinets where has the particle board that made
with urea formaldehyde binder
that emits formaldehyde and other harmful chemical. For the
future usage, the cabinets must
have the three goals which is the energy efficiency,
conservation of natural resources and indoor
air quality. The cabinet made with a particleboard underlayment.
The particleboard contains glue
that uses urea formaldehyde. At room temperature urea
formaldehyde easily convert from solid
to gas. It is the property that makes urea formaldehyde a
Volatile Organic Compound (VOC). As
interest green products grow, manufactures are responding with
cabinet lines designed to satisfy
consumer demands for healthier indoor environment. Instead of
particleboard, the use panels
made from compressed wheat straw. The glue used in this product
is a non-toxic MDI resin.
The other product for future marketing is wrinkle-free fabric.
This product is to help clothes,
upholstery and bedding stay wrinkle free, they are often treated
with a formaldehyde-based resin.
But, the consumers can expect is an allergic skin reaction, like
a rash, blisters and eczema. The
consumers are recommended to buy clothing produced in the
countries, such as Japan, that have
strict formaldehyde guidelines.
Cosmetics also have the formaldehyde. The examples of the
cosmetics are nail polish, nail polish
remover and hair-styling products. These products contain the
most formaldehyde, up to 50% as
formalin in some case. But the chemical is also used as a
preservative in skincare and baby
products, even natural and organic ones.
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ORGANIZATIONAL STRUCTURE FOR PROJECT MANAGEMENT
The organization structure is effective for defining the role
and responsibilty of the project
manager and his/her team members during the plant construction.
There must be a clear
understanding of the reporting relationships of all member of
the project team. Every department
play their role and responsibility in order to achieve their
goal for this project.
Figure 1: Organisational structure.
Project Manager
Safety and Licensing
Licensing Management
Environmental Protection
Security and Safeguard
Occupational Safety
Engineering
Chemical
Civil
Mechanical
Electrical
Instrumentation and Control
Environmental
Construction
Construction Technology
Site Work Management
Administration
Human Resources
Financial
Cost Control
Public Relation
Legal Assistance
Planning and Scheduling
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THE WORK BREAKDOWN STRUCTURE (WBS) WBS is constructed to ensure
that any task required is not overlooked, which may cause
problems and delay of the project.
No. Task Duration Predecessor Resources Assigned to 1
Organization
a) Task outline
3 days
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Planning & scheduling
Safety & licensing, Engineering, Construction,
Administration
2 Design a) Design plant
b) Design safety measurement of plant
3 months
5 days
1 (a)
2 (b)
Engineering
Safety & licensing
Construction, Financial, Safety & licensing Construction,
Engineering
3 Financial a) Site purchasing b) Equipment purchasing c)
Construction cost
10 days 8 weeks 5 days
2 (b) 2 (b)
3 (a), (b)
Financial, Engineering, Cost control
Construction, Engineering
4 Construction a) Installation b) Setup
8 months 1 month
3 (c) 4 (a)
Engineering
Engineering, Administration
5 Test and run a) Site clearing
b) Inspection for safety measurement
c) Test and run
3 days
2 days
3 days
4 (b)
4 (b)
5 (a), (b)
Site work management Occupational safety Engineering
Engineering Engineering Licensing management
6 Termination a) Final report
5 days
6 (a)
Safety & licensing, Engineering, Construction
Administration
Table 1: Work Breakdown Structure (WBS) of the project.
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6.0 SCHEDULING (PERT/ CPM)
Since activity-on-node (AON) network is easier to draw compared
to activity-on-arrow (AOA) network, AON network is applied to
display the project network.
Figure 2: Activity-on-node (AON) network of the project.
5 (b) 2
S T A R T
5 (a) 3
5 (c) 3
2 (a) 60
2 (b) 5
4 (b) 20
3 (b) 41
3 (c) 5
4 (a) 164
3 (a) 10
1(a) 3
6 (a) 5
F I N NI S H
0 3 3 63 63 68
68 78
68 109
109 114 114 278 278 298
298 301
298 300
301 304 304 309
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BUDGETING
7.1 The Cost of Equipment
Table 2: Total Cost of Equipments
Price and cost of the main equipment have been evaluated based
on Chemical
Engineering Plant Cost Index (CEPCI). The total cost of
equipment is RM 20,625,749.
EQUIPMENT UNIT PRICE PER UNIT
(RM)
TOTAL PRICE
(RM)
Reactor 1 25,435 25,435
Distillation column 2 1,716,407 3,432,814
Heat exchanger 5 3,433,500 17,167,500
TOTAL MAIN
EQUIPMENT
COST
6 5,175,342 20,625,749
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o.
Task Duration
Cost
Organization
b) Task outline
(Planner & Project Manager)
3 days
RM 21 000
Design
c) Design plant
(Engineers)
d) Design safety measurement of plant
(Safety & licensing manager)
3
months
5 days
RM 7 000
RM 9 000
Financial
(Administrator, Engineers)
d) Site purchasing
e) Equipment purchasing
f) Construction cost
10 days
8
weeks
5 days
RM 12
000
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Construction
(Engineer & Labor workers)
c) Installation
d) Setup
8
months
1
month
RM 7 900
Test and run
d) Site clearing
(Labor workers)
e) Inspection for safety measurement
(Safety & licensing manager)
f) Test and run
(Engineers)
3 days
2 days
3 days
RM 900
RM 9 000
RM 7 000
Termination
b) Final report
(Safety & licensing manager,
Engineers, Administrator)
5 days
RM 21 000
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Fixed and Total Capital Investment
For total capital investment (TCI):
Total Capital Investment = Fixed Capital Investment + Working
Capital + Start Up
Specification Cost (RM)
DIRECT COST
1. ONSITE
Purchased Equipment 20,625,749
Purchased Equipment Installation 10% E 2,062,574.9
Instrumentation (installed cost) 13% E 2,681,347.37
Piping Installed 30% E 6,187,724.7
Electrical Installation 12% E 2,475,089.88
Inflation 9.3% E 1,918194.657
2. OFFSITE
Building 30% E 6,187,724.7
Yard Improvement 10% E 2,062,574.9
Land 4, 500, 000
Service Facilities 30% E 6,187,724.7
TOTAL DIRECT COST (RM) 54,888,704.81
INDIRECT COST
Engineering and Supervisions 30% E 6,187,724.7
Constructor Expenses 10% TDC 2,062,574.9
Construction Fee 6% TDC 1,237,544.94
TOTAL INDIRECT COST (RM) 9,487,844.54
Table 3: The Data of Fixed Capital Investment
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Total cost (RM) = Total Direct Cost + Total Indirect Cost
= RM 54,888,704.81+ RM 9,487,844.54
= RM 64,376,549.35
7.3 Contingencies = 8% ( tot)
= 0.08 (RM 64,376,549.35)
= RM 5,150,123.95
7.4 Fixed Capital Investment
() = () + ()
= RM 64,376,549.35+ RM 5,150,123.95
= RM 69,526,673.3
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7.5 Working Capital and Startup Expenses
Specification Cost (RM)
Working Capital 10% FCI 6 952 667.33
Startup Expenses 8% FCI 5 562 133.86
Table : The Cost of Working Capital & Startup Expenses
Therefore,
() = ( ) +
+
= RM 69,526,673.3+ RM 6 952 667.33+ RM 5 562 133.86
= RM 82 041 474.49
Therefore, the total capital investment needed for Formaldehyde
Plant is RM 82 041
474.49. The cost was includes all equipment cost, cost of
working and startup expenses and also
the direct and indirect cost in setting up the plant.
7.6 Raw Material Consumption
Raw Material
Price of raw material
Methanol RM1552.27 / tonne
Raw material usage
Methanol 2.884tonne/hr
Total cost of raw material RM36 852 606
4476.75 / hr 24 hr / 1d 7d/1wk 49 wk/1 yr
= RM 36,852,606 / yr
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7.7 Total Production of Formaldehyde
Product
Price per product:
Formaldehyde RM 4338.86/tonne
Product Amount
Formaldehyde 2.5479tonne /hr
Total Annual Sales for Formaldehyde RM91,004,595.36
7.8 Estimation on operating labor
= (6.29 + 31.72 + 0.23)0.5 (1)
Where:
NOL = number of operator per shift
P = number of processing step involving the handling particulate
solids
(transportation and distribution, particulate size control,
particulate removal)
Nnp= number of non-particulate processing step and includes
compression,
heating and cooling, mixing and reaction.
The equation (1) is derived for process with two solid handling
steps and not acceptable
for greater number of solid handling operation.
= (2)
The value of NOL is the number of operator required to run the
process unit per shift. A
single operator works on the average 49 weeks a year, 3 week
vacation and sick leave, five 8-
hour shifts per week. This amounts to:
49
4
= 196
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A chemical plant normally operates 24 hours/day and
requires,
No. of shift per year = 3
365
= 105
The number of operators needed to provide this number of shift
is:
1095 /196
.= 5.6 operator Means 6 operators are needed for each operation
in plant in certain time. This number of
operator in only for a labor and not include any support or
supervisory staff.
EQUIPMENT NUMBER OF
EQUIPMENT
Nnp
Reactor 1 1
Distillation column 2 -
Heat exchanger 5 5
TOTAL EQUIPMENT 8 6
Table 3: List equipment for estimation of operating labor
requirement
By using equation (1):
N0L= (6.29 + 31.72 + 0.23)0.5
= (6.29 + 31.7(0)+ 0.23(6)0.5
= 2.77
Number of labor required per shift: 5.6 2.77 = 15.512 person per
shift
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The total of labor needed for a plant:
16 persons per shifts 5 shift
= 80 persons per operator
Cost for a labor per year:
= RM29.67 7 day
= RM207.69 per week
= RM207.69 52 weeks/year
= RM10800 per year
Total Labor Cost = RM10800 80 persons per operator = RM864 000
per year
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7.9 Total Production of Cost Estimation
Costs (RM)
Direct Manufacturing Costs
Patent and Royalties 3 % FCI 2 085 800.199
Maintenance and Repair 10 % FCI 6 952 667.33
Operating Labor Cost 864 000
Operating Supplies 10 % Operating Labor 86 400
Direct Supervision & Clerical
Labor
25 % Operating Labor 216 000
Laboratory Charges 15 % Operating Labor 129 600
Plant Overhead 40 % Operating Labor 345 600
Raw Material RM36 852 606
Total Direct Manufacturing
Costs (RM)
47 532 673.53
Indirect Manufacturing Costs
Insurances 1 % FCI 695 266.733
Total Indirect Manufacturing
Costs (RM)
695 266.733
Total Manufacturing Expenses = RM 48 227 940.26
General Expenses
Distribution & Selling Expenses 15 % FCI 10 429 001
Administration 10 % Operating Labor
10% Direct Supervision
10 % Maintenance
86 400
21 600
695 266.733
Research & Development 5 % FCI 3 476 333.665
Total General Expenses = RM 14 708 601.4
Table 4: The Production of 85000 tonne of Acrylic Acid
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Total Production Costs
Total production cost
= Total Manufacturing Expenses + Total General Expenses
= RM 48 227 940.26+ RM 14 708 601.4
= RM 62 936 541.66
Gross Profit
, = ,
= RM 91,004,595.36 RM 62 936 541.66
= RM 28 068 053.7
Income Taxes
= 20% ()
= 0.20 (RM 28 068 053.7)
=RM 5 613 610.74
Net Annual Profit
, = ,
=RM 28 068 053.7 RM 5 613 610.74 = RM 22 454 442.96
Based on the overall evaluation, it can be concluded that this
plant is indeed
economically feasible and thus contributes a promising return to
satisfy investments. So that, this
plant of production of formaldehyde has a bright potential since
the demands of the production
as mention under needs and marketing analysis is continuously
increasing.
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TERMINATION
Project termination is one of the most serious decisions a
project management team and its
control board have to take. It can be carried out by using a
brief checklists.
Project Termination Checklist #
Item
Results / Reference to Contract /
Remarks
1 Final presentation of the project results ---
2 Follow procedure for the final
acceptance of project results
Final acceptance of all project results
3 Handover of project results to the
customer and/or user
---
4 Official celebration with all stakeholders ---
5 Complete and close all project
controlling tools
All controlling tools complete and
closed
6 Complete and close all reports or
documents
All reports and documents complete and
closed
7 Generate final project reports for the
customer
Final project reports for the customer
8 Close the contract Contract closed, including all
necessary
signatures
9 Issue final invoice and follow up on
payment
Payment received
10 Generate final project reports for other
stakeholders
Final project reports for other
stakeholders
11 Generate final project reports for our
own organization
Final project reports for our own
organization
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#
Item
Results / Reference to Contract /
Remarks
12 Complete and close project management
handbook
Project management handbook
complete and closed
13 Lessons learned workshop Final risk assessment;
problems and solutions;
changes;
claims and their settlement
14 Handover to the team that takes care of
the warranty period or further customer
support
Handover accepted
15 Support all team members to find new
assignments
All team members have new
assignments
16 Feedback of the customer (executive
level)
---
17 Feedback of the customer (end user
level)
---
18 Feedback of control board ---
19 Feedback of team members ---
20 Feedback of other stakeholders ---
21 Close all project accounts Project accounts closed
22 Carry out the final project calculation Final project
calculation complete
23 Have a party with your team ---
24 Release resources ---
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REFERENCES
Yant, W. P.; Schrenk, H. H.; Sayers, R. R. (1931). "Methanol
Antifreeze and
Methanol Poisoning".
Berger, Sandy (30 September 2006). "Methanol Laptop Fuel".
CompuKiss. Retrieved 22
May 2007.
Weast, Robert C., ed. (1981). CRC Handbook of Chemistry and
Physics (62nd ed.). Boca Raton,
FL: CRC Press. pp. C301, E61
Francis-Floyd, Ruth (April 1996). "Use of Formalin to Control
Fish Parasites". Institute of
Food and Agricultural Sciences, University of Florida.
Turner JH, Reh DD (June 2012). "Incidence and survival in
patients with sinonasal cancer: a
historical analysis of population-based data". Head Neck 34 (6):
87785.
Read, J. (1935). Text-Book of Organic Chemistry. London: G Bell
& Sons
Woon, David E. (2002). "Modeling Gas-Grain Chemistry with
Quantum Chemical
Cluster Calculations
Heterogeneous Hydrogenation of CO and H2CO on Icy Grain
Mantles". Astrophys. J. 569:541-
48.
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INTRODUCTIONDemandSUPPLYFUTURE MARKETING POTENTIALORGANIZATIONAL
STRUCTURE FOR PROJECT MANAGEMENTTHE WORK BREAKDOWN STRUCTURE
(WBS)6.0 SCHEDULING (PERT/ CPM)BUDGETING7.1 The Cost of
EquipmentFixed and Total Capital Investment7.3 Contingencies7.4
Fixed Capital Investment7.5 Working Capital and Startup Expenses7.6
Raw Material Consumption7.7 Total Production of Formaldehyde7.8
Estimation on operating labor7.9 Total Production of Cost
Estimation
TERMINATIONREFERENCES
