Your number for Gross Profit for selling "processors" is Grossly overstated.
"That would result in a gross profit for each processor sold of $6.5 to $7 million"
The main problem is that you are confusing the cost of the entire system; constructed, commissioned, and started up with the appropriate level of Engineering effort. The SAIC Summary and cost to-date for JBI are useful in looking at the cost of a fully functional system.
We know that there are several pieces of Equipment at a fabricator (which is costing JBI storage costs by the way) that are 75% complete. The last financial statements show a value of over $1 Million for Construction in Process, which refers to those pieces. Whatever is at the fabricator is only part of the solution.
Based on my experience the cost breakdown on any job in the process industries are roughly as follows:
- Construction - 20%
- Equipment - 20%
- Engineering - 30%
- Project management - 10%
- Commissioning -20%
The best reference we have for the cost of a full 3-processor installation comes from the SAIC Summary. That document put the Total Cost at $9 Million. The last financial statements support that, showing an Incurred Cost to-date for the 3 machines that JBI has already built is about 7.4 Million. Any estimate produced by SAIC would have used Union labor rates, etc and would be more expensive, with no shortcuts.
The SAIC estimate was estimating the cost to the Owner. The role that JBI would play is that of an Equipment Vendor. The Revenue to JBI would be a part of the Cost to the Owner in the form of a markup.
They do not have the construction, Engineering, Commissioning, or Project Management experience to do 100% of this work. In this role, JBI is only going to be able to garner a portion of the Total Cost as Revenue.
We have the comment from Heddle that the processors are "75% Complete". The only thing that makes sense, given the number on the books for Construction-in-process, would be that he is talking about the status of the fabricated equipment alone. That is to say, they are 75% complete on the "Equipment - 20%" component.
The SAIC Summary is accurate from a Cost standpoint and supports this. Their figure was 8.5 Million with an OOM estimate complete (according to the document). An OOM estimate is worth 5% of the total budget. That is an industry standard. That gives a total cost of 9 Million for a 3-processor cluster, with about 400k already spent. The rest of the figures they give, which is a further 2 Million for Engineering, jive with industry standards. A FEL2 estimate is worth 10%, a FEL3 (final detailed) estimate is worth 15% of the budget. That results in the 30% Engineering cost.
The SAIC study was done on Processor #2, and things have been improved. #3 is more modular and has some drawings (Engineering work) associated with it. OK, modularization is worth about 10% cost reduction in Construction. The drawings mean more Engineering has been done.
The SAIC study was for a 3-processor cluster.
We can talk about 2 things; the cost of a 3-processor cluster, or the cost per Unit (based on one processor). Based on all of the above, the cost of an individual unit would have to be between 3-4 Million, and the cost of a 3-processor cluster would be upwards of 6-7 Million. There would be a lot of common systems that would make a cluster advantageous.
JBI's take as Revenue (Cost to the Owner and part of the $9 Million for the SAIC estimate) from this would probably be 2-3 Million per Unit, and maybe 5-6 Million for a Cluster.
Profit to JBI
I think the only thing we can assume a 20-30% markup on Labor (Consulting) and Equipment. That would mean they would make anywhere from $500k to $1 Million per processor sale... or 1 Million on a 3-processor cluster.
This is assuming that that kind of money can be justified. I know of no business (ROI) justification for doing this based on profitability, and if it is some other justification (Green? Environmental?) those budgets are hard to find in those amounts.
