Systems Definition and Cost Calculation Method For API Flushing Plans

At Sulzer Pumps India Ltd.

Sagar Biyani
Email biyanisagar@gmail.com

St. Francis Institute of Management and Research

Mt. Poinsur, SVP Road, Borivli (W). Mumbai 400 103. Contact No: 28917089.

A RESEARCH PROJECT ON Systems Definition and Cost Calculation Method for API Flushing Plans at Sulzer Pumps India Ltd
FOR SFIMAR
Compiled to the Mumbai University in the partial fulfillment of the requirement for the award of the degree in... MASTERS OF MANAGEMENT STUDIES

Submitted By:
Name: Sagar Anil Biyani. Course: MMS I, Div A. Roll No. 45. Year: 200607.
Under the guidance of Prof. Sulbha Rao Rane SFIMAR

St Francis Institute Of Management And Research, Mt. Poinsur, S.V.P Road, Borivali (W) Mumbai.
Year : 20062008. 1

Certificate
This is to certify that the Project work titled Systems Definition and Cost Calculation Method for API Flushing Plans submitted by me in partial fulfillment of the requirement for the degree of Master of Management Studies to St. Francis Institute of Management and Research under Mumbai University, is an original work and the same has not been submitted either to St Francis Institute of Management & Research (under Mumbai University) earlier or to any other institution.

Sagar Anil Biyani Roll No. 45

Countersigned by: Project Guide

a. Acknowledgement:
I am extremely grateful to all the people who have guided me during the tenure of this Summer Project. I would like to acknowledge the support & valuable inputs from my guides at Sulzer & SFIMAR without which it would not have been possible to carry out an extensive study on the subject. First Of all I would like to express my heart felt gratitude to Mr. N. V. Suresh, Sr. Manager, HRDA & Mr. N. H. Dharamshi, ORE Department for their constant encouragement & kind Co-operation in carrying out this work. It is my privilege to express my gratitude towards St Francis Institute Of Management & Research & in particular our director Dr. Thomas Mathew & my Guide Prof. Sulbha Raorane for providing me the support & giving me the opportunity to successfully complete my summer project at Sulzer Pumps India Ltd. Lastly I am pleased to express my sincere appreciation to all those who have helped me by providing useful information and supported me to complete this project on time.

b. Executive Summary:
There are various types of plans like primary, secondary and auxiliary used in pumps depending on the applications. Many of the plans have instrumentation applicable varying on the processes and customers requirement. Instruments could be sourced indigenously or needs to be imported. While submitting an offer the applicable price is worked out with costing department and then included in the price being submitted. Price is worked out based on applicable items. The project was carried out to study the various plans, review the applicable items, prepare functional properties and define the cost band. A standard supply list of optional supplies with applicable procurement policy and its respective cost is prepared. A ready reckoner matrix has been prepared which gives the standard supply with clearly indicating where the same would applicable, listing the optional supplies along with their applicability and cost factor band.

c. Table of Contents:
1. Brief Description of the Company ........................................................ 6 a. Annual Report 2005 ...................................................................... 8 2. Introduction to Project .......................................................................... 9 a. Project Title ................................................................................... 9 b. Problem Identification .................................................................... 9 c. Objective ....................................................................................... 9 3. Project Design ...................................................................................... 10 a. Research Methodology ............................................................... 10 b. Data Collection ............................................................................ 10 c. Analytical Tool Used .................................................................... 10 4. Limitations............................................................................................ 11 5. Analysis and Finding ........................................................................... 12 a. Part I ........................................................................................ 12 b. Part II ....................................................................................... 14 6. Conclusion ........................................................................................... 18 7. Bibliography, References & Websites ............................................... 19 8. Annexure .............................................................................................. 20

1. Brief Description of the Company:

Sulzer Pumps is one of the worlds leading pump manufacturers; they are specialized in centrifugal pumps and agitators/mixers for the Oil & Gas, Hydrocarbon Processing, Pulp & Paper, Power Generation, Water & Wastewater and Food, Metals & Fertilizer markets. Their products are internationally reputed for their technical excellence. They have over 20 Marketing offices, 12 Manufacturing facilities and 50 dedicated service centres world-wide to provide local support for our customers. The sales office of Sulzer is located in all the metros of INDIA like Delhi, Mumbai, Kolkata and Chennai along-with Baroda and Hyderabad. Sulzer Pumps India Ltd is a professionally managed company which is demonstrated by the work culture that empowers people, promotes cross functional teams & encourages new ideas & initiatives. Sulzer Pumps India Ltd. desires to be a leader in its area of business, to be responsive to customer needs, to set up new standards in the quality, performance & fulfill obligations with team work & commitment.

Aspiration:
"Sulzer Pumps India Ltd has ambitious plans for the future; it focuses systematically on customer orientation, performance and financial success. The company believes in implementing these principles, which in future will be followed up more intensively and hence will help to achieve the company goals."

Mission:
"Our primary Goal is to Create Value by Utilizing Our Engineering Know - how in Selected Industrial market" 6

Customer Dedication:
"We Make Our Customers More Competitive"

Performance:
"We Meet High Standards"

Financial Success:
"We Deliver Financial Value"

Quality Policy:
"Focus on Customers growth & profit will follow."

Vision:
We create added value for our customers, employees and

shareholders with rapid, anticipatory adaptation to customer's requirements and modern, innovative technology.

History of Sulzer Pumps India Ltd

1974 Started as Khimline Pumps Ltd. (KPL) with the manufacture of chemical norm pumps as per ISO 2858 1984 Tied up with Sulzer and entered the HPI market 1996 - Sulzer increased its stake in KPL by acquisitions from Financial Institutions, original Promoters and Employees. 1998 Change of Company name from Khimline Pumps Ltd. (KPL) to Sulzer Pumps India Ltd.

Annual Report 2005

In 2005, Sulzer pumps India Ltd. Registered an increase in order intake of 11.90% over the previous year. The order intake increased from INR 1087 Mio in 2004 to INR 1216 Mio in 2005. The sales in 2005 is 34.70% higher than the previous year. The following graph gives the performance of Sulzer Pumps India Ltd.

1400 1200 1000 800 600 400 200 0 COGS (in Mill) 557 753 970

1318

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115 22.5 46.36

Sales (in Mill)

Profit (in Mill)

EPS (in Rs.)

2004

2005

2. Introduction to Project:
a. Project Title
The title of this project is Systems Definition and Cost Calculation Method for API Flushing Plans.

b. Problem Identification
There are various types of pumps and due to rotation of motor and other components the seal gets heated and corroded. Hence, various Flushing systems are used, to improve the life of Seal and the Pump. But it is very difficult to decide which flushing systems should be used. Also the cost of this system varies as it is outsourced. Along with the basic cost the cost also varies on the accessories used along with them. There are many different accessories like Temperature Indicator, Cooler and many more.

c. Objective
The objective of the project was: To study all the flushing plans and to define a proper system for selection of Flushing Plans according to the conditions specified by the customer. To prepare a matrix for calculating the cost of various plans based on the Basic cost along with the cost of accessories as required in various plans. The matrix should also include various taxes and give the final Landing Cost of the plan. This system and the matrix will be used by the marketing department to determine the cost of plans so that the calculation of any project becomes easier, accurate and consistent.

3. Project Design:
a. Research Methodology:
The Research Methodology used is a combination of Exploratory and Causal method. The exploratory research was conducted as the method of selection of plans was not clearly defined. This research gave me a significant insight into the process of selecting appropriate Flushing Plans. The causal research was conducted to study the selection of plan and its effect on cost.

b. Data Collection
The Secondary data was collected from the data sheets API 682 and API 610 created by the American Petroleum Institute which gave all the information regarding the selection of Flushing Plan. The first hand information regarding the Costs, etc. was primarily collected from Mr. Dharamshi.

c. Analytical Tools Used

Software like MS-Excel and MS-PowerPoint were used to design the system for selection and the model for costing of flushing plans. As these were user friendly and extensively used.

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4. Constraints:
The model was designed based on the parameters decided during the discussions with the users. The cost was not available for all the plans and instruments, so was not able to test it for all the plans.

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5. Analysis and Finding:

Seals are one of the major components of Pump. Now whenever a pump is in use, due to rotation and continuous movement the seal gets heated or corroded and gradually damages. So to increase the life of seals as well of pump various flushing systems are used. The project was divided in two parts: 1. Preparing a system for the selection of various Flushing Plans based on the requirement of the pump and 2. Preparing a matrix for the calculation of the Flushing Plans selected along with the accessories required in the Plan. PartI There are various Flushing Systems classified by names of plans as follows: i. ii. iii. iv. v. vi. vii. viii. ix. x. Plan 01 Plan 02 Plan 11 Plan 13 Plan 14 Plan 21 Plan 23 Plan 31 Plan 32 Plan 41 xi. xii. xiii. xiv. xv. xvi. xvii. xviii. xix. xx. Plan 51 Plan 52 Plan 53a, 53b, 53c. Plan 54 Plan 62 Plan 71 Plan 72 Plan 74 Plan 75 Plan 76

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One of the plans is shown below:

The plans are classified on the basis of the fluid being used and the type of seal. The fluid is mainly of two types: 1. Non-Hydrocarbon 2. Hydrocarbon. a. Flashing Hydrocarbon b. Non-Flashing Hydrocarbon

The seals are classified on basis of arrangement: 1. Arrangement 1 Single Seal. 2. Arrangement 2 Pressurized Dual Seal 3. Arrangement 3 Unpressurized Dual Seal.

After these two major factors the flushing plans are selected as on basis of temperature and many other such factors.

So these factors were studied from the data sheets of American Petroleum Institute; API 610 & API 682 which gives the description of all the plans and the 13

conditions regarding the use of plans. After studying the various plans, a system was designed in which we give input about the type of fluid, the seal arrangement and then various questions are asked about the temperature of fluid, etc. which helps in the Decision-Making for the selection of pump. Then based on these selections a list of the plans to be installed is prepared.

Thus, the system helps in selection of the Flushing Plans as per the requirement of the pump.

Part II As we saw earlier there are 20 plans. Hence, after the plans are selected from the system, the next step was to calculate the cost. The major problem was, in every plan there are again different designs based on type of pump like CC/CZ or ZE/ZF/OHH/MB/MC/GSG. Also the cost of plan various on designs like 3/8 tube or pipe, etc. After analysing the above factors a matrix was prepared. The matrix considered the basic costs of all the plans and instruments required with the plan. There are many accessories along with the plans. The various accessories as follows: i. ii. iii. iv. v. vi. vii. Temperature Indicator Pressure Indicator Pressure Control Valve Level Indicator Level Switch High Level Switch Low Level Gauge

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viii. ix. x. xi. xii. xiii. xiv. xv. xvi. xvii.

Pressure Switch Pressure Switch High Pressure Switch Low Flow Indicator Flow Switch High Flow Indicator Low Strainer Cooler Cyclone Separator Reservoir

All the plans do not require all the above accessories. So the matrix gives the cost and a list of only those accessories which are required along with that plan. The matrix also gives the total cost including the Custom duty or Excise and Sales tax. Thus the matrix gives the Landing cost of the plans and a list of accessories required. Let us assume plans 11, 21 & 32 are selected, the flush piping in CC and design is pipe. Then the matrix appears as follows:

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Project No: Customer: Pump:

220123 ABC Ltd. CC Excise/Custom Sales Tax

Basic Cost 16.00% 4.00%

Accessories 8.00% 12.00%

Plans

Flush Piping

Flange Rating Pump Piping in SS 316 1/2" pipe SS 316 1/2" pipe SS 316 1/2" pipe

Basic Cost

Total

11 21 32

CC/CZ CC/CZ CC/CZ

4,550.00 35,893.00 34,560.00

4,550.00 37,893.00 44,560.00

Total Basic Cost Excise/Custom Total Sales Tax Net Basic Cost Cost of Accessories Excise/Custom Total Sales Tax Net Accessories Cost Total Cost

75,003.00 12,000.48 87,003.48 3,480.14 90,483.62 12,000.00 960.00 12,960.00 1,555.20 14,515.20 104,998.82

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List of Accessories Temperature Indicator Pressure Indicator Pressure Control Valve Level Indicator Level Switch High Level Switch Low Level Gauge Pressure Switch Pressure Switch High Pressure Switch Low Flow Indicator Flow Switch High Flow Indicator Low Strainer Cooler Cyclone Separator Reservoir Total 2 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 4

There are special guidelines for using this sheet. Some colour codes are there to be considered s follows:
Enter the Cost Optional Instruments Cost is Included Cost is Included, but optional Data cells The cost of accessories should be entered only in these cells. These instruments should be included only if specified by the customer. The cost of these instruments is included in basic cost The cost of these instruments is included in basic cost, but should be supplied only if specified by the customer No data should be entered in these cells. These cells gives the output, do not make any changes in these cells.

Formulas

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6. Conclusion:
The system has been designed to ensure proper selection of plans with its cost elements. The system designed can be more extensively used by the marketing department for selecting the types of flushing plans. This system will also be implemented in the Engineering design department as they also need to do the selection of plans. This matrix can be used by the costing department to determine the cost of plans so that the calculation of any project becomes easier, accurate and consistent.

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7. References, Websites & Bibliography:

1. American Petroleum Institute Datasheets API 610 and API 682. 2. Sulzer Pumps India Ltd. 32nd Annual Report 2005. 3. Sulzer Pumps India Ltd. 33rd Annual Report 2006. 4. www.sulzer.com 5. www.sulzerindia.com 6. www.google.com 7. www.en,wikipedia.org

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