Track: Engineering Economy

Abstract

This case study was carried out to determine the economic study of the implementation of the burner unit removal project. Three investment alternatives have been developed and compared in this study to determine the most economical option, i.e. operational refractory burner system as well as current state (alternative 1), remove unit burner to ladle shop building in accordance build a new building in ladle shop building and also modify existing overhead crane (alternative 2), remove unit burner to ladle shop building in accordance build a new building in ladle shop without modifying overhead crane unit (alternative 3). Economic evaluation is studied by performing cost saving analysis, increment cash flow projection, NPV, IRR, and Payback Period. Furthermore, sensitivity analysis of the most economic option was carried out based on three investment parameters which are a projection of the operational saving cost, discounted rate, and cost of investment changes. The result shows that alternative 2 have the highest NPV, IRR, and Payback period has slightly lowest than alternative 3. In term of sensitivity analysis, alternative 2 have a big tolerance to the all of investment parameter. Therefore, this study has been successfully confirmed that alternative 2 is the most economical option.