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Systems Definition and

Cost Calculation Method

For API Flushing PlansAt Sulzer Pumps India Ltd.

Sagar BiyaniEmail – [email protected]

St. Francis Institute of Management and Research

Mt. Poinsur, SVP Road, Borivli (W). Mumbai – 400 103.

Contact No: 28917089.

mailto:[email protected]






1

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 requirementfor 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: 2006 – 07.

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 : 2006 –2008.



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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



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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 OfManagement & 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.



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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.



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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



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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 centre’s 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"



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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.



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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.

0

200

400

600

800

1000

1200

1400

COGS (in Mill)Sales (in Mill)

Profit (in Mill)EPS (in Rs.)

557

970

56

22.5

753

1318

115

46.36

2004 2005



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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 onthe 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.



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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 theinformation 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.



12

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.

Part –I

There are various Flushing Systems classified by names of plans as follows:

i. Plan 01

ii. Plan 02

iii. Plan 11

iv. Plan 13

v. Plan 14

vi. Plan 21

vii. Plan 23

viii. Plan 31

ix. Plan 32

x. Plan 41

xi. Plan 51

xii. Plan 52

xiii. Plan 53a, 53b, 53c.

xiv. Plan 54

xv. Plan 62

xvi. Plan 71

xvii. Plan 72

xviii. Plan 74

xix. Plan 75

xx. 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



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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 ½”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. Temperature Indicator

ii. Pressure Indicator

iii. Pressure Control Valve

iv. Level Indicator

v. Level Switch High

vi. Level Switch Low

vii. Level Gauge



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viii. Pressure Switch

ix. Pressure Switch High

x. Pressure Switch Low

xi. Flow Indicator

xii. Flow Switch High

xiii. Flow Indicator Low

xiv. Strainer

xv. Cooler

xvi. Cyclone Separator

xvii. 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 ½” pipe. Then the matrix appears as follows:



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Project No: 220123 Basic Cost Accessories

Customer: ABC Ltd. Excise/Custom 16.00% 8.00%

Pump: CC Sales Tax 4.00% 12.00%

Plans Flush PipingFlange Rating

Pump Piping inBasic Cost Total

11 CC/CZ SS 316 1/2" pipe 4,550.00 4,550.00

21 CC/CZ SS 316 1/2" pipe 35,893.00 37,893.00

32 CC/CZ SS 316 1/2" pipe 34,560.00 44,560.00

Total Basic Cost 75,003.00

Excise/Custom 12,000.48

Total 87,003.48

Sales Tax 3,480.14

Net Basic Cost 90,483.62

Cost of Accessories 12,000.00

Excise/Custom 960.00

Total 12,960.00

Sales Tax 1,555.20

Net Accessories Cost 14,515.20

Total Cost 104,998.82



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List of Accessories

Temperature Indicator 2

Pressure Indicator 1

Pressure ControlValve

0

Level Indicator 0

Level Switch High 0

Level Switch Low 0

Level Gauge 0

Pressure Switch 0

Pressure Switch High 0

Pressure Switch Low 0

Flow Indicator 1

Flow Switch High 0

Flow Indicator Low 0

Strainer 0

Cooler 0

Cyclone Separator 0

Reservoir 0

Total 4

There are special guidelines for using this sheet. Some colour codes are

there to be considered s follows:

Enter the CostThe cost of accessories should be entered only in thesecells.

OptionalInstruments

These instruments should be included only if specifiedby the customer.

Cost is Included The cost of these instruments is included in basic cost

Cost is Included,but optional

The cost of these instruments is included in basic cost,but should be supplied only if specified by the customer

Data cells No data should be entered in these cells.

FormulasThese cells gives the output, do not make any changesin these cells.



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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 ofplans 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

http://www.sulzer.com/


http://www.sulzerindia.com/


http://www.google.com/


http://www.en%2Cwikipedia.org/






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