Management control in bio-gas plants
Biogas plants have a seemingly simple production cycle which on paper make possible to achieve substantial margins. In reality the manufacturers are often found to deal with unforeseen financial need, or after a few years of activity, they can not make ends meet. The reasons can be found in various aspects that make the biomass processing activities far more critical than it seems at first sight.
To understand how complex factors interact with each other and how they affect the final result is not sufficient general accounting analysis or the simple detection of the technical system data.
It is indeed necessary to identify the key technical data of the industrial process to monitor them adequately and to place them in relation to the costs and revenues closely evaluated with industrial criteria.
Quantification of costs should be performed with instruments that give a reply promptly, objectively and in a technically correct way.
There are a number of elements that can make difficult to run of bio-gas plants in a balanced way.
The investment required is significant in relation to turnover, considering that with maximum efficiency the maximum expected turnover can be reached but never bettered, while, in case of problems, revenues may suffer a irrecoverable decline.
The investment is not only constituted by the plant in itself, but also by the large stocks of raw materials (plant biomass) immobilized for long periods.
A high investment involves, in general, a high debt, high interest rates and high rate of return: all this makes very delicate, particularly in first years, both the balance between financial commitments and cash flows and the balance between costs and revenues.
The industrial cost of biomass is often not easy to evaluate. It is the main cost item of the production cycle, but its cost can not be immediately deducted from the accounts because:
- Biomass is often partially or totally self-produced.
- The cost of procurement is subject to the agri-food market fluctuations that may be relevant.
- Various service costs combine to determine the actual cost of biomass.
- Biomass is subject to a significant weight loss.
- The storage period is very long.
- Several mayor biomass can be used simultaneously.
- Several alternative or complementary commodities can be used.
- The inventory of the biomass storage requires measurements and indirect estimates that hardly are able to give a clear and a clear and unequivocal response.
The processing cycle is affected by various factors and it has a very strong inertia. The relationship between cause and effect – that is, between feeding of the tank and energy production – is affected by many variables and widely dilated in time. It is therefore not immediately obvious the actual economic effect of the production decisions taken.
Operating margins are not expandable (you can not use the volume or the sales price lever ) and if the production cycle is not optimized they can be eroded quickly.
The operation of a biogas plant is an industrial activity and requires similar control instruments to those used in other manufacturing industries.
Of course, the peculiarities of the production process requires the adoption of specific and properly structured instruments.
The technical data are normally largely available in the plant conduction system, but they are not able to provide control and management tools regarding the economic performance of the production activity.
On the other end the general accounts has civil and tax purposes but may be inadequate or even misleading to the assessment of the industrial process.
The Facts management software developed by Luca Pretti in collaboration with Dr. Marco Pretti ‘s accounting firm – specialized in management control systems – is a unique, specific, effective and exhaustive instrument able to provide in real-time all the information necessary to assess the production operating performance as well as to monitor and value at any time the stocks of raw materials.
The feedback is immediate and instantly evaluates the raw materials loads with stringent criteria in terms of quantity, energy and cost, detecting deviations against set business standards.
The recorded process data allows to automatically analyze the production process efficiency indexes highlighting their trend over time.
The critical aspects of the biogas plant
The biogas plant has an apparently linear transformation process, however, involves several critical aspects:
- Volume of the necessary bio masses is significant and their industrial cost can not be of immediate determination.
- The cost of procurement is subject to significant market fluctuations; services and ancillary costs contribute to the final cost.
- The silage biomass is subject to a significant drop in weight and to a compacting process.
- Simultaneously many alternative end/or opportunistic feedstock can be used together with the major silage bio-masses .
- There are inputs of chemical or biological additives.
- The inventory of the stock of bio-masses is error prone and requires measurements and indirect estimates.
- The processing cycle is affected by various factors and it has a very strong inertia. The relationship between cause and effect – that is, between feeding of the tank and energy production – is affected by many variables and widely dilated in time. It is therefore not immediately obvious the actual economic effect of the production decisions taken.
BIOGAS DATA MANAGER Characteristics
The management system developed by Luca Pretti in collaboration with Dr. Marco Pretti ‘s accounting firm is an information technology tool for the rational, formal and exhaustive survey of the production made in order to record and process in a systematic and organized way the factors that affect the economic performance of the process.
Administrative procedures relating to the keeping of the general accounting do not in fact allow you to obtain timely feedback on the economic results of the plant nor to have useful information to adopt effective corrective measures to the production process.
The IT system dedicated to technical management of the system for its part provides a massive amount of of plant data, but does not implement the needed economic process analysis tools and in particular can not be an instruments for detection and management of handling and cost of production means..
The management system developed by Luca Pretti is based on a Firebird relational database installed on a local machine working as a database server.
Access to the database is granted by an application server installed on the same machine, which on the one hand manages all reads and writes to the database and on the other one provides a unique access to a range of client applications either through local network or across the Internet.
The application server segregates the database from client applications, and optimizes data traffic on the network, improving the usability of the system and preventing problems that might arise from the instability of the network itself.
Available client applications are:
Windows application that handles all the functionality of the system, either through local or remote network connection.
Android OS application to be used on a tablet during the loading operations.
Browser access to all reporting capabilities of the system.
Management of production means
Means of production (eg. Shredded cereals) constitute the main item of the income statement and the management of their cost (as unit value, mix and production capacity) is a fundamental and essential issue for optimizing the operating result.
In Facts system three main categories of production means are handled with different logic and instruments configured according to their peculiarities:
For silage (eg. Shredded corn) productions of each year are managed separately, and each lot is separately managed regarding the cost (even the the self-produced lots), the weight drop, the specific production capacity (compared to the raw material of reference) and warehouse handling of the trenches.
For alternative production means the cost (also of the auto-productions) and the specific production capacity are managed. The production load value is determined for each movement, progressively, with the FIFO calculation method. Warehouses handling is also managed (ex. silos).
- Each means of production is moved to the quantity and value.
- The value of the load is simultaneously determined and instantly recalculated in case of adjustments.
- All purchases are managed from a registry of supply contracts that guides and facilitates each recording. Any accessories purchase costs (ex. Shredding, transport) are contextually managed .
- Weighting and laboratory analysis sample references can be associated the single delivery.
- Data on the operator and the level of rainfall subsisting at the time are recorded for each production load movement. The detection of the rainfall level is used (optionally and in a totally reversible way) to make a parametric adjustment of the actual weight of the loaded raw materials. The recording of production loads data can be made via the tablet used directly from the loading vehicle.
For integrators in the value of production loads is determined for each movement, in a progressive way, with the FIFO calculation method.
Information system characteristics
- The computerized technical management system detects and stores a wide range of plant data: a small number of such data, relevant for management control, is automatically imported on a daily basis in the Facts management system, by means of a special customized interface, to enable an immediate integrated economic and functional assessment of the plant performance.
- Other monthly production and sales data are recorded directly in the management control system.
- the activities carried out by operators are detected.
- The system produces inventory situations and inventory sheets, in quantity and value, of all the means of production, and allows you to produce on screen a number of reports that make up a large and comprehensive tool for monitoring the trend of the system through efficiency indicators.
All on screen reports, as well as all the raw database tables can be exported selectively on a spreadsheet to allow for further processing (ex. Graphics representation).
We have available a series of reports, such as:
- Daily Report finalized to control the quantity, the energy capacity (weighted for the respective production capacity index) and the cost of production loads. The totals for each day may be viewed also in a synthetic way and aggregate for a given period.
- Report aggregate per month, which shows, for the desired period, the production data and the fundamental indexes of plant efficiency and of the production process.
- Trend report of technical parameters (ex. Filling levels) acquired from the plant conduction system.
- Synthetic report, for the desired period, of the operators’ activities.
- State of purchase contracts of silage, for which instantly the advancements in quantity and cost are calculated, with separate presentation of the additional costs incurred for purchase. These additional costs may also be examined by type and by supplier.
- Reports of purchases of alternative raw materials and supplements for the desired period.
- You can enable a daily automatic delivery to a list of recipients of an email containing the production load data of the day.
Access to the system is protected by an identification system (username and password). Each user is assigned a level of operation structured as follows:
- Administrator, no operational limitations, can manage users.
- Advanced user, no operational restrictions.
- Operator, just input of production loads data and staff activities
- Guest just use of the web interface (for reports).
- All records in the database register the date and time and the currently logged user name at the time of creation or modification. Deleted records are retained and can be retrieved.