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Profit Estimation Methods for Automation Investments in Process Industries
5d-Ol 2
Copyright © 19961FAC 13th Triennial World Congress, San Francisco, USA
PROFlT ESrIMATION METHODS FOR AUTOMATION INVESrMENTS IN PROCESS INDUSTRIES
Matti Ketonen Kemira Engineering OY P. O. Box 330, 0010] HelsiTlki 10 , Finland fel. +358-0-13211 ,fax. + 358-0-694 0914
email [email protected]
Abstract: As the integration of processing plants grow and demands of organizational development, environment, society and customers become more severe investments on automation become more and more difficult to assess with straight-forward monetery terms. An automation investment often coincides with strategic development of production units and is therefore dependent on strategic values of the enterprise. In this work a benefits-of-automation-matrix (RAM) is presented as a tool for screening and evaluation of different investments on automation. Keywords: Process automation, Industrial control, Efficiency enhancement, Organizational factors
estimation methods for some classes of automation investments but no universal method has been given.
1. INTRODUCTION In the early stages of automation investments may be justified by hard credits alom:. In the future the benefits of certain investments will be increasingly more subjective and nebulous (Ballou and Tayi 1994). At present these investments may be considered "strategic" but as intuition plays major role in the evaluation of such investments, tools are needed to form a basis for such decisions to allow justification of technological choices in economic tenn<;, irrespective of the technical competency of the people who are responsible of the investment approval (Francalanci et al. 1994). Methods for evaluating investments under uncertainty have been developed (Brennan and Schwartz, 1985). These methods are based on the stochastic nature of income and may be used to evaluate investments where relevant income sources are already known. These income sources shall be identified before any analysis can be made in a way where all of the affecting factors would be noticed. There are investigations of profit
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Effective production units can only be designed if the whole operation is considered as a combined entity. Processes, their automation and tools for management have to be studied and designed jointly. In recent years tools have developed so that more and more attention may be given to the functionality of the resulting overall system (Marlin 1993, deSpautz 1994). The investment evaluation procedure may differ according to the time expected to be needed before returns can be achieved. This may be problematic in conjunction with automation investments where profits usually may come from varying sources with differing expectations of magnitudes and timing. 2. BENEFITS ANALYSIS METHODS A typical automation investment considered here is a combination of following items:
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Copyright © 19961FAC 13th Triennial World Congress, San Francisco, USA
PROFlT ESrIMATION METHODS FOR AUTOMATION INVESrMENTS IN PROCESS INDUSTRIES
Matti Ketonen Kemira Engineering OY P. O. Box 330, 0010] HelsiTlki 10 , Finland fel. +358-0-13211 ,fax. + 358-0-694 0914
email [email protected]
Abstract: As the integration of processing plants grow and demands of organizational development, environment, society and customers become more severe investments on automation become more and more difficult to assess with straight-forward monetery terms. An automation investment often coincides with strategic development of production units and is therefore dependent on strategic values of the enterprise. In this work a benefits-of-automation-matrix (RAM) is presented as a tool for screening and evaluation of different investments on automation. Keywords: Process automation, Industrial control, Efficiency enhancement, Organizational factors
estimation methods for some classes of automation investments but no universal method has been given.
1. INTRODUCTION In the early stages of automation investments may be justified by hard credits alom:. In the future the benefits of certain investments will be increasingly more subjective and nebulous (Ballou and Tayi 1994). At present these investments may be considered "strategic" but as intuition plays major role in the evaluation of such investments, tools are needed to form a basis for such decisions to allow justification of technological choices in economic tenn<;, irrespective of the technical competency of the people who are responsible of the investment approval (Francalanci et al. 1994). Methods for evaluating investments under uncertainty have been developed (Brennan and Schwartz, 1985). These methods are based on the stochastic nature of income and may be used to evaluate investments where relevant income sources are already known. These income sources shall be identified before any analysis can be made in a way where all of the affecting factors would be noticed. There are investigations of profit
5629
Effective production units can only be designed if the whole operation is considered as a combined entity. Processes, their automation and tools for management have to be studied and designed jointly. In recent years tools have developed so that more and more attention may be given to the functionality of the resulting overall system (Marlin 1993, deSpautz 1994). The investment evaluation procedure may differ according to the time expected to be needed before returns can be achieved. This may be problematic in conjunction with automation investments where profits usually may come from varying sources with differing expectations of magnitudes and timing. 2. BENEFITS ANALYSIS METHODS A typical automation investment considered here is a combination of following items:
5630
5631
5632
5633
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