(116b) Make Sure They Understand: Communicating the Cost of Developing Products and Processes

Abstract The cost of manufacturing of new products and processes is information that is useful at very early stages in a project's development. Even rough estimates can be helpful to project teams as decisions to support or abandon projects are made. The need to prepare such estimates at early stages requires that they be made in the absence of complete information. Educated guesses about reaction yields, raw material prices, capital, etc. must often be made to complete a cost estimate. In such an environment, the decisions made on the basis of early stage estimates are necessarily vulnerable to those assumptions that prove to be invalid. Unfortunately, the importance of the assumptions and the potential for changes is often not sufficiently understood and appreciated by clients who review early stage cost estimates. Use of probability and statistics tools has been employed in numerous fields to provide a deeper understanding of the effects of uncertainties on computations1,2,3. Entering ranges of input values and effectively communicating the attendant range of results using such tools enables more thorough communication and can provide insights about the probability of achieving a desired cost target. The discussion will include the topics listed below.

Identify the Uncertainties, Identify the Significant Costs, Communicate Sensitivities, Handling Multiple Variations, Other Economic Considerations

References: 1. Phillips, C.V., ?The Economics of ?More Research is Needed'?, International Journal of Epidemiology, Volume 20, No. 4, pp. 771-776 (2001). 2. Halog, A., Sagisaka, M. and Inaba, A., ?Assessment of Waste Gasification Technology Under Data Uncertainty and Variability?, Ninth Annual Industrial Wastes Technical Regulatory Conference, pp. 514-525, (2003). 3. Calis, H.P.A., et al ?Preliminary Techno-Economic Analysis of Large-Scale Synthesis Gas Manufacturing from Imported Biomass?, Pyrolysis and Gasification of Biomass and Waste, Proceedings of an Expert Meeting, pp. 403-417 (2003