Estimating the Financial Benefits in Variability Reduction

I received an email from a university student with a great question the other day. It prompted a great answer from Pete Sharpe, a Principal Advanced Automation Consultant. You may recall Pete from earlier posts on process optimization.

I’ve retained the anonymity of the person asking the question by editing the question:

I am doing my thesis on estimation of benefits by implementation of advanced control, I read your articles in this field and it help me so much, but I still have some questions, I would like to know if you could give me information about how to calculate the benefits to pour point, viscosity and Research Octane Number (RON). I will be grateful for your help.

Pete responded:

I was forwarded your request about calculating benefits. I’ve had some experience in this area. Are you estimating benefits for a blending process? If so, the opportunity is to reduce variability and approach the specifications closer using less of the more valuable components. So instead of making 87.5 RON on the average, you reduce it to 87.1. The value is the total blend rate times the difference in average octane times the octane barrel cost.

Anyhow, I’m attaching a paper that perhaps might help describe how these benefits are calculated.

I contacted the ISA and received permission to re-host this paper, Estimating Benefits from Advanced Control (Copyright © 1986 ISA. Reprinted by permission. All rights reserved.)

In the paper, the authors (Pete, P.L. Latour, and M.C. Delaney) apply statistical methods to estimate savings from dynamic control improvement and steady state optimization. At the end of the article, they run through a distillation column example calculating annual dollar savings by reducing process variability and thus allowing the column to operate more closely at its limits.

Whether you’re a student or a project engineer, you might find the calculations in this “oldie but goodie” paper useful in trying to estimate and quantify the benefits for your project.

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