P-BEAT: A Process-Based Economic Analysis Tool

NASA Glenn Research Center is developing P-BEAT (Process-Based Economic Analysis Tool): an engineering-focused economic analysis code to be used in performing engineering trade studies and technology investment decision analyses for all phases of a product life cycle. Version 1.0 of the code, currently available upon request, combines Decision Analysis and Economic Analysis capabilities in a Microsoft Excel spreadsheet-based format. Included with the deterministic economic analysis tool is an Excel add-in simulation module (CpSimulation) that can be used to perform uncertainty and statistics analyses.

The initial release version of P-BEAT estimates development and production costs using an innovative process rollup-based methodology to calculate product complexity and its impact on cost. It offers multi-user capabilities, network-based configuration control, and data security features. It provides Decision-Support tools that can be used to generate utility curves that quantify stakeholder "desirability" and a pair-wise method to determine system attribute priorities. P-BEAT includes an extensive database of over 14,000 materials and hundreds of manufacturing processes plus context-sensitive help and graphical tools for sensitivity analyses and identification of cost drivers, as well as the CpSimulation add-in module for uncertainty and cost-risk analyses.

The P-BEAT architecture is template-based and provides four usage modes (straight cost roll-up mode and dual-pane analogy mode, each using either the innovative process-based methodology or a traditional high-level parametric methodology), presented in a multi-paned graphical user interface with default values and bounds-checking for all user input parameters, along with context sensitive help and parameter-specific charts and tables. Depending on available data, the fidelity of the analyses can range from first-order, system-level trade studies to detailed, investment-grade, component-level product cost breakdowns. This allows the tool to be used to manage product cost throughout its full life-cycle from conception to production to retirement.

Compared to traditional cost estimation tools, which are not usually intended for use by engineers, P-BEAT provides the following benefits:

• Predicted costs based on known, actual cost of similar products: Estimates are credible to engineers.
• Self-documenting studies describe why costs vary in terms understandable to engineers and managers.
• Fast turn-around - an experienced practitioner can generate a first-order cost estimate in about 15 minutes when working with product development team members.
• Allows studies using high level parametric inputs and/or detailed design characteristics, such as design tolerance and material alternatives with a single tool. Can use the same tool throughout all life cycle phases.
• Decision module provides a hybrid Analytic Hierarchy Process/Utility Function method for evaluating multiple criteria in a consistent manner for any number of design trades.
• Cost-estimating relationships, inputs, and results are archived in a Microsoft Access database to ensure both access security and data integrity.
• Built-in automation mode allows batch-processing of thousands of related studies for regression analysis and cost-driver assessment.
• Context-sensitive help system provides on-the-fly user instruction as well as model and cost estimation documentation.

Masterbill Features at the NIQS Conference in Calabar, Nigeria

The Biennial Conference of the Nigerian Institute of Quantity Surveyors (NIQS) is an important national forum to advance the role of Quantity Surveying in National Development and Masterbill were pleased to be a part of this event.

Our Nigerian Agent reports....

This year’s conference was held in Calabar Cross River State of Nigeria and termed ‘TINAPA 2006’. It was so christened in order to showcase the first and largest business resort in Africa sited in Calabar and under construction.

 

 The project is in phases and the first phase which is to be commissioned in January 2007 consists of:

• A four unit shopping mall called ‘Emporia’ of 10, 000m2 each
• 52 Units line shops
• Entertainment centre consisting of Casinos, Restaurants, Cinemas and Games Arcade.
• A fisherman’s village consisting of Bars, Nightclubs, Arts and Crafts complex.
•     A 300 bed 3 star hotel complex
•     4 No warehouses
•     Leisure land comprising a lazy river, picnic area, wave pool among others
•     Lake dredging
•     Independent power supply

The Theme of the Conference ” QUANTITY SURVEYING IN THE 21ST CENTURY - AGENDA FOR THE FUTURE” focused on future role of Quantity Surveyors as project finance economists, project and contract interpretation and administration professional, including the nature of quantity surveying as a profession concerned with financial probity in the conceptualization planning and execution of development project and the specific areas of the Quantity Surveyors development and training on the current and future core-competence.

 

 These included:

• Value Engineering
• eMeasurement & Bid documentation
• Earned Value Management
•  Constructability Analysis
•  Budgeting and Budget Analysis for Government Fiscal Policies.
• Project Control Studies
• Cost Estimating & Control of engineering projects
• Economic Analysis of Project Procurement Methods
• Planning & Scheduling

Some of the papers presented at the conference included the following:

•     The Quantity Surveyors role in the 21st Century hospitality industry – The Tinapa Experience.
•     21st Century measurements in Bid documentation
•     Nigerian Institute of Quantity Surveyors as agent of economic development
•     FIG commission 10 - Impact of the Quantity Surveyor
•     The Quantity Surveyor and Road Map for the future
•     The 21st century Quantity Surveyor and University education
•     New opportunities for Quantity Surveyors in Nigerian business environment
•     The Quantity Surveyors in highway development
•     Project control mechanism of engineering projects in a developing economy
•     Due process initiative in contract award.
•     The roles of the professional Quantity Surveyor in Dispute Resolution
•     Overview of the Quantity Surveyors role in Engineering Infrastructure
•     Project management of Hospitality and Tourism development – Tinapa experience

The conference was an international conference as sub regional meetings of the following organisations were also held simultaneously during the conference.

• The International Cost Engineering Council (ICEC) Region 3 meeting was held on the 2nd day of the conference.
• The regional meeting of FIG - Commission 10 was also held on the 3rd day of the conference.
• The Regional meeting of the Association of African Quantity Surveyors was also held on the 3rd day of the conference.

In total the conference attracted over 500 participants from all over the continent.

Masterbill had a stand to display and demonstrate their software at the conference venue. This attracted a lot of participants which resulted in many enquiries.

 

 

Reliability Engineering

Reliability engineering is the discipline of ensuring that a system will be reliable when operated in a specified manner. Reliability theory is the foundation of reliability engineering. For engineering purposes, reliability is defined as the probability that a system will perform its intended function during a specified period of time under stated conditions. Reliability engineering is performed throughout the entire life cycle of a system, including development, testing, production, and operation.

The function of reliability engineering is to develop the reliability requirements for the system, design the system or product to meet the reliability requirements, establish an adequate reliability program, and perform appropriate analysis to monitor the actual reliability of the system or product during its life. Reliability improvement can be thought of as a process, and Exponent can provide assistance with any or all of the main elements of that process, which are:

•     Reliability strategies
•     System or product design
•         Failure modes and effects analysis
•         Reliability modeling and estimation
•         Reliability testing (accelerated life-cycle tests)
•     Quality assurance strategies
•     Work management and execution
•     Continuous improvement

With experience in analyzing thousands of failures, Exponent provides unique and advanced services in performing risk and reliability assessments. The primary focus of our scientists and engineers is assisting our clients in minimizing bottom-line losses in their business or operation. Accidents, unanticipated events, and system failures are the primary causes of deferred or lost production interruptions and may lead to loss of life, injury, property damage, and undesired releases. Exponent’s multi-disciplinary staff has performed diverse technical, business-interruption, and compliance-related risk and reliability assessments for chemical, petrochemical, petroleum, and manufacturing clients worldwide.

Reliability strategies involve a structured approach to identifying critical equipment and systems. This could include a failure mode and effects analysis to identify the critical component or system failure modes. A mean time to failure (or between failure for repairable systems) model can also be used to derive a probabilistic reliability model. Defining the appropriate maintenance regimen and replacement strategies based on that criticality determination is also part of a well-designed reliability program. When done properly, this element leads to optimal reliability. Our staff uses traditional and innovative situation-specific methods and tools to identify risk scenarios and their causes, consequences, and likelihood. This enables further quantification and prioritization of technical and business risks. Exponent lets the client’s need dictate the methodology. The methods include Preliminary Hazard or Risk Analysis (PHA/PRA), Layer of Protection Analysis (LoPA), Failure Modes and Effects Analysis (FMEA), Mechanical Integrity Assessments, Hazards and Operability Study (HAZOPs), Fault Tree Analysis (FTA), Human Error Analysis, and others. Exponent supplements these methods with risk quantification using probabilistic and uncertainty principles, and decision analysis. Our staff performs risk analysis ranging from compliance to total business-based approaches and addresses a number of issues critical to the operation a facility. These issues include: 

 

Economic Risks and Benefits

Engineering-economic studies of operational risks and costs are performed. Costs for alternative safety mitigation/quality control measures and the risk reduction or quality improvement potential for each alternative are evaluated to identify optimal measures.

At various levels (component, subsystem, system, plant), risk management analysis can assist in design, operation, feasibility studies, scheduling, budgeting, and revenue allocation. Properly integrated analysis can be modularized at any desired level, resulting in useful information to aid decision making.

Operational Reliability

Factors affecting production operations are analyzed to evaluate the risk of breakdown and production stoppage. Such factors include reliability, performance, and adequacy of structures, equipment, control systems, and operating and maintenance procedures. Detailed analysis of critical structural systems and process equipment are performed as necessary.

Safety Hazards

Plant personnel safety, as well as public safety issues, are analyzed to identify potentially significant health and safety risks. These include risks of environmental release of hazardous chemicals, fire and toxicity hazards, and emergency response plans.

Product Quality

Factors affecting product quality are analyzed to reduce the potential of product batches being manufactured out of specification. These include process control ranges, statistical sampling, and quality assurance testing programs. Work execution includes the identification of work to be performed, as well as the planning, scheduling, and performance of that work. This is part of an overall quality assurance or quality control program. When done properly, this element leads to optimal resource utilization.

Continuous Improvement

Continuous improvement is the process by which an organization learns from the performance of each in the process and applies that knowledge to improve effectiveness and efficiency through each process cycle. It includes proper work closeout procedure, as well as a comprehensive corrective action program (and culture), bolstered by a robust root-cause analysis program. The proper application of metrics and/or key performance indicators also play a key role in this element.

Cost Engineering Community of Practice

Mission:Photo of Harvey Canal Sector Gates - Permanent structure built to prevent storm surge from the Gulf of Mexico.

The Cost Engineering Community of Practice (COP) formulates all regulations and policies, and provide guidance and directions on all issues related to Cost Engineering for the Military Programs, Civil Works, Environmental and Construction Programs. In addition, it provides economic analysis for the Military Construction (MILCON) program and oversees the maintenance and operation support of the Cost Engineering automation tools.

COP Functions:

This Community of Practice is responsible for developing policy and guidance for USACE Computer Aided Cost Engineering System (CACES), coordinate the efforts to develop standard guidance between the DOD Tri-Service Cost Engineering Community, and provide oversight to the Assigned Responsible Agency (ARA) located at the Huntsville Engineering Support Center (HNC), Huntsville, Alabama.  It develops cost engineering policy, directions, procedures and implementation guidance for Military Construction Army (MCA), Civil Works, Environmental, as well as the  Support for Others programs.  It prepares and review planning and budget estimates annually for authorization and appropriate by Congressional Committees.  It provides staff assistance and support to the Office of the Assistant Secretary of the Army for Civil Works, ASA (CW) and the Office of the Assistant Secretary of Defense (Energy and Engineering), OASD (E&E) on cost engineering issues, including the required survey and development of DOD Area Cost Factors and Facilities Unit Prices guidance. The CoP provides cost engineering consulting and technical support to other federal, state and local agencies, field offices and the private sector. 

In addition, it is responsible for overseeing the development, reviews; applications of policy, technical criteria, standards and guidance in the area of engineering economics, economic analysis (EA), and life cycle costing (LCC) of military construction
 

Energy Brokerage & Consulting

America Approved helps you buy electricity 20 to 50% below peak rates with a simple, objective and proven strategy that eliminates uncertainty and ensures consistent, smart decision-making in much less time.

Our objective is the same as yours - to obtain the best price and best supply agreement for your company. Through our relationships with many of the nation's largest and most reliable energy providers, you will have access to highly competitive rates and programs that help you identify, understand, and manage the variables that affect the price you pay for electricity.

Purchasing of energy requires a thorough understanding of the risk factors associated with the various energy products. America Approved is your source for objective advice.

We take a consultative approach with you and make the best-case recommendations that are designed to lower your energy cost. We present you with an Energy Cost Savings Analysis that predicts your long term energy savings.

Other Services

•     Electricity & Natural Gas
•     Short & Long Term Service Agreements
•     Operations & Maintenance
•     Environmental Engineering & Permitting
•     Engineering, Procurement and Construction
•     Project Engineering Feasibility & Economic Analysis Studies
•     Project Funding & Financing
•     3rd Party Ownership & Project Development
•     Shared & Guaranteed Savings Programs

Micro Turbine Vision

As visionaries in the industry, America Approved has the foresight to recognize that micro turbines would become widespread for distributed power (combined heat & power) applications. America Approved and Capstone have formed a strategic alliance to offer our commercial clients a revolutionary Green Energy Solution. To learn more about price protection by bundling Capstone Turbines, gas and electric.

Engineering Economic Analysis

Engineering Economic Analysis Program



What is it?
The Engineering Economic Analysis HVAC Software program compares the lifecycle economics of alternative designs for HVAC systems and buildings. While primarily intended for HVAC and building applications, the program can be used for other types of economic studies as well.

The program offers four types of economic analysis studies. All four are bundled into one seamlessly integrated package.

    Private Sector Lifecycle Analysis
        Conducts detailed comparisons of the lifecycle economics of design alternatives. The analysis provides features required by private firms making investment decisions. In these applications maximizing profit is the key concern. Alternatives are rated on the basis of internal rate of return (IRR), net present worth savings and total present worth.
    Public Sector Lifecycle Analysis
        Conducts detailed comparison of lifecycle economics for design alternatives. In this case the analysis provides features required by government or non-profit organizations making economic decisions. In these applications cost effectiveness is the key concern. Designs are rated on the basis of savings to investment ratio (SIR) and total present worth.
    Simple Payback Analysis
        Compares the investment and operating costs of pairs of design alternatives to determine the payback period. This analysis is useful for quick, simple cost studies.
    Simple Cash Flow Analysis
        generates a cash flow table for each design alternative considered. This analysis is useful for projecting costs over a period of years and for determining total present worth of a design.

Engineering Economic Analysis Features

• Permits input of multiple investment cost items, loans, and depreciation of investments, annual operating costs and periodic operating costs for each design alternative.
• Calculates cash flow, total present worth, net present worth savings, internal rate of return, payback, savings to investment ratio.
•  Customizes content of reports based on the type of analysis being performed and therefore the economic criteria being used to make decisions.
• Generates reports that combine text and graphics.
• Reduces user effort by importing annual energy cost data from HAP building simulations, if desired. (Must use HAP v4.2 or later).
• Exports cash flow information in a text format suitable for loading into spreadsheet programs. This facilitates custom analysis of data by users.
• Provides extensive on-line help system and user¿s manual provide explanations, tutorials and example problems.

Saipan DOW Executive Summary

 This project was designed to investigate the economic and commercial feasibility of using cold deep ocean water (DOW) in an integrated system that would provide fresh water through atmospheric condensation and increased or new crop production through application of cold water agriculture techniques. Such an integrated system would likely be constructed in tandem with other DOW technologies, such as Sea Water Air Conditioning (SWAC), Ocean Thermal Energy Conversion (OTEC) and use of the deep ocean water for aquaculture.

The primary site for this study is the island of Saipan in the Commonwealth of the Northern Marianas Islands (CNMI). Saipan was chosen because of its dire fresh water and energy situation and the need to prove DOW concepts in tropical or semi-tropical environments. The CNMI Government had indicated its ready interest in helping to implement this project. A secondary site, as a control for the cold water agriculture experiments, was the Waimanalo Research Station of the University of Hawaii’s College of Tropical Agriculture & Human Resources (CTAHR).

The first task was to establish the feasibility of accessing deep ocean water on Saipan. As a general statement, this requires installation of a piping system that can bring sufficient quantities of cold DOW to the surface for the applications envisaged, which could potentially include not only the cold agriculture and potable water production technologies under investigation, but also Sea Water Air Conditioning, Ocean Thermal Energy Conversion, aquaculture or other technologies. In fact, using the same piping system for several of these applications in series or in tandem is probably necessary to justify the cost of the deep ocean pipes. So, the first question to be answered was whether or not the pipes themselves are feasible in the chosen location. Makai Ocean Engineering, arguably the world’s leading designer and builder of deep ocean pipes, took the lead in this part of our investigation. The answer is clear: the placement of pipes off Marpi Point on Saipan's northern coast is feasible, but at a cost of between $15 and $25 million depending on design, capacity, and precise location.

Once the feasibility of the deep pipes was established, the project focused on the twin technologies of cold agriculture and fresh water condensation. Cold agriculture (ColdAg™) was pioneered in the 1990s by Common Heritage Corporation in demonstration plots at the Natural Energy Laboratory of Hawaii. Our objective for ColdAg™ under this grant was to establish a scientific baseline for production of needed temperate zone crops in an arid tropical area using cold DOW to create the necessary growing conditions for the crops. Actual deep ocean water, of course, was not used since no deep ocean pipe yet exists off Saipan or at Waimanalo, but the cold DOW was simulated using fresh water cooled to the desired temperatures. The basic concept was to run chilled water through a closed piping system a few inches deep in the soil, chilling the soil and the plant roots to create “Spring-like” conditions for the temperate zone crops being tested. Our thesis was that such conditions chill the roots, produce fresh water condensation in the soil near the roots and may, through resultant water flow, prompt transport of natural nutrients from surrounding soil to the root systems. Results from the tests on Saipan were excellent, achieving high quality temperate zone crops in an area where they could ordinarily not be grown. Results from the control plots in Waimanalo were problematic, owing to an infestation of nematodes and failure of a generator, which made Waimanalo’s results inconsistent. The Saipan results, however, indicate that ColdAg™ was proven as a viable means of producing temperate zone crops in an arid, tropical area where such growth was otherwise not possible. The results appear to confirm the beneficial effects of creating the “Springtime” environment for the crops, though we have not yet confirmed the impact of condensation or nutrient flow. More trials are needed. The general outline of an integrated ColdAg™ system, using sample products, is shown below:

This project was not intended to produce a working prototype of a fresh water condensation system, but to further the research and design work needed to get us to that point. The concept is known to anyone who has taken a cold glass filled with ice outside in the summer. Our design work drew on an early prototype built by Common Heritage Corporation (CHC) at the Natural Energy Laboratory of Hawaii (NELHA). That prototype, which we called SkyWater, successfully produced fresh water from the atmosphere using condensation brought about be piping cold DOW through the system. Efficiencies were improved by also using available trade winds to enhance the cooling effect of the deep ocean water. Still, efficiencies were not good enough to justify fullscale applications and many questions remained concerning the design of water collectors, condensation surfaces and the materials that could increase efficiencies.

 Early SkyWater Design

Nisymco Inc. had done independent research and was brought into the project to take the lead on improving our designs. New designs were produced that combine the approaches of the two companies, and considerable progress was made on identifying appropriate materials to enhance efficiency. Building actual prototypes was beyond the scope of the project and will require additional funding.

The bottom line is that (1) deep ocean pipes are a feasible option for installation off Saipan; (2) temperate zone crops were successfully grown where they otherwise could not be grown; and (3) a vastly updated and, we believe, more efficient design was produced for condensing fresh drinking water from the atmosphere.

Economic feasibility remains a question. The "killer applications" for Deep Ocean Water have been Sea Water Air-Conditioning (SWAC) and, to a lesser extent, Ocean Thermal Energy Conversion (OTEC), neither of which were investigated in this project. SWAC is in use commercially in several projects around the world, notably in Halifax, Nova Scotia, at Cornell University (using cold lake water), at the University of Hawaii Medical School in Honolulu, and at an InterContinental Bora Bora Resort & Thalasso Spa in French Polynesia. The latter claims that SWAC has cut their electricity bill by more than 90%, thoroughly and quickly justifying the costs of putting down a deep pipe. OTEC is less proven, but we understand that efficiencies are showing dramatic improvements and that commercial operations are on the horizon. Our conclusion is that either SWAC or OTEC can justify the installation of the DOW piping system. When used as part of a system which includes SWAC and/or OTEC, ColdAg™ and SkyWater can dramatically enhance the economic viability of an integrated project by adding on new products and revenues at little or no additional initial cost. Our detailed economic analysis, included in the Technical Discussion below, concludes that the annual savings from a DOW system using SWAC, SkyWater and ColdAg™ would likely be about 11% of its capital cost.

The project was carried out by Saipan DOW Project LLC, a wholly-owned subsidiary of Common Heritage Corporation (CHC). Partners and contractors include Makai Ocean Engineering, Nisymco Inc., Nauticos LLC, Kekepana International Services, Shimokawa Architects, Inc., SSFM International Inc., Air Masters Inc. and FMS Consulting Services. Faculty and personnel of the University of Hawaii’s College of Tropical Agriculture & Human Resources were among our investigators.