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PALM OIL MILL PROJECT MANAGEMENT

Lecture no 2Introduction Palm Oil Mill Project

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DefinitionDefinition

The Palm Oil Mill Project can be defined as “The creation and Implementation of Plans” for machines, structures and systems or processes to perform the desired milling function of oil palm fruits to efficiently recover palm oil and palm kernels with minimum loss”.

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WHAT IS PALM OIL MILL ?

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OBJECTIVE OF PALM OIL MILL

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OBJECTIVE TO HAVE PALM OIL MILLTo Process Oil Palm Fruits Commercially◦To process FFB from own estates◦To commercially offer processing

capacity to out growers or small holders

◦To process of both own estate ffb and outside source

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Background

Stork Amsterdam was the pioneer as oil palm factory designer, parts supplier and as contractor in the early days of milling technology.Transfer the trade indirectly to local sub contractor through local fabrication works for cost savings.“Time saving and Guarantee of Operation type of approach” by Local industry then accept local mill design and fabrication by local contractors modeled closely to original Stork –

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• Approach of Big Plantations Agencies by – Looking at Basic Fundamentals – New innovative ideas

• Resulted in agency mills design varies from time to time and from place to place to justify the followings requirements– To strike for easy milling operation– Easy maintenance & Operator friendly– Taken into consideration human welfare aspects– Long run investment type, using long lasting parts and

materials. – Operating cost optimization in the long run

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Background Contd.

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Fundamental

• The processes Palm Oil Mill is made up of many sub processes which should have the following attributes

Safe and user friendly Good and high performance Cost Effective Environmentally friendly

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• No significant different between palm oil mills• CPO and PK are extracted mechanically from FFB. • All Mills basically consisted the following basic

processes;– Material Handling (Conveyors, elevators)– Mechanical Extraction (Screw Press)– Separation (Mechanical, Pneumatic & Hydraulic)– Heat Transfer (Sterilization & Drying)– Energy Conversion (Boiler, Turbine, Fans, Pumps)– Distribution of Energy

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Fundamentals Contd.

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REQUIREMENTS OF PALM OIL MILL

• To be suitable for processing palm fruits• To extract and recover CPO and PK with

acceptable minimum loss• To produce CPO and PK of highest quality• To facilitate the disposal of shell, fibre and

empty bunches• To incinerate or to treat the empty bunch

to recover 0.25% additional oil and used as fuel to produce steam for more valuable electrical power generation

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Requirements of Palm Oil Factory Contd.

The plant and process shall be Environmentally friendly and to dispose of waste water (sludge) through proper waste water treatment so as not to pollute local rivers and waters

To be reliable and suitable for local conditions of labour, supervision and maintenance

Consideration and incorporation of safety aspects that comply with OSHA such as to provide for good ventilation, working space, dust free and noise levels within permissible limits.

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Requirements of Palm Oil Factory Contd.• The incorporation of operating procedures,

equipment, plant and process systems to meet the ecological, hygenic and cleanliness of the plant on par with food manufacturing standards – (New Challenge HACCP)

• Designed for cost effectiveness for operation and maintenance.

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Palm Oil Mill Project

Introduction Before constructing palm oil mill, planning and

selection of the propose mill site is very important. It is a very good approach if this planning is made

during planting stage to avoid wasting of cost for unnecessary clearing the planted palms tree for the construction of mill.

However this always not the case as most of the mills has also been constructed upon decision of site after estate is ready.

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• The implementation of Palm Oil Mill project usually as stated in six phases of project life cycle discussed in the chapter one of this lecture– Concept– Definition– Design– Development/ Fabrication– Erection/ Application/ Commissioning– Post completion

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• CONCEPT – OPERATION INPUT– INVESTIGATION OF TECHNOLOGY– FEASIBILITY STUDY– BUSINESS SURVEY

• DEFINITION– SPECIFY THE OBJECTIVE OF CONSTRUCTING THE MILL– ESTABLISH TARGETS– ESTABLISH PROJECT ORGANIZATION– SETUP PROJECT NOTEBOOK

• DESIGN• DEVELOPMENT & CONSTRUCTION• ERECTION/ APPLICATION/ COMPLETION• POST COMPLETION

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• CONCEPT – ESTATES OPERATION INPUT

To obtain size of planting area and expected year of maturityFFB Projection/ Forecast for next 15 to 25 yearsCompany milling policy i.e. to process all crops

– FEASIBILITY STUDY TO ASCERTAIN PROJECT VIABILITYDetermine the required mill capacity from the FFB projectedConsider options such as defer building oil mill and sell FFB etcPrepare Financial analysis to calculate Return of Investment, IRR (Internal Rate of

Return), Payback years etc

– BUSINESS SURVEYNearby third party estatesOther Palm Oil Mills in the regionFuture trend of planting Oil Palm in the region

– INVESTIGATION OF TECHNOLOGYWhat is the newer technology available in Palm Oil Mill for considerationConventional type of design or using new approach such as Continuous Steriliser or

Vertical SteriliserFinalise what is in mind and evaluate the cost involve

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• DEFINITION

– SPECIFY THE OBJECTIVE OF CONSTRUCTING THE MILLTo serve only own estatesTo venture into 3rd party milling businessDead capacity or future expansion plan

– ESTABLISH TARGETSTarget the completion of the mill to beTarget to obtain Approval from all relevant authority such as EPU, State

Gov, DOE, MPOB, Majlis Daerah etcTarget to complete the designTarget to tenderTarget to award the project

– ESTABLISH PROJECT ORGANIZATION *

– SETUP PROJECT NOTEBOOK *04/28/23

Palm Oil Mill Project